How to Identifying Entrepreneurial Opportunity
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Entrepreneurial opportunity can be defined as the process of establishing a business which is based on a new idea. For all the individuals who are willing to be entrepreneur in future, it is very important to gather appropriate information of essential requirements that may help to set up a commercial enterprise successfully (Aliaga-Isla and Rialp, 2012). Main aim of this report is to figure out the sources that are required to launch an effective business idea.
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In this project report a new Chinese restaurant “Sweet and Spicy”is going to be established in London, UK. Low fat food items and beverages are going to be offered by the organisation. It is a great place for foodies who are fitness freak. Various topics are covered under this report that are sources for a new and innovative business idea, choice of a specific idea and primary and secondary data to identify market potentials. An assessment of potential viability and competitor analysis has also been covered under this assignment.
P1 Different sources of entrepreneurial ideas and innovation
Most of the entrepreneurial idea are based on innovation because these are made according to recent market trends. Entrepreneurs get business idea from various sources that motivate and support them through out its implementation. A new business is going to be established in London, UK. It is a restaurant which is Sweet and Spicy. Target market of the organisation is fitness freak and diet conscious individuals. Chinese food and beverage items with less fat and calories are going to be offered by it. The concept of Sweet and Spicy is being identified with the help of Drucker's 7 Sources of Innovation which is described below:
Drucker's 7 Sources of Innovation: All these sources are introduced by Peter Drucker in order to inspire individuals so that a new business can be launched successfully. All the 7 sources are described below:
- The unexpected: It is the first source of innovation that described the unexpected nature of innovation that may result in massive success or failure. As the business idea of Sweet and Spicy is very interesting then it may help the entrepreneur to achieve all the business goals. Identification of unexpected situations may guide to find best idea (Alvare, Barney and Anderson, 2013).
- Incongruities: According to this source the entrepreneurs need to gather appropriate data of market so that a new business can be established with such items that customers are willing to buy. While introducing Sweet and Spicy the owner need to collect proper information of market so that taste and preferences of customers can be identified.
- Process need: The entrepreneurs needs to be task oriented rather than situation focused as it can help to identify best business opportunity. According to this source the entrepreneurs should use such concept for business which has not yet been used by any other person. Differentiation and uniqueness of Sweet and Spicy restaurant will help to attract large number of customers.
- Industry and market structure change: Modification in industry and market structure guides to create innovative idea for a specific product so that it can meet the expectations of customers. As Sweet and Spicy is based on an innovative business concept and the idea is formulated according to market changes in order to reach large number of customers.
- Demographics: Fluctuations in demographics such as population, education and income level guides individuals to create a business idea according to them. It will help to meet the goals of the new businesses such as Sweet and Spicy. For the restaurant it is very important to give preference to these factors while launching business. It helps to motivate the entrepreneurs to set a business by analysing the demographics that are required to be focused while establishing a business.
- Changes in perception: Preferences and perception of customers changes with time. It can motivate Sweet and Spicy to offer them such food and beverage items that they are willing to have (Audretsch, 2012).
- New knowledge: It is the combination of scientific and non scientific technology. It is very important for entrepreneurs to have appropriate information of recent trends of market. It may motivate the individuals who have formed the business idea of Sweet and Spicy to focus on the preference and current market trends that have taken place in food and beverage sector.
All the above described sources can motivate individuals to form innovative ideas for businesses so that future goals can be achieved. These sources may guide and support the owner of Sweet and Spicy to offer such food items to the customers that may meet their preferences (Godley, 2013).
P2 Rational and market gap for a specific entrepreneurial idea
Market gap concerned with business opportunities that can be used implement an innovative idea in order to expand business by capturing large market area. Sweet and Spicy is going to use different targeting segments in order to identify best target market. All of them are described below:
Behavioural segmentation: It is can be defined as the way of distributing whole market in small homogeneous groups that are based on the buying behaviour of customers. Sweet and Spicy can segregate the its target customers according to their buying behaviour such as brand loyalty, frequency etc. It may help to attract large number of customers and retain them by offering good quality food items.
Demographic segmentation: This is the segments which is divided according to age, gender, family size, income, education and other factors of customers. Sweet and Spicy can divide its individuals on the basis of demographies in order to know them more accurately. All the socio economic characteristics of consumers may help the restaurant to target such individuals who are going to buy the food items (Grégoire and Shepherd, 2012).
Geographic segmentation: In this type of segment the market is divided on the basis of geography. It can be segregated in areas, city, country, state and region. Sweet and Spicy is going to be launched in London, UK and the geographic segment which can be selected by it is A country which is London.
From all the above above described segmentations the best suited segment for Sweet and Spicy is demographic in which the targeted customers are the young, foodies and fitness freak customers. It will help to reach large number of individuals who are willing to have such food items that are going to be offered by Sweet and Spicy.
As Sweet and Spicy is a new restaurant and the food and beverage sector of UK is broad hence there are various competitors are available in the market. These are Min Jiang, Kai Mayfair and rice republic Chinese restaurant. All of them are well established and famous and for Sweet and Spicy it is very important to be competitive in the market in order to survive in the market. In food and beverage sector there is a high possibility of getting failure due to end number of competitors but the business idea is unique and innovative that may help to get huge success in the market. There are end number of growth opportunities for the restaurant in the market along with this organisation also have to face various risks such as higher competitors. This can be reduced by offering unique food items to the customers.
Gap analysis is the process of assessing the gap between market demand and organisation's products. As requirements of customers in food and beverage sector are very high and it is very important for Sweet and Spicy to meet their aspirations so that business can be executed appropriately. The organisation have planned to offer fast food items and soft drinks with less fat. Demand of such products is continuously increasing in the market. It has been estimated that in future Sweet and Spicy can attain higher growth because customers are becoming fitness freak and health conscious. Main objective behind the business idea is to offer unique food items so that business can be established successfully. This can be achieved by meeting requirements of customers.
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P3 SWOT framework to collate evidence
SWOT analysis: It is a technique which is used by organisation to analyse its strengths, weaknesses, opportunities and threats. A SWOT analysis of Sweet and Spicy is conducted by the entrepreneur that may help to formulate new strategies in order to successfully establish the business (Mitchelmore and Rowley, 2013). The analysis is as follows:
- The new business idea is based on customer's preferences which may result in increased market share.
- The food items that are going to be offered by Sweet and Spicy have unique feature of low fat which will attract fitness freak customers.
- There is a lack of trained staff members that may create issues for the firm in future.
- As it is new business hence there is a lack of sufficient finance that may affect appropriate executing of business activities.
- Sweet and Spicy is offering low fat food to the customers which will attract large number of foodies and fitness freak customers towards the company.
- As the business idea of the restaurant is unique that may help to achieve growth quickly by capturing large market area.
- There is a high competition in food and beverage market and it may affect business operations of Sweet and Spicy.
- Customer's preferences and tastes changes with time and if Sweet and Spicy is not able to meet their expectations then it may affect on overall performance of the company (Siegel and Renko, 2012).
Sweet and Spicy have various risks such as high competition and the restaurant can overcome the risk by offering unique food items that may grab attention of customers and meet their requirements.
P4 Evaluation of competitive and market environments
Competitive market analysis is a process of analysing existing competition that may affect a new business or a running business. The best technique that can be used by Sweet and Spicy in order to analyse competitive market is Porter's five force model. This model is described below:
Porter's five force model: This model was introduced by Michael Porter in year 1979 in order to facilitate new entrepreneurial ventures to while assessing factors that may affect their business in future. This model can be used by Sweet and Spicy to identify the competitive forces that are affecting food and beverage sector (Porter's Five Force Model,2018). All the five elements of this model are described below:
(Source: Porter's Five Force Model, 2018)
- Industry rivalry: For all the new businesses that are going to be launched in the market it is very important to identify existing competitors in the market who are providing same products to the customers. For Sweet and Spicy it is essential to gather information of existing firms which may affect business of the restaurant. Main competitors of the firm are Min Jiang, Kai Mayfair and rice republic Chinese restaurant. It is very important for Sweet and Spicy to be competitive in the future which is possible by offering good food and beverage items to the customers.
- Threat of new entry: In Current era competition in food and beverage sector is continuously increasing and new restaurants are launching frequently. It is very important for Sweet and Spicy to keep information of new entries in the same market so that a unique feature can be added in the food items to get competitive advantage (Smith and Ibrahim, 2012). In UK there are fewer rules and regulations on small business like Sweet and Spicy so the organisation have higher threat of new entry in the same market.
- Threat of substitutes: There are various cuisines that are eaten by customers and for Sweet and Spicy it is very important to analyse such restaurants which are supplying substitutes to the customers. These are Mexican, Thai, Continental etc. It will help the restaurant to retain its customers by offering them such food and beverage items that may fulfil their requirements. In market demand of Chinese and fast food is continuously increasing which will reduce the threat of substitutes because Sweet and Spicy is going to offer fast food items with less fat.
- Bargaining power of suppliers: In Food and beverage market of UK there are end number of suppliers hence it may help Sweet and Spicy to bargain on food materials. It will help the restaurant to get food material on low prices so that monetary resources can be saved for future (Suddaby, Bruton and Si, 2015).
- Bargaining power of buyers: In UK demand of fast food items is very high hence there is less bargaining power of customers. It will be very beneficial for Sweet and Spicy because there are end number of buyers that will decrease their bargaining power.
For Sweet and Spicy it is essential to conduct a PESTLE analysis in order to analyse market conditions. All the elements of this model are as follows:
- Political: In UK political parties are supporting new business in order to develop the economy. They are implementing low tax rates on such business which have higher potentials to get developed in future. For Sweet and Spicy it is a great opportunity to establish the business successfully..
- Economic: In UK food and beverage sector is growing massively. This sector is contributing a higher amount in the national income of the country hence the government supports the sector. As Sweet and Spicy is also a part of this sector then it will be beneficial for the restaurant in order to successfully launch a new venture..
- Social: These factors depends upon education level, taste and preferences, paying capacity of customers etc. Local public of UK like to have different types of cuisines and Sweet and Spicy is offering Chinese food with less fat hence it is a unique concept that may help to target large number of customers. It is very important for the firm to set appropriate prices for food items that may attract the target market (Tang, Kacmar and Busenitz, 2012).
- Technological: All the elements that are related to latest technology in the market. In UK People are interested in technology hence it is very important for Sweet and Spicy to use some technological factors. If the organisation is using any new technique then it will help to grab attention of customers.
- Legal: Rules and regulations of legal parties are required to be followed by all the businesses as it may help to smoothly run the business. If Sweet and Spicy is not able to implement the rules that are imposed by government then it will affect its launch in the market.
- Environmental: Environment protection law and regulations are the part of such factors. Sweet and Spicy needs to make sure that it is not harming society and environment as it is required to perform all the operational activities (Wilson and Martin, 2015). It will create different opportunities for the restaurant because the government supports such business entities which are concerned with social and environment welfare activities.
All the above described factors are required to be analysed while launching a new business because all of them may help to form appropriate strategies to successfully conduct all the operations.
From the above project report, it has been concluded that entrepreneurs are the individuals who analyse market opportunities and grab them. It is very important for all the entrepreneurs to identify the actual needs and wants of customers so that an innovative idea may be created in order to meet their expectations. If a businessmen is not able to analyse current trends of market then it is not possible to establish a successful business. PESTLE analysis is a tool that can be used to assess external environment that may help to form appropriate strategies to run the business.
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