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IDENTIFICATION, ANALYSIS
AND CHOICE OF BUSINESS
OPPORTINITY
Objectives:
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Introduction
Every business begins with the availability of an opportunity.
Opportunity is when there is a space to offer goods or services
in any specific market.
When:
I.Products have been available but not fulfilling the customers
demand.
II.Customers demand for something better than what available
in the market.
III.They want more choices, so that they would be able to choose
according their tastes and preferences.
IV.They want something different from what has been offered
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d) Industrial Linkages
An output for one industry can be an input to another.
Therefore, integration between on industry with another
should exist. Example, proton cars industry-there are 125
vendors who supply car components to Protons, meaning that
proton assembly lines cannot operate without the support
from other protons components suppliers.
There are two types of integration:
a)Forward Integration.
Any business opportunity exists after a core/main
company produces a product or services.
b)Backward integration
Any business opportunity exists before a core/main
company starts their production process.
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Backward
Integration
Main
company
Component
industry
Transportation
Cleaning service
Suppliers
PERUSAHAAN
KERETA
NASIONAL
(PROTON)
Forward
Integration
Distributors
Workshops
Part suppliers
Car rental
Car wash
Transport
service
The existence of the national car project (PROTON) has helped to create,
Directly or indirectly, opportunities for the growth of the car industry and
Other businesses, which include the component industry the supplies car
Parts to Proton and spare parts to the suppliers.
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Experience
Many entrepreneurs are involved in business that are
suited to their own experience,e specially in relation to
their former career.
b)
c)
Financial situation
Financial ability is an important factor in determining
whether particular business opportunity can be further
developed or not.
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d)
Interest
The business field to be selected must be based on the
entrepreneurs interest. Interest can give more
confidence and a sense of responsibility to the business to
be developed.
d)
Networking
An entrepreneur will face difficulties developing a business
opportunity if his/her networking with others is limited.
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1. Legality
The entrepreneur has to make sure that the business
opportunity that is going to be developed is legal.
For example: a business involves the buying and selling
imitation VCDs or stolen product is illegal.
3. Capital Requirement
The study of the capital requirements of a business is
important.
Normally, capital is required to finance investment on fixed
assets (land, building, machine and equipment) and working
capital.
The funding of the business can be done with the use of the
entrepreneurs own money or from external sources such as
banks, finance companies and cooperatives.
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4. Risks
In business, risk is something that is uncertain and is related
to success and failure.
Due to that, an entrepreneur must identify the risks he is
going to encounter and take into consideration to percentage
of success and failure.
Based on this, an entrepreneur will decide whether to
proceed with the business or not.
In general, the level of risk that will be encountered by an
entrepreneur will depend on three factors;
1. The difficulty or easy to enter a particular business field;
2. The size of capital that going to be invest in the business;
3. The profit margin (big or small0 expected from the
business.
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Types
Types of
of business,
business, category
category or
or risks
risks and
and expected
expected returns
returns
BUSINESS
ENTRY
LEVEL OF
RISK
EXPECTED
RETURS
EXAMPLES
EASY
LOW
LOW
FOOD
STALL
MEDIUM
MEDIUM
MEDIUM
MINI
MARKET
DIFFICULT
HIGH
HIGH
CHOICE
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PUBLIC
TRANSPORT
1. Business Risks
Can be classified into three category:
I. Transferable risk- risk that can be insured against fire,
theft and employees accidents.
II. Controllable but non-transferrable risks- not 100% to
be controlled but there are things to be done. Example,
market situation, unemployment rate and quality of goods.
III. Uncontrollable risks-things in the economy, exchange
rates and natural disaster.
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2. Financial Risks
I. Level of liquidity-less solvent companies probably the
business has to face short term debts. Example, to supplier
and overdraft.
II. Loan-fixed payment is scheduled, yet profit keeps
changing.
III. Credit-cedit given to customers will always face risk of
getting the credits being paid as after some time the credits
(if unpaid) will be considered bad-debt-expenses to the
company.
IV. Exchange rate-if exchange rate involves, entrepreneurs
have to face risks-fluctuations of rates.
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Conclusion
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