Entrepreneurial opportunities
Introduction
Opportunity is among the essential components entrepreneurship as a concept is pegged on. It is the central pillar other entrepreneurship aspects revolve around. Individuals might be creative, innovative, risk-takers, but it is opportunities that provide a platform to execute plans. They also define the sphere of operation and determine the type of entrepreneur the person is. Thus, an entrepreneurial venture is defined by two significant factors; enterprising individuals and opportunities ventured into by the individuals. Scholars tend to concur that opportunity plays a vital role in modeling entrepreneurship. However, there exist conflicting ideas on the process of identifying and defining an opportunity (Hansen and Shrader., 2007), resulting in two leading schools of thought.
The two theories regarding opportunity identification are; discovery and creation of opportunities (Alvarez and Barney., 2007). The two perspectives have been at the center of debate for decades. To elaborate on the two, a definition of entrepreneurial opportunity is important. At the moment, there exist many definitions, but this report will adopt a definition by Holcombe (2003). According to this author, opportunity in its simplest form refers to a situation where an individual identifies a person willing to sell a commodity or service at a lower price than what the consumer is willing to pay for. Through this process, an entrepreneur can fill a gap through what he/she makes profits. Opportunities possess specific characteristics that differentiate them from other business activities. These characteristics are; perceived desirability, newness, and inherent economic value (Baron., 2006). How the opportunity sprouts into existence is an overarching paradox to the business world.
Identification of opportunity by discovery
This perspective presumes that opportunities exist before their identification (Vaghely, and Julien., 2010). This concept heavily attributes the opportunity to the identification process while masking the factors and their interactions in their role to opportunity development. The concept was first postulated by Kirzner in 1973. According to him, opportunities exist independently until entrepreneurs discover them. The entrepreneur has to simply find a gap in the supply-demand situation of commodities or services, and such innovativeness fills the gap. For example, an increase in demand for fruits might surpass the supply, and entrepreneurs’ role is to realize such opportunity. Thus, Kirzner’s theory is grounded on the assumption that new information is not part of opportunity identification but rather existing knowledge.
Creation of opportunity
Under this concept, the opportunity does not exist until it is created. The identification process forms an integral part of opportunity development. Opportunity is thought to materialize as a result of a combination of identification aspects and exterior elements of factors affecting opportunity emergence. This theory was put forward by Schumpeter in 1942. He concluded that entrepreneurs’ activities are responsible for the development of new opportunities. According to him, opportunity results from combining new information and individual innovativeness.
Other emerging perspectives suggest that discovery and creation of opportunities denote only diverse types of opportunities in various situations rather than a single theory being the only right one (Sarasvathy et al., 2003). The two perspectives are thought to be two leading representatives of the environment that supports opportunity emergence. To further this view, Sarasvathy et al. (2003) put forward another perspective regarding opportunities and classified them under equilibrating and dis-equilibrating opportunities. Equilibrating opportunities are defined as responsive; they emerge as a result of gaps in the supply and demand interactions of the market. It explains discovered opportunities.
On the other hand, dis-equilibrating opportunities emerge from innovative activities of the entrepreneur and have the ability to shift the demand and supply systems besides opening up new opportunities in the market. Disequilibrium opportunities are created. By this definition then, it is sound to conclude that the two theories, discovery and creation, coexist in a natural setting.
Opportunity exploitation strategies by firms
Opportunity exploitation refers to actions put forward with a purpose to gain profits from the discovery of a possible entrepreneurial opportunity. It comprises the decision to act on an apparent opportunity and the accompanying behaviors intended for value realization of the opportunity. Several strategies emanating from the two theories have spearheaded opportunity exploitation. Among the strategies, include market orientation, collaboration formations, and networking. The three approaches are discussed below.
Market orientation
This strategy advocates for the exploitation of opportunities by focusing on prioritization and identification of consumer needs and desires. The firms, therefore, respond by creating commodities and services that meet the two(Kyriakopoulos and Moorman., 2004). The approach, in its most straightforward sense, promotes interplay of discovery and creation theories whereby an entrepreneur has to study the current information, identify the gaps, and then create products to sense fully propel the opportunity into action.
Given its customer-centered nature to product creation, it entails a market study of consumers’ immediate needs, personal preferences, and immediate needs within a specific market sphere. Such researches have gone beyond the said boundaries to include data analysis to help reveal trends in consumer needs and desires that are under-expressed.
Knowledge acquisition via such research is vital to product developers. It defines the boundaries they should stretch to meet and anticipate the evolution of the needs of consumers within their operational spheres. The results might inspire changes and improvement of the product that consumers didn’t expect. Companies have utilized this strategy to ensure they exploit opportunities in a consumer needs-driven environment. By this, companies have a leeway to focus and direct their production efforts to market demand.
Companies like Coca-Cola have embraced the art of market orientation, and through it, they have managed to diversify their products to align with customer desires. The company has heavily invested in research that identifies beverage flavors that meet consumer desires such as lime, strawberry, and zero sugar. Many other competitive companies rely on market orientation to remain relevant.
Market orientation is beneficial in that it encourages consumer product improvement anchored on consumer desires and needs. These activities have been applauded for maintaining consumer satisfaction through solving their concerns. By this, the company induces brand loyalty and minimizes costs like advertisement.
Collaboration
Companies are currently struggling to keep with the emerging competition. New entrepreneurs are investing in research, which has yielded both exogenous and endogenous opportunities. The ever ballooning competition has invariably resulted in shifting in demand supply and thus making the prediction of future trends for existing companies difficult. To retain their niche and be able to adapt to the ever-progressing market, the companies had previously sought to the production of various goods and services. This strategy only helps to close the gaps that can be used by competitors to bring similar products but does not limit the innovative ideas which can overhaul their system.
To deal with such challenges, firms have developed an exceptional interest in the diverse strategies and mechanisms that propel to the achievement of innovations with excellent novelty. The firms have put forward a collaborative strategy. A two-level collaboration has achieved this; 1, firms’ collaboration, and 2, by chain actors’ cooperation. Collaborative agreements have created a conducive environment, allowing actors (partners) to eliminate competition threats by pooling resources together besides the exploitation of complementarities (Asakawa, Nakamura, and Sawada., 2010). Main collaborations have been observed in marketing, product creation, market research, and technology. Companies in collaboration have been able to effectively exploit existing opportunities within their operational sphere and also extensively created opportunities.
Coca-Cola and Heinz is an example of a beneficial firm-level collaboration. On its course to transform beverage bottles from plastic to organic, Coca-Cola saw it fit to collaborate with Heinz company who possess high-tech factory with the capacity to produce plastic-free bottles. Coca-Cola also has boosted its efforts to recycle current plastic bottles by working with furniture, making company Emeco. Through their collaboration manufacturing, they have managed to manufacture 111 Navy Chair. The chair is 100% made of recycled plastic bottles. Emeco also plans to be making more than three million such seats a very year. Other unique collaborations are that of Corning company, which has, for years, collaborated with its clients and transformed their ideas into opportunities.
Networking
Scholars postulate that collective knowledge by market participants dictates who acquires potential information regarding opportunities that supports innovation of future products and bringing them into existence (Dodgson et al., 2011). Networking plays a vital role in information acquisitions (Keh, Nguyen, and Ng., 2007). Studies have indicated that a firm is in a position to exploit diversified new opportunities only if it increases the number of recurrent partners. The position aspect of the firm in the network, such as centrality relative to others, is also critical. Firms in a good position in the system possess asymmetric information acquisition advantage (Soh., 2003). Such firms acquire competitive information regarding other firms hence gaining an enormous gap of opportunities to create or improve its products before the realization of its competitors. Networking has been key to the success of computer companies and internet providers.
Entrepreneurial orientation (EO)
EO is defined as a three interlinked factor activity that involves the interplay of practice processes and decision-making. The three aspects interact, resulting in entrepreneurship. EO has also been utilized as a strategic orientation at the firm level, an organization’s; managerial philosophies strategy-making practices, and firm behaviors that are entrepreneurial. The crucial dimensions that define an entrepreneurial orientation are; a tendency to act autonomously, a propensity to be aggressive at competitors, zeal to innovate risk-taking, and finally sensitiveness to emerging market opportunities. The five dimensions, aggressiveness, risk-taking, innovativeness, autonomy, and proactiveness, are commonly used to evaluate new entries and define characteristics of the companies’ chief managers.
In other spheres of life, the five dimensions can be used to assess personal progress, strength, and weaknesses. For instance, through my study journey, success be can echoed on the entrepreneurial dimensions despite having not known about them before. As a student coming from a low income earning family, I had to find a way to make some cash as I study. To get the part-time employment, I had to aggressively respond to any job advert relating to my study specialization. `Despite facing stiff competition from highly qualified individuals, I had to strategize on how to get the jobs. I enrolled in many short courses that would give me a competitive advantage, such as communication skills and new skills in the use of economics analytical tools.
After getting my part-time employment, I had to synchronize its time with my study time. I applied for evening classes and asked the management to assign me morning duties. I had to be creative for the morning common classes that could not be retaken in the evening. I sought online courses while at work during my free time. I further sought for recorded lectures to help me keep up with other some lectures that I could not attend. With the assistance of the manager, I also requested online duties, whereby I was allowed to execute my responsibilities in the comfort of my home.
In the marketing department, I was mandated to provide economically feasible and robust techniques the company would adopt to enhance its customer loyalty. I developed an online platform that would keep customer records and actively engage them. The platform was useful in evaluating customers’ satisfaction with the company services. Using this information, the company could tailor its services to meet specific customer demands and desires. The management also evaluated the consumption of new commodities by taking data from the platforms. The platform was rated the best strategic marketing tool and was awarded for the efforts.
By effectively employing entrepreneurial dimensions to my studies and part-time job such as; aggressiveness in job hunting, proactive in harmoniously combining studies and job requirements, and innovatively creating an award-winning marketing tool, I have been successful in propelling my career and education to higher levels. My self-esteem levels have spiraled high with dual achievements. The use of entrepreneurial dimensions should be encouraged and adopted at any level of operation, particularly individuals and business firms.
References
Alvarez, S.A., and Barney, J.B., 2007. Discovery and creation: Alternative theories of entrepreneurial action. Strategic entrepreneurship journal, 1(1‐2), pp.11-26.
Asakawa, K., Nakamura, H., and Sawada, N., 2010. Firms’ open innovation policies, laboratories’ external collaborations, and laboratories’ R&D performance. R&d Management, 40(2), pp.109-123.
Dodgson, M., Hughes, A., Foster, J., and Metcalfe, S., 2011. Systems thinking, market failure, and the development of innovation policy: The case of Australia. Research Policy, 40(9), pp.1145-1156.
Hansen, D.J., and Shrader, R., 2007. Opportunity: An 11-letter word. In Babson College Entrepreneurship Research Conference, Madrid, Spain.
Holcombe, R.G., 2003. The origins of entrepreneurial opportunities. The Review of Austrian Economics, 16(1), pp.25-43.
Keh, H.T., Nguyen, T.T.M., and Ng, H.P., 2007. The effects of entrepreneurial orientation and marketing information on the performance of SMEs. Journal of business venturing, 22(4), pp.592-611.
Soh, P.H., 2003. The role of networking alliances in information acquisition and its implications for new product performance. Journal of business venturing, 18(6), pp.727-744.
Vaghely, I.P., and Julien, P.A., 2010. Are opportunities recognized or constructed? An information perspective on entrepreneurial opportunity identification. Journal of business venturing, 25(1), pp.73-86.