Opportunity Recognition Essay

Mr Kurian was born in December, 13th 1961 and had graduated in Diploma in Electrical and Electronic Engineering in the year 1983. Mr Kurian has been in the engineering industry for almost 30 years, in which he has worked under different companies during the first 17 years. Mr Kurian had begun his career as entrepreneur in the year 2000, where he established his own engineering firm alongside with his 2 partners. Mr Kurian took full advantage of his experience working under different engineering firms for 17 years, and applied engineering and management skills that he had learnt to start his own business. Currently, Mr Kurian Zachariah is the Managing Director of Frezawa Engineering Sdn Bhd. This literature review concentrates on the topic of opportunity recognition for entrepreneurs. In order to start-up business, entrepreneurs have to identify the idea or core value of the business. Generally, entrepreneurs would go for opportunity or business which would promise greater success in the market. 2. 0 Literature Review Opportunity Recognition A stream of research shows that opportunity recognition is highly associated with entrepreneur’s alertness in the market, prior knowledge on a particular field, mental stimulation, social capital, and behavioral and cognitive skills. According to research done by Gregoire, Barr and Shepherd (2010, 29), cognitive skills are crucial for entrepreneurs to identify opportunities. Entrepreneurs used their prior knowledge and creativity skills in order to search for â€Å"open window† in the market. D’Souza, Rodney, and Schenkel (2011, 46) stated that greater prior knowledge breadth provide entrepreneurs with higher chances of identifying innovative opportunities. Research shows that 46% of the studied entrepreneurs agreed with crucial roles of knowledge in identifying the best opportunity. With knowledge, entrepreneurs know how and where to look for opportunities. Butler, Doktor and Lins (2012, 23)viewed alertness and social interaction as the major driving forces for entrepreneurs. St-Jean and Tremblay (2011, 42) stated in his research that entrepreneurs are alert to the environmental factors such as economy, political and social to create opportunities. Moreover, it is observed from the literature review that entrepreneurs applied different types of strategies and techniques throughout the opportunity recognition process. Studies done by Butler, Doktor and Lins (2012, 32) shows that entrepreneurs involved the technique of active searching and experiential learning throughout the recognition process. In other hand, Gregoire, Barr and Shepherd (2010, 63)concluded in his research that entrepreneur opportunities occurred based on timing and luck; thus waited for opportunities to occur instead of taking crucial steps searching for opportunities. Chitakornkijsil (2011, 53) noted that different individuals discovered different opportunities, according to their particular way of gathering and processing information. Based on the study done by Butler, Doktor and Lins (2012, 98), entrepreneurs have different sources of opportunities. First, Butler, Doktor and Lins viewed that entrepreneurs focused on innovation as a source of opportunity. Entrepreneurs focused on innovation of technology to create a â€Å"door† to the market. D’Souza, Rodney, and Schenkel (2011, 94)also stated that entrepreneurs used innovation to create new products and market for customers. For example, the introduction of smart phones and tablets to the market. Furthermore, entrepreneurs also considered society’s knowledge and awareness as one of the sources. The development of new knowledge would enhance awareness in the society. Therefore, entrepreneur used society’s awareness and created solution to the problems. Research conducted on sample group of Panel Study of Entrepreneurial Dynamics concluded that 53% of entrepreneur respondents would take great advantage from introduction of new knowledge to the market. Butler, Doktor and Lins (2012, 54) stated entrepreneurs likely taken opportunity regarding health and environmental awareness such as pollution and disease. In addition, entrepreneurs also depend on market trends and structure as a source of opportunity. Entrepreneurs studied growing trends in the market and implied related strategy to enter the market. Entrepreneurs focused on trends and demands to ensure profits and success. However, showed different view compared to other research reports. St-Jean and Tremblay (2011, 67) was less focused on these sources but emphasized on facts that entrepreneurs depends on external environmental factors such as politic, economy, and social environment as the major source of opportunity. D’Souza, Rodney, and Schenkel (2011, 85) implied that entrepreneurs take advantage of the current environmental crisis such as economy downfall, riot, and social crisis to create business opportunities. A stream of research showed that entrepreneurs search for business opportunities by implementing strategic methods which depends on active searching, social networking, past experience learning, and deep knowledge. Research by Pech and Cameron (2006, 142)showed that entrepreneurs used active searching for information in order to locate â€Å"new window† in the market. Plus, Nixdorff (2008, 44) stated that the potential of success for entrepreneurs depends on the social network ties of the individual. According to Chitakornkijsil (2011, 75), the bigger the size of entrepreneur’s social network in the market, the higher entrepreneur’s chances of gaining potential information. Social interaction also helped entrepreneurs in providing network chain of opportunities. Furthermore, most of the research project studied mutually agreed with the statement of entrepreneurs mostly depend on past experience in order to create new opportunity. Entrepreneurs used past experience learning method to create innovation to the previous idea such as features or design modification. Entrepreneurs with past experience have higher knowledge on what the future successful product should be. Survey conducted by Pech and Cameron (2006, 118)on sample group of successful entrepreneurs shows that almost 55% of the entrepreneurs managed to locate high potential opportunities through past experience learning. In other hand Ozgen (2011, 58) and Kolb (2010, 86) have the opposite views. Ozgen and Kolb denied social network and experience to be the best way for entrepreneurs in identifying opportunity. However, both of the research agreed that entrepreneurs move together with the demands of market and availability of technology in market. This means that entrepreneurs followed the trends and high demands in market, but produced only at limited innovation. Based on the literature review done on several research projects, different conflicting ideas were studied on the characteristics of a potential opportunity. Through comparison, most research projects agreed with characteristics of a high potential opportunity to be rare, exclusive, hard to copy and not readily substituted opportunity. In other words, the opportunity would require an introduction of new market. However, Ozgen (2011, 47) denied the idea of rare and exclusive opportunities to be majorly focused by entrepreneurs, as according to Ozgen, this type of opportunity would be cost expensive, compared to normal market opportunity. The research done in developing countries shows that 62% of the studied entrepreneurs went for low cost opportunity as they defined exclusive products to be less promising to succeed in the country. Nixdorff 2008, 62) Therefore, Nixdorff stated entrepreneurs considered low cost opportunity to be high potential opportunity in the market as it is more attractive and promise fewer loss. However, some entrepreneurs avoided low cost venture opportunity as it is a long-term profit venture. In other hand, entrepreneurs went for new markets as there would be fewer competitors in the market and are more attractive to society. Empirical research done by Gregoire, Barr and Shepherd (2010, 134) shows on average only 2 out of 5 entrepreneurs would gain greatest share in ighly competitive market. Therefore, it would be legit to decide opportunity with fewer competitors would offer greater potential of success for entrepreneurs. According to research projects studied, most of researchers mutually stated that the major challenges faced by entrepreneurs in identifying opportunity occurred from self and external environment. From the self view, entrepreneurs faced challenges in identifying potential opportunity due to anti-social lifestyle, uncertainty avoidance attitude, lack of creativity and imagination, poor knowledge, and refusal behavior. These factors studied to results in entrepreneurs having less network ties in the market, low confidence in taking risks, lack of alternative and innovative idea, and loss of opportunity. Based on study conducted by Kolb (2010, 131) on entrepreneurs of Institute of Wyoming, 44% out of 100 respondents agreed that the major challenge which could constraint them from identifying potential opportunities is entrepreneur’s own attitude and behavior. Furthermore, entrepreneurs also faced obstacles in opportunity recognition due to environmental factors such as lack of technology innovation and legal constraint idea. Research studied by Chitakornkijsil (2011, 113), proved that the rate of opportunity development in developed countries to be approximately 32% greater than developing countries. This shows that entrepreneurs in developing countries such as Malaysia, China, and etc, are facing obstacles due to level of technology enhancement and legal constraints idea, where entrepreneur’s idea have to be filtered by the ethical perspective of the society. This can be seen from development of smart phones in developed countries, but only few developers in developing countries. . 0 Conclusion As conclusion, entrepreneurs can be defined as innovators who, despite constraints, actively focus on searching and identifying potential opportunities in the market for the sake of the business establishment, survival and growth. Based on the literature review conducted, it is studied that entrepreneurs implemented cognitive and creativity skills in identifying the highest potential opportunities in the m arket. It is important for entrepreneurs to be alert and aware of market opportunity. With the presence of the required skills, entrepreneurs would still be required to implement strategic techniques and strategies such as active searching and social interaction to identify promising â€Å"window† in the market. Furthermore, it is studied that the strength or competitive advantage of entrepreneurs in the market depends on the entrepreneur’s network ties and prior knowledge on the field. The best way for entrepreneurs to increase the possibility of identifying potential opportunities is to increase size of network, which would increase sources of information.