Opportunity Analysis

The role of entrepreneurship in economic development varies from economy to economy

depending upon human & material resources, industrial environment, & the importance
attached to entrepreneurial growth by the political system. The emergence, working & growth
of entrepreneurs are facilitated in those economies where favourable conditions exist.

According to Joseph Schumpeter, an ‘Entrepreneur is one who seeks to reform or

revolutionize the patter of production by exploiting an innovation or more generally an
untried technological possibility for producing a new commodity or producing an old one in a
new way by opening up a new source of supply of material or a new outlet for a product.’
Thus, Schumpeter is of the opinion that an entrepreneur is always on the lookout for potential
profitable opportunities and exploits them in the best interest of his enterprise.

According to Peter F. Drucker, an entrepreneur must be capable of analysing the

opportunities and exploiting them successfully. According to him, opportunities are of three
kinds.

1. Additive opportunities are those which enable the decision maker to better utilise the
existing resources without in any way changing the character of a business.

2. Complimentary opportunities involve the introduction of new ideas and as such

lead to a certain amount of change in the existing structure.

3. Breakthrough opportunities on the other hand involve fundamental change in both

the structure and character of the business.

Additive opportunities involve the least amount of disturbance to the existing state of affairs
and hence there is least amount of risk. There is more risk involved in complimentary and
breakthrough opportunities.

With the increase in risk it becomes all the more important for the entrepreneur to carefully
define the nature and scope of the project idea. He should also analyse the various solutions
aimed at realizing objectives of the project by selecting those solutions which on one hand
help in reducing cost and risks and on the other hand facilitate the realization of maximum
possible returns to the enterprise. Entrepreneurs have to consider availability of 5 M’s, i.e.
Men, Material, Machine, Money and Markets. They are equally concerned about availability
of infrastructural facilities such as roads, power, water, severage and communication. The
entrepreneur also considers various financial and non-financial incentives provided by the
government, availability of markets, environment factors, and so on.