Question

Explain the first five steps involved in idea and opportunity assessment.

Answer 1

1. Product identification - An idea should lead the entrepreneur to a definite product/service which he can sell. So the first step is to obtain a concept of the suggested product or service. We should also see whether this product is already available in the market. If so, we should identify the reason for introducing the same product or service in the market.
2. Application and use - Ideas should be examined for their actual life use and application. If it already exists in the market, we will have to find out its present use, and then we may consider modifying it for better service.
3. Level of operation - This is a crucial product/service identification test. Depending on the use of the product/service, the entrepreneur will produce it in a cottage industry or a small scale– industry or a large–scale industry.
4. Cost - What is the per unit cost of the product at a particular level of operation? Whether this cost is comparable with that of other competitive products? These are some of the questions that have to be answered. This will ultimately decide the sale price.
5. Competition - Any product or service will face market competition at some stage. So market competition should be assessed by studying the trends in demand and supply.