Question

What factors should an entrepreneur consider while selecting a product or service?

Hint:

Right product choice = Balance of demand, cost, competition, and legal feasibility.

Answer 1

Step 1: Introduction.
The success of a business largely depends on the right choice of product or service. An entrepreneur must evaluate several factors before finalizing what to produce or offer.
Step 2: Key factors to consider.
1. Market demand: The entrepreneur should select a product or service that has sufficient and growing demand in the market. Without demand, survival is impossible.
2. Availability of resources: The required raw materials, labor, and infrastructure must be easily available at reasonable cost.
3. Competition: The entrepreneur should analyze the intensity of competition. A highly saturated market may pose difficulties, while a niche market offers better opportunities.
4. Cost and profitability: The cost of production and expected selling price must ensure adequate profit margins.
5. Government policy and legal requirements: Some products may require licenses, approvals, or may even be restricted. Policies must be carefully considered.
Step 3: Example.
For example, if an entrepreneur wishes to enter the food industry, they must check consumer preferences, cost of ingredients, licenses (FSSAI in India), and existing competitors before deciding the product.
Step 4: Conclusion.
Thus, careful evaluation of demand, resources, profitability, competition, and legal aspects helps entrepreneurs make the right product/service choice.