Developing

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Developing Evaluating Opportunities
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Session Outline

• Review
• Developing Ideas
• Researching Evaluating Opportunities
• Market Failures

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Full View of the Opportunity Recognition Process
Depicts the connection between an awareness of
emerging trends and the personal characteristics
of the entrepreneur
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Personal enterprise relating opportunity to
personal goals
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Connecting Opportunities and Personal goals

• Why do people choose the opportunities they do?
  e.g.
• Family background
• Personal interests and hobbies
• Previous career experience
• Education, training, professional development
• Social networks and connections
• Which factors are most influential for you?

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Unlocking Value
Ideas
Personality Motivation Drivers Ability to
Learn Capabilities Know How
Expertise Relationships Contacts
Unlocking Personal Value
Opportunities
Ventures
Rae (1999)
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Develop the Idea

• Idea Manufacturing Service Retail
• Courier Service Back packs/Satchels Letters/small
  parcels Manuf Items
• Panniers/uniforms
• Mapholders/uniforms Large Parcels (Car or
  Lorry)
• Football Printed t-shirts Training
  Services Supporters Club
• Pennants Gym T-shirts
• Collapsible Goal Posts Programmes

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Structured Brainstorming
Shoes laces soles heels,shoes in
unusual materials,for different purposes shoe
polish,brushes,storage
Consumer products
Mending, repairing, colouring, home
repairs relining, made to measure
Consumer Sales
Consumer Services
Shop, mobile(van),market stall mail order,
web,door to door franchise, store within a store,
railway stations, airports
Shoes
Swap and repair - dancing/circus/ theatrical
shoes, safety shoe service Shoe advertising
Business Sales
Business Services
Business products
Mobile to offices, mail order/web to businesses,
self employed rep Shoe agency specialist
Shoe making equipment, shoe repairing equipment,
speciality shoes, shoe protectors
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A Framework to Think About Ideas for Enterprise
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The Importance of Why?

• Why is the outlet buying more milkshake machines
  than its floor space would suggest?
• - attracting more customers than competitors
• Why?
• - customers prefer to competitors
• Why?
• - food is consistently tasty and no queues
• Why?
• - store staff effective
• Why?
• - menu limited and staff specialise in systemised
  tasks

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From Idea to Business Plan
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Developing the Business Concept
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Example West Coast location sites to film
studios over the Internet

• What is the product and/or service being offered?
• In the information business
• Who is the customer?
• Film production companies
• What is the benefit to the customer?
• Ability to visually check sites and make
  decisions without travel
• How will the benefit be delivered?
• Via an interactive website with still and full
  motion video of movie location sites

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The Business Idea

• THE McKINSEY COMPANY (2000) CHECK LIST
• What is new and innovative in your business idea?
• How unique is your business idea?
• Who is the client?
• Why should somebody buy your product or service?
• Why is the product better than similar products
  already on the market?
• What is your competitive advantage, and why
  could/would it not be copied by competitors?
• Can the business idea be produced, and how much
  would that cost?
• How would the product reach the customers?
• How would you earn money on the product, what are
  the costs and what is the price that can be
  charged?
• How big is the market?

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The Big Lie

• If you build a better mousetrap, the world will
  beat a path to your door, even though your house
  be in the woods.
• Maybe they dont want more mousetraps
• Maybe they like the ones they buy now
• Maybe theyll never even hear about your
  mousetrap
• The truth
• If you think getting the technology right is
  tough, try marketing. Then try sales if you want
  a real challenge!

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What Is Feasibility Analysis?

• Feasibility Analysis
• Feasibility analysis is the process of
  determining whether a business idea is viable.
• It is the preliminary evaluation of a business
  idea, conducted for the purpose of determining
  whether the idea is worth pursuing.
• Feasibility analysis takes the guesswork (to a
  certain degree) out of a business launch, and
  provides an entrepreneur with a more secure
  notion that a business idea is feasible or viable.

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Feasibilty 4Ms
Market
Management
Money
Motivation
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Feasibility Analysis What Does the Market Say?
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Feasibility Analysis
Role of feasibility analysis in developing
successful business ideas
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Understanding the customer

• Its not about you. Its not about your
  revolutionary products or services. Successful
  entrepreneurial ventures are about serving
  customers and their needs. Not just any
  customers. Target customers
• John Mullins, The New Business Road Test

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The Customer Need Should Be Satisfied In A Better
And Unique Way

• Product/service

• Customer value

• Airbag

• Safer

• To create customer value a new product/service
  must offer something new or better than the
  existing offering

• Healthier food

• Organic

• Internet-food store

• Faster

• More reliable, faster

• Quick mail service

• Automatic camera

• More simple

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Segmentation

• You might have an idea who your customer is but
  find your niche

The global washing machine market
Households only
Your product/ service
In the UK
Earning 100k p.a.
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Milestones

• Your milestones will help you to reach that
  customer

Your product/ service
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Segmentation Methods
Factor Consumer markets Industrial markets
What are the characteristics of the customer? Age, sex, race Income Family size Life cycle stage Location Lifestyle Vertical industry Geographical location Size of company Technology Profitability Style/ culture of management
How will the customer purchase/ use the product? Size/ frequency of purchase Issues with brand loyalty Purpose of use Purchasing behaviour Importance of purchase Source of purchase Application of product Importance of purchase Volume of purchases Frequency of purchase Purchasing procedure Distribution channel
What are the users specific needs, and preferences Similarity to existing purchases Price elasticity Brand preferences Desired features Quality Performance requirements Assistance from suppliers Brand preferences Desired features Quality Service requirements
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Understanding the industry
Wholesaler/ reseller
Retailer
Producer
Retailer
Customer
Consumer
Supplier
Where are you in the chain?
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The Value of the Five Forces Model
Determining the Attractiveness of an Industry
Using the Five Forces Model
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The Value of the Five Forces Model
Using the Five Forces Model to Pose Questions to
Determine the Potential Success of a New Venture
in a Particular Industry
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Industry Types and the Opportunities They Offer

• Emerging Industries
• Industries in which standard operating procedures
  have yet to be developed.
• Opportunity First-mover advantage.
• Fragmented Industries
• Industries that are characterized by a large
  number of firms of approximately equal size.
• Opportunity Consolidation.

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Industry Types and the Opportunities They Offer

• Mature Industries
• Industries that are experiencing slow or no
  increase in demand.
• Opportunities Process innovation and after-sale
  service innovation.
• Declining Industries
• Industries that are experiencing a reduction in
  demand.
• Opportunities Leadership, establishing a niche
  market, and pursuing a cost reduction strategy.
• Global Industries
• Industries that are experiencing significant
  international sales.
• Opportunities Multidomestic and global
  strategies.

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Identifying Competitors
Types of Competitors New Ventures Face
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Competitor Analysis

• Who are they?
• Where are they?
• What do they offer?
• What size/ share/ growth rate are they?
• What are they good at?
• What are they bad at?

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Completing a Competitive Analysis Grid
Competitive Analysis Grid for Activision
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Competitor Analysis
Competitor Strengths Weaknesses Threat (1 to 5) Your competitive advantage
1 2 3
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Sources of Competitive Intelligence
Ways that a firm can ethically obtain information
about its competitors

• Attend conference and trade shows.
• Read industry-related books, magazines, and Web
  sites.
• Talk to customers about what motivated them to
  buy your product
• as opposed to your competitors.
• Purchase competitors products to understand
  their features,
• benefits, and shortcomings.
• Study competitors Web sites.
• Study Web sites that provide information about
  companies.

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Idea Development Process
Bragg (2005) Developing New Business Ideas
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Take Aways

• A person with one idea is dangerous
• Get a feel for the industry
• Work on your idea
• MR focuses and can minimise risk
• MR can be unreliable and reduces intuition
• MR may not be conclusive
• Customer is King