www.bradford.ac.uk/management

Developing & Evaluating Developing & Evaluating OpportunitiesOpportunities

Session OutlineSession Outline

•Review

•Developing Ideas

•Researching & Evaluating Opportunities

•Market Failures

Full View of the Opportunity Full View of the Opportunity Recognition ProcessRecognition Process

Depicts the connection between an awareness of emerging trends and the personal characteristics of the entrepreneur

Personal enterprise: Personal enterprise: relating opportunity to personal goalsrelating opportunity to personal goals

How does the opportunity

relate to my personal

goals?

Personal

enterprise

How to balance

individual &

group interests?

What do I want to

achieve? Why?

How will I

benefit?

What are my

strengths &

capabilities?

What excites,

interests,

stimulates me?

Connecting Opportunities and Personal goalsConnecting 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?

Unlocking ValueUnlocking Value

Unlocking Unlocking Personal ValuePersonal Value

Ideas

Opportunities

Ventures

Personality

Motivation & Drivers

Ability to Learn

Capabilities

Know How & Expertise

Relationships & Contacts

Rae (1999)

Develop the IdeaDevelop the Idea

Idea Manufacturing Service Retail

Courier Service Back packs/Satchels Letters/small parcels Manuf ItemsPanniers/uniformsMapholders/uniforms Large Parcels (Car or Lorry)

Football Printed t-shirts Training Services Supporters Club

Pennants Gym T-shirtsCollapsible Goal Posts Programmes

Structured BrainstormingStructured Brainstorming

Shoes

Consumer products

Consumer Services

ConsumerSales

Businessproducts

BusinessSalesBusiness

Services

Shoes laces solesheels,shoes in unusualmaterials,for different purposesshoe polish,brushes,storage

Mending, repairing,colouring, home repairsrelining, made to measure

Shop, mobile(van),market stallmail order, web,door to doorfranchise, store within a store, railway stations, airports

Swap and repair - dancing/circus/theatrical shoes, safety shoe serviceShoe advertising

Mobile to offices, mail order/webto businesses, self employed repShoe agency specialist

Shoe making equipment, shoerepairing equipment, speciality shoes, shoe protectors

Video Players

Walkman

Personal Computers

Mobile pet grooming device

Specialty sports car

Overnight package delivery

Clothes for professional women

New varieties of food or clothing

Alternative Greeting Cards

Women’s Shampoo

Dixons/Tesco Free ISP

Existing Products Modified Products New Products

Existing Markets

Identifiable Markets

New Markets

AA Framework to Think About Ideas for Framework to Think About Ideas for EnterpriseEnterprise

The Importance of Why?The Importance of Why?

Why is the outlet buying more milkshake machines than its floor space would suggest?

- attracting more customers than competitorsWhy?- customers prefer to competitorsWhy?- food is consistently tasty and no queuesWhy?- store staff effectiveWhy?- menu limited and staff specialise in systemised tasks

From Idea to Business PlanFrom Idea to Business Plan

Developing the Business ConceptDeveloping the Business Concept

ExampleExample: West Coast location sites to film studios over : West Coast location sites to film studios over the Internetthe 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

The Business IdeaThe Business IdeaTHE 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?

The Big LieThe 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 don’t want more mousetraps– Maybe they like the ones they buy now– Maybe they’ll 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!

What Is Feasibility Analysis?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.

MarketManagement Money

Motivation

Feasibilty – 4M’sFeasibilty – 4M’s

Feasibility Analysis: What Does the Market Say?Feasibility Analysis: What Does the Market Say?

Feasibility AnalysisFeasibility Analysis

Role of feasibility analysis in developing successful business ideas

Understanding the customerUnderstanding the customer

‘It’s not about you. It’s 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’

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

• Product/service

– Airbag

• Customer value

– Safer

– Organic – Healthier food

– Internet-food store

– Faster

– Quick mail service

– More reliable, faster– Automatic

camera – More simple

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

The global washing machine market

Your product/ service

Households only

In the UK

Earning £100k+ p.a.

With current machine over 2 years old

You might have an idea who your customer is… but find your ‘niche’

SegmentationSegmentation

‘‘Milestones’Milestones’

Your ‘milestones’ will help you to reach that customer

Your product/ service

Milestones

T1 T2 T3 T4

Segmentation MethodsSegmentation Methods

Factor Consumer markets Industrial markets

What are the characteristics of the customer?

Age, sex, raceIncomeFamily sizeLife cycle stageLocationLifestyle

Vertical industryGeographical locationSize of companyTechnologyProfitabilityStyle/ culture of management

How will the customer purchase/ use the product?

Size/ frequency of purchaseIssues with brand loyaltyPurpose of usePurchasing behaviourImportance of purchaseSource of purchase

Application of productImportance of purchaseVolume of purchasesFrequency of purchasePurchasing procedureDistribution channel

What are the users’ specific needs, and preferences

Similarity to existing purchasesPrice elasticityBrand preferencesDesired featuresQuality

Performance requirementsAssistance from suppliersBrand preferencesDesired featuresQualityService requirements

Producer

Wholesaler/ reseller

Retailer

Retailer

Customer ConsumerSupplier

Where are you in the chain?

Understanding the industryUnderstanding the industry

The Value of the Five Forces ModelThe Value of the Five Forces ModelDetermining the Attractiveness of an Industry Using the Five Forces

Model

The Value of the Five Forces ModelThe 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

• 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.

Industry Types and the Opportunities They OfferIndustry 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.

Industry Types and the Opportunities They OfferIndustry Types and the Opportunities They Offer

Identifying CompetitorsIdentifying Competitors

Types of Competitors New Ventures Face

Competitor AnalysisCompetitor 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?

Completing a Competitive Analysis GridCompleting a Competitive Analysis Grid

Competitive Analysis Grid for Activision

Competitor Strengths Weaknesses Threat

(1 to 5)

Your competitive advantage

123

Competitor AnalysisCompetitor Analysis

Sources of Competitive IntelligenceSources 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 competitor’s products to understand their features,

benefits, and shortcomings.

• Study competitor’s Web sites.

• Study Web sites that provide information about companies.

Idea Development ProcessIdea Development Process

Bragg (2005) – Developing New Business Ideas

Take Away’sTake Away’s

• 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