Embed Size (px)
Citation preview
2-1
Chapter 2
Entrepreneurship: Successfully Launching
New Ventures, 2/e
Bruce R. Barringer
R. Duane Ireland
What is An Opportunity?(1 of 2)
• Opportunity Defined– An opportunity is a favorable set of circumstances
that creates the need for a new product, service, or business idea.
• Difference between an opportunity and an idea.– An idea, as we defined it, is “Something imagined or
pictured in the mind”. The difference is that an idea may or may not represent an opportunity.
2-2
What is An Opportunity?(1 of 2)
• Most entrepreneurial firms are started in one of two ways:
• Some firms are internally stimulated. An entrepreneur decides to start a firm, searches for and recognizes an opportunity, then starts a business.
• Other firms are externally stimulated. An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it.
2-3
I am not sure that there is much of a difference here other than whether the business was founded before or after the opportunity is recognized.
What is an Opportunity?(2 of 2)
2-4
An opportunity has four essential qualities
Here is another perspective from the high- tech industry.
• Research and Development by Firms– Science Push approaches suggest that innovation
proceeds linearly:Scientific discovery inventionmanufacturing marketing
– Demand Pull approaches argued that innovation originates with unmet customer need:
Customer suggestions invention manufacturing
– Most current research argues that innovation is not so simple, and may originate from a variety of sources and follow a variety of paths.
2-5
This is very true in industry.
Window of Opportunity
• Window of Opportunity– The term “window of opportunity” is a metaphor
describing the time period in which a firm can realistically enter a new market.
• Once the market for a new product is established, its window of opportunity opens, and new entrants flow in.
• At some point, the market matures, and the window of opportunity (for new entrants) closes.
2-6
Window of Opportunity
• Window of Opportunity– The term “window of opportunity” is a metaphor
describing the time period in which a firm can realistically enter a new market.
• Once the market for a new product is established, its window of opportunity opens, and new entrants flow in.
• At some point, the market matures, and the window of opportunity (for new entrants) closes.
2-7
2-8
Window of OpportunityProduct Life Cycle
Time
Introduction
Growth
Maturity Decline
Sales
Where is the window of opportunity?
Three Ways to Identify An Opportunity
2-9
First Approach: Observing Trends(1 of 2)
• Observing Trends– The first approach to identifying opportunities is to observe
trends and study how they create opportunities for entrepreneurs to pursue.
– There are two ways that entrepreneurs can get a handle on changing environmental trends:
• They can carefully study and observe them.
• They can purchase customized forecasts and market analyses from independent research firms.
2-10
First Approach: Observing Trends(2 of 2)
2-11
Environmental Trends Suggesting Business or Product Opportunity Gaps
Trend 1: Economic Forces
• Economic Forces– Economic forces affect consumers’ level of disposable
income.– When studying how economic forces affect opportunities,
it is important to evaluate who has money to spend and who is trying to cut costs.
• An increase in the number of women in the workforce and their related increase in disposable income is largely responsible for the number of boutique clothing stores targeting professional women that have opened in the past several years.
• Many large firms are trying to cut costs. Entrepreneurs have taken advantage of this trend by starting firms that help other firms control costs.
2-12
Trend 1: Economic Forces
• Economic Forces– Economic forces affect consumers’ level of
disposable income.
Given today’s poor economy and assuming the recovery takes 3 – 5 years, what business opportunities can you think of?
2-13
Trend 2: Social Forces(1 of 2)
• Social Forces– Changes in social trends provide openings for new
businesses on an ongoing basis.
– The continual proliferation of fast-food restaurants, for example, isn’t happening because people love fast food. It is happening because people are busy, and have disposable income.
– Similarly, the Sony Walkman was developed not because consumers wanted smaller radios but because people wanted to listen to music while on the go.
2-14
Trend 2: Social Forces(2 of 2)
2-15
Examples of Social Forces That Allow For New Business Opportunities
• Family and work patterns.
• The aging of the population.
• The increasing diversity in the workplace.
• The globalization of industry.
• The increasing focus on health care and fitness.
• The proliferation of computers and the Internet.
• The increase in the number of cell phone users.
• New forms of entertainment.
Trend 2: Social Forces(2 of 2)
2-16
Examples of Social Forces That Allow For New Business Opportunities
What social changes might we see as a result of Obama being elected president?
Are there potential business opportunities as a result of these changes, if they occur?
Trend 3: Technological Advances
• Technological Advances– Given the rapid pace of technological change, it is vital that
entrepreneurs keep on top of how new technologies affect current and future business opportunities.
– Entire industries have emerged as the result of technological advances.
• Examples include the computer industry, the Internet, biotechnology, and digital photography.
– Once a new technology is created, new businesses form to take the technology to a higher level.
• For example, RealNetworks was started to add audio capability to the Internet.
2-17
Trend 3: Technological Advances
• Technological Advances– What are the new emerging technologies that might
provide new business opportunities?
– What are the industries that will be impacted by these technologies?
2-18
Trend 4: Political and Regulatory Changes
• Political and Regulatory Changes– Political and regulatory changes provide the basis for new
business opportunities.• For example, laws that protect the environment have created
opportunities for entrepreneurs to start firms that help other firms comply with environmental laws and regulations.
• Similarly, many entrepreneurial firms have been started to help companies comply with the Sarbanes-Oxley Act of 2002. The act requires certain companies to keep all their records, including e-mail messages and electronic documents, for at least five years.
2-19
Trend 4: Political and Regulatory Changes
• Political and Regulatory Changes– What recent political and regulatory events have created
business opportunities?
– What are these opportunities?
2-20
2-21
TechnologyTrend 3
Greater use ofComputers at home
PO: 10 RI: 3
Social/CulturalTrend 2
More leisure time and travelPO:9 RI: 2
OpportunityInternet basedTravel services
Value 48
ChallengeDecline in use
Of travel agentsValue 48
New IdeasOnline travel sites
(Expedia, Travelocity)Value 48
Social/CulturalTrend 2
More leisure time and travelPO:9 RI: 2
TechnologyTrend 3
Greater use ofComputers at home
PO: 10 RI: 3
New idea generation
using multiple trends
Second Approach: Solving a Problem(1 of 2)
2-22
Second Approach: Solving a Problem
Sometimes identifyingopportunities simply
involves noticing a problemand finding a way to
solve it.
These problems can bepinpointed through observing
trends and through more simplemeans, such as intuition,serendipity, or chance.
Some business ideas are clearlyinitiated to solve a problem.
For example, Symantec Corp. created Norton antivirus
software to guard computersagainst viruses.
Second Approach: Solving a Problem(2 of 2)
2-23
Businesses Created to Solve a Problem
Second Approach: Solving a Problem(2 of 2)
2-24
Businesses Created to Solve a Problem
heelcuffs
Third Approach: Finding Gaps in the Marketplace
• Gaps in the Marketplace– A third approach to identifying opportunities is to find a
gap in the marketplace.– A gap in the marketplace is often created when a product or
service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers.
• This is the reason that small clothing boutiques and specialty shops exist.
• The small boutiques, which often sell designer clothes or clothing for hard-to-fit people, are willing to carry merchandise that doesn’t sell in large enough quantities for Wal-Mart, GAP, or JC Penney to carry.
2-25
This can also happen in industry – niche markets
Personal Characteristics of the Entrepreneur
2-26
Characteristics that tend to make some people better at recognizing opportunities than others
Prior Experience Social Networks
Cognitive Factors Creativity
Prior Industry Experience
• Prior Industry Experience– Several studies have shown that prior experience in an
industry helps an entrepreneur recognize business opportunities. There are several explanations for this.
• By working in an industry, an individual may spot a market niche that is underserved.
• It is also possible that by working in an industry, an individual builds a network of social contacts who provide insights that lead to recognizing new opportunities.
2-27
Cognitive Factors
• Cognitive Factors– Studies have shown that opportunity recognition may be an
innate skill or cognitive process.
– Some people believe that entrepreneurs have a “sixth sense” that allows them to see opportunities that others miss.
– This “sixth sense” is called entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in deliberate search.
2-28
Social Networks(1 of 3)
• Social Networks– The extent and depth of an individual’s social network
affects opportunity recognition. – People who build a substantial network of social and
professional contacts will be exposed to more opportunities and ideas than people with sparse networks.
– In one survey of 65 start-ups, half the founders reported that they got their business idea through social contacts.
• Strong-Tie Vs. Weak-Tie Relationships– All of us have relationships with other people that are
called “ties.” (See next slide.)
2-29
Social Networks(2 of 3)
• Nature of Strong-Tie Vs. Weak-Tie Relationships– Strong-tie relationship are characterized by frequent
interaction and form between coworkers, friends, and spouses.
– Weak-tie relationships are characterized by infrequent interaction and form between casual acquaintances.
• Result– It is more likely that an entrepreneur will get new business
ideas through weak-tie rather than strong-tie relationships. (See next slide.) – Hmmmmmm – Very interesting.
2-30
Social Networks(3 of 3)
2-31
Strong-Tie Relationships Weak-Tie Relationships
These relationships, which typically form between like-minded individuals, tend to
reinforce insights and ideas that people already have.
The relationships, which form between casual acquaintances,
are not as apt to be between like-minded individuals, so one person may say something to
another that sparks a completely new idea.
Why weak-tie relationships lead to more new business ideas than strong-tie relationships
Creativity(1 of 2)
• Creativity– Creativity is the process of generating a novel or useful
idea. It is also the process of generating an innovation from a new idea. So, I have changed our definition to “Creativity is the process of generating and converting an idea into an innovation.”
– Opportunity recognition may be, at least in part, a creative process.
– For an individual, the creative process can be broken down into five stages, as shown on the next slide.
2-32
Creativity(2 of 2)
2-33
Five Steps to Generating Creative Ideas
It is my belief that the Eureka moment may be the result of subconscious thinking.
Full View of the Opportunity Recognition Process
2-34
Depicts the connection between an awareness of emerging trends and the personal characteristics of the entrepreneur
Techniques For Generating Ideas
2-35
Brainstorming Focus Groups
Surveys Other Techniques•User groups•Trade shows•Suppliers
Brainstorming(1 of 2)
• Brainstorming– Is a technique used to generate a large number of ideas and
solutions to problems quickly.
– A brainstorming “session” typically involves a group of people, and should be targeted to a specific topic.
– Rules for a brainstorming session:• No criticism.
• Freewheeling is encouraged.
• The session should move quickly.
• Leap-frogging is encouraged.
2-36
Brainstorming(2 of 2)
• Brainstorming (continued)– There are two reasons brainstorming generates ideas that
might not arise otherwise:• Because no criticism is allowed, people are more likely to offer
ideas than they would in a traditional setting.
• Brainstorming sessions can generate more ideas than a traditional meeting because brainstorming focuses on creativity rather than evaluation.
– In most meetings, one person suggests an idea, and immediately the rest of the group begins evaluating it. This happens because most people are better at criticizing ideas than they are at suggesting new ones.
2-37
Focus Groups
• Focus Group– A focus group is a gathering of five to ten people, who
have been selected based on their common characteristics relative to the issues being discussed.
– These groups are led by a trained moderator, who uses the internal dynamics of the group environment to gain insight into why people feel they way they do about a particular issue.
– Although focus groups are used for a variety of purposes, they can be used to help generate new business ideas.
2-38
Surveys(1 of 2)
• Survey– A survey is a method of gathering information from a
sample of individuals. The sample is usually just a fraction of the population being surveyed.
• The most effective surveys sample a “random” portion of the population, meaning that the sample is not selected haphazardly or only from people who volunteer to participate.
• The quality of survey data is determined largely by the purpose of the survey and how it is conducted.
– Surveys generate new product, service, and business ideas because they ask specific questions and get specific answers.
2-39
Surveys(2 of 2)
2-40
Example of a suspect survey technique
Self-Selected Opinion Poll Result
Most call-in television surveys or magazine write-in
polls are highly suspect because the participants
represent what’s called a self-selected opinion poll.
Most people who take the time to participate in a self-selected
opinion poll do so because their have either strong
positive or strong negative feels about the a particular
product or topic.
Other Techniques
• Customer Advisory Boards / User Groups– Some companies set up customer advisory boards that meet
regularly to discuss needs, wants, and problems that may lead to new ideas.
• Day-In-The-Life Research– A type of anthropological research, where the employees of
a company spend a day with a customer.
• Trade Shows
• Suppliers
2-41
Encouraging New Ideas
• Establishing a Focal Point for Ideas– Some firms meet the challenge of encouraging, collecting,
and evaluating ideas by designating a specific person to screen and track them—for if its everybody’s job, it may be no one’s responsibility.
– Another approach is to establish an idea bank (or vault), which is a physical or digital repository for storing ideas.
• Encouraging Creativity at the Firm Level– Creativity is the raw material that goes into innovation and
should be encouraged at the organizational and individual supervisory level.
2-42
Organizational Communication
2-43
SOURCE: Adopted from Richard L. Daft and Richard M. Steers, Organizations; A Micro-Macro Approach, 538 Copyright 1986 by Scott, Foresman and Company, Used by permission.
Horizontal and Vertical Teams
2-44
Exhibit 14.3
Protecting Ideas From Being Lost or Stolen
• Step 1– The idea should be put in a tangible form such as entered
into a physical idea logbook or saved on a computer disk, and the date the idea was first thought of should be entered.
• Step 2– The idea should be secured. This may seem like an
obvious step, but is one that is often overlooked.
• Step 3– Avoid making an inadvertent or voluntary disclosure of an
idea, in a manner that forfeits the right to claim exclusive rights to it.
2-45
2-46
Chapter 2
Entrepreneurship: Successfully Launching
New Ventures, 2/e
Bruce R. Barringer
R. Duane Ireland
