identifyingopportunities. entrepreneurial process identify and evaluate the opportunity develop the...

Identifying Identifying

OpportunitiesOpportunities

Entrepreneurial Process

Identify and Evaluate the Opportunity Develop the Business Plan Determine Resources Required Manage the Resulting Enterprise Created

Identify & Evaluate Opportunity

Fruitful Sources: consumers, distributors, technical people, business associates

Evaluation of opportunity most critical element Window of opportunity (size & duration) are primary

basis for determining risks/rewards Opportunity must fit personal skills and goals of

entrepreneur Opportunity Assessment Plan

Opportunity Assessment Plan

What market need does it fill? Personal observations reflect market need? What social condition underlies market need? Market research to support need? Are patents required? What competition exists in marketplace? International competition? Where is the money to be made in this activity?

Develop a Business Plan Executive Summary Description of Business Description of Industry Marketing Plan Financial Plan Production Plan Organization Plan Operational Plan Summary Appendices

Entrepreneurial Interest Small firms play a major role in job creation and innovation Most large organizations provide little opportunity for self-

actualization New ventures by female entrepreneurs 3 times that of males Life-Cycle Approach

9 areas of development little statistical significance tend to have self-employed fathers generally know for strong work values and dominant management

style

Concept Development

Identify Needs

Target Specs

Product Concepts

Select Concept

Test Concept

Set FinalSpecs

Plan Downstream

Development Plan

Concept Development

Perform Economic Analysis

Benchmark Competitive Products

Test Models / Prototypes

Identify Needs

Target Specs

Product Concepts

Select Concept

Test Concept

Set FinalSpecs

Plan Downstream

Development Plan

Opportunity Identification

Identify Opportunity

Determine Capabilities

Evaluate Opportunity

Select BestOpportunity

Summary ofConcept

Test Concept

Nine Categories of Opportunities

Increase value of a product or service New applications of existing technologies Creating mass markets Customization for individuals Increasing reach Managing the supply chain Process innovation Increasing the scale of the firm

Trends / Opportunities Genetic Engineering, genomics Information technology Food preservation / distribution Video gaming Speech recognition Security systems Nanotechnology

Trends / Opportunities Fuel Cells Superconductivity Designer enzymes Smart cards Software security Robots

Social / Cultural Trends Aging baby boomers Increasing diversity Two-working parent families Rising middle class in developing nations Changing role of religious organizations Changing role of women Media – DVDs, Internet Growth of Latino population in U.S.

Convergence

Customer Needs

Technology Capacity

Applications

Opportunity

Evaluating Opportunity Capabilities: is it consistent with mission, knowledge

base ? Novelty: does product have sufficient differentiating

qualities that it creates value for the customer ? Resources: are the available resources sufficient for the

venture ? Return: is expected return consistent with the risk of the

venture ? Commitment: is the entrepreneurial team sufficiently

passionate about the venture that they can commit ?

Team: accept risk knowledge base commitment

Opportunity: novelty potential market good risk vs reward

Context: timeliness industry conditions market conditions

Resources: financial processes human

100%

50%

Team: accept risk knowledge base commitment

Opportunity: novelty potential market good risk vs reward

Context: timeliness industry conditions market conditions

Resources: financial processes human

100%

50%

Holiday Inn

Team: accept risk knowledge base commitment

Opportunity: novelty potential market good risk vs reward

Context: timeliness industry conditions market conditions

Resources: financial processes human

100%

50%

Electric Auto

Feasibility Analysis

Why Smart Executives Fail Bary Bertiger, Motorola Engineer Wife couldn’t reach clients while in Caribbean Iridium LLC – 66 low altitude satellites Nov. 1, 1998, Al Gore made first call July 1999, Iridium defaulted on $1.5 billion and

filed for bankruptcy What went wrong ?

Feasibility

Product Concept

Product feasibility

Industryfeasibility

Org. feasibility

Financialfeasibility

Business Plan

Yes YesYes Yes

Yes

Concept Statement

Description of product or service being offered

Intended target market Benefits of product or service Description of how product will be

positioned in market place Description of how product will be sold

Concept Test Validate the underlying premise of new

product or service Help to develop a product / service idea Estimate potential market share

Usability Testing Prototyping – iterative process that is

refined until user and designer agree on final design

Efficient product vs Usable product Apple Partnering for Success

Industry Feasibility Attractive Industries

Large, growing industries Important to customer Newer technology Higher profit margins Few competitors

Attractive Industries (3-yr growth)

Application software 1.9% Biotechnology 21.1% Communications 5.1% Internet Information Services 4.5% Medical Instruments 13.1% Restaurants 10.2% Semiconductors 5.1% Specialty eateries 21.8%

Idea Generation Necessity Trends; business, social Sales Internet

Focusing the Idea Diverging Questions

What is problem about?

Housing What is housing about?

Being warm, sheltered What is being warm and sheltered?

Feeling loved, cared for, safe

Focusing the Idea Converging Chain of Questions

What is problem about?Quality housing

What is causing poor housing quality?Poor workmanship in frame to

foundation What are the foundation problems?

Anchor bolts poorly aligned, not vertical How can I resolve frame/foundation problem?

Anchor Float

Focusing the Idea Customer Surveys

Address the respondent Configure for easy scoring Obtain needed demographics Obtain user opinions/preferences

Focusing the Idea Surveys

Poor: Do you usually buy electronic gifts?

Improved: Last Chrismas, approximately how much did you spend (total) for electronic gifts?

Focusing the Idea Surveys

Poor: Do you personally prefer clock radios with CD or with cassette?

Improved: About how much would you be willing pay for each of the radios for your own use (assume equal high-quality sound and tuning)

<$20 $20-39>$40

AM/FM with alarm Alam-clock with CD Alarm-clock with Cassette Alarm-clock with ipod

Focusing the Idea Customer Surveys

Wrong people are surveyed Wrong questions are asked Questions are asked at the wrong time Satisfaction/dissatisfaction assumed to be

equally important Results generalized to groups not surveyed

Identify the Real Identify Real Problem

Retention at SDSMT too low Identify Real Customers

Need to build a curriculum that is adaptive to the needs of the customer

Secondary Research Resources ABI Inform Dun & Bradstreet Hoovers Online Lexis Nexis MultexNet Reuters Business Insight Standard & Poors Value-Line Wall Street Journal