acquiring essential information entrepreneurship 4
TRANSCRIPT
![Page 1: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/1.jpg)
ACQUIRING ESSENTIAL
INFORMATION
Entrepreneurship
4
![Page 2: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/2.jpg)
Introduction
Many entrepreneurs who found new ventures to develop products or services do not do their homework: they fail to acquire essential information before beginning.
Market information Who are the potential customers? How will potential customers react to the new
product of service? What can you learn about specific markets or
geographic areas?
![Page 3: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/3.jpg)
Direct Techniques
Survey / customer surveys Potential customers compare your product with existing
ones Target group rates different dimensions of the product on a
scale from low to high
Perceptual mapping A map that reveals the key dimensions along which
potential customers perceive products and evaluate them
Focus groups Groups of 8 to 12 people similar to potential customers
meeting for 1 to 2 hours to describe their perceptions of and reactions to relevant products
Identify the key dimensions along which focus group members perceive and evaluate various products
![Page 4: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/4.jpg)
Indirect Techniques
Desk researchExamines secondary data including
Sales of competing products Demographic data Trends (economic, lifestyle, etc.)
![Page 5: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/5.jpg)
External Analysis
Collecting and Evaluating information from the external environment
Firms do not exist in a vacuum but are part of a complex world (systemic view)
Management should be continually aware of the external forces which: influence demand for existing products and services create opportunities for new products and services
Scanning of the external environment to evaluate PLEST factors and Industry factors (Porter’s 5 forces model)
Need also to monitor their respective trends
![Page 6: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/6.jpg)
External Analysis
Analyzing the dynamics of the industry in which an organisation intends to compete to help identify: Opportunities: conditions in the environment that a
company can take advantage of to become more profitable
Threats: conditions in the environment that endanger the integrity and profitability of the company’s business
![Page 7: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/7.jpg)
External Environment
General / Societal Environment – PLEST Includes environmental forces that are beyond the
influence of the organization and over which it has no (or little) control.
General forces that do not touch directly on ST activities of the firm
General forces affecting LT decisions
![Page 8: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/8.jpg)
External Environment
Task Environment (5 forces) Includes environmental forces that are within the
organization’s operating environment and may be influenced to some degree.
Elements directly affecting the firm ( Porter’s 5 forces)
Industry within which firm intends to operate
![Page 9: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/9.jpg)
Scanning Societal Environment
Political ForcesLegal forcesEconomic forcesSocio-cultural ForcesTechnological Forces
![Page 10: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/10.jpg)
Political Forces
Significant impact on level of competition & on success of strategies Limiting entry in selected sectors/markets Political stability Incentives Policies Attitude towards FDI
Government policy Encouraging SMEs Conducive environment Business registration Permits and licences Tax rate
![Page 11: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/11.jpg)
Legal Forces
Antitrust regulationsLaws protecting the environmentTax laws (Depreciation, Tax credits, etc.)Labour lawsForeign trade regulationsProduct SafetyEqual employment opportunitiesSex discriminationOccupational Safety and Health Act
![Page 12: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/12.jpg)
Economic Forces
Obvious impact on business activity GDP trends Interest rates Inflation Unemployment Wage/Price controls Business cycle Disposable income
![Page 13: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/13.jpg)
Socio-Cultural Forces
Lifestyle changesAttitudes & ExpectationsDemographics
Constituents (and evolution) Age distribution Growth rate
Environmental AwarenessSocial Classes & Mobility
![Page 14: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/14.jpg)
Technological Forces
Spending on R&D (Govt, Industry)Patent/Trademark ProtectionNew productsProductivity gains through automationICT infrastructure Breakthrough Development
Rate & Degree
![Page 15: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/15.jpg)
Industry Analysis(Porter’s 5 Forces Model)
![Page 16: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/16.jpg)
Threat of New Entrants
Substantial Resources & New capacityDesire to gain market shareThreats of entry – function of entry barriers &
reaction of competitorsE.g. – US – new local automobile co’s are rare
due to High capital reqts. to build production facilities
to develop dealer distribution network
![Page 17: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/17.jpg)
Traditional Barriers to Entry
Economies of scale (Intel – production & sale of microprocessors)
High Advertising & Promotion to differentiate product (P&G)
Capital Reqts. (Boeing & Airbus)Switching CostsCost Advantages Independent of Scale
Incumbents may have learning advantages, location advantages, etc.
Access to distribution channelsGovernment policy
![Page 18: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/18.jpg)
Non-Traditional Barriers to Entry
Strength of management team
First-mover advantage
Passion of the management team and
employees
Unique Business Model
Inventing a new approach to an industry and
executing the idea in an exemplary fashion
![Page 19: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/19.jpg)
Rivalry among Existing firms
No. of competitors
Rate of industry growth
Product/service characteristics
Amount of fixed costs
Capacity (large increment only)
Height of Exit barriers
![Page 20: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/20.jpg)
Threat of Substitutes
Different appearance but satisfying same need Fax machines and FedEx Bottled water & cola Tea & Coffee
Low switching costs Strong effect on
industry
Subs limit potential returns of an industry by
placing a ceiling on price
![Page 21: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/21.jpg)
Bargaining Power of Buyers
Can force prices downBargain for quality, more servicesPlay competitors against each otherPowerful if
Purchase of large proportion
Potential to integrate backwards
Alternative suppliers
Changing suppliers costs
![Page 22: ACQUIRING ESSENTIAL INFORMATION Entrepreneurship 4](https://reader036.vdocument.in/reader036/viewer/2022062619/5517c38d5503461b658b4876/html5/thumbnails/22.jpg)
Bargaining Power of Suppliers
Ability to reduce prices / qualityPowerful if:
Industry dominated by few (soft drink) Unique product/service (Windows) Subs not readily available (electricity) Ability to integrate forward (Intel can make PCs) Purchasing industry not important to supplier
(lawn mower tyres)