from idea to start up
DESCRIPTION
From idea to Entrepreneurial start up - workshop given in Kuching Sarawak 11th July 2013TRANSCRIPT
Getting From an Idea to Start-up
Murray Hunter
A Roadmap for today
Create IdeasDecide on what product each group
would want to be involved in.
Screen the Idea for opportunity
Determine whether there is a market and how much competition there is.
Determine if the product can be made.
Look at how to develop the opportunity
Resources, skills, Strategy, how to make, business model
How to get to Mars
We can land a man on the moon and return him successfully to Earth but we are still not too sure
what factors make a firm successful
I can’t tell you why
High Growth
Habitual
Needs based
Lifestyle
Hobby based
Inventor
Retail
Direct marketing
B2B
Product based
Service based
Manufacturing
Engineering
48 different types of Entrepreneurship
Strategic Business Analysis
Resources, networks, capabilities, competitive
environment, etc.
Business Goals
Family Values
The Vision Aspiration
Family Goals
Self Assessment (Self-efficacy)
Decision Making Skills
Knowledge Competencies
Personal Goals
Business Competencies
Knowledge
Production & Operations
Marketing
Personnel
Financial
Risk Management
Horizontal and
vertical expansion
Aspirations
Self view
Income needs
Time Horizon
View of retirement
Opportunity cost of doing
other activities
Passion
Family Considerations
Generational
evolution
Grooming successors
Family aspirations
Lifestyle
Attachment
Asset Fulfillment
Value
Type
Needs
Wants
Liquidity needs
Alternatives
Future (Retirement)
Time horizon
Investment
options
Risk management
Tax planning
Opportunity cost of doing
other activities
Exit barriers
The Individual & Family Family history, Current family
livelihood, Current Family Status.
Motivational Origins
Social
Regulation Technology
Economy How we see & feel about the world
Alternatives:
Both for you and potential customers
The competitive environment
Resources
Skills, competencies & capabilities
Networks
Strategy
Business Model
Influence of com
petitors Influ
ence
of
com
petit
ors
Imitation
Almost straight imitation
Even the big companies do it
Scarcity
Visiting nurse
Scarcity determines your level of success
Discovery
Construction
Fastfood (General Characteristics)
1. Cheap 2. Good standard of hygiene 3. Good service 4. Fast and efficient 5. Specialize in a particular food 6. Know what to expect 7. A meeting place for people
Charcoal Burger Grill
1. Location near young people (university): convenient
2. Cheap and affordable 3. Good service 4. Authentic charcoal BBQ
burger grill (western style) 5. Convenient meeting place
with WiFi etc.
University
Location
Potential success parameters
Co
nce
pt
Extr
acti
on
Constructed Concept Concept Extraction
A (location) + B (characteristics) = C (constructed Concept)
A
B
C
Images and Connections
Concepts
Ideas
Opportunity
Vision Platform - Perception
Time & Space Potential
Concept Generator – Making Connections
Sources of Opportunity Learning:
Conceptual World
Identifying concepts
Evaluation after experience
Complete re-evaluation (seek further information)
Real World
Experimentation & Testing
Structure common to all opportunities Vision – Outcomes
Time & Space Resources Networks
Skills, Competencies & Capabilities Competitive Environment Strategy – scope & depth
“A Narrative”
Evaluated and Elaborated Upon
The birth of an opportunity
Success recipes are just stories
No Sensitivity High Sensitivity
Ability to see the environment in different ways
Emotional Sensitivity
Locked into the same patterns
Locked into old paradigms of business
Farming in Fiji
Farming is primarily subsistence agriculture
Taro Yam Cassava Ginger
Chillis
Sunday
Monday Morning
Monday Afternoon at the Melbourne Wholesale Market
Level One Imitation See and belief, little thought except for viability- logical thinking
Level Two Creative Imitation See and enhance, maybe with some connection, logic and holistic creativity
Level Three Creating a new business Model
Connectivity of different pieces of information, some imaginatively, or through re-engineering
Level Four Creating something new to the world
Complete holistic, imaginative construction, building from deep and sparse pieces of prior knowledge.
Opportunity Awareness
A
va
ila
bilit
y I
nc
rea
ses
Usefulness Increases
Media Reports
Ideas
Data
Information
Knowledge
Wisdom
The Continuum from media reports to wisdom in relation to availability and usefulness
Where does the informati on come from?
Introduction
Banana, grape, Pineapple, apple, orange, papaya, Mango stein
6 kilograms in various proportions according to person’s own formula
Honey 2 liters Water 20 Liters Procedure: Place all ingredients together in a sealed tank and mix. Leave for at least one year. This process can be sped up by placing an existing enzyme in the mixture.
Formula I: A General Enzyme Base for Cosmetic Products
Hunter & Yothangrong (2006)
Enzyme (base) Base will consist heavily of citrus fruits
15 Kilograms
Coconut oil or CDE 2 kilogram Ash water 15 kilograms
Formula 4: Dishwashing Liquid
Organic Agro-Chemicals
Existing Thai Organic Products
Changing the paradigm
Small Business Verses Entrepreneurship
Standard food business
Value
New food offerings
Opportunity is about adding value
1 2 3 4 5Does the idea create value over what might already be available?Is this value easily perceived by the potential customer?What risk is involved with the idea? (see risk chart)Does the idea have potential customers and will they support the idea? Can the idea make money? Will this be hard to do?Do I have alternative things I can do with my time? (what is the opportunity cost?)Am I committed? (Am I motivated enough?) Are there great barriers in front of me? (1=yes, 5 = no)Can I handle these barriers? (1=no, 5 = yes)
Idea Appraisal
Sub-Total (score out of 50)
Change In User Habits
Risk None
None
Some
Some
Great
Great
Dangerous
High
High
None
Change in how and where people buy the product
Medium
Medium
Medium
Low
Low
Appropriate Technology
Technology
Scientific knowledge used in practical ways in industry
Oxford Dictionary Definition
Scientific
A way of doing something or thinking: Careful and logical (Adj.)
Oxford Dictionary
Innovation
The introduction of new things, ideas or ways of doing things
Oxford Dictionary
that there “is also the tendency for Asian countries, including Malaysia, to deal with the issue of values in development by Importing many technologies and systems wholesale from
abroad without going through the process of mental transformation necessary to master them fully. Although
Malaysia is going through rapid transformation, our growth is one without development in the context of knowledge
contribution to science, engineering and technology. As long as we are consumers and operators of
sophisticated techniques, plants and technologies imported wholesale from abroad, we are to a certain
extent undergoing a technology-less form of industrialization. This transformation of values and attitudes is a key issue
in the nation’s development agenda”[i] .[i] Asma, A., Going Glocal: Cultural Dimensions in Malaysian Management, Kuala Lumpur, Malaysian Institute of Management, 1995, P. 179.
Tissue Culture
Microwave Oven Pressure Cooker
Chemicals & Spoons, etc. Glassware
• Minimise Production scale to account for initial low sales/production quantities and lower capital investment
• Mobile GMP Facility
• Simplified Technology
Appropriate technology is about keeping out of
Appropriate technology is also a way to gain
Competitive advantage
1 2 3 4 5Do you have access to the required technology? How expensive is this technology? (1 = most expensive - 5 = least expensive)Are you able to develop the necessary technology? (1=no, 5=yes)Can you modify existing technologies in a way that will make it less expensive? (1 = very difficult - 5 = very easy)Will the technology give you any advantage over others already in the industry?
Technology Appraisal
Sub-Total (score out of 25)
The Summarised
Entrepreneurial
Process
Idea
Turn into Opportunity
Final Commitment
Start-Up
Growth
Sustainability
Creativity
Innovation
Strategy
Sales
NPD
Resource Gathering
Networks
Skills, Capabilities
Resources
Making Connection
Vision Platform
Time & Space
Strategy
Competitive Field
©Hunter (2011)
The Vision Platform Social demographics, culture,
generational outlook, experiences, Cognition, emotions, the psych & psychotic, & cognitive traps, etc.
Time & Space Stage of economic, social,
legal, & knowledge development,
The Ability to Make Connections
Cognition, creativity, problem solving, creative tools
The Sources of Opportunity
Market Void, Technology Infusion, Structural Changes,
Resource Monopoly, Regulation, Non-Innovative
The Resource Base
Personal Skills & Competencies,
Enterprise Capabilities
The Opportunity
Gap
The Ability to Build Networks
The Competitive Environment Influence of suppliers, customers,
complementary goods & substitutes, barriers to entry, the competitive field & influence of social,
technology, economic, & regulatory factors
Strategy
Hunter (2012)
Resources
Tangible Resources Intangible Resources
Product Designs
Knowledge
Intellectual property
Research & Development
Creativity Brands
Team Specific Experience
Reputation
Organizational Routines
Relationships
Passion
People
Plant & Equipment
Property & Location
Technology
Cash & Other Finance
Access to inputs
Business model
Time
Organizational Culture
New ventures with fewer resources and lack of history in an industry will have issues of legitimacy to overcome (Aldrich & Fiol 1994).
Patents
Brands
Channel Capacity
Product Design
Market Share
Firm Size
Financial resources
Technology
Size
Access to Inputs
Barriers to Entry & Differentiation Advantage
Bargaining Power
Cost Advantage
Competitive Advantage
Venture Growth
Time
Pre-start-up Start-up Growth Maturity Paradox Period Move to professional management
Management orientation and possible decline
Entrepreneurial orientation and the
pursuit of more opportunities
Evaluate opportunity & imagine what
resources needed
Create business model
Acquire & allocate resources
Cash & Finance
Initial asset & use and/or acquisitions
Creation of brands
Acquire tangible resources
Require more working capital
Seek equity partner or
finance
Develop intangible resources
Employ people Select location
Identify necessary
technologies
Create product designs
Forming organizational
culture
Develop organizational
routines
Formal research & development
Develop relationships &
reputation
Opportunity
Reso
urce
Re
quire
ment
s
Avail
able
Reso
urce
s
Reso
urce
Gap
Inputs are combined, transformed and converted
into capabilities. Organizational capabilities
are used to support strategies. The objective is to create value in line with
the value proposition through defined distribution
channels to generate a revenue stream.
Distribution Channels
Strategies
The Venture People Plant & Equipment Property & Location Cash & Other Finance Technology Product Designs Knowledge Brands Reputation Relationships Organization Culture Access to inputs Intellectual Property Research & Development Creativity Team Specific Experience Organizational Routines Passion
Inputs Outputs
Perceived problem observed and value
proposition proposed through a product and/or service
Product/Service
Revenue Stream
Feedback influences inputs such as reputation, R&D direction, available inputs, level of technology, etc
Determine your needs
Enterprise Capabilities
Specialized Resources
Applied Resources
Generic Resources
Input Resources Raw Materials Various Support Services Consultancies Fixed Costs
People
Property & Location Cash & Other Finance
Technology
Business Model
Intellectual Property
Knowledge
Brands
Reputation Organizational Culture
Organizational Routines
Basic Plant & Equipment
Office Space
Product designs
Proprietary Machinery
Creativity Team Ind. Experience
1 2 3 4 5Can you acquire all the necessary resources you listed above? (1 = no 5 = yes)Are there any resources I can't acquire? (1 = yes 5= no)Can I do without them? (1 = no 5 = yes)Can I develop them as I go along? (1 = no 2 = yes)Will the resources you have give you flexibility? (1 = no 5 = yes)
Resources Appraisal
Sub-Total (score out of 25)
Getting the right skills around you
Start-up Growth Stability
Various cognitive skills Research skills
Opportunity Competency
Entrepreneurial Competency
Relationship Competency
Strategic Competency
Management Competency
Idea Evaluation
Idea Discovery
Organizational Competency
Research skills Evaluation skills Decision making skills Networking skills Interpersonal & communications skills
Specific technical skills (product) Basic administration skills Resource gathering skills Interpersonal skills Business plan preparation skills Oral presentation skills Production engineering skills Organizational development skills Sales skills Promotional skills Start-up finance skills Networking skills Decision making skills
Various Cognitive Skills
General management skills Interpersonal skills Accounting skills Finance skills Cash-flow management skills Marketing skills Sales skills Human resource management skills Logistics management skills Manufacturing management skills
Leadership Competency
Creativity Competency
Entrepreneurial Start-Up Competencies
EntrepreneurialStrategic
Conceptual
Opportunity
Commitment
Management
Managed Company Competencies
Entrepreneurial
Strategic
Conceptual
Opportunity
Commitment
Management
Competencies Required During the Essential Oil Development Process
Screening & Bio-prospecting
Propagation & domestication or
introduction
Planting, cultivation & maintenance
Harvesting, Extraction and
wastage handling
New product development &
creation of value added products &
activities
Strategic, operations, finance and technical
management
Product & venture management
Marketing & commercialisation
Sustaining and growing the enterprise
(adapting & survival)
Output: Result/Performance, Sustainable and healthy enterprise or
a struggling and failing enterprise
Opportunity and technical competencies require:
Botany, ethno-botany, research ability, chemistry, bio-chemistry, analytical
chemistry. Market and specific technical product knowledge
Technical Competencies require: Plant physiology, micro-propagation, nursery
management, agronomics
Technical competencies require:
Bio-system engineering, Soil management,
entomology, plant nutrition, Agronomics, field
management, irrigation engineering
Technical competencies require:
Thermodynamics and plant physiology, heat transfer, distillation engineering,
chemistry, chemical engineering, agricultural
engineering, environmental engineering (waste
management)
Strategic, opportunity and technical
competencies require: Project management,
marketing management, chemistry, cosmetic
chemistry, perfumery/ flavour knowledge,
Packaging & design, manufacturing
engineering
Strategic, organizational, relationship opportunity competencies require:
Business strategic, industry knowledge, industry
networks, ability to raise finance, ability to plan,
implement & adjust, leadership, entrepreneurial
Strategic and organizational
competencies require: Administrative, financial management, technical management, strategic
management, personnel management, resources
management, entreprenuerial
Sub-Skills Book-keeping Product costing Administration Presentation Sales Business plan preparation Data-entry Negotiation Budgeting Empathy Imagination Sense of fairness Interpersonal Technical (product) Promotional Teamwork Communication Accounting procedures Self reflection Networking Ability to inspire Deal with uncertainty Resource gathering Paperwork
Skills Marketing Production Scheduling Delegation Product design Finance Planning Sourcing Human resources Organizational Decision making Finance Operational
Personal Competencies Entrepreneurial competency Managerial competency Opportunity competency Leadership competency Creativity competency Conceptual competency Ethical competency Strategic competency Emotional intelligence Commitment competency
Enterprise Capabilities New Product Development Logistics capability Manufacturing capability Management capability Growth capability Strategic capability Learning capability Marketing capability Innovation capability Technology capability Organizational culture
Dynamic Capabilities
Strategy Anchors
Competency Present Not Present Comments
Technical 1. Botany2. Plant Physiology3. Chemistry/Analytical4. Micro-propagation5. Nursery Management6. Environmental Engineering7. Chemical
engineering/thermodynamics/etc8. Soil Management9. Agronomy/plant nutrition/field
management10. Entomology11. Irrigation engineering12. Agricultural Engineering13. Regulation knowledge14. Cosmetic chemistry/food etc15. Perfume/flavours16. Packaging & design17. Consumer product manufacturing
Basic
BasicExperienc
eExperienc
eExperienc
eBasicBasicBasic
LowLowLowLowLowLowLowLowLow
Need guidanceNeed assistanceNeed guidance Assistance AvailableCan design Need appraisalUse contractorUse instituteReplicated experimentsWith EnvironmentUse contractorCan developNeed assistanceLearn from experienceUse contractor
Opportunity/Entrepreneurial/Commitment1. Able to screen environment for
opportunities2. Able to evaluate opportunities3. Commitment level
YesYes
Passionate
Need to see realistically
Relationship1. Have relationships in target
industries2. Have relationships in research
area3. Have relationships in finance
industry
A fewA fewSome
Organising/Management1. Able to project manage2. Able to administrate3. Able to financially manage
operation4. Able to undertake research5. Able to keep key people
motivated
YesYesYesYesYes
Strategic1. Understand dynamics of market
and industry environment2. Able to plan for a business
within this environment3. Able to implement, evaluate
and adjust plans in this environment
YesYesYes
Believe so but not tested
Curiosity
Exploration
Discovery
Excitement
Dedication
Mastery
New Skills
Confidence/ Self Esteem
Security & Purpose
Insight
Passion for the domain
Openness to Learning
Obsessive Persistence
Wisdom
Skills Appraisal
Sub-Total (score out of 25)
1 2 3 4 5Do I have the necessary skills to undertake the venture?
If, not can I acquire and develop these skills (1 = difficult 5 = yes)
Is there a large gap between what skills I have and what skills I need?
How critical are these skills I don't have? (1 = critical 5 = not critical)
Will these skills you have give you flexibility? (1 = no 5 = yes)
Different types of Networks
Support Networks
Resource Networks
Regulatory Networks
Development Networks
Sales Networks
Peer Networks
Two elements:
Technical Know How
Technical Know Who
Decision Maker
Inside the firm Father
Accountant
Bank
Customer
Employees
Property Owner
Competencies
Friends
Expectations
Suppliers
Auto Parts manufacturers
Automobile manufacturer
Coordination, Kanban, JIT, etc.
Independent Dealerships
Sales coordination, Custom Ordering
Service Centres
Consumers
In constant communication about service times and
other car owner information Road Side Assist
Schemes
This is what it is about
Business is technical
“Know howwho”
Doing business without networks is an
insurmountable barrier to entry
No Network – No Business
Sources of Technology
Suppliers
Customers
Competitors
Regulators Other
Stakeholders
Critical
Necessary
Important
Useful
Not Important
Customer A
Customer B
Customer C
Wholesale A
Wholesale B
Supplier A Supplier B
Supplier C
Backup Supplier A
Backup Supplier
B+C
Supplier D
Supplier E
Accountant
Bank
Father
EPA
Taxation
Systems Software
Best Friend Competitor A
Competitor B
Competitor C
Stakeholder category
Priority
1 2 3 4 5Do I know the potentially important stakeholders? (1 = no, 5 = yes) Can I get to know the important stakeholders I don't know? (1 = no, 5 = yes)Will these stakeholders support me? (1 = no, 5 = yes)How open and approachable are the important stakeholders in this industry? (1 = Closed, 5 = open)Are there any special membership restrictions in the industry (1 = yes, 5 = no special membership restrictions)
Network Appraisal
Sub-Total (score out of 25)
Networks are the keys to building value chains
The Branding ParadigmThe Level of
Competition
The Channel of
Distribution
The Marketing Mix
Product
Price
Position
Promotion
Customer Solution
Customer Cost
Convenience
Communication
Veggie burgers
One stall Franchise Manufacture & Market
One product idea but 3 different types of business
1 2 3 4 5
Do I know exactly where I want to be in the value chain? (1 = no, 5 = yes)Can I get to that position? (1 = no, 5 = yes)Do I have the skills? (1 = no, 5 = yes)Do I have the resources? (1 = no, 5 = yes)Do I have the networks? (1 = no, 5 = yes)
Value Chain Appraisal
Sub-Total (score out of 25)
Strategy
Consumers
Positioning
Targeting
Segmentation
Market Identification
The Causation Process
Product idea to compete with
existing products in market
Attempting to create
some form of
competitive advantage
Opportunity
Refining the Idea
Concept
The set of possible ideas/products/markets
The Effectuation Process
Potential new novel product extending
market field or creating a new one through existing or new channels and business models.
How do you develop strategy?
X X X X
Evolved Strategy
Tactics Applied
Trial and error tactical use with various levels of Success/Non-Success
Vision & Goals
Modified Vision & Goals
Actual Path & Performance
Wind in the case of a yacht or environmental turbulence in the
case of a firm.
It’s about finding your own strategy
Customers
Laundry Service
Service Convenience Price Quality Relationship
Find the important mix for your business
Industrial
Industrial Markets These markets usually buy
materials and components to manufacture other products, or supplies necessary to run a
business. Manufacturers usually deal directly
with industrial customers or act through distributors.
Consumer
Consumer Markets Consumer products include automobiles, white goods, electrical goods, fast moving consumer
products and services, including financial, insurance, travel, etc.
Companies market and sell direct to consumers, through distributors and/or retailers, etc. Many manufacturers tend to
service national markets, while many service businesses are localized, except where companies have overcome fragmentation.
International
International Markets An international market could be any type of the other markets excepting it
is in a remote location from the enterprise.
The entering firm will have to decide whether to enter directly through a fully owned
subsidiary, joint venture with a local partner, utilize a distributor or other representative,
license or franchise the product or service to a local company. The enterprise will also have to adapt its strategies to the local ways of doing
things.
Resale Resale Markets Second hand goods, some
internet sites like eBay, Auctions & Real Estate, etc.
Sales often undertaken by intermediaries, pricing varies
according to demand & supply, power in market according to scarcity
Government
Government Markets Usually high volume capital &
service products. Goods usually decided upon through issuing specifications and tenders. In
some industries the government market can be up to 60% of the total market. This market although decisions made
through tenders, strategies based upon building strong relationships necessary.
Types of Markets
Competitive Rivalries Lemongrass quick yield and straightforward to cultivate and distil – expect high elasticity of supply from both existing and new producers. Producers of substitutes very aggressive
Bargaining Power of Suppliers Collecting the most suitable planting material require effort. Extraction and harvest .technology needs to be acquired or developed Analytical equipment or service maybe expensive/remote.
Substitutes Citral (main constituents) can be produced from a number of chemical feed stocks. Alternative oils (litsea cubeba) cost much less to produce. Lemon myrtle oil much smoother and acceptable to end users Many alternatives to lemongrass in product formulations.
Trends & Technology Alternative technologies to steam distillation (CO2) can make much smoother oil but will increase capital needs greatly. Natural, exotic, organic, FAIRTRADE could increase oils popularity (?) if seen as exotic.
Substitutes
Tre
nd
s &
Te
ch
no
log
y
Bargaining power of buyers
Bargaining power of suppliers
Competitive Rivalries
Re
gu
lati
on
Regulation SCCP placed lemongrass oil under scrutiny as a cosmetic ingredient in EU.
Industry Competitors
Intensity of Rivalry
Bargaining Power of Buyers Currently small item of trade in flavour industry, strong relationships with established producers.
Opportunities
Cognitive Bias
An identified market where enterprise resources and competencies will be able to exploit
The potential opportunity will have a large enough market size to sustain the enterprise
The enterprise will be able to take advantage of this opportunity better than any other competitors
Outside elements in the supply chain will support the enterprise
Any factor or group of factors that will allow the enterprise to grow in a
sustainable manner within the market environment
Threats
Competitors identifying the same opportunities and enacting upon them
The regulatory environment and potential changes within it
Inability to penetrate the existing supply chain and make alternative strategies
Dependence on survival from a single or very few customers
Depending on a single product for total Any factor or group of factors that may potentially hinder enterprise growth in a sustainable manner without any contingencies verse
acts of God, bad weather, drought, etc.
Strengths
Personal and enterprise competencies, knowledge & experience that can be utilized for the benefit of the enterprise
Facilities, infrastructure, financial backing & liquidity, long timeframe view
Ability to learn through research and experimentation
Any network connections with industry and access to the supply chain for both information and marketing
Ambition and vision (but not delusional), focus & commitment
Ability to innovate technically, market and organizational wise
Any factor or group of factors that can assist the enterprise gain
competitive advantage over its competitors
Weaknesses
Competency gap Short term timeframe, no fall back position if positive results
delayed or there are technical or market failures Poor infrastructure that hinders production or marketing Shortage of funds to undertake project to completion Qualified or lack of commitment by any key people within
organization Lack of network, knowledge and access to supply chain
Any factor or group of factors that can hinder the enterprise gain competitive advantage over its
competitors
Opportunities are seen with bias according to knowledge,
experience, wisdom, educational background, market knowledge,
competencies, etc.
Risks/ Uncertainties
Any factor or groups of factors
that make outcomes uncertain
in the future
Any factor or groups of factors that may lead to venture failure
High Market Growth Low Strong Weak Relative Competitive Position
Crude Essential Oil Steam Distilled
Essential Oil under
CO2 extraction
Cosmetic production for international
market
Organic Cosmetic
production for international
market
Essential Oil Based Agro-
chemical
Organisational Capability Creative, Opportunity, conceptual, strategic, Learning, Organisational, financial, Technical,
Marketing, Networking and Commitment Competencies
How the Business is Currently Performing
The base for potential future Development
Resources Existing and Available to the Business
The Set of Potential Opportunities
Tim
e a
nd C
om
pany
Evo
lutio
n/C
han
ge
Enterprise Performance
Personal Objectives
Stre
ngth
s and W
eaknesse
s T
hem
e Personal Resou
rces Netw
ork Product M
anagem
ent Fin
ance
4 Ps & S
kills Facilities A
ttributes
Exte
rnal In
fluence
s &
Thre
ats
M
arke
t E
conom
y Reg
ula
tion T
echnol
ogy
P
ositio
n Soc
ial S
ituat
ion Chan
ge &
Com
petition
A
spirat
ions
D
evel
opm
ent
Key internal influences on the strategic
process
The process of product/market development
Key external influences on the strategic
process
Competitive Position
Cognitive Bias
Structural/ Support Strategies
Interventional Strategies
Your Moves
Your Competitor’s
Moves
Your advantages & Disadvantages
©Hunter (2011)
Range of Generic Strategies
Convergence
Divergence Aspirational Brand Strategy
Duplication & Replication
Creating Customer Utility
Tactical Combination
Extension
Synthesis
Segmenting
Differentiation
Creative Imitation Market Leadership New Business Model
Imitation
Cost Advantage
Technology Superiority
Overcoming Fragmentation
Dynamic Strategy
Opportunity
Foundation (Capacity Building) Strategies
Finance, Gearing, Asset Management, Location
Decisions, Identity, Mission, etc.
Enterprise capabilities
Administrative (Support) Strategies
Financial (operational), Procurement, Logistical, Human Resources, Operational Policies,
Work Procedures, etc.
Operational Strategies Competitive strategies: Marketing,
Sales, Advertising, Channel, New product development, Intellectual
property, supply chain, etc. General Operational: Manufacturing, product & customer service support,
accounting, etc.
Tactical Actions & Behavior
Field Promotion, Discounts, Incentives, Selling, Product
Styles, etc.
Sales Revenues, Profitability, Other market Measures, Growth, Sustainability, Survival
Opportunity
Manifestation as a set of strategies (Product, Channel, Business model, etc.)
Factors and causes leading to the Opportunity Conditions
(Social, Economic, Technology, & Regulatory Conditions)
The Sources of Opportunity (Market Void, Technology Infusion, Structural
Changes, Resource Monopoly, Regulation & non-Innovative Sources)
Resources
Resources
Resources
Resources
Resources
Capabilities
Capabilities
Capabilities Capabilities
Capabilities
Opportunities
Environment
Firm Opportunity Trajectory
Firm Alternative Opportunity Trajectory
Field of Network Based
Opportunities
Case study
Mamor Chocolates- Melbourne Chocolate History Tours™
Organically produced high active concentration shampoo with product
variants to suit various conditions.
Central Theme (Product Proposition)
Underlying Assumptions High & discerning
market end. Customers who
want mass custom produced
products.
Low competition in segment.
Rapidly growing segment.
Products match personal values.
Sustainable
Strategy Characteristics
Brand Theme
Features Benefits Signal
Attributes Channels
Things are always a
mystery until we get there
1 2 3 4 5Are there a number of strategy options for my idea? (1 = no, 5 = yes)Can I overcome any barriers of entry within the market and value chain? (1 = no, 5 = yes)Can I overcome and/or react to external threats? (1 = no, 5 = yes)Do I have the right strengths to pursue my desired strategies? (1 = no, 5 = yes)Do any weaknesses I have prevent me from implementing the strategies I have in mind? (1 = yes, 5 = no)
Sub-Total (score out of 25)
Strategy Appraisal
New Product Development
Hunters Brands Sdn. Bhd.Standard Product Costing Sheet
Product: Ant Attack Liquid 100ml Size: 0.1
Formulation No: Date: 16/6/03
Units per packet: 1 No. Packets per Outer Carton: 6
Individual Unit Size: 0.1 Batch Size (Kg): 100
Part 1: Chemical Materials
Ingredient Quantity Price ExtensionEthanol 93 $2.500 $232.500Clove Oil 5.25 $35.000 $183.750Peppermint Oil 0.7 $38.000 $26.600Citronella Oil 1.05 $35.000 $36.750
$0.000$0.000$0.000$0.000$0.000$0.000$0.000$0.000$0.000
100
Batch Cost: $479.600 Cost Per Kilogram: $4.796
Wastage Cost per raw unit: $0.480 Factor Cost per Packet: $0.480
0.00% Cost Per Outer Qty: $2.878Ctn Cost per yield: $2.878
Ave. Yield/ Units per Batch: 1000 Date Last Updated:
Part 2: Packaging Materials
Item Unit Mea Quantity Price ExtensionAnt Attack Inner Box unit 6 $0.190 $1.140Ant Attack 50ml Label unit 6 $0.095 $0.570Ant Attack Bottle unit 6 $0.750 $4.500Ant Attack 50ml Outer carton unit 1 $0.450 $0.450
$0.000$0.000$0.000$0.000$0.000
Total Packaging: $6.660
Part 3: Labour
Mean Labour Cost $0.70Mean Fixed Overhead $0.00Mean Administrative Cost $0.00
$0.70 Part 4: Total Product Cost
Unit Carton % TotalMaterials $0.480 $2.878 28.11Packaging $1.110 $6.660 65.05Labour $0.117 $0.700 6.84Total $1.706 $10.238
Part 5: Selling Prices and Margins
Sell Price Gross Contribution % Margin Transfer Price -$10.24 #DIV/0! Sell 1: Whole/Distributor -$10.24 #DIV/0! Sell 2: Retailers -$10.24 #DIV/0! Sell 3: Export -$10.24 #DIV/0! Sell 4: Other -$10.24 #DIV/0!
Wholesaler Price Structure & Sales ProjectionWholesaler: National Location: Date: 1/6/03
1 2 3 4 5 6 7 8Super Roach Ant Ant Citro
Cit. candle Attack Attack (P) Attack (L) Fresh 500mlCarton Size 24 24 24 24 12
RSP (Unit) $3.50 $5.60 $4.20 $5.90 $7.90Margin 16.67% 16.67% 16.67% 16.67% 16.67%
RP (Carton) $70.00 $112.00 $84.00 $118.00 $79.00 $0.00 $0.00 $0.00Carton calculations:
Whl'slr Margin % 15.00% 15.00% 15.00% 15.00% 15.00%Whl'slr GP (RM) $10.50 $16.80 $12.60 $17.70 $11.85 $0.00 $0.00 $0.00
Gross Invoice Price $59.50 $95.20 $71.40 $100.30 $67.15 $0.00 $0.00 $0.00
A&P % 15.00% 15.00% 15.00% 15.00% 15.00%A&P Amount (RM) $10.50 $16.80 $12.60 $17.70 $11.85 $0.00 $0.00 $0.00
Net Invoice Price $49.00 $78.40 $58.80 $82.60 $55.30 $0.00 $0.00 $0.00
Media % 5.00% 5.00% 5.00% 5.00% 5.00%Media Amount (RM) $3.50 $5.60 $4.20 $5.90 $3.95 $0.00 $0.00 $0.00
Net Price (Before Mrkt) $45.50 $72.80 $54.60 $76.70 $51.35 $0.00 $0.00 $0.00Freight $1.00 $1.00 $1.00 $1.00 $1.20
Gross Margin % 54.29% 132.81% 178.86% 73.38% 39.30% #DIV/0! #DIV/0! #DIV/0!Gross Margin RM $15.66 $40.96 $34.38 $32.04 $14.15 $0.00 $0.00 $0.00
Cost $28.84 $30.84 $19.22 $43.66 $36.00
1 2 3 4 5Can I make this product or deliver the service? (1 = no, 5 = yes)Do I have the skills, resources, and advice available to help me develop the product? (1 = no, 5 = yes)
Do I have the time and patience to develop the product? (1 = no, 5 = yes)Will the cost of the product enable me to sell it profitability? (1 = no, 5 = yes)
Will the cost of the product enable me to sell it competitively? (1 = no, 5 = yes)
Sub-Total (score out of 25)
New Product Development Appraisal
Idea/Product/Concept1. What is the idea/product/concept?
2. Is there a consumer need for this idea/product/concept?3. Do many people need this idea/product/concept?4. How do consumers cope with their problem/need/want without this idea/product/concept now?
5. Will this idea/product/concept provide a better solution to the consumer than what is already available?
Marketing1. Who are the potential customers and target market?2. How many potential customers are there (how large is the market)?3. Who are the competitors (and potential competitors)?4. How are your competitors doing in the market (decline, stable, growth)?5. Is it their major business (do they rely on other forms of business)?6. How will you promote the product (what advertising and promotion strategy)?
7. What will be your pricing strategy (what revenue over cost)?8. Do you have the ability to reach potential customers?
Skills
1. What skills do you need to realize the opportunity?
2. Do you have these skills or can they be acquired?
3. Are these skills commonly available to all competitors (and potential)?4. Can I manage this venture?
Networks
1. What networks do I need on the supply side?
2. What networks do I need to obtain resources (materials, people, finance)?3. What networks do I need on the sales side?
4. How crucial are these networks to success/failure?
Resources
1. What resources do I need?
2. Are these resources available?
3. Are these resources within my reach?
4. Are these resources available to everyone?
5. Will I have enough financial resources to sustain this venture?
Product
1. Does the product solve a consumer problem, or satisfy a want or need?2. Is this problem, want or need an important one?
3. What are the alternative solutions to the consumer?
4. What is the cost to the consumer of these solutions?
Product/Strategy
1. Can I develop a product/strategy that is different from others?2. Will this different product/strategy be valued (or provide benefits) to consumers?
Source of Opportunity
Vision &
Objectives
Networks
Key Stakeholders
Key Activities
Key Resources
Key Capabilities
Technology
Themes
Customer engagement
Channels
Cost Structure
Value Propositions
Revenue Streams
Strategies
It’s the business model that’s important
This turns into processes….
An exciting low cost airline to fly
on
Young & invigorating image
Baggage
No baggage transfers No connection with
other airline baggage services
Baggage surcharge Auto-check with no
baggage
Internet Bookings
Limited use of travel agents
Fast Aircraft turn-around times
Not burdened by traditional air and ground
crew procedures No connection with other
airlines
Standardized aircraft to cut down on
maintenance costs
Extra means of revenue
Paid snacks & meals Seating
Blankets Computerized ticketing
methods Related businesses -
hotels
General savings on overheads
Low landing charges and terminal fees
Headquarters located at airport terminal
Young good looking air & ground crews Modern and trendy
aircraft interiors Advertising image
Vision & Objectives
Strategy
Key activities
Key capabilities
Themes
Revenue streams
ChannelsSource of opportunity
Customer segments
Technology
Key stakeholders
Networks
Cost structure
Key resources
Value propositions
Business Model
1 2 3 4 5Is my vision and objectives clear? (1 = no, 5 = yes)Do I know what my key activities will be? (1 = no, 5 = yes)Do I know what my key capabilities should be? (1 = no, 5 = yes)Am I sure about how I should engage the customer? (1 = no, 5 = yes)Do I know what my revenue streams will be? (1 = no, 5 = yes)
Business model appraisal
Sub-Total (score out of 25)
Total EvaluationIdea Appraisal (out of 50)Technology Appraisal (out of 25)Resources Appraisal (out of 25)Skills Appraisal (out of 25)Network Appraisal (out of 25)Value Chain Appraisal (out of 25)Strategy Appraisal (out of 25)New Product Development Appraisal (out of 25)Business model appraisal (out of 25)
Total Possible (250)Multiple X 4/10 %
100% Outstanding (the ideal business opportunity)90-99% Very Good 80-89% Good (the plan is sound with a few areas
that need to be refined)
70-79% Above Average (this plan has some good areas but needs reevaluation and improvement)
60-69% Average (some areas covered in detail yet other areas show Weaknesses)
50-59% Below average (most areas evaluation and improvement)
Below 50% Poor (plan needs to be researched and documented much better)
Score Interpretation
The novelty of a new essential oil
The potential uses & applications of the new essential oil
The closeness of any substitutes
The stability of the essential oil in applications
The cost/performance ratio
The Toxicity
The general consistency of quality and supply
The prevailing market/product trends
The current level of technology
Low Novelty High Novelty
Low Potential High Potential
Close Substitutes
No Close Substitutes
Poor Stability Good Stability
Poor Ratio Good Ratio
High Toxicity Low Toxicity
Low Consistency
High Consistency
Low Trend Match
High Trend Match
High likelihood of
synthesis
Low Likelihood of
Synthesis
A B D C
A Grid showing the characteristics of a new essential oil
Genetic Material
Habitat & Topography Suitability
Soil Type, Texture & Drainage Suitability
Temperature Range Suitability
Rainfall Suitability
Access to Irrigation
Diurnal Radiation
Crop Maintenance Cycle
Pest, Disease & Weed Control Issues
Easily Available
Need to Develop
Very Suitable Not Suitable or Need to Develop
Very Suitable Not Suitable
Very Suitable Out of Range
Very Suitable Deficient or Excessive
Yes No
Very Suitable Out of Range
Common & Generic
Require Specialized Processes
Common & Generic
Require Specialized Processes
Harvest & Extraction Processes
Common & Generic
Require Specialized Processes
The Agronomic Characteristics Required for the New Essential Oil
Technology Required
Level of Mechanization Required
Research & Development Time-frame
Capital Requirements
Crop Cycle Timeframe
(Additional) Infrastructure Required
Regulatory Issues
Skills, Competencies & Capabilities Required
Networks, Market, Potential Competitors, etc.
Low & Generic
High & Specialized
Low and/or Generic
High and/or specialized
Short & straight forward
Long & Complex
Low High
Short Long
Low High
Low Need of Consideration
High Need of Consideration
Common & Generic
Rare & Specialized
Available Networks, Wide Market & high
competition
Need Network, Specialized
Market, Few Competitors
Potential Revenue High Low
The Project Characteristics.
Thank You