KSU ENTR 27056 - Chapter 3: Recognizing & Creating Opportunity

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1/30/14Chapter 3: Recognizing & Creating OpportunityWhat is competitiveness?- Creating best economic, social, environmental conditions for development- Creating more opportunities/better life for all- Keeps the world on a path of sustained growth Global Competitiveness Report- Switzerland is #1, United States is #5Creativity:-Enables entrepreneurs to differentiate their businesses from their competitors-Basis for invention-Fundamental to problem solvingCritical concepts of Creativity:-Idea-Business opportunity-Opportunity recognition-Opportunity creationInvention Process:Connection- two ideas brought together Discovery- once a connection has been established, inventor explores in depthInvention- product of effort once discovery has occurred; typically arise out of the needs of the market Application- for an invention to be successful it must have applications in the marketChallenges to Creativity:-No time -No confidence-No creative skills Removing Roadblocks:-Minimize distractions-Devote time daily to quiet contemplation-Spend time in the places that best promote your creative thinking-Develop a creative company culture-Mix people up-Keep track of ideas-Start with the familiar-Take advantage of a personal network-Return to your childhood-Think in oppositesSources of Innovation:-Customers/suppliers/distributors-Newspapers and magazines-Observation-Demographic shifts-Unexpected news events-Trends and patterns of change-New government regulation-Emerging industries -Anything that’s “bugging” you 2/4/14Chapter 4: Developing a Business Model“I’d rather have a Class A entrepreneur with a Class B idea than a Class B entrepreneur with a Class A idea.” – Gifford Pinchot III * A business concept is a concise description of an opportunity that contains four essential elements:- Value proposition and compelling story- Definition of the customer- Description of the product/service- Distribution channel The compelling story answers the questions…-Why the interest?-What problem does this solve?The customer is the one who pays.-The end user is as important as the intermediary customerThe Product/Service-What does the customer need?-What is the team’s core competency?The Distribution Channel-How will the benefit be delivered to the customer?The Concept Statement:-Creating clear concept statement is not difficult, but telling compelling story can be-Compelling story consists of a problem and a solution-Elevator Pitch-The problem being solved should be presented in a clear, simple wayValue Proposition- a clear statement of the tangible results someone gets from usingyour product/service Unique Selling Proposition- what makes you and your company different from othervendors; creates competitive differentiation The Value Chain and the Concept:Upstream Activities- related to production of product/service (raw materials, manufacturing, warehousing)Downstream Activities- associated with selling the product/service (sales transactions, installation, logistics)Forces Affecting the Value Chain:The InternetReduced transaction costsDisintermediationScarcity of Raw MaterialsSnags in DistributionDeveloping a distribution strategy: Evaluate strategies of similar companies Look for the opportunity gapsFactors affecting the choice of strategy: Cost Market coverage Speed & reliability *Why do businesses fail? Flawed logic Limited strategic choices (No Plan B) Incorrect assumptions about the value chain Imperfect value creation and capture assumptionsWhat are the size and importance of the revenue streams that the business model can generate?What costs most affect the model, and what is their size and importance to the model? (What are the cost drivers for the business?)How much capital is required to execute the business model and what is the timing of the cash needs?What are the critical success factors to achieving the goals of the business


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KSU ENTR 27056 - Chapter 3: Recognizing & Creating Opportunity

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