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Process of EntrepreneurshipProcess of Entrepreneurship
Decision to Become anEntrepreneur
Introduction toEntrepreneurship
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Process of EntrepreneurshipProcess of Entrepreneurship
Developing Successful BusinessIdeas
Recognizing Opportunities & generatingIdeas
Feasibility Analysis
Industry & Competitor Analysis
Developing an Effective Business Model
Chapter
2-5
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Process of EntrepreneurshipProcess of Entrepreneurship
Moving from an Idea to anEntrepreneurial Firm
Building a new Venture Team
Assessing a new ventures financial strength &viability
Preparing a proper ethical & legal foundation
Writing a Business Plan
Getting Finance or Funding
Chapter
6-10
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Process of EntrepreneurshipProcess of Entrepreneurship
Managing & growing anEntrepreneurial Firm
Managing & Growing an Entrepreneurial Firm
The importance of intellectual Property
Preparing for & evaluating the challenges of
growth
Strategies for firm growth
Franchising
Chapter
11-15
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Recognizing opportunities & generating ideasRecognizing opportunities & generating ideas
y Buyandhold.com: Filling a Void in the Online Investing Marketplace
Geoffery M. Tudisco worked for shareholder Communication Corporation
SCC worked for Dividend Reinvestment Plan.(DRIP). Enable individuals to
purchase stock directly from company with investment as low as $25. The
company offers service called Direct Purchase plan Clearing House .
Soon after Tudisco was hired SCC made an effort to offer clearing house facilitythrough website while partnering a company Netstockdirect.com.
However when Netstock redesign a website just remove all indication that
clearing house was a partner. Tudisco highlighted the issue to Peter Breen the
boss. On the approval he made within 30 days a new website having all DRIP
plans. One step ahead he also develop an idea of buy & hold brokerage services.
Once been forwarded to the higher management both Peter Breen & Tudiscodidnt get a positive response. In response to that both have left the company
and started their own company with the name buyandhold.com to pursue
their own idea. SCC failed to recognize the idea and the people who did it get it
successful as they can see the dire need of the people who would like to have
save investment of $20/trade and can subscribe the service by $6.99/month.
SSC has failed to realized & created an opportunity Gap which was filled by both
Breen & Tudisco by generating an idea and recognizing the need of the customer.
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Identifying & Recognizing OpportunitiesIdentifying & Recognizing Opportunities
y Entrepreneurs recognize an opportunity and turn it into a
successful Business.
y An opportunity is a Favorable set of Circumstances that creates a
need for a product, service or a business.
y
Most entrepreneurial firms are started in either of the ways Externally Stimulated: An entrepreneur decides to launch a firm, search for &
recognize an opportunity and then starts a Business.
Internally Stimulated: An entrepreneur recognized a problem or an
opportunity gap and creates a business to fill it. Eg. Buyand hold.com
y Opportunities for any product , service or business are always
tough to find. Opportunity recognition is part art & science. Relying on instinct is an art, while
having analytical examination is science.
Opportunity has 4 essential qualities 1) Attractive 2) Durable 3) Timely
4) anchored in a product service or business that creates a value to its
customer.
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Identifying & Recognizing OpportunitiesIdentifying & Recognizing Opportunities
y Difference between an opportunity & Idea Idea is a thought, impression or notion. It may or may not meet the criteria of an
opportunity.
y 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.x Once the market for a new product is established, its
window of opportunity opens, and new entrants flow in.
x At some point, the market matures, and the window ofopportunity (for new entrants) closes.
y 2 Ways to identify an opportunity
y Observing Trends
y Solving a Problem
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Observing TrendsObserving Trends
y The first approach to identifying opportunities is to observe trends &
study how they create opportunities for entrepreneurs to pursue.
y Economic Factors, Social Factors, Technological advances, and political
and Regulatory changes are the most important trends to follow.
y
2 ways to handle the trends are; They can study and observe them. Some are better at this than others, depending
on their personal characteristics & levels of motivation.
Understand emerging trend is to purchase customized forecasts & market analysis
from independent research firms.
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Environmental Trends Suggesting BusinessEnvironmental Trends Suggesting Business
or Product Opportunity Gapsor Product Opportunity Gaps
Economic Forces
State of the economy level ofdisposable income consumer
spending patterns
Social Forces
Social & cultural trendsdemographic changes what
people think is in
Technological Advances
New technologies emergingtechnologies
New user of oldtechnologies
Political & RegulatoryChanges
New changes in Politicalarena
New Laws & Regulations
Business, Product orService Opportunity Gap
Difference between what's available &What's possible
New Business,Product and
Service Idea
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Environmental Trends Suggesting BusinessEnvironmental Trends Suggesting Business
or Product Opportunity Gapsor Product Opportunity Gaps
y Economic Forces:y It affects consumers level of disposable income. When incomes are
high, people are most likely to spend on buying products orservices that enhance their lives.
y
Individual sector s of the economy have a direct impact onconsumer buying patterns. Eg, decrease in interest rate leads tonew home construction and furniture sale. Decrease in stockmarket has a reverse impact of reduction in demand of newproducts or services.
y Many entrepreneur took advantage of this trend in coming ahead
while bringing new ideas in filling this economic despondency. Theyprovided consultancy or make their own firm to give solutions orprovided with product or services to fill the gap eg; is the onlinemarketplace by developing web solution to buy & sell products orservices.
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Environmental Trends Suggesting BusinessEnvironmental Trends Suggesting Business
or Product Opportunity Gapsor Product Opportunity Gaps
y Social Forces:y An understanding of the impact of social forces on trends & how
they affect new product, services and business ideas is a
fundamental piece of the opportunity recognition puzzle.
y Example for this will be love of the people for fast food restaurants
is because they are busy with their work have less time.
Introduction of sony walkman is not because people wanted
smaller radios but in actual they wanted to listen music while on
the move. Some of the recent social trends that allow for new
opportunities are; Family & work patterns, the aging of the population, increasing diversity in the
workplace, globalization of industry, increasing focus on health care and fitness,
use of internet & computers, massive use of cell phones, new forms of music's &
other types of entertainment.
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Environmental Trends Suggesting BusinessEnvironmental Trends Suggesting Business
or Product Opportunity Gapsor Product Opportunity Gaps
y Technological Advances:y Acquiring the pace of technological changes it is important for the
entrepreneurs to foresee the opportunities lies with the
technological advances.
y Example of real networks was created to add video capabilities to
the internet, which took the internet era into the next level.
y Advances in technology frequently dovetail with economic and
social changes to create opportunities.
y Creation of cell phone is a technological achievement but it was
motivated by an increasingly mobile population that found manyadvantages to having the ability to communicate with its coworkers,
customers, friends and families from anywhere.
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Environmental Trends Suggesting BusinessEnvironmental Trends Suggesting Business
or Product Opportunity Gapsor Product Opportunity Gaps
y Political Action & Regulatory Changes:y Political & Regulatory changes also provide the basis for
opportunities. For example New laws create opportunity for
entrepreneurs to start firms to help companies comply with these
laws.y Act of terrorism today have created an opportunity for data base
designer firms to work for those companies, hotels or Government
organizations to save & protect their secret data's somewhere on
the servers where their interest can be served. This expands the
backup data industry
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Environmental Trends Suggesting BusinessEnvironmental Trends Suggesting Business
or Product Opportunity Gapsor Product Opportunity Gaps
ChangingEnvironmental Trend
Economic Trend Teenagers with more cash &
disposal Income Increased Interest in the stock
Markets
Social Trend Increasing job preoccupation
by working parents or families
Interest in Health care
Technological Trend
Development of the Internetservices
Political &Regulatory Trends
Development of new laws
Resulting NewBusiness, Product &service opportunity
Economic Trend Designer cloths, compact discs,
DVD players, games console Online Brokerage services,
stock research, Magazine
Social Trend Restaurants microwavable
dinners, food delivery system
Fitness Centers
Technological Trends Ecommerce, Improved Supply
Chain Management
Political &Regulatory Trends
Back up Data basedevelopment
Companies thatResulted
Economic Trend Gap, Banana republic, MTV saga,
Palm Buyandhold.com, the street.com,
motley fool.
Social Trend McDonalds, KFC, Pizza Hut,
Burger King
Fitness Equipment, Curves Int.
Technological Trends
Yahoo, Amazon, aoline, ChemConnect
Political &Regulatory Trends
Prima tech
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How Are Opportunities Identified?How Are Opportunities Identified?(1 of 1)(1 of 1)
2-16
Second Approach: Solving a Problem
Sometimes identifying
opportunities simply
involves noticing a problem
and finding a way to
solve it
These problems can be
pinpointed through observing
trends and through more simple
means, such as intuition,
serendipity, or chance
Some business ideas are clearly
initiated to solve a problem
For example, Symantec Corp.created Norton antivirus
software to guard computers
against viruses
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Solving a ProblemSolving a Problem
y Sometimes identifying opportunities simply involves noticing a
problem & finding a way to solve it. These problems can be
pinpointed though observing trends & through more simple means,
such as intuition or chance.
y There are many problems that have yet to be solved.
y Some business ideas just emerged from the recognition of
problems in emerging trends.
y Example of Norton antivirus to rid computer for viruses, while
McAfee develop software's to save computers from hackers.
y
Rob Glaser 1995 sees the problem of No way to play audio &video on the internet have developed software while seeing the
opportunity & business resulted is Real networks. Same is the case
with Jerry Yang while seeing the need of organize directory of
favorite websites come with an idea of yahoo.com
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Personal Characteristics of EntrepreneurPersonal Characteristics of Entrepreneur
y Researchers have identified several characteristics that tend to
make some people better at recognizing opportunities than others.
y Opportunity Recognition refers to the process of perceiving the
possibility of a profitable new business, product or services.
y
Characteristics are; Prior Experience
Cognitive Factor
Social Networks
Creativity
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Personal Characteristics of EntrepreneurPersonal Characteristics of Entrepreneur
y Prior Experience Several studies shows that prior experience in an industry helps
entrepreneurs recognize business opportunities.
Normally entrepreneurs develop new business, product or
services ideas while working in the same industry.
By working in an industry an individual may spot a market niche
that is underserved. Example of buyandhold.com by Tudisco is
based on prior experience.
Once an entrepreneur starts a firm new venture opportunities
became apparent. This is called the corridor principle.
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Personal Characteristics of EntrepreneurPersonal Characteristics of Entrepreneur
y Cognitive Factors Opportunity recognition may be an innate skill or a cognitive
process.
Entrepreneurs have entrepreneurial alertness which is the ability
to notice things without engaging in deliberate search.
Research finding says for alertness some times it needs
purposeful efforts & sometimes its happen by innate skills.
In other words entrepreneurs may be better than others at
sizing up the marketplace & inferring the likely implication.
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Personal Characteristics of EntrepreneurPersonal Characteristics of Entrepreneur
y Social Networks The extent & depth of an individuals social networks affects
opportunities recognition.
People who build a substantial network of social & professionalcontacts will be exposed to more opportunities & ideas than people
with sparse networks. This exposure can lead to new business starts.
Network entrepreneurs identifies more opportunities than soloentrepreneurs but were less likely to be recognized as alert orcreative as they work in networks rather than a single entity.
Entrepreneurs normally got good ideas through weak tierelationships rather than strong tie relationships. Reason is thatpeople you met every day or like minded individuals have similarideology. While one can get a good idea even through a discussionwith those whom we never give special attention in life, likeservants, gardener, electrician.
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Social NetworksSocial Networks(3 of 3)(3 of 3)
2-22
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
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Personal Characteristics of EntrepreneurPersonal Characteristics of Entrepreneur
y Creativity It is the process of generating a novel or useful idea.
Opportunity recognition may be, at least in part, a creative process.
For an individual the creative process can be broken into five stages.
x
Preparationx Preparation is the background experience & knowledge that an entrepreneur
brings to the opportunity recognition
x Incubation
x Stage in which a person considers an idea or think about a problem
x Insight
x Its a flash of recognition- when the solution to a problem is seen or an idea is
bornx Evaluation
x Idea is subjected to scrutiny & analyzed for its viability
x Elaboration
x Creative idea is put into a final form the details are worked out and the idea istransformed into something of value. In case of new business here business planis normally been written.
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Personal Characteristics of EntrepreneurPersonal Characteristics of Entrepreneur
Preparation
Incubation
Insight
Evaluation
Elaboration
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Opportunity Recognition ProcessOpportunity Recognition Process
EnvironmentalTrends
Economic Factor
Social Factor
Technological AdvancesPolitical & regulatory
Changes
PersonalCharacteristics ofanEntrepreneur
Prior ExperienceCognitive Factors
Social Networks
Creativity
Business, Productor service
opportunity Gap
New Business
Product &
Service Ideas
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Techniques for Generating IdeasTechniques for Generating Ideas
y In general, Entrepreneurs identify more ideas than opportunities
because many ideas are typically generated to find the best way to
capitalize on an opportunity.
y Brainstorming: used to generate a number of ideas quickly, notused for analysis or decision making.
y Focus Group: 5 to 10 people together for generating new
business idea
y Surveys: gathering information through a sample of
individuals
y Other Techniques: Customer advisory Board
y
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Protecting Ideas From Being Lost orStolenProtecting Ideas From Being Lost orStolen
y Step 1
The idea should be put in a tangible form such asentered into a physical idea logbook or saved on acomputer disk, and the date the idea was first thought
of should beentered.y Step 2
The idea should be secured. This may seem like anobvious step, but is one that is often overlooked.
y
Step 2 Avoid making an inadvertent or voluntary disclosure
of an idea, in a manner that forfeits the right to claimexclusive rights to it.
2-27
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Case Study Assignment No. 2Case Study Assignment No. 2
y Case 2.2
Align Technology: Making Braces More
Bearable (Pg 48)
www.invisalign.com
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