Mississippi State University “The people’s university” -- Dr. Mark Keenum MGT 3323...
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Transcript of Mississippi State University “The people’s university” -- Dr. Mark Keenum MGT 3323...
Mississippi State University
“The people’s university”-- Dr. Mark Keenum
MGT 3323
Entrepreneurship
Daniel T. Holt
Assistant Professor of Management
Administrative Issues
• First screen assignments—DUE Today, 13 Feb (electronic version due NLT than 9 a.m. tomorrow morning)• Grades will be posted NLT than Monday, 20 Feb
• Industry, Competitor, & Target Market Analysis—Due 5 Mar• Get started early (represents 20% of your grade & 20 – 25 pages are
expected)• Discussion for today
Planning Process
Considering the opportunitygenerally
Business Opportunity Insight
Existing Products New Products
Existing Markets Most simple ideas.Face stiff competition because
existing firms
Practical
New Markets Practical May be the most difficult as they are expensive and
may require considerable capital with R&D.
Feasibility Analysis
• A more stringent test designed to take the best ideas that emerge from the First Screen and more fully assess the feasibility
• Includes…• First phase (due 5 Mar)
• Analysis of the Industry• Analysis of competitors & how you’re different• Analysis of the target market (requires first hand data from customers—we’ll talk
about this next Monday)
• Second phase• Financial feasibility
• Final phase• Revisions & improvements to first two phases• And…
Suppliers
Distribution channels
Location analysis
Technology and service analysis
Requires….
• Primary data• Analysis of original research data that you collect (for
instance, buying preferences of your target market—you must do this as part of your assignment)
• Secondary data• Analysis of data that are publicly available (for instances,
analysis of industry study data, Census Bureau data, company reports
• These are found through several sources (we’ll discuss several today)
Industries
Industries represent…
A group of firms producing a similar product or service
Industries vary by… Size Growth-rate structure Financial characteristics Attractiveness
Industry analysis shows…
• The market need• There is a substantial market size
• There are industry trends to support the company’s strategy
Industry & Market Niches
• Industry—group of firms producing a similar product or service• Large and growing industries (would like few competitors, less than 5)
• Structurally attractive
Start-ups can enter the industry and compete
• Target segment—portion of the industry that the firm goes after or tries to appeal to• Importance of product to its customers• Should be large enough for the new business but small enough to
avoid attracting larger competitors
• Favorable environmental and business trends
Industry Participants
• Describe segmentation• Product
• The computer industry might be segmented by PC, laptop, server equipment, or software
• Customer• The computer industry might also be segmented by customers such as business,
individual, government, or schools• Financially
• Some firms (as we have discussed compete on price) positioning themselves for a target group financially (i.e., higher price ranges)
• As you decide a focus, it might be good to overlap these two to clearly identify your focus.
• Nature of the participants in an industry• Size of the industry• Growth potential• Profitability (bizstats.com)• Key issues
• Key trends & long term prospects for new products & services
Determining Industrieshttp://www.naics.com/search.htm
• Your demands…• A definition of the industry (see p. 103-104)• Industry characteristics
• Explain how the industry is segmented and where your business fits into that segmentation
• Explain the portion or specific market within your broader industry that you plan to target
• Industry size• Normally displayed in dollars over 3 to 5 years
• Industry growth rate• Displayed as a percentage over 3 to 5 years• Consider looking at the local market it possible
See the Census• Industry sales projections
• Report the next year to 3 years• Consult trade associations
‘…it’s a tough call in many instances’ as many firms might be classed in a number of categories.
Identifying industriesIdentifying trends
• How has the market changed over the last five years?
• What is the projected growth in the market?
• What factors will affect growth…several reports are available through Mintel.
Industry trends• What are the general
economic factors?• What are the changing
regulatory conditions?• What are the changing
consumer needs
“Understanding an industry is
solving a puzzle…” Interpreting the
data to assess the opportunity
‘Each fact and figure should help you and investors understand the viability of the opportunity.’
Lets watch a pitch….http://www.msnbc.msn.com/id/14855230/
What industry?
Online Retail Industry
Industry Issues
• Industry size• Normally displayed in dollars over 3 to 5 years
• Industry growth rate• Displayed as a percentage over 3 to 5 years• Consider looking at the local market it possible
• See the Census
• Industry sales projections• Report the next year to 3 years• Consult trade associations
Industry Issues
• Industry size• US online retail sector had total revenue of $134.9 billion in
2009• The electronics segment was the sector's most lucrative in
2009, with total revenue of $32 billion, equivalent to 23.7% of the sector's overall value
• Industry growth rate• Represented a compound annual growth rate (CAGR) of
11.5% for the period spanning 2005-2009
• Industry sales projections• Performance of the market is forecast to decelerate, with
an anticipated CAGR of 10.5% for the five year period 2009-2014, which
Industry Size
$ Billion € Billion Percent Growth
2005 87.4 62.9
2006 107.0 77.0 22.4%
2007 126.7 91.1 18.4%
2008 132.3 95.1 4.4%
2009 134.9 97.0 2.0%
Average Growth 11.5%
Source: Datamonitor (note from last week (see slides; access through Business Source Complete; Search for this included “Industry profile” AND “United States” AND Datamonitor AND retail)
Consider the following…
Develop business to retrofit cars to be environmentally friendly.
Consider the Car Industry…
Financial Benchmarks
• Identify key financial benchmarks and ratios, interpreting the meaning of those ratios (consult the sources from the library & online sources)
• Bizstats example
Competition
Consider the Value Proposition
• Product• Performance, quality, features, brand, selection, search,
easy to use, safe
• Price• Fair, visible, consistent, reasonable
• Access• Convenient, location, nearby, at-hand, easy to find, in a
reasonable time period
• Service• Ordering, delivery, return, check-out
• Experience• Emotional, respect, ambiance, fun, intimacy, relationships,
community
What would the primary and secondary value be of
?
What would the primary and secondary value be of
?
Competitors
• Direct competitors• Businesses that offer a product similar
to yours
• Indirect competitors• Businesses that offer close substitutes
to your product
• Future competitors• Businesses that could move into direct
or indirect competitor roles
Future Competitors…
Competitive Advantages
• Firms X, Y, and Z are in this market space• We are able to enter because … • We can protect ourselves from imitation by …• What do customers currently do without us?• Consider
• How do you compare to rivals?• How can you compete in the space?• Are rivals focused on your space?
Your demands….
• An identification of direct and indirect competitors (see p. 134-137)• A description of where these competitors are located and how accessible they
are to customers• A description of the products and services competitors offer (varieties,
inventories)• Competitors’ prices and costs• The types of customers competitors attract• Competitors’ strengths and weaknesses• Competitors marketing and distribution systems• Barriers created by the competitors
• A description of the methods for generating revenue in the industry• Your venture’s values and benefits directly compared to your competitors
against meaningful criteria that you define• A competitive analysis grid (p. 138)
Resources
• Consult the following to share avoid mistakes• http://www.gaebler.com
• Company information• Hoovers on-line
Http://www.hoovers.com/
• Professional Associationshttp://idii.com/resource/associations.htm
http://www.weddles.com/associations/index.cfm
• Business patterns• http://www.census.gov/econ/cdp/index.html
Resources
• Community specifics can be identified through• US Census Bureau
http://www.factfinder.census.gov/home/saff/main.html?_lang=en
• City-Datahttp://www.city-data.com/
• Income data for communities• Quickfacts through US Census Bureau
http://quickfacts.census.gov/qfd/index.html
• Social trends• Mintel (must create a profile using Mississippi State
Information; accessed through the library)http://academic.mintel.com.proxy.library.msstate.edu/sinatra/oxygen_academic/whatshot/
Resources
• Company information• Hoovers on-line
Http://www.hoovers.com/
• Professional Associationshttp://idii.com/resource/associations.htm
http://www.weddles.com/associations/index.cfm
Questions, Comments, or Criticisms?