The document discusses factors to consider when evaluating new business opportunities and strategies. It describes three types of startup ideas (Type A draws on existing products, Type B involves new technologies or products, Type C improves existing products). It also discusses opportunity recognition, competitive advantage, analyzing the general, industry and competitive environments, assessing a company's resources and capabilities using SWOT analysis, and strategies like cost-based, differentiation-based, and focus strategies. The key is to identify opportunities through alertness, evaluate strengths and weaknesses, and choose a strategy to gain competitive advantage.

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Starting from Scratch or Joining an Existing BusinessPart 2

2. 1. Identify several factors that figure out whether an idea for a
medical is a smart investment opportunity.
2. Give several reasons for starting a new company on your own
rather than buying a series or a preexisting company.
3. Distinguish among the different types and types of start-up
ideas.
4. Describe exterior and inner studies that might shape medical
possibilities.
5. Explain broad-based strategy options and focus strategies.
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After you have read this chapter, you should be able to:

3.  Chance Recognition
 Identification of prospective new services or items that
may cause appealing businesses
 Entrepreneurial Alertness
 Readiness to act on current, but unseen, business
opportunities
 Good Financial commitment Qualities
 Products that provide clear and important needs
 Products that clients know about
 Products that clients can afford
 A wise decision is not the same as an excellent chance.
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Market
Factors
Market
Factors
Competitive
Advantage
Competitive
AdvantageJudging a
Business
Opportunity
Judging a
Business
Opportunity
Management
Capability
Management
Capability EconomicsEconomics
Fatal
Flaws
Fatal
Flaws

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To tap into
unique
resources
that are
available
To tap into
unique
resources
that are
available
To avoid
undesirable
features of
existing
companies
To avoid
undesirable
features of
existing
companies
To develop a
commercial
market for new
product or
service.
To develop a
commercial
market for new
product or
service.
Wanting the
challenge of
succeeding (or
failing) on your
own
Wanting the
challenge of
succeeding (or
failing) on your
own
Motivations
To Start
a Business
Motivations
To Start
a Business

6.  What other start-up kinds might be considered?
 What are some resources for more new ideas?
 How to recognize a authentic chance that produces
value, for both the organization and the company’s
owners?
 How should the concept be refined?
 What can be done to enhance the possibilities that the
organization will be successful?
 What aggressive benefits does the organization have
over its rivals?
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ATTRACTIVENESS
Criterion Favorable Unfavorable
Market Factors
Need for the product Well identified Unfocused
Customers Reachable; receptive Unreachable; strong loyalty to competitor’s product or
service
Value created for customers Significant Not significant
Market structure Emerging industry; not highly
competitive
Mature or declining industry; highly concentrated competition
Market growth rate Growing by at least 15% a year Growing by less than 10% a year
Competitive Advantage
Control over prices, costs, and distribution Moderate to strong Weak to nonexistent
Barriers to entry:
Proprietary information or regulatory
protection
Have or can develop Not possible
Response/lead time advantage Competition slow, nonresponsive Unable to gain an edge
Legal/contractual advantage Proprietary or exclusive Nonexistent
Contacts and networks Well developed; accessible Poorly developed; limited
Economics
Return on investment 25% or more; sustainable Less than 15%; unpredictable
Investment requirements Small to moderate; easily financed Large; difficult to finance
Time required to break even or to reach
positive cash flows
Under 2 years More than 4 years
Management Capability Management team with diverse
skills and relevant experience
Solo entrepreneur with no related experience
Fatal flaws None One or more
Source: Adapted from Jeffrey A. Timmons and Stephen Spinelli, New Venture Creation: Entrepreneurship for the 21st Century (Boston: McGraw-Hill Irwin, 2007), pp. 128–129.

8.  Marketing Factors
◦ Need for product
 Identified or unfocused
◦ Customers
 Reachable or not, brand loyal
◦ Value created for customer
 Significant or insignificant
◦ Life of product
 Recovery of cost by customer
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9.  Marketing Factors (cont’d)
◦ Market structure
 Emerging or mature
 Market size (known or unknown?)
 Market growth (how fast?)
 Competitive Advantage
◦ Cost structure
 Management over price, expenses, programs of supply
 Barriers to entry: regulating security, response/ lead-time
benefits, lawful, connections and networks
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10.  Economics
◦ Return on investment?
 Investment requirements
 Break-even point
 Management Capability
◦ Diverse skills or solo entrepreneur
with no related experience
 Fatal Flaws
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12.  Type A
◦ Are based around offering clients with a preexisting item
not available in their market.
Type B
◦ Include new concepts, involve new technology, focused
on offering clients with a new product.
Type C
◦ Are focused on providing customers with a greater
product.
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Source: Data developed and provided by the National Federation of Independent
Business and sponsored by the American Express Travel Related Services Company, Inc.

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Change Factor Definition
Industry Factors
The unexpected Unanticipated events lead to either enterprise success or
failure.
The incongruous What is expected is out of line with what will work.
Process needs Current technology is insufficient to address an emerging
challenge.
Structural change Changes in technology, markets, etc., alter industry
dynamics.
Human and Economic
Factors
Demographics Shifts in population size, age structure, ethnicity, and
income distribution impact product demand.
Changes in perception Perceptual variations determine product demand.
New knowledge Learning opens the door to new product opportunities
with commercial potential.

15. 1. Lend ideas from current products and services or other sectors.
2. Combine two businesses into one to create a industry starting.
3. Begin with a problem in mind.
4. Recognize a hot trend and drive the trend.
5. Explore ways to improve an item or service’s function.
6. Think of how to improve a customer’s activities.
7. Adapt services or products to meet customer needs in a different way.
8. Imagine how the industry for services or products could be extended.
9. Keep an eye on technology.
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16.  Outside-In Analysis
◦ Checking perspective of the project to recognize businesses
and determine which concepts are eligible as possibilities.
◦ General Environment
◦ A wide atmosphere, covering factors that effect most
businesses in a community.
◦ Industry Environment
◦ The mixed causes that straight effect a given firm and its
opponents.
◦ Competitive Environment
◦ The atmosphere that concentrates on the strength, position,
and likely goes and countermoves of opponents in an market.
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Bargaining Power
of Buyers
Threat of Substitute
Products or Services
Bargaining Power
of Suppliers
Intensity of Rivalry Among
Existing Competitors
Threat of New
Competitors
Attractiveness and
Profitability of a
Target Market

19.  Who are the new venture’s present competitors?
 What sources do they control?
 What are their strong points and weaknesses?
 How will they react to the new venture’s choice to get in
the industry?
 How can the medical respond?
 Who else might be able to notice and manipulate the
same opportunity?
 Are there methods to co-opt prospective or real
opponents by developing alliances?
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20.  Inside-Out Analysis
 Assessing the firm’s inner aggressive potential
 Resources
 Basic information that a company uses to perform its
business
 Tangible resources: noticeable and simple to evaluate.
 Intangible resources: unseen, challenging to quantify
 Capabilities
 Integration of various business sources that are
implemented together to the firm’s benefits.
 Core Competencies
 Resources and abilities offering a company with an
aggressive edge on its competitors.
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21.  Strong points, Weak points, Possibilities, and Risks
(SWOT) Analysis
 A type of evaluation that provides a brief review of a firm’s
ideal scenario.
 Helps recognize opportunities that coordinate the project.
 Seeking Aggressive Insight
 Will the chance result in others in the future?
 Will the chance develop abilities that start the entrance to
new opportunities in the future?
 Will quest for the chance be likely to enjoy to competitive
reaction by prospective rivals?
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24.  Strategy
 A technique that harmonizes the time and
responsibilities of an company to obtain excellent
efficiency.
 Strategic Decision
 A choice regarding the route a company will take
in pertaining to its customers and opponents.
 Sustainable Aggressive Advantage
 A value-creating industry position that is likely to
have over time.
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Cost-Based
Strategy
Cost-Based
Strategy
Focus
Strategy
Focus
Strategy
Broad-Based
Strategy
Broad-Based
Strategy
Differentiation-
Based Strategy
Differentiation-
Based Strategy
Strategies That
Capture
Opportunities
Strategies That
Capture
Opportunities

27.  Focus Strategy Implementation
◦ Restricting focus to a single subset of customers.
◦ Emphasizing a single products or services.
◦ Limiting the market to a single geographical region.
◦ Concentrating on superiority of products or services.
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28.  Advantages
◦ Niche market shields from direct competition.
◦ Allow development of unique expertise
 Disadvantages
◦ Focus markets can quickly erode if:
1. The main focus technique is replicated.
2. The focus on section is structurally unpleasant.
3. The focus on segment’s variations from other sections
filter.
4. New companies subsegment the industry.
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29.  opportunity recognition
 entrepreneurial alertness
 competitive advantage
 Type A ideas
 Type B ideas
 Type C ideas
 serendipity
 general environment
 industry environment
 competitive environment
 resources
 tangible resources
 intangible resources
 capabilities
 core competencies
 SWOT analysis
 strategy
 cost-based strategy
 differentiation-based
strategy
 focus strategy
 strategic decision
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