New Business Venture - Essay Example

Entrepreneurship and new business launch is always associated with meeting the challenges successfully. However, in order to achieve the success in creating a new business and successfully manage it is critical that the overall idea behind the creation of the business is commercially viable and can provide the desired returns. The scenario presented in this paper deals with the opportunity recognition and how the new start up businesses can actually be started. This paper therefore outlines some of the important steps required to be included in the business plans and other communication made by the new entrepreneurs in order to convince the venture capitalists to actually provide the necessary support to kick start the new business. However, in order to achieve this, it is important that the entrepreneurs must be able to demonstrate that they have the capability, experience and skills to generate the new opportunities and develop them into new business. (Terrell, K., & Troilo, M. 2010). This paper therefore highlighted some of the important requirements which new entrepreneurs must have in order to successfully present the new opportunity. A complete scanning of the external environment and how it can actually help generate the new opportunities is also presented. The analysis of the factors such as PESTLE provide a critical insight into the changing nature of the external environment and how entrepreneurs can actually take advantage of such changes to materialize them into successful businesses. This paper also presented a discussion on the particular mindset and individual characteristics which are required to successfully spot the new opportunities and convert them into the new businesses. Introduction Entrepreneurship and new business launch is always associated with meeting the challenges successfully. However, in order to achieve the success in creating a new business and successfully manage it is critical that the overall idea behind the creation of the business is commercially viable and can provide the desired returns. It is always important that the new ideas should be properly addressed and developed into successful business provided they have the potential to become successful business. (Welsch, 2003). Idea creation is one of the key areas for the new entrepreneurs and it is critical that the idea is properly transformed successfully. However, in order to achieve this, it is critical that the overall attractiveness of the products and services which will be delivered as a result of the new ideas, timeline involved, product value and durability of the products and services to be created as a result of this should justify the introduction of a new product, service or business. (Sorensen, Lassen., & Hinson,2007). This memo will deliberate on a new business opportunity which author considers as an important and believes that can add value to the firm. However, in order to convince the management of the firm and to present the ideas in the more meaningful manner, this memo will attempt to discuss different factors which may affect the new business opportunity for the firm. Apparently, this memo will deliberate on these factors and provide an objective analysis of how these factors can actually contribute towards the successful development of the new business opportunity into a commercially viable business. Description of the product It is a important that a complete description of the product is provided in the memo. The manager must include the relevant and important characteristics of the product to convince the manager that the proposed product can actually add value to the organization. Following information can be included regarded the description of the product: “The product to be developed and subsequently marketed by the firm is based upon a software program which can add value to the firm’s existing portfolio of software products. This new software will be based upon cutting edge technology and will attempt to offer the features and attributes which are not available in the products offered by our existing competitors. This new software will be used for the statistical analysis purposes and will be targeted at the financial as well as non-financial firms to basically generate real time business intelligence about their customers. Connected with the customers’ credit cards, this software will be able to read and analyse the consumption patterns of the consumers and will generate unique business profiles of the cohort of customers which can subsequently be used for new product development.” Attractiveness of the product Another very important and critical aspect of the memo should be the description of the overall attractiveness of the product and how it can of value to the customers. Mr. Kevin can included following information in the memo regarding describing the overall attractiveness of the product: One of the major attractiveness of this product is based upon the fact that this software will be based upon cutting edge new generation of software technology which is not being offered by other competitors. Based on firm’s historical competitive in different niche markets, this software will be an excellent addition for the firm to further penetrate into the existing market. It is also important to note that this product can be used by the company itself and therefore can literally offer it an opportunity to analyse the consumption patterns of their customers and than subsequently design the new products and services to the defined target market. It is also important to note that the overall changes in the market are also requiring that the new products in this regard are introduced in order to take advantage of the changes taking place. The recent financial crisis has forced many financial and non- financial institutions to look closely into the behavioral patterns of their customers and design the products and services which can best suit them. The case of the financial services organizations is relatively different because they have to also ensure that they are lending to the right kind of customers. This software will definitely allow them to get a better insight into the real time consumption and other lifestyle patterns of their customers to understand them better before they can make a decision whether to lend them or not. Financial services organizations are also important in the sense that as a result of the poor lending decisions in the past, they suffered heavy losses because their existing technology and infrastructure was insufficient to allow them to actually get better insight into what their customers are and what are their real characteristics which can really allow them to develop better relationships and further increase their trust and relationship with them. Further, the competition is becoming critically important for most of the organizations where focus on the customer services is one of the key to achieve the desired results. Constant improvements in the customer services definitely allow the firms to become more competitive and target their customers in more effective manner. This software will definitely add value to them by providing them real time data about their customers. The above description is accurate because of the underlying changes which are taking place in the financial services industry and other industries which are related with consumer finance. It is important because the overall attractiveness of the product will be what will create the product value for the customers as well as for the firm. Product Value Product value shall be described from the perspectives of the firm as well as its customers because if the product can add value to the firm, it will also add value for its customers. Product value can become the new business opportunity because it can allow the organization to better tap into the new segments of the market as well as allow its customers to become more pro-active in their existing markets. it is therefore important that a complete description of the product value is provided in order to ensure that the manager is fully aware of how the product will add value to the organization as well as for its customers. Mr. Kevin can also attempt to include quantitative information in this section outlining objectively as to how the product value will actually add to the profitability and overall value of the organization. Though this may be based upon the arbitrary numbers however, it can provide the managers a very fair and balanced view of how the product will actually add to the value for their customers and the firm also. Problem Solving Opportunity recognition and creation also involves the fact whether the opportunity conceived can actually result into the problem solving for the customers or not. Mr. Kevin therefore has to provide a clear and concise discussion about how problems this product will be able to solve. Though a brief description of the product has been provided in the previous sections however, it would be important that a general discussion about the problem solving ability of the product is described. This will further allow the managers of Mr. Kevin’s firm to actually get insight into the overall market potential of the new opportunity. Since most of the product development often takes place in order to address any particular issue or problem, it is therefore important that the firm must have a critical insight into how the new proposed product will actually help its customers to solve their problems. Strategic fit Probably one of the most important discussions Mr. Kevin has to make is to define the strategic fit of the new proposed product with the firm’s overall strategic direction and the vision.( Shulman, Cox,& Stallkamp,2011). Finding the strategic fit between the product and the organization and its values therefore is one of the key variables which can help Mr. Kevin to convince managers to actually contemplate on the introduction of this new product. A very good discussion on finding the strategic fit therefore will not only add value to the organization but will also help it to better serve its customers. Mr. Kevin therefore has to ensure that the new proposed product clearly fits into the overall strategic direction of the firm. a digression from the existing strategic direction of the firm therefore may result into more resistance from the managers to accept this new idea. Opportunity Identification The above discussion provided an insight into how the product can actually add up to the value to the organization and also can help the customers to solve their problems. It is also important that overall definition of the opportunity is presented in order to make a better case to distinguish an opportunity from a mere idea. (Schwartz,& Teach, 2000). It is really critical that Mr. Kevin is able to present a clear distinction between the two. This is because opportunity comprises of the favorable set of circumstances which can allow the firm to roll out a new product or service. Based on this assumption, a clear discussion about some of the external factors which can favorably contribute towards the launching of the new product should be presented. It is however, important to note that a clear discussion of how the opportunity is actually spotted is also important to be presented. (Morrison, 2000). A good opportunity can always be spotted either through the careful study of the observing the current trends in the market, solving any problem or finding the gaps in the market place. In order to further the cause of the introduction of the new product, it is also important that Mr. Kevin present further information about some of the external factors which can actually contribute towards the achievement of the overall organizational objectives. The following information can actually help to further crystallize the opportunity and will bring more clarity. Observation of the trends In order to provide a critical discussion about the trends in the market, it is important that a clear and concise discussion of some of the external factors is presented. These external factors can be: Economic forces Economic forces can be the key external variables which can provide a very clear window of opportunity to any firm to capitalize on. Since we have assumed that the new product will provide the real time customer analytics to the firms therefore in such tighter economic conditions a better understanding of the customers will actually allow the firms to become more robust and efficient in terms of serving their customers. Mr. Kevin therefore needs to provide some facts and figures about how the economy is currently performing and where it will head in the future. A clear description of the economic facts and figures will provide the mangers a critical insight into how big the market can be and what are the current economic trends which can provide this window of opportunity to the firm. It is also important to understand that economic forces also allow the organizations to understand as to how they can actually affect them if they show negative trends. However, on the other hand a better understanding of the economic factors can actually also organizations to launch new products and services to take advantage of the gaps left behind by the existing market players. A further analysis of economic forces may also allow the firm to look into how the new business opportunities are emerging and how the firm can actually target such businesses. For example, with the increased participation of women in the workforce, more and more women are opening up new businesses which are specifically targeted at women. A better understanding of how the economic forces will actually affect the decision making process of existing players in the market and potential new entrants therefore can allow the firm to actually increase the overall base of its customers. Mr. Kevin therefore has to ensure that he presents a very balanced and objective view of the relevant factors which can directly affect the decision making process of different economic agents. Social forces A good discussion on the social forces will also allow Mr. Kevin to present the changing nature of the social factors and how they can affect the new product development. For example, the UK’s population is ageing therefore this single social variable can provide a great insight to the firms in the healthcare industry because higher ageing will translate into higher demand for the healthcare services. Any product or service therefore which can address the changing social requirements will certainly provide value for the firm. What is critical however, is how the firm can actually translate these social forces as credible commercial opportunities for itself. Mr. Kevin therefore will have to ensure that he present some hardcore facts and figures about the key social variables such as demographics, changes in the family structure, spending patterns etc so that the overall value creation ability of the new product can be expressed. Since the proposed product will provide the real time analytics about the customers, therefore a clear discussion about how the product will be able to capture such changing social forces and how the end users of this product can actually analyze the impact of such forces on the demand and supply of their own services will be of critical value. The memo therefore should clearly establish a link between how the social forces will actually affect the firm and its customers and how both of them can take advantage of the changing nature of these forces. It is also significant that Mr. Kevin shall be able to offer a better insight into how the social forces will shape the future product development process at the firm and how firm can actually take advantage of it by introducing new products and services which can address such important issues. Technological Forces Probably one of the important parts of the memo will be based upon the impact of technological forces on the new product development. Since the software industry heavily depends upon the technological sophistication of the firms offering such products and requires constant investment into new technology, it is really critical that the existing firms must be able to take advantage of the current technology. It is therefore critical that Mr. Kevin must present a very well thought out section upon how the technology will shape in the future and how with the help of current technology they can lock in the new customers. An important objective assessment of how the technology will actually affect the new product development process in the future will be a key area which needs to be discussed. It is also important to understand that the changes in the technological forces can be rapid and the new technologies can readily replace the older technologies very quickly therefore a better and more extensive treatment should be given to the technological forces and how it can actually contribute towards the product development process. Political and Regulatory Factors It is also important to understand that the regulatory changes are forcing many industries to become more sensitive to the needs of their customers. Since this product will be focused mostly on the financial services industry, the overall impact of the political as well as the regulatory changes is relatively more critical. A good discussion of how the political factors can actually influence the decision making process of the company’s customers will offer a better insight into how the external factors can actually be capitalized by the firm’s customers with the use of this new software. Since this new software will be based on providing real time data about the customers and their consumption patterns, the use of this software will therefore definitely add value to their organizations. Michael Porter’s Five Forces A good discussion about the five forces as outlined by Michael Porter will provide a better insight into the overall value and significance of the product to the organization and competitiveness of the organization within the industry. The five forces include following: 1. Bargaining power of suppliers: Suppliers often play key role in shaping the decision making process of the organizations. Better bargaining power they have, difficult it can become for the firm to actually make timely and cost effective decisions. It is also important to note that suppliers can influence the overall decision making process by increasing the cost constraints on the firms. If the suppliers are very few in the market, chances are that they will exercise significant power and subsequently firms’ total profitability can be compromised. In order to overcome such situation, it is important that the firm must diversify the range of suppliers with whom it can work. Since the firm is a service oriented firm and offers products for which no raw material can be sourced, the overall bargaining power of the suppliers may be less however; a concise and precise discussion of the suppliers and their influence on the organization can make the case of Mr. Kevin better. 2. Bargaining Power of Buyers: Bargaining Power of buyers often does not allow the organizations to actually make better profitability. Larger buyers often focus on obtaining better rates as compared to the smaller buyers therefore the overall impact of the buyers can be significant on the firm. An objective discussion about the bargaining power of the buyers can provide the organization a better view of how the product will actually fit into the needs and desires of their customers and how organization can actually serve them in a better manner. It is also important to understand that considering the overall nature of the product, it may be possible that the firm can actually sell it at the premium prices thus the overall bargaining power of the buyers can be not so important. However, it is really important that the bargaining power of the customers is discussed in order to provide an objective view of how the product will actually help the organization to earn higher profitability by circumventing the bargaining power of the customers. 3. Threat of New entrants: a general discussion on the possible entry of new players into the market can offer a better insight into how the product will fare in the future. This generally depends upon the overall nature of the industry and the relative cost of entry into the market. If the barriers to entry are less, chances are that the new entrants will enter into the market to cash into the new opportunity. A fair an objective discussion about the possible chances of the entry of new entrants will therefore allow the managers to have a better insight into the overall position of the firm in case the new players enter into the market. It is also important to understand that low cost of entry can potentially entice many new entrants to enter into the market and hence reduce the available margins. Since software industry does not require heavy capital expenditure, chances are that the new entrants will enter the market. In order to successfully tackle with these new entrants, it is really important that Mr. Kevin present a balanced view of the threat of new entrants into the industry and how they may reduce the profitability of the firm. Mr. Kevin may also need to discuss the first mover advantage which the firm can take if they enter into this market earlier. 4. Threats of substitutes: the overall success of the product define whether the new substitute products will be introduced or not. The threat of substitutes can actually result into the dilution of the existing margins because new players can be able to offer relatively cheaper products thus eroding the margins. A better discussion on the threats of new substitutes will actually allow the firm to see the long term future of the product and how it can perform against the cheaper products. It is relatively easier to copy the technology and there is a strong possibility that the new substitutes may flood the market. Mr. Kevin therefore also needs to be aware of the possible threats which the new entrants can present and how to tackle them. A balanced discussion on this aspect of the doing business shall also be presented in order to ensure that the managers have a very clear view about the different threats which the introduction of this new product can actually face in the future. 5. Finally a good discussion on the overall industry rivalry will provide a critical strategic insight into how the overall competition will shape after the introduction of this new product. The industry rivalry also depends upon the overall characteristics of the industry and if there are many firms and the industry is already fragmented, the overall intensity of the competition may be less and the existing firms can be able to look into the new opportunities. This discussion will provide the managers an insight into how the competition will shape as the result of the introduction of this new product and what will be the overall position of the firm in the industry. If Mr. Kevin is able to provide a positive and objective picture of the overall scenario, chances are that the mangers may be able to accept the idea and further contemplate on it to develop it into a commercially viable product. Problem Identification Identifying the problems which are faced by the customers can also serve as an important factor to spot the new opportunities. The changing nature of the economy, technology and demographics can present new problems and therefore new products and services to address these problems. Mr. Kevin therefore has to identify the different problems which the customers are currently facing in the industry and how the introduction of new product will actually help them resolve these problems. It is however, also important to understand as to whether the new proposed product will be able to solve the problem on the long term basis or will only provide a short term solution. In our current assumed description of the product, it seems that the product will attempt to address the issue of misinterpreting the consumer trends which subsequently result into the development of products and services which do not specifically address the problems of the customers. This product will therefore aim to bridge that gap by offering better and more comprehensive insight into the consumers and their spending and lifestyle patterns so that the overall process of product development can be improved to a great extent. What is also significant to understand that problem identification may be related to one specific industry or range of different businesses? If the problem can actually address the issue which is simultaneously faced by different industries and different business, it may become possible for the firm to design new products and its different extensions in order to address the particular issue faced by each firm. The discussion on this will therefore be effective in terms of providing a clear picture regarding the range of the problem solving ability of the product. Finding Gaps in the market Another important aspect of the opportunity generation is the identification of the gaps in the market. A gap in the market is often created when an existing product is need by the market to address or solve certain problem. In this case, if Mr. Kevin believes that this new product will actually help the existing players in the market to address certain specific issues, this must be highlighted. Finding the gaps in the market however, can offer a very narrow opportunity and the chances of failure can be higher if the problem is resolved through some other alternative means. It is therefore really critical that Mr. Kevin clearly identifies the pros and cons of this approach and outline how the new proposed product will actually help to provide consistent support to the organizations in terms of solving their existing problems. Personal Characteristics Launching new business and become and entrepreneur largely depends upon a particular and typical mindset. The previous research on the subject outlined that the entrepreneurs were always born and cannot be made however, this myth has been shattered by the later research which suggest that the entrepreneurs must develop a certain set of skills and abilities before they can actually take on the opportunity and successfully develop into a viable business opportunity. It is therefore important that a comprehensive discussion about the Mr. Kevin’s ability to steer the new business opportunities in entrepreneurial way are described in the memo also. Some of the personal characteristics which can be further explored and included in the memo may include following: Prior Experience It is really critical that Mr. Kevin must present eloboratively his past experience in the product development process and how he has been able to present the solution. Prior experience will also help him to better understand the existing dynamics of the industry and the business and how he can take advantage of them. Further, a discussion about the prior experience will also allow the managers to get a critical insight into the overall abilities of Mr. Kevin in handling such opportunities in the past and the overall success of such endeavors. Further, a clear insight into the past experience will also allow managers to understand more about Mr. Kevin and his capabilities and what actually can be expected of him. Mr. Kevin also need to highlight the statement that by having the previous industry experience, he may be in a better position to identify the different opportunities which have previously been unserved by the market. Such ability therefore allow the firms to actually better understand as to how the proponent of the idea can actually tackle the problem and whether the opportunity presented is really unserved by the existing market players or not. This therefore also requires the presentation of some hardcore facts which can make the case stronger. Cognitive Process Studies have suggested that the identification of the opportunities can also be innate process whereas it depends largely upon the natural ability of the individual to spot the opportunities and successfully convert them into real businesses. Such characteristics however are often present in the entrepreneurs from the developing countries where due to lack of information may allow the entrepreneurs to use their natural abilities to spot the opportunities.( Wang,2009). The so called entrepreneurial alertness therefore can serve as one of the key factors in underlining the overall capabilities of Mr. Kevin in spotting the new opportunities. If it is believed by Mr. Kevin that he has that sixth sense to actually spot lucrative opportunities, he must be able to highlight this fact also in the memo. This will allow the mangers of the firm to get better insight into the natural curiosity and capabilities of Mr. Kevin in understanding the overall process of opportunity recognition. Social Networks How an individual is connected with any given social networks and what is the extent and depth of such social networks also define the overall ability of the individuals to spot the opportunities. It is really important for the individuals to highlight their penetration into the existing social networks and they can take advantage of them in order to develop the new ideas and opportunities. It is important for Mr. Kevin to highlight the overall exposure that he has got in terms of social networking because higher exposure to the social networks can expose the individual to better opportunities. Highlighting this aspect about the personal trait of Mr. Kevin will therefore allow the managers to have a look into the way Mr. Kevin approaches the professional life and how better equipped he is in terms of understanding the industry and market dynamics. The existence of social networks therefore can serve on informal basis to allow the new entrepreneurs to get better ideas. Creativity Creativity is another important and natural characteristic of the individuals to develop the ideas into more creative and innovative manner. The idea generation therefore can be either through the consistent use of brainstorming or performing other techniques such as focus groups and surveys. In order to highlight this aspect of his personality, it is really important for Mr. Kevin to actually underline his whole process of how he has generated the idea and who were involved in this whole process. Highlighting this aspect will therefore give mangers a very precise view of the overall creativity and innovativeness of the individual’s mind and how such creativeness and innovativeness can actually be utilized in the future also. (Zheng, Hu, & Wang, 2009). Core Values It is also important that Mr. Kevin must also present and outline a set of core values required to be a successful entrepreneur and how he will adhere to such values in the future. It is generally believed that the entrepreneurial greatness can only be achieved if entrepreneurs can demonstrate the adherence to such core values. These core values are: 1. Treat others as you want to be treated. 2. Share the wealth 3. Give back to the community Why these core values are important is based on the assumption that the entrepreneurs must be able to demonstrate their commitment with the society and believe in sharing. The subsequent entrepreneurial activities therefore shall be based upon those core values to allow the business to distinguish itself from others. (Mellor, 2008). What is important about these core values and why they should be highlighted in the memo is based upon the fact that Mr. Kevin must be able to demonstrate to the managers as to why the introduction of this new product, beside solving the problems of the customers, can actually also contribute towards the society. Further, giving back to the community will require that the new products or businesses are based on the ideas and technologies which can support the community rather than contribute towards damaging it. Sharing the wealth and treating others as the way one wanted to be treated is also critical for the overall success of the new product and business in long run. Conclusion Starting up a new business or generate a new business opportunity requires a typical process to be followed. There are certain characteristics and traits which the new entrepreneurs have to follow in order to convince those who can provide support that the opportunity presented is a well thought out process and can really offer the firm an opportunity to further increase its value. The overall opportunity presented therefore shall be able to address the existing problems in the market faced by the existing players or it can further allow the firms to become more efficient in terms of serving their customers. It is also important that to successfully materialize the opportunity and convert it into a sizeable commercial reality, it is really critical that the entrepreneur must provide a critical glimpse into his own capabilities and characteristics which can set him apart from the others. Some of the important characteristics which can provide an advantage to the new entrepreneurs are their overall social networking, their creativity and ability to generate new ideas and opportunities as well as their cognitive capabilities. This therefore can potentially distinguish each entrepreneur from others and outline their true traits. What is also significant to note that the entrepreneurs also need to ensure that they must convince the venture capitalists that they have the capability and ability to not only spot the new opportunities but also can transform them into new and successful businesses? Bibliography 1. Mellor, R. (2008). Entrepreneurship for Everyone : A Student Textbook. 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