From idea to start up


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From idea to Entrepreneurial start up - workshop given in Kuching Sarawak 11th July 2013

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From idea to start up

  1. 1. Getting From an Idea to Start-up Murray Hunter
  2. 2. A Roadmap for today Create Ideas Decide on what product each group would want to be involved in. Screen the Idea for opportunity Determine whether there is a market and how much competition there is. Determine if the product can be made. Look at how to develop the opportunity Resources, skills, Strategy, how to make, business model
  3. 3. We can land a man on the moon and return him successfully to Earth but we are still not too sure what factors make a firm successful
  4. 4. High Growth Habitual Needs based Lifestyle Hobby based Inventor Retail Direct marketing B2B Product based Service based Manufacturing Engineering 48 different types of Entrepreneurship
  5. 5. Strategic Business Analysis Resources, networks, capabilities, competitive environment, etc. Business Goals Family Values The Vision Aspiration Family Goals Self Assessment (Self-efficacy) Decision Making Skills Knowledge Competencies Personal Goals Business Competencies Knowledge Production & Operations Marketing Personnel Financial Risk Management Horizontal and vertical expansion Aspirations Self view Income needs Time Horizon View of retirement Opportunity cost of doing other activities Passion Family Considerations Generational evolution Grooming successors Family aspirations Lifestyle Attachment Asset Fulfillment Value Type Needs Wants Liquidity needs Alternatives Future (Retirement) Time horizon Investment options Risk management Tax planning Opportunity cost of doing other activities Exit barriers The Individual & Family Family history, Current family livelihood, Current Family Status. Motivational Origins
  6. 6. Social Regulation Technology Economy How we see & feel about the world Alternatives: Both for you and potential customers The competitive environment Resources Skills, competencies & capabilities Networks Strategy Business Model Influenceof competitors Influenceof competitors
  7. 7. Almost straight imitation
  8. 8. Scarcity
  9. 9. Visiting nurse
  10. 10. Discovery
  11. 11. Construction
  12. 12. Fastfood (General Characteristics) 1. Cheap 2. Good standard of hygiene 3. Good service 4. Fast and efficient 5. Specialize in a particular food 6. Know what to expect 7. A meeting place for people Charcoal Burger Grill 1. Location near young people (university): convenient 2. Cheap and affordable 3. Good service 4. Authentic charcoal BBQ burger grill (western style) 5. Convenient meeting place with WiFi etc. University Location Potential success parameters ConceptExtraction Constructed Concept Concept Extraction A (location) + B (characteristics) = C (constructed Concept) A B C
  13. 13. Images and Connections Concepts Ideas Opportunity Vision Platform - Perception Time & Space Potential Concept Generator – Making Connections Sources of Opportunity Learning: Conceptual World Identifying concepts Evaluation after experience Complete re- evaluation (seek further information) Real World Experimentation & Testing Structure common to all opportunities Vision – Outcomes Time & Space Resources Networks Skills, Competencies & Capabilities Competitive Environment Strategy – scope & depth “A Narrative” Evaluated and Elaborated Upon The birth of an opportunity
  14. 14. No Sensitivity High Sensitivity Ability to see the environment in different ways
  15. 15. Farming in Fiji Farming is primarily subsistence agriculture
  16. 16. Taro Yam Cassava Ginger Chillis
  17. 17. Sunday Monday Morning Monday Afternoon at the Melbourne Wholesale Market
  18. 18. Level One Imitation See and belief, little thought except for viability- logical thinking Level Two Creative Imitation See and enhance, maybe with some connection, logic and holistic creativity Level Three Creating a new business Model Connectivity of different pieces of information, some imaginatively, or through re-engineering Level Four Creating something new to the world Complete holistic, imaginative construction, building from deep and sparse pieces of prior knowledge.
  19. 19. AvailabilityIncreases Usefulness Increases Media Reports Ideas Data Information Knowledge Wisdom The Continuum from media reports to wisdom in relation to availability and usefulness
  20. 20. Introduction
  21. 21. Banana,grape,Pineapple,apple, orange,papaya,Mangostein 6kilogramsinvariousproportions accordingtoperson’sownformula Honey 2liters Water 20Liters Procedure:Placeallingredients togetherinasealedtankandmix. Leaveforatleastoneyear.This processcanbespedupbyplacingan existingenzymeinthemixture. Formula I: A General Enzyme Base for Cosmetic Products Hunter & Yothangrong (2006)
  22. 22. Enzyme (base) Base will consist heavily of citrus fruits 15 Kilograms Coconut oil or CDE 2 kilogram Ash water 15 kilograms Formula 4: Dishwashing Liquid
  23. 23. Organic Agro-Chemicals
  24. 24. Existing Thai Organic Products
  25. 25. Small Business Verses Entrepreneurship
  26. 26. Value New food offerings
  27. 27. 1 2 3 4 5 Does the idea create value over what might already be available? Is this value easily perceived by the potential customer? What risk is involved with the idea? (see risk chart) Does the idea have potential customers and will they support the idea? Can the idea make money? Will this be hard to do? Do I have alternative things I can do with my time? (what is the opportunity cost?) Am I committed? (Am I motivated enough?) Are there great barriers in front of me? (1=yes, 5 = no) Can I handle these barriers? (1=no, 5 = yes) Sub-Total (score out of 50)
  28. 28. Change In User Habits Risk None None Some Some Great Great Dangerous High High None Change in how and where people buy the product Medium Medium Medium Low Low
  29. 29. Technology Scientific knowledge used in practical ways in industry Oxford Dictionary Definition
  30. 30. Scientific A way of doing something or thinking: Careful and logical (Adj.) Oxford Dictionary
  31. 31. Innovation The introduction of new things, ideas or ways of doing things Oxford Dictionary
  32. 32. that there “is also the tendency for Asian countries, including Malaysia, to deal with the issue of values in development by Importing many technologies and systems wholesale from abroad without going through the process of mental transformation necessary to master them fully. Although Malaysia is going through rapid transformation, our growth is one without development in the context of knowledge contribution to science, engineering and technology. As long as we are consumers and operators of sophisticated techniques, plants and technologies imported wholesale from abroad, we are to a certain extent undergoing a technology-less form of industrialization. This transformation of values and attitudes is a key issue in the nation’s development agenda”[i] . [i] Asma, A., Going Glocal: Cultural Dimensions in Malaysian Management, Kuala Lumpur, Malaysian Institute of Management, 1995, P. 179.
  33. 33. Tissue Culture
  34. 34. Microwave Oven Pressure Cooker Chemicals & Spoons, etc. Glassware
  35. 35. • Minimise Production scale to account for initial low sales/production quantities and lower capital investment • Mobile GMP Facility • Simplified Technology
  36. 36. 1 2 3 4 5 Do you have access to the required technology? How expensive is this technology? (1 = most expensive - 5 = least expensive) Are you able to develop the necessary technology? (1=no, 5=yes) Can you modify existing technologies in a way that will make it less expensive? (1 = very difficult - 5 = very easy) Will the technology give you any advantage over others already in the industry? Sub-Total (score out of 25)
  37. 37. The Summarised Entrepreneurial Process Idea Turn into Opportunity Final Commitment Start-Up Growth Sustainability Creativity Innovation Strategy Sales NPD
  38. 38. Networks Skills, Capabilities Resources Making Connection Vision Platform Time & Space Strategy Competitive Field ©Hunter (2011)
  39. 39. The Vision Platform Social demographics, culture, generational outlook, experiences, Cognition, emotions, the psych & psychotic, & cognitive traps, etc. Time & Space Stage of economic, social, legal, & knowledge development, The Ability to Make Connections Cognition, creativity, problem solving, creative tools The Sources of Opportunity Market Void, Technology Infusion, Structural Changes, Resource Monopoly, Regulation, Non-Innovative The Resource Base Personal Skills & Competencies, Enterprise Capabilities The Opportunity Gap The Ability to Build Networks The Competitive Environment Influence of suppliers, customers, complementary goods & substitutes, barriers to entry, the competitive field & influence of social, technology, economic, & regulatory factors Strategy Hunter (2012)
  40. 40. Resources Tangible Resources Intangible Resources Product Designs Knowledge Intellectual property Research & Development Creativity Brands Team Specific Experience Reputation Organizational Routines Relationships Passion People Plant & Equipment Property & Location Technology Cash & Other Finance Access to inputs Business model Time Organizational Culture
  41. 41. New ventures with fewer resources and lack of history in an industry will have issues of legitimacy to overcome (Aldrich & Fiol 1994). Patents Brands Channel Capacity Product Design Market Share Firm Size Financial resources Technology Size Access to Inputs Barriers to Entry & Differentiation Advantage Bargaining Power Cost Advantage Competitive Advantage
  42. 42. Venture Growth Time Pre-start-up Start-up Growth Maturity Paradox Period Move to professional management Management orientation and possible decline Entrepreneurial orientation and the pursuit of more opportunities Evaluate opportunity & imagine what resources needed Create business model Acquire & allocate resources Cash & Finance Initial asset & use and/or acquisitions Creation of brands Acquire tangible resources Require more working capital Seek equity partner or finance Develop intangible resources Employ peopleSelect location Identify necessary technologies Create product designs Forming organizational culture Develop organizational routines Formal research & development Develop relationships & reputation
  43. 43. Opportunity ResourceRequirements AvailableResources ResourceGap
  44. 44. Inputs are combined, transformed and converted into capabilities. Organizational capabilities are used to support strategies. The objective is to create value in line with the value proposition through defined distribution channels to generate a revenue stream. DistributionChannels Strategies The Venture People Plant & Equipment Property & Location Cash & Other Finance Technology Product Designs Knowledge Brands Reputation Relationships Organization Culture Access to inputs Intellectual Property Research & Development Creativity Team Specific Experience Organizational Routines Passion Inputs Outputs Perceived problem observed and value proposition proposed through a product and/or service Product/Service Revenue Stream Feedback influences inputs such as reputation, R&D direction, available inputs, level of technology, etc Determine your needs
  45. 45. Enterprise Capabilities Specialized Resources Applied Resources Generic Resources Input Resources Raw Materials Various Support Services Consultancies Fixed Costs People Property & Location Cash & Other Finance Technology Business Model Intellectual Property Knowledge Brands Reputation Organizational Culture Organizational Routines Basic Plant & Equipment Office Space Product designs Proprietary Machinery Creativity Team Ind. Experience
  46. 46. 1 2 3 4 5 Can you acquire all the necessary resources you listed above? (1 = no 5 = yes) Are there any resources I can't acquire? (1 = yes 5= no) Can I do without them? (1 = no 5 = yes) Can I develop them as I go along? (1 = no 2 = yes) Will the resources you have give you flexibility? (1 = no 5 = yes) Sub-Total (score out of 25)
  47. 47. Getting the right skills around you
  48. 48. Start-up Growth Stability Various cognitive skills Research skills Opportunity Competency Entrepreneurial Competency Relationship Competency Strategic Competency Management Competency Idea Evaluation Idea Discovery Organizational Competency Research skills Evaluation skills Decision making skills Networking skills Interpersonal & communications skills Specific technical skills (product) Basic administration skills Resource gathering skills Interpersonal skills Business plan preparation skills Oral presentation skills Production engineering skills Organizational development skills Sales skills Promotional skills Start-up finance skills Networking skills Decision making skills Various Cognitive Skills General management skills Interpersonal skills Accounting skills Finance skills Cash-flow management skills Marketing skills Sales skills Human resource management skills Logistics management skills Manufacturing management skills Leadership Competency Creativity Competency
  49. 49. Entrepreneurial Start-Up Competencies Entrepreneurial Strategic Conceptual Opportunity Commitment Management Managed Company Competencies Entrepreneurial Strategic Conceptual Opportunity Commitment Management
  50. 50. Competencies Required During the Essential Oil Development Process Screening & Bio-prospecting Propagation & domestication or introduction Planting, cultivation & maintenance Harvesting, Extraction and wastage handling New product development & creation of value added products & activities Strategic, operations, finance and technical management Product & venture management Marketing & commercialisation Sustaining and growing the enterprise (adapting & survival) Output: Result/Performance, Sustainable and healthy enterprise or a struggling and failing enterprise Opportunity and technical competencies require: Botany, ethno-botany, research ability, chemistry, bio-chemistry, analytical chemistry. Market and specific technical product knowledge Technical Competencies require: Plant physiology, micro-propagation, nursery management, agronomics Technical competencies require: Bio-system engineering, Soil management, entomology, plant nutrition, Agronomics, field management, irrigation engineering Technical competencies require: Thermodynamics and plant physiology, heat transfer, distillation engineering, chemistry, chemical engineering, agricultural engineering, environmental engineering (waste management) Strategic, opportunity and technical competencies require: Project management, marketing management, chemistry, cosmetic chemistry, perfumery/ flavour knowledge, Packaging & design, manufacturing engineering Strategic, organizational, relationship opportunity competencies require: Business strategic, industry knowledge, industry networks, ability to raise finance, ability to plan, implement & adjust, leadership, entrepreneurial Strategic and organizational competencies require: Administrative, financial management, technical management, strategic management, personnel management, resources management, entreprenuerial
  51. 51. Sub-Skills Book-keeping Product costing Administration Presentation Sales Business plan preparation Data-entry Negotiation Budgeting Empathy Imagination Sense of fairness Interpersonal Technical (product) Promotional Teamwork Communication Accounting procedures Self reflection Networking Ability to inspire Deal with uncertainty Resource gathering Paperwork Skills Marketing Production Scheduling Delegation Product design Finance Planning Sourcing Human resources Organizational Decision making Finance Operational Personal Competencies Entrepreneurial competency Managerial competency Opportunity competency Leadership competency Creativity competency Conceptual competency Ethical competency Strategic competency Emotional intelligence Commitment competency Enterprise Capabilities New Product Development Logistics capability Manufacturing capability Management capability Growth capability Strategic capability Learning capability Marketing capability Innovation capability Technology capability Organizational culture Dynamic Capabilities Strategy Anchors
  52. 52. Competency Present Not Present Comments Technical 1. Botany 2. Plant Physiology 3. Chemistry/Analytical 4. Micro-propagation 5. Nursery Management 6. Environmental Engineering 7. Chemical engineering/thermodynamics/etc 8. Soil Management 9. Agronomy/plant nutrition/field management 10. Entomology 11. Irrigation engineering 12. Agricultural Engineering 13. Regulation knowledge 14. Cosmetic chemistry/food etc 15. Perfume/flavours 16. Packaging & design 17. Consumer product manufacturing Basic Basic Experience Experience Experience Basic Basic Basic Low Low Low Low Low Low Low Low Low Need guidance Need assistance Need guidance Assistance Available Can design Need appraisal Use contractor Use institute Replicated experiments With Environment Use contractor Can develop Need assistance Learn from experience Use contractor Opportunity/Entrepreneurial/Commitment 1. Able to screen environment for opportunities 2. Able to evaluate opportunities 3. Commitment level Yes Yes Passionate Need to see realistically
  53. 53. Relationship 1. Have relationships in target industries 2. Have relationships in research area 3. Have relationships in finance industry A few A few Some Organising/Management 1. Able to project manage 2. Able to administrate 3. Able to financially manage operation 4. Able to undertake research 5. Able to keep key people motivated Yes Yes Yes Yes Yes Strategic 1. Understand dynamics of market and industry environment 2. Able to plan for a business within this environment 3. Able to implement, evaluate and adjust plans in this environment Yes Yes Yes Believe so but not tested
  54. 54. Curiosity Exploration Discovery Excitement Dedication Mastery New Skills Confidence/ Self Esteem Security & Purpose Insight Passion for the domain Openness to Learning Obsessive Persistence Wisdom
  55. 55. Sub-Total (score out of 25) 1 2 3 4 5 Do I have the necessary skills to undertake the venture? If, not can I acquire and develop these skills (1 = difficult 5 = yes) Is there a large gap between what skills I have and what skills I need? How critical are these skills I don't have? (1 = critical 5 = not critical) Will these skills you have give you flexibility? (1 = no 5 = yes)
  56. 56. Different types of Networks Support Networks Resource Networks Regulatory Networks Development Networks Sales Networks Peer Networks Two elements: Technical Know How Technical Know Who
  57. 57. Decision Maker Inside the firm Father Accountant Bank Customer Employees Property Owner Competencies Friends Expectations Suppliers
  58. 58. Auto Parts manufacturers Automobile manufacturer Coordination, Kanban, JIT, etc. Independent Dealerships Sales coordination, Custom Ordering Service Centres Consumers In constant communication about service times and other car owner information Road Side Assist Schemes
  59. 59. Doing business without networks is an insurmountable barrier to entry No Network – No Business
  60. 60. Sources of Technology Suppliers Customers Competitors Regulators Other Stakeholders Critical Necessary Important Useful Not Important Customer A Customer B Customer C Wholesale A Wholesale B Supplier A Supplier B Supplier C Backup Supplier A Backup Supplier B+C Supplier D Supplier E Accountant Bank Father EPA Taxation Systems Software Best Friend Competitor A Competitor B Competitor C Stakeholder category Priority
  61. 61. 1 2 3 4 5 Do I know the potentially important stakeholders? (1 = no, 5 = yes) Can I get to know the important stakeholders I don't know? (1 = no, 5 = yes) Will these stakeholders support me? (1 = no, 5 = yes) How open and approachable are the important stakeholders in this industry? (1 = Closed, 5 = open) Are there any special membership restrictions in the industry (1 = yes, 5 = no special membership restrictions) Sub-Total (score out of 25)
  62. 62. Production Approach
  63. 63. Usually OEM Production
  64. 64. Sales Approach
  65. 65. Marketing Approach
  66. 66. The Branding ParadigmThe Level of Competition The Channel of Distribution
  67. 67. The Marketing Mix Product Price Position Promotion Customer Solution Customer Cost Convenience Communication
  68. 68. Technology Approach
  69. 69. Veggie burgers One stall Franchise Manufacture & Market One product idea but 3 different types of business
  70. 70. 1 2 3 4 5 Do I know exactly where I want to be in the value chain? (1 = no, 5 = yes) Can I get to that position? (1 = no, 5 = yes) Do I have the skills? (1 = no, 5 = yes) Do I have the resources? (1 = no, 5 = yes) Do I have the networks? (1 = no, 5 = yes) Sub-Total (score out of 25)
  71. 71. Consumers Positioning Targeting Segmentation Market Identification The Causation Process Product idea to compete with existing products in market Attempting to create some form of competitive advantage Opportunity Refining the Idea Concept The set of possible ideas/products/markets The Effectuation Process Potential new novel product extending market field or creating a new one through existing or new channels and business models.
  72. 72. X X X X Evolved Strategy Tactics Applied Trial and error tactical use with various levels of Success/Non-Success
  73. 73. Vision & Goals Modified Vision & GoalsAnticipatedStrategy ActualPath& Performance Wind in the case of a yacht or environmental turbulence in the case of a firm.
  74. 74. Customers Laundry Service Service Convenience Price Quality Relationship Find the important mix for your business
  75. 75. Industrial Industrial Markets These markets usually buy materials and components to manufacture other products, or supplies necessary to run a business. Manufacturers usually deal directly with industrial customers or act through distributors. Consumer Consumer Markets Consumer products include automobiles, white goods, electrical goods, fast moving consumer products and services, including financial, insurance, travel, etc. Companies market and sell direct to consumers, through distributors and/or retailers, etc. Many manufacturers tend to service national markets, while many service businesses are localized, except where companies have overcome fragmentation. International International Markets An international market could be any type of the other markets excepting it is in a remote location from the enterprise. The entering firm will have to decide whether to enter directly through a fully owned subsidiary, joint venture with a local partner, utilize a distributor or other representative, license or franchise the product or service to a local company. The enterprise will also have to adapt its strategies to the local ways of doing things. ResaleResale Markets Second hand goods, some internet sites like eBay, Auctions & Real Estate, etc. Sales often undertaken by intermediaries, pricing varies according to demand & supply, power in market according to scarcity Government Government Markets Usually high volume capital & service products. Goods usually decided upon through issuing specifications and tenders. In some industries the government market can be up to 60% of the total market. This market although decisions made through tenders, strategies based upon building strong relationships necessary. Types of Markets
  76. 76. Competitive Rivalries Lemongrass quick yield and straightforward to cultivate and distil – expect high elasticity of supply from both existing and new producers. Producers of substitutes very aggressive Bargaining Power of Suppliers Collecting the most suitable planting material require effort. Extraction and harvest .technology needs to be acquired or developed Analytical equipment or service maybe expensive/remote. Substitutes Citral (main constituents) can be produced from a number of chemical feed stocks. Alternative oils (litsea cubeba) cost much less to produce. Lemon myrtle oil much smoother and acceptable to end users Many alternatives to lemongrass in product formulations. Trends & Technology Alternative technologies to steam distillation (CO2) can make much smoother oil but will increase capital needs greatly. Natural, exotic, organic, FAIRTRADE could increase oils popularity (?) if seen as exotic. Substitutes Trends&Technology Bargaining power of buyers Bargaining power of suppliers Competitive Rivalries Regulation Regulation SCCP placed lemongrass oil under scrutiny as a cosmetic ingredient in EU. Industry Competitors Intensity of Rivalry Bargaining Power of Buyers Currently small item of trade in flavour industry, strong relationships with established producers.
  77. 77. Opportunities Cognitive Bias An identified market where enterprise resources and competencies will be able to exploit The potential opportunity will have a large enough market size to sustain the enterprise The enterprise will be able to take advantage of this opportunity better than any other competitors Outside elements in the supply chain will support the enterprise Any factor or group of factors that will allow the enterprise to grow in a sustainable manner within the market environment Threats Competitors identifying the same opportunities and enacting upon them The regulatory environment and potential changes within it Inability to penetrate the existing supply chain and make alternative strategies Dependence on survival from a single or very few customers Depending on a single product for total Any factor or group of factors that may potentially hinder enterprise growth in a sustainable manner without any contingencies verse acts of God, bad weather, drought, etc. Strengths Personal and enterprise competencies, knowledge & experience that can be utilized for the benefit of the enterprise Facilities, infrastructure, financial backing & liquidity, long timeframe view Ability to learn through research and experimentation Any network connections with industry and access to the supply chain for both information and marketing Ambition and vision (but not delusional), focus & commitment Ability to innovate technically, market and organizational wise Any factor or group of factors that can assist the enterprise gain competitive advantage over its competitors Weaknesses Competency gap Short term timeframe, no fall back position if positive results delayed or there are technical or market failures Poor infrastructure that hinders production or marketing Shortage of funds to undertake project to completion Qualified or lack of commitment by any key people within organization Lack of network, knowledge and access to supply chain Any factor or group of factors that can hinder the enterprise gain competitive advantage over its competitors Opportunities are seen with bias according to knowledge, experience, wisdom, educational background, market knowledge, competencies, etc. Risks/ Uncertainties Any factor or groups of factors that make outcomes uncertain in the future Any factor or groups of factors that may lead to venture failure
  78. 78. High Market Growth Low Strong Weak Relative Competitive Position Crude Essential Oil Steam Distilled Essential Oil under CO2 extraction Cosmetic production for international market Organic Cosmetic production for international market Essential Oil Based Agro- chemical
  79. 79. Organisational Capability Creative, Opportunity, conceptual, strategic, Learning, Organisational, financial, Technical, Marketing, Networking and Commitment Competencies How the Business is Currently Performing The base for potential future Development Resources Existing and Available to the Business The Set of Potential Opportunities TimeandCompanyEvolution/Change Enterprise Performance Personal Objectives StrengthsandWeaknesses ThemePersonalResourcesNetwork ProductManagementFinance 4Ps&SkillsFacilities Attributes ExternalInfluences&Threats MarketEconomyRegulationTechnology PositionSocialSituationChange& CompetitionAspirationsDevelopment Key internal influences on the strategic process The process of product/market development Key external influences on the strategic process Competitive Position Cognitive Bias Structural/Support Strategies Interventional Strategies
  80. 80. Your Moves Your Competitor’s Moves Your advantages & Disadvantages ©Hunter (2011)
  81. 81. Range of Generic Strategies Convergence DivergenceAspirational Brand Strategy Duplication & Replication Creating Customer Utility Tactical Combination Extension Synthesis Segmenting Differentiation Creative ImitationMarket LeadershipNew Business Model Imitation Cost Advantage Technology Superiority Overcoming Fragmentation Dynamic Strategy
  82. 82. Opportunity Foundation (Capacity Building) Strategies Finance, Gearing, Asset Management, Location Decisions, Identity, Mission, etc. Enterprise capabilities Administrative (Support) Strategies Financial (operational), Procurement, Logistical, Human Resources, Operational Policies, Work Procedures, etc. Operational Strategies Competitive strategies: Marketing, Sales, Advertising, Channel, New product development, Intellectual property, supply chain, etc. General Operational: Manufacturing, product & customer service support, accounting, etc. Tactical Actions & Behavior Field Promotion, Discounts, Incentives, Selling, Product Styles, etc. Sales Revenues, Profitability, Other market Measures, Growth, Sustainability, Survival
  83. 83. Opportunity Manifestation as a set of strategies (Product, Channel, Business model, etc.) Factors and causes leading to the Opportunity Conditions (Social, Economic, Technology, & Regulatory Conditions) The Sources of Opportunity (Market Void, Technology Infusion, Structural Changes, Resource Monopoly, Regulation & non- Innovative Sources) Resources Resources Resources Resources Resources Capabilities Capabilities Capabilities Capabilities Capabilities
  84. 84. Opportunities Environment Network Firm Opportunity Trajectory Firm Alternative Opportunity Trajectory Field of Network Based Opportunities
  85. 85. Mamor Chocolates- Melbourne Chocolate History Tours™
  86. 86. Organically produced high active concentration shampoo with product variants to suit various conditions. Central Theme (Product Proposition) Underlying Assumptions High & discerning market end. Customers who want mass custom produced products. Low competition in segment. Rapidly growing segment. Products match personal values. Sustainable Strategy Characteristics Brand Theme Features Benefits Signal Attributes Channels
  87. 87. Things are always a mystery until we get there
  88. 88. 1 2 3 4 5 Are there a number of strategy options for my idea? (1 = no, 5 = yes) Can I overcome any barriers of entry within the market and value chain? (1 = no, 5 = yes) Can I overcome and/or react to external threats? (1 = no, 5 = yes) Do I have the right strengths to pursue my desired strategies? (1 = no, 5 = yes) Do any weaknesses I have prevent me from implementing the strategies I have in mind? (1 = yes, 5 = no) Sub-Total (score out of 25)
  89. 89. New Product Development
  90. 90. Hunters Brands Sdn. Bhd. Standard Product Costing Sheet Product: Ant Attack Liquid 100ml Size: 0.1 Formulation No: Date: 16/6/03 Units per packet: 1 No. Packets per Outer Carton: 6 Individual Unit Size: 0.1 Batch Size (Kg): 100 Part 1: Chemical Materials Ingredient Quantity Price Extension Ethanol 93 $2.500 $232.500 Clove Oil 5.25 $35.000 $183.750 Peppermint Oil 0.7 $38.000 $26.600 Citronella Oil 1.05 $35.000 $36.750 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 100 Batch Cost: $479.600 Cost Per Kilogram: $4.796 Wastage Cost per raw unit: $0.480 Factor Cost per Packet: $0.480 0.00% Cost Per Outer Qty: $2.878 Ctn Cost per yield: $2.878 Ave. Yield/ Units per Batch: 1000 Date Last Updated: Part 2: Packaging Materials Item Unit Mea Quantity Price Extension Ant Attack Inner Box unit 6 $0.190 $1.140 Ant Attack 50ml Label unit 6 $0.095 $0.570 Ant Attack Bottle unit 6 $0.750 $4.500 Ant Attack 50ml Outer carton unit 1 $0.450 $0.450 $0.000 $0.000 $0.000 $0.000 $0.000 Total Packaging: $6.660 Part 3: Labour Mean Labour Cost $0.70 Mean Fixed Overhead $0.00 Mean Administrative Cost $0.00 $0.70 Part 4: Total Product Cost Unit Carton % Total Materials $0.480 $2.878 28.11 Packaging $1.110 $6.660 65.05 Labour $0.117 $0.700 6.84 Total $1.706 $10.238 Part 5: Selling Prices and Margins Sell Price Gross Contribution % Margin Transfer Price -$10.24 #DIV/0! Sell 1: Whole/Distributor -$10.24 #DIV/0! Sell 2: Retailers -$10.24 #DIV/0! Sell 3: Export -$10.24 #DIV/0! Sell 4: Other -$10.24 #DIV/0!
  91. 91. Wholesaler Price Structure & Sales Projection Wholesaler: National Location: Date: 1/6/03 1 2 3 4 5 6 7 8 Super Roach Ant Ant Citro Cit. candle Attack Attack (P) Attack (L) Fresh 500ml Carton Size 24 24 24 24 12 RSP (Unit) $3.50 $5.60 $4.20 $5.90 $7.90 Margin 16.67% 16.67% 16.67% 16.67% 16.67% RP (Carton) $70.00 $112.00 $84.00 $118.00 $79.00 $0.00 $0.00 $0.00 Carton calculations: Whl'slr Margin % 15.00% 15.00% 15.00% 15.00% 15.00% Whl'slr GP (RM) $10.50 $16.80 $12.60 $17.70 $11.85 $0.00 $0.00 $0.00 Gross Invoice Price $59.50 $95.20 $71.40 $100.30 $67.15 $0.00 $0.00 $0.00 A&P % 15.00% 15.00% 15.00% 15.00% 15.00% A&P Amount (RM) $10.50 $16.80 $12.60 $17.70 $11.85 $0.00 $0.00 $0.00 Net Invoice Price $49.00 $78.40 $58.80 $82.60 $55.30 $0.00 $0.00 $0.00 Media % 5.00% 5.00% 5.00% 5.00% 5.00% Media Amount (RM) $3.50 $5.60 $4.20 $5.90 $3.95 $0.00 $0.00 $0.00 Net Price (Before Mrkt) $45.50 $72.80 $54.60 $76.70 $51.35 $0.00 $0.00 $0.00 Freight $1.00 $1.00 $1.00 $1.00 $1.20 Gross Margin % 54.29% 132.81% 178.86% 73.38% 39.30% #DIV/0! #DIV/0! #DIV/0! Gross Margin RM $15.66 $40.96 $34.38 $32.04 $14.15 $0.00 $0.00 $0.00 Cost $28.84 $30.84 $19.22 $43.66 $36.00
  92. 92. 1 2 3 4 5 Can I make this product or deliver the service? (1 = no, 5 = yes) Do I have the skills, resources, and advice available to help me develop the product? (1 = no, 5 = yes) Do I have the time and patience to develop the product? (1 = no, 5 = yes) Will the cost of the product enable me to sell it profitability? (1 = no, 5 = yes) Will the cost of the product enable me to sell it competitively? (1 = no, 5 = yes) Sub-Total (score out of 25)
  93. 93. Idea/Product/Concept 1. What is the idea/product/concept? 2. Is there a consumer need for this idea/product/concept? 3. Do many people need this idea/product/concept? 4. How do consumers cope with their problem/need/want without this idea/product/concept now? 5. Will this idea/product/concept provide a better solution to the consumer than what is already available? Marketing 1. Who are the potential customers and target market? 2. How many potential customers are there (how large is the market)? 3. Who are the competitors (and potential competitors)? 4. How are your competitors doing in the market (decline, stable, growth)? 5. Is it their major business (do they rely on other forms of business)? 6. How will you promote the product (what advertising and promotion strategy)? 7. What will be your pricing strategy (what revenue over cost)? 8. Do you have the ability to reach potential customers?
  94. 94. Skills 1. What skills do you need to realize the opportunity? 2. Do you have these skills or can they be acquired? 3. Are these skills commonly available to all competitors (and potential)? 4. Can I manage this venture? Networks 1. What networks do I need on the supply side? 2. What networks do I need to obtain resources (materials, people, finance)? 3. What networks do I need on the sales side? 4. How crucial are these networks to success/failure? Resources 1. What resources do I need? 2. Are these resources available? 3. Are these resources within my reach? 4. Are these resources available to everyone? 5. Will I have enough financial resources to sustain this venture?
  95. 95. Product 1. Does the product solve a consumer problem, or satisfy a want or need? 2. Is this problem, want or need an important one? 3. What are the alternative solutions to the consumer? 4. What is the cost to the consumer of these solutions? Product/Strategy 1. Can I develop a product/strategy that is different from others? 2. Will this different product/strategy be valued (or provide benefits) to consumers?
  96. 96. Source of Opportunity Vision & Objectives Networks Key Stakeholders Key Activities Key Resources Key Capabilities Technology Themes Customer engagement Channels Cost Structure Value Propositions Revenue Streams Strategies
  97. 97. An exciting low cost airline to fly on Young & invigorating image Baggage No baggage transfers No connection with other airline baggage services Baggage surcharge Auto-check with no baggage Internet Bookings Limited use of travel agents Fast Aircraft turn-around times Not burdened by traditional air and ground crew procedures No connection with other airlines Standardized aircraft to cut down on maintenance costs Extra means of revenue Paid snacks & meals Seating Blankets Computerized ticketing methods Related businesses - hotels General savings on overheads Low landing charges and terminal fees Headquarters located at airport terminal Young good looking air & ground crews Modern and trendy aircraft interiors Advertising image
  98. 98. Vision & Objectives Strategy Key activities Key capabilities Themes Revenue streams Channels Source of opportunity Customer segments Technology Key stakeholders Networks Cost structure Key resources Value propositions Business Model
  99. 99. 1 2 3 4 5 Is my vision and objectives clear? (1 = no, 5 = yes) Do I know what my key activities will be? (1 = no, 5 = yes) Do I know what my key capabilities should be? (1 = no, 5 = yes) Am I sure about how I should engage the customer? (1 = no, 5 = yes) Do I know what my revenue streams will be? (1 = no, 5 = yes) Sub-Total (score out of 25)
  100. 100. Idea Appraisal (out of 50) Technology Appraisal (out of 25) Resources Appraisal (out of 25) Skills Appraisal (out of 25) Network Appraisal (out of 25) Value Chain Appraisal (out of 25) Strategy Appraisal (out of 25) New Product Development Appraisal (out of 25) Business model appraisal (out of 25) Total Possible (250) Multiple X 4/10 %
  101. 101. 100% Outstanding (the ideal business opportunity) 90-99% Very Good 80-89% Good (the plan is sound with a few areas that need to be refined) 70-79% Above Average (this plan has some good areas but needs reevaluation and improvement) 60-69% Average (some areas covered in detail yet other areas show Weaknesses) 50-59% Below average (most areas evaluation and improvement) Below 50% Poor (plan needs to be researched and documented much better)
  102. 102. The novelty of a new essential oil The potential uses & applications of the new essential oil The closeness of any substitutes The stability of the essential oil in applications The cost/performance ratio The Toxicity The general consistency of quality and supply The prevailing market/product trends The current level of technology Low Novelty High Novelty Low Potential High Potential Close Substitutes No Close Substitutes Poor Stability Good Stability Poor Ratio Good Ratio High Toxicity Low Toxicity Low Consistency High Consistency Low Trend Match High Trend Match High likelihood of synthesis Low Likelihood of Synthesis A BDC A Grid showing the characteristics of a new essential oil
  103. 103. Genetic Material Habitat & Topography Suitability Soil Type, Texture & Drainage Suitability Temperature Range Suitability Rainfall Suitability Access to Irrigation Diurnal Radiation Crop Maintenance Cycle Pest, Disease & Weed Control Issues Easily Available Need to Develop Very Suitable Not Suitable or Need to Develop Very Suitable Not Suitable Very Suitable Out of Range Very Suitable Deficient or Excessive Yes No Very Suitable Out of Range Common & Generic Require Specialized Processes Common & Generic Require Specialized Processes Harvest & Extraction Processes Common & Generic Require Specialized Processes The Agronomic Characteristics Required for the New Essential Oil
  104. 104. Technology Required Level of Mechanization Required Research & Development Time-frame Capital Requirements Crop Cycle Timeframe (Additional) Infrastructure Required Regulatory Issues Skills, Competencies & Capabilities Required Networks, Market, Potential Competitors, etc. Low & Generic High & Specialized Low and/or Generic High and/or specialized Short & straight forward Long & Complex Low High Short Long Low High Low Need of Consideration High Need of Consideration Common & Generic Rare & Specialized Available Networks, Wide Market & high competition Need Network, Specialized Market, Few Competitors Potential Revenue HighLow The Project Characteristics.