In chapter six, we are introducing the concepts of how to create business from opportunities. This course provide the students with a conceptual knowledge regarding the essentials for management practices of a technology-based organization, and the evolution of technology. The topics covered in this course would include: • Introduction to the concept of entrepreneurship. • What entrepreneurs do and their importance to economy • How to seize business opportunity; • Know the process of creativity and difference between invention and innovation • Know how innovation is important as a dimension of entrepreneurship • Critical factors in managing technology; including • The Time Factor (Osborn effect) • Technology Push and Market Pull • The S-Curve of Technology • Technology and Product Life Cycle • The Chain Equation of Technology Innovation • Price Knowledge Gape Relation • Difference between Entrepreneurship and Stewardship Management • Difference between technology leader and followers • Competition and Competitiveness Concepts. • The process of the technological innovation; • Who are the customers; and • How to optimize cost and find finance for your projects • Demonstrate the importance of business plan, including the marketing and financial plans and how to prepare it. • Know the structure and management of a technology organization

1. CS443 Course
Introduction To Entrepreneurship
p p
Spring 2009, Modern Science & Arts University
Chapter Six: Creating Business from Opportunity
Instructor:
Al-Motaz Bellah Alaa Al-Agamawi
Chapter Source, “chapter Two: entrepreneurship starting and operating a small business”
book, by Steve Mariotti, 2007, Pearson Education, Inc.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

2. Four basic Types of Business
2
Manufacturing: Makes a tangible product.
Wholesale: Buys in bulk From the manufacturer and sells smaller quantities to the
retailer.
Retail: Sells one piece at a time to consumers .
Se ces: Sells a g b e p oduc o co su e .
Services: Se s intangible product to consumer.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

3. Three Question to Define a Business
3
Who will the business Serve?
Who is in the market for your product and service?
What will the business offer to customers?
what are the product or service business will sell?
How will the business provide the product or service it offer?
What are the primary actions and activities required to conduct this business?
Buying or developing or manufacturing the product
Identifying its potential customers and selling the product to them
Producing and delivering the product or service
Receiving Payment
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

4. Three elements for Business Definition
4
The Offer: what will you sell to your customers?
g g y g
Target Market: Which Segment of the consumer market are you aiming to serve?
Production and Delivery Capability: How will you provide your offer to your
targeted customers?
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

5. Competitive Advantage
5
Competitive advantage. It is whatever you can do better than the competition that
y
will attract customers to your business.
Can you supply your product a t a lower price than other businesses serving
your market?
Can you attract more customers than your competitor by offering better
quality or some special service?
Find Your Competitive Advantage by Thinking about What
Consumers Need
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

6. Competitive Strategy
6
Y business will only succeed if you can offer the customers i your market
Your b i ill l d ff h in k
something more than the competition does.
Once you are clear about your competitive advantage , or core competency, your
business decisions will start to fall into place.
Your competitive strategy combines your business definition with your competitive
advantage.
A competitive advantage must be sustainable, meaning that you can keep it going.
If you decide to beat the competition by selling your product at a lower price
, your advantage will not l t l
d t ill t last long if you cannot afford t continue at th t price.
t ff d to ti t that i
Small business owners should realize that price alone is probably not going to
work advantage for long.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

7. Strategy VS. Tactics
7
Y strategy i the plan f outperforming the competition.
Your t t is h l for f i h ii
Your tactics are the ways in which you will carry out your strategy.
If your tactics attract enough customers to make a profit . you will have found a
strategy for achieving a competitive advantage.
To find a competitive advantage. think about everything your business will offer.
Look at your:
Location
Product
D i
Design
Price
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

8. Smart Tactic Example
8
S
Surprisingly. a l of software i available f free or low cost on the I
ii l lot f f is il bl for f l h Internet. FFree
software is called freeware and is free for one of two reasons:
The individual who developed it is eager to share it with others.
A company wants to start you using the program so you will be interested in
buying other; related merchandise. Apple used this strategy effectively with
QuickTime multimedia software and Microsoft used it with the Internet Explorer
Web browser.
Freeware does not include upgrades or technical support. The supplier of a
f
freeware program gambles th t people who use it will like it so much th t th will
bl that l h ill lik h that they ill
decide to pay for the program that includes those upgrades and support .
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

9. Competitive Advantage
9
S
Successful Companies N d the Following:
f lC i Need h F ll i
To sell to a market that is large and growing.
To sell to a market where the competition is able to make a profit.
To sell to a market where the competition is succeeding but is not so powerful
as to make it impossible for a new entrepreneur to enter the market.
To sell a product or service that solves problems consumers may have with the
competition.
To sell a product or service at a competitive price that will attract customers.
If all of th
ll f these are in place, you need to do the f ll i
i l d t d th following:
Understand the needs o f your customers.
Have a sustainable competitive advantage.
Deliver a product or service that meets your customers'' needs at a fair price.
l d h d f
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

10. Six Factors of Competitive Advantage
10
Q lit C you provide higher quality than competing b i
Quality- Can id hi h li h i businesses?
?
Price- Can you offer a lower price than your competition?
Location- Can you find a more convenient location for customers?
Selection- Can you provide a wider range of choices than your competitors?
Service- Can you provide better; more personalized customer service?
Speed/Turnaround
Speed/Turnaround- Can you deliver your product or service more quickly than the
competition?
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

11. Naming Your Business
11
Wh are you going to name your business?
What i b i ?
This is a very important decision. The name of your business will be the first
impression you make on customers. Ideally, it will convey your competitive
advantage to your market.
Keep it simple: The best name is one that tells customers what the company dues,
sells,
sells or makes.
"Naming the company is the first move of many in which you should keep
th customer's needs first and f
the t ' d fi t d foremost i mind."
t in i d "
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

12. Analyzing your Competitive Advantage
12
C
Competitive offers- H d
titi ff ff ih h f l di
How does your offer compare with those of your leading
competitors? What are the key features of each?
Unique Selling Proposition- Based on that comparison, what is your unique selling
proposition USP?
This will require a comparison of offers and identifying what is unique about
yours that your competition cannot or will not match.
Cost Structure- What is different about your business activities, and the cost of
doing business, from that of your competitors? Overall, are you at a cost advantage
or di d t
disadvantage? ?
To be successful you must have a unique selling proposition that will attract
customers to buy from you.
Second, you must have a cost structure that sufficient.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

13. Defining the Unit of Sale
13
U it of sale, which i one unit of the product or service a b i
Unit f l hi h is i f h d i ll
business sells.
Entrepreneurs usually define their unit of sale depending on the type of business:
Manufacturing: One order (any quantity, 100 watch)
Wholesale: A dozen of an item.
Retail: One item
Services; One hour of service time.
If business sells combination of differently priced items (ex. Restaurant), then the
unit of sale is more complicated. In this case we can use the average sale per
t
customer:
Average Gross Profit per customer = Average sales per customer – Average
cost of sale per customer.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

14. Cost of Goods Sold and Gross Profit
14
C t of Goods Sold of one unit of product-COGS, this is cost associated with
Cost f G d S ld f it f d t COGS thi i t i t d ith
each unit of sale
Cost of material used to make the product
Cost of Labor used to make the product.
In services its name is Cost of Service Sold- COSS.
Costs of goods sold can be thought of as the cost of selling "one additional unit." If
you buy watches and then resell them, your COGS per unit is the price you paid for
t h O k COGS l l t fit b bt ti
one watch. Once you know your COGS, you can calculate gross profit by subtracting
COGS from revenue.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

15. Economy of One Unit- EOU
15
EOU i a method f seeing whether your b i
is h d for i h h business idea might b profitable.
id i h be fi bl
If one unit of a sale is profitable, the whole business will be profitable too.
Total Revenue = Total # units sold * unit selling price
Total COGS = Total # of units sold * unit cost price (price which you purchase with
from your supplier).
Total Gross Profit = Total Revenue – Total COGS
Cost of Labor must be calculated in the EOU.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

16. Chapter Assignment…
16
Chapter 2, entrepreneurship starting and operation a small business book
Page 56, Question 3
56,
Page 56 Application Exercise Question
Page 56, Exploring Online Question
Assignment Deadline: Next Week.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

17. Business Plan Practice (Project Section)…
17
Chapter 2, entrepreneurship starting and operation a small business book
Page 59,60 Unit One Business Plan Practice
Assignment Deadline: Week After Next.
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi

18. 18
Q&A…
Creating business from opportunity Chapter 6 By: Motaz Al-Agamawi