Subject Module - Elective CIAKL II - Class 06

EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES
1

ANALYSING
THE
OPPORTUNITY

2

Analysing the opportunity
Sources:
 Howard H. Stevenson and David E. Gumpert, “The Heart of
Entrepreneurship”, HBR 1985
 Francois Colbert, “Entrepreneurship and Leadership in Marketing and
Arts”, International Journal of Arts Management, Vol6, Number 1, 2003
 Michael Porter, “Competitive Strategy ‐‐ Techniques for Analysing
Industries and Competitors”, The Free Press, 1980

Opportunistic, creative and innovative

The first step is to identify the opportunity, which entails an external (or market) orientation
rather than an internal (or resource) orientation. The promoter type is constantly attuned to
environmental changes that may suggest a favorable chance, while the trustee type wants to
preserve resources and reacts defensively to possible threats to deplete them. Entrepreneurs
are not just opportunistic; they are also creative and innovative. The entrepreneur does not
necessarily want to break new ground but perhaps just to remix old ideas to make a seemingly
new application. Many of today’s fledgling microcomputer and software companies, for
example, are merely altering existing technology slightly or repackaging it to accommodate
newly perceived market segments.

External pressures For the entrepreneurial mentality external pressures stimulate opportunity
recognition. These pressures include rapid changes in:
 Technology, which opens new doors and closes others. The minicomputer posed
problems for those producers that failed to perceive the change quickly.
 Consumer economics, which alters both the ability and willingness to pay for new
products and services. The sharp rise in energy costs during the mid‐1970s made
popular the wood burning stove and chain saw, and spawned the solar energy
industry, among others. But these same pressures set back those huge sectors of our
industrial economy that thrived on the belief in cheap energy forever.
 Social values, which define new styles and standards of living. The 1980s interest in
physical fitness opened up markets for special clothing, “natural” food, workout
centers, and other businesses.
 Political action and regulatory standards, which affect competition. Deregulation of
airlines and telecommunications has sparked opportunities for assorted new products
and services while at the same time disrupting the economics of truckers, airlines, and
many concerns in other sectors.

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4

 Economic factors To determinate how economic is growing, considering the inflation
rate, the exchange and interest rates and other economic factors that
have major impacts on how businesses operate and make decisions. Since all business
need capital to work, all costs of capital will determinate how business could grow or
expand, and all economic factors work together as force that affecting business trade
and the prices to the final costumers, because the exchange rates affect the costs of
exporting goods and the supply and price of imported goods.

 Social factors To identify social trends, culture environments that affect the demand,
including the wellness and health consciousness, age distribution, population growth,
active people rate, employment and careers, the consciousness and the commitment
of people to the state and the government. It is also important know the social
structure, the different life styles, and the trends of consumption.

 Technological factors They have large impact in the macro tendencies, with a great
impact in the trends of consumption, but also in the production efficiency, in the
development of new products that could emerge new companies with new products
that becomes from R&D activity. It is also important identify the rate of the
importance the technological evolution in the markets and in the business sector of
our interest, since technological shifts can affect costs, quality, new trends and lead to
innovation.

Furthermore, it is also important determinate what is the state of art of the technology
in the business sector, and how important is to follow the tendency, and if it is really
determinant for the success for the company and to the costumers.

 Environmental factors Great importance in the markets in nowadays, because people
and consumers developed a global concern about the environment, and that
conscientious determinate how they make their consumption. The concerns about the
ecological and environmental aspects such as the climate change, the weather,
climate, and, which may especially affect industries such as farming, insurance,
tourism, water and waste management, and all industries that may be affected or may
affect the environment, with pollutions activities, with a large impact on the
awareness of the potential impacts of climate change is affecting how companies
operate, which products they offer, and considering the governmental policies, how it
determinate the creating of new markets and diminishing or destroying existing ones.

 Legal factors How the markets operate, and have a large impact in many companies. In
many businesses it is necessary licenses to operate, and in some markets the
commercial activity is highly regulated by laws. Therefore, in these

cases it influences its production costs, the way how the companies can offer the products
to the market, and the demand for its products.

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PEAN COURS
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PEAN COURS
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7
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8

Strategy and implementation
Sources:
 Robert M. Grant, “Contemporary Strategy Analysis” Fifht Edition, Blackwell
Publishing, 2005
 Michael Porter, “Competitive Strategy ‐‐ Techniques for Analysing Industries
and Competitors”, The Free Press, 1980
 Francois Colbert, “Entrepreneurship and Leadership in Marketing and Arts”,
International Journal of Arts Management, Vol6, Number 1, 2003
 Philip Kotler and Kevin Keller, “Marketing Management”, 12th
edition,
Prentice Hall, 2006
 Regis McKenna, “Marketing Is Everything”, Harvard Business Review, 1991
 Kevin Roberts, “Lovemarks, The Future Beyond Brands”, Powerhouse Books,
205

Tools for strategic planning

Business strategy is a long term plan designed to achieve a particular goal or a set of goals.
The entrepreneur should gather as much information as possible about external conditions
and opportunities, as well as internal attributes, so that his decisions are valuable, feasible and
maximise value. Porter’s five forces model determines attractiveness of market segments the
company is interested in, and helps determining what should be its competitive advantages to
reach the objectives.

The Ansoff matrix is a valuable tool that helps decision making for growth strategy.
Implementing strategy means firstly defining the marketing mix also known as the  4P’s ‐ which
products, where they should be placed, at what price and how they should be promoted.
Secondly, to develop or to create the most efficiently organized internal processes, attributes
and resources required to achieve the purposed objectives. This includes investment decisions,
namely the acquisition of fixed assets, as shown in the next chapter.

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PEAN COURS
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9
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10

 Threat of new entrants: The most attractive segment is one in which entry barriers are
high and exit barriers are low. There will be few new entrants and many leaving the
segment. The worst case scenario is when entry barriers are low and exit barriers are
high since firms enter with a good economy and face high costs if they want to leave
during a bad economy.

 Threat of substitute products: A segment is unattractive when there are actual or
potential substitutes for the product. Price competition is high and profits are low.

 Threat of buyers’ power: When the buyers have many alternatives and switching costs
are low, their bargaining power rises and the segment is unattractive.

 Threat of suppliers’ power: Reduction of market attractiveness is also caused by
powerful, concentrated and organized suppliers which can easily raise prices or reduce
quantity supplied, or when the suppliers’ input is important and switching costs are
high.

However, when we are analysing the creative industries market, it’s important to consider
other forces in the market, since this is a market with some specificities, and is depending of
many interlocutors and stakeholders.

Like Michael Porter has identified 5 big forces in the market, for general markets, the same
process inspired a new perspective and market analysis. Considering multiple intervenients in
creative industries projects, it seems very important to include others groups of stakeholders
as forces into the market, once that can be determinate to the project success. They usually
are a concern to project promoters and they are referenced as strategic elements, and that’s
why it’s possible and important to define a strategy of how to involve all of them in the
development and implementation of the project.

Beyond suppliers and buyers power, threats of substitute products and threats of new
entrants, we have also for the creative industries, as stakeholders: the investors, the state,
sponsors and the place agents, all of them as forces in the market.

Investors – usually, the initial investment in creative industries projects is quite large which
leads to seeking intensive capital, where investors will be an answer and an alternative to
finance the projects, instead of using banks. At the same time, they also have great power and
the possibility to make pressure.

State ‐ can be seen as a partner, as an investor, as a promoter or even a direct customer to
certain cultural and economic activities, which may involve the creative industries. Through its
ministries and its social responsibility network, can also be seen as a network of contacts and
as a distribution channel for products and services.

That is why we may consider the State as a force in the market, because through specific
policies, it can finance or subsidize some areas and sectors of the economy that could make a
greater or lesser impact in production and create opportunities to the creative industries.

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PEAN COURS
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13

 Product development: Using an existing gap in the market to develop and offer
a new product in an existing market. Customer oriented companies usually take
customers suggestions and develop products to satisfy their needs.

 Product/Market diversification: New product in a new market, as in, for
example, entering a new segment with a new product. It could be the case of
vertical integration where the corporation buys a suppliers’ company hence
entering in a new market.

Subject Module - Elective CIAKL II - Class 06

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