1. ENT422: The Role of Entrepreneurship in Value Creation in Large and Small Enterprises Lecture 3 Guest Speaker: Jim Doyle, Jr. Executive Director, ProVenture (Far East) Ltd.
What are some of the points we gained from Jim’s lecture?
What would you done differently if you had started ProVenture?
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2. Highlights of September 21
Corporations start new business because base is maturing, to meet strategic goals, new ideas from employees and others.
The success of corporate venturing varies; they can be excellent or very poor.
All organizations should attempt venturing – but they need support from management.
Major changes taking place in the economy resulting in opportunities for entrepreneurs are: technological, political and regulatory and social/demographic.
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3. Highlights of September 21 (cont.)
Industry components influence new ventures: knowledge and demand conditions, life cycles and structure (capital needs, concentration, etc.)
Sources of ideas include consumers, distribution channels, federal government and personal R&D.
Other methods include focus groups, brainstorming and inventory analysis
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4. Sources of Information for Evaluating Ideas
Baron: Chapter 4
Acquiring Essential Information
Readings: (handout materials) Alreck Chap. 1 Initiating a Survey; Chap. 2 Planning the Project; The Market Research Encyclopedia; The Business Plan Resources; Conjoint Analysis; Internet sources including Google; Business Week article: “Get Creative”
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5. Background What not to do: Mr. and Mrs. “Bow Tie” He was an engineer
She was the conductor ridding in the caboose; (should she have been driving?)
They wanted some advise
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6. Conditions Favoring New Business Development
Industries that are growing rapidly and not controlled by a few companies.
Where innovations are coming from small companies.
Industries that are not capital intensive or require high advertising expenditures.
Industries that are in early life cycles.
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7. Information Needed For Idea Evaluation
Market data concerning needs and preferences of potential customers.
Potential government regulations and policies that will impact the evaluation of the idea.
What entrepreneurs need to know about government regulations.
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8. Market Information: Ways to Determine What Customers Want
Direct Techniques:
Customer surveys – using market research to help determine if the idea will satisfy customers needs/wants. Peter will discuss
Perceptual mapping - a method used to identify the key dimensions (attributes) of an idea which can be used to gauge how customers perceive them.
Focus groups – group discussions can help determine how customers will perceive and evaluate the idea.
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9. Market Information (cont.)
Indirect Techniques (or Secondary Data):
Reading material - (handouts) contain a number of suggestions that could be used to evaluate ideas.
Industry associations and publications - could be vital sources of data.
Information from potential competitors - will be vital to the evaluation process.
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10. Government Policies and Regulations: How They Affect New Ventures
Compared to other countries starting a business in the U.S. is relatively simple. Other countries exercise greater control.
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11. Government Policies and Regulations (cont.)
Taxes:
Overall tax rates – total tax rates can negatively impact the growth of startups; when they increase they go down and conversely go up when they are lower.
Legal forms of startups can impact tax paid;
A “C” corporation must tax profits; a subchapter “S” passes profits to individuals.
Tax incentives – some government policies are positive for new businesses; benefit from depreciation; tax credit for R&D activities.
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12. Other Government Policies
Favorable Trends:
Support of innovation – to support small business innovation research (SBIR) requires all federal agencies to set aside 2% of their budgets for funding contracts, grants or cooperative agreements.
Small business administration (SBA) helps startups by loaning money.
Women and minority entrepreneurs – several programs to assist these groups to start businesses. Also there is a program designed to stimulate growth in select economic areas.
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13. What Entrepreneurs Need to Know About Government Regulations
Occupational Safety and Health Act (OSHA):
Employers required to provide a safe and healthy work environment.
To comply with specific with specific occupational safety and health standards.
To keep records of occupational injuries and illnesses.
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14. Government Regulations (cont.)
Equal employment opportunity laws - protecting against discrimination:
Title VII of the Civil Rights Act of 1964 – prohibits discrimination on race, color, religion, sex or national origin.
Americans With Disabilities Act of 1990 – prohibits discrimination of persons who are able to perform the essential job functions in spite of disabilities.
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15. Workshop Hand in and discuss the idea generation guide for two ideas.
Work on the application of QuickScreen exercise for two ideas, deciding on one for further study (due at next class).
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16. Market Research
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17. CRITICAL ROLE OF MARKET RESEARCH
The reasons companies do not to market research
Everyone agrees this is a great idea!
We have talked to several potential customers!
Can’t afford it…
Etc!!!
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18. CRITICAL ROLE OF MARKET RESEARCH (cont.)
The consequences of not doing market research.
80% of new product fail
65% of new product development funding is wasted
75% of the products that are test marketed succeed
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19. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Successes and Failures
A $29K “failure”
EPIC, Early Product In Color
The Xerox 5775/Fiery System…
TESCO
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20. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Planning Your Research
Define critical planning assumptions (CPAs)
Have we defined the problem / potential consequences?
What information do we have?
What additional information do we need?
What are the options to gather this information?
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21. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Market Research Options
Focus groups
Survey research
Internet
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22. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Focus Groups
Define the hypotheses
Group dialogue can stimulate interaction
Use the information to prepare survey
Risk: data not projectable
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23. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Survey Research
Phone interviews
Mail survey
Mall Interviews
Benefit: Data can be projectable
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24. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Survey Implementation
Question wording
Scaling
Always pilot
Use Survey Research Handbook
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25. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Internet
Harris Interactive
Internet Services
Advantages
Fast
Cost effective
Customer Suggestions
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26. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Develop your research team
Key managers
Investors
Suppliers
Someone who knows something about market research!
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27. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Analyzing data
Statistical tools
Relationships between variables
Analysis vs. interpretation
Use Survey Research Handbook
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28. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Possible suppliers
Knowledgeable member of the team
Local Business School
“The Credit Audit”
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29. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Getting the information you need
The Internet / Google
Simon School Management Library
The Rundle Memorial Library (Tradeshows)
Professional Associations
SBA
Rochester business Journal
Journals
RBA / HTR
GRE
Rochester Venture Capital Group
Friends, neighbors
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30. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Market research follows the product life cycle
Product development
Introduction
Launch/national roll-out
Maturity
Withdrawal
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31. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Conjoint Analysis
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32. CRITICAL ROLE OF MARKET RESEARCH (cont.)
The Market Research Encyclopedia
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33. CRITICAL ROLE OF MARKET RESEARCH (cont.)
Information Exists…You Do The Mining
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34. Assignment for October 5
Guest Speaker: John Lacagnina, Ceo, Colorcentric Corp.
Topic: The Importance of Creating Value For The Customer
Case due: examining the industry (Baron, page 372) individual preparation. The report should be typewritten, a maximum of two pages answering the questions.
Workshop:
Hand in and discuss QuickScreen exercise for two
ideas, selecting one for further study.
Work on exercises 1 & 2.
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