Programme: BA (Hons) in International Business with Foundation Year Module: Understanding the Entrepreneurial Spirit Module level : Level 4 Resources Essential Resources Rae, D. (2015). Opportunity-Centred Entrepreneurship. (2nd ed.). London: Macmillan International Higher Education. Recommended Resources Bygrave, W.D. and Zacharakis, A. (2019). Entrepreneurship. (5th ed.). Hoboken, New Jersey: John Wiley & Son. Burns, P. (2018). New venture creation: a framework for entrepreneurial start-ups. (2nd ed). Basingstoke, Hampshire: Palgrave Macmillan. Bessant, J. and Tidd, J. (2015). Innovation & Entrepreneurship. (3rd ed.). London: Wiley Stokes, D., Wilson, N. and Mador, M. (2010). Entrepreneurship. London: Cengage Learning. Pervaiz, A. and Shepherd, C. D. (2010). Innovation Management: Context, Strategies, Systems and Processes. New York: Prentice Hall. Trott, P. (2021). Innovation management and new product development. 7th ed. Harlow: Prentice Hall. Wickham, P. (2006). Entrepreneurship. London: Prentice Hall. Week 3 – Lecture Exploring opportunities Topics for today’s session • Creativity and innovation in entrepreneurship • Recognising opportunities in the external environment • Opportunity building: matching needs and resources • Exploring opportunities: market and related investigation and research • Intellectual property: protecting ideas • Assignment guideline Introduction to the module AIMS Through the completion of this module, you will: 1. Gain an understanding of the theoretical and practical frameworks that underline entrepreneurship and intrapreneurship development. 2. Obtain knowledge and understanding of key aspects of business planning, financing, evaluating risk and how innovation creates competitive advantage 3. Develop marketing knowledge and skills, including the role of marketing and marketing processes 4. Understand how entrepreneurial marketing contributes to business startup and growth. 5. Develop entrepreneurial skills that foster engagement with various stakeholders for business development. LEARNING OUTCOMES 1. Recognise and assess the scope and characteristics of entrepreneurship and intrapreneurship 2. Demonstrate a critical understanding of entrepreneurship and entrepreneurs. 3. Present the differences between business activity and entrepreneurial activity, including notions of risk assessment 4. Demonstrate knowledge of the significance of marketing to entrepreneurial activities. 5. Develop personal entrepreneurial skills and behaviour to individually be able to establish a business, interact with and convince various stakeholders. 6. Evaluate how different national cultures will influence the effectiveness of different entrepreneurial policies. Assessment ▪ Assignment Deadlines and weight: Deadline Component number Form of assessment Learning Assessment Weighting outcomes size (%) assessed Late Subn Core or noncore 26/03/2023 1 2 Essay Portfolio 1,500 words 1,500 words 50% 50% 1, 2, 3 4, 5, 6 19/03/2023 Yes Core Yes Core Assessment ▪ Component One: Refer to Assignment Brief posted on Brightspace ▪ Component Two: Refer to Assignment Brief posted on Brightspace Creativity and innovation in entrepreneurship ➢ Today, we will explore the role of creative thinking and innovation in generating ideas and building on them to form opportunities through associative thinking. ➢ Gaps, needs and problems can be identified and analysed as a starting point for creative problem solving and opportunity recognition in the external environment. Exploring the Opportunity (Rae, 2007) Social Networks The extent and depth of an individual’s social network affects opportunity recognition. ➢ People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks ➢ It is more likely that an entrepreneur will get new business ideas through weak-tie rather than strong-tie relationships. Weak-Tie Relationships Strong-Tie Relationships • Frequent interaction and form between coworkers, friends • These relationships, which typically form between like minded individuals, tend to reinforce insights and ideas that people already have. • Infrequent interaction and form between casual acquaintances • The relationships, which form between casual acquaintances, are not as apt to be between like-minded individuals, so one person may say something to another that sparks a completely new idea Prior Experience Studies have shown that prior experience in an industry helps an entrepreneur recognize business opportunities. There are several explanations for this. ➢ By working in an industry, an individual may spot a market niche that is underserved. ➢ It is also possible that by working in an industry, an individual builds a network of social contacts who provide insights that lead to new opportunities Cognitive Factors ➢ Studies have shown that opportunity recognition may be an innate skill or cognitive process. ➢ Some believe that entrepreneurs have a “sixth sense” that allows them to see opportunities that others miss. ➢ This “sixth sense” is called entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in deliberate search. Creativity Creativity is the process of generating a novel or useful idea. Opportunity recognition may be, at least in part, a creative process. For an individual, the creative process can be broken down into four stages Brainstorming →Is a technique used to generate a large number of ideas and solutions to problems quickly. →A brainstorming “session” typically involves a group of people, and should be targeted to a specific topic. Focus Groups → A survey is a method of gathering data from a sample of individuals, who have been selected based on their common characteristics relative to the issues being discussed. →The internal dynamics of the group environment is used to gain insight into why people feel they way they do about a particular issue. Surveys Customer Advisory Boards →A survey is a method of gathering information from a sample of individuals. The sample is usually just a fraction of the population being surveyed. → Surveys generate new product, service, and business ideas because they ask specific questions and get specific answers. → Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas. Creativity and Innovation ➢ Creativity – the ability to develop new ideas and to discover new ways of looking at problems and opportunities; thinking new things. ➢ Innovation – the ability to apply creative solutions to problems or opportunities to enhance or to enrich people’s lives; doing new things. Categories of Innovation D I S R U P T I O N 1. Continuous – CFC free refrigerators, flat screen TVs 2. Dynamically Continuous – Digital cameras, Smart Phones, Electric Cars 3. Discontinuous – Microwave ovens, Internet, Sat Nav The relationship between creativity and innovation ➢ Divergent thinking generates new associations and possibilities ➢ Creativity: generating ideas • • • • identifying and defining the opportunity, need or problem researching – gathering and analysing information exploring – open-ended quest for new information investigating – focused search for specific information. ➢ Convergent thinking enables selection between alternatives ➢ Innovation: finding & applying solutions • • • • planning what to do developing and implementing the innovation communicating the idea to stimulate demand monitoring progress, measuring and reviewing the result Activity Innovation can best be defined as: a) b) c) d) the generation of new ideas. the evolution of new ideas. the opposite of creativity. the successful exploitation of new ideas. Recognising opportunities in the external environment The innovation journey Generate new ideas, options, possibilities Market research report Idea Space Creative thinking: connect ideas, needs & resources Develop the idea as an opportunity Innovation: purpose product project planning & development Opportunity exploration Implementation Resource networks Opportunity evaluation & assessment Problem mapping Identify existing need, problem, possible opportunity Demand Innovation Feasibility Attraction Innovation function analysis Opportunity assessment pentagon Intellectual property definition/ protection Connect opportunity with networks and resources Recognising opportunities in the external environment Is an idea the same as an opportunity? ➢ An idea is a creative connection between two or more pieces of information. ➢ An opportunity can exist where there is a need, problem, and/or want. • Need - something that people must have to survive Example: water, food • Want - a product or service that people desire Example: Luxury Watch Not every business idea is a good business opportunity. Customer Needs- The Creativity Spectrum Recognition 1. Existing markets: customer needs are served by existing products. Discovery 2. Latent markets: customer needs exist but a product has not been offered to meet them. Creation 3. Incipient markets: needs do yet exist but trends indicated these needs will emerge. Tata Nano Google Self Driving Car Activity Think about setting up a new venture- selling luxury handbags. Ask yourself the following questions: 1. Does the idea fill a need or want that’s not currently being met? 2. Will the idea work in the location or in the way that you plan to sell it? 3. Can you put the idea into action within a reasonable amount of time? Window of Opportunity - the period of time you have to act before the opp. is lost 1. Do you have the resources and skills to create the business? 2. Can you provide the product or service at a price that will attract customers? Recognising opportunities in the external environment Essential features of an opportunity: ➢ Demand: there is a need, problem or potential demand to be satisfied. ➢ Innovation: there is an idea for the product, service or experience to be provided. ➢ Feasibility: the idea is technologically feasible. ➢ Attractiveness: the potential reward and the level of interest to the entrepreneur. Together these creates DIFA→ method of defining whether an opportunity actually exists. Recognising opportunities in the external environment The factors which give rise to opportunities can be divided between: ‘supply-side’ or ‘push’ factors, and ‘demand-side’ or ‘pull’ factors which arise from market need. Supply-side or push factors Demand-side market needs, or ‘pull’ factors Technological advance, new possibilities and innovations Demand for innovation New products or processes becoming available Legislation, compliance and standardisation Increase or decrease in cost and availability of resources Increase or decrease in transaction and process costs Social and consumer trends, e.g. rising expectations, increasing disposable income Supplier and distributor capabilities Demand value for money Effects of competition, e.g. rising or falling prices Potential advantages, e.g. saving time or cost Demand from supplier and distributor chains Opportunity and problem mapping: creative thinking to generate innovation ➢ One important process in developing an opportunity is to match the need, problem or demand with the resources needed to make it happen. ➢ That does not mean the entrepreneur needs to own or control the resources, but is rather able to find them and connect them with the project in a negotiated way. ➢ For example, by offering the resource owners the opportunity to participate as investors or partners in the venture. Sources of equity funding for entrepreneurs Sources of equity funding for entrepreneurs ➢ A venture capitalist (VC) is a private equity investor that provides capital to companies with high growth potential in exchange for an equity stake. This could be funding start-up ventures or supporting small companies that wish to expand but do not have access to equities markets. Examples of VCs include General Atlantic and Insight Venture Partners ➢ Corporate venture capital (CVC) is the investment of corporate funds directly in external startup companies. CVC is defined by the Business Dictionary as the "practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise; the objective is to gain a specific competitive advantage.“ Examples of CVCs include GV (investment arm of Alphabet Inc.) and Intel Capital. ➢ Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over US$34 billion was raised worldwide by crowdfunding. ➢ An angel investor (also known as a private investor, seed investor or angel funder) is a high-networth individual who provides financial backing for small start-ups or entrepreneurs, typically in exchange for ownership equity in the company. Often, angel investors are found among an entrepreneur's family and friends. Opportunity and problem mapping: creative thinking to generate innovation Value Proposition Canvas Opportunity and problem mapping: creative thinking to generate innovation Value Proposition ➢ Deliver Customer benefits – customers must see value to them in their own terms ➢ Unique – customers must recognise the benefit(s) as different ➢ Profitable – the company has to be able to deliver at a profit ➢ Sustainable – the advantage should be difficult to copy (have a competitive advantage) Competitive Advantage ➢ Competitive advantage is a function of either providing comparable buyer value more efficiently than competitors (low cost), or performing activities at comparable cost, but in unique ways that create more buyer value than competitors and, hence, command a premium price (differentiation) (Porter, 1985) ➢ 1. Superior Product ➢ 2. Superior Customer Service/Experience ➢ 3. Superior Brand ➢ 4. Cost Advantages ➢ 5. Legal e.g. Intellectual Property Advantages New Value Proposition – No Go Areas Let's look at the following example Barbie vs Bratz dolls “In the four years since their launch in Britain, the Bratz have grabbed a 40% of the £100m-ayear UK doll market, outselling Barbie by an astonishing two to one.” Barbie dolls “For little girls” “Too pink” “Fairies/Disney” “Boring - do not have adventures” Bratz dolls “More like me” “More adventurous” “Like shopping” Opportunity building: matching needs and resources The resources which may be required to exploit an opportunity could include: ➢ knowledge – skills, expertise, specialist know-how and information ➢ technology – existing technical capability or capacity ➢ physical equipment and plant or materials and components ➢ finance – investment capital and start-up capital ➢ human – skills, expertise and capability which is required in the venture ➢ access – permission, licenses, distribution networks ➢ intellectual property – patents, brands, trademarks, design rights, copyright ➢ capacity – facilities which need to be bought-in or sub-contracted. Exploring opportunities: market and related investigation and research ➢ Exploring the market is a key learning process for any opportunity, especially if it is in a sector which is new or unfamiliar to the entrepreneur. ➢ The market focus funnel illustrated in the next slide, visualises the market exploration as a progression where we move from an overview to detailed and specific probing. Exploring opportunities: market and related investigation and research ➢ Identify potential markets ➢ Market characteristics: total value, growth, accessibility. ➢ Decide on target market. ➢ Identify customer segments within market. ➢ Identify segment characteristics: total value, growth, accessibility. ➢ Decide on target segment(s). ➢ Identify customer needs, preferences. ➢ Decision-making factors, pricing. ➢ Identify media, promotional and sales channels. ➢ Develop marketing plan. The market focus funnel Exploring opportunities: market and related investigation and research ➢ Realistically, it is unlikely that your venture will meet the needs of everyone in the market. ➢ You will be more successful if you target your idea at one market sector or segment and aim to meet its needs fully. ➢ To identify this segment, look at the market on a micro levels. ➢ Think about the following questions on the next slides Exploring opportunities: market and related investigation and research Questions to use in conducting market research Potential markets ● What are all the potential markets for the opportunity? ● What is the size of each market: global, national, regional, local? ● What is the total value of each market in sales per year? ● Is each market growing, static or declining? ● What is the intensity of the competition in each market? ● What percentage share of each market could be achieved within (say) two years? ● Which is the most attractive market to enter? Exploring opportunities: market and related investigation and research Questions to use in conducting market research Target market ● How many customers are in the target market? ● What is the anticipated lifetime of the market in years? ● What are the key factors which drive demand and price in the market? ● Who are the dominant sellers in the market? ● What are their market shares by per cent, their competitive strengths and weaknesses? Exploring opportunities: market and related investigation and research Questions to use in conducting market research Customer segments ● How can the market be segmented, for example by geography, industry sector (business/institutional), socio-economic group, age range, occupation, interests (consumers), average spend and media consumption? ● What are the customer segments? ● Which of these are most attractive in terms of under-met needs or aspirations, growth in size/spend and affinity with product? Exploring opportunities: market and related investigation and research Questions to use in conducting market research Target segment ● Who are the target customers? ● What is the average spending per customer per transaction and per year on this product? ● What percentage of the annual spend by this segment can the business secure? ● What is known about these customers? ● What do they want or need? What do they like and dislike? ● Why do they want or need the product? What benefits do they gain from it? ● How far are these wants, and needs met at present? How well are they met? ● What problems or dissatisfaction do the customers experience? ● What are their buying criteria: what, how and from whom to buy? ● What factors do they see as ‘value for money’ and ‘quality’? ● What are their ‘affinity habits’ – what related purchases do they make, what are their listening, viewing, Internet-browsing, reading, visiting habits? Exploring opportunities: market and related investigation and research The STP model is a central concept in marketing that is absolute key to serving a market successfully. STP refers to three activities: segmentation, targeting, and positioning. Customer Segmentation drives Value Proposition How to Segment Consumers (B2C) Markets The Target Segment Targeting is what organisations then do to determine which, if any, of the segments identified should be targeted and become the focus of their marketing efforts (these efforts could include the marketing mix and positioning) ➢ Undifferentiated Marketing e.g. Commodity, Housing offered by local authorities ➢ Differentiated Marketing e.g. Exploit several segments VW, Unilever ➢ Focused / Concentrated Marketing e.g. Saga (products and services for older people) ➢ Customised Marketing - Individually tailored to each customer Marketing Mix- 4P’s Positioning ➢ Position in the ‘Mind’ of the customer ➢ The element “that takes into consideration not only a company’s own value proposition but those of its competitors as well” ➢ Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market. Example of Perceptual Map Segmentation and Positioning Position is in the mind of the customer i.e. not market share Competitive positioning How customers perceive alternatives Customer needs Designing the Value Proposition How marketers identify groups of customers Market segmentation Activity Which section of the business plan focuses on the specific segment or target market of an industry to which the firm will try to appeal? a. Current status b. Market analysis c. Company summary d. Operations plan Activity Which of the following is the reason for business failure ? a) Lack of market research. b) Poor financial control. c) Poor management. d) All the above. Intellectual property: protecting ideas A vital area to consider in exploring opportunities is whether the ownership of the idea can be protected. The area of idea ownership is termed intellectual property (IP), and relates to the following forms of intellectual property rights (IPR): ➢ Patents: protect original discoveries and inventions, such as processes and products, which must be new, inventive and capable of industrial application. ➢ Trademarks: are signs, such as words, logos and pictures, which distinguish the products and services of one organisation from another. They include product and organisation brands such as Virgin, McDonald’s and Orange. Registering a trademark prevents others from using the same mark in relation to the types of products and services for which it is registered. Intellectual property: protecting ideas ➢ Design protection includes Registered Design, which is the total right of ownership to use the design. It covers the appearance of a product or part of a product, which must be novel, individual and not generic. ➢ Copyright is similar to design right, giving creators of all creative works the right to control use and publication for between 25 and 70 years, depending on the type of work. ➢ Trade secrets are unregistered intellectual property, which include confidential processes, techniques and recipes – for example, the secret ingredients of Coca-Cola. They can be protected by confidentiality agreements or by being handed down verbally from one family generation to another, effectively depending on trust. But once the secret is disclosed it is impossible to assert ownership, protect the product or prevent copying Activity Trademarks relate to: a) Practice and knowledge acquired through experience b) The protection of proprietary information of commercial value c) The right to reproduce ones own original work d) Brand identity Activity Which of the list below does not form Intellectual Property? a) Trademarks. b) Patents. c) Tangible assets. d) Copyright. ASSIGNMENT BRIEFS • Component 1 • Component 2 Assignment guideline • Component One and Component 2 • General and basic guideline: • All assignment questions contained in each of the assignment briefs are to be addressed. • Tick each question whenever it is completely addressed. • Read and understand each of the questions carefully before conducting the respective research. • One of the purposes of doing an assignment is to show to your lecturer what you have learnt from the lectures. How to do it? Always refer to the core textbook and the lecture notes before answering the questions. Cite all the relevant materials and apply them to your assignment whenever required. • Always refer to and follow the CRAAP Test. See table. Assignment guideline • Component One and Component 2 • General and Assignment-specific guideline: • Refer to the Marking Guidance table stipulated on p. 4 of the assignment brief. • Address each sub-topic logically and whenever appropriate. • Quantitative measurement (word count) is one of the requirements but qualitative work is equally required for each part of the assignment. • In general, if you have addressed those points in the table, you’ll be fine. Yet, high quality of work is always what we are looking for. • Respective topics in the table should be sufficiently covered in the lecture notes. • Your lecturer will walk you through with it during various lectures, before the submission date or whenever appropriate. SUMMARY • Creativity and innovation in entrepreneurship • Recognising opportunities in the external environment • Opportunity building: matching needs and resources • Exploring opportunities: market and related investigation and research • Intellectual property: protecting ideas Any questions? Thank You References Baron, R. (1998). ‘Cognitive Mechanisms in Entrepreneurship: Why and When Entrepreneurs Think Differently Than Other People’. Journal of Business Venturing, 13(4): 275-294 Burns, P. (2018). New venture creation: a framework for entrepreneurial start-ups. 2nd ed. Basingstoke, Hampshire: Palgrave Macmillan. Bygrave, W.D. and Zacharakis, A. (2019). Entrepreneurship. (5th ed.). Hoboken, New Jersey: John Wiley & Sons. Cohen, S.L., Bingham, C.B. and Hallen, B.L. (2019). The role of accelerator designs in mitigating bounded rationality in new ventures. Administrative Science Quarterly, 64(4), pp.810-854. Evans, V. (2016) Writing a Business Plan, How to win backing to start up or grow your business. 2nd Ed. Pearson Education: Harlow. Meoli, A., Fini, R., Sobrero, M. and Wiklund, J. (2020). How entrepreneurial intentions influence entrepreneurial career choices: The moderating influence of social context. Journal of Business Venturing, 35(3), p.105-982. Mullins, J. (2018). The New Business Road Test. 5th Ed. Harlow: Pearson Education. Open University (2020) Entrepreneurship Accelerator. Available at: https://www.open.edu/openlearncreate/mod/oucontent/view.php?id=144663&section=4.2 (Accessed: 28 December 2022). Steininger, D.M. (2019). Linking information systems and entrepreneurship: A review and agenda for IT‐associated and digital entrepreneurship research. Information Systems Journal, 29(2), pp.363-407.
