Mississippi State University
MGT 3323
Entrepreneurship
Daniel T. Holt
Assistant Professor of
Management
“The people’s university”
-- Dr. Mark Keenum
Administrative Issues
• First screen assignments—DUE Today, 13 Feb (electronic
version due NLT than 9 a.m. tomorrow morning)
• Grades will be posted NLT than Monday, 20 Feb
• Industry, Competitor, & Target Market Analysis—Due 5 Mar
• Get started early (represents 20% of your grade & 20 – 25 pages are
expected)
• Discussion for today
Planning Process
Considering the opportunity
generally
Business Opportunity Insight
Existing Markets
New Markets
Existing Products
New Products
Most simple ideas.
Face stiff competition because
existing firms
Practical
Practical
May be the most difficult as
they are expensive and
may require considerable
capital with R&D.
Feasibility Analysis
• A more stringent test designed to take the best ideas that
emerge from the First Screen and more fully assess the
feasibility
• Includes…
• First phase (due 5 Mar)
• Analysis of the Industry
• Analysis of competitors & how you’re different
• Analysis of the target market (requires first hand data from customers—we’ll talk
about this next Monday)
• Second phase
• Financial feasibility
• Final phase
• Revisions & improvements to first two phases
• And…
Suppliers
Distribution channels
Location analysis
Technology and service analysis
Requires….
• Primary data
• Analysis of original research data that you collect (for
instance, buying preferences of your target market—you
must do this as part of your assignment)
• Secondary data
• Analysis of data that are publicly available (for instances,
analysis of industry study data, Census Bureau data,
company reports
• These are found through several sources (we’ll discuss
several today)
Industries
Industries represent…
A group of firms
producing a similar
product or service
Industries vary by…
 Size
 Growth-rate structure
 Financial characteristics
 Attractiveness
Industry analysis shows…
• The market need
• There is a substantial market
size
• There are industry trends to
support the company’s strategy
Industry & Market Niches
• Industry—group of firms producing a similar product or service
• Large and growing industries (would like few competitors, less than 5)
• Structurally attractive
Start-ups can enter the industry and compete
• Target segment—portion of the industry that the firm goes
after or tries to appeal to
• Importance of product to its customers
• Should be large enough for the new business but small enough to
avoid attracting larger competitors
• Favorable environmental and business trends
Industry Participants
•
Describe segmentation
•
Product
• The computer industry might be segmented by PC, laptop, server equipment, or
software
•
Customer
• The computer industry might also be segmented by customers such as business,
individual, government, or schools
•
Financially
•
•
•
•
•
•
•
Some firms (as we have discussed compete on price) positioning themselves for a target group
financially (i.e., higher price ranges)
As you decide a focus, it might be good to overlap these two to clearly identify
your focus.
Nature of the participants in an industry
Size of the industry
Growth potential
Profitability (bizstats.com)
Key issues
•
Key trends & long term prospects for new products & services
Determining Industries
http://www.naics.com/search.htm
• Your demands…
• A definition of the industry (see p. 103-104)
• Industry characteristics
• Explain how the industry is segmented and where your business fits into
that segmentation
• Explain the portion or specific market within your broader industry that you
plan to target
• Industry size
• Normally displayed in dollars over 3 to 5 years
• Industry growth rate
• Displayed as a percentage over 3 to 5 years
• Consider looking at the local market it possible
See the Census
• Industry sales projections
• Report the next year to 3 years
• Consult trade associations
Identifying industries
Identifying trends
•How has the market changed
over the last five years?
•What is the projected growth in
the market?
•What factors will affect growth
…several reports are available
through Mintel.
‘…it’s a tough call in
many instances’ as many
firms might be classed in
a number of categories.
“Understanding an
industry is
solving a
puzzle…”
Industry trends
•What are the general economic
factors?
•What are the changing
regulatory conditions?
•What are the changing
consumer needs
Interpreting the
data to assess
the opportunity
‘Each fact and figure should
help you and investors
understand the viability of
the opportunity.’
Lets watch a pitch….
http://www.msnbc.msn.com/id/14855230/
What industry?
Online Retail Industry
Industry Issues
• Industry size
• Normally displayed in dollars over 3 to 5 years
• Industry growth rate
• Displayed as a percentage over 3 to 5 years
• Consider looking at the local market it possible
• See the Census
• Industry sales projections
• Report the next year to 3 years
• Consult trade associations
Industry Issues
• Industry size
• US online retail sector had total revenue of $134.9 billion in
2009
• The electronics segment was the sector's most lucrative in
2009, with total revenue of $32 billion, equivalent to 23.7%
of the sector's overall value
• Industry growth rate
• Represented a compound annual growth rate (CAGR) of
11.5% for the period spanning 2005-2009
• Industry sales projections
• Performance of the market is forecast to decelerate, with
an anticipated CAGR of 10.5% for the five year period
2009-2014, which
Industry Size
$ Billion
€ Billion
Percent
Growth
2005
87.4
62.9
2006
107.0
77.0
22.4%
2007
126.7
91.1
18.4%
2008
132.3
95.1
4.4%
2009
134.9
97.0
2.0%
Average Growth
11.5%
Source: Datamonitor (note from last week (see slides; access through Business Source Complete;
Search for this included “Industry profile” AND “United States” AND Datamonitor AND retail)
Consider the
following…
Develop business to retrofit cars to be
environmentally friendly.
Consider the Car Industry…
Financial Benchmarks
• Identify key financial benchmarks and ratios,
interpreting the meaning of those ratios (consult the
sources from the library & online sources)
• Bizstats example
Competition
Consider the Value Proposition
• Product
• Performance, quality, features, brand, selection, search,
easy to use, safe
• Price
• Fair, visible, consistent, reasonable
• Access
• Convenient, location, nearby, at-hand, easy to find, in a
reasonable time period
• Service
• Ordering, delivery, return, check-out
• Experience
• Emotional, respect, ambiance, fun, intimacy, relationships,
community
What would the primary and
secondary value be of
?
What would the primary and
secondary value be of
?
Competitors
• Direct competitors
• Businesses that offer a product similar
to yours
• Indirect competitors
• Businesses that offer close substitutes
to your product
• Future competitors
• Businesses that could move into direct
or indirect competitor roles
Future Competitors…
Competitive Advantages
•
•
•
•
•
Firms X, Y, and Z are in this market space
We are able to enter because …
We can protect ourselves from imitation by …
What do customers currently do without us?
Consider
• How do you compare to rivals?
• How can you compete in the space?
• Are rivals focused on your space?
Your demands….
•
An identification of direct and indirect competitors (see p. 134-137)
•
•
•
•
•
•
•
•
•
•
A description of where these competitors are located and how accessible they
are to customers
A description of the products and services competitors offer (varieties,
inventories)
Competitors’ prices and costs
The types of customers competitors attract
Competitors’ strengths and weaknesses
Competitors marketing and distribution systems
Barriers created by the competitors
A description of the methods for generating revenue in the industry
Your venture’s values and benefits directly compared to your competitors
against meaningful criteria that you define
A competitive analysis grid (p. 138)
Resources
• Consult the following to share avoid mistakes
• http://www.gaebler.com
• Company information
• Hoovers on-line
Http://www.hoovers.com/
• Professional Associations
http://idii.com/resource/associations.htm
http://www.weddles.com/associations/index.cfm
• Business patterns
• http://www.census.gov/econ/cdp/index.html
Resources
• Community specifics can be identified through
• US Census Bureau
http://www.factfinder.census.gov/home/saff/main.html?_lang=en
• City-Data
http://www.city-data.com/
• Income data for communities
• Quickfacts through US Census Bureau
http://quickfacts.census.gov/qfd/index.html
• Social trends
• Mintel (must create a profile using Mississippi State
Information; accessed through the library)
http://academic.mintel.com.proxy.library.msstate.edu/sinatra/oxygen_academic/whatshot/
Resources
• Company information
• Hoovers on-line
Http://www.hoovers.com/
• Professional Associations
http://idii.com/resource/associations.htm
http://www.weddles.com/associations/index.cfm
Questions, Comments, or
Criticisms?