Midterm #2 Study Guide GREAT

Midterm #2 Study Guide GREAT - Bus131D Midterm#2 Study...

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Bus131D – Midterm #2 Study Guide FEASIBILITY ANALYSIS What is a feasibility analysis? Why is a feasibility analysis necessary? Preliminary evaluation of a business idea Process of determining whether a business idea is viable/worth pursuing It takes the guesswork out of a business launch and provides an entrepreneur with a more secure notion that the idea is feasible The thought is to screen ideas before lots of resources are spent on them Components of a Feasibility Analysis A. Product/Service Feasibility Concept Testing: involves showing a preliminary description of the idea to prospective customers o Concept Statement – one page description of the produce idea A. Description of the product B. Intended target market C. Benefits of the product/service D. Description of how it will be positioned in the market E. Information about the founder/firm Usability Testing: involves asking prospective customers to perform certain tasks with the product idea o Prototype or Virtual Prototype (3D) – beta, trials, tests that is developed first B. Industry/Market Feasibility 1. Industry attractiveness 2. Market timeliness 3. Identification of a niche market Primary and Secondary Research needs to be conducted to gain a full understanding of the dynamics in the industry C. Organizational Feasibility 1. Management Prowess: passion and expertise of management team, extent of professional and social networks, new venture team 2. Resource Sufficiency: sufficient nonfinancial resources available to launch the venture D. Financial Feasibility 1. Total start-up cash needed (Murphy’s Law) 2. Financial performance of similar businesses 3. Overall financial attractiveness of the proposed new venture Porter’s Five Competitive Forces Potential Entrants – threat of new entrants Substitutes – threat of substitute product/services Suppliers – bargaining power of suppliers Buyers – bargaining power of buyers What is Value Innovation? Page | 1
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Markets are overcrowded and demand-starved Profitable growth only sustainable with re-creating markets Creating new market space is critical for new ventures It allows new venture to become big Create value with your own market space that is not yet occupied. Avoid competition and identify a niche that you can go after New Venture Produce Value Innovation Create uncontested market space (rather than compete in existing market space) Make the competition irrelevant (rather than beat the competition) Differentiation at low cost (rather than differentiation or low cost) Attract non-customers (rather than segmenting existing customers) Create and capture new demand (rather than exploiting existing demand) The Six Approaches to Value Innovation 1. Looking across substitute industries 2. Looking across strategic groups within industries 3. Looking across the chain of buyers
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This note was uploaded on 09/08/2010 for the course BUS 131D at San Jose State.

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Midterm #2 Study Guide GREAT - Bus131D Midterm#2 Study...

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