EMGT5130_2008_CH2

EMGT5130_2008_CH2 - EMGT5130 New Business Development...

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New Business Development EMGT5130 CHAPTER 2. Opportunity and the Biz. summary
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Figure 2.1 six steps to acting as an entrepreneur . 1. Identifying the opportunity 2.Determining the entrepreneur’s capabilities and interests 3. Evaluating the opportunity 4. Deciding to act on the opportunity or look elsewhere 5. Writing a summary of the concept 6. Testing the summary and the concept with potential customers and investors
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Good Opportunities - are usually disguised . - emerge from personal experience (need) . Opportunity pull : AIDS Capability push : Digital TV, CISCO Founders of new industry capitalize on opportunity pull to create disruptive innovations : Apple Apple sales: $7.8M in 1978; $117M in 1980; $5B+ in 2001 CISCO sales: $22B in 2001 Opportunity Identification
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1.Increasing the value of a product or service. winemaker: higher Q, better T, Lower P 2.New applications of existing means or technologies. credit card (magnetic) → hotel door card 3.Creating mass markets. disposable camera 4.Customization for individuals. Dell computer Table 2.1 Nine categories of opportunity.
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1.Increasing reach. Schwab (using Internet) 2.Managing the supply chain. Wal-Mart; Dell 3.Convergence of change. E-Trade (brokerage → banking 4.Process innovation. FedEx 5.Increasing the scale of the firm. Blockbuster; Hollywood video rental Table 2.1 Nine cat of opportunity. (cont)
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Entrepreneurship IS a Contact Sport   $ Time for New Tech to Reach 25% of US Population Household electricity (1873) 46 years Telephone (1875) 35 years Automobile (1885) 55 years Radio (1906) 22 years TV (1925) 26 years VCR (1952) 34 years PC (1975) 15 years Cellular phone 13 years WWW 7 years Spontaneity, Opportunism Discipline, Processes
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Role of Ideas A good idea is nothing more than a tool in the hands of an entrepreneur. Finding a good idea is the first step (entrepreneur’s creativity an opportunity); however, the importance of the idea is most often over-rated, usually at the expense of underemphasizing the need for products or services, or both, which can be sold in enough quantity to real customers.
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Opportunity An opportunity has the qualities of being attractive, durable, and timely and is anchored in a product or service which creates or adds value for its buyer or end user.
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Table 2.2 Sources of discontinuities.
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EMGT5130_2008_CH2 - EMGT5130 New Business Development...

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