Assessing market opportunity may be thought of in terms of fit external and

Assessing market opportunity may be thought of in

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Assessing market opportunity may be thought of in terms of: fit, external and internal; time frame, including the speed of development; and decision outcome. Fit : In assessing an opportunity, an entrepreneur must ask: Is there a demand for this product or service (product-market fit) and are we the right company to sell such a product (product- company fit)? Assessing product-market fit requires knowledge of the marketplace as well as an understanding of customers‟ willingness to purchase the product or service from an entrepreneur.
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126 Likewise, assessing product- company fit involves considering one‟s own company‟s resources, skills, and capabilities that are needed to exploit the opportunity. Fig. 7.0 can be used to assess the fit based on the company‟s position on the newness map. Fig. 7.0: Company’s Position on Newness Map Newness to Market Low High Newness to Firm High Product-Company fit issue Maximum uncertainty and risk Low Cannibalization: Size of incremental impact Product-Market fit issue Time Frame : In assessing an opportunity, an entrepreneur must ask: How much time do we have to develop this opportunity? Speed of development is a critical factor in gaining a competitive advantage in the marketplace. The decision to speed up depends on the development risk and the opportunity cost. Fig. 7.1: Company’s Position on Risk Map Development Risk Low High Opportunity Cost High Crash program Challenging Low No problem 100% right Fig. 7.1 can be used to evaluate the time frame based on the company‟s position on the risk/cost map. Decision Outcome : An entrepreneur must make a commitment to pursuing a business opportunity long before the outcome of that decision is known. Naturally, opportunity assessment should consider the potential pitfall of making the wrong decision. An entrepreneur should ask whether she is making a mistake by pursuing an opportunity with poor potential (“sinking -the- boat” error). On the other extreme, if an entrepreneur decides not to pursue an opportunity, is she making the mistake of forsaking a good chance (“missing -the- boat” error)?
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127 Fig. 7.2 can be used to evaluate the outcome related to an entrepreneur‟s decision to pursue an opportunity. Fig. 7.2: Decision-Outcome Analysis Outcome/Performance Bad Good Strategic Decision Go Type I Error (sinking-the-boat) Right Decision No-Go Right Decision Type II Error (missing-the-boat) How can entrepreneurs know whether the opportunities they are pursuing have a perfect fit with the marketplace, need to be expedited on a rush basis, and are the right decisions to go ahead with? Advice to entrepreneurs: Start on intuition, Build on research! Acquiring Market Information An entrepreneur needs to do research to identify and assess an opportunity. Intuition, personal expertise, and passion can take you only so far. Many entrepreneurs tend to ignore negative market information because of their strong commitment to their idea.
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