Mississippi State University

“The people’s university”-- Dr. Mark Keenum

MGT 3323

Entrepreneurship

Daniel T. Holt

Assistant Professor of Management

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 opportunitygenerally

Business Opportunity Insight

Existing Products New Products

Existing Markets Most simple ideas.Face stiff competition because

existing firms

Practical

New Markets 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 Industrieshttp://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

‘…it’s a tough call in many instances’ as many firms might be classed in a number of categories.

Identifying industriesIdentifying 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.

Industry trends• What are the general

economic factors?• What are the changing

regulatory conditions?• What are the changing

consumer needs

“Understanding an industry is

solving a puzzle…” 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 Associationshttp://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-Datahttp://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 Associationshttp://idii.com/resource/associations.htm

http://www.weddles.com/associations/index.cfm

Questions, Comments, or Criticisms?