Models for Entrepreneurship Development

Models for Entrepreneurship DevelopmentDevelop a transaction proposal based on an actual or presumable opportunity which has non yet been use upd1.0 Introduction psychiatric hospitals and rude(a) business ideas ar the cornerst unrivaled of business ontogenesis and wealth creation in an economy (Drucker, 1993). As such(prenominal), the creation of risque business proposals and plans to exploit these opportunities is likewise vital to ensuring ongoing economic conquest. This spot bequeath take three effectiveness entrepreneurial business opportunities, reconcile which atomic number 53 has the most potential difference, and then confine relevant economic theories and models to fix business plans and financial projections for said opportunity, along with a discussion of whatsoever stakes and con lookrations for this business to address.2.0 Opportunity pickax2.1 Creative thinking modelWalls (1926) inventive thinking model contains five stages preparation, incubatio n, intimation, illumination and verification. However, in line with firedogs (1971) analysis, this piece volition condense this model to a quaternary stage model, ignoring the intimation stage, which f lourpot be argued to represent a wedge heel stage of the process.Idea 1 Mobile Grocery Retail answer supplying In many campestral countrys at that do argon meaningful distances between pastures, and many plurality do non ready oerture to local shops selling a commodious variety of crossings. The small coat of many villages also selects it impractical to serve them with a macroscopic scale of measurement brick and mortar super commercialize or by requested online deliin truth. incubation The idea was primarily veritable from the authors experience of living in a rural community, where village shops plyed to be poorly stocked, and therefrom rural d comfortablyers tended non to have access to the same level of choice as battalion in urban centres.Illuminati on The concept of a officious intellectual nourishment product retail religious service, with a wide trim of groceries sold direct to consumers from the rearwards of a van was seen as the only feasible way to serve scattered rural communities with no major supermarkets of their own. This would take advantage of b guess wholesale and distribution facilities set up across the country. balk explore from Datamonitor (2007) indicates that the food market sector is genuinely prominent and competitive, but that no set up manages to maintain a signifi contributet level of loyalty amongst its guest, with over lxxx per cent of customers using more than one check off of foodstuff retailer. As such, customers tend to be very flexible ab go forth where they profane groceries, thus creating an attractive niche market and meets verification criteria.Idea 2 call forth selling its own branded range of organic productsPreparation As with the grocery service, past experience of liv ing in a rural community guide to the conclusion that many farms are struggling because they drop dead to make use of all their available opportunities.Incubation After considering divers(a) diversification ideas, the idea of selling farm made goods in shops developed as the only one yet to be fully exploited. This led to the idea of developing a distinctive brand appeal and first mateing with a major supermarket chain.Illumination Research by Trobe (2001) indicated that consumers have an increasing choice for locally waxn, organic and ethical food, and that they want to kickoff it from the manufacturer to be sure of its organic credentials. As such, a farm branded product would provide the enquired level of assurance, above that offered by a supermarket corporation.Verification MarketWatch (2005) indicates that consumers are leading to constitute momentously mellowed prices for organic food they know is grown in the local subject field. In addition, the Soil tie-in ( 2008) demonstrated that the organic food market in the UK grew by close to 22% in 2006, and that growth was predicted to continue in the future. This makes the market very valuable for new entrants. However, the fact that this opportunity would regard to be undertaken in confederation with living supermarket chains would potential make it difficult to shape a business plan with extinct runner finding a retail partner.Idea 3 Small screen cinema businessPreparation The painting entertainment business is very volatile, with some(a) films making gigantic revenues whilst a nonher(prenominal)s take very picayune. As such, the author tried to sketch out a way to minimise this volatility by creating an offering with a steady cash flow and no corner office flops.Incubation Unfortunately, in a creative manufacturing such as film entertainment, there is no way to find opportunities which are guaranteed to succeed. As such, the pure tone at was to find a way of extracting more re venue and respect from existing successful films.Illumination The current lifecycle for a film goes from cinema to videodisk to pay television to standard television. This means that only a disembowel of the lifecycle is spent in the cinema, whilst the remaining three quarters is spent in peoples al-Qaidas. This reduces the extent to which the film butt joint be shown to large groups. As such, the motor was to extend the lifecycle for large groups, by showing films on smaller screens in smaller cinemas in front they go to DVD, making a more exclusive environment than standard cinemas.Verification Unfortunately, in this area there was little research available to indicate that the opportunity was presumable to succeed. Many filmmakers are reluctant to adjust their model for fear of undermining their mainstream box office revenues, and also resist making films widely available before they go to DVD ascribable to the risk of piracy. As such, this idea did not achieve verificat ion or present itself as a possible opportunity.2.2 Opportunity pass judgmentmentBased on the analysis above, there was inadequate data to assess the third opportunity, which indicates that it does not fulfil Cassons (1982) criteria of providing new goods or service at greater than their cost of production or Shanes (1996) definition of recombining resources to produce a pro consort. As such, the only cardinal ideas to be assessed are the first and second. Of these, the second idea cannot be pursue in depth at this stage, as it requires a significant horizontal surface of commitment from a partner organisation before it can be investigated in detail and financial resources can be determined. This implies that idea one is the one which should be taken forward.3.0 Analysis of business concept background signal up a mobile grocery retail service with the aim of serving communities with a wide range of groceries in accessible local locations intellectual nourishment 2 You is a n ew menace which volition look to service local communities which do not have access to a large supermarket or shop. The venture go away operate a world action of refitted lorries which entrust contain a wide range of groceries beyond that which would be available in a typical village shop. The mobility of this service allow for make such a range cost in effect(p) because solid food 2 You go out not be limited by the geographic distribution radii possessed by most local stores. Instead, the lorries go away be able to visit numerous villages thus achieving economies of scale similar to a supermarket whilst maintaining all the convenience of a local store.3.1 Difa analysisAccording to Raes (2007) argument, the existence of a submit and the ability to fill it is key to the success of any innovation. As such, the Difa model depart be employ to assess the level of have, the innovation of the model, the feasibility of supplying the market and the attractiveness of the potenti al share.Demand The UK grocery diligence is forecast to grow by 35% from 2007 to 2012, a compound annual growth rate of over 6% (Datamonitor, 2008). In addition to this, Cotterill (2006) reports on the findings of various studies into the competitive nature of grocery retailing markets, finding that customers often convictions lack choice about the services available to them. As such, a completely new service which is remote any previous offerings could succeed in attracting a large fall of customers.Innovation As discussed above, the main innovation in this offering is that it is alone(predicate) in grocery retailing. Currently, customers have the choice of all visiting a shop, which requires conviction and effort, or ordering online which requires extra language expense and the risk of the wrong goods being packed or supplied. fodder 2 You offers the foregone conclusion of making selections from a shop, whilst also providing the convenience of local food delivery.feasi bleness A MarketWatch (2007) report indicates that consumers are more active in choosing where to shop for food when compared to any different retail sectors. Indeed, shoppers for food and groceries rule-governedly use three stores, on average, to fill all their shop requirements. This implies that it is feasible to fit this service into existing demand and make a profit from it.attractive feature Ketzenberg and Ferguson (2008) argue that one of the key issues facing many shops is how to handle the slack off moving perishable items which have higher levels of waste and lower revenues. By combining all such items into one mobile store, and selling them in a variety of locations, Food 2 You can access a niche which is not curiously profitable for other shops. This go away back up oneself it develop rapidly with little competition from the established players, who have little profits to defend in this area.3.2 affair modelSee attachment 1 for the business model3.3 Market pot ential pieceationDatamonitor (2007) claims that grocery customers are very flexible regarding the locations and times at which they shop, with low levels of brand loyalty. As such, they are very in all probability to switch supplier if there is a more agreeable option available. As a result, this business will be based strongly on providing a convenient solution, grown customers what they want, when and where they want it. The expectation is that customers will be willing to pay a small premium for this superfluous convenience, and thus this service will be able to extra significant rents.The service will probably have three channelise customer segmentsFamilies where one or both parents work, and thereof they are under significant time pressure and regular shopping trips increase this pressure further. In addition, these families would tend to have higher income levels, due to both parents working, and will thus be able to chip in to pay the premium.Elderly or retired peop le who will find it gainsay to go to the shops on a regular basis. As such, they will often be limited to local shops with a very poor selection and quite high prices due to a lack of economies of scale. As such, this segment would potentially not see higher shopping bills due to using the service, but will benefit from increased convenience.Homemakers and people who work from home. These people may have chosen to stay at home because they have small children, something which can make shopping in a large store very difficult. In addition, they do not commute to work, and and so have a lower geographic range when shopping. Also, as this segment is not constrained by time, and is growing due to the increase in flexible working (Vant, 2003), it could be one of the largest growing market segments in the coming years.4.0 Resources, returns, risks4.1 Financial plan forecastsSee Appendix 2 for slender financial plan and forecasts.4.2 Proposed investment anticipated returnsThe servic e is such that it can be begeted out on a small scale and can grow further as its profile and demand rise. As such, an initial investment of 200,000 should be sufficient. 100,000 of this could be used to purchase the first ii lorries and refit them to carry goods including refrigerated food. The remaining 100,000 would be used to buy groceries on the wholesale markets and to provide ongoing cashflow. Given the anticipated demand for this service, this capital should be fully recouped within eight years.4.3 Required human capabilitiesThe main human capabilities needed are in 2 areas. The first of these is the ability to source and negotiate groceries at or near to wholesale prices. This could be quite difficult, as the supermarkets in the UK tend to have significant power over the distribution networks for groceries. As such, it would be ideal to either recruit someone with supermarket experience, or to enter into a supply partnership with a supermarket or a major grocery supplier in order to purchase groceries on the same terms as other major players (Kumar, 2008).The second capability required is rather more terrestrial the service needs drivers who can also operate their lorries as mobile shops. It is envisioned that the lorries will operate by opening one side completely, so that customers can see all products within the store. However, this will not allow a significant number of customers to enter the lorry at any one time. As such, the driver will also need to fetch most goods for the customer, bag them and perform all other customer service actions. This will require a somewhat unique gang of human capabilities.4.4 Risk assessmentThere are several risks to this ventureLack of acceptance from customers over established brandsbankruptcy to arrange in a local market with sufficient customer demandFailure to negotiate partnerships or supply deals with wholesalers revolt costs such as petrol pricesInadequate start up capitalMitigation strategies are as followsCarry out local advertising prior to open upConduct studies of market demographics to determine which are the best areas for the target marketIf supply deals cannot be negotiated, the venture will not be cost competitive and will likely have to be abandonedRising petrol prices should drive up grocery prices across the board hence prices can be raised to absorb the additional costexcess drawdown facilities should be negotiated to provide additional cash flow in cocktail dress of difficulties5.0 Start-up marketing planAs discussed above, the initial actions will rivet on using demographic, social and economic analyses to determine the best markets for the service to launch into. Households in these areas will then be surveyed to determine the likely answer to the service and generate word of mouth publicity. This is consistent with Collinson and Shaws (2001) survey that entrepreneurial organisations should structure their activities roughly the market.5.1 Internal evalua tionFood 2 Yous main strength will be its flexibility and responsiveness, as well as the relationships it can build up with the local communities. For example, customers will be given the opportunity to place orders for goods they want, which can be sourced finished the supply deals and be collected by the customer the next time the lorry is serving the area. However, the main weakness of the service is that it will not have the marketing and buyer power of the main supermarkets, and thus will not be able to match them for price. Also, in the early stages of launch, it will not have the reputation and awareness amongst consumers, and thus it may be difficult to establish the service.5.2 Competitor analysisAs discussed above, the main competitors will be the big supermarkets, whose buyer power allows them to keep their prices at lower levels that Food 2 Yous. In addition, local shops may oppose the service, beholding it as a threat to their business. Of these, Tesco is likely to re present the main threat, as it has stores in every UK postcode area and thus will be the only bon ton to challenge the potential geographic flip over of Food 2 You.5.3 porters beers five forcesPorters (1980) five forces model is one of the most used and recognised methods for analysing the competitive environment acting in a market. The forces tend to act at the microeconomic level, which means that they will tinct on Food 2 You differently in each region served. However, in commonplace the five forces will act as followsNew EntrantsWhilst the market is very attractive for Food 2 You to enter, this will also apply for any other potential entrants, particularly if Food 2 Yous offering proves profitable. Indeed, the low entry costs all new entrants require is refurbished lorries and the ability to buy groceries at wholesale prices, will also make the market more attractive to potential new entrants. As such, and due to the small growth speed of the service due to the need to anal yse a region before entering it, it is likely that Food 2 You will soon face several competitors and will not be able to dominate the market.Potential SubstitutesAs discussed above, the main substitutes are shopping in a standard store or ordering groceries online from a major supermarket chain. Shopping in a standard store is the predominate mode of purchasing groceries, but has significant time and travel requirements, particularly for those who do not live near a store. Online ordering reduces the time and travel requirement, but leaves customers unable to choose their own produce, at the risk of errors by the supermarket, and having to pay a delivery charge.BuyersGiven the wide range of choice and the ability of consumers to switch supplier at will, consumers represent the ascendant force in the grocery market. As such, this service aims to play on this by offering consumers a service close to their homes, with a wide selection, and at a convenient time. It is hoped that this will attract consumers away from stores.SuppliersIn the early stage, the service is likely to be dependent on one major supplier, which means the supplier will have significant power. This could be countered by making the supplier a partner in the service, giving said supplier an incentive to grow the service and make it profitable. If this does not prove to be possible, then as the service grows it should look to work with more suppliers to reduce this level of power.Competitive RivalryThe UK supermarket industry has very strong competitive rivalry, however the rivalry is lower in home delivery as there are fewer suppliers and the market is not large enough for the major supermarkets to pay much attention to it (Boyer and Hult, 2006 narrator et al, 2006). However, with the low barriers to entry, if Food 2 You proves popular the market and the number of competitors in it could grow rapidly.5.4 Marketing objectivesThe main marketing objective will be to build relationships with the villages or towns identified as being worthwhile locations in which to operate. These locations will be segmented according to their demographic, social and economic characteristics and the residents will be surveyed to find out their times and dates. Each part of the town or village will then be allocated a delivery slot based on their espoused interest.5.5 Product strategyThe service will aim to stock the products which will be most in demand in specific areas, focusing on high quality, high brink products in affluent areas and more basic products in poorer areas. However, in general the service will aim to provide higher quality items in order to justify its price premium.5.6 Price strategyAs discussed with the products, the social club will pursue a pricing strategy based on providing maximum convenience in terms of time and distance. As such, the service will not be aiming to compete on price, and thus will have more flexibility to set premium prices and extract additional s urplus from time pressured consumers. This will likely reduce the size of the target market for the service, but at the same time increase its value and profitability.5.7 Place strategyThe service will look to select locations in each town or village based on the locations which are easiest to reach for the majority of target customers. This will also require some consideration of where lorries can be parked most easily, as well as some consultation with local authorities to ensure that roadstead are not blocked and the public are not inconvenienced.5.8 forward motion strategyThe promotional activity of Food 2 You will sign on showing consumers the value that the company offers to them, in terms of not needing to spend lots of time and effort travelling to supermarkets. It will focus strongly on developing word of mouth advertising around the convenience of the stores and will also look to build relationships through allowing consumers to place orders for their favourite products and have a say in their delivery times.6.0 maturation exit6.1 Growth strategyThe main growth strategy for the company will be to develop sufficient word of mouth in its chosen launch locations to allow it to develop into nearby geographical areas and hence to expand its fleet of mobile stores (Bolton and Drew, 1991). As this word of mouth begins to reach its limits in terms of reach and effectiveness, it can be supplemented by effective PR, such as arranging for local newspapers to write stories about the impact of the delivery service (Klein, 2007). Once the companys brand visit has grown significantly, it can also help grow itself through network promotions, such as setting up a electronic networksite through which potential customers can request the company provide services to their local area ( mayzlin, 2006). This will then help the company grow from being a local to a national company, thus allowing it to better compete with other stores on price.6.2 Exit strategyThe exit strategy for the venture is likely to be contingent on the level of success it experiences, and the reactions of other players in the grocery industry to its success. Should the company be launched in partnership with a major supermarket chain or supplier, then a takeover of Food 2 You by said partner would be a likely exit strategy. However, if the company launches alone and experiences significant success then it may still be purchased by one of the major players, as this would help the buyer increase their market share and access this segment of the industry without having to start their own offering. If this does not come to pass, then the most likely exit strategy would be an IPO by the owners, who could then watch whether to stay on as managers to the company or whether to exit completely. Alternatively, depending on the relationships the company builds with the communities in which it operates, the company could be taken over by these communities and run as a co-operative, or even taken over by its employees.7.0 ConclusionThe market analysis indicates that there is significant potential demand for this service, and that it can fill a sizeable existing initiative in the grocery market. However, the main criteria for the success of the company is that it is able to partner with an existing major grocery retailer or supplier in order to obtain wholesale prices for its groceries. If it can do this, then it will be able to remain relatively price competitive, and thus can compete aggressively on convenience for consumers. However, in the initial two years of operation the venture will be quite high risk, particularly in terms of the locations in which it chooses to operate and its level of customer exposure. As such, it is vital that the company is careful when researching and selecting its start up locations, and also has significant cash flow to get it through the initial start up period where sales may be low. However, the innovative and convenient nat ure of the service should mean that, once it is through the initial period, it will rapidly develop a significant following and will grow into a successful and sustainable business venture.8.0 ReferencesBirley, S. and Muzyka, D. (2000) Mastering Entrepreneurship your single source guide to becoming a master of entrepreneurship. Pearson Education.Bolton, R. N. and Drew, J. H. (1991) A Multistage Model of Customers Assessments of armed service Quality and Value. Journal of Consumer Research Vol. 17, prune 4, p. 375-384.Boyer, K. K. and Hult, G. T. M. (2006) Customer behavioral intentions for online purchases An mental testing of fulfillment method and customer experience level. Journal of Operations circumspection Vol. 24, Issue 2, p. 124-147.Casson M. (1982), The Entrepreneur Totowa Barnes and Noble.Cotterill, R. W. (2006) Antitrust analysis of supermarkets global concerns playing out in local markets. Australian Journal of Agricultural Resource economics Vol. 50, Issue 1, p. 1 7-32.Datamonitor (2008) Food Retail in the United Kingdom manufacturing Profile. July 2008.Datamonitor (2007) UK grocery market more competitive than ever. MarketWatch Global Round-up Vol. 6, Issue 12, p. 65-66.Drucker, P. F. (1993) Innovation and Entrepreneurship. Collins.Hutchings A. (1995), Marketing A Resource Book, London Pitman Publishing.Ketzenberg, M. and Ferguson, M. E. (2008) Managing Slow-Moving Perishables in the Grocery perseverance. Production Operations steering Vol. 17, Issue 5, p. 513-521.Klein, K. E. (2007) Effective PR on a Limited Budget. Business Week Online 9th April 2007, p. 13.Kotler, P. and Keller, K. L. (2006) Marketing Management 12th Edition. Harlow Financial Times / Prentice Hall.Kumar, S. (2008) A study of the supermarket industry and its growing logistics capabilities. international Journal of Retail Distribution Management Vol. 36, Issue 3, p. 192-211.MarketWatch (2007) UK grocery market more competitive than ever. Datamonitor MarketWatch Food V ol. 6, Issue 12, p. 12-13.MarketWatch (2005) Industry Comment UK organics harvesting rewards. Datamonitor MarketWatch Food Vol. 4, Issue 1, p. 16.Mayzlin, D. (2006) Promotional Chat on the Internet. Marketing Science Vol. 25, Issue 2, p. 155-163.Odin Y. Odin N. Valette-Florence P. (2001), Conceptual and Operational Aspects of Brand homage An Empirical Investigation, Journal of Business Research Volume 53, Number 2, p75-84.Porter M. (1980), Competitive Strategy Techniques for Analyzing Industries and Competitors. London Free Press.Rae D. (2007) Entrepreneurship From Opportunity to Action, Palgrave MacMillan.Shane S. (2000), Prior companionship and the Discovery of Entrepreneurial Opportunities, Organization Science, Volume 11, Number 4, p448-469.Simkin, L. (1996) Understanding Competitors Strategies The practician Academic Gap, Marketing Intelligence Planning, Volume 15, Number 3, p124-134.Soil standstill (2008) UK organic sales nudge 2bn up 22 per cent averaging 7 million grow th per week. Sales through local, direct marketing schemes such as veg boxes soar by 53 per cent. Soil Association http//www.soilassociation.org/web/sa/saweb.nsf/7626dec679c2455580256de2004bae42/efd75fcb51d9029c8025734800579da9OpenDocument Accessed 13th October 2008.Steyaert, C. and Hjorth, D. (2006) Entrepreneurship as Social Change a Third Movements in Entrepreneurship Book. Cheltenham Edward Elgar Publishing.Teller, C. Kotzab, H. and Grant, D. B. (2006) The consumer direct services revolution in grocery retailing an alpha investigation. Managing Service Quality Vol. 16, Issue 1, p. 78-96.Trobe, H. L. (2001) Farmers markets consuming local rural produce. International Journal of Consumer Studies Vol. 25, Issue 3, p. 181-192.Vant, T. R. (2003) More jobs, greater choice. OECD Observer Issue 239, p. 29.Wallas, G. (1926) The art of Thought. New York Harcourt Brace.West and Steinhouse (2008) Think Like An Entrepreneur Your Psychological Toolkit For Success. Pearson Education.Wiener, M. (1971) amongst two worlds The political thought of Graham Wallas. Oxford Clarendon Press.Appendix 1 Business ModelAppendix 2 Detailed Financial Plan and Forecasts periodical Cash Flow ForecastYear 1JanFebMarAprMayJunJulAugSepOctNovDecOpening Balance25000022300096000940009206090181883658661284924833038174980264RevenueIncome from Sales0010000102001040410612108241104111262114871171711951ExpensesMarketing Expense25000250000000000000Equipme