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Writer's pictureZPerry78

Conducting Analysis and Designing Business Model


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Idea assessment- examine a need in the market/ developing solution/ determining ability to make it happen


Business ideas- conducting idea assessment- feasibility assessment- business model- business plan- strategy plan- launch business


5 parameters: Customers/ Offering/ Value proposition (importance)/ Core competencies (originality)/ people (launch)


Feasibility analysis- determining if idea is a viable foundation to create successful business/ is there a sustainable competitive advantage?

  • Industry/ market analysis: industry attractiveness from macro-environment/ market changes lead into new industry

    • Global changes in market/ Demographic/ Socio-cultural/ Technological/ Economic/ Political & legal

    • Porter's Five Forces Model:Focus on Immediate Competition Environment/ Industry More Attractive when:

Rivalry among companies competing in the industry (strongest-dynamic/ competitive market)

  • large number of competitors (or fewer than 5) not similar in size or capacity

  • industry is growing at a fast pace/ opportunity to sell differentiated product

Bargaining power of suppliers to the industry (greater leverage of raw materials)

  • many suppliers sell products to companies in it/ substitute products available for items suppliers provide/ easy to switch suppliers or substitute products

  • items suppliers provide industry account for small portion of cost of the finished product

Bargaining power of buyers

  • customers switching costs to competitors or substituting products

  • large number of buyers/ differentiated products demanded over commodity products from any supplier (pin one company against the other to drive down price)

  • customers find it difficult to gather info on suppliers costs/ prices/ features

Threat of new entrants to the industry

  • advantages of absent economies of scale (exist when low average costs with high volume)

  • low capital requirements to enter/ cost advantages not related to company size

  • Low brand loyalty in industry/ governments don't restrict new entrants

Threat of substitute products or services

  • quality substitution products are not readily available/ high cost of switching

  • substitute products prices are not significantly lower than the industry products

  • Market Niches (requires adaptability in initial plan/ niches change, go away and grow)

  • Product/ Service analysis: determines attractiveness to potential customers/ identifies necessary resources

    • primary research (collecting/ analyzing data) secondary research (gathering data compiled)

    • customer surveys/ questionnaires/ focus groups/ prototypes

    • In home trial: observe customers in their homes using products of that company

    • Windshield research: observe customers interaction with similar business/ seeing preferences

    • Trade associations and business directories/ industry databases/ demographic and census data

    • Forecasts interest rates/ market research/ articles/ local data/ internet market research

  • Financial analysis: determining economic sufficiency to stay afloat

    • Capital requirements: needs capital to start up business (equipment/ buildings/ technology/ hire/ market products)

    • Estimated earnings: forecast earning potential/ gives investors expectations for upcoming year

    • Time out of cash: divide available cash by the operating costs each month

    • Return on investment: divide estimated earnings by the capital invested

  • Entrepreneur analysis: how ready is the entrepreneur/ team to launch venture successfully (entrepreneur readiness)

Developing/ testing business model

  • Customer segments: use demographic/ geographic/ socioeconomics to define target market

  • Value proposition: collection of products/ satisfy needs over competition (pricing/ features/ quality/ availability)

  • Customer relationships: not every business has the same level of customer service. competitive edge

  • Channels: communication (promotion)/ distribution channels (product placement)

  • Key activities: activities necessary to ensure long term success

  • Key resources: human/ capital/ intellectual resources needed for the business to be successful

  • Key partners: suppliers/ partners/ investors/ advisers to make the business model work

  • Revenue streams: Value proposition brings one site sale/ ongoing fees/ advertising/ or influx of cash

  • Cost structure: fixed and variable costs necessary to make business work

The four phase process: 1- develop business model 2- test value proposition

3- test with prototype

4- pivot model to expand

  • business prototyping- test business models on small scale before committing resources to an uncertain venture

  • minimal viable product- simplest version of product in which to build off of

  • pivots- making adjustments to business model on basis on customer feedback

    • Product pivot- may not match customers needs/ unnecessary features for more money is bad

    • Customer pivot- model targets wrong segment/ market

Revenue model point- deciding on a high margin/ low volume model or the opposite

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