Good Example Of Opportunity Recognition Essay
Identify Valuable Entrepreneurial Idea
Entrepreneurship is among the trending fields in the business market with most firms advocating a business entrepreneurial culture in their strategic plans. The insatiable nature of consumers’ tastes and preferences is the key driving force tom business innovations and improvement in product efficiency. In every market structure, there is always an opportunity gap that firms fail to bridge to their target market –a difference that is only realized by open-minded people who accommodate change through creativity and innovation (Driessen & Zwart, 2007: 6). The opportunity gap may arise from either a firm’s perspective or a consumer’s experience with market products and services (Zimmerer, Scarborough & Wilson, 2002: 1). In most cases, a manufacturing company may notice the usefulness of another company’s waste products and seize the opportunity to create a new business idea that would serve a particular target population in the market. Such a firm would be regarded as an entrepreneur who capitalizes on an existing idea and improves its efficiency and output to serve consumers in a better way.
Another firm or individual may observe the market keenly and come up with an unprecedented venture that strives to increase efficiency, quality of products and services and eventually increase the entrepreneur’s returns. Hence, an entrepreneur is a person who identifies a business opportunity in the market, conducts market viability and amasses the required resources to achieve the set objective (Markman & Baron, 2003). A successful entrepreneur possesses the character of innovation, risk-taking, passion and accountability and thrive his idea through networking with like-minded individuals or organizations’ knowledge and expertise (Minniti & Lévesque, 2010).
Rational entrepreneurs often conduct a product and market analysis to determine its degree of acceptability by consumers, differentiation level form substitutable products and the necessary human and capital resources to ensure that the idea survives the market forces and bridges the opportunity gap (Carsrud & Brännback, 2007).
One of the core corporate strategies fronted by firms in all industries is continuous improvement of goods and services with an aim to satisfy consumers’ tastes and preferences. Employees are advised to embrace teamwork in innovation by realizing market loopholes that would enhance the firm increased customer base and strengthen its sustainable advantage. Despite their aggressive effort to improve product and service delivery, they are unable adequately to address the insatiable utility nature of consumers. For that reason, an opportunity gap will always remain until an open-minded and risk taking firm or individual realizes it and ventures appropriate resources to bridge the gap. Opportunity recognition may be influenced by either a personal experience or market observation of consumer needs and demands for product improvement.
During a Christmas vacation with my friends In California state, we needed to purchase an attire with a cultural theme to satisfy our urge for unique and market differentiated products. Criss-crossing all favorite clothes shops and supermarkets; we could find none that sold cultural –oriented garments for young people. To our surprise, only adult cultural-thematic attires existed in the market. And the question popped out; Why hasn’t anyone realized the opportunity that lies with the rising youth population and their ever competition for uniqueness and trendy looks in fashion. Considering, 20 friends sample, we believed the market demand could be greater hence an opportunity gap emerged. Our business opportunity zeroed on the rapid increase in the young population whose life thrives through fashion and technology. The opportunity would occupy the forgotten youth demands on culturally customized attires that match alongside their current fashion attires available in the industry.
In any business opportunity, the principal focus is to outsmart the existing market players by offering differentiated products with a caution on affordability, quality and sustaining the enterprise to the break-even point. In an economic perspective, a new venture must demonstrate a flow of returns on invested resources to enable the company maintains its competitive force for an extended period (Wirtz, 2010). Therefore, the idea needed to be incubated for further analysis before conceptualizing the product. According to entrepreneurs, networking an idea creates a platform for generating various aspects of the innovation thus enabling the project developers to formulate a comprehensive strategic plan to steer the product to success.
Idea generation is the process of dissecting into the strengths and weakness of a business opportunity to determine its response to the market and its uniqueness from other market products. The process involves matching the products against the existing products, production strategy, as well as the social culture of the target market(Zimmerer, Scarborough & Wilson, 2002: 41). As the convener of the idea, I adopted a brainstorming approach to facilitate expansion of the concept based on individual opinions and available market facts. Questionnaires and oral interview characterized our venture to identify the response of youths towards idea. Results indicated that youths have been craving for attires that manifest different cultures themes but have been rare in the market. Further, the few available attires were had fixed cultural themes such as African culture thus denying the customers the opportunity to choose according to their taste. The information was an eye-opener and broadened the conceptualization of the idea. Following extensive external and internal research, the following success strategies for the idea emerged:
Make to order (MTO) product strategy
The make to order approach as a tactical manufacturing process that allows customers to select the components for their products based on their tastes and preferences. The technique is useful in shielding a firm especially a start-up from the unpredictable aspect of consumer change in tastes and eventual loss of revenue. The approach will augur well with our target population i.e. the youths whose market is highly elastic to product differentiation. Moreover, it will enable the business to conform to the rapid shift in technology efficiency in production.
Target youths aged between 16-30 years
Our product venture will target the young population in their early 16th and late 30th birthdays, who have been subconscious been neglected by the existing producers of cultural attires. Unlike existing market producers, the new venture will blend the trendy, youthful culture with the designs that portray a particular country’s or community theme and retaining the attires youthful nature.
E-commerce trading platform for attires
Research revealed that the rising adoption of mobile technology such as the use of smartphones was a key market penetration approach to reach a broad customer base. Global statistics indicates the uptake of smartphones technology has been rising among the youths due to the gadget’s ease of accessing information. For that reason, the E-commerce platform will be used for marketing the products as well as enabling consumers to order and purchase their customized attires. The brainstorming team proposed development of a company’s customized downloadable application to be installed in major mobile telephone players such as Apple, Nokia, and Samsung. The application will boost the company’s aspiration to global diversification at low operation cost. The e-commerce approach safeguards a firm's sustainability from the unpredictable political instability and overstretched outlets maintenance cost (Rayport & Jaworski, 2002).
Discounted shipping for bulk purchases
Discounted shipping of products as a marketing mix price strategy that is used to lure customers and to increase their switching cost to existing or potential entrants. Shipping of products will operate on the firm’s integrated supply and management chain system to ensure that customers receive the right products within the stipulated period.
Attires to be customized along the trending themes across the globe
The company will manufacture differentiated attires characterized by different continents cultural themes and activities. One of the advantages of adopting production of cultural attires is that it will connect the youthful population to their culture and different cultural practices and foster the commitment to towards sustaining cultural practices and beliefs.
Birth of an Entrepreneurial idea
Upon conducting research and discussion on the opportunity gap, U-Culture Company was born. The company will specialize in manufacturing youth attires that feature and celebrate the diversity of cultural practices in United States and across the globe. The company will optimize their production through make to order approach that will provide customers with an unprecedented market privilege to suit their tastes and preferences. To complement the production strategy and revenue target, e-commerce will be utilized in smartphone applications to enable consumer’s select production inputs, make orders and make suggestions on the products. Besides e-commerce trading, the company intends to establish one-stop shop sale points through franchise across the globe to facilitate access of products to users and non-users smartphone gadgets.
Product operations will consolidate towards attaining the company mission objectives of satisfying youths tastes through unique and customized attires. The manufacturing firm will be located in California as a strategy to benefit from the enormous resources and amenities available. The manufacturing idea will seal the untapped market gap between the youths and adults on customized cultural attires whose projected revenue could contribute immensely to the manufacturing industry’s Gross Domestic product (GDP)
Opportunity Evaluation and Feasibility analysis
Feasibility study is an integral stage for every firm that aspires to venture into a specific market. IT is a cautionary mechanism that helps companies to understand the viability of their products in the target market and enabling the management to amass the necessary resources required to produce the product. Feasibility study combines the contents of the generated idea, target market, and the economic performance in the country to help evaluate the operation cost of the company. Through the process, the entrepreneur values the cost of human and technological resources required, product profitability, competitive strengths as well as forecast on unforeseen market shortfalls that could derail the venture from capturing the target market. In addition, the study, serves as a platform to source funds from internal and external sources based on the projected return on investments.
Economic feasibility analysis
Economic performance of the target market forms the basis for a firm to deliver its products to the consumers. It would be illogical for an entrepreneur to launch his products in a dwindling economy. The growing economy in the United States and the rise in technological innovation compliments U-Culture company venture into customized youth attires. Externally, the promising economic growth and political stability in developing countries is a timely advantage for the company to capitalize on the cultural attires untapped market especially in African continent. In addition, reduction in trade tariffs proposed by European Union and the presence of free economic zones will supplement the company’s value-chain based approach in obtaining raw materials at an economical cost. The Stability of US dollar will boost the firm’s revenue due to reduced operation cost.
Market feasibility analysis
Market feasibility concentrated on studying the target market consumer behavior, their needs and expected solution to their needs. The youths, which form our target population, have demonstrated a continued change in preferences in clothes based on market uniqueness and affordability. Over the past years, they have accustomed to the routine designs common to every citizen. As such, they feel the void of differentiation from the rest. Hence, U-culture will aspire to provide alternative attire in the market to suit their demands. The customization approach overwhelms all another production strategy where the consumer’s role is limited to selecting finished products from retail stores. The target customers share a common segmentation of choice that is connected to differentiation and uniqueness. Having been among the victim in market deficiency, it indicates that the youths have realized their segregation from culture in favor of their elders and thus demand a firm that would bridge the social-cultural gap.
For the product to deliver in the market, it would require an integrated supply chain system that endorse value-chain based link among the suppliers, manufacturers, and consumers. The firm would link with mobile phone manufacturers to integrate the e-commerce application that would ease the accessibility of attires to the youths in all economic sectors. The costly nature of mobile application approach will take some time before the firm realizes its fruits. However, it is projected that within a span of two years, the system will have captured approximately 50% of the target population.
Every entrepreneur is driven by the passion for introducing a product or services that will replenish what the existing market players have deprived the consumers. The solution feasibility study endeavors to determine the extent to which a product innovation satisfies consumer market gap without offsetting their optimal welfare (Mullins, 2012). In our case, the youth culture customized attires’ objective will be to quench the youths urge for unique dressing style at an affordable price. Additionally, the idea will offer the market an unprecedented privilege of contributing to the formation of their final product rather than purchasing exogenously customized clothes. The Make to order technology will reduce the manufacturer’s sensitivity cost thus spilling the benefits to the consumer’s product cost. The technology has been rarely adopted by rival firms therefore portraying U-Culture Company at the helm of technology.
Sustainable competitive advantage analysis
Venturing in a new market is always an uphill task for most firms and their only survival is to understand the consumer’s market dissatisfaction and capitalize on producing matching products. U-Culture Company will have to counter the dominant fashion industry and its unpredictable obsoleteness of products and services. Sustainable competitive advantage is a firm's ability of a firm to withstand their rival’s competitive force by endeavoring on product efficiency, low-cost production, and quality products (Markman & Baron, 2003). The competitive intensity for Culture youth attires is likely to be considering the level of customer loyalty to the existing firms. However, U-Culture market analysis has devised a cost –differentiated market strategy through adoption of Make-To –order strategy and E-commerce trading platform. The former will enable the manufacturer withstand the unforeseen decrease in demand that could be influenced by rising inflation rate and polarized currency market. Further, the customized platform that occurs through online will increase existing customers switching cost- a factor that will deter the competitive forces of potential entrants into the market.
Human resource analysis
U-culture Company will have to employ fresh graduates and experienced employees across all the departments to align the company through a transfer of skills program that would enable the firm to sustain its workforce and experience in the future. Teamwork and periodic training will characterize the modalities of work in the company. The management will endeavor to maintain high standards of workers social welfare to enhance innovation and motivation.
The company plans to source funds from friends, donors, and financial institution. Further, the leasing program will be entrenched in the plan to help the firm reduce its construction and operation cost before a break-even point. The firm projects that the firm will have captured at least half of the youth population and accumulated loan capital within a payback period of 2 and a half years. Franchise program to establish a point of collection and sale shops will save the firm maintenance and construction cost for retail branches.
Rusk analysis refers to the cautionary approach to a firm to assess the vulnerability of an innovation success and develop modalities that would counter the eventualities. In the proposed venture, U-Culture anticipates the following risks during its operations;
Change in consumer taste and preference risk
The firm anticipates the rapid and random change in consumer tastes and presences that could lead to reduced goods demand and reduced revenue. However, the firm plans to foster continued engagement in market research to utilize technology in sustaining their demands.
The fashion industry is a monopolistic market and, therefore, new firms are likely to venture into the industry and reduce the firm’s economic profit and market share.
Government regulation risk
Trade tariffs, regulation of raw materials and capping market price are the possible scenarios likely to impact the firm’s operation process in the unexpected future.
Economic instability risk
Volatile oil prices across the globe, currency instability, and increased inflation may adversely reduce consumers real income resulting in attires reduced demand and loss of company revenue.
All in all, the customized youth culture attires remain an outstanding venture for U-Culture Company considering the rising youth population, need for uniqueness and differentiation and the global influence of smartphone technology on social-cultural development.
Industry and competitive analysis
According to Michael Porters, conducting industry analysis paramount to a firm understands of its competitive forces and develops strategies to maintain a sustainable advantage in the current and unforeseeable future (Porter, 2008). U-Culture venture into the volatile fashion industry needs to assess the competitiveness of its product in the market.
Bargaining power consumers
The level of buyers bargaining power could be ranked as high because the youths have a variety of clothes from distinguished companies to choose from. Therefore, the firm will utilize technology initiatives and market research to remain ahead of competitors and retain customer loyalty.
Bargaining power of suppliers
Obtaining cultural materials is a challenging task to the firm due to the materials scarcity thus providing the suppliers with high bargaining power. Hence, the company needs to introduce value-chain based approach to seeking the privilege of securing the source of raw materials as an approach to withstand future competition. For instance, the firm could create a partnership with suppliers to enhance quick delivery and accessibility of raw materials.
Threat of substitutes
The level of substitutability is very high in the fashion industry among the youths considering their insatiable utility nature. U-Culture company will capitalize on the Make-to-Order initiative to retain customer loyalty and lure potential clients in the market.
Threat of new entrants
The manufacturing industry requires enormous resources to venture thus deterring the pace at which new firms can join the market. However, the threat is possible in the near future especially when U Culture break-even. For that reason, the current medium threat of new firms could be mitigated by improving product technology and conducting aggressive research on consumer needs.
Intense competitive rivalry
Internal competitiveness in the fashion industry is very high. Different firms are producing various products at varied prices. U-Culture company will utilize on make to order technology to give customers a chance to select products based on their taste and preference.
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