Change Flexibility
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Competition
Market share: a firm’s sales volume as a percentage of the total sales in a specific market • Limited competition: easier to increase market share, (higher price), more revenue • Intense competition, market share may decline, lower price, less revenue
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SWOT Analysis
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Firms use SWOT analysis to develop a competitive advantage
– Assess strengths and weaknesses – Identify opportunities and threats – Use strengths to capitalize on opportunities & reduce exposure to threats.
2.
3.
4. 5.
Explain how to develop a business plan
Identify risks of a business & explain how to manage them
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Key Terms
initiative • segments • market share • business plan • economies of scale • business risk
Part II: Starting a New Business
6
Entrepreneurship and Business Planning
Learning Goals
1.
Identify advantages & disadvantages of being an entrepreneur & creating a business Identify market conditions that should be assessed before entering a market Explain how to develop a competitive advantage
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Key Advantages
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Produce products efficiently
– efficient management of HR – efficient management of production process
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Produce Higher-Quality Products
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Expenses of Web-Based Business
– cost of developing a website & installing a shopping cart system – cost of screening credit card payments – cost of paying a website firm monthly fee – cost of paying marketing expenses to increase its visibility to customers
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Creating a New Business
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Small businesses are created by entrepreneurs who
– have a business idea & – willing to invest their own money to back the idea
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Developing Competitive Advantage
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Ways to maintain or increase market share: ONE of FOUR
– Low-cost production – Better quality than competitors – Product differentiation – Technological Advantage (Revise for GLOBAL Markets)
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Competition
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Segmented market
• by types of customers • by quality
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Labor Costs Unions
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Regulatory Conditions
state/government regulations • especially restrictive regulations • industry regulations
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Exhibit 5.1
16
Industry Research
•
After tracking pet industry statistics for more than a decade, The American Pet Products Manufacturers Association (APPMA) released new figures today proving the pet industry is leading the pack. Pet spending has more than doubled from $17 billion in 1994 to a projected $35.9 billion for 2005. And, according to the U.S. Census Bureau, the pet industry is now the seventh largest retail segment in the country*. In 2005, Americans’ spending on pets is projected to be higher than ever: · $14.5 billion for food · $8.8 billion for supplies and O-T-C medications · $8.6 billion for veterinarian care · $1.6 billion for live animal purchases · $2.4 billion for other services Pet spending in 2004 was even more successful than projected, with total sales coming in at $34.4 billion. This positions the pet industry 60 percent larger than the toy industry ($20 billion) and 33 percent larger than the candy industry ($24 billion). Source:/press_releasedetail.asp?id=51 - 33k acessed 7/11/05
Internet makes the process easier • Some useful websites: p167
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Resources Available to Assist Entrepreneur
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•
•
SBA: The Small Business Administration web site provides many resources related to creating a small business Yahoo !: Yahoo ! Small Business Site – a good place to find links for more information American Express: American Express Small Business Site /smallbusin ess provides much information and links that can help during start up.
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Entrepreneurship
- Profit Potential
- Your Own Boss -Direct Rewards -More self-satisfaction - Loss Potential - Accountability
- Failure Possibility
Advantages
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Disadvantages
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Entrepreneurial Profile
Risk tolerance • Creativity • Initiative