Using Internal and External Analysis to Assess New Business Ideas Flashcards
Entrepreneurs can look for needs in the marketplace and then determine how to use their own capabilities to pursue those opportunities.
Outside-In Approach
Entrepreneurs can first evaluate their capabilities and then identify new products or services they might be able to offer to the market.
Inside-Out Approach
- General Environment
- Industry Environment
- Competitive Environment
Outside-In Analysis Considerations
The broad environment, encompassing factors that influence most businesses in a society.
General Environment
The environment that includes factors that directly impact a given firm and all of its competitors.
Industry Environment
The environment that focuses on the strength, position, and likely moves and countermoves of competitors in an industry.
Competitive Environment
- Economic trends
- Politicallegal trends
- Sociocultural trends
- Global trends
- Techological trends
- Demographic trends
The General Environment
- Changes in the rate of inflation
- Interest rates
- Currency exchanged rates
Economic Trends
- Societal currents that may affect customer demand
- Opening up new markets and forcing others into decline.
Sociocultural Trends
- Changes in tax law and government regulations that may pose a threat to existing companies or devastate an inventive business concept.
Politicallegal Trends
Reflect international developments that create new opportunities to expand:
- Markets
- Outsource
- Invent abroad
Global Trends
Developments that grow out of these spawn or wipe out many new ventures. Developments:
- The creation of high-quality, affordable, virtual-reality hardware that could radically transform entertainment and communications.
- The Internet of things, which connects and combines the limited computing power embedded in devices in the home and office to make advanced automation possible.
- The fast-falling price of 3-D printing, which makes the creation of just about any suitable product possible, as well as fast, inexpensive, and completely customizable
- The exponential growth and availability of data collected online, or big data, that make high-powered analytics and decision making faster and less expensive.
Techological Trends
- Population size
- Age structure
- Ethnic mix
- Wage distribution
Demographic Trends
- Threat of new competitors
- Threat of substitute products or services
- Intensity of rivarly among existing competitors
- Bargaining power of suppliers
- Bargaining power of buyers
The Industry Environment: 5 Factors that determine the nature ad degree of competition in an industry.
The five factors that determine the nature and degreee of competition in an industry weigh equally with the potential attractiveness and _____ of a target industry.
Profitability
Entrepreneurs who understand industry influences can better identify:
High Potential Startup Opportunities
It is important to determine the strength, position, and likely responses of rival businesses to newcomers.
The Competitive Environment
- Who would be the new venture’s current competitors?
- What unique resources do they control?
- What are their strengths and weaknesses?
- How will they respond to the new venture’s decision to enter the industry?
- How can the new venture respond?
- Who else might see and exploit the same opportunity?
- Are there ways to co-opt potential or actual competitors by forming alliances?
Several questions about the competitors like to be encountered in the marketplace
A further step in analyzing the competition. To identify the thinking that _____ their rivals’ moves, which is often based on the assumption that business must operate in a certain way because they always have.
- Example: Blockbuster vs Netflix- if things aren’t done differently, companies are left vulnerable.
Shapes
- Building on internal resources and capabilities
- Core competencies and competitive advantage
Inside-Out Analysis
The basic inputs that an entrepreneur can use to start and/or operate a business.
- Cash for investment
- Knowledge of critical technologies
- Access to essential equipment
- Capable business partners
Resources
Those organizational resources that are visible and easy to measure.
- An office building
- Manufacturing equipment
- Cash reserves
Tangible Resources
Those organizational resources that are invisible and difficult to assess.
- intellectual property
- a favorable reputation
- network of contacts and relationships
Intangible Resources
A company’s routines and processes that coordinate the use of its productive assets in order to achieve desired outcomes.
Capabilities
Are often used interchangably, but are not the same.
Resources and Capabilities
Do not work on their own.
Resources
Those capabilties that distinguish a firm competitively and reflect its focus and personality.
- Make it possible to achieve competitive advantage
Core Competencies
A benefit that exists when a firm has a product or service that is seen by its target market as better than that of competitors.
Competitive Advantage
An assessment that provides a concise overview of a firm’s strategic situation. This integrates Internet and Externaly Analyses.
- Strengths
- Weaknesses
- Opportunities
- Threats
SWOT Analysis
Because SWOT analysis focuses on the _____, the entrepreneur needs to consider whether the targeted opportunity will lead to other opportunities in the future.
Present
