Opportunity refers to the good or favourable situation to do something. Opportunity in business context refers to bring into existence new products, services, raw materials and organizing techniques that help their finished products to be sold at higher prices than their initial cost of production. Converting an idea into a business concept involves a depth analysis of the entire process initiating from making a product, deciding its unique distinct features so that it could be differentiated from its existing goods besides those that are being offered by its rivals, identifying the target audience, choosing channel of distribution and so on. Therefore, it becomes critical for a business to identify prevailing market opportunities and to grab and nurture them into an innovative business concept (Alvarez, Barney and Anderson, 2013).
The project will discuss De' Base company which is a retail store dealing in groceries and other general merchandise. The report will brief about various sources that could be considered for nurturing a business idea and various techniques that can be looked upon for finding market gaps. Moreover SWOT analysis of the company will also be discussed that will evaluate core competencies of new business concept and its feasibility in the present market scenario.
P1 Sources of Business Ideas
In this era of immense competition where a business has to deal with frequently changing business dynamics comprising consumers tastes and preferences, competitors strategies, market conditions etc. it becomes utmost important for a company to continuously observes for opportunities that can be converted into a unique business idea. Therefore, a businessman is subject to carefully evaluate best and most creative idea from among plethora of sources that has not been worked upon by anyone and can provide a lead in market (Cuervo, Barakat and Turnbull, 2015) . Mentioned below are some of the sources that can be considered while working upon a business idea:-
Drucker's 7 Sources of innovative opportunity model- Following are 7 sources suggested by Peter Drucker for generating innovative ideas-
- The Unexpected- It is of high significance for an business firm to monitor and scan the prevailing market environment to convert an opportunity into new and improved products. De'Base could adopt latest techniques for its retail stores to enhance its customers shopping experience reaping benefits for the company.
- Incongruity- It is been evident that there is always some deviations that could encountered between what is been planned and how it finally gets applied and emerges out. Hence for De' Base, it is requite create innovative tools, techniques and processes that assists in implementing ideas as it was perceived and visualized into a whole new concept.
- Process Needs- It involve evaluating the strength as well as areas of lacking and to improve them by redesigning or developing them . This steps provides firm with the signifiant information as on knowing its current competencies business can innovate new products , process and ways that could be helpful to improve and increase its position by generating higher profits and success for the firm
- Industry and Market structure change- Company is greatly affected by changes occurring in it market scenarios, legislations, frequently emerging technologies and other micro environmental factors. De ' Base, to attain sustainability and growth in its long term, has to keep an eye on recent market trends so that it can adopt those changes in its business process. This will lead firm to enhance its customers experience by assisting them in shopping experience and by providing them with products and services as per their needs and aspirations (Dimov, 2011). This could include making changes in its store layout, introducing latest technology for scanning products etc.
- Demographics- Demographic involves changes that are emerging in income level of people, human capital, population, age etc. This assist firm to find out their new requirements, demands and aspiration of this changed demographic conditions which can be furthered in to new concept or idea by business.
- Changes in perception, meaning and model- Any change in demographic situations directly reflects in people's perception i.e. the way they feels, thinks and requires. Company like De' Base can monitor and analyse this behavioural pattern and change in attitude to fulfil requirements of new potential customers by innovating and introducing products and services customized as per their desires.
- New Knowledge- In order to be figurehead in its industry, it is utmost important to keep on introducing new and innovative products, technologies, process so that it apart from catering changing demands of its customers. It can also develop curiosity among its target audience about what will the next new product company will launch ?
Apart from the above mentioned sources there are some other prominent sources that can also be considered while looking for a new business opportunities:-
- Customers:- For a firm to its customers could be the most authentic and valuable sources for generating a new idea. A firm by making use of various tools and methods like survey interview, questionnaires etc. can collect information about the actual needs, wants, taste and preferences of its potential market as well as can also get useful review or feedback about it lacking or areas of improvement in its present product and product line analysing which company can innovate new products or services or can make necessary changes in the existing ones.
- Competitors:- Competitors are often seen as the most neglected sources for innovation by a firm, which if monitored thoroughly could be most significant source to generate new ideas and plans (Foss and Klein, 2012). It is thus beneficial for a firm to closely observes market leaders and business rivals of its industry to have a knowledge about their marketing strategies, variety and quality of their product and services etc. This could be done by attending various industrial conferences, exhibitions, trade shows etc. that could be evaluated by firm further to append and alter for creating an innovative and improved product or service,.
- Employees- Employees forms the most valuable sources of latest knowledge, capabilities and creative ideas for any firm as they continuous been exposed within industry and its related products,employees and market strategies. Hence, their proficiency and knowledge of the field could be utilize to evaluate and articulate needs and desires of customers and to implement them into generating a new and profitable idea.
- Look into past and future:- Past history of a firm could also be serves as a source of distinctive and innovative ideas. It is because, it might happen that unfeasibility of that ideas could now be in hands of firm to easy tackle. For instance an idea rejected on technical grounds could solve the purpose in present because of emergence of latest technology. In same sense future scenario also holds lots of opportunities for a business which if identified could lead a company into new heights (Gonzalez-Alvarez and Solis-Rodriguez, 2011) . Thus De' Base could analyse its past performance by going through its company's history records. Also it can work with universities and research institutions company can get advantage of out of the box thinking of budding talent who can serve as most valuable assets for addressing any problems in most creative manner by giving viable solutions.
P2 Explain the rationale and the market gap for a specific entrepreneurial idea using relevant tools and techniques.
There is quiet a variation in products which are being manufactured by a company in respect to the prevailing market requirements. Different ways to identify gap are-
Porter five forces of the model –
This model identifies competition that a business is prone to through five forces that effects the ability of a firm to serves its consumers and generate profits. These five forces shape up any industry and help it to identify and analyse its strengths and weakness so that firm can always be ahead with its business rivals by timely modifying its strategies and policies according to business dynamics. These forces are-
- Threat of New Entrants- One of the biggest threat for a firm is the new entrants in its industry which directly affects its profitability, market share and its products demands. Thus, less the investment and time and efforts required by a competitor to join a market more threat it have for a business to get its market position affected by it.
- Competition in the Industry- Presence of competition is considers as one of the sources of innovating something new. It is because larger the number of business rivals with homogeneous products, greater are the chances that its products could be serves as a substitute for a company's products line thereby providing immense opportunity for consumers to switch to other brands (Grégoire and Shepherd, 2012). Thus, analysis of market competitors helps a firm in knowing number of its business rivals, their core competencies in comparison to its own key weaknesses which can be emerge as future threat for a company.
- Bargaining Power of Suppliers- Bargaining power could be described as advantage of business to easy shifts from one supplier to other by evaluating factor like easy availability, switching cost, quality of raw materials being provided etc. It is essential to consider these factors because lesser the number of supplier more bargaining power they have over De' Base that will directly affects its profit margins.
- Bargaining power of customers- It can be described as an advantage possessed by consumers to exert pressure on firm by influencing its price levels. Buyer are likely to gain this power when they are having many other substitute available in market that are offering low cost for switching over them Karlesky, 2015). In such cases, De' Base can reduce this influence by designing and executing various loyalty programs, offers, discounts and other similar strategies that could bind, capture and prevent buyers to opt for purchasing from other competitors.
- Threat of Substitutes- Presence of large number of substitutes available at competitive prices are likeable to be a major threat to De' Base. It is due to the fact that if a customer feels that goods and services provided by a company can be easily substituted with other competitors products at low prices, they will switch to them thereby greatly affecting De' Base's productivity and sales volumes.
- Gap Analysis – Gap analysis is done by making a comparison of present business performance in relation to that with the desired performance on the basis of pre ascertained standards. This helps in finding out the deviations and gaps that could be measured and eliminated or reduced by undertaking corrective actions so that they wont hamper he performance of De' Base in achieving its goals within specific time period generating higher returns and profits. Gap analysis also includes closely and regularly keeping a check on business activities and operations so that any deviation from the actual guideline could be detected at early stage without those gaps being given chances of widen up.
P3 Data which supports gap analysis in evaluation of the idea
De' Base in order to analyse its level of performance and position in the market conducts gap analysis of its business performance with that of its other market rivals on various competitive factors. Mentioned below is the data that could be taken into account for gap analysis.
Competition in market
De' Base being a new player in the market requires to get hold on market share for which adopts competitive pricing strategy, market penetration and psychological pricing strategy where in its products are affordable enough to suits its consumers pocket along with high quality.
Other leading retail brands are giving tough competition to De' Base by providing goods, thereby providing customers with number of substitutes from which they choose the best one.
New entrants in industry
Opening a store requires large establishments,huge capital investments, establishing brand, attaining economies of scales. Therefore De'Base with its low cost local retail strategy and direct tie up with local farmers will help firm to give competition to established brands. Also to remain in market and builds its position De' Base provides 10% discount to its customers on there consecutive two sales to attract and induce them to purchase. Therefore, threat for new entrance is medium for De' Base.
Leading retail brands also face intense competition among themselves competing over product, price , promotion intermittently.
Power of supplier
De' Base has taken considerable efforts and time in selecting its suppliers. It charges $5000 approximative that is considerably quiet low as compared to its competitors.
The competitive firms charges almost $4000 from its suppliers which adversely affects their business operations.
Threat of substitute
De'Base is already applying various efforts like competitive pricing strategy, various discount offers and other tactics to capture its potential consumers. Having a dedicated and loyal base has reduced its chances to get switched over by consumers for other available substitutes .
The competitive brands are giving tough competition to De' Base by providing quality goods and services at competitive price levels.
P4.Interpretation of data
The above market and gap analysis data interprets and conclude following results for De' Base:-
- To conduct business in a market which is having a huge number of competitors De' Base initially to capture attention of its potential target market and to build up its brand image is charging exceptionally low in comparison to its competitors. This has helped De' base to build a strong brand image even in its initial phase (Khaksar and et. al.,, 2011) .
- De' Base with an object of attracting maximum customers is providing 10% discount to its customers on there consecutive two sales to This will provide De' Base to capture this opportunity and apply consumer centric approach to convert these potential for inducing and stimulating them to make a purchase.
- Also it making various efforts like competitive pricing, market penetration, offering various discounts etc. which has benefited the company to gain dedicated market base.
P5 Apply a SWOT framework to collate evidence to support an objective assessment of a specific entrepreneurial idea.
A SWOT analysis is an analytical technique used to identifying various key factors that are: Strength, Weakness, Opportunities and Threats. It is focused on evaluation of internal and external factors that influence the success of organisation. Internal factors include Strength and Weakness of system and external factors includes Opportunities and Threats (Kohlbacher, Herstatt and Levsen, 2015) . It is helpful for strategic management of company in analysing a strategic intention. For Debase this is very effective tool to analysis within and outside business issues.
Debase has advance technology which leads to greater cost effectiveness. Company buys in bulk that is benefiting from economies of scale. This allows organisation to keep price of commodity attractive and be competitive with UK retailers such as Asda, Sainsbury and Aldi. For retain customers and creating long term relationship with customer Debase will provide loyalty packages like Club cards. Enterprise uses various types of promotional tools to attract customer and influence them to buy their products (Mitchelmore and Rowley, 2013).
It is very difficult for organisation to gain competitive advantage because there is price wars between retailers of UK. Company needs to invest their funds in IT and new web technologies. There is lack of focus on specific market as business entering all market at same time. Another issue of Debase is it has weak financial performance. This hasn't been able to impact globally because there are only few chain stores. One more weakness of entity is there are only limited range of products. As Debase is new company it face problem of positioning. This has limited global presence as compared to other competitors.
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Debase has opportunity to move into emerging economies like Brazil where large population and people can afford company's product easily. Company also adopt similar strategies like Tesco that is increase its visibility by opening smaller stores with essentials needed by customers. Organisation must invest more in promotional activities to keep up with competition (Shabani, 2016). Expanding in new areas such as pharmacies, opticians, jewellery and photo department is another opportunity for entity.
Competition is the major threat of company because Debase has weak brand name. Shifts in consumer taste is problem for company. Advance technologies used by competitor is serious issue for enterprise in medium to long term future. There is growth of online retailer is also great problem for company. Pressure of maintaining low price with quality is very difficult task for company. Get the best assignment help at an affordable budget.
P6 Evaluating competitiveness and market environments
It is of more essential for De'base in order to analysis its competitive environment as well as other market situation so as to develop different policies and plans as per these factors. and Market environment and Competitive analysis of De'base are determined as below:
It is of more significance for the organisation to measure the market technologies and techniques so that it get easy for business to adopt them. It is essential for organisation as it will be capable to implement its products and services as per the changing preferences and requirements of clients leading to an maximise in its market share (Siegel and Renko, 2012). There are some competitive factors which are determined as below:
- Substitute products: Business entity should develop such goods and services that are new, unique and can be distinguished from other brand which is available in market. It provides benefits to enterprise as clients can search out their products easily. Also a De'base should distinguish in its pricing strategies and policies as well as develop its plans and activity that are way in the lead from its challenger .
- Target audience- It is another essential aspect in order to acquire a competitive advantages is to prefer the suitable target customers for each and every group. The purpose of organisation should be to provide all the retail products related to women needs and wants of by rendering them with better quality goods and services in reasonable prices.
- Demand- In today's market, people are more aware regarding the products and services demands which is important for the company to provide this as per customer needs. Requirements of the clients is get quality products and services at reasonable price (Suddaby, Bruton and Si, 2015).
There are different conditions of the marketing environment that a business entity requires to evaluate and examine so that it can hold out in the marketplace for long duration. There are some factors which are monitored by De'base are-
- Macro Factors – In this business organisation do its PESTEL evaluation for analysing different legal, social, economical, environmental, political and technological that can highly effects on business operations and activities. As De'base main target all audience therefore it has to create effective technologies, machines and tools which are mainly related to the needs of customers.
- Micro Factors – It is another factor that highly effects on the business activities and functions in an effective manner. An organisation have to find and measure its workforce perception, attitude, behaviour and business culture. It is essential factor which support in formulating of effective policies and plans in align with it (Vasilchenko and Morrish, 2011).
According to the above mentioned it can be concluded that there are various elements that needs to taken into account while carrying out business activities and operation in an effective manner. Opportunities that are available in the market place must be exploit in an accurate manner by entrepreneur such that effective outcome can be generated by using available resources in best possible manner. In modern era, one of the leading and fast growing sector is Retail sector. There are ample number of opportunities prevailing in the environment that either directly or indirectly affect overall business activities in a cost-effective and timely manner.