2005 MBA Technology Transfer Challenge

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(No Transcript)
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Agenda

• Ideas Challenge Overview
• A Competitive Idea
• Questions and Answers
• Wrap Up

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IdeaChallengeOverview
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Ideas Challenge

• Campus-wide program asking
• Whats your big idea?
• New Product
• New Service
• New Company
• Ideas are judged by members of the business and
  academic communities.
• Cash prizes awarded.

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Why We Do This

• Students
• Encourage entrepreneurial thinking.
• Real world feedback on your idea.
• Skills development.
• Nice resume addition.
• Cash prizes and recognition.
• Texas AM
• Showcase our students.
• Develop entrepreneurial culture.
• Involve business community in AM activities.

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How it Works

• Student develops bright idea.
• Student completes two forms.
• Student submits forms.
• Judging panel selects top 40 ideas as finalists.
• Finalists present to judging panel.
• Judges vote on top 10 ideas.
• Awards and networking reception.

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Key Dates

• 2/25 Workshop 3 Koldus 110, 630-800 pm
• 3/28 Submission deadline
• 4/14 Finalists notified
• 4/20 Finalist workshop
• 4/30 Presentation Day Awards

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Submitting Your Idea

• Ideas are submitted in writing.
• Complete an entry form and terms conditions
  form.
• www.cnve.org
• Limited to 1000 words. No more!
• Ideas must be submitted by
• March 28, 2008.
• 5 pm.
• Email to cnve_at_mays.tamu.edu

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Entry Form

• Word Document.
• Covers
• Identification.
• Idea title.
• 2-minute drill.
• Customers.
• Competition.
• Suppliers.
• Benefits.
• Goals.

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Terms Conditions Form

• Word document.
• Agreement between you and CNVE
• It is your idea.
• We will maintain confidence.
• Ability to publicize winners.

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Who is Eligible

• Any registered student on the College Station
  campus.
• Freshman to doctoral students!
• Agriculture to Zoology!
• Team or individual entries.

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Resources

• CNVE Website
• Overview and Guidelines
• Entry Form
• Terms Conditions Form
• Workshops

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A Competitive Idea
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The 4 Anchors of a Good Idea

• The idea adds significant value to the user it
  solves an important problem, or meets a
  significant want or need, and the user is willing
  and able to pay for it.
• The idea is economically attractive it has high
  margins, low fixed costs, and good cash flows.
• The idea is competitively attractive it goes up
  against weak, disinterested, or disorganized
  competitors, and is hard to copy or imitate.
• The idea fits the entrepreneurs life goals,
  values, knowledge and skills.

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Competitive Advantage

• Competitive advantage A way of tilting the
  playing field so that it is not level, but favors
  your business.
• The biggest single problem facing the startup is
  building advantages that competitors cannot or
  will not match.
• Analyzing customer needs, competition and supply
  chain will help you to identify potential
  competitive advantages.

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Competitiveness

• Customers
• Who will buy it and why?
• Competitors
• Who will try to stop you and can they?
• Suppliers
• Who do you depend on and can you?

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Customers
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Customers Who?

• You must clearly identify your customer.
• Buyer or user?
• Medical device who is the customer?
• Baby product who is the customer?
• Buyer vs. Influencer.
• Identify and understand both.
• Understand the relationship.

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Customer Why?

• Why will
• A user use?
• A buyer buy?
• An influencer influence?
• Benefits the reason people will buy.
• Tangible benefits.
• Soft benefits.
• Tangible, hard, quantifiable, real benefits are
  REQUIRED.
• Financially motivated.
• Have to motivated regulatory.

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Bargaining Power of Buyers

• The ability of your buyers to squeeze profits out
  of your business.
• A problem when
• There are few buyers and many suppliers.
• Buyers purchase in large quantities.
• Buyers can switch suppliers at low cost.
• Buyers can easily backward-integrate.
• Buyers can buy from several suppliers at once.
• Examples Wal-Mart auto manufacturers.

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Competitors
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Who is a Competitor?

• Same product or service.
• GM vs. Ford vs. Toyota vs. Honda vs. .
• Substitute product or service.
• Car vs. bus vs. cab vs. walking.
• Complimentors turned Competitors.
• Regional airlines vs. major airlines.
• Do nothing.
• How do you motivate someone to buy?

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Step 1 Identify Direct Competitors

• What are the directly competitive products or
  services?
• Who offers them?
• What is the profile of these companies?
• Strong financially?
• Strong technically?
• Strong brand?
• Entrenched in the market?
• Aggressive reputation?

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Rivalry

• The willingness of competitors to directly attack
  each other.
• When rivalry is strong, price wars are likely and
  competition is intense low profits.
• When rivalry is weak, prices are easier to raise,
  and competitors dont fight over customers.
• Key determinant The number and relative size of
  competitors.

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Rivalry

• When there are lots of small, equally-sized
  competitors, (the industry is fragmented) rivalry
  is likely to be sharp.
• When there are a few large competitors, (the
  industry is consolidated) they learn how to
  behave.
• The best way to enter a consolidated industry is
  under the radar screens of the big players
• A specialized product with a tiny market share
• Alternate channels of distribution that they
  cant use

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Rivalry

• Demand conditions also influence rivalry
• Perishable products The fact that you must sell
  your inventory or throw it away leads naturally
  to price cuts.
• Capital intensity The pressure to run at full
  capacity, so that per-unit costs are low, leads
  naturally to price cuts. Critical for high
  fixed-cost products.
• Industry overcapacity All the competitors feel
  the same pressure, and price wars are the result.

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Entry Barriers

• The problems confronting new entrants to an
  industry.
• Absolute cost advantages
• Patents.
• Trade secrets.
• Control over scarce inputs.
• Scale economies the ability to produce at lower
  cost because of higher volume.
• Brand loyalty customers keep returning.
• Switching costs it is expensive or difficult
  for customers to change to a competitors product.

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Step 2 Identify Substitutes

• Brainstorm alternatives to your idea.
• How viable are these alternatives?
• Who offers the alternatives?
• How strong are these competitors?
• How widely known is the alternative?

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Substitutes

• Products from outside the industry that can serve
  the same purpose as the products from within the
  industry.
• Examples
• Wood, plastic, and steel (structural materials).
• Pizza, hamburgers, tacos (low-cost meals).
• Coal, oil, and natural gas (sources of energy).
• Most forms of entertainment.

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Substitutes

• Many technical business ideas are substitutes for
  existing products and services
• Can your business withstand a price cut in the
  original product or service?
• How will you attract customers away from the
  existing products, and keep them once youve
  attracted them?

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Step 3 Identify Complimentors

• Complementors are products that work along with
  other products, improving them in some way.
• Examples
• Netscape runs on the Windows operating system.
• ForecastX an Excel add-in.
• The original manufacturer may be able to undercut
  your product by building the features into their
  own product.
• Be careful of complementors who can cut you out
  if you become successful.

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Step 4 You vs. the Competitors

• Once you understand
• Direct competitors.
• Substitute competitors.
• Complimentors.
• Do nothing alternative.
• Critically evaluate your position
• Clear sustainable advantage.
• Clear advantage for now.
• Neutral.
• Clear deficit.
• Develop plan to build and exploit advantages.

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Suppliers
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What do you Need?

• What will it take to produce your product or
  service?
• Direct costs
• Raw materials.
• Facilities manufacturing, warehouses, etc.
• Transportation.
• Labor.
• Indirect costs
• Sales and marketing.
• Technical skills engineering, science, RD.
• Management.
• Facilities offices.

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Are There Supply Constraints?

• What about
• Unique raw materials limited supply, limited
  production capacity.
• Hard to find talent engineers, scientists,
  programmers, etc.
• Specialty facilities biohazard materials
  handling, space station time, etc.
• Regulatory issues waste permits, zoning
  requirements.
• Ask difficult general or for your application?

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Bargaining Power of Suppliers

• The ability of suppliers to squeeze profits out
  of your business. A problem when
• There are few suppliers and many buyers.
• Buyers are not important customers to suppliers.
• Buyers cant switch suppliers easily.
• Suppliers can easily forward-integrate.
• Examples Intel Microsoft

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Questions
?
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Wrap Up

• If you dont have a competitive advantage that
  you can easily explain to someone you dont know
  well, either find another idea or refine yours
  further.
• If you think your business wont have
  competitors, think again!
• Be careful of entering a business that has buyers
  and suppliers who can squeeze profits out of your
  company.
• If you cant articulate quantifiable, real
  benefits, reconsider.

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Key Dates

• 1/28 Workshop 1
• 2/18 Workshop 2
• 2/25 Workshop 3 110 Koldus, 630 800 PM
• 3/28 Submission deadline
• 4/14 Finalists notified
• 4/20 Finalist workshop
• 4/30 Presentation Day Awards