ENTREPRENEURSHIP

(BPK 20802)

CHAPTER 2:
IDEATION & BUSINESS
MODEL CANVAS
DR. HJH. ROSLINDA BINTI ALI
FACULTY OF ENGINEERING TECHNOLOGY
 WHAT IS IDEA GENERATION?

An idea can be regarded as the outcome of a thinking process

(i.e. impression, opinion, view, belief, formulation and concept).

In entrepreneurship, ideation is the creative process of generating,

developing and communicating new ideas. A business start-up
ideation must be centered on solving customers problems.

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 HOW IDEA IS GENERATED?

Ideas may come to entrepreneurs from daily exposures.

- E.g. Frustrating experience, customers complaints and
feedback can provide an opportunity to develop something
better, quicker or cheaper than existing products.

It may also come from work experience

- An entrepreneur can use his work experience and technical
skills obtained from earlier work to resolve problems and
shortcomings in his present work or operation system.

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 MALAYSIA: A MOST ENTERPRISING CULTURE
AND NATION
Knowledge-
based
Agriculture-based Export high goods &
value added services
led by Government
Export electrical &
textile & electronic
electronic goods
Manufacture
of import goods
substitution
Export of goods
rubber, tin, Knowledge Era
palm oil &
timber 2000s
Technology Era
Knowledge
1990s
Industrial Era Driven
1980s Productivity
Agriculture Era Driven
1970s Investment
Driven
1960s Labour Knowledge-based led by
Labour Driven Private Enterprises
Driven

11/22/2017
PERUBAHAN SISTEM EKONOMI MALAYSIA

KELEWATAN PERUBAHAN EKONOMI

MALAYSIA
Era ICT Malaysia
Era Teknologi
Era
Maklumat Malaysia Bioterials
Era Pertanian
Malaysia
(- 220 th) Era Teknologi
Maklumat

Era Agraria
Era Teknologi

650 1750 1950 2000

Era Teknologi
 HOW IDEA IS GENERATED? (cont.)

Ideas may grow from a hobby or personal interest

- E.g. Someone who loves to bake cakes may start selling their
cakes online as a way to generate income. This business may
grow as demand increases. The home baker will need to
decide at one point whether to become an entrepreneur
managing a growing business, or he may return to baking just
as a hobby.

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INTRODUCTION ABOUT US OUR PRODUCTS & SERVICES CURRENT PROJECTS FUTURE PROJECTS

REVOLUSI PERNIAGAAN DARI BAWAH POKOK KE BUSINESS ON WHEEL

 HOW IDEA IS GENERATED? (cont.)

New ideas, information, opportunities or insight into new

technological trends may reach entrepreneurs through trade
exhibitions, or links with universities and research institute distributors,
manufacturers, franchisers, professors and research scientists.

It is also important to observe and pay attention to latest trends

and technological development in technical magazines, scholarly
journals, newspapers and internet.

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 Exploring New Business Ideas and Opportunities

Search for a product or service idea

From your From From a

From
previous casual deliberate
hobbies
employment observation search

Product
Magazines Trade shows Government Use
licensing
and other and agencies and creative
information
publications conventions departments thinking
services

Evaluate the possible alternatives

Determine your preferences

 TECHNIQUES FOR GENERATING NEW
BUSINESS IDEAS

GENERATING
BUSINESS
IDEAS

Brainstorming Surveys

Focus groups

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 TRANSFORMATION OF IDEAS INTO
BUSINESS OPPORTUNITIES
In order to get an idea on the business potential of the new ideas,
entrepreneurs may ask the following:
- Has it solved the customers problem or pain?
- Does it offer higher value added products or services?
- Does it have a unique selling proposition?
- Can it be produced at an acceptable cost, and marketed
and sold at a profit?
- Does it have competitive advantage compared to
competitors products?

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 BUSINESS MODEL CANVAS (BMC)
AND
SWOT ANALYSIS

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 WHAT IS BMC?

Developed by Alexander Osterwalder in 2009

BMC is a visual representation of current or new business models. It

analyse, strategise and test a business model based on nine
business areas.

It provides a holistic view of the business as a whole

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 7 4
8 1
2

6 3

9 5
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 8 7 2 4 1
What key activities does What kind of relationship
your value proposition does the target
require? customers expect you
What activities are the to establish?
Who are the most important in What core
How can you integrate
key partners/ distribution channels, value do you
that into your business in
suppliers? customer relationships deliver to the Which classes
terms of cost and
What are the and revenue streams? customers? are you
format?
motivations for Which creating
customer values for?

6
the

3
partnership? needs are you Who are your
satisfying? most
important
Through which channels customers?
What key resources
do your customers want
does your value
to be reached?
proposition require? Which channels work
What resources are best?
the most important in How much do they cost?
distribution channels, How can they be
customer relationships integrated into your and
and revenue streams? your customers routines?

5
What costs the most in your What is the value that your customers are

9 business?
Which key resources/ activities
are the most expensive?
willing to pay?
What and how do they recently pay?
How would they prefer to pay?

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 1. CUSTOMER SEGMENTS

Customer segments refer to the target people and/or organisations

your are offering value propositions.

From whom the product and/or the technology is useful and what
for such as basic need, solving problem.

Types of customers :- mass market, niche market, segmented.

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 Develop Product Positioning cont.
Positioning maps

15-17
 2. VALUE PROPOSITION

A companys value proposition is what distinguishes itself from its

competitors (Osterwalder, 2008).

The value created for users by the product or service containing

the new technology

Describes the bundle or products that create value for specific

customer segment

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 2. VALUE PROPOSITION (cont.)

What value do we need to deliver?

- Newness new set
- Performance
- Customisations
- Getting the job done
- Design
- Brand/status
- Price
- Cost reduction
- Accessibility
- Usability

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 2. VALUE PROPOSITION (cont.)

Some value propositions involve innovative technology, while some

simply deliver better service. Others are a mix of better goods and
services.

The value propositions may be quantitative (e.g. price and

efficiency) or qualitative (e.g. overall customer experience and
outcome).

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 3. CHANNELS

A company can deliver its value proposition to its targeted

customers through different channels.

Effective channels will distribute a companys value proposition in

ways that are fast, efficient and cost-effective.

The first decision to be made when trying to sell products or

services to the target market is whether to sell directly to that target
market, or to use intermediary services.

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 3. CHANNELS (cont.)

Common methods of direct marketing:

- direct selling
- internet marketing
- catalogues

Although direct marketing is a straightforward process, if does not

always move goods from producers to consumers due to lack of
expertise, experience and economies of scale.

In order to be more efficient, many companies rely on marketing

intermediaries to market their products.
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 4. CUSTOMER RELATIONSHIPS

Describe the types of relationships a company establishes with

specific customer segments.

Types of relationship:
- Personal assistance communicate directly
- Self service
- Automated services
- Co-creation YouTube/ Facebook

Studies show that it costs four to six times as much to get a new
customer as it does to keep a customer loyal, hence, it is
imperative for companies to build brand loyalty.
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 5. REVENUE STREAMS

Revenue streams represent the cash a company generates from

each customer/product segment.

Two types of revenue streams:

- Transaction revenue cash payment
- Recurring revenue on-going payment

Ways to generate revenue streams:

- Asset sales products
- Usage sales phone calls
- Lending, licensing
- Subscription fees
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- Advertising
 6. KEY RESOURCES

Key resources are the most important assets needed to make a

business model work.

Key resources can be:

- physical :- building, machines
- intellectual :- brand, knowledge, IP
- human :- expertise
- financial

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 7. KEY ACTIVITIES

Key activities are activities that a company must do in order to

make its business model work.

Category of key activities:

- organising
- production
- problem solving
- marketing

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 8. KEY PARTNERS

Key partners are the network of suppliers and partners that make
the business model work.

Companies forge partnership to optimise business models, reduce

risk, and acquire resources.

Four different types of partnership:

- Strategic alliance
- Cooperation
- Joint venture
- Buyer-supplier relationship
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 8. KEY PARTNERS (cont.)

Three motivations for partnership:

- Optimisation of economy of scales
- Reduction of risks
- Acquisition of resources and activities

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 9. COST STRUCTURE

All cost involved to operate business models. Two types:

- Cost driven minimising cost
- Value driven concern of value

Characteristics of cost structure:

- Fixed cost salaries, rental, physical facilities
- Variable costs

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 SWOT ANALYSIS

A SWOT analysis is a planning tool used to understand the

Strengths, Weaknesses, Opportunities, and Threats involved in a
project or in a business.

It involves specifying the objectives of the business or project and

identifying the internal and external factors that are supportive or
unfavorable in achieving that objective.

SWOT is often used as part of strategic planning process.

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 SWOT ANALYSIS (cont.)
Strengths Weaknesses

- INTERNAL FACTORS

Opportunities Threats

- EXTERNAL FACTORS -

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 SWOT ANALYSIS (cont.)
Strengths Weaknesses
What do you do well? In what areas do you need to
What are your unique skills? improve?
What expert or knowledge do What resources do you lack?
you have? What parts of your business are
What experience do you have? not very profitable?
What do you do better than your Where do you need further
competitors? education and/or experience?
What are your most profitable What costs you time and/or
business? money?
Opportunities Threats
What are the business goals you
Whats going on in the
are currently working towards?
economy?
How can you do more for your
Whats going on in the industry?
existing customers or clients?
What are your competitors doing
How can you use technology to
that you are not?
enhance your business?
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 SWOT ANALYSIS MATRICS

TOWS Analysis is the analysis of Threats, Opportunities, Weaknesses,

and Strengths.

The 4 strategies derived from this analysis are as follows:

- Opportunity-Strength (OS) strategies
- Opportunity-Weakness (OW) strategies
- Threat-Strength (TS) strategies
- Threat-Weakness (TW) strategies

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 SWOT ANALYSIS MATRICS (cont.)
Strengths Weaknesses

List of strengths List of weaknesses

Opportunites Opportunity-Strength Opportunity-Weakness

(OS) Strategies (OW) Strategies

Use the strengths to Overcome

List of opportunities take advantage of weaknesses by
opportunities taking advantage
of opportunities
Threats Threat-Strength (TS) Threat-Weakness (TW)
Strategies Strategies

List of threats Use strengths to Minimise

avoid threats weaknesses and
avoid threats

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 EXAMPLE OF SWOT ANALYSIS

Example on the Campbell Soup Company that stress on financial

goals.

The example also illustrates how you can pair the items within SWOT
grid to develop strategies.

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 Strengths Weaknesses
Current profit ratio Legal suits not
increased resolved
Employee morale Plant capacity has
high fallen
Market share has Lack of strategic
increased management
system
Opportunites Opportunity-Strength Opportunity-Weakness
Western European (OS) Strategies (OW) Strategies
unification Acquire food
Rising health company in Europe Develop new
consciousness in (S1,S3,O1) Pepperidge Farm
selecting foods Develop new products
Demand for soups healthy soups (S2, (W1,O2,O3)
increasing annually O2)

Threats Threat-Strength (TS) Threat-Weakness (TW)

Strategies Strategies
Low value of dollar
Tin cans are not Develop new Close unprofitable
biodegradable biodegradable European
soup containers operations (W3,T1)
(S1,T2)
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 Thank you

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