Factors Considered Before Developing a Business Idea
Discuss about the Cognitive Approach to Business Model Innovation.
Due to increased competition in the modern business world, it becomes imperative to come up with a feasible business idea that will do exemplary well when introduced and implemented in the market. There are, of course, some factors considered before coming up with a business idea. These factors include identifying a market gap, identifying customers, where to locate the business, legal requirements, among other factors (Rapp, 2015). Now, one and the major factor are identifying the entrepreneurial problem that ought to be solved. After much consideration of the necessary factors, the business idea that was arrived at was coming up with a smartphone software that has the capability of controlling all domestic electrical appliances. The software will cone with a provision for configuration of all the devices with the smartphone so that the user can control any electrical device in the house in the convenience of only one gadget.
Research shows that most of the people who have several electrical appliances have the capability of purchasing smartphones. When electrical devices in one’s house increase it becomes harder than before to control them. Some people opt to shut down some as they operate others since they are afraid that switching on several of them may result in damages when one or several snaps out of their control. Under normal circumstances, it would be difficult to control a TV, microwave, etc., using one gadget from the comfort of your seat. As a result, therefore, it would be imperative to introduce into the global a means of bringing these devices under control. The business idea arrived at is coming up with an Android software that can put all the domestic electric appliances under control begging from switching them on, operating to switching them off. The reason for choosing this business idea is that it will fill a wide entrepreneurial gap that has existed for decades and bring domestic appliances under control of one mobile gadget. Again, most of the people in the world are using smartphone technology and have the zeal to perform more using the convenience of their single gadget. The paper is aimed at writing a report that briefs about the business idea.
Various benefits come along as a result of the establishment of the business idea. First and foremost, the business idea will make operating domestic appliances easier and convenient as people will be performing all the tasks in one device. It will also reduce time wasted switching from one device to another. For instance, in normal circumstances, one has to operate a device, switch it off and go to the other hence wasting a lot of time that could be channeled to other income-generating activities. The business will not be associated with the emission of harmful substances to the environment hence no risks of increasing global warming.
Proposed Business Idea: Control of Domestic Electrical Appliances
Similarly, the business will increase the Gross Domestic Product of the country. Consequently, the per capita income will equally go up. That indicates that the standards of living of the Australian citizens will increase. The business will be diversified with time even to enter the global market, and therefore this will help provide employment raising the people’s standards of living (Bocken, 2016). The corporate tax paid out by the business will also be used to better infrastructure, say, water, roads, electricity, hospitals, etc. within and without the business environments.
Most importantly, the business will lead to poverty reduction hence attaining sustainability goals. The business will offer employment to quite a large number of people, something that will decrease the dependency ratio thereby reducing poverty (Nanlohy, 2017). The business will also help in reduction of social evils like theft, robbery with violence, among other evils because it reduces poverty. Poverty in most of the countries is the cause of all social evils due to inability to cater for basic needs. Poverty also leads to prostitution leading to contraction of STDs and HIV/AIDS. This behavior will be prevented by the business.
Coming up with a business model is very imperative because it sheds a considerable amount of limelight on the business idea to be established. The proposed business model is the long tail model that targets the customer segment that is more profitable to the business. Firstly, customers will be divided into the low and high-income earners. That will help draw a distinctive border between the segments that have the capability of acquiring multiple domestic electrical devices and those who are not able. From that point, it shall be clear which segment of people is beneficial to the business and which one is not (Jia, 2017). For value propositions, the business will offer a bundle of products to offer benefit for the target segment. Unlike other existing technologies, this business will offer quality after sales services, troubleshooting, change of operating system, system upgrade among others. This move will make the customers opt for this business because it will be offering more value propositions. For the channels, the business will provide a 24/7 toll-free customer support to ease the delivery of value propositions. On the same note, the business will reach out to the public through social networking and virtual connectivity and place adverts on the social media platforms (Sinha, 2017). It will use mainstream media advertisements. The role of distribution will be clad in the logistics management department.
Benefits of the Proposed Business Idea
The business will seek to establish a personal customer relationship. At first, it will strategize on acquiring them and making them aware of the new business. Revenue streams are very imperative because the main aim of a business is to make profits (Amit, 2016). The business will have two revenue streams, i.e., transaction revenues and recurring revenues. Transaction revenues will result from timely customer payment will recurring will involve payments for delivering the value propositions.
The key resources will be physical, technological, financial and human resources. The key activities required to make the business model work is manufacturing and distribution by supply chain management that will come up with ways of distributing the product from the producer to the consumer efficiently and cost-effectively. Key partnerships are very crucial. The partnerships involved will be strategic alliances and buyer-seller relationships. The key costs incurred will be purchasing raw materials, meeting legal requirements and delivery of the products to those customers wishing to have that service.
During the execution of the business idea, several critical success factors will be put into consideration. Firstly, the business will be service-oriented when working with customers. It will ensure that the best quality services are offered to the customers to improve their satisfaction. Care will be taken to ensure that customers get the best services so that they can become routine customers as a result of satisfaction (Wang, 2016). Businesses that do not relate well to their customers or offer poor quality services are likely to make fewer sales hence fewer profit margins. The business will also offer good remuneration and motivation to the employees. A business that .motivate their employees usually become successful due to improved performance and productivity from the side of the workforce.
The business will put into practice the idea of division of work and specialization. This idea increases productivity by reducing boredom leading to monotony as well as enable everyone does what they are best in (Aversa, 2014). By so doing, the business will succeed. Again, the business will make use of its internal resources and core competencies to achieve competitive advantage. Because the business is exposed to a similar external environment as its rivals, it will outdo them by developing good competitive strategies from the internal environment (deviMartins, 2017). The business will also embrace creative hiring process. The hiring of a skilled workforce is very vital for the business to start up. Therefore, the experts will be hired into several positions to develop a good business culture as well as instill the best working approaches to the rest of the workforce. These experts may also be hired for some time to act as an advisory team for junior employees.
Proposed Business Model: Long-tail Model
The demand for the product will be high since good quality products will be offered and there is no existing competition. The customers targeted by this business are the smartphone users who have the capability of purchasing multiple domestic electrical appliances. The business will target more than 80% world’s population aiming at diversification to reach the global market by marketing its product. The competitors will be companies associated with electrical device remote manufacture which are few and can only produce remotes for specific devices (Rayna, 2017). The business proposed can out-compete them because it provides an alternative device that can operate all electrical appliances conveniently. The quality of the product will be relatively higher than those of the competitors. It will also be sold at a price slightly higher than that of the competitors because it will be more sophisticated. The only strength of the main competitors is having already established a brand, but that will be countered by providing quality products and mass advertisements. Some of their weakness are poor customer relations, poor supply chain, and logistics management among others. There is no a significant barrier to entering the market.
4.3 billion US dollars will be required to start the business. This move will be achieved through the selling of shares and debentures as well as borrowing (Prasad, 2015). Business diversification will come from ploughing back profits. The business will need to operate for about a month before making the first sales. It may be required to operate for approximately two months to reach breakeven sales volume. The business will be expected to pick immediately as a result of quality product provision and well strategic planning.
Generating a business idea is determined by some factors. You need to know why you want to start the business, what you want to sell and to whom you will sell. These factors among others open up your mind to come up with a feasible idea. You also ought to be conversant with the prevailing legal requirements to avoid being banned from operating. You also ought to evaluate the significance of the business you are to start, to the business owner and the external environment. It is imperative also, to consider the critical success factors as well as the source of competitive advantages. The business of introducing an Android software for controlling all domestic appliances in the global market will succeed because it has been well planned and the necessary considerations made.
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