Firms engage in new ventures to remain competitive. New ventures are endeavors in pursuit of new revenue streams. The firm has to consider internal and external factors that are likely to affect the revenue in the process of identifying new ventures (Armstrong et al. 2004).
This paper discusses the introduction of a new mobile money transfer service as a business venture. A firm could engage in internal or external corporate venturing. The business venture is born because of a gap identified in the market.
Again Boston Consulting Group (2005) suggests that this calls for the need for customers to transfer money at minimal charges and with relative ease. The venture requires a large capital outlay. Implementation and commercialization of the service is expected to follow the business life cycle.
Success in marketing of the new corporate venture will rely heavily on how well the marketing appeals to the customers’ adoption process. The organization selected is a mobile telephony company. The business opportunity is provision of money transfer services through the phone.
External analysis of the firm
This involves analyzing the opportunities and threats the environment holds for the business. For the purpose of this analysis, the environment can be grouped in macro and task environment. The macro will involve an analysis of the political, economic, social, technological, environmental and legal framework.
An evaluation of the task environment will involve an analysis of the customers, suppliers, labour and competitors (Chen Chang & Fan 2008). On the macro-economic front, it will be critical to analyze the economic trends.
Opportunities prevailing include economic expansion, which will boost demand for the service (Gilley 1989). With a growing economy, the need to transfer money conveniently and fast stands to guarantee uptake of the service by customers.
On the political front, the country is stable and there is an active campaign to market the country to willing investors. Socially, the nature of the country’s populace is such that very few are banked. This implies that small and medium scale businesses transact through other avenues other than banks (Boston Consulting Group, 2005).
This presents the firm with potential clientele. Technologically, the customers stand to benefit from the new service in that there will be no need to travel or exchange physical documents like cheques and receipts to confirm sealed deals.
The service will facilitate business transactions that are geared towards economic growth. The inconveniencing paper trails of money transfer will be reduced, consequently, the initiative will contribute to environmental conservation of trees and less dumping of paper (Centennial business summit 2008). There are challenges that one ought to overcome in case implementation of the new venture is to succeed.
Some of the challenged include obtaining political goodwill, competition, financing, lack of specialized equipment. As such, customers could take too much time to warm up to the new service for fear of security of their funds. Ultimately, the regulators may be opposed to such a venture or limit transfer amounts (Armstrong et al. 2004).
This will involve an analysis of those factors that create a competitive advantage and those that limit the firm. These are strengths and weaknesses that the firm meets in its operation. The strengths and weaknesses count as the salient aspects to consider under internal analysis in relation to strengths. These include experience of the firm, management of the firm and its recent successes, market penetration by its marketing and sales team.
According to Wheeler, Fabig and Boele (2002), availability of a platform on which to run the new service are fundamental in this endeavor. Effective information management systems count significantly in the smooth operation of the business that effects better decision making. Good standing with financial institutions guarantees credit lines that favor the company. As Carrand and Oliphant say:
Before you commerce in business you must have a certain sum of money available for starting the enterprise; that is, a certain amount of Business Capital. The amount of capital need will naturally depend upon the nature and extent of the business concerned. It is not essential; however, that you should possess all this capital yourself, as a great deal of modern business is carried on with borrowed capital.
But you must remember that if you run your business on partly borrowed capital you will have to pay interest on the sum borrowed and therefore will be at a disadvantage compared with a competitor who uses his own capital. (Carrand and Oliphant, 1973, p 21)
It must not be lost to the firm that there are inherent internal weaknesses to contend. Some of these weaknesses include drying up of credit lines because of bad debts, worn out plant and machinery, poor market research, poor staff preparedness and management and duration of patents.
The firm already has an existing base of distributors. It only needs to tap in to this existing network by incentivizing the distributors through commissions and bonuses based on the volume of the new product they move. The business venture is born because of a gap identified in the market. As Mugala writes:
A company should start by analyzing the environment. It should set a market intelligence system to track important developments and trends such as changes in income, spending patterns, savings rate, regulatory framework, etc.
After identifying the implied opportunities and threats, it should then evaluate the opportunities in terms of their attractiveness, size, growth potential and profitability. It should choose those opportunities for the company possesses the required strengths or f it can develop (Mugala, 1999, p 25).
This presents the need for customers to transfer money on minimal charges and relative ease. In addition, the venture sits well with the firm’s mission to be the leading telephony company in the country. Such a venture will go a long way in giving the company a competitive advantage.
Availability of resources necessary for the success of the venture will be crucial. Finance for the entire venture will have to be availed. The scale of the venture will determine if external funds will need to be sourced from financial institutions or rights issue.
Some of the key aspects of financing will include infrastructure (plant and equipment), sales and marketing, hiring of specialized skills and training of new and existing staff (Boston Consulting Group, 2005). The success of this venture will rely heavily on the marketing and commercialization of the new service. Secondly, information technology needs will need to be addressed.
This involves infrastructure of the new operating system, good information management systems, hiring of back office operators, and training of existing distributors on the mechanism of the new money transfer system (Swift & Zadek 2002).
Thirdly, a critical look at intellectual property rights will be paramount. This includes branding of the money transfer system and patenting of the service. Fourth, the legal aspect of the transfer of money through a new platform will need to be addressed with the regulator.
The firm had previously got on board a data hub service. This venture required a large capital outlay on the onset. Profits from the venture were only realized in the growth stage of the products life cycle (Unity Marketing 2005).
This venture was undertaken to cash in on the desire expressed by many organizations in the economy to concentrate on their core competencies and transfer overheads related to their non-core business functions to more specialized companies. The business gained traction by strategic advertising, venturing into new market segments, increased sales promotion activities and maintaining stable prices (Lovelock and Wirtz 2007).
Being a business in the emerging industries category the firm was able to attract a lot of attention and investments in the early stages of the product. This led to a rapid grow of new customer, increased market penetration and competitive advantage. To achieve this, the firm had to take a considerable risk.
It took the research and development team one year to conduct feasibility studies before the venture was given a go ahead. The venture was aimed at adding to the firm existing product portfolio and adding value to its customers. The venture was an initiative of the firm with no outside partnership. This meant the firm had to have a solid business proposal to convince banks to advance credit.
Along the process of research and development up to the product introduction point, many challenges were encountered. Some of the challenges encountered included, logistical problems, availability of skilled labour and technical problems.
However this served to galvanize the team contributing to the eventual success of the project. “It is desirable that one should know something about the general nature of the business one proposes to carry on. This gives experience. Yet you will find that a good many tradesmen have the vaguest knowledge of its more technical side” (Carrand and Oliphant, 1973, p 21).
New business venture proposal
Emerging industries have tremendous growth and equally face is a great deal of competition and uncertainty. With this in mind, the firm should seek to create a win early strategy which enables a company to grow as quickly as possible in the process creating a brand name that customers can associate with (Birch 2002).
The company has to be the best by establishing highly efficient performance standards. In so doing, it creates a gap between itself and the competition.
Apart from that, this new venture establishes a superior niche market. The company being in the telephony industry should take advantage of new technology to reap maximum benefits since technology changes rapidly. With ever present competition, building brand loyalty will be key. The quicker the company creates brand loyalty, the better placed it is to insulate itself from the competition.
Innovation is the key word, a daily process for any marketer in the liberalized world today. Technological innovations have turned this world into a global village. Managing a cross-cultural global market is a challenging task for the marketing personnel. Corporates are having a hard time to look at their products getting to markets prior to making a decision on the marketing strategy (Mugala, 1999, p.25).
Recommendation of a suitable implementation mechanism
Implementation has to be in line with the set plan on management, finance, human resource, marketing and operations. Since it’s a money transfer service a trial will have to be conducted on a test market before the eventual roll out to the entire market.
As suggested by Timmons, Gillin, Burshtei & Spinelli (2010), the company will outsource the training of the new service to another firm. The firm will be responsible for the training of all the existing and new distributors. They will supply the materials needed for the service and brand the distributors premises.
Training will be a continuous process. This is because an additional improvements made on the product will have to be communicated to the distributor without failure (Bieber & Meurer 2010). This will enables the company to concentrate its efforts on the operations of the new venture.
Teamwork will aid achieve better results. A good team outperforms a group and outperforms all reasonable expectations of its individual members.
Meaning a team produces synergy. Team members must be committed to each other’s personal growth and success, as well as that of the team. Team members also share ideas on what traditional or company policy orientation.
Management functions such as planning, organizing, setting performance goals, assessing performance are important to consider. Again, developing their own strategies to manage change and securing their resources are of fundamental consideration (Carrand & Oliphant 1975).
In any given market, buyers differ in the speed and willingness to accept new products. Buying behavior of customers needs to be understood by a company launching a new product.
An individual goes through a set of successive decisions before buying a new product. The adoption process involves awareness, interest, trial and confirmation of the new product. Adaptor categories include innovators, early adaptors, early majority and late majority.
The firm intends to launch into the market a mobile service, which enables customers to receive and send money through their mobile phones. This will be done in line with the business cycle that involves the introduction, growth, maturity and decline stages. At the introduction stage, competitive advantage will be gained since the company is the first to venture into the market with such a product.
In the process, the company will create brand recognition. This strong brand recognition will serve as a strong switching cost. In the event that a competitor may surface, customers will be reluctant to switch to the new entrant (Boston Consulting Group, 2005).
This competitive advantage should be maintained by continuously improving the product with the change in technology. The marketing objective at this stage is to promote consumer awareness.
At the growth stage, there is less pressure and there will be exciting advances in new technology and sales volume. At this stage, developing innovative expertise will be easier. Being the only service of its kind in the market, the service is likely to enjoy huge demand. This will most likely attract new competitors. The company will have balance short-term returns with long-term viability.
Sale will grow rapidly and this may attract competitors (GOOGOL 2000). The objective at this stage is to maintain growth in sales by improving on the new venture. New distributors may be interested in the new venture due to the returns in the venture. The firm will cease this opportunity as a market development strategy.
At the maturity stage, the service is likely to have four characteristics. It will lack continued growth, it will lack patent protection on some of the key technologies, experience will cease to provide an advantage to other competitors and it will have few avenues for differentiation (Unity Marketing 2005).
The firm may consider introducing other services on the same platform that add value to the customer. For example, pay bill services, purchase of goods and collaborating with banks on mobile banking.
At the decline stage, the firm should re-evaluate its viability. Should it find that its competitive advantage is still strong, it should reposition the business as a long term survivor in a dwindling market. There are four strategies to consider at this stage.
The firm should either divest (sell out), harvest (let the business wither gradually), niche (focus only on a section of the market with sustained demand), and leadership (position itself so that it has the lion’s share of the dwindling market).
For the venture to succeed a great investment has to be made on human resource development. The technical department has to make sure that there is no server that is not functional as this might delay funds transfer and inconvenience customers.
The focus of Human Resource Development (HRD) is to develop the most superior workforce. Organizations have many opportunities for HRD both within and outside the workplace. This will regulate motivation among regular and non-regular employees. The need for human resources development should be understood by both the employees and the employer. HRD should be implemented systematically.
HRD is important in an organization to do the tasks. Non-regular employees can be given training. In today’s scenario it is important to educate and train employees about the change. Quality needs to be assured. There are many strategies for this development. First, there should be a plan.
This plan should be discussed and adhered to. Finally, this plan should be executed for the desired output. The employees should also benefit from it. The extent to which people will give suggestions and ideas for improvement will depend to a large extent on human resources development strategies in a firm (Unity Marketing 2005).
The mobile telephony industry is a rapidly changing industry in terms of technology. A certification acquired today may not be valid after three years. Reviews have to be made to the old certifications. This makes human resource development a continuous process (Unity Marketing 2005).
This asset has to be protected from competitors who will be out to offer good deals to the firm’s employees. Long-term investment plan will be necessary to aid the firm’s new venture to be the best and eventually roll out its operations globally.
According to Final Report of the Expert Group (2008), many companies rush to cash in on new ventures but are eventually bought by their rivals at maturity due to the lack of innovation and failure to maintain their competitive advantage.
Again, Final Report of the Expert Group (2002) reiterate in the same voice that survive, the firm has to focus on long-term projects through taking risks which they know its market trend. The company should be consistent, relevant and continually improve on its financial, human and technical capabilities (Reference USA Database of Business 2007).
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