DEPARTMENT
OF COMPUTER SCIENCE
CSC454/2527S:
The Business of Software
January-April
2003
Assignment
D
Posted:
Due
In: 3 Feb 2003
Marks:
15%
Please complete the following brief outline and submit it. You may complete the sections in point form, the questions are there as a guide. This is worth 15% of your final mark; the more effort you invest now the better off you will be come the end of the term. All of this information is necessary to complete a business plan. AVOID GENERIC STATEMENTS OR CLAIMS AS YOU WOULD AVOID THE PLAGUE! – be as precise as you reasonably can and indicate if there remains significant uncertainty about particular points you’ve made.
Each group should submit their Assignment D to their TA via email. THE TITLE OF YOUR SUBMISSION SHOULD BE “ASSIGNMENT D: XXX”, where ‘XXX’ is the name of your team’s project.
In addition to this questionnaire you must also submit:
Completing this assignment is not a linear process and you will find as you dig deeper into the analysis that you may change your idea, your product description, your market etc….. If you split the work amongst group members, we strongly suggest that you meet regularly to ensure that your efforts are converging on a single and strong understanding of your new business.
Describe your product (< 50 words):
Your product isn’t simply a technology or thing. Typically it is a combination of that as well as service and business model. The best way to define your product and assess market and competition is to describe it in your customers’ terms. Address your customers’ needs in your product description.
What
is the nature of your innovation (<
100 words):
Is it a Product, Process, Service, Technology?
Is it an integration of existing products, an improvement over an existing product or process or a business model innovation?
How are you different; what is your competitive advantage?
Identify
your potential markets (< 100 words):
Who are your customers? Consumers, Small, Medium, Large Enterprises? What is their business? How do they make money? How will they use your product? Why do they need it? Is there a difference between customers and users?
If they are consumers, what about demographics, needs, lifestyles?
Are you selling to a few big customers or to many small ones? What purchasing, bargaining, strategic alliance etc powers do they have? Can they use this against you by driving price down?
Use the chart in Appendix A to as a framework to discuss your competition; you can either fill it out as is or use it as a structure for your submission in describing your competitive situation. Later in the development of your business plan, you will need to do a feature-by-feature product comparison; for now, the intent of the grid in Appendix A is to capture a high-level view of your competition to get perspective and start focussing. Use company websites (watch for exaggeration or straight untruth!), press releases, trade magazines, analyst reports, the news, stock information and annual reports, subject matter experts, etc. as sources of information.
Even if you discover some actual or potential competition for your new business, it doesn’t mean that you’re doomed! The key is to make a case that:
a) your company’s differential capabilities/ strengths/ assets/ technologies/ relationships will deliver a markedly more desirable solution to a segment of your market; and
b) that your target segment and its key internal decisionmakers and opinion leaders are identifiable and accessible via marketing efforts (ads, PR, trade shows, telemarketing, direct mail, etc.); and
c) members of your target segment have the cash and (at least) a degree of demonstrated willingness to purchase your kind of product/service, and that the target segment is big enough to get you to initial profitability (at least!); and
d) you can identify an appropriate distribution channel for your product/service that is acceptable/attractive to your target segment (appropriate channels might include one or more of the following: direct sales and service by your company, VARs, system integrators, PC manufacturers (some of these channels may require that your offering be available to them via a master distributor, such as Tech Data)). Remember that companies in your distribution channel must have sufficient incentive to carry and promote your product service!; and
e) you can build a profitable business given these requirements!
You are not required to write out or to
submit your “case” as described in a) to e) above – however, we want to see
this kind of thinking and research in your answers to the questions in the
Competition section in this questionnaire.
On the other hand, stating in your business plan that you have no competition will raise many “red flags” for readers. Consider the following types of competition:
Primary competition – offer the same or substitute product
Secondary competition – offer a solution that addresses the customer’s need you have identified though it may look totally different (i.e. mental telepathy makes cellular phones unnecessary)
Tertiary competition – may not offer a competing or similar product but they can easily move into your space given their current product offering and infrastructure, i.e. IBM and the handheld market etc.
Consider
as well the technological competition (<
100 words):
What is the current state-of-the-art technology in that area? Do you see any indicators your product/service may be leapfrogged? (home wire-line networking vs wireless networking) What is happening in R&D in that technological area?
Can your product/service be easily replicated? If it can be replicated, what can you do to safeguard your position?
Regulation
etc (< 50 words):
Might any regulatory standards apply? What about industry standards? Are there any legal or liability issues you may have to address?
Suppliers (< 50 words):
Will you have any suppliers (products, services, etc.)? How crucial are they for your product/service? How unique/specialized are they in terms of the product and/or service they offer? (The more unique and/or specialized they are, the more dependent you’ll become, the more leverage they will have against you). How can you mitigate their control over your company?
Complementary products and/or services
(< 100 words):
In all likelihood, the use of your product or service will be dependent on the use of another product or service. How dependent is it? How crucial is it for you? How unique and/or specialized are the complementary products or services? Will you need any sort of alliance or partnership to develop and market your product/service? Who will be in the commanding position in the alliance? How can you mitigate against the threats?
How
will you make money (< 100 words):
What can you charge for (your product, supplementary services, information)?
How
will you get your product to your customer (< 100 words):
What distribution network needs to be in place?
If you have to go through a distribution intermediary, are they strong and hard to bargain with?
Manufacturing/Development/Production
(< 50 words):
What are the requirements to manufacture any necessary hardware? Do you need to contract anything out? What about production and rollout of a solution? Suppliers?
Take
stock of what you already know (<
100 words):
What expertise exists on your team already? How will you divide the work amongst you? What roles will you assume?
Take
stock of what and who you need to know (<
100 words):
What expertise is missing from the team to make this fly? Who can you contact as a subject matter expert in the technology, business area, or market that can help you? Who do you want to know?
(PLEASE INCLUDE A LIST OF INTENDED CONTACTS)
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APPENDIX A:
Competition |
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Competi-tors |
Date/
Experience |
Revenues/
Financial Strength |
Apparent
Market Focus/Strength of Position (Market Share) |
Products and Product
Branding |
Location and
International Penetration etc. |
Strength of
Resources |
Strategic
Alliances |
Key Strategic
Moves/ Acquisitions |
Comparison/
Competitive Rating |
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Competi-tor A: name, website locations etc.. |
How long has the
company been around? What is their
history/experience in the market? What may have they evolved from? |
This is easier
for public companies. Try to estimate
their sales and the sources of their revenues. What are you up against? |
Some
competitors may offer the exact same product or service but target
specific niche markets (Small Business, Enterprise etc) Where are
they? Are they still developing and
moving to a better product? |
Strength of the
brand. Price, quality, and product. i.e. competing with
Microsoft will be a nightmare because of brand recognition alone. |
Head offices and
branches, are they established internationally already? |
What expertise
do they have? How many people
etc? What kind of
R&D horsepower do they have? |
How vital they are for product or service? How hard is it to create competitive
alliances? |
Have they made
any purchases etc to increase manufacturing/R&D capacity etc.? |
Estimate the
threat i.e. High/Med/Low risk |
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(< 100
words) |
(< 50
words) |
(< 100
words) |
(< 100
words) |
(< 100
words) |
(< 50
words) |
(< 100
words) |
(< 50
words) |
(< 100
words) |
(< 25
words) |
If you’ve got lots of competitors, complete this grid for the five most important ones and then describe the rest in 3 groupings: Primary, Secondary, and Tertiary.
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APPENDIX B:
Technological Competition (use as a guide to thinking; this grid is
not required for assignment) |
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Technology |
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Research and Development in Progress |
Competitors’ Moves |
Predictions |
Competitive Advantage |
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Consider the possible features of your product and technology required for it. |
What is the current state of the art as well as what the industry standards are etc |
Who is researching and developing what, what might be the next wave in technology |
What are our competitors doing: product moves, research or standards alliances, mergers and acquisitions with technologies etc. |
Where might the industry be going or what might the target market desire 1, 2, 5 years out… |
Where should you carve out a market? Is this an area you want to lead in? |
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Examples: |
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Operating Systems: Platforms they support |
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Multimedia Capabilities |
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