Entrepreneurship: Location, Technology, Factors of Production and Implementation

Location decision
1. New enterprise 2. Relocation of existing business, as the present location does not have extra space 3. Expansion of existing business 4. Relocation of clients 5. Supply chain problems

Factors in Location Decision

Customer-access Access to suppliers Climate & geography Convenience Cost of facilities Economy & business incentives Demographics Regulations & laws Labour pool Proximity to competitors Visibility

Location Needs Differ by Business Type

Manufacturers Facilities and distribution costs Skilled labour pool Access to suppliers Laws and regulations Wholesalers Facilities and distribution costs Proximity to customers and suppliers Laws and regulations

Location Needs Differ by Business Type (contd.)

Retailers Demographics Traffic generators Competitor locations Selling space Rental costs Service and Professional Needs vary much Customer convenience and accessibility Demographics Image/positioning Safety/security factors

Evaluating Locations
Factor-rating methodprioritize and weight criteria with these steps: 1. Develop a list of critical factors 2. Determine weight of each factor 3. Create a measurement scale. 4. Score each location for each factor using scale. 5. Multiply factor weight by factor score 6. Compare sums of locations weighted factors.

Evaluating Locations (contd.)

Use geographic information systems which include demographic, psychographic, geographic, topographic and competition data, maps, major transportation routes and so on. Use market research for data.

Evaluating Locations (contd.)

Location breakeven analysiscalculate and compares fixed and variable costs of each location Center-of-gravity methodused to locate a distribution center by judging: Locations of destinations Quantity of products for transport to destinations Frequency of delivery Cost of delivery

Facilities Design and Layout

Space for manufacturing, warehousing, and distribution facilities. Retail facilities - design and layout.
Service and professional firms facility needs are based on business type.

Facilities for Manufacturers/Distributors

Capacity for efficient movement of materials, equipment, and people Adaptability to changing needs Conducive work-environment Vital control regulators Parking space Utility services on the premises Security and safety

Types of Manufacturing Layouts

Product layoutsappropriate for continuous, mass-production processes Process layoutsfunctional layouts that work well where there are common procedures for varied products Fixed-position layoutsused for production of large objects where materials and teams are brought to a single location

Location Factors for services

1. Customer based (banks, stores, restaurants) 2. Cost based ( retail shops) 3. Competitor based ( clusters) 4. Support systems( Medical store near a Hospital, Hotels near Railway stations, Airports ) 5. Environmental factors ( ski resorts, resorts at hill-stations and beaches )

Location Factors for services (contd.)

6. Business climate ( restaurants near tourist spots) 7. Communication based ( Financial institutions in cities) 8. Transportation based (courier services) 9. Entrepreneur desires ( family reasons)

Facilities for Retailers

Selling area and space-configuration Possibility for additional space needs Space for offices, storage, restrooms, deliveries, special needs, etc. Signage for rules/regulations Parking space Lighting and security

Retail Store Design and Layout

Building exterior, window displays and cleanliness, and signage all send messages to customers. Inside layout: To designed to entice customers to purchase. Product placement Type of shopping experience desired for customer

Home-Based Business
Investigate zoning ordinances, deed restrictions, and civic association rules Determining business area and familys living area Business preference: Office building or store or home furnishings and equipment Assess customer

Web-Based Business (contd.)

It could have a one-room office. Location is more a function of personal preference, cost, or proximity to vendors. Location, facility, and layout decisions should minimize distribution costs and time. Some technology-based companies prefer to cluster with similar firms.

Technology
Adoption of technology Transition from technology professional to technology entrepreneur Replace techno-centric view with one that is customer-oriented Technology is not just a tangible object, but rather a package of valuable services Customers have little use for products as objects; they have great use for services these objects provide

Technology as Services: Examples

Light bulb: nobody buys it as a product; rather for the expectation of illumination. Similarly, software is not a product residing on the computer; it should be used to provide additional value to customers.

Dimensions of Performance
Some of the service features customers would look for are: speed, convenience, economy, prestige, etc. Taken together, these performance dimensions define the competitive space

Dynamics of Performance
Simple products (pencil, hair-dressing) tend to compete along one or two dimensions. Complex technology products (computers) compete along many more dimensions (e.g. speed, features and prestige) The challenge in discerning all dimensions of customer value is to identify the poorly articulated or unspoken components of value

Dynamics of Performance
Technical Improvements: IT has improved the safety and reliability of many systems, e.g. banks, insurance, transportation systems, etc. Lack of Technical Improvements: Technology improvement reaches the limits of physical capabilities, e.g. speed of land vehicles. Discern the tech responsive customers from those not likely to respond to innovative technology

Model of Technology Marketing

Some customers adopt new tech innovations, and others dont. Potential customers for a new technology fall into five categories: Innovators Early Adopters Early Majority Late Majority Laggards

Model of Technology Marketing

Innovators: Actively seek change, sometimes for its own sake. First to turn to newtechnology solutions. Technology itself is a core interest for them. They are a very small minority of ultimate customers set Early Adopters: Easily relate to technology, and comprehend its benefits readily. Less interested in tech for its own sake, than for its ability to solve problems. More in number than Innovators, yet a minority in customer base

Model of Technology Marketing

Early Majority: First to make wide-scale use of technology (comprise ~1/3rd of customer population). Appreciate tech, but only so far as its adoption does not cause undue risk. The tech should work as advertised to reduce their risk

perception Late Majority: Less able to handle new tech with

skill, tend to await its becoming an industry standard before adopting; require a lot of support in adopting new tech (comprise ~ 1/3)

Model of Technology Marketing

Laggards: Tend to focus on price, and do not adopt new technology unless it is so deeply embedded in a system that it becomes inevitable and invisible. An entrepreneur should not bother with these customers

Successful Entrepreneurship
Build marketing organization around open-minded people with a capacity to shed assumptions. Successful entrepreneurship is a marketdriven process. To understand the salient characteristics of the technology

market-place.

Technology Adaptation
Rarely is the same technological solution optimal everywhere. It depends on socio-economic
climatic, and ecological specifics.

Innovativeness and technology should meet specific conditions. Mismatches would have negative environmental side effects and wastage. A technology may have several versions to meet needs and capabilities of various users in a region, e.g., large vs. small farmers versions of a
machinery.

Technology Adaptation (contd.)

Environmental regulations trigger cleaner technologies. E.g. A tax on carbon will lead to improved stoves. Academics and start-up companies are becoming major sources of new innovations. ownership of a technology and leadership in its applications move across organizations over time.

S-Shaped Diffusion Curve

Adoption and Diffusion

Use of new technologies spreads gradually. There is much time lag between the introduction of a new innovation and its wide use by producers or consumers. Diffusion is the aggregate process of product penetration. It is measured by the percentage of potential users who actually adopt a technology. Diffusion curves measure aggregate adoption as a function of time. They tend to be S-shaped. Adoption is a decision by a specific person to use a technology. Diffusion is aggregate adoption.

Factors of Production
An entrepreneur combines the factors of land, labour and capital to produce goods and services. The choice of technique could be labour-intensive or capital-intensive. It depends on the nature of products and the scale of operations.

Implementation Schedule
Schedule of implementation plays a crucial role for the success of an enterprise. It depends on the degree of professional approach adopted by the entrepreneur. Government policies and managing the same effect the end results.

Adoption, Credit, Location, and Education

Lack of credit and high cost of credit are major hurdles for adoption. Poorer consumers and farmers may be more constrained by risk and credit constraints. Adoption may be slower at distant locations due to less access to information and sources of technology, higher input costs. In some cases, early adopters are at distance locations (if technology reduces transportation costs). Adoption needs a high learning cost - more educated persons tend to be early adopters. When technology is simple, less sophisticated persons adopt first.