SU1 Innovation and Design Case Study

SU1 Innovation and Design Case Study

 The lack of uniqueness and George’s chances of success

George is venturing into a market dominated by competitors who have acquired a sustainable market share and customer loyalty. There is a truth in the potential investor’s comment because George is not offering anything unique to attract new customers and create a competitive advantage. The lack of uniqueness will hurt George’s chances of success because his business will not have anything that distinguishes it from competitors and allows customers and partners to realize the potential that his business offers them. Therefore, George should consider developing a strong, unique selling point before opening his business to guarantee its success. According to Alexander-Passe (2017), a unique selling point is vital in differentiating a brand or product from competitors and developing a long-term competitive advantage. The unique selling point that George should consider is adding a unique pizza flavor that is currently not offered by competitors and providing complementary products such as soft drinks and salads to customers who purchase a specific type of pizza at his restaurant. The lack of uniqueness will also hurt George’s business by making it hard to maintain customer loyalty because customers may opt to buy from competitors offering the same products at the same or slightly different prices. Therefore, George should consider making his business unique by offering more value to customers who may be swayed to purchase pizza from competitors. Uniqueness will also allow George to create a unique image, thus increasing sales and enhancing business success and sustainability.

Analysis of George’s Proposed New Venture and Its Success

According to Yoon (2021), a feasibility study determines whether a proposed project is reasonable. The feasibility criteria approach focuses on technical, economic, legal, operational, and scheduling feasibility. The approach also enables businesses to identify constraints to business operations and appropriate measures to eliminate the constraints. Technical feasibility includes reviewing the technical resources in the business to determine whether the resources are enough to sustain business operations. Economic feasibility includes assessing the costs and benefits of the business to determine whether there is a reasonable balance between the two. Legal feasibility focuses on determining whether the business’ operations conflict with any laws. Operational feasibility focuses on determining whether the business’ operations meet the business’ needs. Scheduling feasibility includes determining the time needed to start the business. Based on the information provided about George’s proposed business and the business environment, the business is not technically feasible because George is relying on his partner and any other interested investor to acquire the resources needed to keep the business operational. However, the business is economically feasible because George can leverage the available market to increase sales, thus generating more revenue to cover costs and gain profit. The business is also legally feasible because it does not violate any laws. The business has limited operational feasibility because of the high uncertainty about the business’ success. For instance, there is uncertainty about whether the business will survive the stiff competition from the two similar enterprises that have been in the market for a long time. There is also uncertainty about whether George will acquire the required capital to start and sustain the business because the selected partner has expressed concerns about the business’ success and may be unwilling to invest in the business. The business also has limited scheduling feasibility because George has to get an investor to raise the capital needed for the business within 90 days, and the first investor he approached does not think the business is a worthy investment since it does not offer any unique product or service.

Critical Factors that George is Overlooking and my Recommendations for What to do about Them.

One of the critical factors that George is overlooking is the stiff competition from the large national franchise unit and pizza wagon. According to Farida & Setiawan (2022), competition impacts the success of a new business by reducing its ability to attract and retain customers. George must look for an effective strategy to retain customers and gain a competitive advantage for his venture to be successful. George is confident that combining door-to-door delivery and high-quality in-house services will help him win 15 to 20 percent of the local market, but he is overlooking the possibility that customers may be unwilling to purchase the same product and services offered by a company that has been in the market from a new venture with limited market presence. After opening his venture, George should acknowledge that it will take a while to achieve the 15 to 20 market share target. The second factor that George is overlooking is price changes. George intends to use price to gain a competitive advantage, but he does not consider price fluctuations that may be caused by the changes in the cost of supplies and the price set by competitors. He may experience a challenge setting a competitive price because he has to consider the purchasing power of the target customers and the price set by competitors to attract and retain customers. The third factor that George is overlooking is the availability of resources. George has estimated the resources needed for the venture to guide him on the capital needed for the business. However, additional resources may be required to sustain the business based on competition levels, customer needs, and demands.

References

Alexander-Passe, N. (2017). Unique Selling Points (USPS). The Successful Dyslexic, 131–137. https://doi.org/10.1007/978-94-6351-107-0_12

Farida, I., & Setiawan, D. (2022a). Business strategies and competitive advantage: The role of Performance and Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 163. https://doi.org/10.3390/joitmc8030163

Yoon, D. (2021). Preliminary feasibility study trend. Preliminary Feasibility for Public Research and Development Projects, 23–25. https://doi.org/10.1108/978-1-80117-266-020211016

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During the past four months, George Vazquez has been putting together his plan for a new venture. George wants to open a pizzeria near the local university. The area has three pizza enterprises, but George is convinced that demand is sufficient to support a fourth.

SU1 Innovation and Design Case Study

The major competitor is a large national franchise unit that—in addition to its regular food service menu of pizzas, salads, soft drinks, and desserts—offers door-to-door delivery. This delivery service is very popular with university students and has helped the franchise unit capture approximately 40 percent of the student market. The second competitor is a “pizza wagon” that carries pre-cooked pizzas. The driver circles the university area and sells pizzas on a first-come, first-served basis. The pizza wagon starts the evening with 50 pizzas of all varieties and sizes and usually sells 45 of them at full price. The last 5 are sold for whatever they will bring. It generally takes the wagon all evening to sell the 50 pizzas, but the profit markup is much higher than that obtained from the typical pizza sales at the franchise unit. The other competitor offers only in-house services, but it is well known for the quality of its food.

George does not believe that it is possible to offer anything unique. However, he does believe that a combination of door-to-door delivery and high-quality, in-house service can help him win 15 to 20 percent of the local market. “Once the customers begin to realize that ‘pizza is pizza,’” George told his partner, “we’ll begin to get more business. After all, if there is no difference between one pizza place and another, they might just as well eat at our place.”

Before finalizing his plans, George would like to bring in one more partner. “You can never have too much initial capital,” he said. “You never know when you’ll have unexpected expenses.” However, the individual whom George would like as a partner is reluctant to invest in the venture. “You really don’t have anything unique to offer the market,” he told George. “You’re just another ‘me too’ pizzeria, and you’re not going to survive.” George hopes he will be able to change the potential investor’s mind, but if he is not, George believes he can find someone else. “I have 90 days before I intend to open the business, and that’s more than enough time to line up the third partner and get the venture underway,” he told his wife yesterday.

QUESTIONS

1. One of the six pitfalls when selecting new ventures is the lack of venture uniqueness. The potential investor George seeks has referred to his operation as a “me too pizzeria” and is predicting his demise. Pizza is sold through chain stores (Pizza Hut, Papa John’s, Little Cesar’s, etc.) small independent shops, and some grocery stores. It is a proven product and does not come with a very high sticker price. Is there any truth to the potential investor’s comment? Is the lack of uniqueness going to hurt George’s chances of success?

2. Uniqueness is not the only factor that needs to be considered when evaluating the feasibility of a new venture. Using the feasibility criteria approach, George’s proposed new venture will be analyzed. Given that there is very limited information presented, your analysis may consist of questions that need to be answered to determine the success of the venture.

3. In addition to the uniqueness feature, what other critical factors are George overlooking? Identify and describe three, and give your recommendations for what to do about them.

You are strongly encouraged to perform additional research to supplement your analysis (above and beyond the assignment details). Using the course materials as references will be considered additional research.