Report: Opportunity Analysis of Music Station Business Venture

This report presents an opportunity analysis for Music Station, a proposed new business venture in the music industry. It begins with an introduction to the competitive business environment and the need for innovative ideas. The report details the elements of self-analysis for the entrepreneur, descri...Read More

Opportunity Analysis of new
business venture
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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Opportunity analysis .......................................................................................................................3
Elements of self analysis .............................................................................................................3
Description of proposed venture .................................................................................................4
Market research ...........................................................................................................................5
Industrial analysis .......................................................................................................................6
Technically feasibility .................................................................................................................7
Financial feasibility .....................................................................................................................7
Scenario version...........................................................................................................................8
Scalability of the new venture......................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................11
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INTRODUCTION
In modern era, competition in the international business environment has become so
intense that it is not easy for any new venture to establish itself and earn adequate profit
(Barringer, 2012). Further in order to achieve the same, ventures are required to come up with
innovative and creative ideas which can differentiate them. New business finds it tough to enter
the market because there are many players which provide same kind products and services.
Therefore, with the help of innovative and creative ideas, businesses try to offer something
different to different people in the market. Further it also helps in lowering the entire degree or
level of competition in marketplace. The present report explains viability of a new business
venture which is Music Station. Opportunity analysis of new business has been carried out in this
report in order to examine its feasibility.
OPPORTUNITY ANALYSIS
Elements of self analysis
Entrepreneur can be defined as the person who establish a new business and takes various
kind of risk in order to achieve profit (Dimov, 2010). Further the person plays very significant
role in the development of innovative and creates idea which becomes the foundation of
business. It is the ideas, vision, creativity and risk taking abilities of an entrepreneur which
makes a firm successful (Carter, 2007). Along with these entrepreneurs they also need to have
various kinds of quantities and competences which helps in management of new venture in most
effective manner. In addition to this qualities such as venture specific human capital,
entrepreneurship specific human capital and general human capital are required to become a
successful entrepreneur. Every entrepreneur is required to posses some skills and capabilities
which can help in maintain and managing the business enterprise (Anderson and Khedair, 2009).
In addition to this, he is required to have general capabilities such as ability to raise money for
venture and its expansions. He must be passionate and motivated towards accomplishment of
aim and objectives of the ventures. Other than this, he is also required to have abilities such as
risk taking, time management etc. This helps in making bold decision and getting most desirable
output (Schiraldi and Silva, 2012). The grading matrix for the entrepreneur of is provided below
as:
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Human Capital  Characteristics Rating
General capabilities  Ability to raise money
 Passion and motivation
 Level of education
(Kew and Stredwick,
2005).
 Self believe and
disciplined
 High
 High
 High
 Moderate
Entrepreneurship specific  Risk taking (Jones and
Penaluna, 2013).
 Networking abilities
 Time management
 Moderate
 Medium
 High
Venture specific  Knowledge regarding
the industry
 Capabilities required
for competitors
analysis (Werbel and
Danes, 2010).
 Moderate
 High
Description of proposed venture
The new venture is going to be introduced on the name of Music Station. Further a
website will be created with a domain name of Music Station (Harrison, 2013). This venture will
provide trading platform to all the music composers of UK, where they will be able to publish
demo of their composition for online bidding and sale. All the buyers will bid for the particular
music demo in order to purchase the same (Glackin, 2013). There are various factors which will
contribute in creating value proportion for the website. Separate category will be developed in
order to make the entire process of uploading, bidding and sale more convenient. New and
advanced technology will be used to provide people with good speed in order to upload and
download the music (Hiduke and Ryan, 2013). The website will be created in such a manner that
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it won't face any kind of problem related to payments. For example a compositor has uploaded
his composition, and then the highest bidder will be required to make the payment instantly. A
separate gateway will be created to make the entire process of payment more convenient
(Vaghely and Julien, 2010). Only registered bidders will be able to access the website or mobile
application of Music Station. Other than this, a rating system will be developed in which all the
bidders will have access to rate the composition uploaded. The domain name for new venture
will be MusicStation.com.
Market research
Every market has its own set of characteristics which is required to be taken into
consideration before establishing any kind of new business (Dahlqvist and Wiklund, 2012).
Good knowledge of market helps business entrepreneurs to develop effective strategies for
growth and development. Other than this it also helps in understanding the need and demand of
people in the market. It is suggested before establishing any kind of new venture or offering new
products, entrepreneurs needs to carry out intense market research (Navis and Glynn, 2011).
Adequate research also supports businesses to become aware of existing market players and level
of competitiveness. In terms of Music station, the entrepreneur will be required to collect
information regarding market needs, existing competition and their strategies. It has been
observed that there is no such renowned website which is providing same kind of services which
Music Station will be provided (Burke, Fraser and Greene, 2010). The customers will be people
of music industry or the one which are interested in buying music compositions. Along with
this, the core suppliers of Music Station will be the person which develops music and other
compositions. Further the 4 P's model of marketing has been used to understand the
characteristics of market (Parker and van Praag, 2012).
4P Target Market strategy
Product Music Station A website and mobile application
will be developed in such a way
that it will assist music composers
to promote their tunes and music
(Wood and McKinley, 2010).
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People Music composers and
bidders
Music composers will be able to
upload the demo of their
composition of website. Further
people will bid for the
composition (Allen, 2015).
Place Online website and Mobile
application
Music Station will be accessed
through its online application and
mobile application
Promotion Events The promotion of this website will
be done with the help of musical
event where all the people of
music industry will be invited
(Sahaym, Steensma and Barden,
2010).
Industrial analysis
After carrying out the analysis of industry, it can be stated the website will or face any
kind of tough competition. There are no popular brands or websites which provides such kind of
services. Other than this, music composers need a potential platform which can help them in
growth and development (Fung, 2014). Most of the websites present in the industry provides
services where people can listen and upload music. This website will help the composers to
promote their tunes and music. Along with this, it will also support them to sell their composition
on fair prices.
Force Description Threat level
Threat of new entry New entry in this field will be
very difficult as the more
technical knowledge will be
required (Prashantham and
Low
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Dhanaraj, 2010).
Threat of substitute product The services are unique and
creative which means narrow
scope of substitute products
Low
Bargaining power of
customers
Services of Music station are
new which means that the
customers i.e bidders won’t
have high power to bargain
(Porter, 2008).
Medium
Bargaining power of suppliers Suppliers will be music
compositors. The website can
become successful only when
more compositions are
uploaded (Dälken, 2014).
High
Competition among rivalry There is no such a product or
service available in market.
Low
Technically feasibility
The entrepreneur will be also required to ensure that the services provided are technically
feasible or not. Music Station will needs to hire various IT expertises in order to design its
website and create the mobile application of the same. At the time of developing website, the
entrepreneur will be encountered with various kinds of software and hardware problems (Fung,
2014). Therefore, IT expertise from different parts of UK will be hired in order to deal with the
above mentioned problems. This will include website developers and designers which will help
in ensuring the fact that a best and more user friendly website are being developed (Thompson
and MacMillan, 2010). Users will be able to download mobile application on IOS, Android and
Microsoft.
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Financial feasibility
Particular Year 1 (£) Year 2 (£) Year 3 (£)
Sales Revenue
Registration 14400 17280 20736
Music Track 4500 5400 6480
From ads 12000 14400 17280
Total sales revenue 30900 37080 44496
Less: Cost of sales 9270 11124 13349
Gross Margin 21630 25956 31147
Operating Expenditure
Marketing & Promotion 600 630 662
Legal & Accounting fees 200 200 200
Website Maintenance 500 550 605
General Expenses 1000 1100 1210
Salary & Wages 8000 8400 8820
Utilities 1200 1320 1452
Total Operating Expenditure 11500 12200 12949
Profit before Interest & tax 10130 13756 18199
Interest 1700 1360 1020
EBITDA 8430 12396 17179
Tax 1686 2479 3436
Net profit 6744 9917 13743
Scenario version
What is the proposed startup capital?
The proposed startup capital will be £100000 in which 75% of the funds will be raised
through owners’ fund. The remaining amount will be issued with the help of bank loan. Both the
sources will be more suitable for the proposed ventures. The rationale behind this is that no
interest will be applicable on venture capital. At last very less interest will be applicable as less
amount will be issued by bank loan.
What if the similar product launched ahead of Music Station?
If same kind of product is developed then, Music Station will move to other potential
markets such as India and China. This will help in increasing sales, market share and profitability
of the new venture.
What if market leader adopt the idea?
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The technology and website of Music Station will be kept patent in order to eliminate the
chances of copying website and its services. In case, if the market leader adopts this idea, the
website will move to other markets.
What if any other organization proposes mergers?
The proposal of merger will be rejected as Music Station wants to create its own identity
in marketplace.
What if any other organization offers acquisition?
The concept of acquisition will be eliminated for initial 10 years.
Scalability of the new venture
Scalability can be termed as the process in which entrepreneurs put their efforts to grow
and make new ventures larger. Along with this, the core modes such as culture and operations
are also taken into consideration (Chesbrough, 2010). After doing this, the entrepreneur of Music
Station can ensure higher sales and profitability of the website. There are three parameters on the
basis of which scalability of Music Station can be examined. After carrying out the assessment of
Music Station's business plan, it can be stated that the plan is effective enough for the growth of
new venture.. On assessment of second parameter, it can be explained that the entrepreneur has
enough passion to grow and expand its Music Station. At last, the assessment of proprietor has
been carried out (De Clercq, Danis and Dakhli, 2010). It can be stated that there are adequate
competencies and capabilities to make the entire business successful. .
CONCLUSION
From the above report it can be concluded that the idea of new business venture i.e.
Music Station is very new and unique. The website will provide music composers with a strong
platform to upload and sell their music. Demo of composition will be uploaded on the website
and bidders will bid to buy the composition. After carrying out the market analysis, it can be
concluded that Music Station will not face any kind of intense competition in the market place.
Further, one of the most important things which need to be considered is the power of suppliers
i.e. number of music composers which will be very high. It can be also concluded that this
business plan is operationally feasible as the only requirement for implementation of the idea
will be of IT expertise.
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REFERENCES
Books and journals
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Thompson, J. D. and MacMillan, I. C., 2010. Business models: Creating new markets and
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Online
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