ENTREPRENEURSHIP AND INNOVATION

Executive summary:

In this present era, the invention is important to improve the lifestyle of the community. Every invention resolves some societal or environmental issues so that sustainability can be maintained. This report has proposed an invention which handcrafted jute bags. The organisation has decided to offer both the jute carry bags and designer jute handbag is that environmental sustainability regarding issues can be resolved. After the identification of an innovative idea, an organisation must conduct a better analysis on the market so that they can identify the level of competition in the market and develop a better strategy to secure sustainable competitive advantage. For securing competitive advantage, this report conducts a five forces analysis so that the competitive position of the new business idea can be developed. For making a business idea successful, identification of a better market entry strategy is necessary so that the company can achieve organisational success.

Introduction:

The invention is the action to invent a device or process. The invention offers a variety of benefits to society and inventors. Invention resolves a lifestyle problem that offers a better lifestyle to society. Every innovation involves some barriers by resolving which an inventor can increase their inner strengths. This report is intended to propose an invention. After that, this report conducts market analysis to identify the number of key players in the market. This report also proposes a strategy to enter the market. 

1) Selection of an invention:

For the facilitation of innovation, identifying the business idea is important. This is because; the success of a business is dependent upon the idea of the invention. The selected business idea is handcrafted environmentally sustainable bags that are made of jute. It has been decided to sell the jute carry bag and exclusive as well as unique handbags. 

2) Problems that are resolved by selected innovation:

The term environment sustainable product refers to the product that is not harmful to the environment (Charter & Tischner, 2017). Therefore, the handcrafted environmentally sustainable jute bags can reduce the impact of the product on the environment. Presently, the environment is facing various problems like ozone layer depletion, waste disposal, global warming, water pollution, climate change and urban sprawl. In everyday life, carry bags plays an important role to carry our intended products which creates a harmful impact on the environment. Plastic bags create harmful impacts on the environment because it takes huge time to decompose. Plastic items take 1000 years for decomposing. The plastic bags that we use every day mainly take 10 to 20 years to decompose (Corigliano, Dossi & Mariani, 2015). 

Everyone wants to give their family the best product or wants to use the best products. Therefore, handcrafted environment sustainable product can be the best choice for the customers. This is because; it reduces the environmental impact of product and creates biodegradable wastes which reduce the harmful impact on the environment. Moreover, it perfectly resolves every need of carrying bags. The organisation has also decided to develop jute handbags which are one of the best products. Jute handbag is one of the trendy products which have high strength. Therefore, it can be used for a longer time. These facts can attract customers towards the jute handbags and carry bags. Additionally, handcrafted products support the tradition of skilled work. Supporting the local artisan is good for the community and also good for the art. Therefore, buying handcrafted products helps a community to secure growth. Therefore, buying handcrafted environment sustainable products not only increases environmental well-being but it also increases community well-being.

3) Market analysis and a key player in the market:

For the conduction of the market analysis, it is necessary for performing the porter five forces model. Porter five forces model is the tool or framework that helps in analysing the competitive market environment of an organisation. The five different market forces of the handcrafted and innovative jute bag manufacturing organisation is shown below:

Competition in the industry:

According to Varelas & Georgopoulos (2017), market competition is dependent on the number of competitors and their ability to create threats for an organisation. Various offline and online sellers sell environmentally sustainable jute bags to the customers. The offline sellers that sell jute handbag and carry bags to the customers are the local sellers. On the other hand, various online sellers offer jute bags to the customers such as the jute shop, Green bag wholesale, Bags247.com, Albury Enviro Bags and many more. These entire organisations offer both the carry bags and handbags to the customers. However, none of them offers the designer and unique handbags to the customers. Therefore, the jute bag manufacturing organisation can get a sufficient number of customers as they have decided to offer handcrafted designer jute bags to the customers. Therefore, it can be said that competition in the market is medium.

Potential of new entrants:

The power of an organisation is affected by the new entrants into the market (Takata, 2016). The threat of new entrants’ related threat is very low. This is because, the initial setup costs of handcrafted jute bag are very less; therefore, any organisation can enter the market if they can invest the minimum money. Moreover, there are sufficient numbers of suppliers in the market. Therefore, it is not difficult in developing a better supplier base to fetch good quality jute fibres from them. Due to a higher level of availability of jute and lesser investments, huge competition has to be faced by the handcrafted jute bag manufacturing company in their future.

Power of suppliers:

The power of suppliers refers to the extent to which suppliers can increase the cost of the input (Takata, 2016). The power of suppliers is low among the suppliers who supply jute fibre to the jute-product manufacturing organisation. This is because; there is a sufficient number of farmers and suppliers who sells jute fibre to the customers. Australia manufactures sufficient jute and they also import jute fibre from other countries. Therefore, there are sufficient quantities of jute in the market. 

Power of customers:

Customer’s power refers to the ability of customers in reducing the price of products (Sheehan & Bruni-Bossio, 2015). Power of customers is less for designer jute bags because it is unique products to the Australian customers. There is not an organisation that offers designer jute bags to the customers. However, for their carry bag and normal handbag section, the power of customers is very high because there is an enormous organisation in Australia that offers normal jute carry bag and normal handbags to the customers. 

The threat of substitutes:

The threat of substitute product is very high for the jute bag. This is because; there are other materials such as foam or plastic which can be used in manufacturing handbag and carry bag.

4) Strategy to enter in the market:

As the handcrafted jute bag manufacturing organisation wants to start its operation as a domestic company, therefore, it would be better for the organisation in starting a business as a sole proprietorship business. According to Tulung (2017), a sole proprietorship is the simplest form of business under which one person operates the business. A sole proprietorship is the easiest strategy with the help of which one can start a business. It is easy to set up which requires nominal costs to develop a business. The income that is earned by the sole proprietorship is the income earned by the owner

In this case, the handcrafted jute bag manufacturing business wants to enter the market as a small business that has a good set of efficient staff to develop handcrafted products. The organisation has one owner who has developed the business idea. Therefore, it would be better for the organisation to enter the market as the sole proprietorship business. For starting a business as one of the sole proprietorship business, the owner must register his or her name and then the owner must secure the local license. The legal environment of Australia is very strict despite high economic freedom. Therefore, for starting a business without any legal issues, the owner of handcrafted jute Bag Company must secure the local licences with efficiencies. During starting a business, arranging setup costs is one of the big matters for the owner (Hollender, Zapkau & Schwens, 2017). Therefore, starting a business as a sole proprietorship can help the business owner because the setup costs are low. Moreover, the taxation of a sole proprietorship is simple.

5) Selection of financing model:

For financing the business, it is important for the owner in following corporate finance. Corporate finance deals with the capital structures that include action management and funding for increasing the value of an organisation (Han et al. 2016). Corporate finance mainly includes different types of analysis and tools for distributing and prioritising financial resources. Therefore, by applying corporate finance, the jute bag company can maximise their values with the help of proper planning of the management resources (Karyani et al. 2015). Along with that, risk and profitability must be effectively balanced to secure a better competitive advantage.

The jute bag company must follow the comparable company analysis model to identify its financial condition. This model is one of the processes that are used for evaluating the value of a firm by utilising the metrics of other organisation. Therefore, for using the model, the owner must identify the key success metric of other organisation so that it can be used in evaluating the value (Angilella & Mazzù, 2015). This model operates by considering the assumption that similar organisation have similar types of valuation multiples like enterprise value. This model is not only helpful for the owner in understanding the chances of success of the organisation but it is also helpful in identifying the requirement of further investments.

For applying this model, the owner first picks a group of a competitor from the same industry. After that, the owner must calculate the capitalisation in the market. After that, calculating the Enterprise value is important. Then, historical formulas must be used from the projection and filing of equity analysis and management. After that, the calculation of different spread multiples is highly important. Then, the valuation of the target company is important by selecting the proper benchmark multiple for valuation from the peer group.

6) Obstacles faced by the invention:

Every organisation faces some obstacles and the jute bag manufacturing organisation is not the exception. The main challenge that could be faced by the organisation is the fierce competition from the existing brand. As stated by Zobnina (2015), competition poses sustainability-related issues for an organisation. The success of the handcrafted jute bag company entirely depends upon the selection of staff who has extensive knowledge in making handcrafted jute bag. Therefore, the biggest issue that could be faced by the organisation is hiring the experienced staffs that have better knowledge in developing handcrafted jute bag. This is because, as a new organisation the financial capability of the organisation is also limited (Kesale, 2017). Therefore, it is difficult for the organisation in hiring experienced staff by offering more money from their present organisation. 

The financial strength of the organisation is limited which can create an obstacle in buying machinery for manufacturing.  For every business, the customer is the king. The success of a business is always dependent upon the trust of customers (Ferina, Khurotul & Sukowidyanti, 2018). Therefore, for achieving more profitability, winning the trust of customers is important. However, it is highly difficult for an organisation in winning the trust of the organisation. This is because, for winning customer's trust, huge investment is necessary for marketing. Investments are really difficult for the new organisation as they have limited funds which can create difficulties in making customers aware of the new brand. For securing organisational success, realistic expectation of an organisation is necessary. Unrealistic expectation of the organisation can create difficulties for the organisation by reducing their confidence. However, for developing realistic expectation, an organisation needs experience. Therefore, the ineffective experience of the new company can create difficulties for them in developing a realistic expectation that can offer them success.

7) Key takeaways from the analysis:

From the above discussion, it is clear that for successful invention, developing a better business idea is everything.  Developing an environmentally sustainable business idea is important for organisational success. Presently, the environment is suffering from different issues; therefore, developing products that can create a lesser impact on the environment is always important for drawing the attention of the customers. From the above analysis, it is observed that developing market analysis is important to understand the competition in the sector. Identification of the competition level is important to develop a strategy with the help of which competitive advantage can be achieved. It can be said from the discussion that the competition in the market is very high due to the presence of the various organisation. Moreover, the threat regarding the new competitors or substitute related threat is also high for the handcrafted products as there are chances of a large number of products. For entering in the market and achieving success in business, identification of the best strategy according to the business type and size is important. In that context, a sole proprietorship is the appropriate business strategy with the help of which the jute bag company can achieve success. For understanding the present financial condition or assuming the future financial condition of an organisation, using a better financing model is necessary so that proper strategy can be taken to resolve the financial condition. In this context, the comparable company analysis model is necessary.