All entries for April 2010

April 27, 2010

ENVC Exercise 5 – updated


Your business is bringing out a new product which adds on to an existing product, that you already produce. You are keen to ensure that the take up of the add-on product is high but your manager needs to be assured that you are aware and mindful of anticompetitive practices. Set out the arguments you would give to your manager concerning what the business can and cannot do in this context.

Example & Analysis

For the purpose of this exercise I am going to use a real case of Monsanto vs DuPont about genetically modified soybeans. In May 2009 Monsanto sued DuPont claiming it was illegally selling new line of biotech seeds, which was add on to older soybeans developed under a license with Monsanto.

Clearly in this case we have a situation where license and terms of license are the core of the problem. It touches more general issue of how much freedom do the licensees have to use the licensor’s product and develop their own products based on it.

Licensor must make clear the limit of the license, so that licensee can be sure what they are getting. In this particular situation if we apply the logic of the antitrust law we end up questioning whether Monsanto had a right to restrict the license in such manner (provided those were the Terms & Conditions). If developing new products, as add on to the license property, is in favor and benefit of the market and customers, Monsanto might not have the right to restrict the license in this direction. Also considering the fact that in the area of herbicide tolerance technology in soybeans Monsanto has 97% of market share. In fact, the judge in this case kept this point opened and DuPont is challenging its licensing agreement with Monsanto on antitrust grounds.

Another aspect, which is perhaps triggering the whole discussion, can be hidden in the license agreement. Licensor generally seeks some way to ensure that the licensee will use its best effort to exploit the property and maximize the licensor’s income. Should there be other than flat royalty agreement by which licensor would have an option to benefit from the sale of products based on its property Monsanto would probably not be so concerned with restricting the license. However, having a weak chance to benefit from sales of new add on products or having just a flat royalty payment, Monsanto is apparently losing money to recover their R&D costs. Even further, should Optimum GAT – the new product of DuPont replace Roundup Ready corn, this would have devastating effect on Monsanto.

Genetically modified organism is a subject of controversy. Modification of biological states or processes that have developed over long period of time are seen by many as intolerable. Any GMO situation potentially outside of regulatory boundaries that surface to the public (whether intentionally or unintentionally) is attracting a lot of attention and will call for legal dealing. Such situations are and will in the near future cause public discussion with politic involvement. This has certainly also contributed in the case of Montsanto vs DuPont. Final rulings in such cases are creating very influential precedence and there will be therefore a lot of attention and political/public pressure in this case.

From the above example it is clear that IPR protection with the license agreement and its terms and conditions protecting intellectual property are the key elements of the business relationship involving intellectual property rights. Protecting company’s IPR without harming the market and being accused of intention to monopolize it is sometimes challenging, probably not always possible. Monsanto existence is at stake.

Coming back to our hypothetical situation described in the question, I would firstly ensure whether the add on product bares the same IPR as the original one. If not, it is vital that right level of IPR is secured, whether in the form of patent, copyright, trademarks, etc. It will secure that we are not going to lose on the market against the fast competitors and that we recover the invested R&D.

There are also areas which need to be taken into consideration in terms of anticompetitive practices to avoid violation of articles 81 and 82 of the EC Treaty, should the situation occur in EU:

  • Price/Profits
  • Potential price reduction effect on consumption
  • Market impact of price or supply differentiation
  • Tie-ins negatively impacting competition
  • Overtake entry strategy – Trade purchase
  • Selling exit strategy – Trade sale

The principles of US Intellectual property law is practically the same as in EU and many countries around the world are aligning to the same in order to enable the right conditions for companies to come and invest.

IPR in the home country

Observing situation with IPR protection in my home country (Slovakia), it is very much aligned to European Union standards as Slovakia is part of EU. Focus is currently on allowing faster electronic based processes around registration form, which is proceeding well. In general level of IPR protection is good and companies coming to invest to Slovakia are provided fair ground for their business.


Selecting the right type of IPR (patent, copyright, trademarks) is a number one step to protect company’s future. In case of license agreement it needs to be ensured that it is supporting the IPR protection. Last but not the least, new products or add on’s strategy needs to be assed to ensure if it is legal, not in breach of antitrust law.


Burke, A. (2009). Warwick MBA: Entrepreneurship and New Venture Creation. Coventry: Warwick Business School

Bygrave W.D and Zacharakis A (2004). The Portable MBA in Entrepreneurship. 3rd ed. Hoboken, New Jersey: John Wiley & Sons, Inc.

Bioscience Technology [Online] (Accessed 27 April 2010)

UPVSR Annual Report 2009 [Online] (Accessed 27 April 2010)

United States Patent and Trademark Office [Online] (Accessed 27 April 2010)

April 24, 2010

ENVC Exercise 4 – updated


There is the opportunity to lead a new team that will introduce a new (or substantially amended) service. Conduct a self-assessment exercise as suggested in the notes and outline how your sectoral, managerial and personal skills match the service.

For the purpose of this exercise let us assume that the new services are being introduced by IBM Services organization and below self-assessment is therefore based on the current situation.


Purpose & Ability:

I felt satisfaction when I could convince people to do what I needed them to do in order to achieve a goal or task despite their original push back. The high moments of my life include achieving challenging goals on my own, e.g. self-sponsored work & travel. Low moments are on the contrary failures in moments when other people put trust in me or situation when people failed me while I have put trust in them. Criteria to measure my high and low are performance related: expectation –> achievement with element of trust.

Personal resources



Sector skills

I have been working in IT sector in last 12 years and have a solid knowledge on it. I have gain most experience through support functions working with internal customers (brands, sales, etc).

I have never worked with nor faced external customers. Most of my sector knowledge and experience comes from dealing with hardware and software, little with services.

Management ability

I have worked in purchasing area, customer support operation area and financial operation. I led and managed teams and was able to work through complex matrix organization collaborating with sales and brand teams, marketing, HR and others.

I have a tendency to push and focus on execution mainly while underestimating importance of linking to a big picture. I find it difficult being able to translate strategic missions to small operational teams.

Personal atributes

I am reliable in execution, leading team towards goal achievement, determined and am good at using network of my peers and upward management. I feel particularly strong in being able to push execution through organization and functions bringing them together and making them work as a team. I enjoy communication with people.

I have less sense for strategy, am weaker at pushing through my own innovative ideas and am sometimes unnecessary hesitant.

In the results of my Belbin’s self-perception test three dominant types are

·        Coordinator

·        Monitor

·        Shaper

As per Belbin’s team role profiles in Figure 1 picking from the strengths including focused, extrovert, analytical and makes things happen are linking to what I have shared in first part of the answer above. From the weaknesses I can link to not creative and intolerant, which are in a way also similar to above analysis.

In the team I prefer to work with two other profiles based on Belbin, which I believe are complementing my profile and therefore working with these types of profiles can form a good team:

  • Implementer – I benefit from the drive of implementers and treasure their practicality which I sometimes lack. Their controlled behavior and approach to topics is fitting my preference for structured and organized workflow. Weaknesses are not generally contradicting my profile or I can handle them well.
  • Completer, Finisher – my weak spots is ability to plan well and efficiently carry out the tasks. These profiles are always motivating me and pulling me back to basics to stay focused on the main goal. Sometimes I find it difficult to manage the weaknesses of completer/finisher as they tend to worry too much and are not able to approach challenges with ease.

Figure 1.

Personal objectives

Year 1

Year 3

Year 10

What do I want to have ?

I want to have reasonable financial securities.

I want to have achieved level of experience sufficient for senior position.

I would like to have my own business and have sufficient resources to enjoy working for myself.

What do I want to do ?

Gain position in the area of Services. Get back to people & team management.

I want to be able to influence organization structure and cooperation in order to deliver better results.

I want to run a small private company in the area of services or retailing.

What do I want to be ?

Services finance leader or leader of operations. Preferably I would like to have a role closer to customers

I would like to be in an executive role.

I want to be a leader of my own company.


As the new services require determination and execution focus in terms of Purpose and Ability my personal profile matches the position. My experience in the sector is long term, but not “first hand” which is a disadvantage. The key drawback is no previous experience in sales area facing the customer and no services experience. When introducing a new service this might be a risky choice. On the other hand I have already experience from hardware and software operations, which can provide a background and network. Previously I successfully lead various teams therefore am fitting the requirement of leader capabilities. My strengths in personal attributes area are needed for the position, however strategic leadership is a weak spot.

Belbin’s type analysis result (Coordinator, Monitor and Shaper) are valuable and relevant for the position. Should there be Implementer & Completer/Finisher in the team this will help to create a good working team.

My personal objectives are matching the new role.

Overall, the new position is challenging for my type of profile, however there are several matches with the requirements. Weaknesses can represent a problem therefore education and experience in stable services environment would be required.


Burke, A. (2009). Warwick MBA: Entrepreneurship and New Venture Creation. Coventry: Warwick Business School

BelbinM. (1984), Management Teams: Why They Succeed and Fail, Oxford

April 23, 2010

ENVC Exercise 3


Discuss an idea for a new product that will create a new industry niche. To convince others of your idea you need to set out the likely scenario for how the new niche will develop in terms of competition, numbers of firms, and how firms compete over time.

New Product

I would like to introduce an idea and concept of relax drink RD. This type of drink should serve to calm down stress, sooth nerves and remove irritations. Beverage market is going through the boom of energy drinks. RD can use this “wave” to promote itself creating new industry segment on principle of opposite concept. Relax drink is made of natural products and contains no sugar or artificial sweeteners. Packaging comes in cans. RDs will be placed next to energy drinks on the store shelves in order for a customer to make a choice. It is a new choice which was not there before: Relax fast and easy. Customers with a need to increase energy level will not consider purchase between energy and relax drink. However, there are many customers who are buying energy drinks for image or taste while energy boost is a secondary element. These are the target customers of RD. Relax drink will parasite on customer base of energy drinks.


The current competitors are seen in herbal tea producers, in different type of medication and supplements. There is no direct competitor selling this or similar type of products in the same format.

Timing of the market entry

RD drink will be first mover of its kind in a beverage market with a focus on Europe. However, considering the fact that it is not first in the area of beverages with “value added dimension” like energy drinks, it can benefit from advantages of late entrant (e.g. approach to marketing and distribution chain) and those of a first mover at the same time (benefiting from rapid growth of a new industry segment).

Company & market development

It is expected that after entering the market with new RD product its success and potential will attract new competitors appearing in the segment as it grows. Competitors can be large beverage producers launching new product line in the space of relax drinks, energy drinks producers might decide to extend their product portfolio and diversify it or there can be new small producers entering the segment as late entrants after the RD has proven to be successful. I expect the development of revenue and firms to follow the typical pattern for the number of firms and industry revenue as captured in Figure 1.

It is difficult to assess how many competitor firms will be attracted, however in the long run the segment might consolidate up to 5 top firms which will dominate the market.

Figure 1.

Production of RD drink will trigger higher initial costs for developing formula, testing it and gaining required certifications in order to comply with high health standards in Europe, developing a can design, setting up production plants and establishing distribution channels. Costs will amount to high numbers therefore minimum efficient scale is high. Pricing strategy will be to set up prices on a higher than average levels as intention is to create image of a premium product with trustworthy content and effect. With higher than average prices and minimized cost based on economies of scale profit results can be maximized. RD drink is a homegenous product which allows for standardization, large production runs and mass production techniques.

Barriers to entry

Barriers to entry depend on a type of a competitor. For those who already are present in beverage industry introducing new product is not so costly – they can use economies of scopes. Most of the initial costs which are faced by RD drink can be avoided by these companies (e.g. production plants, distribution channels). In order to increase barriers to entry RD drink needs to emphasize uniqueness of formula, advertising and goodwill. For new start up companies entering calm drink segment barriers to entry are higher as they have to face the same sunk costs as RD, although they can also benefit from being late entrants.

Market maturing

In the initial phase of entering a new segment high growths are expected. Before competition enters RD can enjoy high revenues and high profits. In this phase RD will maximize benefits and gains of a first mover. It is important that in this stage company avoids burning cash and invest in facilities, working capital, recruiting and training in order to secure the right resources availability – company has to become an Adaptive Survivor (Day 1997). Also, from initial phase with management focusing on growth there might be a need for replacement in case the management is not suitable for phase with slower growth, as it is probable that original high growth slows down after the first company life cycle of 2-3 years.

Relax drink segment is expected to undergo overshooting shakeout due to number of firms trying to exploit the same market opportunity, which is characteristic for new industries. It is vital that RD is prepared for shakeout and is able to benefit from it. Management needs to carefully consider amount of long term investments, expansion plans and mainly cash management as already mentioned. Effective cost & expense management and operational effectiveness will be crucial as the company enters the shakeout and revenue drop will trigger margin reduction.

Provided RD is successful in a more maturing market it might consider expanding to new markets outside of Europe as once the market is fairly stabilized with few key players it will be difficult to gain further market shares. Such step can help to increase economies of scale even more, reduce the cost and increase the margins giving RD stronger position against other competitors. It might also consider extending or diversifying its product portfolio or aggressively acquire smaller companies – following the approach of an Aggressive Amalgamators, which will eventually cause a seismic shakeout (Day 1997).

Overtime I would consider selling the business to larger beverage or food company. Niche segment can expand better in the larger corporation with strong brand name, which is difficult to gain for a smaller player.


Burke, A. (2009). Warwick MBA: Entrepreneurship and New Venture Creation. Coventry: Warwick Business School

Day, G.S. (1997). ‘Strategies for Surviving a Shakeout’. CHarvard Business Review, 75, 2, pp 8-9

April 20, 2010

ENVC Exercise 2 – updated


There is a committee that considers strategic developments on the basis of business plans. It is concerned that it may be too risk averse and requires some new guidance on evaluating business plans. Having worked through the PORES how would you advise the committee?

The first thing that comes into my mind when reading through the question is: who are the members of the committee? Are there actually members that have real business experience and have lived through success or failure? Or is there more members with little real life experience? Having a mixed and well balanced group can help to bring in new views in evaluation process. Especially at the point when numbers and facts from the papers just cannot tell more.

Furthermore, who is preparing business plans? Is it necessary to re-assess the business plans structure and content in order to enable the committee getting more dimensional view?

PORES analysis is an evaluation approach helping to assess the business opportunity on basic principles reviewing elementals. It can help the committee to understand whether the level of its risk aversion is appropriate. PORES views the opportunity as a dynamic one. Therefore should the committee be evaluating dynamic business plans, performing further evaluation will not bring in much more light and might be unnecessary and expensive. On the contrary, should the committee be working with static business plans or Dehydrated business plans (William D. Bygrave and Andrew Zacharakis 2004) PORES can provide the needed dimensions for further decision making. PORES tends to be a costly analysis, therefore it is to be used when the business idea shows signs of being viable. Dehydrated business plans can serve to provide initial conception of the business only.

Before moving to PORES analysis however, it is also important to understand what is the committee investing in: the idea itself or the entrepreneur? While many great companies built a successful start up company on the breakthrough idea, often it is the entrepreneur who can build a success story on a simple idea. (Richard Branson).

In order to determine where is the committee too risk averse I have selected an example of The Body Shop company and will apply the PORES analysis.

The Body shop’s history is a classical example of how a company evolves and needs to search new directions and ideas in order to survive and be successful. Current perception of the company as socially and environmentally conscious (e.g. famous for its “products not tested on animals”) has not been there at the start up of the company, but it was used throughout the life of the company to enhance the differentiator.

The Body shop started in 1976 as a small stand-alone shop for £4,000 Anita Roddick, the founder, raised. Idea was to sell natural-ingredient cosmetics and personal care products. The whole concept was based on simple-out-of-necessity principle.

Is there a market for the product?

  • Is there a competition?
    The idea of selling natural-ingredient cosmetics in a specialized shop was fairly new to the market and is a main differentiator. Generally The Body Shop had to face very strong and well established competitors like Nivea and L’Oreal, famous and popular cosmetic brands.
  • Who are the potential buyers and how much are they willing to pay?
    By the format of economized packaging, handwritten labels with product information and simple shop design Anita targeted health conscious women who would build trust to the products and who don’t necessarily want to spend fortune for luxurious products without any proper content information. However, they are willing to spend more than average provided they get a value for it.
  • How many are there?
    Above specification of potential buyers implies that Anita’s customer were to be middle class women which are strongly represented in UK.

Anita has identified a profit opportunity and there was a market gap she explored. The key uncertainty every potential start-up company faces is demand. Answers to the questions above are helping to determine the demand potential and therefore reducing the level of uncertainty.

Can you acquire the necessary resources?

  • Anita has chosen testing her business idea on a very small scale, therefore production, distribution and financial & general management was not a challenge at that point. There are not many information available on this part of company operation at the time, but let us assume Anita managed most of the resources on the DIY principles for the sake of cost.
  • Marketing/Promotion?
    Company has from a very early start chosen not to use advertising as a form of marketing/promotion, but rather use press coverage and personal references.

Low cost approach in all elements of the start-up business revealed good potential. Resources are vital element for every business opportunity. In my view it is necessary to break down the management of resources to rather detailed level. This can help to reveal any hidden risks. Having concrete answers on who, how and when is a must.

Who else can acquire these resources?

  • At what cost?
    Acquiring the resources was relatively easy , there was no major obstacle for competition to enter in the same business
  • Variety, quality and quantity capability?
    The variety, product portfolio and quantity were planned at low levels at the starting point, therefore this was not of an interest for competition, however it could have been tested by large cosmetic brands as a new product line
  • Commercial incentive to exploit the same profit opportunity?
    As the starting business was small at that point larger brands had no incentives to exploit this field. As it has shown later, growing the business on the larger scale would bring in competitors
  • Intensity of competition with the new venture?
    It was safe to assume that at early stages competition was not to be intensive. With the growth of the business, this would become a serious threat.
  • Likelihood of cooperation with the new venture?
    Given the uniqueness of the idea and size of its realization it was not preferable. Anita’s preference was to run a small personalized business.

Given the fact that the early Body Shop was looking for a small business with candid approach to customer relations which had the privilege not being threatened by fierce competition yet, it was preferable to run an independent start-up.

It is recommended to run a deeper analysis on competition situation. Follow up questions like “What if...” are helpful to prepare a strategy. Not only we need to understand how the competitors react, but we need to ensure what steps can be taken if they do react. This can also help to reduce the overall uncertainty by discussing concrete situations and actions.

The Body Shop company has proven to be viable and experienced interest in its products. Soon it arrived to a milestone of growth decision. Similarly PORES analysis can be again carried out with a focus on areas which need to be further stretched (resources) or analyzed & addressed (competition).


There are several approaches how uncertainty about potential start up business can be reduced. Starting from the variety of people assessing the opportunity in terms experience level, the format of the business plan or focus of the evaluation (idea or entrepreneur). Getting the answers to principle questions of the PORES analysis can help to narrow the risk and provide further basis for decision making process.

As PORES analysis is expensive once the committee understands the areas to look into in order to help them to be less risk averse they can switch to use of business plans whether traditional or dynamic ones. A use of specific check list on PORES principles can be helpful.


Burke, A. (2006). Modern Perspectives on Entrepreneurship. Dublin : Senate Hall Academic Publishing

Burke, A. (2009). Warwick MBA: Entrepreneurship and New Venture Creation. Coventry: Warwick Business School

Bygrave W.D and Zacharakis A (2004). The Portable MBA in Entrepreneurship. 3rd ed. Hoboken, New Jersey: John Wiley & Sons, Inc.

Funding Universe [Online] ( (Accessed 21 April 2010)

April 2010

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