Managing start-ups in Unregulated Markets - Revision history

Tkokotas at 17:42, 16 November 2018

2018-11-16T17:42:09Z

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			''Developed by Aksel Watson''


	==Abstract ==		==Abstract ==
	In these times where many new inventions and technologies are erupting, many start-ups will find themselves in a place where they are entering untouched, untested or unregulated markets. For these start-ups it can be hard to identify and manage the risks that are associated with their future business since there are many unknowns that must be considered. Through this article these risks will be assessed and analyzed in order to determine if traditional strategic management approaches and models are appropriate for start-ups in unregulated markets.		In these times where many new inventions and technologies are erupting, many start-ups will find themselves in a place where they are entering untouched, untested or unregulated markets. For these start-ups it can be hard to identify and manage the risks that are associated with their future business since there are many unknowns that must be considered. Through this article these risks will be assessed and analyzed in order to determine if traditional strategic management approaches and models are appropriate for start-ups in unregulated markets.

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Refferences

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	==Refferences==		==Refferences==
	~~Morgan, Peter. (2009) Unregulated Entities, Products, and Markets: Challenges for Monitoring and Regulations https://www.adb.org/sites/default/files/publication/157271/adbi-rpb30.pdf[1]~~

	~~Manktelow, James. (1996) SWOT Analysis: Discover New Opportunities, Manage and Eliminate Threats. [online] https://www.mindtools.com/pages/article/newTMC_05.htm[2]~~


	~~Further reading section,~~

	~~skriv et kort refeat om kilden~~


	<references/>		<references/>

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BMC

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	=== BMC ===		=== BMC ===
	The Business Model Canvas is a strategic tool often used by start-ups. It is used to visualize a company’s partners, activities, value proposition, resources, customer relationships, marketing channels, customer segment, cost structure and revenue streams. It allows the company to get an overview of all activities and procedures needed to sell their product to a customer. Unlike the previous models, the focus of BMC is internally in the company. <ref> "https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf~~" (~~Accessed ~~on 18th of~~ February) </ref>		The Business Model Canvas is a strategic tool often used by start-ups. It is used to visualize a company’s partners, activities, value proposition, resources, customer relationships, marketing channels, customer segment, cost structure and revenue streams. It allows the company to get an overview of all activities and procedures needed to sell their product to a customer. Unlike the previous models, the focus of BMC is internally in the company. <ref> Diehl, Barbara. and Dr. Nikolou, Maria (2013) From Business Models to Business Plans [Online] Available at: https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf [Accessed 21 February 2018] </ref>

	==== Project Canvas ====		==== Project Canvas ====
	The Project Canvas is very similar to BMC and describes the project's purpose, scope, success criteria, milestones, actions, teams, stakeholder, resources, constraints, risks and outcome. Unlike from BMC this model includes external factors such as constraints and risks. It is mainly designed to manage projects, but can be applicable to a company as a whole or a single product. <ref> "https://www.inloox.com/company/blog/articles/the-project-canvas-setting-the-direction-for-your-project-s-success/~~" (~~Accessed ~~on 18th of~~ February) </ref>		The Project Canvas is very similar to BMC and describes the project's purpose, scope, success criteria, milestones, actions, teams, stakeholder, resources, constraints, risks and outcome. Unlike from BMC this model includes external factors such as constraints and risks. It is mainly designed to manage projects, but can be applicable to a company as a whole or a single product. <ref> 9: Tran, Lihn.(2017) The Project Canvas: Setting the Direction for Your Project’s Success [Online] Available at: https://www.inloox.com/company/blog/articles/the-project-canvas-setting-the-direction-for-your-project-s-success/ [Accessed 22 February 2018] </ref>

	==== Risk assessment ====		==== Risk assessment ====
	BMC and project canvas are designed to be used when beginning a project or company. Their emphasis is therefore on the strengths of the company, instead of what weaknesses they have. Within risk assessment they both lack a comprehensive analysis of external forces that impact the business. It would therefore be beneficial to either combine BMC or project canvas with either a PEST or PESTEL to incorporate these risks. <ref> "https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf~~" (~~Accessed ~~18th of~~ February) </ref>		BMC and project canvas are designed to be used when beginning a project or company. Their emphasis is therefore on the strengths of the company, instead of what weaknesses they have. Within risk assessment they both lack a comprehensive analysis of external forces that impact the business. It would therefore be beneficial to either combine BMC or project canvas with either a PEST or PESTEL to incorporate these risks. <ref> 10: Diehl, Barbara. and Dr. Nikolou, Maria (2013) From Business Models to Business Plans [Online] Available at: https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf [Accessed 21 February 2018] </ref>

	== Managing start-ups in unregulated markets ==		== Managing start-ups in unregulated markets ==

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Risk assessment

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	[[File:SWOT123.png\|500px\|thumb\|center\|SWOT analysis]]		[[File:SWOT123.png\|500px\|thumb\|center\|SWOT analysis]]
	==== Risk assessment ====		==== Risk assessment ====
	Using SWOT as a risk assessment tool, one must focus on weaknesses and threats, since theses constitute the risks involved in the product or service. A product’s weaknesses are often factors that can be improved and therefore a company can often follow a straight path to remove these risks. Threats are more difficult to act upon, since they are out of your control. However, when threats are identified, a company will have the opportunity to ensure that the consequences are minimized. <ref>		Using SWOT as a risk assessment tool, one must focus on weaknesses and threats, since theses constitute the risks involved in the product or service. A product’s weaknesses are often factors that can be improved and therefore a company can often follow a straight path to remove these risks. Threats are more difficult to act upon, since they are out of your control. However, when threats are identified, a company will have the opportunity to ensure that the consequences are minimized. <ref> Harrison, Jeffery P. (2010) Essentials of Strategic Planning in Healthcare [Online] Available at: https://www.ache.org/pdf/secure/gifts/Harrison_Chapter5.pdf [Accessed 21 February 2018] </ref>

	=== PEST ===		=== PEST ===
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	==== Risk assessment ====		==== Risk assessment ====
	As PEST and PESTEL only investigates external factors, it is a very useful tool to identify which areas a company should focus its risk reduction measures. It can be very time consuming to make a comprehensive analysis for each factor. Therefore, companies can advantageously start by creating a SWOT, and then based on that decide which factors are relevant to dig deeper into. With the volatility of the current world and market PEST is becoming increasingly necessary when determining external risks. <ref> https://www.unicef.org/knowledge-exchange/files/SWOT_and_PESTEL_production.pdf~~" (~~Accessed ~~20th of~~ February) </ref>		As PEST and PESTEL only investigates external factors, it is a very useful tool to identify which areas a company should focus its risk reduction measures. It can be very time consuming to make a comprehensive analysis for each factor. Therefore, companies can advantageously start by creating a SWOT, and then based on that decide which factors are relevant to dig deeper into. With the volatility of the current world and market PEST is becoming increasingly necessary when determining external risks. <ref> UNICEF.(2017) Understanding your external and internal context for better planning and decision-making [Online] Available at: https://www.unicef.org/knowledge-exchange/files/SWOT_and_PESTEL_production.pdf [Accessed 22 February 2018]
			</ref>

	=== BMC ===		=== BMC ===

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Risk assessment

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	[[File:SWOT123.png\|500px\|thumb\|center\|SWOT analysis]]		[[File:SWOT123.png\|500px\|thumb\|center\|SWOT analysis]]
	==== Risk assessment ====		==== Risk assessment ====
	Using SWOT as a risk assessment tool, one must focus on weaknesses and threats, since theses constitute the risks involved in the product or service. A product’s weaknesses are often factors that can be improved and therefore a company can often follow a straight path to remove these risks. Threats are more difficult to act upon, since they are out of your control. However, when threats are identified, a company will have the opportunity to ensure that the consequences are minimized.		Using SWOT as a risk assessment tool, one must focus on weaknesses and threats, since theses constitute the risks involved in the product or service. A product’s weaknesses are often factors that can be improved and therefore a company can often follow a straight path to remove these risks. Threats are more difficult to act upon, since they are out of your control. However, when threats are identified, a company will have the opportunity to ensure that the consequences are minimized. <ref>

	=== PEST ===		=== PEST ===

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Evaluating risks

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	=== SWOT ===		=== SWOT ===
	SWOT stands for strengths, weaknesses, opportunities and threats and is strategic planning tool for companies. It used to identify internal and external factors that impact a business, a project or a product. The internal factors refer to strengths and weaknesses, since these emphasize which activities the company does well and which they could improve. The external factors are the opportunities and threats, since they represent factors, which the company itself cannot control.		SWOT stands for strengths, weaknesses, opportunities and threats and is a strategic planning tool for companies. It is used to identify internal and external factors that impact a business, a project or a product. The internal factors refer to strengths and weaknesses, since these emphasize which activities the company does well and which they could improve. The external factors are the opportunities and threats, since they represent factors, which the company itself cannot control.
	[[File:SWOT123.png\|500px\|thumb\|center\|SWOT analysis]]		[[File:SWOT123.png\|500px\|thumb\|center\|SWOT analysis]]
	==== Risk assessment ====		==== Risk assessment ====
	Using SWOT as a risk assessment tool, one must focus on weaknesses and threats, since theses constitute the risks involved in the product or service. A product’s weaknesses are often factors that can be improved and therefore a company can often follow a straight path to remove these risks. Threats are more difficult to act upon, since they are out of your control. However, when threats are identified, a company will have the opportunity to ensure that the consequences are minimized. ~~<ref> "https://www.ache.org/pdf/secure/gifts/Harrison_Chapter5.pdf" (Accessed 15th of February) </ref>~~		Using SWOT as a risk assessment tool, one must focus on weaknesses and threats, since theses constitute the risks involved in the product or service. A product’s weaknesses are often factors that can be improved and therefore a company can often follow a straight path to remove these risks. Threats are more difficult to act upon, since they are out of your control. However, when threats are identified, a company will have the opportunity to ensure that the consequences are minimized.

	=== PEST ===		=== PEST ===
	Pest stands for political, economic, social and technology and is a strategic planning tool for companies. Different from SWOT, PEST only considers external factors when evaluating a business, a project or a product. It used to determine ~~in what~~ environment the business ~~lays~~ within in respect the four aforementioned areas. Political refers to how the government impacts the businesses economy e.g tariffs and taxes. Economic refers to how the economy in ~~giving~~ area is and includes factors such as economic growth, gross domestic product(GDP) and inflation. Social refers to demographics of the area and could be average age or sleeping habits. Lastly, technology refers to ~~at what~~ rate the technology is changing in the area and is often specific for each industry.		Pest stands for political, economic, social and technology and is a strategic planning tool for companies. Different from SWOT, PEST only considers external factors when evaluating a business, a project or a product. It is used to determine the environment that the business lie within with respect to the four aforementioned areas. Political refers to how the government impacts the businesses economy e.g. tariffs and taxes. Economic refers to how the economy in a given area is and includes factors such as economic growth, gross domestic product(GDP) and inflation. Social refers to demographics of the area and could be average age or sleeping habits. Lastly, technology refers to the rate the in which the technology is changing in the area and is often specific for each industry.

	==== PESTEL ====		==== PESTEL ====
	PEST is not comprehensive enough for many industries, thus for some projects, product or business PESTEL must be applied, which includes an environmental and legal aspect. These aspects allow a company to dig even deeper into the surrounding environment. Legal refers to the laws in the area such as marketing and competition laws. Environmental refers to the ecological aspects such as the weather or climate.		PEST is not comprehensive enough for many industries, thus for some projects, product or business PESTEL must be applied, which includes an environmental and legal aspect. These aspects allow a company to dig even deeper into the surrounding environment. Legal refers to the laws in the area such as marketing and competition laws. Environmental refers to the ecological aspects such as the weather or climate.
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	==== Risk assessment ====		==== Risk assessment ====
	As PEST and PESTEL only investigates external factors, it is a very useful tool to identify which areas a company should ~~focuses it risks~~ reduction ~~measure in~~. It can be very time consuming to make a comprehensive analysis for each factor. Therefore, companies can advantageously start by creating a SWOT, and then based on that decide which factors are relevant to dig deeper into. With the volatility of the current world and market PEST ~~are~~ becoming increasingly necessary when determining external risks. <ref> https://www.unicef.org/knowledge-exchange/files/SWOT_and_PESTEL_production.pdf" (Accessed 20th of February) </ref>		As PEST and PESTEL only investigates external factors, it is a very useful tool to identify which areas a company should focus its risk reduction measures. It can be very time consuming to make a comprehensive analysis for each factor. Therefore, companies can advantageously start by creating a SWOT, and then based on that decide which factors are relevant to dig deeper into. With the volatility of the current world and market PEST is becoming increasingly necessary when determining external risks. <ref> https://www.unicef.org/knowledge-exchange/files/SWOT_and_PESTEL_production.pdf" (Accessed 20th of February) </ref>

	=== BMC ===		=== BMC ===
	The Business Model Canvas is a strategic tool often used by start-ups. It is used to visualize a company’s partners, activities, value proposition, resources, customer ~~relationship~~, marketing channels, customer segment, cost structure and revenue streams. It allows the company to get an overview of all activities and procedures needed to sell their product to a customer. ~~Different from~~ the previous models, the focus BMC is internally in the company. <ref> "https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf" (Accessed on 18th of February) </ref>		The Business Model Canvas is a strategic tool often used by start-ups. It is used to visualize a company’s partners, activities, value proposition, resources, customer relationships, marketing channels, customer segment, cost structure and revenue streams. It allows the company to get an overview of all activities and procedures needed to sell their product to a customer. Unlike the previous models, the focus of BMC is internally in the company. <ref> "https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf" (Accessed on 18th of February) </ref>

	==== Project Canvas ====		==== Project Canvas ====
	The Project Canvas is very similar to BMC and describes the project's purpose, scope, success criteria, milestones, actions, teams, stakeholder, resources, constraints, risks and outcome. ~~Different~~ from BMC this model includes external factors such as constraints and ~~risk~~. It is mainly designed to manage projects, ~~however due to the generality of the aspect it would also~~ be applicable to a company as a whole or a single product. <ref> "https://www.inloox.com/company/blog/articles/the-project-canvas-setting-the-direction-for-your-project-s-success/" (Accessed on 18th of February) </ref>		The Project Canvas is very similar to BMC and describes the project's purpose, scope, success criteria, milestones, actions, teams, stakeholder, resources, constraints, risks and outcome. Unlike from BMC this model includes external factors such as constraints and risks. It is mainly designed to manage projects, but can be applicable to a company as a whole or a single product. <ref> "https://www.inloox.com/company/blog/articles/the-project-canvas-setting-the-direction-for-your-project-s-success/" (Accessed on 18th of February) </ref>

	==== Risk assessment ====		==== Risk assessment ====
	BMC and project canvas are designed to be used when beginning a project or company. Their emphasis is therefore on the strengths of the company, instead of what weaknesses they have. Within risk assessment they both lack a comprehensive analysis of external forces that impact the business. It would therefore be beneficial to either combine BMC/project canvas with either a PEST or PESTEL to incorporate these risks. <ref> "https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf" (Accessed 18th of February) </ref>		BMC and project canvas are designed to be used when beginning a project or company. Their emphasis is therefore on the strengths of the company, instead of what weaknesses they have. Within risk assessment they both lack a comprehensive analysis of external forces that impact the business. It would therefore be beneficial to either combine BMC or project canvas with either a PEST or PESTEL to incorporate these risks. <ref> "https://www.sbs.ox.ac.uk/sites/default/files/Entrepreneurship_Centre/Docs/diehl-nikolou.pdf" (Accessed 18th of February) </ref>

	== Managing start-ups in unregulated markets ==		== Managing start-ups in unregulated markets ==

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Being suid

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	==== Being suid ====		==== Being suid ====
	New regulation can cause the government or a third party company to sue the business. At the time of doing business the service or product was not illegal, however after new regulations, it has become so. In some instances, this will cause the government to sue the company for e.g. helping illegal gangs with money laundering. <ref> "https://www.adb.org/sites/default/files/publication/157271/adbi-rpb30.pdf~~" (~~Accessed ~~on 23rd of~~ February) </ref>		New regulation can cause the government or a third party company to sue the business. At the time of doing business the service or product was not illegal, however after new regulations, it has become so. In some instances, this will cause the government to sue the company for e.g. helping illegal gangs with money laundering. <ref> 5: Morgan, Peter (2009) Unregulated Entities, Products, and Markets: Challenges for Monitoring and Regulations [Online] Available at: https://www.adb.org/sites/default/files/publication/157271/adbi-rpb30.pdf[Accessed 21 February 2018]
			</ref>

	== Evaluating risks ==		== Evaluating risks ==

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Human risks

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	A more intangible risk is that if he/she can be trusted with respect to handling their time while at work as well as not stealing company money or equipment. Long term risks include that the employee will find a job in an established company in order to increase their salary.		A more intangible risk is that if he/she can be trusted with respect to handling their time while at work as well as not stealing company money or equipment. Long term risks include that the employee will find a job in an established company in order to increase their salary.
	<ref> ~~"https~~:~~//books~~.~~google~~.dk/books?id=9Kvv2Yv67jYC&pg=PA9&dq=risks+associated+with+starting+a+business&hl=da&sa=X&ved=0ahUKEwj3gYniv8nZAhUPYVAKHRUtAMkQ6AEILjAB#v=onepage&q=risks%20associated%20with%20starting%20a%20business&f=false" (Accesed on 27th of February) </ref>		<ref> Harper, Stephen C. (2005). Extraordinary Entrepreneur: the Professional Guide to Starting an Exceptional Enterprise. Hoboken, New Jersey, USA. P. 8-15. </ref>

	==Risks associated with unregulated markets==		==Risks associated with unregulated markets==

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Uncertainties vs. Unknowns

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	===Uncertainties vs. Unknowns===		===Uncertainties vs. Unknowns===
	An uncertainty within industry refers to a process/project conducted or decision made under intangible circumstance i.e. where all information is not known by the concerned person. Uncertainties are caused in situations where data is only partially observable or if the project lies within a field where many values are stochastic and volatile. Uncertainties can often be hard to quantify as there is missing information. Therefore, when dealing with this, one will often see companies relying on probabilities to assess the consequence of uncertainties. Practically this is done by reviewing all the possible outcomes of this project and then determining the probability of them happening based on historical data, previous similar events or executive experience within the field. Unlike from uncertainties, unknowns refer to conducting a process/project or making a decision in an environment, where values are impossible to predict. Unknowns come in every shape and form, and greatly impact companies across the globe, since the risks and consequence are also unknown to the concerned person too.<ref>"https://hbr.org/2014/09/the-industries-plagued-by-the-most-uncertainty~~",(~~Accessed ~~on 28th of~~ February) </ref>.		An uncertainty within industry refers to a process/project conducted or decision made under intangible circumstance i.e. where all information is not known by the concerned person. Uncertainties are caused in situations where data is only partially observable or if the project lies within a field where many values are stochastic and volatile. Uncertainties can often be hard to quantify as there is missing information. Therefore, when dealing with this, one will often see companies relying on probabilities to assess the consequence of uncertainties. Practically this is done by reviewing all the possible outcomes of this project and then determining the probability of them happening based on historical data, previous similar events or executive experience within the field. Unlike from uncertainties, unknowns refer to conducting a process/project or making a decision in an environment, where values are impossible to predict. Unknowns come in every shape and form, and greatly impact companies across the globe, since the risks and consequence are also unknown to the concerned person too.<ref>Dyer, Jeff. Furr, Nathan. Lefrand, Curtis (2014) The industries Plagued by Most Uncertainty [Online] Harvard Business Review. Available at: https://hbr.org/2014/09/the-industries-plagued-by-the-most-uncertainty [Accessed 28 February 2018] </ref>.

	Uncertainties are for example found within the insurance field, since it can be hard to estimate the amount of injuries or illnesses that will occur to a person or company within one year and thus hard to determine the insurance cost. Here they highly rely on historical data to generate an estimate where they can ensure profitability. Unknowns are often seen in new, emerging and disruptive industries, since there is no historical data to predict e.g. the demand of a product.		Uncertainties are for example found within the insurance field, since it can be hard to estimate the amount of injuries or illnesses that will occur to a person or company within one year and thus hard to determine the insurance cost. Here they highly rely on historical data to generate an estimate where they can ensure profitability. Unknowns are often seen in new, emerging and disruptive industries, since there is no historical data to predict e.g. the demand of a product.
	<ref>"https://www.actuariesindia.org/downloads/gcadata/10thGCA/Uncertainity%20in%20GI%20&%20Solvency%20Issues_PI%20Majmudar.pdf~~" (~~Accessed ~~on 20th of~~ February) </ref>.		<ref> Parikh, Navnit K. and Majmudar, Piyush I. (2016) Uncertainty in General Insurance and Solvency Issues[Online] Available at: https://www.actuariesindia.org/downloads/gcadata/10thGCA/Uncertainity%20in%20GI%20&%20Solvency%20Issues_PI%20Majmudar.pdf [Accessed 28 February 2018] </ref>.

	==Risks associated with start-ups ==		==Risks associated with start-ups ==

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What are risks?

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	== What are risks? ==		== What are risks? ==
	Risks are often connected to a specific decision that can end up with a company or individual losing something of value. This includes both monetary losses such as money or customers but also non-monetary losses such as social status or emotional well-being. Therefore, companies will often have numerous measures in place to reduce these potential losses. Risks are often associated with entering an area of many uncertainties and unknowns that must be considered before undertaking any endeavour. <ref> Cline, Preston B. (2003) The Merging of Risk Analysis and Adventure Education[Online] Available at: https://www.outdoored.com/sites/default/files/documents/files/wrmc_proceedings_05_adventure_cline.pdf [Accessed 28 February 2018] </ref>.		Risks are often connected to a specific decision that can end up with a company or individual losing something of value. This includes both monetary losses such as money or customers but also non-monetary losses such as social status or emotional well-being. Therefore, companies will often have numerous measures in place to reduce these potential losses. Risks are often associated with entering an area of many uncertainties and unknowns that must be considered before undertaking any endeavour. <ref> Cline, Preston B. (2003) The Merging of Risk Analysis and Adventure Education, [Online] Available at: https://www.outdoored.com/sites/default/files/documents/files/wrmc_proceedings_05_adventure_cline.pdf [Accessed 28 February 2018] </ref>.

	===Uncertainties vs. Unknowns===		===Uncertainties vs. Unknowns===