These resources are necessary to develop models, prototypes and products, to apply for patents and extend legal protection, and to invest in research and development and production means. The value creation potential is variable as is the level of risk. At the end of this section, four types of entrepreneurial projects are proposed/presented, based on two key variables: new value and risk.
New value and risk potential
The value of a given project depends on its competitive advantages and how they are exploited. Measuring the potential value of a project can be done by analysing its development potential, analysis that should be supported by market and competition studies in order to demonstrate the fit between the product and the market. Entrepreneurs cannot better their competitors on every link of the value chain (Porter 1985).They must therefore make choices regarding the competitive advantages they intend to (or can) develop. These advantages may be the following:
lower costs better quality of the product or service improvement of the distribution system geographical focus or strategic location strategic alliance or partnership with a client, opinion leader or supplier introduction of a complementary service.
These competitive advantages must be valuable to the customer and sustainable. Incidentally, the higher the value, the higher the risk of being copied; it is therefore important to consider adequate protection means at an early stage. Competitive advantage may be improved for the whole activity sector or only the segments that are particularly attractive for the entrepreneur, and of course, having a competitive advantage does not dispense the business from competing on other levels. To develop competitive advantage, the entrepreneur must absolutely:
acquire a good knowledge of the competition in his or her given sector; in most cases, competitive forces can be analysed with Porter’s model (1981)