Managing start-ups in Unregulated Markets

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.

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 loses 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. However, in more recent literature it has become present, that risks are also opportunities gain the aforementioned values. Risk are often associated with entering an area of many uncertainties and unknowns that must be considered before undertaking any endower. [1]

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 lacking 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. Different from uncertainties, unknowns refers 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 highly impacts companies across the globe, since the risks and consequence are also unknown to the concerned person too. [2]

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.

Managing risks projects in unregulated market

Manning the risks projects in projects that are unregulated can be even more difficult. The above mentioned models, assume that the person or team conducting the analysis know about the , laws, regulation, legislation, environment etc. However in unregulated markets, these risks are often unknown making it hard to quantify the impact they may cause.

scenarios building

Manging start-ups in unregulated markets

Example – Cryptocurrency

Cryptoexchange (Binance), expecting regulation, headquarters in 3 countries, fail-safe project management approach

Conclusion

project canvas vs. bushiness model canvas.

What is missing in the BMC? Is BMC enough

add description of methods in introduction

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,

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