ENTR EXAM 2 REVIEW

I/O venture

(Industrial Organization Model) explains the external environment that you want to know before you are deciding on a strategy. Deals with industry that your firm is competing in. Opportunitys and Threats are attributes of the external model so you are looking at what's going on outside of the organization (IE, the industry)

Business vision.

- "What we want people to view as in what we intend to do, who we are, what are values are, what our ethical make up is, why we're sustainable, why we're great corporate citizens, why we have great social capital" - Should rarely (if ever) be changed.

Brainstorming parameters

1 No criticism is allowed, including chuckles, raised eyebrows, or facial expressions that express skepticism or doubt. Criticism stymies creativity and inhibits the free flow of ideas. 2 Freewheeling, which is the carefree expression of ideas free from rules or restraints, is encouraged; the more ideas, the better. Even crazy or outlandish ideas may lead to a good idea or a solution to a problem. 3 The session moves quickly, and nothing is permitted to slow down its pace. It is more important to capture the essence of an idea than to take the time to write it down neatly. 4 Leapfrogging is encouraged. This means using one idea as a means of jumping forward quickly to other ideas.

Factors of an attractive industry.

1) Are young rather than old 2) Are early rather than late in their life cycle 3) Are fragmented rather than concentrated 4) Are growing rather than shrinking 5) Are selling products or services that customers "must have" rather than "want to have" 6) Are not crowded 7) Have high rather than low operating margins 8) Are not highly dependent on the historically low price of a key raw material, like gasoline or flour, to remain profitable

The three ways to identify an opportunity.

1) Observing Trends - The first approach to identifying opportunities is to observe trends and study how they create opportunities for entrepreneurs to pursue 2) Solving a Problem - The second approach to identifying opportunities is to recognize problems and find ways to solve them. - Problems can be recognized by observing the challenges that people encounter in their daily lives and through more simple means, such as intuition, serendipity, or chance. 3) Finding Gaps in the Marketplace - Gaps in the marketplace are the third source of business opportunities. - There are many examples of products that consumers need or want that aren't available in a particular location or aren't available at all. - Part of the problem is created by large retailers, such as Walmart and Costco, which compete primarily on price and offer the most popular items targeted toward mainstream consumers

Two of the most important factors to consider regarding management prowess

1) Passion the solo entrepreneur or the management team has for the business idea 2) the extent to which the management team or solo entrepreneur understands the markets in which the firm will participate. There are no practical substitutes for strengths in these areas.

The five-stage creative process.

1) Preparation - the background, experience, and knowledge that an entrepreneur brings to the opportunity recognition process. - as much as 50 to 90% of start-up ideas emerge from a person's prior work experience. 2) Incubation - the stage during which a person considers an idea or thinks about a problem - can be conscious for unconscious 3) Insight - the flash of recognition when the solution to a problem is seen or an idea is born. It is sometimes called the "eureka" experience - the moment an entrepreneur recognizes an opportunity 4) Evaluation - the stage of the creative process during which an idea is subjected to scrutiny and analyzed for its viability - requires an entrepreneur to take a candid look at the viability of an idea 5) Elaboration - the stage during which the creative idea is put into a final form - The details are worked out and the idea is transformed into something of value, such as a new product, service, or business concept. - In the case of a new business, this is the point at which a business plan is written.

The economic forces that impact the opportunities available to entrepreneurs

1) state of the economy 2) level of disposable income 3) consumer spending pattern

The four steps of the entrepreneurial process

1. Deciding to become an entrepreneur 2. Developing successful business ideas 3. Moving from an idea to an entrepreneurial firm 4. Managing and growing the entrepreneurial firm

Core strategy

The overall manner in which a firm competes relative to its rivals.

Innovation

The process of creating something new, which is central to the entrepreneurial process.

Business churn

Refers to the number of subscribers that a subscription-based business loses each month.

Uber: Transcending economic change.

The company was also being credited (along with a handful of other startups) with ushering in what was being called the on-demand economy, in which people used their smart phones to connect to a distributed workforce that delivers everything from hot meals, housekeeping, groceries, etc at a moment's notice

Main sections of the feasibility study

The key objective behind feasibility analysis is to put an idea to the test Part 1: Product/Service Feasibility Part 2: Industry/Target Market Feasibility Part 3: Organizational Feasibility Part 4: Financial Feasibility

The main focus of an organizational feasibility analysis.

Conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch. There are two(2) primary issues to consider in this area: (1) management prowess A proposed business should evaluate the prowess, or ability, of its initial management team, whether it is a sole entrepreneur or a larger group. This task requires the individuals starting the firm to be honest and candid in their self-assessments. (2) resource sufficiency. -Determine whether the proposed venture has or is capable of obtaining sufficient resources to move forward. The focus is on nonfinancial resources. The objective is to identify the most important nonfinancial resources and assess their availability. -To test resource sufficiency, a firm should list the 6 to 12 most critical nonfinancial resources that it will need to move its business idea forward and determine if those resources are available.

The 4 pillars of a typical business

Four Pillars of any Organization (Pait Principle) Everything we do in business involve these ideas: People (to present it, sell it, or teach it to client) Assets (have assets in place to carry it out) Information (back it up with information) Time (You need to deliver it in a timely manner)

The two most common strategies pursued by firms in global industries.

Multidomestic Strategy An international expansion strategy in which firms compete for market share on a country-by-country bases Ex: Food companies Global Strategy An international expansion strategy in which firms compete for market share by using the same basic approach in all foreign markets Ex: Athletic shoes

Business trend.

Note: An opportunity gap is the difference between what's available and what's possible. These can be found from following environmental trends and used to develop a new product/business/and service idea. The four(4) most important environmental trends for a business to follow are 1. economic trends 2. social trends 3. technological advances 4. and political action and regulatory changes

What are Uber's troubles when entering a market and what type of marketing tactics have they been accused of?

TROUBLES: Not only did the company endure frequent customer criticisms about its surge pricing policy, Uber was constantly battling government regulators, taxi companies, and critics who charged that they were playing fast and loose with the legal system. Barry Korengold, President of the San Francisco Cab Drivers Association, described Uber this way: "I think of them as robber barons. They started off by operating illegally, without following any of the regulations and unfairly competing. TACTICS: Critics also claimed that Uber's prices were unfairly designed to kill off competition. Uber engaged in overly aggressive market tactics.

Primary and secondary research

primary research Research that is original and is collected firsthand by the entrepreneur by, for example, talking to potential customers and key industry participants. secondary research Data collected previously by someone else for a different purpose.

Uber: Business model.

Destructive business model

Core competencies.

- A specific factor or capability that supports a firm's business model and sets it apart from its rivals. - A core competency can take on various forms, such as technical know-how, an efficient process, a trusting relationship with customers, expertise in product design, and so forth. - It may also include factors such as passion for a business idea and a high level of employee morale For example, IndieU has three core competencies: 1) Connecting independent, unsigned musicians to colleges and college students 2) Recruiting and managing a volunteer network 3) Recruiting independent, unsigned musicians to place songs on the firm's website

Business mission.

- Describes why it exists and what its business model is supposed to accomplish. - Describes how the firm plans to compete relative to its competitors. - If carefully written and used properly, can articulate a business' overarching priorities and act as its financial and moral compass. - Is an anchor around which decisions are made. - At a very broad, 50,000-foot level, a mission statement indicates how a firm intends to create value for stakeholders. - Is the first box that should be completed in the business model template.

four essential qualities of an opportunity

1. attractive 2. timely 3. durable 4. anchored in a product, service, or business that creates or adds value for its buyer or end user

competitive analysis

A competitor analysis is a detailed analysis of a firm's competition. It helps a firm understand the positions of its major competitors and the opportunities that are available to obtain a competitive advantage in one or more areas. ________________________________________________________________________ (1) DIRECT COMPETITORS - These are businesses that offer products or services that are identical or highly similar to those of the firm completing the analysis. - These competitors are the most important because they are going after the same customers as the new firm. (2) INDIRECT COMPETITORS - These competitors offer close substitutes to the product the firm completing the analysis sells. - These firms' products are also important in that they target the same basic need that is being met by the new firm's product. (3) FUTURE COMPETITORS - These are companies that are not yet direct or indirect competitors but could move into one of these roles at any time. - Firms are always concerned about strong competitors moving into their markets.

Peer-to-peer business model.

A model in which a business acts as a matchmaker between individuals with a service to offer and others who want the service. Examples: Airbnb, Uber

Concept Statement

A preliminary description of a business that includes descriptions of the product or service being offered, the intended target market, the benefits of the product or service, the product's position in the market, and how the product or service will be sold and distributed.

First-mover advantage

A sometimes-significant advantage, created by the opportunity to establish brand recognition and/or market power, gained by the first company to produce a product or service or the first company to move into a market.

Joint venture.

An entity created by two or more firms pooling a portion of their resources to create a separate, jointly-owned organization

A disruptive business model.

Business models that are rare, that do not fit the profile of a standard business model, and that are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry Three Types of Disruptive Models: New Market Disruption Addresses a market that previously wasn't served. An example is Google and its AdWords program. AdWords allows an advertiser to buy keywords on Google's home page, which triggers text-based ads to the side of (and sometimes above) the search results when the keyword is used. Low-End Market Disruption A type of disruption that is possible when the firms in an industry continue to improve products or services to the point where they are actually better than a sizeable portion of their clientele needs or desires Disruptive Business Models are commonly referred to as Blue ocean strategy (typically called Blue Ocean because they've gone where no one has gone before and started their own industry) and life changing.

The three categories of costs to consider when completing the "financing/funding" section of the Barringer/Ireland Business Model Template

Capital costs. - right up front will be lease/purchase, machinery, leasing vehicles, etc. One-time expenses, such as building a Web site and training initial employees. (Ie pay a consulting firm like accounting to put our numbers together or legal documents together) Provisions for ramp-up expenses (most businesses incur costs before they earn revenues). IE: Salary, travel expenses, power, supplies, etc. Ongoing expenses (he would add this fourth one)

Declining industry

DECLINING INDUSTRY = Industries that are experiencing a consistent reduction in industry demand Entrepreneurial firms employ three different strategies in declining industries. (1) The first is to adopt a leadership strategy, in which the firm tries to become the dominant player in the industry. This is a rare strategy for a start-up in a declining industry. (2) The second is to pursue a niche strategy, which focuses on a narrow segment of the industry that might be encouraged to grow through product or process innovation. (3) The third is a cost reduction strategy, which is accomplished through achieving lower costs than industry incumbents through process improvements. Achieving lower costs allows a firm to sell its product or service at a lower price, creating value for consumers in the process of doing so.

Blue ocean venture.

Disruptive Business Models are commonly referred to as Blue ocean strategy (typically called Blue Ocean because they've gone where no one has gone before and started their own industry) and life changing.

Entrepreneurs as risk takers.

Entrepreneurs are usually moderate risk takers, which means they are willing to assume a moderate amount of risk in business, being neither overly conservative nor likely to gamble.

PAIT Principle

Everything we do in business involve these ideas: People (to present it, sell it, or teach it to client) Assets (have assets in place to carry it out) Information (back it up with information) Time (You need to deliver it in a timely manner)

Fragmented industry.

Industries that are characterized by a large number of firms of approximately equal size. Opportunity: Consolidation. A fragmented industry is one that is characterized by a large number of firms of approximately equal size. The primary opportunity for start-ups in fragmented industries is to consolidate the industry and establish industry leadership as a result of doing so. The most common way to do this is through a geographic roll-up strategy, in which one firm starts acquiring similar firms that are located in different geographic areas. This is an often observed path for growth for businesses such as auto repair shops and beauty salons. It is difficult for them to generate additional income in a single location, so they grow by expanding into new geographic areas via either organic growth or by acquiring similar firms.

Mature industry.

Industries that are experiencing slow or no increase in demand, numerous repeat customers, and limited product innovation.

Being proactive, innovative, and engaging in risk taking.

corporate entrepreneurship Behavioral orientation exhibited by established firms with an entrepreneurial emphasis that is proactive, innovative, and risk taking.

Five Forces model and their determining rate of return.

the five forces model can be used to help a firm determine: 1) whether it should enter a particular industry 2) whether it can carve out an attractive position in that industry FIVE FORCES MODEL: 1) Threat of substitutes 2) Threat of new entrants 3) Rivalry among existing firms 4) Bargaining power of suppliers 5) Bargaining power of buyers

RBV venture.

the internal and what is going on within the firm itself. Deals with strengths and weaknesses, and deals with going on within the firm itself. 3 key RBV questions: -What resources does the firm have? -What resources can the firm build? -What resources can a firm maintain? Test 1: Inimitability Test 2: Durability Test 3: Appropriability Test 4: Substitutability Test 5: Competitive Superiority