Entrepreneurship Exam 1

Characteristics of successful entrepreneurs

1. Passion for the business 2. Product/customer focus: good products to satisfy customers paired with diligence to spot product opportunities 3. Tenacity despite failure 4. Execution intelligence: idea into a viable business

What is a business plan? What are the three different types of business plan? Explain each.

A business plan is a written document that describes what a business intends to accomplish and how they hope to accomplish it. Three types of business plans are the summary, full and operational business plans. The summary is the shortest and is written when a business is early in development. A Full plan is for when they are at the point of needing funding, it serves as a blueprint for a business. An operational plan is the most extensive, mainly written for internal audience, providing guidance for operation managers.

Core competencies:

Are the aspects that support the business model and differentiate it from other businesses. An example is recruiting and managing a volunteer network in a non profit organization

Key Assets:

Are the assets in which a business owns that allows it to work, including physical, intellectual, financial and human. An example is intellectual assets including a copyrights for an artists album.

Threat of new entrants:

Competitors can easily enter the industry and successfully copy what the industry incumbents are doing to earn profits. To avoid, there are barrier to entry: condition that creates a disincentive for a firm to enter,

What is Core Strategy? Explain the four key components of core strategy using the example of Etsy that we have discussed in class.

Core Strategy is how a business plans to compete with its competition. The four key components include Business Mission, Basis of Differentiation, Target Market, and Product/Market Scope. Etsy utilized its Core Strategy by focusing on handmade goods, the number of buyers and sellers on its site and the sense of community that it has created. Its business mission of bringing vintage unique items into an online community where they can be shared. Its target market was anyone interested in buying or selling homemade pieces. With time, their Product/Market Scope transitioned to allowing manufacturers to sell on the website rather than small in home creators.

What is Creative Destruction? Based on Chapter 1, B & I, explain three ways in which entrepreneurial firms impact economies and societies throughout the world.

Creative Destruction is the process of entrepreneurs developing new products and technologies that over time make current products and technologies obsolete. Entrepreneurial firms impact economies and societies through the focus of innovation, job creation and the replacement of previous products and services through creative destruction. They also influence both moral and ethical ideas towards certain influences of higher technology being able to receive more personal information on customers.

Was doing a feasibility analysis valuable to this venture pre-launch? Why? Give three reasons to explain your answer.

Doing a feasibility analysis was valuable before the launch because they were able to receive feedback from the designers to establish connections, figure out their target market and conduct tests to see if their business design was worth continuing. They saved money and time by conducting this process before getting too invested.

Define any two characteristics of an attractive industry and give one example of each.

Environmental and business trends. An example of an environmental trend would be the social movement towards healthier lifestyle leading a growth in the health food industry. Business trend includes the technological development of adding a website to a business allowing more revenue.

Salary-Substitute Firms

Firms that basically provide their owner or owners a similar level of income to what they would be able to earn in a conventional job

Lifestyle firms

Firms that provide their owner or owners the opportunity to pursue a particular lifestyle, and make a living at it

What are focus groups? Explain at least three ways in which Rover.com might use focus groups to better understand the needs of their current and potential customers.

Focus groups are gathering of five to ten people who are selected because of their relationship to the issue being discussed, used for generating new ideas and respond to questions. Rover.com might utilize focus groups to better understand the needs of their current and potential customers by bringing in a group of both dog owners and sitters that use the app. The moderator would ask questions regarding issues, this leads to a discussion on the best way to fix the problems. Following this, there could be a brainstorm of ideas collected to refine them.

What is the difference between an idea and an opportunity? Explain four key characteristics of an opportunity as defined in the textbook. Give one example of each.

Idea is just a thought, an impression, or notion, it may not meet the criteria of an opportunity. Opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. The four characteristics of identifying an opportunity includes it being attractive to the economy, timely within trends, durability though the industry's growth and creates value for its buyer or end use through the ability to add to someone's life in a beneficial manner.

Explain what you understand by the term Industry.

Industry is the realm in which a business works under including their direct and indirect competition.

What were the different ways in which Hyman and Fleiss vetted their business idea prior to launch? Explain any two.

Initially, they met with designers to discuss the possibility of developing their business through the support of renting from big names. Then ran tests including Harvard college with students and pop up shops to simulate their business.

Why is it important to write a business plan? Use the example of d.light to give two reasons to explain your answer.

It is important to write a business plan because it lays out all the details of the business for employees, investors and external shareholders. It will also keep the business on track to meet their stated goals. D.light was successful based on the use of their business plan because they were able to display their big market and strong vision supported by the right team leading to investors being interested and financial support their business after winning a business plan competition.

What type of firm is Patients Like Me?

Patients Like Me is an Entrepreneurial Firm based on the highly innovative idea through new perspective of drug interactions and establishes a certain service through taking patients information through data collected. Value to patients through updating and educating them.

Based on Chapter 2, B & I, what four personal characteristics of entrepreneurs enable them to recognize opportunities? Identify the four characteristics and explain any two.

Prior Industry Experience: helps recognize business opportunities Cognitive Factors: opportunity recognition many be a cognitive process, called entrepreneurial alertness: ability to notice things without engaging in deliberate search. Social Networks: exposing one to more opportunities and ideas than people with sparse networks. Creativity: generating a useful idea, this involves preparation, incubation, insight, evaluation, elaboration

How are entrepreneurial firms different from other types of start-up firms? Define the three types of start up firms

The entrepreneurial firms are different from other types of start up firms because they are focused on bringing new products and services into our economies with an enhanced innovation focus. Unlike other start-up firms, they are able to partner with larger firms known as the usage of execution intelligence.

identify four primary traits and characteristics of successful entrepreneurs. Using an appropriate example, explain any one of these characteristics.

The four primary characteristics of being a successful entrepreneur include Passion for the business, Product/customer focus, execution intelligence, and tenacity despite failure. An example of utilizing the skills of tenacity despite failure includes altering an issue within the business that people have been complaining about rather than believing the issue is too difficult to overcome and walk away from the business.

Who reads a business plan and what are they looking for? Identify three key people who read a business plan, and explain why they read it.

The people who read business plans are the employees, investors and external shareholders. Employees read the business plan in order to stay focused on the firm's vision and future. Investors read the business plan to see whether they feel the business is worth investing their money in, usually based on their professional perspective and reasonable goals to help society while turning a profit. External shareholders read the business plan read the business plan with a focus on the feasibility analysis demonstrated throughout the written document.

According to the textbook, what are the three primary reasons people become entrepreneurs? Which one is most common and why (give one reason)?

The primary reasons for people to become entrepreneurs are to be their own boss, pursue their own ideas and the drive of financial rewards. The most common is considered to be one's own boss based on the desires of a personal ambition or because they have become frustrated working in traditional jobs under a boss.

Based on B & I Chapter 2, describe the three techniques for recognizing opportunities. Give one example of each.

The three techniques to recognize opportunities includes Solving a problem: driven by an experience within one's own life, Finding Gaps in the Marketplace: products that consumers either want or need that are not available in the market, and Observing Trends: being aware of changes in the area including: economic forces: state of economy, level of disposable income, consumer spending patterns Social forces: social and cultural trends, demographic changes, what people think is "in" Technological advantages: new technologies, emerging technologies, new uses of old technologies Political and Regulatory Changes: New changes in political area, new laws and regulations.

Who did Hyman and Fleiss validate their business idea with prior to launching their venture?

They decided to validate their business idea through contacting both the supplier side (designers) and consumer side (women wanting dresses).

Define Window of Opportunity.

Window of Opportunity is the time period in which a firm can realistically enter a new market. Once a market for a new product is established, its window of opportunity opens. As the market grows and firms enter to establish profitable position leads to a maturity causing the window of opportunity to close.

Business Model:

a firms plan or recipe for how it creates, delivers, and captures value for its stakeholders. It is important because it is the foundation to a firm's ability to succeed both in the short and long term and represents the core aspects of the business.

Product Prototype:

a physical example of the business product in a preliminary form.

Milestone:

a significant event the business endured

Business Plan:

a written narrative, about 25 to 30 pages long, that describes what a new business intends to accomplish and how it intends to accomplish it. It is important because it helps businesses establish where they want to be in the future and can help businesses receive investments.

Key Assets:

assets that a firm owns that enable its business model to work, physical, financial, intellectual or human. Requires three of four for business success.

Myths about entrepreneurs

born not made, gamblers, motivated only by money, young and energetic, love spotlight

Basis of Differentiation:

causes consumers to pick one company's products over others, solves a problem of satisfies a need. Benefits rather than features.

Standard Business Model

depicts existing plans firms can use to determine how they will create, deliver and capture value for their stakeholders. An example of this is Ebay using the auction business model to develop a website to create value for this procedure online.

Core Strategy: includes:

describes how the firm plans to compete relative to its competitors. Business Mission, Basis of Differentiation, Target Market, Product/market Scale

Financials: Includes:

describing process of earning money, most fundamental aspects built around. Includes: Revenue Streams and Cost structure

Competitor Analysis:

detailed analysis of a firm's competition, helps firm understand the positions of its major competitors. opportunities that are available to obtain a competitive advantage in one or more areas.

Product/Service desirability

determine if it is desirable and serves a need, does through a concept test: showing a preliminary description of a product or service idea to prospective customers and industry experts to receive feedback. The goal of this process it to find a product market fit: benefits the product/service offers and what customers need and require.

Product/Service demand:

determine if there is a demand for the product or service. This includes: talking face to face with potential customers (primary research), utilizing online tools for ad placements and landing pages to assess demand (primary), and use the library, internet and Gumshoe research (secondary)

Porter's Industry Analysis:

determine the average rate of return for the firms competing in a particular industry or segment of industry, by applying pressure on industry profitability. Threat of Substitutes, Threat of new entrants, rivalry among existing firms, bargaining power of suppliers, bargaining power of buyers.

Disruptive Business Models

do not fit the profile of a standard business model, it is impactful enough to change the way business is conducted in an industry. An example of this is Uber's business model, a low end disruptive business model leading to a more convenient way of travel.

Characteristics of Attractive Industries:

environmental trends: economic, social, technological and political/regulatory. Shift in favor or against the products or services sold by firms in the industry and business trends: favor some industries over others, increasing ability to outsource manufacturing or service functions lowering cost in labor, move customer procurement and service functions online considerable cost savings.

Entrepreneurial Firms

firms that bring new products and services to the market by creating and seizing opportunities regardless of the resources they currently control.

Industry

group of firms producing a similar product or service.

Channels:

how a business delivers its products or services to its customers. An example of this is someone scheduling their airline ticket through Travelocity as an intermediary channel.

Channels:

how it delivers its product or service to its customers, sell direct, through intermediaries or through a combination.

Resources: Includes:

inputs a firm uses to produce, sell, distribute, and service a product or service. Developed and accumulated over time. Includes: core competencies and Key assets

Operations: Includes:

integral to a firm's overall business model, represent the day to day heartbeat of a firm. Includes: Product/service production, Channels, Key Partners

Business Model

is a business's foundation for success through laying out the process in which they will become profitable and add value to consumers through their core strategies, resources, finanaics and operations.

Product/Service feasibility analysis

is an assessment of the overall appeal of the product or service being proposed. consists of Product/service desirability and product/service demand

Primary research

is collected by the person completing the analysis, involves talking to prospective customers, receiving feedback from industry experts. The techniques involve interviews, administering surveys and conducting focus groups

Feasibility Analysis

is the process of determining if a business idea is viable. It is important because it determines if the idea should be continued to develop.

Cost Structure:

most important costs incurred to support its business model, identify whether the business is a cost driven or value driven business, identify the nature of the business' costs, and identify the business' major cost categories.

Target Market

one or more specific groups of potential consumers toward which an organization directs its marketing program

Key Partners:

partners to perform key roles including getting sufficient resources or funding so the business model will work. An example of this is a board game company partnering with online gaming company in order to establish a platform for the online company and give new ideas to the board game company.

Why do people become entrepreneurs?

people become entrepreneurs to be their own boss, pursue their own ideas, and pursue financial rewards

Product/service production:

physical products produced/manufactured in-house, by a contract manufacturer or outsource provider.

Secondary research

probes data that is already collected, includes studies, Census Bureau data, analyst forecasts and library/internet research.

Product/Market Scope:

products and markets to concentrate, can alter with time

Key Partners:

rely on partners to perform key roles including supplying sufficient resources or funding

Types of Start up firms

salary substitute firms, lifestyle firms, entrepreneurial firms

Target Market:

segment within larger market that represents a narrower group of customers with similar interests.

Executive Summary:

short overview of the entire business plan, said to be most important.

Rivalry among Existing firms:

so competitive that prices are pushed below the level of costs, industry-wide losses occur.

Core Competencies:

specific factor or capability that supports a firm's business model and sets it apart from its rivals. Including passion, knowledge, moral.

Competitor Analysis:

the detailed analysis of the competitors within the market.

Entrepreneurship

trying to identify opportunities and putting useful ideas into practice, using creativity, drive and willingness to take risks.

Revenue Streams:

ways in which business makes money, most have more than one.

Threat of substitutes:

when products or services from other industries can easily serve as substitutes for the products or services made and sold in the focal firm's industry, depends on the propensity of buyers to substitute alternative. Example: wheat and rice substituting one another

Mission Statement:

why a company exists and what it aspires to become

Business Mission:

why it exists and what its business model is to accomplish, anchor