ENT 3320 - Entrepreneurial Process w/ Linstrom - FINAL EXAM
What are the 6 Initial and Legal Issues Facing a New Firm?
1) Establishing a Strong Ethical Culture 2) Choosing an Attorney 3) Drafting a Founder's Agreement 4) Avoiding Legal Disputes 5) Obtaining Business Licenses and Permits 6) Choosing a Form of Business Organization
What 3 pieces fall under the "Insight" step of Generating a Creative Idea?
1) Eureka! 2) Business Idea Conceived 3) Problem Served
What are the 11 Sections of a Business Plan?
1) Executive Summary 2) Industry Analysis 3) Company Description 4) Market Analysis 5) The Economics of Business 6) Marketing Plan 7) Design and Development Plan 8) Operations Plan 9) Management Team and Company Structure 10) Overall Schedule 11) Financial Projections
What are the 3 purposes of acquisitions?
1) Expanding its product line 2) Gaining access to distribution channels 3) Achieving competitive economies of scale
What 4 traits makes an entrepreneur appear "strong" in the eyes of investors?
1) Experience 2) Maturity 3) A Solid Reputation 4) A Track Record of Success
What are the 6 Foreign-Market Entry Strategies?
1) Exporting 2) Licensing 3) Joint Ventures 4) Franchising 5) Turnkey Project 6) Wholly Owned Subsidiary
What are the 5 keys to new product/service development?
1) Find a niche and fill it 2) Develop products that add value 3) Get quality right and pricing right 4) Focus on a specific target market 5) Conduct ongoing feasibility analysis
What are the 4 sources of labor that new ventures utilize?
1) Full-time or part-time employee 2) Intern 3) Freelancer (or contractor) 4) Virtual assistant
What are the 7 advantages of participating in strategic alliances and joint ventures?
1) Gain access to a specific resource 2) Economies of scale 3) Risk and cost sharing 4) Gain access to a foreign market 5) Learning 6) Speed to market 7) Neutralizing or blocking competitors
What 3 items should be included in the Operations Plan section?
1) General Approach to Operations 2) Business Location 3) Facilities and Equipment
What are the 9 ways Lenders and Investors add value to an entrepreneurial firm?
1) Help identify and recruit key management personnel 2) Help the venture fine-tune its business model 3) Provide introductions to additional sources of capital 4) Provide insight into the markets that the new venture plans to enter 5) Serve as a sounding board for new ideas 6) Serve on the new venture's board of directors or board of advisors 7) Recruit customers 8) Help to arrange business partnerships 9) Provide a sense of stability and calm
What are the 5 preferred elements of a successful founding team?
1) Heterogeneous rather than homogeneous 2) Higher Education 3) Prior Entrepreneurial Experience 4) Relevant Industry Experience 5) Broad Social and Professional Network
What are the 6 steps in putting together an Advertisement?
1) Identify the purpose of the ad 2) Determine the target audience 3) Select a medium 4) Create the ad 5) Select a place and time for the ad to appear 6) Fulfill expectations
What are the 3 types of historical financial statements?
1) Income Statement 2) Balance Sheet 3) Statement of Cash Flows
What are 6 disadvantages of External Growth Strategies?
1) Incompatibility of top management 2) Clash of corporate cultures 3) Operational problems 4) Increased business complexity 5) Loss of organization flexibility 6) Antitrust implications
What 6 items should be included in the Overall Schedule section?
1) Incorporating the Venture 2) Completion of Prototypes 3) Rental of Facilities 4) Obtaining Critical Financing 5) Starting Production 6) Obtaining the First Sale
What are the 5 advantages of internal growth strategies?
1) Incremental, even-paced growth 2) Provides maximum control 3) Preserves organizational structure 4) Encourages internal entrepreneurship 5) Allows firms to promote from within
What 6 items should be included in the Industry Analysis section?
1) Industry Size, Growth Rate, and Sales Projections 2) Industry Structure 3) Nature of Participants 4) Key Success Factors 5) Industry Trends 6) Long-Term Prospects
What are the 5 costs involved with buying a franchise?
1) Initial Franchise Fee 2) Capital Requirements 3) Continuing Royalty Payment 4) Advertising Fees 5) Other Fees
What are the 5 stages of growth?
1) Introduction 2) Early Growth 3) Continuous Growth 4) Maturity 5) Decline
What are the 3 Key Questions of an Industry Analysis?
1) Is the industry accessible - in other words, is it a realistic place for a new venture to enter? 2) Does the industry contain markets that are ripe for innovation or are underserved? 3) Are there positions in the industry that avoid some of the negative attributes of the industry as a whole?
What are the 6 elements of the new-venture team?
1) Key Employees 2) Board of Directors 3) Other professionals 4) Lenders and Investors 5) Board of Advisors 6) Management Team
What 6 things are protected by Copyrights?
1) Literary Works 2) Musical Compositions 3) Computer Software 4) Dramatic Works 5) Pantomimes and Choreographic Works 6) Pictorial, Graphic, and Sculptural Works
What are the 7 disadvantages of participating in strategic alliances and joint ventures?
1) Loss of proprietary information 2) Management complexities 3) Financial and organizational risks 4) Risk becoming dependent on a partner 5) Partial loss of decision autonomy 6) Partners' cultures may clash 7) Loss of organizational flexibility
What is the 6-step process of obtaining a patent?
1) Make sure the invention is practical 2) Determining the type of application to file 3) Hire a patent attorney 4) Conduct a patent search 5) File a patent application 6) Obtain decision from U.S. Patent and Trademark Office
What 4 items should be included in the Management Team and Company Structure section?
1) Management Team 2) Board of Directors 3) Board of Advisors 4) Company Structure
What are the 2 categories of the challenges of growth?
1) Managerial Capacity Problem 2) Day-to-Day Challenges of Growing a Firm
What 3 itms should be included in the Market Analysis section?
1) Market Segmentation and Target Market Selection 2) Buyer Behavior 3) Competitor Analysis
What are the 2 most important Political and Regulatory Changes?
1) New Changes in Political Arena 2) New Laws and Regulations
What are the 3 most important Technological Advances?
1) New Technologies 2) Emerging Technologies 3) New Uses of Old Technologies
What are the 4 rules of a brainstorming session?
1) No criticism 2) Freewheeling is encouraged 3) The session should move quickly 4) Leap-frogging is encouraged
What 4 factors determine the intensity of the rivalry among existing firms in an industry?
1) Number and Balance of Competitors 2) Degree of Difference Between Competitors 3) Growth Rate of an Industry 4) Level of Fixed Costs
When utilizing the "Solving a Problem" method, what are the best 4 ways to identify problems in need of solving?
1) Observing Trends 2) Intuition 3) Serendipity 4) Change
What are the 3 ways to identify an opportunity?
1) Observing Trends 2) Solving a Problem 3) Finding Gaps in the Marketplace
What 4 items should be included in the Marketing Plan section?
1) Overall Marketing Strategy 2) Product, Price, Promotions, and Distribution 3) Sales Process (or Cycle) 4) Sales Tactics
Name the 4 primary characteristics of a successful entrepreneur
1) Passion for Business 2) Product/Customer Focus 3) Tenacity Despite Failure 4) Execution Intelligence
What are the 4 key forms of intellectual property?
1) Patents 2) Trademarks 3) Copyrights 4) Trade Secrets
What are 4 alternatives for raising money for a new venture?
1) Personal Funds 2) Equity Capital 3) Debt Financing 4) Creative Sources
What are 3 sources of personal financing?
1) Personal Funds 2) Friends and Family 3) Bootstrapping
What are the 6 potential payoffs of establishing a strong ethical culture?
1) Potential Avoidance of Fines 2) Better Access to Capital 3) Improved Brand Reputation 4) Improved Employee Commitment 5) Improved Customer Loyalty 6) Decreased Vulnerability
What are the 5 steps to generating a Creative Idea?
1) Preparation 2) Incubation 3) Insight 4) Evaluation 5) Elaboration
What are the 4 steps of the Process of Financial Management?
1) Preparation of Historic Financial Statements 2) Preparation of Forecasts 3) Preparation of Pro Forma Financial Statements 4) Ongoing Analysis of Financial Results
What are the 7 techniques considered Public Relations?
1) Press Release 2) Social Media Coverage 3) Blogging 4) Traditional Media Coverage 5) Article in Industry Press and Periodicals 6) Monthly Newsletter 7) Civil, Social, and Community Involvement
What 4 characteristics tend to make people better at recognizing opportunities?
1) Prior Experience 2) Cognitive Factors 3) Social Networks 4) Creativity
Name 3 characteristics exhibited by Entrepreneurial firms
1) Proactive 2) Innovative 3) Risk-Taking
What are the 4 P's of marketing for new ventures?
1) Product 2) Price 3) Promotion 4) Place (or Distribution)
What are some of the ways that markets can be segmented?
1) Product Type 2) Geography (city, state, region) 3) Demographic Variables
What are the two types of franchise systems?
1) Product and Trademark Franchise 2) Business Format Franchise
What are the 4 Forms of Feasibility Analysis?
1) Product/Service Feasibility 2) Industry/Target Market Feasibility 3) Organizational Feasibility 4) Financial Feasibility
What are the 6 disadvantages of franchising as a method of expansion?
1) Profit sharing 2) Loss of control 3) Friction of franchisees 4) Managing growth 5) Differences in required business skills 6) Legal expenses
What are the 4 main objectives of a firm?
1) Profitability 2) Liquidity 3) Efficiency 4) Stability
What are the 7 steps of the sales process?
1) Prospect for (or gather) sales leads 2) Make the initial contact 3) Qualify the lead 4) Make the sales presentation 5) Meet objections and concerns 6) Close the sale 7) Follow up
What are 2 things that a Board of Directors can do to help a start-up get off to a good start?
1) Provide Guidance 2) Lend Legitimacy
What are the 4 reasons that motivate firms to go public?
1) Raise equity capital to fund current and future operations 2) Raises a firm's public profile, making it easier to attract high-quality customers and business partners 3) It's a liquidity event that provides a means for a company's investors to recoup their investments 4) Creates a form of currency that can be used to grow the company via acquisitions
What 2 things does Financial Management deal with?
1) Raising Money 2) Managing a company's finances in a way that achieves the highest rate of return
What are the 6 advantages of franchising as a method of expansion?
1) Rapid, low-cost market expansion 2) Income from franchise fees and royalties 3) Franchisee motivation 4) Access to ideas and suggestions 5) Cost savings 6) Increased buyer power
What are 7 advantages of External Growth Strategies?
1) Reducing competition 2) Gaining access to proprietary products or services 3) Gaining access to new products and markets 4) Obtaining access to technical expertise 5) Gaining access to an established brand name 6) Economies of scale 7) Diversification of business risk
What are 6 physical measures for protecting trade secrets?
1) Restricting access 2) Labeling documents 3) Password protecting confidential computer files 4) Maintaining logbooks for visitors 5) Maintaining logbooks for access to sensitive material 6) Maintaining adequate overall security measures
What 5 items should be included in the Economics of the Business section?
1) Revenue Drivers and Profit Margins 2) Fixed and Variable Costs 3) Operating Leverage and its Implications 4) Start-Up Costs 5) Break-Even Chart and Calculations
What are the 2 types of crowdfunding?
1) Reward-Based Crowdfunding allows entrepreneurs to raise money in exchange for some type of amenity or reward 2) Equity-Based Crowdfunding helps businesses raise money by tapping individuals who provide funding in exchange for equity in the business
Name the 3 types of Start-Up Firms
1) Salary-Substitute Firms 2) Lifestyle Firms 3) Entrepreneurial Firms
What are the two types of Joint Ventures?
1) Scale Joint Venture 2) Link Joint Venture
What 3 steps do all start-ups go through to discover their market segment and their position within it?
1) Segmenting the Market 2) Selecting the Target Market 3) Establishing a Unique Position
What is the 3-step process of obtaining a trademark?
1) Select an appropriate mark 2) Preform a trademark search 3) Create rights in the trademark
What are the 4 disadvantages of internal growth strategies?
1) Slow form of growth 2) Need to develop new resources 3) Investment in a failed internal growth strategy can be difficult to recoup 4) Adds to industry capacity
What are the 3 most important Social Forces?
1) Social and Cultural Trends 2) Demographic Changes 3) What People Think is "in"
What are the 4 forms of businesses?
1) Sole Proprietorship 2) Partnership 3) Corporation 4) Limited Liability Company
What 6 items should be included in the Financial Projections section?
1) Sources and Uses of Funds Statement 2) Assumptions Sheet 3) Pro Forma Income Statements 4) Pro Forma Balance Sheets 5) Pro Forma Cash Flows 6) Ratio Analysis
What are the 2 general categories of business models?
1) Standard Business Model 2) Disruptive Business Model
What are the 3 most important Economic Forces?
1) State of the Economy 2) Level of Disposable Income 3) Consumer Spending Patterns
What are the 6 Nontraditional Barriers to Entry?
1) Strength of the Management Team 2) First-Mover Advantage 3) Passion of the Management Team and the Employees 4) Unique Business Model 5) Internet Domain Name 6) Inventing a New Approach to an Industry
What are the 2 main techniques available to assess industry attractiveness?
1) Study Environmental and Business Trends 2) The Five Competitive Forces Model
What are the 3 types of business plans?
1) Summary Business Plan 2) Full Business Plan 3) Operational Business Plan
What 4 factors affect the Bargaining Power of Suppliers?
1) Supplier Concentration 2) Switching Costs 3) Attractiveness of Substitutes 4) Threat of Forward Integration
Name 3 characteristics exhibited by Conservative firms
1) Take a more "wait-and-see" posture 2) Less Innovative 3) Risk Averse
What are the 4 disadvantages of starting a venture as a team?
1) Team members may not get along 2) If two or more people start a firm as "equals," conflicts can arise when the firm needs to establish a formal structure and designate one person as the CEO 3) If the founders have similar areas of expertise, the may duplicate rather than complement one another 4) Team members can easily disagree in terms of work habits, tolerances for risk, levels of passion for the business, ideas on how the business should be run, and similar key issues
What are the 2 types of Strategic Alliances?
1) Technological Alliances 2) Marketing Alliances
What are the 2 kinds of licensing?
1) Technology Licensing 2) Merchandise and Character Licensing
What are the 4 major issues you need to consider when choosing your business form?
1) The cost of setting up and maintaining the legal form 2) The extent to which personal assets can be shielded from the liabilities of the business 3) Tax considerations 4) The number and types of investors involved
What 2 important things must happen for a business to be successful during the Early Growth stage?
1) The founder must start working "on the business" rather than "in the business" 2) Increased formalization must take place, and the business has to start developing policies and procedures
What are the top 5 reasons that new products fail?
1) The potential market was overestimated 2) Customers saw the product as too expensive 3) The product was poorly designed 4) The product was no different than the competition's ("me too" products) 5) The costs of developing the product line were too high
What are the 3 advantages of starting a venture as a team?
1) They bring more talent, resources, and ideas to a new venture 2) They bring a broader and deeper network of social and professional contacts to a new business 3) The physiological support that the cofounders of a business can offer one another can be an important element of a new venture's success
What are the 5 forces in Porter's Five Competitive 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
What are the 2 types of Licenses and Permits at the local level?
1) To operate a certain type of business 2) To engage in certain types of activities
What are the 4 types of Trademarks?
1) Trademark 2) Service Mark 3) Collective Mark 4) Certification Mark
What are the 3 basic requirements for acquiring a patent?
1) Useful 2) Novel 3) Not Obvious
What are the 3 types of patents?
1) Utility 2) Design 3) Plant
What are 4 "Other Sources" of debt financing?
1) Vendor Credit 2) Factoring 3) Merchant Cash Advance 4) Peer-to-Peer Lending
What are the 3 sources of equity funding?
1) Venture Capital 2) Business Angels 3) Initial Public Offerings
Name the 4 positive demographic changes in Entrepreneurship today
1) Women 2) Minorities 3) Seniors 4) Young Entrepreneurs
Describe a Summary Business Plan starting with the suggested number of pages
10-15 pages; Works best for new ventures in the early stages of development that want to "test the waters" to see if investors are interested in their idea
Describe a Full Business Plan starting with the suggested number of pages
25-35 pages; Works best for new ventures who are at the point where they need funding or financing; serves as a "blueprint" for the company's operations
What is the average amount of time that it takes to receive a patent grant from the time you submit it?
29.1 months
Describe a Operational Business Plan starting with the suggested number of pages
40-100 pages; It is meant primarily for an internal audience; works best as a tool for creating a blueprint for a new venture's operations and providing guidance to operational managers
How many patents have been granted by the U.S. since when?
6 million since the first was issued in 1790
About how many Venture Capital Firms are their in the U.S.?
875
What is a Business Method Patent?
A "Special Utility Patent" that protects an invention that is or facilitates a method of doing business
What is an elevator speech?
A brief, carefully constructed statement that outlines the merits of a business opportunity
What are A Firm's Employees looking for in their company's business plan?
A clearly written business plan helps the employees of a firm operate in sync and move forward in a consistent and purposeful manner
What is liquidity?
A company's ability to meet its short-term obligations
What is an Initial Public Offering (IPO)?
A company's first sale of stock to the public
What is a Barrier to Entry?
A condition that creates a disincentive for a new firm to enter an industry
What is Competitor Analysis?
A detailed analysis of a firm's competition
Define Opportunity
A favorable set of circumstances that creates a need for a new product, service, or business
What is included in "Firm-Level Factors"?
A firm's assets, products, culture, teamwork among its employees, reputation, and other resources
What are Investors and Other External Stakeholders looking for in a company's business plan?
A firm's business plan must make the case that the firm is a good use of investor's funds or the attention of others
What is most important about resources?
A firm's most important resources, both tangible and intangible, must be both difficult to imitate and hard to find a substitute for. This stipulation is necessary for an individual's company business model to be competitive over the long term
What is a Business Model?
A firm's plan or recipe for how it creates, delivers, and captures value for its stakeholders
What is Franchising?
A form of business organization in which a firm that already has a successful product or service (franchisor) licenses its trademark and method of doing business to another business or individual (franchisee) in exchange for a franchise fee and an ongoing royalty payment
What is a Copyright?
A form of intellectual property protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work
What is a Focus Group?
A gathering of 5 to 10 people, who have been chosen based on their common characteristics relative to the issue being discussed
What is a Patent?
A grant from the federal government conferring the rights to exclude others from making, selling, or using an invention for the term of the patent
What is the definition of an Industry?
A group of firms producing a similar product or service, such as music, Pilates and yoga studios, and solar panel manufacturing
What is Guerrilla Marketing?
A low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques
What is a Board of Directors?
A panel of individuals who are elected by a corporation's shareholders to oversee the management of the firm
What is a Strategic Alliance?
A partnership between two or more firms developed to achieve a specific goal
What is an Inside Director?
A person who is also an officer of the firm
What is an Outside Director?
A person who is not employed by the firm
What is the given example of the "Solving a Problem" method?
A problem facing the U.S. and other countries is finding alternatives to fossil fuels. A large number of entrepreneurial firms, like wind farms, are being launched to solve this problem
What is the purpose of the Overall Schedule section?
A schedule should be prepared that shows the major events required to launch the business. It should be in the format of milestones critical to the business's success
What is the Executive Summary?
A short interview of the entire business plan. Should not exceed two double-spaced pages. Appears at the beginning but should be written last
What is the relationship between brand and market value?
A successful brand can increase market value of a company by 50% to 75%
What is a Competitive Analysis Grid?
A tool for organizing the information that a firm collects about its competitors
What is the given example of an Economic Trend creating a favorable opportunity?
A weak economy favors start-ups that help consumers save money. E.g. GasBuddy.com helps people save money on gas
What is a Business Plan?
A written narrative, typically 25 to 35 pages long, that describes what a new business plans to accomplish
What is the conceptual continuum of corporate entrepreneurship?
All firms fall along the conceptual continuum that ranges from highly conservative to highly entrepreneurial
What is Place?
All the activities that move a firm's product from its place of origin to the consumer
What is a Product and Trademark Franchise?
An arrangement under which the franchisor grants to the franchisee the right to buy its products and use its trade name
What is a Business Format Franchise?
An arrangement under which the franchisor provides a formula for doing business to the franchisee along with training, advertising, and other forms of assistance
What is a Joint Venture?
An entity created when two or more firms pool a portion of their resources to create a separate, jointly owned organization
What is a Trade Secret?
Any formula, pattern, physical device, idea, process, or other information that provides the owner of the information with a competitive advantage in the market place
What is a Plant Patent and what is its duration?
Any new varieties of plants that can be reproduced asexually; 20 years
What is Intellectual Property (IP)?
Any product of human intellect that is intangible but has value in the marketplace
What is a Trademark?
Any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those products or services from others
What is the statistic concerning the number of banks that participate in SBA Loans?
Approximately 50% of the 9,000 banks in the U.S. participate in the SBA Guaranteed Loan Program
What are Forecasts?
Are an estimate of a firm's future income and expenses, based on past performance, its current circumstances, and its future plans
What are the given examples of Business Trends worth watching?
Are profit margins in the industry increasing or falling? Is innovation accelerating or waning? Are input costs going up or down?
Why is the Company Description important?
Because it demonstrates to your reader that you know how to translate an idea into a business
Why is the Financials section of the business model so important?
Because it is the only part of the business model that describes how the firm earns money
Why are Business Angels so valuable?
Because of their willingness to make relatively small investments
Aside from it being very helpful, why is it that new-ventures who form as corporations all have a board of directors?
Because they are legally required to
What is cultivated through brand and is one of a company's most valuable assets?
Brand Loyalty
What is Industry Analysis?
Business research that focuses on the potential of an industry
What are Future Competitors?
Business that are not yet direct or indirect competitors but could be at any time
What are Indirect Competitors?
Businesses offering close substitute products
What are Direct Competitors?
Businesses offering identical or similar products
What are international new ventures?
Businesses that, from their inception, seek to derive significant competitive advantage by using their resources to sell products or services in multiple countries
What is the Bargaining Power of Buyers?
Buyers can suppress the profitability of the industries from which they purchase by demanding price concessions or increases in quality
How does an Industry Analysis start?
By describing the industry that the business will enter in terms of its size, growth rate, and sales projections
How do firms combat the Threat of New Entrants?
By erecting barriers to entry
How does Access to Distribution Channels create a Barrier to Entry?
Distribution channels are often hard to crack. This is particularly true in crowded markets, such as the convenience store market
What is the perfect time to conduct a Feasibility Analysis?
Early in thinking through the prospects for a new business. The thought is to screen ideas before a lot of resources are spent on them
What is the "sixth sense" many people believe that entrepreneurs have?
Entrepreneurial Alertness
What is a firm's position along the conceptual continuum of corporate entrepreneurship called?
Entrepreneurial Intensity
What did Venture Capitalist Fred Wilson say about Entrepreneurship?
Entrepreneurship is the art of turning an idea into a business
What is Equity Funding?
Exchanging partial ownership in a firm, usually in the form of stock, for funding
How do Cost Advantages Independent of Size create Barriers to Entry?
Existing firms may have a cost advantage not related to size. For example, the existing firms in an industry may have purchased land when it was less expensive than it is today
What are experts' opinions on the size of founding teams?
Experts disagree about whether new ventures started by a team have an advantage over those started by a sole entrepreneur
True or False: Entrepreneurs are born, not made. Explain your answer
False: most studies show that no one is born an entrepreneur and that everyone has the potential to become one. Whether or not you do is a product of your environment, life experiences, and personal choices
True or False: Entrepreneurs should be young. Explain your answer
False: studies actually show that entrepreneurial activity is evenly spread out among all age ranges
What are 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
What are Entrepreneurial Firms?
Firms that bring new products and service to the market by creating and seizing opportunities regardless of the resources they currently control
How does the Level of Fixed Costs in an industry affect the intensity of the rivalry among existing competitors in that industry?
Firms that have high fixed costs must sell a higher volume of their product to reach the break-even point than firms with low fixed costs
What are Lifestyle Firms?
Firms that provide their owner or owners the opportunity to pursue a particular lifestyle, and make a living at it
How does Entrepreneurship impact job creation?
Firms with 500 or fewer employees create 65% of new jobs on an annual basis
What is the proper time to develop a Business Model?
Following the feasibility analysis stage and prior to fleshing out the operational details of the company
What is a Dual-Use Document?
For most new ventures, the business plan is a dual-use document used both inside and outside the firm
What is the Early Growth stage of growth?
Generally characterized by increasing sales and heightened complexity
What is Debt Financing?
Getting a loan
What is efficiency?
How productively a firm utilizes its assets
What is the focus of the Marketing Plan section?
How the business will market and sell its product or service
How does Inventing a New Approach to an Industry create a barrier to entry?
If a start-up invents a new approach to an industry an executes it in an exemplary fashion, these factors create a barrier to entry for potential imitators
How does a Unique Business Model create a barrier to entry?
If a start-up is able to construct a unique business model and establish a network of relationships that make the business model work, this set of advantages creates a barrier to entry
How does First-Mover Advantage create a barrier to entry?
If a start-up pioneers a new industry or a new concept within an industry, the name recognition the start-up establishes may create a barrier to entry
How does the Strength of the Management Team create a barrier to entry?
If a start-up puts together a world-class management team, it may give potential rivals pause in taking on the start-up in its chosen industry
How does the Passion of the Management Team and the Employees create a barrier to entry?
If employees of a start-up are motivated by the unique culture of a start-up, and anticipate a larger financial reward, this is a combination that cannot be replicated by larger firms
How does Price Stability create a challenge for a growing firm?
If growth comes at the expense of a competitor's market share, a price ware could ensue
Why is it important to note an industry's Threat of New Entrants?
If the firms in an industry are highly profitable, the industry becomes a magnet to new entrants. Unless something is done to stop this, the competition in the industry will increase, and average industry profitability will decrease
How does Buyer Group Concentration affect the bargaining power of buyers?
If there are only a few large buyer, and they buy from a large number of suppliers, they can pressure the suppliers to lower costs and thus affect the profitability of the industries from which they buy
What are Emerging Industries and what opportunity do they offer?
Industries in which standard operating procedures have yet to be developed; First-mover advantage
How does Product Differentiation create a Barrier to Entry?
Industries such as the soft drink industry that are characterized by firms with strong brands are difficult to break into without spending heavily on advertising
What are Fragmented Industries and what opportunity do they offer?
Industries that are characterized by a large number of firms of approximately equal size; Consolidation
How do Economies of Scale create a Barrier to Entry?
Industries that are characterized by large economies of scale are difficult for new firms to enter, unless they are willing to accept a cost disadvantage
What are Declining Industries and what opportunity do they offer?
Industries that are experiencing a reduction in demand; Leadership, establishing a niche market, and pursuing a cost reduction strategy
What are Global Industries and what opportunity do they offer?
Industries that are experiencing significant international sales; Multidomestic and global strategies
What are Mature Industries and what opportunity do they offer?
Industries that are experiencing slow or no increase in demand; Process innovation and after-sale service innovation
What is the given example of using an Environmental Trend?
Industries that sell products to seniors are benefitting by the aging of the population
What is a Design Patent and what is its duration?
Invention of a new, original, and ornamental design for manufacturing products; 14 years
What are Cash Flow Challenges?
Inventory must be purchased, employees must be trained and paid, and advertising must be paid for before cash is generated from sales
What does a brand do for pricing?
It allows a company to set a price that is consistent with its brand
What is AdSense?
It allows advertisers to buy ads that will be shown on other Websites instead of Google's homepage
What is AdWords?
It allows advertisers to buy keywords on the Google homepage
What does the Market Analysis section do?
It breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal
What is the first application of the Five Competitive Forces Model?
It can be used to assess the attractiveness of an industry by determining the level of threat to profitability for each of the forces
What is the second application of the Five Competitive Forces Model?
It can be used to help determine whether a firm should enter an industry by answering a set of questions to determine if the firm can carve out an attractive portion of the industry
What is Core Strategy?
It describes how the firm plans to compete relative to its competitors
What is the major advantage of Leasing?
It enables a company to acquire the use of assets with very little or no down payment
What is Viral Marketing?
It facilitates and encourages people to pass along a marketing message about a particular product or service
What does Industry Analysis do for a firm?
It helps a firm determine if the target market is identified during feasibility analysis is favorable for a new firm
Why is Competitor Analysis important?
It helps a firm understand the the positions of its major competitors and the opportunities that are available
What is Market Segmentation?
It involves studying a firm's industry and determining the different target markets in that industry
What is New Product Development?
It involves the creation and sale of new products (or services) as a means of increasing firm revenues
What is a Balance Sheet?
It is a snapshot of a company's assets, liabilities, and owner's equity at a specific point in time
What is the Operations Plan section?
It outlines how your business will be run and how your product or service will be produced. It is helpful to describe your operations in terms of "backstage" (unseen to the customer) and "front stage" (seen by the customer) activities
What is accomplished by the final section of a firm's business plan?
It presents a firm's pro forma (or projected) financial projections
What does an Income Statement do?
It reflects the results of the operations of a firm over a specified period of time. It records all the revenue and expenses for the given period and it shows whether the firm is making a profit or experiencing a loss
What is Patent Infringement?
It takes place when one party engages in the unauthorized use of another party's patent
What are Budgets?
Itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control
What is the given example of an opportunity created by Political Action and Regulatory changes?
Laws to protect the environment have created opportunities for entrepreneurs to start firms that help others comply with environmental laws and regulations
What is the most important thing that you can do to establish a strong ethical culture?
Lead by example
What are Venture Capital Firms?
Limited partnerships of money managers who raise money in "funds" to invest in start-ups and growing firms
What is Advertising?
Making people aware of a product or service in hopes of persuading them to buy it
What is a positive relationship between entrepreneurial firms and larger firms?
Many of them have built their entire business model around producing products and services that help larger firms become more efficient and effective
What is a Certification Mark and what is its duration?
Marks, words, names, symbols, or devices used by a person other than the owner to certify a particular quality about a good or service; renewable every 10 years as long as the mark remains in use
What is a Utility Patent and what is its duration?
New or useful process, machine, manufacturer, or composition of material or any new and useful improvement thereof; 20 years
What is Copyright Infringement?
Occurs when one derives from another or is an exact copy or shows substantial similarity to the original work
Why is Industry Analysis important?
Once it is determined that a new venture is feasible in regard to the industry and market in which it will compete
What are "Business Trends"?
Other trends (than Environmental ones) that impact an industry
What is the statistic about trust in a company vs purchasing its products?
Over 50% of customers say that a known and trusted brand is a reason to buy a product
Describe the Outline for a Comprehensive Feasibility Analysis
Part 1: Product/Service Feasibility A: Product/Service Desirability B: Product/Service Demand Part 2: Industry/Target Market Feasibility A: Industry Attractiveness B: Target Market Attractiveness Part 3: Organizational Feasibility A: Management Prowess B: Resource Sufficiency Part 4: Financial Feasibility A: Total Start-Up Cash Needed B: Financial Performance of Similar Business C: Overall Financial Attractiveness of the Proposed Business Overall Assessment
What is the #1 characteristic shared by successful entrepreneurs?
Passion for Business
What is the key difference between Public Relations and Advertising?
Public Relations is not paid for directly
What are Service Marks and what is their duration?
Similar to trademarks; they are used to identify the services or intangible activities of a business, rather than a business's physical products; renewable every 10 years as long as the mark remains in use
What does SBIR stand for?
Small Business Innovation Research
What does STTR stand for?
Small Business Technology Transfer
What is Entrepreneurship's impact on innovation?
Small, innovative firms are 16 times more productive than large, innovative firms in terms of patents per employee
Why are Social Trends important to pay attention to?
Social Trends alter how people and businesses behave and set their priorities. These trends provide opportunities for new businesses to accommodate the changes
How does Rivalry Among Existing Firms affect prices in an industry?
Some industries are fiercely competitive, to the point where prices are pushed below the level of costs, and industry-wide losses occur.
How does Government and Legal Barriers create Barriers to Entry?
Some industries, such as banking and broadcasting, require the granting of a license by a public authority to compete
How does an Internet Domain Name create a barrier to entry?
Some internet domain names are so "spot on" that they give a start-up a meaningful leg up in terms of e-commerce opportunities
What are Lengthy Product Development Cycles?
Some products are under development for years before the generate earnings. The upfront costs often exceed a firm's ability to fund these activities on its own
Which kinds of companies usually rely on nontraditional barriers to entry?
Start-Ups
Why is it that one is more likely to find entrepreneurial ability through their Weak-Tie Relationships?
Strong-Tie Relationships typically occur between like-mined individuals and tend to reinforce insights and ideas that people already have. Weak-Tie Relationships are not as apt to be between like-minded individuals, so one person may say something to another that sparks an entirely new idea
What key statistic shows the importance of Social Networks in entrepreneurial opportunity
Studies show that 40-50% of people who started a business got their idea through a social contact
What have studies shown about the size of founding teams?
Studies show that 50% to 70% of all new ventures are started by more than one individual
What does a Statement of Cash Flows do?
Summarizes the changes in a firm's cash position for a specified period of time and details why the changes occurred
How does the Attractiveness of Substitutes affect the bargaining power of suppliers?
Supplier power is enhanced if there are no attractive substitutes for the product or services the supplier offers
How can suppliers affect the profitability through the Bargaining Power of Suppliers?
Suppliers can suppress the profitability of the industries to which they sell by raising prices or reducing the quality of the components they provide
How do Switching Costs affect the bargaining power of suppliers?
Switching costs are the fixed costs that buyers encounter when switching or changing from one supplier to another. If switching costs are high, a buyer will be less likely to switch suppliers
What is the most notable SBA program available to small businesses?
The 7(A) Loan Guarantee Program
Which section of the business plan is arguable the most important?
The Executive Summary
What is a Code of Conduct?
(AKA Code of Ethics) A formal statement of an organization's values on certain ethical and social issues
What are the 2 primary audiences for a firm's business plan?
1) A Firm's Employees 2) Investors and Other External Stakeholders
What are the 7 advantages of buying a franchise?
1) A proven product or service within an established market 2) An established trademark or business system 3) Franchisor's training, technical expertise, and managerial expertise 4) An established marketing network 5) Franchisor ongoing support 6) Availability of financing 7) Potential for business growth
What are some commonly used techniques of Promotion?
1) Advertising 2) Google AdWords and AdSense 3) Public Relations 4) Social Media 5) Viral Marketing 6) Guerrilla Marketing
What are the 3 formal responsibilities of the Board of Directors?
1) Appoint the Officers of the Firm 2) Declare Dividends 3) Oversee the affairs of the corporation
What are 3 things a business can do to prepare for growth?
1) Appreciate the Nature of Business Growth 2) Stay Committed to a Core Strategy 3) Plan for Growth
What are 6 ethical ways to obtain information about competitors?
1) Attend conferences and trade shows 2) Purchase competitors' products 3) Study competitors' websites and social media sites 4) Set up Google email alerts 5) Read industry-related books, magazines, and websites 6) Talk to customers about what motivated them to buy your product as opposed to your competitor's product
What are the 4 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
What are the 3 types of professional advisors used by start-ups?
1) Board of Advisors 2) Lenders and Investors 3) Other Professionals
What are the 3 Techniques for generating ideas?
1) Brainstorming 2) Focus Groups 3) Library and Internet Research
What are the 3 categories of Licenses and Permits at the state level?
1) Business Registration Permits 2) Sales Tax Permits 3) Professional and Occupational Licenses and Permits
What 4 factors affect the Bargaining Power of Buyers?
1) Buyer Group Concentration 2) Buyer's Costs 3) Degree of Standardization of Supplier's Products 4) Threat of Backward Integration
What are the 3 main reasons that new ventures need to raise money during their early life?
1) Cash Flow Challenges 2) Capital Investments 3) Lengthy Product Development Cycles
What are the 4 day-to-day challenges of growing a firm?
1) Cash Flow Management 2) Price Stability 3) Quality Control 4) Capital Constraints
What are the 2 sources of Debt Financing?
1) Commercial Banks 2) SBA Guaranteed Loans
What 7 items should be included in the Company Description?
1) Company Description 2) Company History 3) Mission Statement 4) Products and Services 5) Current Status 6) Legal Status and Ownership 7) Key Partnerships (if any)
What are the 4 given examples of entire industries that have been created by Technological Advances?
1) Computer Industry 2) Internet 3) Biotechnology 4) Digital Photography
Describe the Barringer/Ireland Business Model Template
1) Core Strategy a) Business Mission b) Basis of Differentiation c) Target Market d) Product/Market Scope 2) Resources a) Core Competency b) Key Assets 3) Financials a) Revenue Streams b) Cost Structure c) Financing/Funding 4) Operations a) Product (or Service) Production b) Channels c) Key Partners
What are the 7 disadvantages of buying a franchise?
1) Cost of the franchise 2) Restrictions on creativity 3) Duration and nature of the commitment 4) Risk of fraud, misunderstandings, or lack of franchisor commitment 5) Problems of termination or transfer 6) Poor performance on the part of other franchisees 7) Potential for failure
What are the two methods most commonly used for pricing?
1) Cost-Based Pricing 2) Value-Based Pricing
What are 5 creative sources of financing or funding?
1) Crowdfunding 2) Leasing 3) SBIR and STTR Programs 4) Other Grant Programs 5) Strategic Partners
What are the 4 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
What are the 4 pieces of an elevator pitch and how long should they be?
1) Describe the opportunity or problem that needs to be solved; 20 seconds 2) Describe how your product meets the opportunity or solves the problem; 20 seconds 3) Describe your qualifications; 10 seconds 4) Describe your market; 10 seconds
Name the 3 primary reasons that people become entrepreneurs
1) Desire to be their own boss 2) Desire to pursue their own ideas 3) Financial rewards
What are the 3 steps of preparing to raise debt or equity financing?
1) Determine precisely how much money is needed 2) Determine the type of financing or funding that is the most appropriate 3) Develop a strategy for engaging potential investors or bankers
What are the 2 criteria for deciding what IP is worth protecting?
1) Determine whether the IP in question is directly related to the firm's competitive advantage 2) Decide whether the IP in question has value in the marketplace
What 4 items should be included in the Design and Development Plan section?
1) Development Status and Tasks 2) Challenges and Risks 3) Projected Development Costs 4) Proprietary Issues (patents, trademarks, copyrights, licenses, brand names)
What are the 3 types of competitors?
1) Direct Competitors 2) Indirect Competitors 3) Future Competitors
What are the 4 most important trends?
1) Economic Forces 2) Social Forces 3) Technological Advances 4) Political and Regulatory Change
What are the 6 reasons for growth?
1) Economies of Scale 2) Economies of Scope 3) Market Leadership 4) Influence, Power, and Survivability 5) Accommodate the Growth of Key Customers 6) Attract and Retain Talented Employees
What are the 6 most common Barriers to Entry?
1) Economies of Scale 2) Product Differentiation 3) Capital Requirements 4) Cost Advantages Independent of Size 5) Access to Distribution Channels 6) Government and Legal Barriers
What are the 5 industry types?
1) Emerging Industries 2) Fragmented Industries 3) Mature Industries 4) Declining Industries 5) Global Industries
The myth that entrepreneurs are gamblers originates from what 2 things?
1) Entrepreneurs typically have jobs that are less structured, and so the face a more uncertain set of possibilities than people in traditional jobs 2) Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking
How is Entrepreneurial Alertness defined?
The ability to notice things without engaging in a deliberate search
What does Promotion refer to?
The activities the firm takes to communicate the merits of its product to its target market
How does the Growth Rate of an Industry affect the intensity of the rivalry amongst existing competitors in that industry?
The competition among firms in a low-growth industry is stronger than it is among those in high-growth industries
What is Corporate Entrepreneurship?
The conceptualization of entrepreneurship at the firm level
What are Capital Investments?
The cost of buying real estate, building facilities, and purchasing equipment typically exceeds a firm's ability to provide funds for these needs on its own
How does the Degree of Standardization of Supplier's Products affect the bargaining power of buyers?
The degree to which a supplier's product differs from its competitors affects the buyer's bargaining power
What is the Liability of Newness?
The fact that new companies often falter because the people involved can't adjust to their new roles and because the firm lacks a track record of success
How do Buyer's Costs affect the bargaining power of buyers?
The greater the importance of an item is to a buyer, the more sensitive the the buyer will be to the price it pays
What is a New-Venture Team?
The group of founder, key employees, and advisors that move a new venture from an idea to a fully functioning firm
What are Resources?
The inputs that a firm uses to produce, sell, distribute, and service a product or service
What is Value-Based Pricing?
The list price is determined by estimating what consumers are willing to pay for a product
What is Cost-Based Pricing?
The list price is determining by adding a markup percentage to a product's cost
What is the Idea-Expression Dichotomy?
The main exclusion is that copyright laws cannot protect ideas
How does the Number and Balance of Competitors affect the intensity of the rivalry among existing competitors in that industry?
The more competitors there are, the more likely it is that one or more will try to gain customers by cutting its price
What happens during the Continuous Growth stage?
The need for structure and formalization increases. Often this is when the business will start developing related products and services. And the toughest decisions take place in this stage
What is an Acquisition?
The outright purchase of one firm by another
What is stability?
The overall health of the financial structure of the firm, particularly as it relates to its debt-to-equity ratio
What is the most common method of forecasting cost of sales?
The percentage-of-sales method
What is a merger?
The pooling of interests to combine two or more firms into one
How does the Threat of Forward Integration affect the bargaining power of suppliers?
The power of a supplier is enhanced if there is a credible possibility that the supplier might enter the buyer's industry
How does the Threat of Backward Integration affect the bargaining power of buyers?
The power of buyers is enhanced if their is a credible threat that the buyer might enter the supplier's industry
Explain why the Threat of Substitutes is important
The price that consumers are willing to pay for a product depends in part on the availability of substitute products
What is the "academic" definition of Entrepreneurship?
The process by which individuals pursue opportunities without regard to resources that they currently control
What is a Feasibility Analysis?
The process of determining whether a business idea is viable. It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing
What is Creativity?
The process of generating a novel or completely new idea
What is the Core Product?
The product itself
What is the Actual Product?
The product plus all the attributes that come with it such as quality level, features, design, packaging, and warranty
What is a brand?
The set of attributes - positive or negative - that people associate with a company
What is the Introduction stage of growth?
The start-up phase where a business determines what its core strengths and capabilities are
What is a Strong-Tie Relationship?
They are characterized by frequent interaction and form between coworkers, friends, and spouses
What is a Weak-Tie Relationship?
They are characterized by infrequent interaction and form between casual acquaintances
What defines a Disruptive business model?
They are rare and do not fit the profile of standard business models. They are impactful enough that they change or disrupt the way business is conducted in an industry or an important niche within an industry
What are the durations of Trademarks?
They are renewable every 10 years, as long as the mark remains in use
Why is it that banks are typically viewed as bad sources of financing for start-ups?
They are risk-averse
Explain what Entrepreneurs do
They assemble and then integrate all of the resources needed - the money, the people, the business model, the strategy - to transform an invention or idea into a viable business
What defines a Standard business model?
They depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value
What are "Environmental Trends"?
They include economic trends, social trends, technological advances, and political and regulatory changes
What are Internal Growth Strategies?
They involve efforts taken within the firm itself, such as new product development, other product-related strategies, and international expansion
What is one way that firms often try to reduce the likelihood that consumers will look for substitutes for their products?
They often offer extra amenities, even in light of a price increase
What do SBIR and STTR do?
They provide grant funding to entrepreneurs working on products/services in specific areas
What are External Growth Strategies?
They rely on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising
What do Business Angels typically invest and what are they looking for in growth?
They typically invest between $10,000 and $500,000 in a single company and look for growth of 30% to 40% per year
What is the main thing that people do wrong when going about getting financing or funding?
They wait to do it until they need to do it and therefore go about it haphazardly because they lack experience in the area
How does Entrepreneurship contribute to society?
Think of all of the news products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us in new ways
What is accomplished by the Economics of the Business section?
This section addressed the basic logic of how profits are earned in the business and how many units of a business's product must be sold for the business to "break even" and then start earning a profit
What is included in "Industry-Level Factors"?
Threat of new entrants, rivalry among existing firms, bargaining power of buyers, and related factors
What is the importance of financial statements?
To assess whether a firm's financial objectives are being met
What is Competitive Intelligence?
To complete a competitive analysis grid, a firm must first understand the strategies and behaviors of its competitors. The information that is gathered by a firm to learn about its competitors is referred to as competitive intelligence
What is the purpose of Financial Ratios?
To depict relationships between items on a firm's financial statements
What is the main challenge of the Introduction stage?
To make sure that the initial product or service is right
What is a Collective Mark and what is its duration?
Trademarks or service marks used by the members of a cooperative, association, or other collective group; renewable every 10 years as long as the mark remains in use
Through whom is one more likely to find entrepreneurial opportunity: strong-tie or weak-tie relationships?
Weak-Tie Relationships
What question is asked when Segmenting the Market?
What groups of customers in my market are similar enough that the same product or service will appeal to all of them
What question is asked when Establishing a Unique Position?
What position will my firm occupy in the minds of my customers (and potential customers) that will differentiate it from all my competitors?
What indicates when a company has entered the Maturity stage?
When its growth stalls
How does supplier concentration affect the bargaining power of suppliers?
When there are only a few suppliers that supply a critical product to a large number of buyers, the supplier has an advantage
When is the Design and Development Plan section necessary?
When you are developing a completely new product or service
Where are Gaps in the Market often found?
Where a product or service is needed by a specific group of people but doesn't represent a large enough market to be of interest to mainstream retailers or manufacturers
What question is asked when Selecting the Target Market?
Which specific group of customers have I decided to target?