Entr 421 midterm

Which one of the following is not a component of the Value Proposition Canvas? a. Products/Services b. Pain Relievers c. Gain Creators d. Revenue Streams

revenue streams

What do entrepreneurs do?

seize opportunities, marshal resources, commit incessant energy to their venture, possess a growth orientation, add value to the customers, build an organization

What is the definition of entrepreneurship?

"The process of creating or seizing an opportunity in order to create new value out of the given resources".

What are the percentages of sources of business ideas?

71% replicated or modified an idea encountered through previous employment, 20% discovered coincidentally, 5% developed an app, 4% discovered through systematic search for opportunities

Are all entrepreneurs college dropouts?

95% of entrepreneurs had earned their bachelor's degrees, 47% had more advanced degrees.

What are the components of the VPC?

Customer Profile: customer jobs, customer pains, customer gains Value Map: products/services, pain relievers, gain creators

What is customer development?

Customer development is a systematic process for iterating from an initial business model to a business model that works before running out of resources.

What questions should you and should you not ask potential customers?

Founders articulate their hypotheses about the business model and run experiments to test problem and solution in front of customers Don't: "Wouldn't your life be better if you had a concept X?" Don't: "Don't you think my product/service idea is better than what exists?" Do: "What would you think of an alternative product/service that solves this problem in a different way?" Interviews with open ended questions, market research

Which one of the following is not an aspect of novelty of business opportunities? a. Technology b. Market c. Price d. Business Model

Price

Which one of the below is an example of recurring revenues? a. Car purchasing b. Grocery store shopping c. Car leasing d. None of the above

Car leasing

What are "spaced-out" ideas?

Crazy, laughable, whacky, supernatural, magical, nonsensical, absurd, ludicrous

Which one of the following would be an example of an emotional customer job for a value proposition canvas? a. Feeling safe b. Trying to look good c. Gaining power d. Performing a task

Feeling safe

What are Grounded ideas?

Safe, incremental, obvious, imitable, plain, predictable

What is the startup stage?

Venture organized, developed and an initial revenue model put in place. Typically 0.5 years before market entry to 0.5 years after market entry. Revenue generation begins at this stage (at "time zero")

What are the novelty components?

What is innovative? What is unique? novelty of market, novelty of the business model, novelty of technology

Which one of the following would be a trigger question for a customer pain in a value proposition canvas? a. What do your customers dream about? b. How does your customer want to feel? c. How do you produce savings? d. What risks do your customers fear?

What risks do your customers fear?

Entrepreneurial Motivation

personal reasons, economic reasons

What is value?

the quality of a product relative to its price

What is invention?

A novel device, method, product, process or technique. The creation of a new technical idea and the physical means to accomplish or embody the idea. The creation of a product or introduction of a process for the first time.

What is entrepreneurship?

An act of innovation, creating something of value from nothing, the creation of a new enterprise, the creation of new organizations

Why is it challenging to evaluate the profit potential of a business opportunity? a. Because of uncertainty b. Because of entrepreneurial skills c. Because of investment activities d. Because of the differences between individual and corporate tax codes

Because of uncertainty?

Which one of the following is a description of customer gains in a value proposition canvas? a. Negative emotions, undesired costs and situations and risks that you are trying to address b. Benefits your customer expects, desires or would be surprised by c. How you alleviate negative emotions and undesired costs d. How you create customer benefits

Benefits your customer expects, desires or would be surprised by

Which one of the following is the most general and overarching definition of a business opportunity? a. Business concept that will likely result in entrepreneurial profit. b. Business concept that will limit the entrepreneurial loss. c. Business concept that will increase competition. d. Business concept that will likely become global.

Business concept that will likely result in entrepreneurial profit

What is business opportunity?

Business concept that, if implemented, will result in entrepreneurial profit

Which one of the following explains the difference between a business model and a business plan? a. Business plan is a very detailed document with financial projections, business model is much less detailed b. Business plan accounts for competition, business model does not c. Business model accounts for revenue generation mechanisms, business plan does not d. Business plan explains customer relationships, business model does not

Business plan is a very detailed document with financial projections, business model is much less detailed

What is indirect competition?

Businesses that do not offer the same product/ service, but they could satisfy the same customer need.

Which one of the following is NOT a part of the business model canvas? a. Key partnerships b. Competition c. Revenue streams d. Customer segments

Competition

Which one of the following defines invention? a. Any idea that is patentable b. Translation of knowledge into economic growth and social well-being by satisfying a specific market need c. Creation or introduction of a novel device, method, product, process or technique for the first time d. Creation of value to customer by responding to specific customer jobs, pains and gains

Creation or introduction of a novel device, method, product, process or technique for the first time

There are many different definitions of entrepreneurship. Which characteristics do they all mention?

Creativity

What are the 4 major steps of customer development?

Customer discovery, customer validation, customer creation, company building

What are the 5 stages of the successful Venture Life Cycle?

Development stage, startup stage, survival stage, rapid-growth stage, early-maturity stage

Who are earlyvangelists? a. Early adopters who buy a startup's unfinished and untested products b. Early investors who provide the initial funding to a startup to launch products c. First management team who leads the startup thorough the process of new product introductions d. The entrepreneurial team

Early adopters who buy a startup's unfinished and untested products

How would one describe earlyvangelists?

Early adopters who buy a startup's unfinished and untested products. They recognize their problems and the value solutions to solve their real problems. They are the most important customer segment for a startup. They want to help your startup and want you to be successful

What is creative destruction?

Entrepreneurship moves market away from the equilibrium

What is entrepreneurial discovery?

Entrepreneurship moves market towards the equilibrium

Which one of the following describes business model? a. It is the quality of a product relative to its competitors. b. It is the quality of a business relative to its expenses. c. It is a promise of value to be delivered to, acknowledged by and enjoyed by a customer group d. It is the mechanism by which a business intends to generate revenue and profits

It is the mechanism by which a business intends to generate revenue and profits

What are the components of the business model?

Key Partnerships, key activities, key resources, value proposition, customer relationships, channels, customer segments, cost structure, revenue streams

Which one of the following is a feature of the secondary target audience of a service? a. Most frequent and loyal customers b. Less frequent customers that are somewhat interested in the product c. Occasional customers d. None of the above

Less frequent customers that are somewhat interested in the product

Are all entrepreneurs already rich before becoming entrepreneurs?

Less than 1% come from extremely rich or extremely poor family backgrounds.

Which one of the following is not a mandatory component of a business model? a. Value chain structure b. Value proposition c. Management structure d. Revenue generation

Management structure

Which one of the following myths about entrepreneurs is often true? a. Entrepreneurs are young. b. Entrepreneurs are college dropouts. c. Entrepreneurs were already rich before becoming entrepreneurs. d. None of the above

None of the above

Entrepreneurial profit is a function of _________? a. Novelty b. Cost c. Customer base d. Amount of investments

Novelty?

Think about the GrubHub case we discussed in class. At the customer discovery stage of GrubHub, which one of the following would have been a bad question to ask to the potential customers? a. What would you think of an alternative food delivery method that allows you to see menus for different restaurants that deliver to your address? b. Ordering on the phone is the worst and online ordering is the best, right? c. Don't you think that online ordering is a much better alternative? d. What would you think of a food delivery method that doesn't require you to use your phone?

Ordering on the phone is the worst and online ordering is the best, right?

Which criterion is NOT included in the opportunity evaluation checklist? a. Market growth b. Competitive intensity c. Uncertainty d. Risk

Risk

Which one of the following businesses is an example of a two-sided platform business? a. The New York Times b. Xerox c. Gillette d. None of the above

The New York Times

Are all entrepreneurs young?

The distribution of entrepreneurship is independent of age. Median = 39

Which one of the following is a limitation of Porter's five forces model? a. Competition and cooperation are modeled simultaneously. b. The industry is modeled as a zero-sum game. c. The symmetries between competitors and complementors are considered. d. None of the above.

The industry is modeled as a zero-sum game

What is innovation?

The process that translates knowledge into economic growth and social well-being. It addresses and satisfies a specific market need. Brings the invention idea to the market.

What are some invention examples?

The secret coco-cola formula, Bluetooth, MP3 music format

Is entrepreneurship gender biased?

The share of men owned firms in total entrepreneurial activity is 66%.

Which of the following competitive forces DOES NOT lead to diminishing profits within an industry? a. Threat of new entrants b. Threat of exits c. Power of suppliers d. Power of buyers

Threat of exits

Which one of the below is not considered a key intellectual resource for a firm? a. Patents b. Trade secrets c. Customer lists d. Distribution networks

Trade secrets

Which one of the following defines innovation? a. Any idea that is patentable b. Translation of knowledge into economic growth and social well-being by satisfying a specific market need c. Creation or introduction of a novel device, method, product, process or technique for the first time d. Creation of value to customer by responding to specific customer jobs, pains and gains

Translation of knowledge into economic growth and social well being by satisfying a specific market need

Which of the following is NOT an innovation by itself? a. Wheel b. Ford Mustang c. Assembly line production process d. PayPal

Wheel

Which one of the below would be an example of a "spaced out" idea, compared to the other three? a. Book recommendation app/website b. Keychain with a location tracker c. Wireless phone charge transfer d. Online food ordering

Wireless phone charge transfer?

Which one of the following is the most common source of business ideas? a. An idea encountered through previous employment b. Coincidental discovery c. Systematic search d. Technological developments

an idea encountered through previous employment

Which one of the following is NOT a component of the value proposition canvas? a. Customer Gains b. Customer Pains c. Competition d. Products and Services

competition

What are some innovation examples?

iPhone, Google revenue model, The ford assembly line production system, Amazon's logistics chain, Walmart store design

Which one of the following is NOT a component of value? a. Quality b. Competitors c. Customers d. Profit margins

profit margins

What are the components of value?

quality, competitors, customers

Which one of the following is the definition of indirect competition? a. Businesses that offer the exact same product and compete for the same market b. Businesses that do not offer the same product, but still satisfy the same customer need c. Businesses from different industries that satisfy a similar customer need d. None of the above

Businesses that do not offer the same product, but still satisfy the customer need

Which one of the following is not an example of market novelty? a. Taking an existing product from the US market and bringing it to China b. Creating a new product that creates its own customer base c. Repurposing an existing product to create a niche customer base d. Buying an existing product online and selling it in a brick-and-mortar store

Buying an existing product online and selling it in a brick-and-mortar store?

Which one of the following is not a major step of the customer development process? a. Customer discovery b. Customer validation c. Customer valuation d. Customer creation

Customer valuation

Which one of the following defines Schumpeter's creative destruction concept? a. Entrepreneurs move the market away from equilibrium by creating new combinations that generate surplus value. b. Entrepreneurs move the market towards the equilibrium by exploiting opportunities that are waiting to be noticed. c. Entrepreneurs create value by marking up prices of existing products. d. None of the above

Entrepreneurs move the market away from equilibrium by creating new combinations that generate surplus value

What are Blue Sky ideas?

Forward-looking, novel, different, unique, exciting, risky, fresh, progressive, thought-provoking

Which one of the following would be a trigger question for a social customer job in a value proposition canvas? a. How does your customer want to be perceived by others? b. How does your customer want to feel? c. What tasks are your customers trying to perform in their personal life? d. What is the one thing that your customer couldn't live without accomplishing?

How does your customer want to be perceived by others?

What is the rapid growth stage

Period of rapid revenue and cash flow. Cash flows from operations to grow much more quickly than cash outflows. Large appreciation in the venture's value. Often occurs within years 1.5 to 4.5. Not every venture can proceed from survival to rapid growth. Successful ventures have substantial gains in the market, taken from less successful, struggling ventures. Depends on the overall industry/market growth. Benefits of economies of scale in production and distribution.

What is the survival stage?

Period when revenues start to grow and help pay some (but not all) of the expenses. Usually 0.5 years to 1.5 years after market entry (very dependent on industry). Gap between revenue and expenses covered by borrowing or by allowing others to own a part of the venture. Lenders or investors to provide financing only if they expect positive and large enough cash flows in the near future. Ventures to have serious concerns about their financial impression on outsiders. Formal financial statements and planning to begin.

What is the early maturity stage?

Period when the growth of revenue and cash flow continue, but at a slower rate than in the rapid-growth stage. Venture value may increase, but at much slower rates. Most venture value has been created and recognized (during rapid-growth stage). Usually around years 4 and 5. Decisions to exit venture through a sale or merger.

Which one of the following defines indirect channels for a customer segment? a. Product is made available to customer by the manufacturer b. Product is sold to an independent distributor, who then sells it to customer c. Product is sold at an auction d. None of the above

Product is sold to an independent distributor, who then sells it to customer

What is the development stage?

Progressing from an idea to a promising business opportunity, usually 1.5 years to 0.5 years prior to market entry, time frame varies for different industries (e-commerce vs manufacturing)

Which one of the following describes comparative value proposition? a. Quality of a product in multiple dimensions, compared with the best of the rest b. Quality of a product relative to its monetary price c. Quality of a product based on its switching costs d. None of the above

Quality of a product in multiple dimensions, compared with the best of the rest

What is in the opportunity evaluation checklist?

Scale from poor to excellent. Novelty/uniqueness, Profit potential (ROI), Payback period, Capital intensity, Resource dependency (non monetary), Competitive advantage, Entry/exit barriers, Market growth, Niche focus/competitive intensity, uncertainty

What is the Schumpeterian view of entrepreneurship?

individual entrepreneurs are the central actors for economic development. Through the process of creative destruction, independent entrepreneurs create new economic combinations that enhance productivity growth and raise living standards. Entrepreneurial profits result from organizing "the relationship between factors of production and market opportunities in ways that create value that would not otherwise have been generated". Individuals are less likely to create new combinations that generate surplus value if they are agents in professionally managed organizations than if they are independent entrepreneurs.

What is secondary target audience?

interested in the product, less frequent customers

What are the 6 components of a business model?

value proposition, market segment, value chain structure, revenue generation and margins, position in value network, competitive strategy