MANT 303

Apple Inc. is a firm that is proactive, innovative and risk-taking. From this description, we can most accurately conclude that Apple has a high level of:

Entrepreneurial intensity

Pacific Printing LLC is a startup that is working on a new technology for the printing industry. Because the technology is highly proprietary. the company is located in the warehouse district of a large western city. Pacific's founder, Jan Sims, rarely gives interviews and is careful not to divulge much about what the company is doing. Which of the following common myths about entrepreneurs does the behavior of its founder, Jan Sims, dispel?

Entrepreneurs love the spotlight.

Explain entrepreneurship and discuss its importance.

Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control.

Explain the purpose of a balance sheet.

A balance sheet is a snapshot of a company's - Assets - Liability - Owner's equity

Explain the meaning of the term business concept blind spot.

A business concept blind spot prevents a firm from seeing an opportunity that might fit its business model.

Explain the purpose of a business plan.

A business plan is a written narrative that describes what a new business intends to accomplish and how it plans to achieve its goals

Explain the purpose of maintaining an idea bank.

An idea bank is a physical or digital repository of storing ideas

Explain the difference between an opportunity and an idea.

An idea is a thought, an impression, or a notion. An opportunity is an idea that has the qualities of being attractive, durable, timely and is anchored in a product or service that creates value for its buyers or end users. Not all ideas are opportunities

Explain the purpose of an income statement.

An income statement reflects the results of a firm's operations over a specified period time. It records all the revenues and expenses for the given period and shows whether the firm is making a profit or is experiencing a loss

Sarah Thornton is the founder of a company named Extreme Sports Apparel. The company makes apparel products for extreme sports enthusiasts such as rock climbers, triathletes, parasailors, and BMX bikers. Sarah wants her company to pursue a high level of corporate entrepreneurship. To achieve that goal, Sarah's firm should be:

Proactive, innovative, and risk-taking.

A ________ illustrates a firm's positioning strategy relative to its major rivals.

Product attribute map.

Explain why it's important to include separate sections on a firm's industry and its target market in a business plan.

An industry analysis describes the industry a business will enter. The market analysis which is separate section, breaks the industry analysis into segments and zeroes in on the specific segments (or target markets) to which the firm will seek to appeal.

An opportunity has four essential qualities:

Attractive, timely, durable, and anchored in a product, service, or business that creates value for its buyer or end user.

The three primary reasons that people become entrepreneurs and start their own firms are to:

Be their own boss, pursue their own ideas, and realize financial rewards.

Stacey Wills, who is at heart a craftsperson, recently started a firm to manufacture a new innovative food blender. Stacy's desire is to sell her food blender to as many people as possible because she firmly believes in the merits of her product. Stacey's story best describes which of the following characteristics or attributes of a successful entrepreneur?

Product/customer focus.

Describe the purpose of a product/service feasibility analysis and the two primary issues that a proposed business should consider in this area.

Product/service feasibility analysis is an assessment of the overall appeal of the product or service being proposed. The two components of this analysis are - Product desirability - Product demand

Does it make sense? Is it reasonable? Is it something consumers will get excited about? Does it take advantage of an environmental trend, solve a problem. or fill a gap in the marketplace? These are the types of questions asked during the ________ component of a complete feasibility analysis.

Product/service feasibility.

The term "window if opportunity", as discussed in chapter 2, is a metaphor that describes the time period in which a firm can:

Realistically enter a new market.

Bernard O'Sullivan is thinking about starting a firm in the upscale women's fashion industry. To get a full appreciation of the competitive nature of the industry, and how he might position his products, Bernard has spent considerable time looking at industry-related publications as: Hoovers Online; and ABI-Inform, which is a database that provides access to articles covering a wide-variety of business and industry related issues. Bernard is conducting:

Secondary research.

The statement is incorrect regarding the personal characteristics of entrepreneurs.

Several studies show that prior experience in an industry actually blind an entrepreneur in recognizing new opportunities in that same industry.

Provide several suggestions for how entrepreneurial firms can avoid litigation.

Suggestions for how new firms can avoid litigation include: - meeting all contractual obligations - avoiding undercapitalisation - getting everything in writing - Promoting business ethics in the firm

Explain the concept of supply chain management.

Supply chain management refers to the flow of all information, money and material that moves through a product's supply chain. The more efficiently an organisation can manage its supply chain, the more effectively its entire business model will perform.

Andy Sanders owns a sporting goods store that appeals to hunters and fishermen. The market Andy is trying to appeal to is called his:

Target market.

Explain the criteria important to selecting an attorney for a new firm.

The criteria important for selecting an attorney for a new firm are show in table 7.3. Critical issues include selecting an attorney familiar with the start-up process, selecting an attorney who can assist you in raising money, and making certain that the attorney has a track record of completing work on time.

Discuss the changing demographics of entrepreneurs in the United States.

The demographic makeup of those launching entrepreneurial firms is changing in the United States and around the world. There is growing evidence that an increasing number of women, minorities seniors and young people are becoming actively involves in the entrepreneurial process

Explain the importance of having a code of conduct and an ethics training program.

A code of ethics and ethics training programs are two techniques entrepreneurs use to promote high standards of business ethics in their firms. A code of conduct describes the general value system, moral principles and specific ethical rules that govern a firm. An ethics training program provides employees with instructions for how to deal with ethical dilemmas when they occur

Describe the reasons for completing a competitive analysis grid.

A competitive analysis grid is a tool for organising the information a firm collects about its competitors. The grid can help a firm see how it stacks up against its competitors, provide ideas for markets to pursue, and, perhaps most importantly, identify its primary sources of competitive advantage

Explain the purpose of competitor analysis.

A competitor analysis is a detailed analysis of a firm's competition. It helps a firm under-stand the position of its major competitors and the opportunities that are available to obtain a competitive advantage in one or more areas

Identify a business model's two potential fatal flaws.

A complete misread of the customer and utterly unsound economics are the two fatal flaws that can make a business model a failure from the outset

Explain a concept statement and its contents.

A concept statement is a preliminary description of a product idea

Define core competency and describe its importance.

A core competency is something that a firm does particularly well. It is a resource or capability that serves as a source of a firm's competitive advantage over its rivals.

Describe a business model.

A firm's business model is its plan or diagram for how it intends to compete, use its resources, structure relationships, interface with customers and create value to sustain itself on the basis of the products it generates.

Explain the concept of fulfilment and support.

A firm's target market is the limited group of individuals or business that it goes after or tries to appeal to at a point in time

i dont think this answer matches up with the question? Describe how to use library and internet research to generate new business ideas.

A focus group is a gathering of 5 to 10 people who have been selected on the basis of their common characteristics relative to the issue being discussed. One reason to conduct a focus group is to generate ideas that might represent products of business opportunities.

Describe a milestone and how milestones are used in business plans.

A milestone is a significant or noteworthy event in the life of a business. Milestones are used to track progress (i.e. milestones completed) and to identify the most important steps remaining to be completed

Discuss the importance of nondisclosure and noncompete agreements.

A nondisclosure agreement is a promise made by an employee or another party (such as a supplier) not to disclose a company's trade secrets. A noncompete agreement prevents an individual from competing against a former employer for a specific period of time.

Explain the purpose of a statement of cash flows.

A statement of cash flows summarises the changes in a firm's cash position for a specified period of time.

Explain the difference between a summary business plan, a full business plan and an operational business plan.

A summary business plan is 10 to 15 pages and works best for companies in the early stages of development. These companies don't have the information needed for a full business plan but may put together a summary business plan to see if potential investors are interested in their idea A full business plan, typically 25 to 35 pages, spells out a company's operations and plans in much more detail than a summary business plan and is the usual format for a business plan prepared for an investor An operational business plan is usually prepared for an internal audience. It is 40 to 100 pages long and provides a blue print for a company's operations

Provide an overview of the business licenses and business permits that a start-up must obtain before it starts conducting business.

Before a business is launched, a number of licenses and permits are typically needed. They vary by city, country and state well as by type of business, so it's important to study local regulations carefully in most communities, a business needs a license to operate. Along with obtaining the appropriate licenses, some business may need to obtain one or more permits.

Describe the purpose of brainstorming and its use as an idea generator.

Brainstorming is a technique used to quickly generate a larger number of ideas and solutions to problems. One reason to conduct a brainstorming session is to generate ideas that might represent product, service or business opportunities

Entrepreneurial firms:

Bring new products and services to market by creating and seizing opportunities.

Explain business model innovation.

Business model innovation refers to initiatives such as those undertaken by Michael Dell when he established the firm now known as Dell Inc. that revolutionised how products are sold in an industry.

Catherine Smith has just finished writing a business plan for a start up in the medical products industry. She has now reached the point where she needs to develop a plan for how her firm will compete, use its resources, structure its relationships, interface with customers, and create value to sustain itself on the basis of the profits it earns. Catherine needs to establish her firm's:

Business model.

In start up firms, inventory must be purchased, employees must be trained and paid, and advertising must be paid for before cash is generated from sales. This is an example of what motive for seeking funding or financing?

Cash flow challenges.

Explain what a completely new firm bases its forecasts on.

Completely new firms typically base their forecasts in a good faith estimate of sales and on industry averages (based on a percentage of sales) or the experiences of similar start-ups for cost of goods sold and other expenses.

Al Jenkins is in the process of developing an exciting new product in the smartphone industry. He'd like to show a preliminary description of the product to industry experts and prospective customers to solicit their feedback. Al should complete and distribute a(n):

Concept statement.

Jeff Mommer is starting an environmentally friendly lawn and garden service. One thing that Jeff worked hard on is determining how his company will compete in the marketplace. This element of Jeff's business model is referred to as:

Core strategy.

Describe corporate entrepreneurship and its use in established firms.

Corporate entrepreneurship is the conceptualisation of entrepreneurship at the organisational level. Entrepreneurial firms are proactive, innovative and risk taking. In contrast, conservative firms take a more "wait and see" posture, are less innovative and are risk averse.

Andy Dungy owns a company that makes Apple iPod, iPhone, and iPad accessories. He is trying to increase his sales, primarily because he knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is:

Economies of scale.

Explain how entrepreneurial firms differ from salary-substitute and lifestyle firms.

Entrepreneurial Firms are the firms that bring new products and services to market by recognising and seizing opportunities regardless of the resources they currently control. Entrepreneurial firms stress innovation, which is not the case for salary-substitute and lifestyle firms.

Describe how to create a strong ethical culture in an entrepreneurial venture.

Establishing a strong ethical culture in their firms is the single most import thing the founders of an entrepreneurial venture can do. Three important ways to do this are; - Lead by example - Establish a code of conduct - Implement an ethics training program

Explain why most fast-growth entrepreneurial ventures organise as corporations or limited liability companies rather than sole proprietorship or partnerships.

Fast-growth firms tend to organise as corporations or limited liability companies for two main reasons: - To shield the owners from personal liability for the behaviour of the firm - To make it easier to raise capital

Explain what a feasibility analysis is and why it's important.

Feasibility analysis is the process of determining whether a business idea is viable. It is a preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing.

Explain the two functions of the financial management of a firm.

Financial management deals with two activities: - Raising money and managing a company's finances in a way that achieves the highest rate of return

Discuss how financial ratios are used to analysis and interpret a firm's financial statements.

Financial ratios depict relationships between items on a firm's financial statement and are used to discern if a firm is meeting its financial objectives and how it stacks up against its competitors.

Clothing boutiques and specialty shops often start because there is a need for a articular product but large retailers like Wal-Mart and Costco can't sell enough of the item to stock it on their shelves. If a clothing boutique started to sell designer clothes or clothing for hard to fit people because the clothing wasn't being offered by a larger retailer, the best way to describe how that idea was recognized is:

Finding a gap in the marketplace.

Identify the five steps in the creative process.

For an individual, the five steps in the creative process are - Preparation - Incubation - Insight - Evaluation - elaboration

Describe the two primary reasons for writing a business plan.

For most venture the business plan is a duel-purpose document used both inside and outside the firm. Inside the firm is helps the company develop a road map to follow in executing its strategies. Outside the firm it acquaints potential investors and other stakeholders with the business opportunity the firm is pursuing and describes how the business will pursue that opportunity

Discuss the role of forecasts in projecting a firm's future income and expenses

Forecasts are predictions of a firms future sales, expenses, income and capital expenditures. A firm's forecasts provide the basis for its pro forma financial statements.

Explain the difference between historical and pro forma financial statements.

Historical financial statements reflect past performance. Pro forma financial statements are projections for expected performance in future periods

Identify ways in which large firms benefit from the presence of smaller entrepreneurial firms.

In addition to the impact that entrepreneurial firms have on an economy and society, entrepreneurial firms have a positive impact on the effectiveness of larger firms. There are many entrepreneurial firms that have built their entire business models around producing products and services that help larger firms increase their efficiency and effectiveness

Explain the importance of "leading by example" in terms of establishing a strong ethical culture in a firm.

In the context of "leading by example" three keys to building a strong ethical culture in a firm are - Having leaders who intentionally make ethics a part of their daily conversation and decision making - Supervisors who emphasize integrity when working with their direct reports - Peers who encourage each other to act ethically

Explain the purpose of an industry analysis.

Industry analysis is business research that focused on an industry's potential. The knowledge gleaned from this analysis helps a firm decide whether to enter an industry and if it can carve out a position in that industry that will provide it a competitive advantage. Environ-mental trends and business trends are the two main components of "industry trends" that firms should study. Environ-mental trends include economic trends, social trends, technological advances, political and regulatory changes. Business trends include other business-related trends that aren't environmental trends but are important to recognise

Explain the importance of library, internet and gumshoe research.

Industry/ market feasibility analysis is an assessment of the overall appeal of the market for the product or service being proposed. For feasibility analysis, there are two primary issues that a business should consider in this area; - Industry attractiveness - Target market attractiveness

Discuss the importance of a founders' agreement.

It is important to ensure that a venture's founders agree on their relative interests in the venture and their commitment to its future. A founders' (or shareholders) agreement is a written document dealing with issues such as the split of equity between or among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founders will have to stay with the firm for their shares to fully vest.

Brenda Berry is thinking about starting a computer company. After doing some research, she has decided that the computer industry can be divided into the following product categories: handheld computers; laptops; tablet computers; PCs; minicomputers; and mainframes. She is now trying to decide which product category she is most interested in competing in. The process that Brenda is going through is called:

Market segmentation.

Angelica owns a company that makes specialized components for the auto industry. Her most important customer is a company that is growing at a rate of 25% per year. Angelica is working hard to grow her firm because she knows that unless her company continually grows it will not be able to keep pace with the growth of its most important customer. This example illustrates the reason fro growth referred to as:

Need to accommodate the growth of a key customer.

Research in Motion (RIM) is a handheld computer company that focuses specifically on business users that need dependable access to e-mail and the Internet while away from their office. For RIM, this specific type of user within the large business market segment is referred to as its:

Niche market.

Explain what is meant by the term percent-of-sales methods.

Once a firm has completed its sales forecast, it must forecast its costs of sales as well as the other items on its income statement. The most common way to do this is to use the percent-of-sales method, which is a method for expressing each expense item as a percentage of sales.

Explain why it's important to start a new firm when its "window of opportunity" is open.

Once an opportunity is recognised, a window opens, and the market to fill the opportunity grows. At some point, the market matures and becomes saturated with competitors, and the window of opportunity closes

According to the textbook, which is the proper sequence of events in developing successful business ideas?

Opportunity recognition, feasibility analysis, development of a business plan.

Identify four main characteristics of successful entrepreneurs.

Passion for the business, product/customer focus, tenacity despite failure, and execution intelligence are four primary characteristic of successful entrepreneurs.

Identify the five competitive forces that determine industry profitability.

Porter's five forces model includes threat of substitutes, threats of new entrants, rivalry among existing firms, bargaining power of suppliers and bargaining power of buyers

Explain why the executive summary may be the most important section of a business plan.

The executive summary is a quick overview of the entire business plan and provides busy readers with everything they need to know about the distinctive nature of the new venture. In many instances, an investor will ask for a copy of a firm's executive summary and will request a copy of the full business plan only when the executive summary is sufficiently convincing.

Explain the five common myths regarding entrepreneurs.

The five most common myths regarding entrepreneurship are that - Entrepreneurs are born, not made - That entrepreneurs are gamblers - That entrepreneurs are motivated primarily by money - That entrepreneurs should be young and energetic - That entrepreneurs love the spotlight

Identify the five primary industry types and the opportunities they offer.

The five primary industry types and the opportunities they offer are as follows: - Emerging industry/first-mover advantage - fragmented industry/consolidation - mature industry/emphasis on service and process innovation - declining industry/leadership, niche, harvest, divest - global industry/multi-domestic strategy or global strategy

Explain the entrepreneurial process.

The four distinct elements of the entrepreneurial process (figure 1.3) are - deciding to become an entrepreneur, - developing successful business ideas - Moving from an idea to establishing an entrepreneurial firm - Managing and growing an entrepreneurial firm

Identify the four environmental trends that are most instrumental in creating business opportunities.

The four environmental trends that are most instrumental in creating opportunities are - Economic forces - Social forces - Technological advances - Political action and regulatory changes

List the four industry-related questions to ask before pursuing the ideas for a firm.

The four industry-related questions that a firm should ask before entering an industry are the following: - Is the industry a realistic place for a new venture? - If we do enter the industry, can our firm do a better job than the industry as a whole in avoiding or diminishing the threats that suppress industry profitability? - Is there a unique position in the industry that avoids or diminishes the forces that suppress industry profitability? Is there a superior business model that can be put in place that would be hard for industry incumbents to duplicate?

Identify the four main financial objectives of entrepreneurial ventures.

The four main financial objectives of entrepreneurial firms are - Profitability - Liquidity - Efficiency - stability

Identify a business model's four major components.

The four major components for a business model are: - Core strategy - Strategic resources - Partnership networks - Customer interface

Discuss the importance of having a clearly articulates business model.

The main reasons that having a clearly articulated business model is important are as follows - It serves as an ongoing extension of feasibility analysis - It focuses attention on how all the elements of a business fit together - It describes why the network of participants who are needed to make a business idea viable would be willing to work together - It articulates the core logic of a firm to all its stakeholders.

Discuss the differences among sole proprietorships, partnerships, corporations and limited liability companies.

The major differences among sole proprietorships, partnerships, corporations and limited liability companies are shown in table 7.5. These forms of business organisation differ in terms of the number of owners allowed, cost of setting up and maintaining, personal liability of owners, continuity of the business methods of taxation, degree of management control, ease of raising capital and ease of liquidating investments

Explain why the "management team and company structure" section of a business plan is particularly important.

The management team and company structure section of a business plan is critical. Many investors and others who read business plans look first at the executive summary and then go directly to the management team section to assess the strength of the people starting the firm.

Identify the non-traditional barriers to entry that are especially associated with entrepreneurial firms.

The non-traditional barriers to entry that are particularly well suited to entrepreneurial firms include strength of the management team, first-mover advantage, passion of the management team and employees, a unique business model, special internet domain name, and inventing a new approach in an exemplary manner.

Detail the parts of an oral presentation of a business plan.

The oral presentation of a business plan typically consists of 15 to 20 minutes of formal remarks, accompanied by approximately 12 PowerPoint slides, and 30 minutes of questions and answers. The presentation should be smooth and well-rehearsed. The slides should be sharp and not cluttered with material.

List the personal characteristics that make some people better at recognising business opportunities than others.

The personal characteristics researchers have identified that tend to make some people better at recognising business opportunities better than others are - Prior experience - Cognitive factors - Social networks - creativity

Discuss the proper time to complete a feasibility analysis when developing an entrepreneurial venture.

The proper time to conduct a feasibility analysis is early in thinking through the prospects for a new business idea. It follows opportunity recognition but comes before the development of a business plan.

Describe the purpose of a "sources and uses of funds" statement and an "assumption sheet".

The sources and uses of funds statement is a document that lays out specifically how much money a firm needs (if it is raising money), where the money will come from, and what it will be used for. An assumptions sheet is an explanation of the most critical assumptions that a business's financial analysis is based on.

Explain the role of "barriers to entry" in creating disincentives for firms to enter an industry.

The threat of new entrants is one of the five forces that determine industry profitability. Firms try to keep other firms from entering their industries by erecting barriers to entry. A barrier to entry is a condition that creates a disincentive for a new firm to enter an industry. Economies of scales, product differentiation, capital requirements, cost advantages independent of size, access to distribution channels, and government and legal barriers are examples of barriers to entry.

Describe the three general approaches entrepreneurs use to identify opportunities.

The three general approaches entrepreneurs use to identify an opportunity are - Observing trends - Solving a problem - Finding gaps in the marketplace

Identify the three groups of competitors a new firms will face.

The three groups of competitors new firm faces are: - Direct competitors - Indirect competitors - Future competitors

Describe the three steps for protecting ideas from being lost or stolen.

The three main steps that can be taken to protect ideas from being lost or stolen are putting the idea into tangible form by such means as - entering it in a logbook or saving it in a computer file - securing the idea - avoiding making an inadvertent or voluntary disclosure of an idea in a manner that forfeits the right to claim exclusive rights to it if it falls into someone else's hands

Discuss three main reason people decide to become entrepreneurs.

The three primary reasons that people decide to become entrepreneurs and start their own firms are as follows: - to be their own boss - realise financial rewards - pursue their own ideas

Discuss the concept of the value chain.

The value chain shows how a product moved from the raw-material stage to the final consumer. The value chain helps a firm identify opportunities to enhance its competitive strategies and to recognise new business opportunities.

Describe ways a firm can ethically obtain information about its competitors.

There are a number of ways a firm can ethically obtain information about its competitors, including - attending conferences and trade shows - purchasing competitors' products - studying competitors web sites - setting up google email alerts - reading industry related books, magazines and web sites - talking to customers about what motivated them to buy your product as opposed to you competitors product or vice versa

Describe who reads a business plan and what they're looking for.

There are primary audiences for a firm's business plan - A firm's employees - Investors and other external stakeholders

Discuss the impact of entrepreneurial firms on economies and societies.

There is strong evidence that entrepreneurial behaviour has a significant impact on economic stability and strength. The areas in which entrepreneurial firms contribute the most are innovation and job creation. Entrepreneurial behaviour also has a dramatic impact on society. It's easy to think of new products and services that have helped make our lives easier, that have made us more productive at work, that have improved our health and that have entertained us in new ways

Describe the purpose of a buying intentions survey and how it's administered.

Two techniques for determining the likely demand for a product or service are administering a buying intentions survey and conducting library, internet and gumshoe research

Michael Jones owns a Web design firm. The way Michael prices his products is to determine what consumers are willing to pay, and then to back off a bit to provide a cushion. The method that Michael uses to determine his prices is called:

Value-based pricing.