MGMT 638 Exam 1

3 types of difficulties as far as why new ventures fail:

1.) Product/Market Problems (poor timing, product design problems, inappropriate distribution strategy, unclear business definition, over-reliance on one customer) 2.) Financial Difficulties (initial undercapitalization, assuming debt too early, venture capital relationship problems) 3.) Managerial Problems (concept of a team approach, human resource problems)

When performing feasibility analysis, you want to make sure that you have feasibility in the following 4 areas:

1.) Product/Service feasibility 2.) Industry/Market feasibility 3.) Organizational feasibility 4.) Financial feasibility

Key opportunities for Fernando of Crystal Lagoons:

1.) Provide a safe location for families to enjoy swimming and watersports 2.) Overcome key challenges to keeping pools clear and clean

3 ways to develop your creativity:

1.) Recognize relationships (look for different or unorthodox relationships among the elements and people around you) 2.) Develop a functional perspective (view things and people in terms of how they can satisfy your needs and help complete a project) 3.) Use your brains

Key Risks involved in Hotel Vertu:

1.) Requires significant up-front investment for renovations 2.) Investors may have undue influence over decisions 3.) Success in the hotel industry requires high occupancy rate, which are uncertain prior to launch

4 types of trends:

1.) Societal 2.) Technology 3.) Economic 4.) Government

3 Categories of Entrepreneurial Organizations:

1.) Stars: high performing companies that had successfully integrated innovation and creativity into their daily business practices 2.) Seekers: display a number of appropriate innovation practices, but came up short in terms of innovation performance and company-side commitment to innovation 3.) Spectators: acknowledge the importance of innovation but provide little support for it

Ways to develop Left-hemisphere skills:

1.) Step-by-step planning of your work and life activities 2.) Reading ancient, medieval, and scholastic philosophy, legal cases, and books on logic 3.) Establishing timetables for all of your activities 4.) Using and working with a computer program 5.) Detailed fantasizing and visualizing things and situations in the future 6.) Drawing faces, caricatures, and landscapes

Key Opportunities of Hotel Vertu:

1.) Taps into a growing demographic trend of younger customers who seek a personalized experience 2.) Boutique hotels typically offer higher margins 3.) Savannah, GA seems to be a popular location

Value Creation of Hotel Vertu:

1.) The boutique hotel offers an experience and lifestyle image to customers, beyond basic lodging: - Design and amenities (like a cool restaurant) - Focus on upscale, young clientele - Avoids chain hotel features such as expensive conference space, large size, elaborate lobbies, etc. 2.) Financial value hinges on higher room rates and occupancy driven by increased focus on extra, unique amenities

Two of the most important factors to consider when it comes to management capability:

1.) The passion that the solo entrepreneur or the founding team has for the business idea. 2.) The extent to which the solo entrepreneur or the founding team understands the markets in which the firm will participate.

Ways to develop Right-hemisphere skills:

1.) Using metaphors and analogies to describe things and people in your conversations and writing 2.) Taking off your watch when you are not working 3.) Suspending your initial judgment of ideas, new acquaintances, movies, TV programs, and so on 4.) Recording your hunches, feelings, and intuitions and calculating their accuracy

The number of new-venture start-ups has been consistently high at reports of more than ____________ new firms in the United States every year since 2010.

400,000

The U.S. Patent Office currently receives more than __________ patent applications per year..

500,000

Financial Feasibility

A quick financial assessment is usually sufficient. The most important issues to consider are: (1) total start-up cash needed, (2) financial performance of similar businesses, and (3) overall attractiveness of the proposed venture.

Characteristics of a creative climate:

A trustful management that does not overcontrol employees; open channels of communication among all business members; considerable contact and communication with outsiders, a large variety of personality types, a willingness to accept change, little fear of negative consequences for making a mistake, the selection and promotion of employees on the basis of merit; sufficient resources for accomplishing goals

Role failure:

AGAINST the firm; examples include superficial performance appraisal, not confronting expense account fraud, palming off a poor performer with inflated praise

Nonrole:

AGAINST the firm; examples include: expense account fraud, embezzlement, stealing supplies

Serial entrepreneurs:

ALWAYS HIGH personal financial risk; either HIGH or LOW level of profit motive, so they are risk accepting and either profit seeking (high level of profit motive) or activity seeking (low level of profit motive)

Societal trends:

Aging, demographics, health and fitness growth, senior living

Synthesis:

Combination of existing concepts and factors (Fed Ex, Starbucks)

Entrepreneurial Mind-Set

Describes the most common characteristics associated with successful entrepreneurs as well as the elements associated with the "dark side" of entrepreneurship.

Extension:

New use or different application of an already existing product, service or process (Ray Croc with McDonald's, Mark Zuckerberg with Facebook)

Top 3 reasons that startups fail:

No market need; ran out of cash; not the right team

Right hemisphere of the brain:

Nonverbal, synthesizing, seeing analogies, non-rational, spatial, intuitive, imaginative

What are the self-destructive characteristics associated with an entrepreneurial ego?

Overbearing need for control, sense of distrust, overriding desire for success, unrealistic externalized optimism

Typical Creative Process:

Phase 1: Background or knowledge accumulation Phase 2: The incubation process Phase 3: The idea experience Phase 4: Evaluation and implementation

Social Cognition Theory

Posits that knowledge structures (mental models of cognitions) can be ordered to optimize personal effectiveness within given situations.

How did Crystal Lagoons add value?

Size/scale of lagoons that could be built; clarity of the water; sustainability and efficiency in terms of energy and chemical use

Main risk for Fernando from Crystal Lagoons:

Starting in the Chilean coast, where other investors/competitors were not willing to operate

5 areas of entrepreneurial grid (which combines degree of entrepreneurship/innovativeness with frequency):

1.) Continuous/incremental (low degree, high frequency) 2.) Periodic/Incremental (low degree, low frequency) 3.) Dynamic (middle degree, middle frequency) 4.) Revolutionary (high degree, high frequency) 5.) Periodic/Discontinuous (high degree, low frequency)

Key Question for Opportunities:

1.) Customer: What customer group is the focus of the opportunity? What customer need is being addressed? How will it be addressed? 2.) Connection: How will the entrepreneur identify and reach specific customers? In other words, what channel of distribution will be used? 3.) Commitment: Is the entrepreneur/team willing and able to develop the opportunity into a business?

Four Types of Innovation:

1.) Discontinuous (high risk) 2.) Dynamically continuous (low risk) 3.) Continuous (low risk) 4.) Imitation (high risk)

A code of ethics provides a clear understanding of the need for:

1.) Ethical administrative decision-making 2.) Ethical behavior of employees 3.) Explicit rewards and punishments based on ethical behavior

Sources of Innovative Ideas:

1.) External and internal environments alert entrepreneurs to opportunities 2.) Trends signal shifts in current paradigm (or thinking) of major population 3.) Valuable insights constitute source of potential entrepreneurial ideas.

3 items to measure proactiveness:

1.) Following versus leading competitors in innovation 2.) Favoring the tried and true versus emphasizing growth, innovation, and development 3.) Trying to cooperate with competitors versus trying to undo them

Reasons for management to adhere to a high moral code:

1.) Good business practices have a corrosive effect not only on the firm itself, but on free markets and free trade which are fundamental to the survival of the free enterprise system 2.) Improving the moral climate of the firm will eventually win back the public's confidence in the firm

Reasons unethical behaviors occur:

1.) Greed 2.) Distinctions between activities at work and activities at home 3.) Lack of a foundation in ethics 4.) Survival (bottom-line thinking) 5.) A reliance on other social institutions to convey and reinforce ethics

Main Resources of Hotel Vertu:

1.) Human Capital - business knowledge and training from the founders' MBA education, experience in the industry 2.) Financial Resources - backing by the co-founder's father and his group of invetors 3.) Location advantages - Option to purchase a unique property in trendy Savannah, with limited competition due to zoning restrictions

7 Types of Creativity:

1.) Idea 2.) Material 3.) Organization 4.) Relationship 5.) Event 6.) Inner 7.) Spontaneous

The 5 major misconceptions of innovation:

1.) Innovation is planned and predictable. 2.) Technical specifications must be thoroughly prepared. 3.) Innovation relies on dreams and blue-sky ideas. 4.) Big projects will develop better innovations than smaller ones. 5.) Technology is the driving force of innovative success.

3 Dimensions of an entrepreneurial organization:

1.) Innovativeness 2.) Risk-taking 3.) Proactiveness

The 4 Major types of innovation:

1.) Invention 2.) Extension 3.) Duplication 4.) Synthesis

What are the two primary issues to consider in the area of organizational feasibility?

1.) Management capabilities 2.) Resource sufficiency

The innovation process:

1.) Most innovations result from a conscious, purposeful search for new opportunities 2.) Uses both the right and left side of the brain 3.) Look at figures and people 4.) Successful innovations are simple and focused toward a clear and carefully designed application 5.) During the process, they create new customers and markets

Top resources of Fernando in Crystal Lagoons:

1.) PERSISTENCE! He overcame doubts from banks, other businesses, and even his own family members 2.) Problem-solving skills: He created intermediate solutions such as adding conventional swimming pools to please owners. He also recovered from unexpected degradation of plastic nylon at the bottom of the pool.

When it comes to the knowledge and learning process, what 5 things lead to distilling ideas into opportunities?

1.) Personal work experience, experience, and education 2.) General industry knowledge 3.) Prior market knowledge 4.) Prior customer understanding 5.) Specific interest knowledge

The home-run strategy involves ______ risk and _______ innovativeness.

high; high

Economic trends:

higher disposable incomes, dual wage-earner families, performance pressures

Missing the boat

the firm failing to undertake a venture that would succeed

Sinking the boat

the firm undertaking a venture that fails

definition of entrepreneurship

the process of creating VALUE by bringing together a unique combination of RESOURCES to exploit an OPPORTUNITY

Invention:

totally new product, service, or process (Examples include: Wright brothers with the airplane, Thomas Edison with the light bulb, Alexander Graham Bell with the telephone)

The right brain helps us...

understand analogies, imagine things, and synthesize information

The _______ __________ of an owner/entrepreneur is the key to establishing an ethical organization.

value system

Left hemisphere of the brain:

verbal, analytical, abstract, rational, logical, linear

The left brain helps us...

analyze, verbalize, and use rational approaches to problem solving

Some characteristics often attributed to entrepreneurs:

confidence, energy, diligence, responsibility, intelligence, resourcefulness, flexibility, commitment, egotism, courage, etc.

Duplication:

creative replication of an existing concept (Wal-Mart within department stores, Gateway for personal computers, Pizza Hut for a pizza parlor)

Ethical codes of conduct:

-A statement of ethical practices or guidelines to which an enterprise adheres -Becoming more prevalent in industry -Proving to be more meaningful in terms of external legal and social development -More comprehensive in terms of coverage -Easier to implement in terms of the administrative procedures used to enforce them

"Innovator" approach to creative problem solving:

-Approaches tasks from unusual angles. -Discovers problems and avenues of solutions -Questions basic assumptions related to current practices -Has little regard for means; is more interested in ends -Has little tolerance for routine work -Has little or no need for consensus; often is insensitive to others

Type A Personalities:

-Chronic and severe sense of time urgency -Constant involvement in multiple projects subject to deadlines -Neglect of all aspects of life except work -A tendency to take on excessive responsibility combined with the feeling that "only I am capable of taking care of this matter" -Explosiveness of speech and a tendency to speak faster than most people

Entrepreneurial imagination and creativity:

-Creative thinking is blended with imagination in a logical process. -Develop an ability to see, recognize, and create opportunity where others find only problems.

Some characteristics of entrepreneurial mind-set:

-Determination and perseverance -Drive to achieve -opportunity orientation -initiative and responsibility -persistent problem solving -seeking feedback -internal locus of control -tolerance for ambiguity -calculated risk taking -high energy level -creativity and innovativeness -vision -passion -independence -team building

Impediments to creativity:

-Either/or thinking (concern for certainty) -Security hunting (concern for risk) -Stereotyping (abstracting reality) -Probability thinking (seeking predictable results)

"Adaptor" approach to creative problem solving:

-Employs a disciplined, precise, methodical approach -Is concerned with solving, rather that finding problems -Attempts to refine current practices -Tends to be means oriented -Is capable of extended detail work -Is sensitive to group cohesion and cooperation

Read it yo

-Entrepreneurial ventures are risky and may fail for a variety of reasons related to products/markets, finances, or management -Successful pursuit of an opportunity requires careful consideration of customer needs and benefits -Feasibility analysis helps uncover the path to success or (importantly) quickly derail opportunities that are not likely to succeed.

Read dis:

-Entrepreneurs draw from a wide variety of sources in finding new innovations -The creative process combines logic and imagination (left-brain, right-brain) to generate new entrepreneurial ideas -Innovation involves market application of new ideas, building on new inventions, extending or duplicating existing ideas, or synthesizing from existing components

Read these:

-Entrepreneurs have certain unique ways of thinking, viewing the world, and reacting to challenges and opportunities -Accepting risk, having high self-motivation, and perseverance in the face of failure are characteristics of entrepreneurs -Excessive need for control and achievement can lead to a "dark side" of entrepreneurship -As in all areas of business, ethical behavior is key in pursuing entrepreneurship

Read this about Crystal Lagoons:

-Fernando Fischmann demonstrates key aspects of the entrepreneurial mindset: 1.) Recognize opportunities missed by others 2.) Taking risks 3.) Having tenacity to follow through -The case introduces ideas of creativity and innovation - seeking novel, beneficial solutions to water treatment -As suppliers of technology, Crystal Lagoons may have limited control over partners' ethical behavior

Benefits of feasibility analysis:

-Getting the product right the first time -A beta (or early adopter) community emerges -Avoiding any obvious flaws in product or service design -Using time and capital more efficiently -Gaining insight into additional product and service offerings

Who are Entrepreneurs?

-Independent individuals who are intensely committed and determined to persevere, who work very hard. -They are confident optimists who strive for integrity. -They burn with the competitive desire to excel and use failure as a learning tool.

Ethical rationalizations used to justify questionable conduct involve believing that the activity:

-Is not "really" illegal or immoral -Is in the individual's or the firm's best interest -Will never be found out -Helps the firm so the firm will condone it.

Pitfalls in selecting new ventures:

-Lack of objective evaluation -No real insight into the market -Inadequate understanding of technical requirements -Poor financial understanding -Lack of venture uniqueness -Ignorance of legal issues

Read et

-Organizations vary in their levels of entrepreneurship based on innovativeness, risk-taking, and proactiveness -Risk and innovativeness have an important relationship in determining the firm's type of entrepreneurship and chances of success -Some organizations adopt structures and practices that allow them to consistently integrate innovation in their activities -The entrepreneurial grid provides a strategic tool to analyze leaders and their firms in terms of degree and frequency of entrepreneurship

Entrepreneurial Ethics:

-Provides the basic rules or parameters for conducting any activity in an "acceptable" manner -Represents a set of principles prescribing a behavioral code of what is good and right or bad and wrong -Defines "situational" moral duty and obligations

Sources of ethical dilemmas:

-pressure from inside and outside interests, changes in societal values, mores, and norms

Key traits of entrepreneurs:

-recognize opportunities where others see chaos, contradiction, or confusion -are aggressive catalysts for change within the marketplace -challenge the unknown and continuously create breakthroughs for the future

Entrepreneurship is more than the creation of a business, it is a MINDSET. It involves:

-seeking opportunities -taking risks beyond security -having the tenacity to push an idea through to reality

Innovation is...

-the process by which entrepreneurs convert opportunities (ideas) into marketable solutions -A combination of the vision to create a good idea and the perseverance and dedication to remain with the concept through implementation -a key function in the entrepreneurial process -the specific function of entrepreneurship

What are the 4 types of risk associated with the dark side of entrepreneurship?

1) Financial Risk 2) Career Risk: loss of employment security 3.) Family and Social Risk: competing commitments of work and family 4.) Psychic Risk: Psychological impact of failure on the well-being of entrepreneurs

What to consider when thinking of entrepreneurship cases:

1) Opportunity: What customer group is the focus of the opportunity? What customer NEED is being addressed? How will it be addressed? 2.) Resources: Financial, technological, process, market, social capital, etc. 3.) Value Creation: What value will you add for stakeholders? For investors, customers, employees, suppliers/retailers, society?

An opportunity has 4 essential qualities:

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

Role distortion:

FOR the firm; examples include bribery, price fixing, and manipulating suppliers

Role assertion:

FOR the firm; examples include investing in unethically governed countries, using nuclear technology for energy generation; not withdrawing product line in fact of initial allegations of inadequate safety

Some characteristics of "star" organizations:

Have CEOs that are heavily involved in fostering innovation; defining innovation as critical to long-term company success; attaching great importance to the concept of managing change; having the words "innovation" and "creativity" in their mission statements; creating budgets allocated exclusively to innovation; providing rewards to creative/innovative individuals

Key Question of the Course:

How do organizations create sustained competitive advantage while identifying and pursuing new opportunities?

Government trends:

Increased regulations, petroleum prices, terrorism

What is organizational feasibility?

It is concerned with determining whether the business itself has sufficient skills and resources to bring a particular product or service idea to market successfully.

Lifestyle Entrepreneurs:

LOW personal financial risk, HIGH level of profit motive, risk avoiding, and profit seeking

User Entrepreneurs:

LOW personal financial risk; LOW level of profit motive; risk avoiding and activity seeking

Technology trends:

Mobile (cell phone), technology, e-commerce, internet advances

Entrepreneurial Cognition

The knowledge structures that people use to make assessments, judgments, or decisions involving opportunity evaluation, venture creation, and growth.

Cognition

The mental functions, processes (thoughts), and states of intelligent humans-- attention, remembering, producing and understanding language, solving problems, and making decisions

Resource Sufficiency:

This is when you assess whether an entrepreneur has sufficient resources to launch the proposed venture. This focus should be on NON-financial resources. To test resource sufficiency, a firm should list 6-12 critical non-financial resources that will be needed to move the business idea forward successfully. If critical resources are not available in certain areas, it may be impractical to proceed.

When you want to decide if a company is being innovative, ask yourself:

To what extent is the company doing things that are novel, unique, or different?

The dark side of entrepreneurship involves an entrepreneur's confrontation with _______.

risk

If you have a high level of personal financial risk, you are usually:

risk accepting

If you have a low level of personal financial risk, you are usually:

risk avoiding