Entrepreneurship Midterm

How many entrepreneurs are there in the US?

15 million

what percentage of 15-25 years old have an interest in starting a business? How many of them actually do something about it?

56%; 10%

_____________________ refers to creative strategies designers utilize during the process of designing.[1] Design thinking is also an approach that can be used to consider issues, with a means to help resolve these issues, more broadly than within professional design practice and has been applied in business as well as social issues

Design thinking

______________ is a person who starts an organization, such as a business

Entrepreneur

in order to start a business, you need four elements to come together - Boundary, Resources, Intention, Energy

False, E= Exchange

Innovation is a creative idea or insight

False. Innovation requires the need to implement the idea

Which of the following would NOT qualify as a radical innovation?

Flat bed sleeping in business class airline cabins

_______________ are what people get from facing and beating challenges

Growth rewards

Q2: Please explain knowledge push and need pull.

Knowledge push is about discoveries or inventions, typically in laboratories and science facilities in the public and private sectors. Need pull is about innovations emerging from unsatisfied market or social needs

_________ is a small business primarily intended to provide partial or subsistence financial support for the existing lifestyle of the owner, most often through operations that fit the owner's schedule and way of working. These typically have sales of $25,000 a year or less, which provides enough profit or salary to supplement an income but usually not enough on which to live. These businesses start and stay very small, often operating seasonally or when the owner wants to work in the business.

Lifestyle or part-time firm

Q4: Briefly describe the commonly mentioned rewards that entrepreneurs look for

Nearly all entrepreneurs talk about three key rewards - flexibility, a livable income and personal growth. Growth rewards are what people get from facing and beating or learning from challenges. Income rewards refer to the money made from owning your own business. For more than three-quarters of entrepreneurs, this means seeking to match or slightly better the income you had before you started your own business. Flexibility rewards refer to the ability of business owners to structure their lives in the way that best suits their needs. There are two other rewards: building great wealth and creating products, which entrepreneurs mention more often than working people in general.

Transferring or Combining old ideas in new contexts is called _____________________.

Recombinant innovation

__________ involves 1-50 people and has its owner managing the business on a day-to-day basis

Small Business/Owner-managed firm

A firm intended to provide a living income to the owner, and operating in a manner and on a schedule consistent with other firms in the industry and market. These are the smallest full-time businesses, and operate on one site. Most often, these are one-site businesses with sales of between $25,000 and $100,000.

Traditional small businesses

A small business involves 1-50 people and has its owner managing the business on a day-to-day basis

True

Which of these would not normally be considered an incremental innovation?

an electric car

Amy plans to open a laundromat with a gym. She got the idea from the laundromat with a bar and game rooms, which she visits regularly. She wants to test her idea by starting out in a small space with the focus on the laundromat and a small space allocated for gym equipments. Amy's idea is an example of _____.

an incremental innovation

An agreement that provides a complete business format, including trade name, operational procedures, marketing and products or services to sell

business format franchising

A ______________________ describes the rationale of how an organization creates, delivers, and captures value,[2] in economic, social, cultural or other contexts.

business model

A high-growth venture has more than $1 million in profit.

false

the mass market consists of early adopters and early majority

false. early and late majority

traditional small businesses aim to become big businesses and pursue high levels of professionalization and external funding

false. high growth venture

late majority buys new products only if absolutely necessary

false. laggards

Innovation can take many forms. Running a hospital booking system which reduces patient waiting time is an example of which kind of innovation?

process

Innovation does not always need to push the frontier - sometimes established ideas in one sector can represent powerful new directions for another.

true

a car dealer is an example of product distribution franchising

true

_______ is the ability of business owners to structure life in the way that suits their needs. Perhaps the most rapidly growing type of reward.

Flexibility rewards

Q5: Please describe the advantages and disadvantages of franchising, compared with starting a new business.

Franchise often comes with a complete business system. a franchisor may be established with an existing business model, proven success and recognized brand name. the franchisor may provide training and support for franchisees. Some franchisors oversees the selection of location, the construction of facilities, the acquisition and installation of necessary equipment and the initial inventory. Many franchises come with a computer software for budgeting inventory control, ordering, point-of-sale , computerized cash register and complete accounting application. Franchise agreements dictate how you run the business, sot there may be little flexibility, such as in operations and in marketing. There are usually restrictions on where you operate, the products you sell and the suppliers you use. Running a franchise may mean ongoing sharing of profit with the franchisor. Bad performance by other franchisees or the franchisor may affect your franchise's reputation.

A firm started with the intent of eventually going public, following the pattern of growth and operations of a big business. 25% growth or more, Revenue>$1M. These firms aim to become big businesses and pursue high levels of professionalization and external funding.

High-growth ventures

A firm intended to provide the owner with a high income through sales or profits superior to those of the traditional small business. Revenue Less than $1M. Growth rate less than 15%, and often growing through multiple locations and higher levels of professionalization, in order to maximize their profitability over a long term, while reaching a plateau that lets them remain manageably small.

High-performing small businesses

__________ is money made by owning one's own business. For more than three-quarters of entrepreneurs, this means seeking to match or slightly better the income you had before you started your own business.

Income rewards

Which country is not among BRIC?

Indonesia

___________ involves recognizing opportunities to do something new and implementing those ideas to create value

Innovation

Which of the following is most likely to be an advantage of a start-up?

It begins with a clean slate.

Which of the following is a disadvantage of a start-up?

It cannot easily gain revolving credit.

When discussing why they haven't started their own business, potential entrepreneurs have mentioned problems such as these:

Not enough financing. You can't start businesses during a recession. To make profits, you need to make something. If you fail, you can never try again. Students don't have the skills to start a business. Ninety percent of all new businesses fail within two years

Q1: Please explain the four dimensions of innovation.

Product innovation means changes in the things, products/services, which an organization offers. process innovation means changes in the ways in which these offerings are created and delivered. Position innovation means changes in the context into which the products/services are introduced. Paradigm innovation means changes in the underlying mental models which frame what the organization does.

Q3: Please explain the five categories of innovation adopters

Technology enthusiasts: technology savvy, enjoy trying new products, even if they are not perfect Early adopters: enjoy new products but need them to be functional Early majority: they are relatively open to new products but need endorsement. they are practical and evaluate benefits and costs in purchases late majority: they are slow in accepting new products, not confident in using new technologies Laggards: buy new products only if absolutely necessary

An agreement that provides an organization through which independent businesses may combine resources

conversion franchising

About 1 in 3 businesses is a franchise.

false

Applying familiar technologies in a familiar market is called exploration.

false

Companies should always invest in radical innovations, not incremental innovations.

false

Franchise is a legal agreement that allows a business to be operated using the name but not the business of another firm

false

IBM convert from being a machine maker to a service and solution company. This is an example of product innovation.

false

In user innovation, early and late majority tend to have many radical ideas.

false

Innovation can only happen in the private sector because the public sector is not concerned with making profits or competition between firms

false

There are about 40 million entrepreneurs in USA.

false

There are five categories of innovation adopters. Technology enthusiasts are followed by the early majority.

false

about 1 in 3 businesses are franchised operations

false

an innovation can come from either knowledge push or need pull, but not both

false

need pull means that some innovations come from discoveries of inventions, typically in laboratories and science facilities in the public and private sectors

false

technology enthusiasts only buy products if they are endorsed by other people

false

there are four categories of innovation adopters in a technology adoption life cycle

false, there are 5

Social entrepreneurship is a form of entrepreneurship which takes place in existing businesses around new products, services or markets

false. It involves creating new charitable and civic organizations which are financially self-sufficient like Bangladesh's Grameen Bank

Small business is a key element of every nation's economy because it offers a very special environment in which the new can come into being. Austrian economist Michael Porter labeled this process creative destruction . It refers to the way that newly created goods, services, or firms can hurt existing goods, services, or firms.

false. Joseph Schumpeter

90% of all new businesses fail within two years

false. about 50% fail

if companies only focus on need pull, there is a bias towards business model innovation

false. bias towards product innovation

a firm intended to provide the owner with a high income through sales or profits superior of those of the traditional small business is called lifestyle firm

false. high performing small business

mass production is a manufacturing technique that combines the flezibility and personalization of custom-made products with the low unit costs associated with large scale manufacturing

false. mass customization

Haagen Dazs created a new market for ice cream: adults. this is an example of process innovation

false. position innovation

crowdsourcing innovation is making an open call to a defined group of people to collect innovative solutions or ideas

false. undefined group

____________ is an organization that sells to or trades with others.

firm

A legal agreement that allows a business to be operated using the name and business procedures of another firm is referred to as a:

franchise

____________________ is the process of reducing the complexity and cost of a good and its production.

frugal innovation

______________ are the tangible things (goods) or intangible commodities (services) created for sale.

goods or services

A _________________ is a problem that a user or consumer doesn't realize they have.

latent need

Which of the following is most likely to be categorized as a radical innovation?

moving from small shops to self-service supermarkets

______________ is one of four general ways to position a business based on the rate and level of growth entrepreneurs anticipate for their firm.

overall growth strategy

___________________ is an agreement that provides to the franchisee only the rights to use the franchisor's trade name and/or trademarks

trade name franchising

A McDonald's franchise includes the right to use McDonald's many trade names, specifications of the product to be sold, operating methods, marketing plan, and national advertising.

true

An owner-managed firm involves no more than 50 people and has its owner managing the business on a day-to-day basis.

true

Buying an existing business, instead of starting from scratch, has the advantage of having existing customers, employees and business processes.

true

Franchising has the advantage of having existing business model and brand name.

true

Position innovation is about changes in the context into which the products/services are introduced.

true

Product distribution franchising provides the franchisee with specific brand named products, which are resold by the franchisee in a specified territory.

true

Rolls-Royce has an increasingly large business around services for aircraft engines. this can be considered as business model innovation or paradigm innovation

true

Starting a company from scratch has the disadvantage of having no initial name recognition.

true

The BRIE model includes four elements needed to start a business, where Boundary means creating a place for your business - in location and in people's mind.

true

The technology adoption lifecycle is a sociological model that describes the adoption or acceptance of a new product or innovation.

true

an entrepreneur is a person who starts an organization, such as a business.

true

applying familiar technologies in an unfamiliar market is one type of exploration

true

changes in the things an organization offers (products and services) are called product innovations

true

exploration can benefit from collaborations with research institutions

true

high-performing small businesses have a revenue between $100k and $1 Million

true

if companies only focus on knowledge push, it may not be clear whether the market needs the innovation

true

if companies only pursue radical innovation, the risk might be high

true

improvement in how a product is manufactured is an example of process innovation

true

popular types of rewards for small business owners include growth, flexibility, and income rewards

true

research and development typically have occasional breakthrough and long periods of incremental improvements

true

small business is a key element of every nation's economy because it offers a very special environment in which innovations can come into being

true

the website ideas.starbucks.com is an example of crowdsourcing innovation

true

user innovation refers to new product and service development by individual users or individual user firms for themselves

true