Entr Midterm 1-6 and 11

4-16. How do fixed costs differ from variable costs?

FC are costs that remain the same despite the volume of goods or services provided. VC vary proportionally with the volume of goods or services produced

6-6. Who reads the business plan and what are they looking for when doing so?

Firms employees: Investors and External Stakeholders: Those who are being recruited to join a firm, such as investors, potential business partners, and key employees

3-19. What is the purpose of a First Screen analysis?

First Screen, like the feasibility analysis itself, is meant to convey an overall impression or sense of the feasibility of a business idea.

5-6. How can the threat of new entrants suppress an industry's profitability?

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 decline. Firms in an industry try to keep the number of new entrants low by erecting barriers to entry. A barrier to entry is a condition that creates a disincentive for a new firm to enter an industry.

Entrepreneurial Firms' Impact on Society and Larger Firms

Impact on Society -The innovations of entrepreneurial firms have a dramatic impact on society. -Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us. •Impact on Larger Firms -Many entrepreneurial firms have built their entire business models around producing products and services that help larger firms become more efficient and effective.

6-2. What are the advantages of preparing a business plan for a new venture?

Internal reason: writing a business plan forces a firm's founders to systematically think through each aspect of their new venture. External reason: create a selling document for a company Communicates the maker it's of a new venture to outsiders, such as bank investors and bankers.

1-22 Corporate Entrepreneurship

Is the conceptualization of entrepreneurship at the firm level.

2-11. How does an extensive social network provide an entrepreneur an advantage in recognizing business opportunities?

It exposes them to more opportunities and ideas. This can lead to new business starts.

3-3. What is the difference between primary research and secondary research?

Primary research is research that is collected by the person or persons completing the analysis. It normally includes talking to prospective customers, getting feedback from industry experts, conducting focus groups, and administering surveys. Secondary research probes data that is already collected. The data generally includes industry studies, Census Bureau data, analyst forecasts, and other pertinent information gleaned through library and Internet research

4-10. Why are the resources a firm possesses a critical part of its business model?

Resources are the inputs a firm uses to produce, sell, distribute, and service a product or service. Must have sufficient amount of resources to enable business model to work Are tangible and intangible, must be hard to imitate and hard to find a substitute. Helps. Firm be more competitive.

4-4. What is a standard business model and what is a disruptive business model?

Standard business model: depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders. Disruptive business model: are rare, are models that do not fit the profile of a standard business model, and are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry

4-18. Who are "key partners" and why are they important to the success of an entrepreneurial venture?

Start-ups, in particular, typically do not have sufficient resources (or funding) to perform all the tasks needed to make their business models work, so they rely on partners to perform key roles. Key Partners can be suppliers (vendors) or other companies (strategic alliances and joint ventures)

2-19. What is the purpose of day-in-the-life research?

The company routinely sends teams of testers to the homes and businesses of its users to see how its products are working and to seek insights for new product ideas

6-20. What is the number-one rule in making an investor presentation?

The first rule in making an oral presentation is to follow directions. If you're told you have 15 minutes, don't talk for more than the allotted time.

11-2. Explain the importance of market segmentation. What are several ways markets can be segmented?

The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential target markets in that industry. This process is called market segmentation Market segmentation is important because a new firm typically has only enough resources to target one market segment, at least initially Markets can be segmented in many ways, such as by geography (city, state, country), demographic variables (age, gender, family size, income), psychographic variables (personality, lifestyle, values), behavioral variables (benefits sought, product usage rates, brand loyalty), and product type (varies by product)

5-23. What is the meaning of the term competitive intelligence?

The information that is gathered by a firm to learn about its competitors

1-10. What is it about passion that makes it particularly compatible with the entrepreneurial process?

The passion an entrepreneur feels for their business typically stems from a belief that the business will positively influence peoples lives. Demands would outweigh potential rewards without passion.

1-5. In what ways is an entrepreneur who just launched a restaurant different from someone who just took a job as the general manager of a restaurant owned by a major restaurant chain?

The person who just launched a restaurant is bringing a new product or service to market, and is assuming the risk associated with doing that. The person who just took a job as the general manager of a restaurant isn't bringing something new to market. While the person is assuming employment risk, he/she isn't assuming the risk of owning a business

6-10. Why should the executive summary, which is one of the first things that appears in a business plan, be written last?

The plan itself will evolve as it's written, so not everything is known at the outset.

1-4. What is entrepreneurship?

The process by which individuals pursuer opportunities without regard to resources they currently control for the purpose of exploiting future goods and services.

2-8. What is the meaning of the term opportunity recognition?

The process of perceiving the possibility of a profitable new business or product or service.

1-7. What are the three primary reasons people become entrepreneurs?

The three primary reasons that people become entrepreneurs and start their own firms are to (1) be their own boss, (2) pursue their own ideas, and (3) realize financial rewards.

3-8. What are the attributes or characteristics of an attractive industry for a new venture?

-Are young rather than old -Are early rather than late in their life cycle -Are fragmented rather than concentrated -Are growing rather than shrinking -Are selling products or services that customers "must have" rather than "want to have" -Are not crowded -Have high rather than low operating margins -Are not highly dependent on the historically low price of a key raw material, like gasoline or flour, to remain profitable

1-24 Conservative Firms

-Take a more "wait and see" posture •Less innovative •Risk averse

4-17. What are the primary elements of the Operations component of the Barringer/Ireland Business Model Template?

-product (or service) production -channels -key partners.

2-4. What are the qualities of an opportunity, and why is each quality important?

1. Attractive 2. Timely 3. Durable 4. Adds value Important because it shows knowledge in the product. It is important to make sure the opportunity is at the right time for the market as well as making the product valuable to th entrepreneur and customer.

5-11. What are the four primary factors that play a role in determining the nature and intensity of the bargaining power of buyers?

1. Buyer Group Concentration: If the buyers are concentrated, meaning that there are only a few large buyers, and they buy from a large number of suppliers, they can pressure the suppliers to lower costs 2. Buyers Costs: The greater the importance of an item is to a buyer, the more sensitive the buyer will be to the price it pays 3. Degree of Standardization of A Suppliers Products: The degree to which a supplier's product differs from its competitors' offering 4. Threat of Backward Integration: if there is a credible threat that the buyer might enter the supplier's industry.

1-13. What are the five common myths of entrepreneurship?

1. Entrepreneurs are born not made 2. Entrepreneurs are gamblers 3. Entrepreneurs are motivated primarily by money 4. Entrepreneurs should be young and energetic 5. Entrepreneurs love the spotlight

4-3. What is the best time for a firm to develop its business model?

1. Initial validation of the business idea 2. Preparation of the business model 3. Fleshing out the operational details of the company

3-1. How would you describe the four areas that a properly executed feasibility analysis explores?

1. Product/ service feasibility 2. Industry/ Target market feasibility 3. Organizational Feasibility

1-21 types of startup firms

1. Salary-substitute firms (earn what they would otherwise) 2. Lifestyle firms (pursue a lifestyle, athletes, traines, tour guides) 3. Entrepreneurial firms (bring in new products. Create Value)

5-9. What are the four primary factors that play a role in determining the nature and intensity of the bargaining power of suppliers?

1. Supplier Concentration When there are only a few suppliers to provide a critical product to a large number of buyers, the supplier has an advantage. 2. Switching Costs 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 3. Attractiveness of Substitutes Supplier power is enhanced if there are no attractive substitutes for the products or services the supplier offers. 4.Threat of Forward Integration The power of a supplier is enhanced if there is a credible possibility that the supplier might enter the buyer's industry.

3-5. What are the two ways that entrepreneurs assess the likely product demand for the proposed product or service they are analyzing?

1. Talking face-to-face with customers 2. Utilizing online tools, such as Google AdWords 3. Library, Internet, and gumshoe research

1-9. Why is passion such an important characteristic of successful entrepreneurs?

1. The ability to learn and iterate 2. Willingness to work hard for an extended period of time 3.ability to overcome setbacks 4. Ability to listen to feedback on th eliminations of your organization and yourself 5.Perseverance and persistence

5-4. What are the five forces that determine an industry's profitability?

1. Threat of substitutes 2. Threat of new entrants 3. Rivalry among existing firms 4. Bargaining power of suppliers 5. Bargaining power of buyers

1-11. Why is a product/customer focus an important characteristic of successful entrepreneurs?

A business cannot stay ahead unless the needs and wants of the customer are met by the product.

4-2. How does a freemium business model work?

A business model in which a firm provides a basic version of its service for free, and makes money by selling a premium version of the service.

6-5. It is often argued that the process of writing a business plan is as important as the plan itself, particularly for the top management team of a young firm. Why is this so?

A clearly written business plan also helps a firm's rank-and-file employees operate in sync and move forward in a consistent and purposeful manner. gives direction and guidance Help employees ensure what they are doing is consistent with overall plans.

1-2. What key insights does the GEM study

According to the 2015/2016 G E M study, 11.9% of Americans are actively engaged in starting a business or are the owner/manager of a business that is less than three years old. Entrepreneurial activity is taking place across the world. Highest rates of ent start-ups occur in low-income countries. And more people are starting to take advantage of an opportunity rather than starting out of necessity. (Pursue an opportunity outweigh. Necessity)

11-17. Contrast the roles of advertising and public relations in promoting a firm and its products.

Advertising is making people aware of a product in hopes of persuading them to buy it. Advertising's major goals are to: Raise customer awareness of a product Explain a product's comparative features and benefits Create associations between a product and a certain lifestyle Public relations refers to efforts to establish and maintain a company's image with the public. Network with journalists and bloggers. The major difference between public relations and advertising is that public relations is not paid for directly.

1-23 Entrepreneurial intensity

All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. ‒The position of a firm on this continuum

1-1. Do you anticipate that entrepreneurship will continue spreading throughout the world, or do you think its appeal will subside over time?

All indicators point to entrepreneurship continuing to spread throughout the world. The primary reasons are: (1) the downsizing of large firms, which have placed a large number of people off the job market that would rather start their own firm than work for another large firm; (2) the push for improved efficiency and effectiveness on the part of firms and individuals, which has provided entrepreneurs the opportunity to meet needs; (3) the rapid pace of change that is taking place worldwide, which provides entrepreneurs additional opportunities to meet needs; and (4) the increasing recognition that entrepreneurship is the engine that fuels economic growth and prosperity worldwide. Most students will argue that there is no reason to think the appeal of entrepreneurship will subside over time. The need to solve problems and meet unmet needs is universal worldwide.

11-14. Contrast cost-based pricing and value-based pricing.

Cost-based pricing, the list price is determined by adding a markup percentage to a product's cost. st-based pricing is based on what a company thinks it should receive rather than on what the market thinks a good or service is worth. value-based pricing, the list price is determined by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion. What a customer is willing to pay is determined by the perceived value of the product and by the number of choices available in the marketplace.

5-22. What are the differences among direct competitors, indirect competitors, and future competitors?

Direct Competitors: Business offering identical or highly similar products Indirect: Business offering close substitute products Future Comp: Businesses that are not yet direct or indirect butcould

4-8. Why do most entrepreneurial firms initially choose to compete within a narrow target market?

Don't have the funding or resources to. most start by identifying an emerging or underserved niche within a merger market.

5-24. Why is it important for firms to collect intelligence about their competitors?

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.

5-7. What are the six major sources of barriers to entry that can restrict a firm's entry into a market?

Economies of scale, Product differentiation, Capital requirements, Cost advantages independent of size, Access to distribution channels, Government and legal barriers 1. Economies of scale - 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. 2. Product differentiation - 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. 3. Capital requirements - The need to invest large amounts of money to gain entrance to an industry is another barrier to entry. 4. Cost advantages independent of size - Existing firms may have cost advantages 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. 5. Access to distribution channels - Distribution channels are often hard to crack. This is particularly true in crowded markets, such as the convenience store market. 6. Government and legal barriers - Some industries, such as banking and broadcasting, require the granting of a license by a public authority to compete.

1-18. What did Joseph Schumpeter mean by the term creative destruction?

Entrepreneurs develop new products and technologies that over time make current products and technology obsolete

11-12. Describe the difference between a core product and an actual product.

While the core product may be a CD that contains a tax preparation program, the actual product, which is what the customer buys, may have as many as five characteristics: quality level, features, design, a brand name, and packaging.

5-21. What is the purpose of a competitor analysis?

a detailed analysis of a firm's competition. It helps a firm understand the positions of its major competitors and the opportunities that are available to obtain a competitive advantage in one or more areas.

4-13. What are a firm's key assets?

are the assets that a firm owns that enable its business model to work.24 The assets can be physical, financial, intellectual, or human

5-2. What is an industry analysis and why is it important for a new firm to analyze the industry in which it may choose to compete?

business research that focuses on the potential of an industry. The analysis helps a firm determine if the target market it identified during feasibility analysis is favorable for a new firm.

6-8. Why is it important for a business plan to follow a conventional structure rather than be highly innovative and creative?

departing from the basic structure of the conventional business plan format is usually a mistake. Typically, investors are very busy people and want a plan where they can easily find critical information. If an investor has to hunt for something because it is in an unusual place or just isn't there, he or she might simply give up and move on to the next plan.

4-15. What is a revenue stream and why is it so important to a firm's short- and long-term success?

describe the ways in which it makes money. The number and nature of a business's revenue streams has a direct impact on the other elements of its business model. All for-profit businesses need at least one revenue stream to fund their operations. Whether additional revenue streams add or subtract value depends on the nature of the business and the other elements of its business model.

3-11. What are some of the ways to determine the attractiveness of a small target market within a larger industry?

discerning the attractiveness of a small target market within an industry is tougher than the attractiveness of an entire industry, particularly if the start-up is pioneering the target market.Often, under these circumstances, information from more than one industry and/or market must be collected and synthesized to make an informed judgment

11-5. What is meant by a firm's positioning strategy?

establish a "position" within it that differentiates it from competitors. position is concerned with how the firm is situated relative to competitors.

11-18. What is the purpose of writing a blog and establishing a presence on Facebook and Twitter?

establishing a presence and connecting with customers. familiarize people with a business and help build an emotional bond between a business and its customers.

6-18. What is the purpose of an assumptions sheet?

explanation of the most critical assumptions on which the financial statements are based. Some assumptions will be based on general information

11-1. What is a target market? Why is it important for a firm to choose its target market early in the process of launching its venture?

firm's target market is the limited group of individuals or businesses to which it attempts to appeal. It is important that a new venture choose its target market and position inside its target market quickly because virtually all of its marketing choices hinge on these critical initial choices.

4-19. What are some common advantages that accrue to a firm as a result of partnering with other companies?

gaining access to a particular resource, risk and cost sharing, speed to market, and learning.

6-14. If you are developing a completely new product or service, what type of information should you include in your business plan regarding the status of the development efforts?

include a section in your business plan that focuses on the status of your development efforts. Many seemingly promising start-ups never get off the ground because their product development efforts stall or the actual development of the product or service turns out to be more difficult than expected. describe the present stage of the development of your product or service

5-17. What are the characteristics of a mature industry?

industry that is experiencing slow or no increase in demand, has numerous repeat (rather than new) customers, and has limited product innovation.

5-18. What is the primary opportunity for new firms in a mature industry?

introduce new product innovations

11-6. What is a tagline? What is your favorite tagline? Why?

is a catchy phrase that's used consistently in a company's literature, advertisements, stationery, and even invoices, and thus becomes associated with that company—to reinforce the position it has staked out in the market.

3-6. What is gumshoe research in the context of product/service feasibility analysis?

is a detective or an investigator that scrounges around for information or clues wherever they can be found. Helps gain a sense of the likely demand for a product or service idea.

5-1. What is an industry?

is a group of firms producing a similar product or service

11-16. What is meant by the term guerilla marketing? Describe an example of guerilla marketing that is not provided in the chapter.

is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques.

11-4. What is a niche market?

is a place within a market segment that represents a narrow group of customers with similar interests

3-7. What is an industry/target market feasibility analysis?

is an assessment of the overall appeal of the industry and the target market of the product or service being proposed

11-13. What is a reference account? How can having a reference account help a new firm?

is an early user of a firm's product who is willing to give a testimonial regarding his or her experience with the product. credibility with peers, non-company advocates who are willing to talk to the press, and quotes or examples to use in company brochures and advertisements.

4-20. Who are "freelancers" and why are these individuals potentially attractive as partners for an entrepreneurial venture?

is an independent contractor who has skills in a certain area, such as software development or website design. to do jobs that are outside a firm's core competencies

3-12. What is an organizational feasibility analysis?

is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch

4-1. What is a business model?

is its plan or recipe for how it creates, delivers, and captures value for its stakeholders.

3-14. What is a new-venture team?

is the group of founders, key employees, and advisers that either manage or help manage a new business in its start-up years

3-13. What are the two primary issues to consider when conducting an organizational feasibility analysis?

management prowess and resource sufficiency. Management prowess: ability, of its initial management team (do they have passion, do they understand market) Resource Sufficiency: determine whether the proposed venture has or is capable of obtaining sufficient resources to move forward

11-9. What is meant by creating "buzz" for a company? Provide an example of a firm that has created effective buzz for its product or service.

means creating awareness and a sense of anticipation about a company and its offerings

5-20. What are the two most common strategies pursued by firms in global industries?

multidomestic strategy compete for market share on a country-by-country basis and vary their product or service offerings to meet the demands of the local market. global strategy use the same basic approach in all foreign markets.

11-20. What is the purpose of having an organized sales process?

sales process depicts the steps it goes through to identify prospects and close sales. helps approach and discern respecting customers and close sales. having a well-thought-out sales process, with accompanying action steps and appropriate employee training, can dramatically improve a company's sales performance. provides a starting point for careful analysis and continuous improvement.

2-14. How does creativity contribute to the opportunity recognition process?

-Helps ent establish where there is a gap in the market -leads to innovation -develop new skills that open new opportunities

6-4. What are the two primary reasons for those starting a new venture to write a business plan?

1. A firm's employees - a clearly written business plan helps the employees of a firm operate in sync and move forward in a consistent and purposeful manner. 2. Investors and other external stakeholders - a firm's business plan must make the case that the firm is a good use of an investor's funds or the attention of others.

1-15. What are the four distinctive parts of the entrepreneurial process and what is the relationship among the parts?

1. Deciding. To become entr 2. Developing successful business ideas 3. Moving from an idea to an Entr firm 4. Managing and growing

What are the four primary traits and characteristics of a successful entreprenuer

1. Passion for business 2. Product customer focus 3. Tenacity despite failure 4. Execution intelligence

2-15. What are the five stages of the creative process for an individual?

1. Preparation: Background experience and knowledge 2. Incubation: thinking about idea or problem; ideas churning 3. Insight: Solution born. Eureka 4. Evaluation: analyzed for viability and feasibility 5. Elaboration: Transformed Into value; business plan written. New product

1-6. What are the three main attributes of firms that pursue high levels of corporate entrepreneurship?

1. Proactiveness 2. Innovativeness 3. Risk taking ability

3-16. What are the three separate components of financial feasibility analysis?

1.Total start-up cash needed 2. Financial performance of similar businesses 3. Overall financial attractiveness

1-20. What are the changes to the demographic makeup of entrepreneurs in the United States that are described in this chapter?

27.5 million businesses are owned by women, minorities, seniors, and young people. Although a low % of Millie also choosing entreprenuership path even though the desire is high The demographics of America are changing becoming more diverse. Entrepreneurial career is exciting.

2-3. What is an opportunity?

A favorable set of circumstances that creates a need for a new product or service.

6-19. What are the differences between historical financial statements and pro forma financial statements?

A firm's pro forma financial statements are similar to the historical statements an established firm prepares, except they look forward rather than track the past.

3-4. What is a concept statement?

A preliminary description of a business that includes descriptions of the product or service being offered, the intended target market, the benefits of the product or service, the product's position in the market, and how the product or service will be sold and distribute

5-26. What is the purpose of completing a competitive analysis grid?

A tool for organizing the information a firm collects about its competitors to see how it stacks up against its competitors, provide ideas for markets to pursue, and identify its primary sources of competitive advantage.√

11-3. How should a firm go about constructing a product attribute map?

After a company has identified its position and primary points of differentiation The idea is to assess strengths and/or weaknesses in each of these categories and plot them on the map

6-3. When is the appropriate time to write a business plan?

As the last step of the entrepreneurial process.

1-8. Of the three primary reasons people become entrepreneurs, which one is given most commonly and why?

Be their own boss.Be their own boss. Because they might have a passion for something or might have become frustrated working in traditional jobs.

2-2. How can an entrepreneur tell if a product opportunity gap exists?

By observing trends, solving a problem, finding gaps or studying social trends, economic forces, and technological advances, political

4-5. What are the four major categories that comprise the Barringer/Ireland Business Model Template?

Core Strategy ● Business mission ● Basis of Differentiation ● Target Market ● Product /Market Scope Resources ● Core Competency ● Key Assets Financials ● Revenue Streams ● Cost Structure ● Financing / Funding Operations ● Product (or services) Production ● Channels ● Key Partners (Core strategy, resources, financials, and operations)

1-3. What does evidence show us about the rate of failure associated with entrepreneurial ventures?

Evidence shows that the majority of new businesses DO NOT FAIL. Many firs don't fail because they disappear, but they are sold to another firm.

1-17. What factors favor older entrepreneurs as opposed to younger entrepreneurs

Experience and skills

2-18. How is a focus group used to generate new business ideas?

Gathering of 5-10 people who are selected for their relationship to the issue are brought together to respond to questions, and who are able to shed light on an issue through the give-and-take nature of a group discussion.

5-8. How does rivalry among existing firms have the potential to suppress an industry's profitability?

In most industries, the major determinant of industry profitability is the level of competition among existing firms. Some industries are fiercely competitive, to the point where prices are pushed below the level of costs, and industry-wide losses occur.

6-11. What is the difference between the industry analysis section and the market analysis section of a business plan?

Industry: describing the industry in which the firm intends to compete. This description should include data and information about various characteristics of the industry, such as its size, growth rate, and sales projections. Market Analysis: breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal.

1-25 Economic Impact of Entrepreneurial Firms

Innovation job creation

1-16. How would you characterize the risk-taking propensity of most entrepreneurs?

Moderate

4-12. How many core competencies do most start-ups have?

Most start-ups will list two to three core competencies on the business model template.

2-16. What are the differences between an opportunity and an idea and why are those differences important for entrepreneurs?

Opportunities are a favorable set of circumstances that creates a need for a new product / service or bsuiness Idea is a thought , an impression, or a notion. Opportunities have value.

6-15. What is the purpose of the "Operations Plan" section of a business plan?

Outlines how your business will be run and how your product or service will be produced. A useful way to illustrate how your business will be run is to describe it in terms of "back stage" (unseen to the customer) and "front stage" (seen by the customer) activities.

4-14. What are the differences between a firms physical assets and its intellectual assets?

Physical assets include physical space, equipment, vehicles, and distribution networks. Intellectual assets include resources such as patents, trademarks, copyrights, and trade secrets, along with a company's brand and its reputation. Financial assets include cash, lines of credit, and commitments from investors. Human assets include a company's founder or founders, its key employees, and its advisors.

2-9. In what ways does prior industry experience provide an entrepreneur an advantage in recognizing business opportunities?

Prior experience in an industry helps entrepreneurs recognize business opportunities.

2-13. What is creativity?

Process of generating a novel or useful idea

11-19. Contrast the advantages of selling direct versus the advantages of selling through an intermediary.

Selling direct: . Being able to control the process of moving products from their place of origin to the end user instead of relying on third parties is a major advantage of direct selling. Intermediaries: An advantage of this approach is that the firm does not need to own as much of the distribution channel.

2-17. Why is "no criticism" the number-one rule for brainstorming?

So people can speak freely. Criticism stymies creativity and inhibits the free flow of ideas.

2-5. What four environmental trends are most instrumental in creating business opportunities? Provide an example of each

Social forces: demographics, what people think is in, social culture Economic forces: state of economy Technological advances: new tech emerging Political and regulatory changes: new laws legislation

2-6. How can "solving a problem" create a business opportunity for an entrepreneur to pursue?

Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. ◦These problems can be pinpointed through observing trends and through more simple means, such as intuition, serendipity, or change.

6-7. How will investors typically react if they think a business plan is based on estimates and predictions rather than on careful analysis and facts?

Sophisticated investors, potential business partners, and key recruits will base their assessment of a proposed firm's future prospects on facts, not guesswork or platitudes , as emphasized in Chapter3. The most compelling facts a company can provide in its business plan are the results of its own feasibility analysis and the articulation of a distinctive and competitive business model. A business plan rings hollow if it is based strictly on an entrepreneur's predictions of a business's future prospects.

2-12. What is the difference between a weak-tie and a strong-tie relationship? Which type of tie is most likely to help an entrepreneur find an idea and why?

Strong tie- frequent interaction (co-worker, friends, spouses) Weak-tie Infrequent interaction ( casual acquaintance) Weak tie os more likely to start a new business idea because not as like-minded

4-6. How are a firm's core strategy and its mission related to each other as parts of a business template?

The business mission is a primary element of the core strategy. A core strategy describes how the firm plans to compete relative to its competitors. A business's mission describes why it exists and what its business model is supposed to accomplish.

6-16. Why is the "Management Team and Company Structure" section of a business plan often touted as one of the most important sections?

This is a critical section of a business plan. Many investors and others who read the business plan 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.

11-15. What is meant by the phrase "price-quality attribution"? How does an understanding of this phrase help an entrepreneur know how to price a product?

This means that consumers naturally assume that the higher-priced product is also the better-quality product. If a firm charges a low price for its products, it sends a signal to its customers that the product is low quality regardless of whether it really is.

5-14. How can a start-up avoid or sidestep the pressure applied by one of the five forces on industry profitability by establishing a unique "position" in an industry?

To help sidestep or diminish these threats, it must establish a favorable "unique" position.

5-5. How can the threat of substitute products suppress an industry's profitability?

When close substitutes for a product exist, industry profitability is suppressed, because consumers will opt out if the price gets too high.

4-11. What is a core competency?

a specific factor or capability that supports a firm's business model and sets it apart from its rivals.

2-1. What is a product opportunity gap?

an entrepreneur recognizes a problem and creates a business to address the problem or fill the identified gap

5-12. How does the bargaining power of buyers have the potential to suppress an industry's profitability?

by demanding price concessions or increases in quality.

4-9. What is a company's product/market scope?

defines the products and markets on which it will concentrate. start narrow 3-5 years

6-17. What is the purpose of a sources and uses of funds statement?

document that lays out specifically how much money a firm needs (if the intention of the business plan is to raise money), where the money will come from, and how the money will be used.

6-13. What is the purpose of "The Economics of the Business" section of a business plan?

financial analysis of a business, which is further fleshed out in the financial projections. It addresses the basic logic of how profits are earned in the business and how many units of a business's product or service must be sold for the business to "break even" and then start earning a profit.

5-19. What is a global industry?

is an industry that is experiencing significant international sales.

5-10. How does the bargaining power of suppliers have the potential to suppress an industry's profitability?

suppliers can suppress the profitability of the industries to which they sell by raising prices or reducing the quality of the components they provide.

1-12. What is it about "tenacity" that makes it such an important characteristic for entrepreneurs

the ability to preserver through setbacks and into a viable business. the factor that determines whether a startup is a success or failure.

11-8. What is the purpose of brand management?

which is a program used to protect the image and value of an organization's brand in consumers' minds.

2-10. What is entrepreneurial alertness and why is it important to entrepreneurs?

which is formally defined as the ability to notice things without engaging in deliberate search. More alert of surroundings rising trends what's going on in business world.

5-25. What are three sources of competitive intelligence that entrepreneurial firms should feel comfortable using to better understand their competitors?

• Attend conferences and trade shows. • Purchase competitors' products. • Study competitors' Web sites and social media sites. • Set up Google e-mail alerts. • Read industry-related books, magazines, and Web sites. • Talk to customers about what motivated them to buy your product as opposed to your competitor's product.

5-3. What are the four primary categories of environmental trends?

• Economic trends • Social trends • Technological advances • Political and regulatory changes

3-18. What are some factors that make a potential start-up attractive from an overall financial perspective?

-The amount of capital invested -The risks assumed in launching the business -The existing alternatives for the money being invested -The existing alternatives for the entrepreneur's time and efforts

3-10. Why do most start-ups focus on relatively small target markets to begin with rather than larger markets with more substantial demand?

-don't have the resources -firm can usually avoid head-to-head competition with industry leaders and can focus on serving a specialized market very well -is also not realistic, in most cases, for a start-up to introduce a totally original product idea into a completely new market

3-17. What are some of the techniques a start-up can use to estimate its potential financial performance by comparing it to similar, already established businesses?

-substantial archival data, which offers detailed financial reports on thousands of individual firms, is available online. -find the financial performance of small, more comparable firms. -ask owner or manager to share sales and income data if they aren't a direct competitor

3-2. What is a product/service feasibility analysis?

An assessment of the overall appeal of the product or service being proposed.

1-19. In general, what effects does entrepreneurship have on economies and societies throughout the world?

Ent has a positive effect on both the economies and societies throughout the world. For two reasons: 1. Innovation 2. Job creation 1. The process of creating something new 2. Small businesses create a lot of new jobs new products and services make like easier,enhance productivity and improve health.

5-15. What are the characteristics of a fragmented industry and why are these important for entrepreneurs?

Industries that are characterized by a large number of firms of approximately equal size.

6-12. What is the difference between a concentrated and a fragmented industry?

Industry structure refers to how concentrated or fragmented an industry is. Fragmented industries are more receptive to new entrants than industries that are dominated by a handful of large firms.

2-7. How can finding a gap in the marketplace create a business opportunity?

Product gaps in the marketplace represent potentially viable business opportunities. Finding a niche within the market gives entrepreneurs an opportunity to innovate their business. Finding a niche and taking advantage can even allow you to create a completely new business.

6-9. What are the differences among a summary business plan, a full business plan, and an operational business plan?

Summary Business Plan: 10-15 pjs. Works best for new ventures in early stages of development. They want to test the waters and see if investors are interested Full Business Plan: 25-35pgs. Works best for new ventures that are at a point where they need funding or financing; serves as a blue print for the company's operations. Operational b-plan: 40-100pgs. Meant for internal audience; works best as a tool for creating a blueprint for a new ventures operations and providing guidance to operational managers

11-11. What are the four elements of a firm's "marketing mix"?

The 4 p's marketing mix is the set of controllable, tactical marketing tools that it uses to produce the response it wants in the target market. Most marketers organize their marketing mix into four categories: product, price, promotion, and place

1-14. What is the evidence that debunks the myth that entrepreneurs are born, not made?

The consensus that many studies on the psychological and sociological makeup of entrepreneurs is that entreprenuers are not genetically different form other people. Whether someone does or does not is a function of environment, life experience, and personal choice.

3-15. What is a financial feasibility analysis?

is the final component of a comprehensive feasibility analysis. A preliminary financial assessment of a new venture that considers the total start up cash needed, financial performance of similar businesses, and the overall financial attractiveness of the proposed venture

6-1. What is a business plan?

is the last activity completed in the step of the entrepreneurial process. The business plan must be substantive enough and have sufficient details about the merits of the new venture in order to convince the reader that the new business is exciting and should receive support.

3-9. What is a target market?

is the portion of the industry that it goes after or to which it wants to appeal.

11-7. What is a brand? Provide an example of a brand that you buy frequently and describe the mental image that pops into your mind when you hear or see the brand's name.

is the set of attributes—positive or negative—that people associate with a company.

11-10. What is meant by the term brand equity?

is the term that denotes the set of assets and liabilities that are linked to a brand and enable it to increase a firm's valuation.1

5-16. What is the primary opportunity for new firms in fragmented industries?

is to consolidate the industry and establish industry leadership as a result of doing so. The most common way to do this is through a geographic roll-up strategy, in which one firm starts acquiring similar firms that are located in different geographic areas

4-7. What is a company's "basis of differentiation" and what is the importance of this part of a business template?

is what causes consumers to pick one company's products over others. And it is what solves a problem or satisfies a customer need. some authors refer to as a company's value proposition.

5-13. What are the nontraditional barriers to entry that are particularly suitable for entrepreneurial firms to study when selecting an industry in which to compete?

• Strength of management team • First-mover advantage • Passion of the management team and employees • Unique business model • Internet domain name • Inventing a new approach to an industry