Management 160 Final Exam
What does the term "bootstrapping" when referring to a startup?
"Bootstrapping means building a startup from personal savings, small loans, credit cards, and the company's retained earnings without giving up equity
The article provides simple equations for "Current Investors' Ownership" and "Previous Investors' Ownership". Please list the two equations
"Current Investors' Ownership" = investment amount/ post money valuation "Previous Investors' Ownership"= pre-money amount/ post money valuation
Define "strategy" as given in the article.
"Strategy" is the integrated set of choices that positions businesses in the industry as so to generate superior financial return for the long run.
In addition to "Strategic Orientation," there were five additional critical dimensions of business practice as defined by Stevenson. List the five additional dimensions. Hint: These were also discussed in lecture n the form of a question so you can alternatively list the question form as an answer here.
-Commitment to Opportunity -Resource Commitment Process -Control of Resources -Management Structure -Reward Philosophy
What are the three core financial statements? Briefly define the purpose of each statement (i.e. what is the gist of each statement). Indicate for each statement if it is for a point in time or a period of time. Hint: "The Statement of Changes in Shareholders Equity" and "The Footnotes" are NOT one of the three core financial statements!
1. Balance Sheet A balance sheet shows the assets, liabilities, and capital of a business or organization at a particular point in time, detailing the income and expenditures of the preceding period. (snapshot, specific point in time) 2. Income Statement An income statement is also called "profit and loss" and it shows the revenues and expenses during a particular period of time. It indicates how revenues transforms into the net income (moving picture, period of time) 3. Statement of Cash Flows Shows the cash movement during a period separated by operating, financing, and investing actions (cash pool).
The article discusses 12 basic accounting concepts and assumptions that anyone interested in financial statements need to understand.Excluding the "Dual Aspect", list FOUR of the other 11 and describe in a sentence or two.
1. Business Entity: Financial Statements are prepared for a business entity separate and distinct from its owners. 2. Going Concerns: Unless evidence proves otherwise, an entity is projected to exist in the foreseeable future. 3. Monetary Unit: Accounting only deals with events measured in monetary units 4. Historical Cost: Nonmonetary and monetary assets are ordinarily initially recorded as acquisitions
According to the article,what are the four common forms of intellectual property (IP)? For each of the forms, list the approximate length of time of exclusivity and the common use (i.e. what does it cover). Note: for the purposes of this class, "Contractual Agreements" are NOT a form of intellectual property, so you cannot use it as part of your answer to this question.
1. Copyright: Protects the authors creative for -author's life + 70 years 2. Patent: Legal barrier that prevents people from copying or replicating their service or product -utility patent: 20 yrs -design patent: 14 yrs -provisional parent: 1 yr 3. Trademark: words, symbols, names that distinguish them from another company -need to renew after 10 yrs 4. Trade Secret: Secret or confidential information that is not generally known (ideas, routines, etc. -indefinte amount of time
Professor Stevenson discusses two historical definitions of entrepreneurship which he argues are both flawed. What were the two "Schools of Thought" on the way to define entrepreneurship according to Stevenson? According to Stevenson, what is a major flaw to each of the two?
1. Economic Function: Entrepreneurship is defined as an economic function and entrepreneur is defined by their role in society Major Flaw: Doesn't make sense to decide what "economic functions" are entrepreneurial 2. Entrepreneurs have a common set of individual traits Major Flaw: single psychological profile of an entrepreneur doesn't exist
The article discusses the "Four Actions Framework." Describe the fourforces and discuss how you can use the framework to develop a business strategy. (4 points)
1. Eliminate: What factors should we eliminate that have been taken for granted? 2. Reduce: What factors should we reduce well below industry standards? 3. Raise: What factors should we raise well above industry standards? 4. Create: What factors should we create that the industry has never offered?
The article discusses three core financial implications of the business model. What are the three core financial implications, and explain each in a sentence or two.
1. Expected Profitability: Depends on the value of output in relation to the value of input 2. Asset Intensity of their business models: Amount of assets that must be tied up in company to generate sales 3. Pace of growth: -How fast the venture is expected to grow
The book describes "five data traps to avoid". Name 3 data traps and describe each in a sentence or 2.
1. Fale Positive Data Trap: seeing something that isn't there 2. False Negative Data Trap: not seeing something that is there 3. Wrong Data Trap: looking at the wrong data
When describing "Customer Jobs," the text distinguishes between 3 main types of customer jobs to be done and supporting jobs. List the 3 types of customer jobs to be done and briefly describe in a sentence.
1. Functional (customer tries to fulfill a specific skill) 2. Social (customer try to gain power or status) 3. Personal/emotional (Customer tries to fulfill an emotional need: Ex, Happiness or security)
The text describes approximately 12 experiments types in the "Experiment Library." For example, the text describes "Ad Tracking" as one type of experiment. Name 4 others and describe in a sentence.
1. Illustrations, Storyboards, Scenarios: Demonstrate these regarding the value proposition to educate individuals and see their understanding of and response to the product. 2. Life Size Experiments: Create a life sized prototype to see how people act and engage with the product and/or experience 3. Split Testing: Test 2 different concepts to see which one people like better 4. Mock Sales: holding a mock sale to see people's interests and if they are interested
The VPC text discusses that value propositions in business-to-business (B2B) transactions typically involve 6 stakeholders in the search, evaluation, purchase, and use of a product or service. Each one has a different profile and a different value proposition canvas. Stakeholders can tilt the purchasing decision in one direction or another. List 4 of stakeholders given in the text and describe in a sentence describing each, OR list all 6 stakeholders without definitions to receive full credit
1. Influencer 2. Recommender 3. Economic Buyer 4. Decision Maker 5. End User 6. Saboteur
The VPC text describes 6 techniques to gain customer insights. These techniques help you understand the customer's perspective when designing value propositions. Name 4 of the techniques and in a sentence and describe each.
1. The data detective: building off of existing research 2. The Journalist: talking to potential customers to gain insight 3. The anthropologist: observing potential customers to understand their behavior and gain insight 4. The Scientist: getting people to partake in experiments to gain insight
The text discusses that a business model can involve two different types of revenue streams. What are the two types?
1. Transaction (one time payment) 2. Recurring (ongoing payment)
The article discusses that "strategy is a firm's answer to two fundamental questions". What are the two questions? (4 points)
1. Where should we compete 2. How should we compete?
The article discusses three key criteria which can be used help choose a legal form of organization. Name two of the three
1. Who are the owners and investors? 2. How long is the life of the business believed to be?
As defined in the text, what is a "Call to Action?" How is a "call to action" used (i.e. why is it discussed in the text)?
A call to action prompts a subject to perform an action. It is used as an experiment to test one or more hypothesis. It uses this evidence to see what the customer likes and doesn't like (interests).
What is "convertible preferred stock"? In other words, how does convertible preferred stock differ from common stock?
A form of stock that can be redeemed at face value (+ any accumulated dividends) or converted into common stock to get pre-negotiated shares of the company
According to the text, Steve Blank coined the term "Earlyvangelist." What is an "Earlyvangelist?" The book lists 5 traits of an Earlyvangelist. List 3 of the 5 traits.
An Earlyvangelist is someone who is willing and able to take a risk on a new product or service 1. has a problem or need 2. is aware they have a problem 3. is actively looking for a solution
The "Dual Aspect" explains that every transaction affects at least twoitems in the basic accounting equation and preserves the equation'sequality. What is the fundamental accounting equation?
Assets= liabilities + Shareholder's equity
In the article, Prof. Stevenson defines "Entrepreneurship as a ___________ phenomenon"
Behavioral
The article discusses a framework for startup crowdfunding. The framework breaks the startup stage into three phases: Pre-startup, Startup, and Growth. According to the article, what is the optimal type of crowdfunding for each stage? You DO NOT need to explain why each is best, simply list the best type for each! Hint: question #2 above lists the three types of crowdfunding! (3 points) Pre-startup: ___________________________________________ Startup: _______________________________________________ Growth: ________________________________________________
Donation; Lending; Equity
The article discusses the purpose of strategy is to create a"competitive advantage". What is competitive advantage?
In a "competitive advantage," the business creates a large gap between the customers willingness to pay and the costs they incur. The business must have a higher level of performance than its competitors.
What does "LLC" stand for?
Limited Liability Company
In the article, Prof. Stevenson discussed strategic orientation as a continuum from "______________" to "_______________" (nickname) as the level of controlled resources increased. Hint: We are not looking for a definition in the blanks, but rather the nickname that Prof. Stevenson assigned each.
Promoter; Trustee
What is "intellectual property"?
Right that results from he physical manifestation of original thought, either naturally or in compliance with the stature
Define the terms "red oceans" and "blue oceans" according to Kim &Mauborgne. (4 points)
The "red oceans" are all of the industries in existence (the known market space) and the "blue oceans" denote all of the industries not in existence (unknown market space)
The text discusses the idea "Same Customer, Different Contexts" when discussing value propositions. What are the authors talking about? Hint: If you remember the example in the book when discussing "Same Customer, Different Contexts," you can use it her to help you answer.
The authors are discussing how the same customer may not want or will want a specific product or service based on the context. For example, in the context of their family, they may not want to try a new, fancy restaurant, but with their friends they may want to. Same as someone working long days during the week vs. having the weekends free. Their interests vary depending on their situation.
What is a sole proprietorship?
The oldest and simplest type of organization: An individual carries out a business that does not deal with the formalities of other organizations. Individuals and businesses are one in the same with taxes and legal liabilities
Define "Entrepreneurship" according to Stevenson
The pursuit of opportunity without regard to resources currently controlled
What is a "strategy canvas"? How is a "strategy canvas" to be used? What does the horizontal axis (i.e. "x-axis") represent on thestrategy canvas? What does the vertical axis (i.e. "y-axis") represent on the strategy canvas? What is the "line" connecting thedots on the strategy canvas called and what does it stand for? (8 points)
The strategy canvas is a diagnostic and action framework for building a compelling blue ocean strategy. The horizontal axis represents the range of factors to compete on and invest in. The vertical axis captures the offering level buyers receive against competing key factors. The "line" is a value curve, which is a graphic depiction of relative performance amongst completion-competitve factors.
What is an "up round" and a "down round"?
Up Round: Value of venture that increases between 2 financial events Down Round: Value of venture that decreases between 2 financial events
How are pre-money and post-money valuations linked? Hint: this can be given by a simple equation.
pre-money valuation + investment amount= post-money valuation
