2 Flashcards
What are the two competing approaches to entrepreneurial opportunities found in the literature?
The two competing approaches are the discovery approach and the creation approach.
What does the “discovery approach” to entrepreneurial opportunities assume?
The “discovery approach” assumes that the opportunity already exists and merely needs to be discovered by the entrepreneur.
According to the discovery approach, what causes opportunities?
Changes in markets or industries, such as changes in laws, regulations, demographics, or customer demands.
How do entrepreneurs who follow the discovery approach differ from other people?
They have special skills that enable them to identify and seize opportunities; they are particularly vigilant to changes in the market environment.
What is the central idea behind the “creation approach” to entrepreneurial opportunities?
The central idea is that it is the entrepreneur’s activity that causes an opportunity to emerge; the opportunity is created, not discovered.
What is the structure of the decision logic or “effectuation process” in the creation approach?
The decision logic or “effectuation process” starts with given possibilities that lead to actions. The entrepreneur explores their own knowledge, skills, and network to discover new possibilities and shape the opportunity.
What are the five principles that often guide the process of opportunity creation?
The five principles are: “Sparrow-in-the-hand” principle, “Affordable-loss” principle, “Patchwork” principle, “Making lemonade from lemons” principle, “Pilot-in-control” principle.
Regardless of whether an opportunity is created or discovered, what key questions must an entrepreneur answer to evaluate it?
The entrepreneur must answer the following questions: Is the idea viable (market feasibility)?, Is its implementation worthwhile (economic feasibility)?, Is the idea feasible (technical feasibility)?
What aspects are examined in the first step of determining the technical feasibility of an opportunity?
The first step examines: the degree of technical possibility, innovation, patentability, and general intellectual protection.
What percentage of ideas typically drop out at the technical feasibility phase, and why?
Approximately 50% of ideas drop out at the technical feasibility phase, often because a similar invention has already been patented.
What is the focus of the second step in assessing an opportunity, and what percentage of ideas are typically not pursued further after this step?
The second step focuses on determining if it’s possible to bring the service or product to market, and about 30% of ideas are not pursued further after this step.
What is the primary focus when evaluating the economic feasibility of an opportunity?
The primary focus is to calculate the expected return, price, market volume, and market, as well as the anticipated costs of pursuing the opportunity.
How is entrepreneurship viewed in relation to a person and an opportunity?
Entrepreneurship is seen as a link between a person and an opportunity.
What factors influence an entrepreneur’s decision to pursue an opportunity?
Entrepreneurs decide to pursue an opportunity if they expect a high chance of success and a profit potential that compensates for the opportunity costs.
What are the two main categories of factors that motivate entrepreneurs?
The two main categories are monetary and non-monetary factors.
