Chapter 3: Starting a Small Business Flashcards
The identification of potential new products or services that may lead to promising businesses is known as
Opportunity recognition
The readiness to act on existing, but unnoticed business opportunities is known as
Entrepreneurial Alertness
New business ventures created from scratch are called
Startups
Entrepreneurs craving the challenge of succeeding or failing on their own is known as
Startup Fever
What are the three basic types of start up ideas?
New Market Ideas
New Technology Ideas
New Benefit Ideas
These are centered around providing customers with an existing product or service not available in their market
New Market Ideas
These involve new or relatively new technology and are centered around providing customers with a new product
New Technology Ideas
Why are new technology ideas considered high risk?
There is not a definite model of success to follow
These are based on offering customers benefits from new and improved products or better ways of performing old functions
New Benefit Ideas
Fundamentally refocusing the startup as it unfolds or completely recreating it if the initial concept turns out to be seriously flawed is known as a
Pivot
What are three possible sources of startup ideas?
Personal Work Experience
Hobbies and Personal Interest
Accidental Discovery
A facility for making desirable discoveries by accident is known as
Serendipity
Combining two business to create a market opening can do what
Lead to unique products, services, or experiences
The broad environment encompassing factors that influence most businesses in a society
The General Environment
The general environment studies what important trends
Economic Sociocultural Politicolegal Global Technological Demographic
The context for factors that directly impact a given firm and all of its competitors
The Industry Environment
This focuses on the strength, position, and likely moves and countermoves of competitors in an industry
The Competitive Environment
What does evaluating the competitive environment help the entrepreneur to do?
Evaluate the nature and extent of existing competition and to fine-tune future plans
Inputs that an entrepreneur can use to start and conduct a business are known as
Resources
These resources are visible and easy to measure
Tangible Resources
These resources are invisible and difficult to assess
Intangible resources
A company’s routines and processes that coordinate the combined use of these productive assets to achieve desired outcomes are called
Capabilities
The crucial capabilities that distinguish a company competitively and reflect its general focus and personality is a company’s
Core compentencies
This gives a startup or small business the upper hand by allowing it to provide products or services that customer will choose over available opportunities is called a
Competitive Advantage
A benefit that exists when a firm has a product or service that is seen by its target market as better than those of competitors
Competitive Advantage
This provides a snapshot view of current conditions outside and inside of the company
SWOT Analysis
A SWOT analysis shows these
Strengths
Weaknesses
Opportunities
Threats
What does a SWOT analysis identify?
Potential business opportunities that match the entrepreneur and his or her planner venture
A set of actions that coordinates the resources and commitments of a business to boost its performance
Strategy
A plan of action that coordinates the resources and commitment of an organization to achieve superior performance
Strategy
The strategy that believes that a firm must hold down it’s costs so that it can compete by charging lower prices for its products or services and still make a profit
Cost-Based Strategy
What is a possible side effect of the Cost-Based Strategy?
Could spark a price war
This strategy emphasizes the uniqueness of a firm’s product or service
Differentiation Based Strategy
A plan of action that isolates an enterprise from competitors and other market forces by targeting a restricted market segment
Focus Strategies
A strategic approach in which entrepreneurs try to shield themselves from market forces by targeting a specific group of customers who have an identifiable but very narrow range of product or service interests
Focus Strategies
Focus strategies are also known as
Market Niche
A segmented market can erode any of these ways
Focus strategy is limited
Target segment becomes structurally unnattractive
Target segment loses its uniqueness
New firms subsegment the industry
What is a common problem with coming up with a business idea
Coming up with too many ideas
This should be completed to determine whether the idea you have selected is viable and merits the investment of time and money
An in-depth Feasibility Analysis
The quality of the final evaluation will only be as good as
The information used to generate it
The merits of an idea are relative to
The strength of the business idea Targeted market and customers Industry and competitive advantage Capability of founders Capital requirements and venture performance
A preliminary assessment of a business idea that gauges whether or not the venture envisioned is likely to succeed
Feasibility analysis
A circumstance or development that, in and of itself, could render a new business unsuccessful
Fatal flaw
success in entrepreneurship is generally the result of these three elements coming together to launch and maintain success
A market with potential
An attractive industry
A capable individual or team with the skill and capabilities to pull it all together
Two levels of the market
Macromarket
Micromarket
This is broad, with a limited attractiveness of the niche if the fundamental features are not promising
Macromarkets
This establishes the boundaries for the research you will need to conduct regarding the number of customers targeted and their overall purchasing power
Macromarket analysis
Fragments or niches of markets that can be identified within the broader market
Micromarkets
Assesses the overall attractiveness of the industry
Macro-level analysis
Focused more on the probability of a startup’s success in the long run
Micro-level analysis
A new business will only be as strong as it’s
leader
The 3 dimensions of capability
The fit of the venture with its leader’s mission, aspirations, and level of comfort with risk involved
The leader’s grasp of factors that are critical to the success of the enterprise and his/her ability to execute on these
The leader’s connection to suppliers, customers, investors, and others who will be essential to making the venture work
