Chapter 5

Question 1

What is Entrepreneurship

Answer 1

is a way of thinking, acting, and being that combines the ability to find or create new opportunities with courage to act on them

Question 2

what makes something plausible?

Answer 2

is it economically feasible?
* can we do it

is it viable?
* can we make money doing it

Question 3

use evidence-based entrepreneurship:

Answer 3

 hypothesising, testing, and validating to create a business model

Question 4

business model:

Answer 4

 the rationale of how new venture creates, delivers, and captures values

Question 5

what are the 4 parts of the business model

Answer 5

Imitation
- Existing customer, Existing Products and services
* Should avoid
* Imitation without differentiation is the biggest form of flattery
* Ex; just because Starbucks in your town does not mean a new coffee shop would fail
o Do not try to be Starbucks, be uniquely you
o Should move from imitation to differentiation by trying to better met customers needs

Differentiation
- New customers, Existing product
* Fulfilling unmet needs of customers using an existing product
* Ex; toothbrush called Quip

Disruption
- Existing customers, New products and services
* Disrupt existing markets by creating something new for customers
* Ex; MOOC’s (massive open online course) disrupt higher education

Innovation
- New customers, New products and services
* ex: Facebook

Question 6

where 4 parts of business model fall on chard

Answer 6

• Existing customers New customers

Existing Product Imitation Differentiation

New Product Disruption Innovation

Question 7

What is the key to success in a business model

Answer 7

-focusing on what customers want and where they are going

Question 8

The 4 parts of a business model

Answer 8

1. The offering
2. The Customers
3. The infrastructure
4. The financial viability

Question 9

Offering part of business model

Answer 9

1. The Offering
   a. : what you are offering to a particular customer segment, the value generated for those customers, and how you reach and communicate with them
   b. Includes a customer value proposition (CVP)
   i. : Statement that describes why a customer should buy and use your product or service
   ii. Value part = how much your product is worth to customers even if more then the price actually costs

Question 10

The customer part of business model

Answer 10

people who populate the segments of a market served by the offering
b. Individuals or business willing to pay for what you are offering
c. Target audience

Question 11

The infrastructure part of business model

Answer 11

a. : the resources (people, tech, suppliers, patterns, facilities) that entrepreneur must have in order to deliver the CVP

Question 12

The financial viability part of business model

Answer 12

a. : defines the revenue and cost structures a business needs to meet its operating expenses and financial obligations
b. How much does it cost to deliver our offering to our customers and how much revenue can we generate
c. Is more then how you intend to make money but rather why would customer give you money (CVP)

Question 13

Customer Value Proposition (CVP)

Answer 13

i. : Statement that describes why a customer should buy and use your product or service
ii. Value part = how much your product is worth to customers even if more then the price actually costs
* Most important part of business model
* Focus should always be on the value created for customer and how this value is captured by business to create profit

Question 14

What do you need for CVP to be effective?

Answer 14

o Better value than competition
o Be measurable in monetary terms
o Must be sustainable
 Must be able to execute for long time

Question 15

overt benefits

Answer 15

o : the one big benefit for your customer

Question 16

Business need to answer 3 questions to customer to survive (overt 3 benefits)

Answer 16

o What is in it for me
o Why should I believe you
o Why should I care

Question 17

4 problems for customers that entrepreneurs should try to solve and why should they do so?

Answer 17

 If you can find a way to solve one of these on your way to creating strong CVP
o Lack of time
o Lack of money
o Lack of Skill
o Lack of access

Question 18

3 types of value propositions from worst to best

Answer 18

• all-benefits
• points of differences
• resonating focus approaches

Question 19

All-benefits

Answer 19

 : identifying and promoting all the benefits of your product or service to customer segments with little regard for competition or any really insights into that the customer wants or needs

Question 20

Points-of-differences

Answer 20

 : focuses on the product or service relative to competition and how the offering is different from others on the market
 Better then all-benefits as shows better then competitor
 Issue is does not tell why your customer will find valuable

Question 21

Resonating-focus approaches

Answer 21

 Describes why people will really like your product and focuses on the customers and what they really need and value
 Gold standard

Question 22

5 Types of customer segments

Answer 22

Mass market
 : large group of customer with very similar needs and problems
 Ex: computers, soaps, coke and Pepsi, insurance

Niche market
 : small market segment that consists of customer with specific needs and requirements

Segmented market
 : market divided into groups according to customers different needs and problems
 Ex: Bank has different services for wealthier clients

Diversified market
 Two + market customer segments with different needs and problems that bear no relationship to each other
 Ex: Amazon

Multisided market
 Markets with 2 + customer segments that are mutually independent of another
 Ex: Newspaper has customer who get it and them the advertisers on the paper

Question 23

Business model Canvas and the 9 steps

Answer 23

: a one page plane that divides the business model into nine components in order to provide a more through overview
1. Customer Value propositions (the offering)
a. What value do we deliver
b. What product services are we offering
c. What are we helping customer achieve
2. Customer segments (customers relate to)
a. Who is most important customer
3. Channels
a. What are all the ways you can reach your customer
4. Customer relationships
a. How do you establish and maintain relationships with customers
5. Key activates (infrastructure)
a. Most important activities to get the job done
6. key resources
a. what resources do you need
7. Key partners
8. Cost structure (financial viability)
a. What are the most important costs associate to business model and the most expensive
9. Revenue streams
a. How much are customers willing to pay
b. How many customers do I need

Question 24

Lean Canvas business model difference from business model canvas

Answer 24

• Less emphasis on customer segments and more on likely first adopters
• Begins with a problem rather then value proposition
• Addresses key metrics to track how a business is doing
• Addresses competitive advantage called unfair advantage

Question 25

Components

Answer 25

1.problem
* problem you are solving for the customer
* is the problem big enough
2.solution
* potential solutions to the problem identified
3.key metrics
* how to track
4.unfair advantage
* is the competitive advantage

Other components in original model
1. cost structure
2. Revenue Streams
3.Unique value proposition
4.Channels
5. Customer segments