Chapter Three

Question 1

Entrepreneurial alertness

Answer 1

Readiness to act on existing, but unnoticed, business opportunities

Question 2

Good investment qualities

Answer 2

• Products that serve clear an important needs
• Products that customers know about
• Products that customers can afford
• good idea is not the same as a good opportunity

Question 3

Motivations to start a business

Answer 3

• to develop a commercial market for new product or service
• wanting the challenge of succeeding (or failing) on your own
• to tap into unique resources that are available
• to avoid undesirable features of existing companies

Question 4

Type A (New Market) Idea

Answer 4

Centered around providing customers with an existing product not available in their market
EX. Targeting the “new age” beverage market by selling soft drinks with nutritional value

Question 5

Type B (New Technology) Idea

Answer 5

Involve new ideas, involve new technology, centered around providing customers with a brand-new product
EX.Using high-tech computers to develop a simulated helicopter ride

Question 6

Type C (New Benefit) Idea

Answer 6

Centered around providing customers with an improved product

EX.Developing a personal misting device to keep workers cool

Question 7

Serendipity

Answer 7

A facility for making desirable discoveries by accident

Question 8

General environment

Answer 8

Encompasses factors influencing business in a society

Question 9

Industry environment

Answer 9

Combined forces impacting a firm and its competitors

Question 10

Competitive environment

Answer 10

Focus on the strength, position, and likely moves and countermoves of competitors in an industry

Question 11

Resources

Answer 11

Basic inputs that a firm uses to conduct its business

Question 12

Tangible resources

Answer 12

Visible and easy to measure

Question 13

Intangible resources

Answer 13

Invisible, difficult to quantify

Question 14

Capabilities

Answer 14

Integration of various organizational resources that are deployed together to the firms competitive advantage

Question 15

Core competencies

Answer 15

Resources and capabilities that provide a firm with a competitive advantage over its rivals

Question 16

SWOT analysis

Answer 16

Strengths, weaknesses, opportunities, and threats. Provides concise overview of firm’s strategic situation and helps identify opportunities that match the venture.

Question 17

Strategy

Answer 17

Plan of action that coordinates resources and commitments of an organization to achieve superior performance

Question 18

Strategic decision

Answer 18

Decision regarding the direction a firm will take in relating to its customers and competitors

Question 19

Sustainable competitive advantage

Answer 19

Value creating industry position likely to endure overtime

Question 20

Broad-based strategy

Answer 20

Seeking an advantage in cost or differentiation

Question 21

Cost-based strategy

Answer 21

Requiring the firm to be the lowest cost competitor

Question 22

Differentiation-based strategy

Answer 22

Emphasizing the uniqueness of the firms products or service

Question 23

Focus strategy

Answer 23

Targeting a specific market slice (niche) using either a cost or a differentiation-based strategy

Question 24

Feasibility analysis

Answer 24

A preliminary assessment of a business idea that gauges whether or not the venture envisioned is likely to succeed

Question 25

Fatal flaws

Answer 25

A circumstance or development that in and of itself could render a new business unsuccessful

Question 26

Opportunity recognition

Answer 26

Identification of potential new products or services that may lead to promising business

Question 27

Pivot

Answer 27

To refocus or re-create a start up if the initial concept turns out to be flawed