closed book mcq 40% Flashcards
What are the 4 steps for an innovation process?
- Opportunity identification
- Invention to dev
- prototyping
- production mktg and sales
What are the 3(4) types of innovation?
process, product, service, strategy
What does innovation results in? (4)
New product
New process
New market
New way of organising the business
What are the 9 drivers of innovation?
- Financial pressures ; reduce cost increase efficiency
- Increase comp
- Shorter life cycles (product)
- Stricter regulation
- Increased demand for accountability
- Digital revolution
- Globalisation
- Increasing turbulent world, shifting demographics and rapid change
- Greater availability of potentially useful technologies
How does tech management affect business? (4)
Reduced costs of operations
New product and new market creation
Improved cust service
Reorganised administrative ops
What is Risk?
Chance or possibility of loss, could be Financial / physical / reputational
what are the 4 levels of risk
Clear single outcome (very low lvl)
Limited sense of possible outcomes (low)
Wide sense of possible outcomes (medium)
Limitless range of possible outcomes (high)
How to calculate risk-adjusted value of a venture V?
V = U Upside - λR downside regret
T/F Smaller value of λ, more risk adverse
F: Larger value of λ, more risk adverse
What does R represent in the formula V = U - λR?
Downside regret
When will risk adjusted value be neutral, when will it be risk adverse?
λ = 1 is neutral, λ = 2 or more is risk adverse
How to obtain required upside?
U > λR
R = 110,000 / λ = 2
Required upside is U > 220,000
What are the 6 steps for risk management?
Identifying risks:
Performing qualitative risk analysis:
Performing quantitative risk analysis:
Planning risk responses
Implementing risk responses
Monitoring risk
What does performing qualitative risk analysis help identify?
Prioritising risks based on probability and impact of occurrence
What are the 5 sources of uncertainty?
Market uncertainties
Organisation and management uncertainties
Product and process uncertainties
Regulation and legal uncertainties
Financial Uncertainties
What are the 4 type of tech venture risk?
tech, market, financial, team
How to estimate a new venture’s possible risk?
Ask 4 ques
Desc likely scenario - expected reward and probability
Desc worst-case scenario - expected loss and probability
Desc best-case scenario - expected reward and probability
Determine how much entrepreneurial teams & investors can afford to lose
What is economies of scale?
Larger quantities = result in reduced per unit costs
What makes venture attractive?
easily scalable ventures, how big a firm can easily grow
What happens when variety of products increases?
unit cost to produce a product will decline
How will scope rise?
sharing of resources, eg P&G diapers and paper towel share cost of procuring raw material
What could be a determinant of demand?
Network of complementary products
What is network effect?
a phenomenon whereby a product or service gains additional value as more people use it
What are the 5 factors of usability?
Ease of learning
Efficiency of use
Memorability
Error frequency and severity
Satisfaction
What makes a good disruptive application?
bring significant value to a product
What is disruptive application?
New product that brings an entirely new category and dominates it
What are the internal and external aspects of a business plan?
Internal:
Dev a road map
External:
Introduces potential investors to the business opp
Why do we write business plan?
Internal: forces founders of the firm to think thru every aspect
External: communicates the merits of a new venture to outsider
Who are the 2 primary audiences of a business plan
Firm’s employees (for vision and future of the firm)
Investors and other stakeholders
What is an elevator speech
Outlining merits of a business venture / business plan insight feature within 45 secs to 2 mins
What are the 4 steps for a good elevator speech
Desc opp
Desc how your product / service meets the opp
Desc qualifications
Desc ur market
What are the 7 red flags for business plan?
Founders with none of their own money at risk
Poorly cited plan
Defining market size too broadly (need to segment market, why would people buy)
Aggressive financials
Hiding or avoiding weakness
Sloppiness
Too long
How long should a business plan be?
25-35 pages
What does a business plan tries to convince (4)?
Exciting
Feasible
Defensible
Within the capabilities of the people who will be launching the firm
What are the 3 sources for new business ideas
Changing environmental trends
Unsolved problems
Gap in the market
What are some changing environmental trends? （4）
economic, social, political and regulatory changes
Why are there gaps in marketplace?
Key large retailers compete on price and target the mainstream cust, leaving gaps in marketplace
Where could business ideas potentially be formulated from? (3)
Brainstorming session
Focus group
Best business idea - extensive library and internet research
Why is business plan essential? (3)
Saves time and money
Key to raising capital
Serves as an operations guide
What 4 factors to include in a business plan?
Story of what the business is and will be
All costs and a mktg plan
Desc of financing
Estimated projected earnings
What are the 3 tests a business plan must pass?
Reality test
Competitive test
Value test
What does the competitive test evaluates?
Company position relative to its competitors
Management’s ability to create a company that will gain an edge over its rivals
What does reality test tries to prove?
Prove market does rly exist
Can actually build or provide it for the cost estimates in the plan
What does a company’s mission contains?
Concise comm of strategy w a business definition and comp adv
What should be included in a company description for an established firm? (2)
Summary of company’s founding
Overview of track record (business progress and financial success)
What are the 5 factors in opportunity analysis
Industry analysis
Environmental
Proof of market
Target market
Competitive analysis
What could be some proposed exit scenarios? (4)
- Buyout plan
- Initial public offering (IPO)
- Sold when benchmarks or date reached
- Succession plan
What are the 7 factors included in financial analysis
Sources and uses of capital
Cash flow projections
Balance sheet projections
Income statements for 3 years (aka profit and loss statement)
Break Even analysis
Ratio analysis
Risks and assumptions
What does cash flow projections shows?
cash receipts - cash disbursement over a time period
How to conduct break even analysis?
Fixed cost / gross profit per unit = breakeven units
What should a business plan contain? (7)
Opp
Vision
Value position
Business model
Concept, feasibility, story
Resources acquisition
Execution and launch process
Risk adverse vs risk seeking vs risk neutral
Risk-averse: Utility or risk tolerance rise at a decreasing rate
Risk-seeking: higher tolerance for risk, satisfaction increases when more payoff at stake
Risk neutral: balance between risk and potential payoff
How to identify risk?
brainstorm, interview, SWOT
What is the objective for project management
not removal of all risk but to manage risks to the benefit of the project
What is the difference between qualitative risk and quantitative?
Qualitative risk: analysing risks and prioritising their effects on project obj
Quantitative risk: measuring probability and consequences of risk
What the 5 Organisation and management uncertainties
Capabilities
Financial strength
Talent
Learning skills
Strategies
What are the 5 product and processes uncertainties
Cost
Tech
Materials
Suppliers
Design
What are the 2 financial uncertainty?
Cost and availability of capital
Expected return on investment
What are the difference between economy of scale and scope?
Scope: Avg total cost of production of a variety of goods
Gives a cost adv when it prod a complementary range of products while focusing on its core competencies
Cheaper for 2 products to share the same resource inputs than for each of them to have separate inputs
Scale
Cost advantage that arises when there is a higher level of production of one good
Increasing volume of a single product
Why is networking important?
Leveraging network effects = increase size of user base, company’s market share, product / service value
What factors could affect choosing the form of ownership ? (8)
Tax
Liability exposure
Start up & future capital requirements
Control
Managerial ability
Business goals
Management succession plans
Cost of formation
What are the major forms of ownership? (6)
Sole proprietorship
Partnership
Corporation (C corporation)
S corporation
Limited liability company
Joint venture
What 4 issues to consider in choosing a legal form of business ownership
Cost of setting up and maintaining
Extent to which personal assets can be shielded from the liabilities of the business
Tax consideration
Number and types of investors involved
What are the adv of sole proprietorship? (6)
Least costly
Profit incentive
Total decision making authority
No special legal restrictions
Losses can be deducted against the sole proprietor’s other sources of income
Easy to discontinue
What are the 2 types of partnership?
general and limited
What are the adv of partnership (4)?
Easy to establish
Complementary skills of partners
Division of profits
Larger pool of capital
What are the disadv of partnership? (4)
Unlimited liability of at least one partner
Difficulty in disposing of partnership interest
Potential for personality / authority conflicts
Partners are bound by the law of the agency
What is a limited partner?
Cannot participate day to day management
Limited liability
What are the 2 types of limited partners
Silent partners
Not active in a business but generally known as member
Dormant partners
Neither active nor generally known to be associated
What is a general partner? (3)
Take an active role in managing the business
Unlimited liability for partnership’s debts
Must have AT LEAST ONE general partner
What are the 2 adv and 2 disadv of a joint venture?
Adv
Access to new markets / distribution networks
Sharing of risks
Disadv
Obj of the venture are unclear
Diff cultures & management styles = barriers
What are the 6 types of corporation?
Domestic
Foreign
Alien
Publicly held
Closely held
Limited liability company (LLC)
What does LLC stands for?
limited liability company, prov limited liability features of a corporation and tax efficiencies and operational flexibility of a partnership
What are the disadv of corporation? (4)
Process of incorporation takes more time and money
Monitored by federal / state agencies
Higher overall taxes
Dividends paid to shareholders = not deductible from business income; thus income can be taxed twice
Which type of companies are suitable to be a S corporation? (3)
start up companies that anticipate net losses
Highly profitable firms with substantial dividends to pay to shareholders
Companies that plan to reinvest
What is different when calculating tax for C corporation vs S corporation / LLC
C = corporate tax + (use after tax income * marginal tax rate)
S = use ordinary income * marginal tax rate
What are the 7 types of organisational forms?
Independent venture:
Corporate venture
Nonprofit org
Family owned
Franchise
Small business
Large business
What is the % of fortune 1000 businesses that are family controlled?
25
What is the problem with family owned business? 6
family issues often carry over into business ops
blurred boundaries
Family rules used in business
Problems determining if decisions relate to fam, ownership, management
Problem solving ability diminished
Businesses may become family/ownership/management-first
What are the 5 adv of fam business?
Long term orientation
Independence of actions
Resilience and commitment
Fam culture
Natural succession
What are the 6 disadv of fam business?
Nepotism
Family strife
Financial strains
Succession problems
Limited access to capital markets
Concentrated risk in case of business failure
What are the 3 main challenges for family business?
need to innovate to keep ahead, accessing the right skills and capabilities, economic envir
What is a franchisor?
Person / company who dev or sells a franchise with specific terms and methods of the agreement
What are the 7 modes of franchising
Product and trade name franchising
Business format franchising
Master franchise
Area / multiple unit franchise
Internet franchise
Conversion franchising
Piggybacking / co-branding
What are the 3 types of franchising
trade name, product distribution, pure (business format)
What is the key question to ask when considering to franchise?
What can franchise do for me that I cannot do myself?
What are the 8 drawbacks of franchise?
Franchise fees and ongoing loyalties
Strict adherence to standardised ops
Restriction on purchasing (approved suppliers only)
Limited product line
Contract terms and renewal (avg term 10.3 years)
Unsatisfactory training prog
Market saturation
Less freedom (no independence, happy prisoners)
What is the right way to buy a franchise? (6 steps)
Evaluate yourself (like or dislike)
Research the market
Consider franchise options
Talk to existing franchisees
Ask franchisor tough ques
Read through franchisor’s FDD (franchise disclosure doc)
What are the 7 factors that make a franchise appealing?
Unique concept / mktg
Profitability
Registered trademark
Workable business system
Solid training prog
Affordability
+ve relationship w franchisees
What are the 5 trends that shape franchising?
Changing face of franchisees
Multiple unit franchising
Int opp
Smaller, non traditional locations
Conversion franchising
How can people protect themselves from making a bad franchise investment? (2)
Examine the FDD in detail, specifically the franchisee turnover rate
Contact other franchisees present and honest, unbiased view
What is a corporate new venture? (3)
New venture started by an existing corporation
Building an important new business unit or org
Focused on identification and exploitation of previously unexplored opp
How is corporate new venture different from a project?
Its newness to the corp
Its independence from the existing activities, org units, products
What are the 4 characteristics of corporate new ventures
Newness and novelty
Independence / semi autonomy from existing corporate structure
High potential for significant innovation
Unique entrepreneurial team leadership capabilities
What are the strengths of corporate new venture (6)?
Ready access to capital
Access to capabilities of corporate employees
Suppliers willing to help in design process
Emphasis on the mktg plan
Gain from brand equity of parent firm
Access to processes and tech of parent
What are the weaknesses of corporate new venture? (6)
May be subjected to a corporate budget process
Multiple control and review levels
Limited autonomy
Limited access to talent
Risk reward may be less attractive
Limited to parent firm’s technologies and processes
What are the 4 incentives for corporate entrepreneurs?
Support/ recognition of employees who create and champion new ideas and opp
Culture that favors indiv or team initiative to create new ideas
Significant degree of autonomy
Effective rewards such as promotion, stock ownership, bonuses
What are the 5 steps in order to establish a corporate new venture?
Identify and screen opp
Refine concept and determine feasibility
Prepare a complete business plan
Determine the best form of the corporate new venture
Establish the corporate new venture w talent, resources, capabilities transferred from the parent company
What are the 6 types of new ventures?
Small business
Niche
High growth
Non profit
Radical innovation
Corporate
What is knowledge?
awareness and possession of info, facts, ideas, truths, principles in an area of expertise
What is intellectual capital?
sum of the knowledge assets of a firm
What does knowledge assets include? (4)
Knowledge of its ppl
Effectiveness of management process
Efficiency of cust and supplier’s relationship
Technical knowledge
How can knowledge grow?
When shared among people
How can core competencies be formed or created? (4)
Shared problem solving
Implementing new processes and tools within the firm
experimenting and learning
acquiring knowledge outside the firm
Why is info about competitors useful?
respond to competitive changes and challenges
How to manage knowledge in a tech venture?
role,
value,
plan,
improve
What does value stands for when managing knowledge in tech venture?
Identify expertise, capabilities and intellectual capital that creates value in the form of products and services
What does plan stands for when managing knowledge in tech venture?
Plan for investing in firm’s intellectual capital and exploiting those value while protecting it from leakage to competitors
What does role stands for when managing knowledge in tech venture?
Role of knowledge in the firm (identify and evaluate)
What does Improve stands for when managing knowledge in tech venture?
Improve knowledge creation and share process within the new venture
Which 5 activities should learning org skilled at?
Systematic problem solving
Experimenting w new approaches
Learning from their own experience and past history
Learning from best prac of others
Transfer knowledge quickly and efficiently throughout the org
How to be successful (learning org)?
Develop right incentive and work collaboratively
What does the power of knowledge depends on?
company’s ability to prov supportive envir
How to build a successful product design? (5)
commitment, vision, improvisation, info exchange and collab
What does the dev process include? (4)
design of the product, architecture, physical design and testing
What are the 5 practices for a good product development?
Commitment of senior management to the design process
Improvisation and iteration to dev a prototype
Clear and stable vision and goals for the product
Open sharing info
Collab of everyone on the team
What are the ways product prototypes can be presented in? (3)
physical model
computer simulation
computer industry
What does sharing and managing knowledge wisely help build ?
competitive and innovative skills
What can prototypes do?
help new venture learn the right form and functions of a product
How can business benefit from creating set of scenarios? (4)
help address complex uncertain challenges
possible sequences of events
encourage openness of mind
flexibility of response
How can knowledge become a powerful tool?
When it is acquired, shared, used
What is IP?
Product of human imagination, creativity and inventiveness
(intangible)
What are the 4 proprietary assets (IP)?
Trade secrets, patents, trademarks, copyrights
What can intellectual property temporary provides?
monopoly in marketplace
What does knowledge equals? (6)
awareness, possession of info, facts, ideas, truths, methods
A company name must be? (5)
Memorable
Related
Attractive
Right name can make a powerful impression
Name tells product major benefit / named after founders
What are the 4 common mistakes firms make regarding protecting their intellectual property
not properly identifying all IP
Not fully recognising the value
Not using IP for plan to success
Not taking sufficient steps to protect
What is the differences when it comes to protection and enforcement and encroachment of physical property / IP
physical: generally can enforce and protect ownership
IP: hard / expensive to enforce and protect ownership
What is a patent
Grants inventors right to excl others from making, using or selling their invention for a certain period
What are the 3 basic requirements for a patent?
Utility, Novel (must be diff), Not obv
What are the 4 types of patents?
utility
design
plant
business method
What are the ways to develop a patent strategy? (5)
Identify the goals of a patent portfolio
Identify the intellectual assets and gather supporting doc
Identify most suitable assets for patent applications
Draft invention disclosures and patent applications
Dev a plan for licensing, enforcing and enhancing patents
What are the 6 processes one have to go through to obtain a patent?
Make sure the invention is practical
Determine the type of application to file
Hire a patent attorney
Conduct a patent search
File the application
Obtain decision from patent and trademark office
What are the 7 reasons why firms patent?
Prevent copying
Patent blocking
Prevent suits
Use in negotiations
Enhance reputation
Licensing rev
Measure perf
What are the 4 types of trademarks?
trademark (name, symbol, device used)
service mark
collective mark
certification mark
What are protected under trademark law? (8)
Words
Numbers and letters
Designs and logos
Sounds
Fragrances
Shapes
Colors
Trade dress
What are excluded from trademark protection? (4)
Immoral / scandalous matter
Deceptive matter
Descriptive marks
Surnames
What does copyright grants?
owner of a work of authorship the legal right to determine how the work is used *must be tangible
What could be protected by copyrights? (6)
Literary works
Musical compositions
Comp software
Dramatic works
Pantomimes / choreographic works
pictorial , graphic, sculptural works
How to obtain a copyright? (3 steps)
Protect any work of authorship the moment it assumes a tangible form
Attach copyright notice
Protection can be obtained by registering the work w the copyright offic
What is trade secrets, what does it incl (5)?
Info that provides the owner of info w a comp adv in the marketplace
Marketing plans
Product formulas
Financial forecasts
Employees rosters
Logs of sales calls
What are some physical measures to take to protect trade secrets? (6)
Restricting access
Password protecting comp files
Maintaining logbooks for access to sensitive materials
Labeling docs
Maintaining logbooks for visitors
Maintaining adequate overall security measures
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What does patents protect?
functional or ornamental features
Who were the winners for Barbie vs Bratz Dolls
Due to complexity of IP laws, attorneys wins as it cost both firms more than 700 mil
What are the objectives of marketing activities ? (3)
Secure
Serve
Retain customers
Why must new business create mktg and sales plan?
Desc target cust
Desc product offerings
What does gaining recognition and acceptance in target market requires? (7)
Product offering
Target cust
State mktg obj
Gather info thru market research
Create mktg plan
Create sales plan
Build mktg n sales team
What are the steps for building a marketing and sales plan (8)
Opp
Mission & strategy
Business model
Target market and cust
Mktg obj
Mktg research
Mktg plan
Sales plan
In order to succeed, what must new firm address?
Who are our cust and how will we appeal to them?
How will start up (well managed) approaches this “Who are our cust and how will we appeal to them?” by? (3)
Segmenting the market
Selecting a target market
Craft a unique positioning strategy
How to group people with similar needs? (3)
Geographical location
Purchasing power
Buying attitudes
How can market be segmented into? (5)
Geo
Demographic
Psychographic
Bhv
Product type
How to select a target market?
After segment a market, choose target market
Must be sufficiently attractive and firm must have capability to serve it
Firm can become expert, prov cust high level of service if focuses on a clearly defined market
What are the 4 critical questions to ask about target markets?
Is there a target segment where the company can enter the market and provide customer benefits at a price the customer is willing to pay?
Do customers perceive that these benefits are superior to other solutions/options?
How large is the target market segment and how fast is it growing?
Will entry into the target market segment serve as a springboard for entry into other segments?
What is positioning?
Designing the product offering and image to occupy a distinctive place in target cust mind
What is a tagline? (3)
Dev tagline to reinforce position they have staked out in their market
Clearly comm the position to target cust
Positioning a product focuses on a few key attributes of the value proposition
What is Nike tagline?
Just do it
What is the key customer question for unique selling proposition?
what’s in it for me?
What is unique selling proposition?
Statement of the key customer benefit of a product that differentiates from its comp
What does a positioning statement include? (4)
For (target cust)
Who (statement of need or opp)
Product Name (product)
That (statement of benefit)
What is market research?
Process of gathering info that serves the basis for sound marketing plan
Need to prove a market exists for your company’s product or service (do not assume)
What are the 4 market research process?
Define the product & unique selling proposition
Collect data using surveys, published sources, focus groups, interviews, secure it (primary & secondary data)
Analyse and interpret
Draw conclusions on the cust and their needs, preferences and bhv
What are the 2 types of pricing strategy?
Cost based pricing
Adding a markup percentage to a product cost
Value based pricing
Determined by estimating what cust willing to pay for a product
What are the 6 steps for advertising?
identify purpose of the ad
determining the target audience
select a medium
create the ad
select a place and time for the ad to appear
fulfill expectations
What are the +ve attributes that people associate with company? (branding) (4)
trustworthy, innovative, dependable, easy to deal with
What is the most valuable assets?
customer loyalty
How did IBM achieve success?
knowledgeable, trained, high motivated sales force
What are the 7 sales processes?
Prospect (gather) for sales leads
Make initial contact
Qualify the lead
Make sales penetration
Meet obj and concerns
Close the sale
Follow up
What does customer relationship management consists of? (4)
Economic exchanges
Product offering
Space where exchange takes place
Context of exchange
How to be fruitful during customer relationship mngment? (3)
Managed thru convo in real time
Economic exchange based on a product offering that is communicated to cust
Space could be physical or websites
What will the 79% of unhappy customer do?
tell others about their experiences
How to address comment and complaints? (6)
Humanise your responses
Respond quickly
Respond publicly
Avoid defensive tone when confronted with -ve comments
Set up alerts
Create a database of complaints and suggestions
What is diffusion of innovation?
process of how innov spread thru a population of potential adopters
What is the primary objective for diffusion of tech and innov?
understand and predict the rate or pattern of diffusion
What are the 5 characteristics of an innovation?
relative adv
compatibility
complexity
trialability
observability
What are the 5 categories of adopters of an innov?
innovators, early adopters, early majority, late majority, laggards
Who has the greatest degree of opinion leadership?
early adopters
Who often has substantial financial resources to help absorb uncertainties and potential losses ?
Innovators
What does the adoption of early majority signifies?
signals the phase of rapid diffusion thru the population
How long did electric power took to diffused?
40 years
Why are capabilities of entrepreneurs (founders) critical? What must they display (3)?
others willingness to join based on their experiences and commitments
Must display: passion, commitment, vision
How should a new venture team be selected?
Ability to gain access to info, knowledge, financial capital
What does a good organisational design signifies?
reduction of bureaucratic costs (gain low cost adv)
What are the characteristics of an innovative organisation? (3)
having free comm, independence in pursuing their own opp, freedom from central micromanagement
What is consider the best organisational design?
compete and generate diff ideas but maintain free, open comm with others
What are the 9 elements of an organisation?
Mission and vision
Goals and obj
Strategy
Capabilities and resources
Processes and procedures
The talent
Leadership team and management
Shared values and culture
Structure and style
What are a leader’s role? (5)
define direction, clarify team roles and responsibilities, resolve conflict, reinforce norms and values, teach and train staffs
How will a leader look like if they show high supporting and directive (telling how) behaviour?
coaching
What are the 7 traits of leaders?
Authenticity
Decisiveness
Focus
Care
people skills
Comm
Continuous improvement
What are some characteristics of an effective team?
Share leadership and ownership between all members
Comm is continuous (in informal atmosphere)
Tasks and purposes - well understood
Listen to each other - comfortable w disagreements
Decisions are reached by consensus
Frequent feedback on performance
Division of tasks / work effort - clear
Collaborative effort
Set their own, shared interim deadlines
Rely on each other
Learn and share
What are the 6 factors of social interaction in a team?
Comm
Cohesion
Work norms
Mutual support
Coordination of tasks
Balance of member contributions and conflicts
What does cohesion of a team includes? (3)
Interpersonal attraction, commitment, team pride
How does communication looks like in a team? (4)
Frequency, formalisation, structure, openness
What are the 5 set of management processes?
Planning, budgeting, organising, staffing, controlling
Why should we consider to use personal contact for help?
Informal networks create part of social capital of an org
What are the 4 psychological capabilities that leaders exhibit?
Self awareness
Self management
Social awareness
Relationship management
What is relationship management?
Ability to communicate thru inspiration / influence / conflict management
What does organisational culture includes? (4)
values, norms, rituals, trust
What are the 7 principles of trust?
Trust is not blind
Trust needs boundaries
Requires constant learning
Tough
Needs bonding
Needs touch
Has to be earned
What are the 6 principles for retaining loyal people and partners?
Preach what you prac
Partners must win
Be selective in hiring
Use teams of talented people
Prov high rewards for right results
Listen hard talk straight
What is needed to launch and grow? (4)
capital, people, intellectual and physical assets
How does the credibility cycle works?
loop:
talent people
customers
sources of financial capital
suppliers
sources of capabilities
physical assets
What are the 6 sources of legitimacy?
regulatory, social, industry, talent, favourable location, IP
What are the 6 principles of persuasion?
liking, reciprocity, social proof, consistency, authority, scarcity
What are the criterias for location selection? (9)
Availability of potential employees and consultants
Availability of complementary firms
Road and airplane transportation
Quality of life ,education, culture, recreation
Costs of doing business
Availability of suitable facilities
Proximity to markets
Availability of support services
Affordable housing
What is a value chain?
Sequence of business activities for transforming inputs into outputs that cust value
What are the 7 characteristics of new basic technology?
Functional perf
Acquisition cost
Ease of use
Operating cost
Reliability
Serviceability
Compatibility
Why does new venture needs to design a set of operation processes?
build, store, ship products to customer
What is the value chain?
Series of activities for transforming inputs into outputs that cust value
What is operation management? What are the 3 activities firm should conduct?
supervising, monitoring, coordination of activities a firm carried out along the value chain
What is process
set of activities that takes one or more inputs, transforms and adds value to prov one or more outputs
What does process transform? (2)
Transforms materials into products
Transforms client info into an insurance agreement
What does business processes should be aligned with?
its strategies and employee competencies
What are the 4 competitive capabilities?
quality, reliability, speed, flexibility
what does speed include?
lead time, on time delivery, product development speed
What is a value web?
Desc a business process as a set of interrelated tasks accomplished in a network of activities
What is a web? (5)
Grids w no center
Allow open comm and movement of items / ideas
Each participant focuses on a limited set of core competencies
Based on internet infrastructure
Consists of extend enterprise within a network of interrelated stakeholders
What is long term success of a firm determined by?
its ability to establish and maintain relationships within its entire network of stakeholders
What is strategic control? (4)
Monitor their activities
Evaluate efficiency and perf
Take correct action to improve perf
Keep firms ops on track
What is a balance scorecard? (3)
Set of measurements unique to a firm
Both financial and operational metrics
Give managers quick yet comprehensive pic of company’s total perf
How to build a successful scorecard?
Measures tangible obj consistent w meeting an org goal
How to build an effective scoreboard? What does an effective scoreboard measure? (3)
Firm needs to determine fundamental drivers of perf
Measure reliability, quality and cust satisfaction
What should new firms develop to show how operations work?
develop diagrams and flowcharts
What is diagrams? (2)
Help comm the process system to all concerned
Outline no. of actions that will be taken in the future
What is a chart form?
All important milestones that firm expects to reach immediate or near term
What is a gantt chart (4)
Depict sequence of tasks and time required for each
Compare what was done and what was planned
Contrast actual and planned progress
Depict both scheduling and coordination of separate tasks
How does a roadmap for a new technology firm may look like? (8)
start new firm, legal team plan, initial product prototype, test & market research, final product & mktg plan, acquire sales force, launch product, initial sales
What are the adv of acquiring an existing firm? (4)
Location
Employees
Equipment
Products
What are the disadv of acquiring an existing firm? (5)
Poor location
Depleted assets
Obsolete inventory
Depreciated brand
Lack profitability
What are the 3 main steps of acquiring?
Target identification and screening
Bidding strategy
Integration / transition to the acquirer
What are the 3 common methods of valuation?
Book value
Price to sales ratio
Price to earnings ratio
What does book value equivalent to?
net worth (equity) of firm
How to calculate book value?
Total assets - intangible assets (patents, goodwill) & liabilities
What is horizontal merger?
Make and sell similar products in similar market
What is vertical merger
Merger of two firms at diff places on the value chain
What are the 5 different types of mergers and acquisition?
overcapacity reduction
geographic extension
product or market extension
tech acquisition
industry convergence
What should acquiring firm do? (6)
Use highly valued stock as payment
Identify key people, get their agreement to stay
Decide who to keep and build relationships fast
Contain the tendency toward hubris
Integrate the culture and the operations of the two firms
Appoint an integration manager or team
What should the acquired firm do? (6)
Demand cash, not stock as payment
Agree to stay for a short period
Avoid a non-compete agreement or keep its duration short
Explain the benefits that accrue to the employees and managers of the acquired firm
Tell people who will have and who will not a job
Restructure with respect for people
What are the 4 roles of integration manager?
- inject speed into process
- create new structure
- make social connections
- build success
What are the 10 strategies for going global?
Becoming an expat entrepreneur
Create website
Rely on trade intermediaries
Create joint ventures
Foreign licensing
Int franchising
Countertrading and bartering
Exporting
Import / outsourcing
Establish int locations
What are the 4 best strategies for going global?
Create a presence on the Web
Rely on trade intermediaries
Form Strategic alliance and joint ventures
The Web’s Global Reach
What’s trade intermediaries?
Domestic agencies, Serve as distributors in foreign countries for companies of all sizes
Make transition to world markets faster and easier for small firms
What are the 6 types of intermediaries?
Export Management Companies (EMCs)
Export Trading Companies (ETCs)
Manufacturer’s Export Agents (MEAs)
Export merchants
Resident buying offices
Foreign distributors
What can strategic alliances boost? (3)
firm’s rate of patenting
product innov
foreign sales
What does tech alliance features cooperation in? (3)
cooperation in r&d, engineering, manufacturing
What is a marketing alliance
Match a company w excess distribution capacity w a company that hav a product to sell
What are the 2 common reasons to form a joint venture?
gain access to a foreign market
typically consists of the firm trying to reach a foreign market and one or more local partners
What are the 2 types of joint venture?
scale and link
What is scale joint?
Partners collab at a single point in the value chain to gain economies of scale in production or distribution
What is link joint?
Positions of the partners are not symmetrical
Partners help each other to access adjacent links in value chain
How to structure franchise deal for international franchising? (3)
Direct franchising
Area development
Master franchising
What are the top 3 countries for franchising?
russia, malaysia, australia
What are the 9 steps to successful exporting?
Recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export
Analyse your product or service
Analyse your commitment to developing export markets
Research potential markets and pick your target
Develop a distribution strategy
Find your cust
Find financing for export sales
Ship your goods
Collect your money.
What are the 6 barriers to international trade?
attitude, tariff, quotas, embargo, political, cultural
What are the 6 guidelines for success in international markets?
Take time to learn before jumping in
Seek out assistance from professionals
Develop new products for the world market
Recruit and retain multicultural workers
Train employees to think globally
Consider using partners and joint ventures to break into foreign markets.
What is a transistor?
semiconductor device used to amplify or switch electronic signals and electrical power
fundamental building block of modern electronic devices
When was transistor practically implemented?
1947
Who developed the first transistor radio?
sony - japan
What are the 4 effects of moore law
possible to make products w more capabilities
become obsolete vv fast
shld not keep too much inventories of products
should clear old stocks regularly
What does the Moore Law states? And who is Gordon Moore?
Number of transistors can be put on a chip doubles every 2 years
founder of Intel
What are the 6 forecasts of technology?
people can comm w monkey and goldfish
discovery of corpses of aliens
colonise mars
Human organs made in farm
recovery drug for human bodies
uncover myths of the beginning of universe and the Big Bang
What did Einstein incorrectly forecast?
said no evidence revealed that nuclear energy is possible as one has to split the atom
What to consider when determining an appropriate time scale for an analysis of the future? (3)
Rate of technological change, flexibility and lead times to respond to change must be considered
How to conduct a trend analysis? (6)
trend extrapolation
time series
regression analysis
historical analogies
patent trend analysis
scientific lit analysis
What are the expert methods for tech forecasting? (4)
interviews
questionnaires
idea gen
nominal group technique
What does EPISTLE stands for ?
economic
psychological
institutional
social
technological
legal and political
environmental
What is a multi order impact?
impact of tech can be indirect and multiplied thru a chain affect
What is a high order impact?
can create a serious consequence undreamed of by their creators
What is a high order impact?
can create a serious consequence undreamed of by their creators
What are the 3 stages of tech change process?
stage 1
invention or discovery
basic idea discovered by chance or research
stage 2
idea is dev into an effective process or product
stage 3
diffusion and commercialisation
process or product is adapted to production or user needs and commercialised, marketed, used, diffused among users
Why is there a need for tech change?
Form competitive advantage, improves economic productivity
What does tech change create? (4)
create new industries
plays major role in industry structural change
change -> crisis = danger + opp
must have ways to recognise and exploit the comp significance of tech change
What are the problems of tech change (4)?
selection of new tech
evaluation of its expected performance
timing of the intro of new tech
determination of the rate and scale / intro of new tech
What are tech entrepreneurs eager to know? (6)
which tech shall we adopt
what kind of tech is comp
is there an ez way to pick up a tech
how to convert tech to product
how we value tech
how to reduce risk
What are electronic goods crippled by? (2)
moore law: better tech show up 6 months ltr
planned obsolescent
manufacturer purposefully designing your good to break and be unrepairable after a ‘reasonable’ amount of time
How to maintain competitive edge?
take opportunity of technological change
What is incremental innovation?
Series of small improvement or upgrades made to a company’s existing products, services, processes or methods
Incremental innovation can be?
simple or complex
What does simple incremental innovation mean?
adding new features to existing product
What will changes for incremental innovation focuses on (3)?
improving efficiency
productivity
comp differentiation
What does incremental innovation do instead of creating new market?
attract higher paying cust as it fulfils their needs
What does 70%, 20% and 10% stands for in incremental innovation?
70% of resources on incremental innov of core business
20% on innov that helps expand that core
10% on more transformational kind of innov, that helps create new businesses
What is radical innovation?
Develop revolutionary new tech, markets, business models
What is disruptive innovation?
Refers to concept, product, service that creates a new value network either by entering an existing market or by creating completely new market
What is the characteristic of disruptive innovation?
Risks are big, but things go right = huge growth potential
What is sustaining innov?
improves and grow existing markets by satisfying cust needs
How is sustaining innovation similar to incremental innovation?
product performance is made slightly better w every iteration, reducing defects
How does S curve shows innovation?
slow early beginning as the tech is dev (ferment) -> acceleration phase (take off) -> matures (maturity) -> discontinuity
What does S curves measure?
speed of adoption of an innovation
What are the 4 stages of S curve?
startup, growth (scale), maturation (compete), decline (transition)
What’s included in startup stage? (3)
Survival, market validation, funding
How to use S curve to relate to technology?
first curve = current tech
Second = emerging tech
What does emerging technology yields?
lower perf initially but will eventually overtake current tech
Lead to even greater lvls of perf
What was the strategic change for electricity (lighting)
fuel based - tungsten bulb (thomas edison)
What does S curve derives?
product follow a life cycle
What are the S curves for semiconductor technology?
vacuum tube -> transistor -> integrated circuit
What is a read write head?
specific physical part of a hard disk that is responsible for reading data from, and writing data to, the disk.
What is the third technology of read write head?
magneto resistive head
Disruptive technology initially serve a?
serve a niche market, eventually enter low end of the range of mainstream market & capture the mainstream market
What will disruptive innovation alter?
industries or market
What does disruptive innovation introduces?
completely new approaches that have the potential to create a new industry or transform an existing one
What are some examples of radical innovation?
Digital photography, micro-bots, high temp superconductors
What is evolutionary innovation? What are some examples?
formed by convergence of previously separate research areas
MRI imaging, faxing, electronic banking
What had Ken Olsen falsely predicted?
“There is no reason anyone would want a computer in their home
How does disruptive technology work? (3)
Offering, at least initially, lil in the way of perf, plenty in terms of cheapness, convenience and ease of use
Appeal to a diff class of cust
Do not initially satisfy demands of even the high end of the market
Why does large companies choose to overlook disruptive technology?
Wait for them to become more attractive (profit wise)
What is the needed shift in mindset?
treat poor as an active market instead of intractable problem, they could be a source of innovation
How did southwest airline serve as a disruptive tech?
Disrupted non-budget airlines
Both low-end and new-market disruption
make air travelling cheap, convenient and easy to use
What happened for the display panel disruption?
Cathode ray tube (CRT) display disrupted by LCD (liquid crystal display)
LCD disrupted by OLED
Low end disruption
What are the 3 tests to determine if an idea has disruptive potential?
New market disruption
Is there a large population who have not own this product now?
Do cust need to go an inconvenient, centralised location
Low-end disruption
Are there cust who wld be happy w low-end product
Are there profits to be made from low-end product
Last test
Is the innov disruptive to all of the significant incumbent firms in the industry
What are EVs targeting at right now?
emerging markets and budget-conscious consumers, positioning themselves as low-cost leaders
How is supply chain gaining more efficient in the automobile industry? (3)
Innovations in 3D printing
modular manufacturing,
supply chain optimization
What are the challenges of automobile makers? (3)
High Capital Requirements, Brand and Trust
What is not always true about switching to new tech?
sales is not guaranteed to increase
What may take over the market share of sustaining innovation? (2)
Low end disruption and new market disruption
Why firms imitate?
make money from products with high demand
What is counterfeiting?
phony/copied products offered for sale as authentic
How does counterfeiting pose threats to businesses? (3)
damage goodwill and reputation of upstanding companies
Flooding the market w lost cost & quality,
reap profits rightfully belong to ori business
How does counterfeiting impact the global economic negatively?
reducing customer trust
risking consumer safety
What is the most counterfeited product?
drugs
What are the 4 stages of an industry life cycle?
emergence, growth, maturation, decline
What are the characteristics for growth stage? (3)
Features and perf become clear
dominant design emerges
Moderate revenue, moderate comp
What are the 5 potential 1st mover advantage?
Create standards and rule
Low cost position
Create and protect IP
Tie up strategic resources
Increase switching cost for producer and cust
What are the 6 disadvantages of 1st mover?
Short lived adv disappear w comp
Higher dev costs
Violate patents and IP rights
Costs of attaining resources
High uncertainty of designing the right product
Cust is reluctant to buy when large cost to switch may incur
What is a late innovator?
an innovator beaten to market by another innovator
How does imitators surpass pioneers?
generally lower prices with improvements
Who invented Microwave?
Dr Percy Spencer
What happened to Amana microwave?
market share dropped when japanese manufacturer came into play
What are the reasons for success of the imitator of microwave? (4)
better size, safer, cheaper, improved user interface
Who was the pioneer for VCR
Phillips
Which of the product’s imitator had market power which prompted its success? (4)
personal computers (IBM), projection tv, diet soft drinks (coke), light beer
What are the 3 imitation strategies?
lower price, superior product, market power
what are the characteristics of firm using lower price to succeed? (2)
Exact duplicate or trimmed down, bare bones version
Entry when market becomes more P sensitive or standardised
How to tell whether a company has market power? (3)
Large industry leaders have mktg clout
Existing distribution network
Financial resources to overwhelm pioneers
How to identify low bargaining power of buyers? (4)
Buyers are more than sellers
Switching costs are high
No substitutes are available
Products are differentiated
What are the 2 areas of focus to conduct an industry feasibility?
Determine how attractive an industry os overall as a ‘home’ for a new business
Identifying possible niches, small business can occupy profitably
What is the strongest among the 5 forces?
rivalry among companies
How are industry more attractive? (bargaining power of suppliers) 4
Sell a commodity product (primary / raw)
Sub are available
Switching cost = low
Account for small portion of the cost of finished products
What does bargaining power of buyers stands for?
Buyers’ influence is high when no. of cust is small, switching cost is low
What does bargaining power of suppliers stands for?
Greater the leverage of suppliers, less attractive the industry
How to be more attractive to new entrants? (threat of new entrants) 5
Adv of economies of scale are absent
Capital requirements to enter = low
Cost adv are not related to company size
Buyers are not loyal to existing brand
Gov doesn’t restrict the entrance of new companies
How could an industry be more attractive to new entrants (threat of substitutes)? 3
Quality sub are not readily available
P of sub are not significantly lower than those of the industry’s products
Switch cost is high
Mobile phone’s bargaining power include:
customer, suppliers, complementors
What are the 2 types of brand?
corporate / product
What are the 4 basic architectures?
Corporate
Product
Corporate and product
Product and corporate
What does imitation strategies also include mimicing in? 2
promotion
distribution strategies
Why are imitation strategies only used at the beginning?
Companies cont to use for long term than it wld be a market follower
Can never be market leader
Why choose to implement imitation strategy?
minimising risk of downside loss associated w new entry
What are the 4 types of imitation strategies?
piracy, cloning, mimics, creative adoption
Why must firm develop competencies? 2
create value, gain competitive advantage
How to you know when a firm has competitive advantage?
its profitability is greater than the avg profitability of all companies in the industry
What does competitive strategy moves consists of? (3)
Attract cust
Withstand comp pressure
Strengthen an org market position
What are the objectives to generate a competitive strategy? (3)
Generate a comp adv
Increase loyalty of cust
Beat competitors
What are the 5 competitive strategies?
Overall low cost leadership strategy
Best cost provider strategy
Broad differentiation
Focused low cost
Focused differentiation
What is distinctive competencies?
firm specific strengths
Why lower P often succeed in capturing market share?
More people at the bottom of pyramid cld not afford to buy high price
How to build distinctive competencies? (2)
capabilities and resources
What does distinctive competencies shape? (3)
strategies, competitive advantage, superior profitability
What is capabilities?
Company’s skills at coordinating its resources
Putting them to productive use
What are the 4 building block of competitive advantage?
superior quality, cust responsiveness, efficiency, innovation
How to increase profit?
selling at higher margin
What is the strategy to increase value?
differentiation
When will customer pay more?
Cust perceived that the value of product or service is worth the amount
What does UPC each stands for?
Utility to consumer, price, cost of production
How to calculate consumer surplus?
Utility to consumer - Price
How to calculate profit margin?
Price - cost of production
How to calculate value created?
Utility to consumer - cost of production
Why is toyota able to make more profit?
lower cost structure (C), creates more utility (U), so can charge a higher P
What are the 5 values proposition offered to a customer?
Product, price, access, service, experience
What is USP?
unique selling proposition, short version of firm’s value proposition
What does red ocean strategy emphasizes on?
emphasizes competition and gradual improvements while taking on established competitors in a well-known market
What is blue ocean strategy? How are firms establishing new markets?
stimulates businesses to venture into uncharted territory, establishing new markets through creative thinking and originality
How does red & blue ocean each tackle with demand?
red; exploit existing demand
blue; create / capture new demand
How did cirque du Soleil succeeded?
Created of a hybrid between the circus and the theatre
How does yellow tail wine broke out of the red ocean? (4)
Appealed to beer and spirits drinkers
being fun and unpretentious to wine drinkers
Had a less complex, sweeter and smooth taste
easy to select as it did not focus on prestige, aging,
What does blue ocean strategy tools help us understand? (3)
Where comp is currently investing
Factors the industry currently competes on in product, service, delivery
What cust receive from existing comp offerings on the market
What is the 4 action framework?
eliminate, reduce, raise, create
What did Cirque du Soleil eliminated? (4)
star performers, animal shows, aisle concession sales, multiple show arenas
What did Cirque du Soleil created? (4)
theme, refined environment, multiple productions, artistic music and dance
What does yellow tail wine reduces? (3)
wine complexity, wine range, vineyard prestige
What does competition forces?
progress
What does blue ocean strategy help to identify?
approaches to differentiate
Should low cost result in high profit?
no, unless volume of sales is high
What is the new product failing rate? Why do new product fail easily?
50-80%, people do not look from commercialisation pov
What to do before commercialisation?
planning and preliminary assessments
What aspects to look on when doing preliminary assessments? (5)
market aspect
Technical
Management
Financial
Legal
What to focus on when doing market research and analysis? (4)
Demand
Target cust
Market size
Trends
What to focus on when building business models? (5)
How will the product make money ?
When will it be profitable?
Value proposition
Rev stream
Cost structure
What does value proposition means?
Why would people buy from you?
What are the factors included in impact of design? (5)
manufacturing
Product use
Service
Product disposal
Living
How to review suitability of members in management team? (4)
Track record
Relevant expertise
Affinity to the project and availability
must be assigned suitable roles and responsibilities
What are the 2 financial aspects to focus on for commercialising?
Financial strength of the company including cash position, gearing ratio etc.
Requirement on Return on Investment (ROI)
What is the characteristic of late expenditure?
technical expenditure may be small
but a huge advertising program is needed
What are the 2 legal aspect to consider?
If your idea is original,
how strong is your intellectual property position?
Can you protect and defend it?
If your idea is not original,
what is the assurance you are not infringing others?
Are there any regulatory requirements?
How does the product innovation process evolve? (5)
strategic planning
concept generation
pretechnical evaluation
technical development
commercialisation
What are the 3 sources of uncertainty and risks?
market
competition
technical
What does competition risk states?
product may not be the winner
Huge fortune can be made => keen competition => many players and Winner Takes All => second best will not survive
What’s missing the boat risk?
Loss of opportunity to make a fortune
What’s sinking the boat risk?
Huge financial loss and perhaps loss of personal esteem when project fails
What are the 3 steps to manage risks?
Identify sources of risk and take action to reduce them
Share the risk with other willing parties
Follow a systematic process, monitor progress and continuously assess the project
How to know if bargaining power of supplier is low?
many suppliers in a competitive environment serve the industry
supply exceeds demand
How to identify if threat of new entrants is high or low?
threat is high if there are no or a few entrance barriers
How to identify if threat of substitute is high or low?
it is high when rivals, or companies outside the industry, offer more attractive / lower cost products
T/F Buyer switching cost is low when bargaining power of buyer is low
F buyer switching cost is high
What are the 6 steps in Booze, Allen & Hamilton Model?
Idea Generation
Screening and Evaluation
Business Analysis
Development
Testing
Commercialization
What are the 7 stages in Cooper Model?
- IDEA
- PRELIMINARY ASSESSMENT
- CONCEPT
- DEVELOPMENT
- TESTING
- TRIAL
- LAUNCH
What is the seed of product development?
a product idea
What’s the 2 criteria of screening for idea generation checkpoint?
Does it fit corporate policy
Does company has the resources to implement it
What are the 2 preliminary assessment?
technical & market
What are market assessment based on (4)?
in-house information
secondary data
knowledgeable experts
potential customers
What is the purpose of 3rd stage, concept formulation? (3)
What the product is
Who it is aimed at
How it will be positioned
What are the elements included in concept formulation?
Concept identification
Concept development
Concept test
What is the purpose of concept identification?
Find out what are the features of the product that cust want
What does preliminary financial analysis assess? (3)
Cost
break-even volume
potential profit from the project
At which stage, a feasibility study report will be presented and decision to GO/KILL project shall be made?
- concept formulation
What does the 4th stage checkpoint consist of?
marketing plan & prototype
What is a trial sale? (2)
Selling the product using the proposed marketing plan to a limited number of customers or in a limited geographical area.
Assess all the elements of the marketing mix (4 Ps)
What are the 4 processes to ensure stages are multi-functional and multidisciplinary?
R&D
Manufacturing
Marketing
Quality Control
What are the 6 major benefits of adopting process ?
Improved teamwork
Less recycling & rework
Improved success rate
Earlier detection of failures
Better launch
Shorter Elapsed Time
What might be the deficiencies in the project? (5)
Too much reliance on inter-functional coop
Whole process = time consuming
Process stifles creativity
Problems in developing and applying Go/Kill criteria
Good for only certain types of projects
Why does many companies do not carry out market research & trial sale ?
time consuming
incur “unnecessary” expenditures
What are the 5 extension strategies ?
Price reduction - discount
Repackaging & redesigning
Launch in new markets - go abroad
Promotion
Direct selling
