mid1 Flashcards
Why is there so much interest in Entrepreneurship globally?
Increase in
(a) Number of Books,
(b) Education Programs,
(c) Research Centers and Academic Journals
What is the difference in the driving force behind entrepreneurship in low vs high-income countries?
Low income: Need - good jobs are scarce
High income: Opportunity - attractive opportunities exist
What is Entrepreneurship?
The process of pursuing opportunities without regard to current resources to create future goods and services.
What is Corporate Entrepreneurship?
The application of entrepreneurial practices within an established company.
What is Entrepreneurial Intensity?
A spectrum of how entrepreneurial a firm is, ranging from conservative (risk-averse) to highly entrepreneurial (innovative, risk-taking).
What are 3 reasons people become Entrepreneurs?
1) Be Their Own Boss
2) Pursue Their Own Ideas
3) Realize Financial Goals (secondary motivator)
What is the #1 characteristic of successful Entrepreneurs?
Passion for the Business - belief it will positively impact lives.
What is Product/Customer Focus about?
Designing products to fulfill customer needs and improve their lives.
What is Tenacity Despite Failure?
The ability to persevere through setbacks and failures without getting discouraged.
What is Execution Intelligence?
The ability to put a business idea into action by building a business model, team, securing funding, and managing finances/employees.
Myth 1: Entrepreneurs Are Born, Not Made. What’s the truth?
Entrepreneurs can be made through environment, life experiences, and personal choices.
Myth 2: Entrepreneurs Are Gamblers. What’s the truth?
- They set challenging goals and are moderate risk-takers, not gamblers.
- Uncertainty in their jobs creates this myth.
Myth 3: Entrepreneurs Are Motivated Primarily by Money. What’s the truth?
Money is a factor, but rarely the main reason they start businesses.
Myth 4: Entrepreneurs Should Be Young and Energetic. What’s the truth?
- Age isn’t the biggest factor. Experience, skills, and reputation matter more.
- Often, success favors older entrepreneurs.
Myth 5: Entrepreneurs love the spotlight. What’s the truth?
Some do, but most avoid public attention.
(e.g. Founders of Twitter and Youtube)
What are 3 Types of Start-Up Firms?
1) Salary-Substitute Firms (e.g. dry cleaners, restaurants) - Provides similar income to a traditional job.
2) Lifestyle Firms (e.g. ski instructors, fitness studios) - Allows pursuing a desired lifestyle while making a living.
3) Entrepreneurial Firms (e.g. Google, Facebook) - Existing firms creating and seizing new market opportunities.
Changing Demographics of Entrepreneurs: How are Women Entrepreneurs doing?
The number of women-owned businesses is increasing, although men still start more businesses.
Changing Demographics of Entrepreneurs: What about Minority Entrepreneurs?
There’s a recent increase in firms owned by minorities, including ethnic and geographic minorities.
Changing Demographics of Entrepreneurs: How about Senior Entrepreneurs?
The number of seniors (50+) starting businesses is growing rapidly due to several reasons:
- Corporate downsizing
- Desire for more fulfillment
- Healthcare cost concerns
- Business experience
- Financial resources
- Improved senior health and vigor
Changing Demographics of Entrepreneurs: How about Young Entrepreneurs?
There’s a growing interest in entrepreneurship among young people, even kids in grades 5-12.
What are the Positive Effects of Entrepreneurship and Entrepreneurial Firms (Economic Impact)?
Strengthens the economy through:
- Innovation (creating new things)
- Job creation (small businesses create many new jobs)
- Impact on Society. The innovations of entrepreneurial firms have a dramatic impact on society.
- Make lives easier, enhance productivity at work, improve health, and entertain us.
- Impact on Larger Firms. Many entrepreneurial firms have built their business models around
producing products and services that help larger firms become more efficient and effective
What’s the difference between an Opportunity and an Idea?
Opportunity: Favorable circumstances creating a need for a new product/service/business with 4 qualities:
1) Attractive
2) Durable
3) Timely
4) Creates value for customers
Idea: A thought, impression, or notion. Many businesses fail because there wasn’t a real opportunity.
What are 3 Approaches to Identify Opportunities?
Observing Trends:
Economic Forces (luxury products in strong economy, budget solutions in weak economy)
Social Forces (fast food, senior care, personalization, health & wellness, clean energy)
Technological Advances (iPhone led to compatible device industry)
Political Action & Regulations (compliance consulting, security products)
Solving a Problem:
Example: Jitterbug Cellphone for elderly with small print issues.
Finding Gaps in the Marketplace:
Examples: Green Job Spider (green jobs), ModCloth (vintage apparel), Chipotle (healthy & fast food).
What factors help Entrepreneurs Recognize Opportunities better?
Four groups of factors:
A. Prior Experience (spotting niches, gaining insights)
B. Cognitive Factors (entrepreneurial alertness - noticing things without deliberate search)
C. Social Networks (network entrepreneurs find more opportunities, weak ties more valuable)
D. Creativity (idea generation process with 5 stages)
What are 4 Techniques for Generating Ideas?
1) Brainstorming: Group session for open idea generation with rules:
No criticism
No evaluation
No personalization
Encourage freewheeling & leapfrogging
Move quickly
2) Focus Groups: Gathering of 5-10 people to discuss an issue.
3) Library and Internet Research:
Consult librarians for resources.
Use search engines but be cautious of “latest” trends.
Set up Google alerts for relevant keywords.
4) Other Techniques (Corporate Entrepreneurship):
Customer advisory boards
Day-in-the-life research
Focal point for idea collection & evaluation
Idea bank (physical or digital repository)
Encouraging creativity at the firm level (office environment)
What is Intellectual Property (IP) and how is it protected?
- IP: Any product of human intellect with value (patents, trademarks, copyrights).
- Ideas can be protected with Non-Disclosure Agreements (NDAs).
What is a Feasibility Analysis?
- The process of determining if a business idea is viable (worth pursuing).
- Done before a business plan to screen ideas and avoid wasting resources.
- Entrepreneurs tend to underestimate competition and overestimate success chances.
What are the 4 Components of a Feasibility Analysis?
1) Product/Service Feasibility Analysis:
Is the product/service desirable and in demand?
(i) Desirability: Does it solve a problem or fill a gap? Is it the right time?
Use a one-page concept statement and concept test to get feedback.
(ii) Demand: Is there a market for it?
Talk to potential customers and use online tools (e.g. AdWords) to assess demand.
2) Industry/Target Market Feasibility Analysis:
How attractive is the industry and target market?
(i) Industry Attractiveness: Look for young, growing industries with high margins.
(ii) Target Market Attractiveness: Find a market that’s large enough but avoids too much competition.
3) Organizational Feasibility Analysis:
Does the venture have the right team and resources?
(i) Management Prowess: Evaluate passion, launch expertise, and market understanding.
(ii) Resource Sufficiency: Ensure access to critical resources like space, personnel, equipment, and funding.
Financial Feasibility Analysis:
4) How financially attractive is the venture?
(i) Total Start-Up Cash Needed: Create a budget for initial costs and funding sources.
(ii) Financial Performance of Similar Businesses: Research similar businesses to estimate financial performance.
(iii) Overall Financial Attractiveness: Consider factors like growth rate, recurring revenue, and exit opportunities.
What is a Business Model?
- A firm’s plan for creating, delivering, and capturing value for stakeholders (customers, investors, employees).
- Developed after feasibility analysis but before operational details.
What are the 2 Categories of Business Models?
1) Standard Business Models: Existing plans like:
Advertising (commercials, banners)
Auction (eBay)
Bricks-and-Clicks (online and physical stores)
Franchise
Low-Cost
Manufacturer/Retailer
Razor-Blade/Refill
Subscription
2) Disruptive Business Models: Rare models that change industries:
Mobile Apps
New Market Disruption (e.g. Google AdWords)
Low-End Disruption (e.g. Southwest Airlines, Uber) - offering simpler or cheaper options.
What is the Value Chain?
- The series of activities that bring a product from raw materials to the customer.
- Used to identify opportunities to improve competitive strategies and create value.
Consists of 9 activities:
ii) Primary (5): Inbound logistics, Operations, Outbound logistics, Marketing & Sales, Service
ii) Support (4): Procurement, Technology development, Human resource management, Firm infrastructure
What are 2 Business Model Visual Frameworks?
1) Alexander Osterwalder’s Business Model Canvas
Barringer/Ireland
2) Business Model Template:
i) Core Strategy (Part 1):
- Mission Statement: Why the business exists and what it aims to achieve.
- Basis of Differentiation: What makes the product/service unique. (2-3 key points, focus on benefits)
- Target Market: The specific customer group the business serves.
- Product/Market Scope: The products and markets the business focuses on (initially narrow, expands later).
ii) Resources (Part 2): The inputs needed to produce, sell, and service products.
- Core Competencies: Specific skills or capabilities that give the business an advantage. (2-3)
- Key Assets: Tangible and intangible assets the business owns (physical, intellectual, financial, human). (3-4)
iii) Financials (Part 3): How the business will make money.
- Revenue Streams: Ways the business generates income (can have multiple streams).
- Cost Structure: The most important costs incurred by the business. (cost-driven or value-driven)
- Financing/Funding: How much funding is needed and where it will come from.
iv) Operations (Part 4): The day-to-day activities of the business.
- Product/Service Production: How the product/service is created (in-house, outsourced).
- Channels: How the product/service reaches customers (direct sales, intermediaries, etc.).
- Key Partners: Businesses the company relies on to perform key tasks.
