Topic 3 Flashcards
The ability to develop something original, particularly an idea or a representation of an idea
Creativity
Change that adds value to an existing product or service
Innovation
Truly novel product, service, or process that, though based on ideas and products that have come before, represents a leap, a creation truly novel and different
Invention
The five stages of creativity
- Preparation
- Incubation
- Insight
- Evaluation
- Elaboration
Involves investigating a chosen field of interest, opening your mind, and becoming immersed in materials, mindset, and meaning
Preparation
Giving yourself and your subconscious mind time to incorporate what you learned and practiced in the preparation stage
Incubation
Also known as “illumination” or the “aha!” moment; when the solution to a creative problem suddenly becomes readily accessible to your conscious mind
Insight
The purposeful examination of ideas
Evaluation
Actual production; release of a “minimum viable product”; function well enough that you can begin to market it while still elaborating on it an alternative development process
Elaboration
Describe a feeling of dissatisfaction among customers’ a persistent or recurring problem that frequiently inconveniences or annoys customers
Pain point
Internally focused sources for innovative opportunity according to Drucker as cited by Kuratko
- The unexpected
- Incongruities
- (Innovation based on) Process-need
- Industry and market structures
Externally focused sources for innovative opportunities
- Demographics
- Changes in perception, mood, and meaning
- New knowledge - both scientific and non-scientific
A difference exists between expectation and reality
Incongruities
Process gaps or bottlenecks where an answer is required
(Innovation based on) Process-need
Changes caused by consumer attitudes, advancements in technology, etc.
Industry and market structures
Age, status, race, sex
Demographics
Unexpevted failure and success, outside events
The unexpected
Uniqueness of every individual creates differentiation of the offered goods and services
Changes in perception, mood, and meaning
Knowledge-based concepts
New knowledge - scientific and non-scientific
An innovation that modifies an existing product or service
Incremental innovation
Based on a new technology, a new advancement in the field, and/or an advancement in a related field that leads to the development of a new product
Pioneering innovation
A process that significantly affects the market by making a product or service more affordable and/or accessible, so that it will be available to a much larger audience
Disruptive innovation
Address social or environmental challenges; involves developing new solutions to improve the lives of others or benefit society as a whole
Social innovation
A process or a device which has never been made before
Invention
Five steps in developing an invention
- Educate yourself
- Stay organized
- Conduct market research
- Conduct patent research
- Develop a prototype
Sources in opportunity identification
Known and the “unknown”
Sources of the “known”
- Education/research
- Experience/skill
- Family (business/tradition)
Sources of the “unknown”
- Information from friends
- Brainstorming (friends, work/school mates, family)
- Tips/information from various sources (social media, articles, magazines, government plans - CLUP/CDP, seminars/conferences)
Creates significant value for customers and offers significant profit potential to the entrepreneur; it exists when there is a gap between supply and demand
Entrepreneurial opportunity
Amount and characteristics of the product produced
Supply
Consumers’ desire for the product
Demand
Steps in shaping opportunities
- Identify the problem or opportunity
- Test hypothesis (validate assumptions)
- Evaluate opportunity
Evaluate opportunity:
- Competencies
- Competition
- Sustainability
- Profitability
- Financing
How to do a competitor check:
- Mystery shopping
- Buy their product/service
- Interviewing competitor’s customers
- Competitor’s website/social media
- Testimonials
Sustainability:
- Threat of new entrants
- Threat of substitute/s
- Bargaining power of supplier
- Short lived trend/fad
Profitability:
- Net income
- Net profit margin
- Break-even point
- Payback period
- Return of investment
Three components that create a successful opportunity recognition
- Prior knowledge of markets and customer problems
- Entrepreneurial alertness
- Networks
Pathways to new ventures
- Creating the new venture
- Acquiring existing venture
- Obtaining a franchise
- Joining a family business
- A business that is owned by one person
- The simplest form and easiest to start
- The most popular form of business ownership
Sole properietorship
- A voluntary association of two or more persons to act as co-owners
- Less common form
- No legal limit on the max no. of partners
Partnership
- A business co-owned by 2 or more general partners
- Simplest to form and most common
- Unlimited liability
General partnerships
A person who has full or shared liability for running the business
General partners
A business co-owned by at least one general partner and one limited partner
Limited partnership
Partners with limited liability; only liable for the amount they invested in the business; do not operate business but rathe rprovide capital
Limited partnership
Partnership agreement
- Capital contributions
- Responsibilities of each partner
- Decision-making process
- Shares of profits or losses
- Departure of partners
- Addition of partners
Most common type of corporation
“C” corportaion
A legal entity, separate from its owners; owned by stockholders
Corporation
The shares of ownership of a corporation
Stock
Two types of stock in corporations
- Common stock (voting privileges)
- Preferred stock (no votinng rights, dividends paid first)
A person who owns a share or shares of a corporation’s stock
Stockholder or shareholder
A portion of the corporation’s profit that is distributed to stockholders
Dividend
The governing body of the corporation, elected by stockholders and appoint corporate officers
Board of directors
A corporation whose stock is owned by relatively few people and is not sold to the general public
Closed (private) corporation
A corporation whose stock is bought and sold on security exchanges and can be purchased by any individual
Open (public) corporation
Corporate structure
- Shareholders
- Board of directors
- Corporate officers - chief executive officer, chief financial officer, chief operating officer
A corporation with a single stockholder, who must be a natural person, trust, or an estate
One person corporation
The code that provided OPC
Title XII (Special Corporations) of Republic Act No. 11232, or the “Revised Corporation Code”
An autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic and cultural needs and aspirations by making equitable contributions to the capital required
Cooperative
Three key organizational structures in the general assembly of a cooperative
- Election committee
- Board of directors
- Audit committee
