3. Creating a Small Business

capabilities

A company’s routines and processes that coordinate the use of its productive assets in order to achieve desired outcomes.

competitive advantage

A benefit that exists when a firm is able to offer a product or service that is seen by its target market as better than those of competitors.

competitive environment

The environment that focuses on the strength, position, and likely moves and countermoves of competitors in an industry.

core competencies

The capabilities that distinguish a firm competitively and reflect its focus and personality.

cost-based strategy

A plan of action that requires a firm to hold down its costs so that it can compete by charging lower prices and still make a profit.

differentiation-based strategy

A plan of action designed to provide a product or service with unique attributes that are valued by consumers.

entrepreneurial alertness

Readiness to act on existing, but previously unnoticed, business opportunities.

fatal flaw

feasibility analysis

A preliminary assessment of a business idea that gauges whether the venture envisioned is likely to succeed.

focus strategies

A plan of action that isolates an enterprise from competitors and other market forces by targeting a restricted market segment.

general environment

The broad environment, encompassing factors that influence most businesses in a society.

industry envrionment

The environment that includes factors that directly impact a given firm and all of its competitors.

intangible resource

An organizational resource that is invisible and difficult to assess.

new benefit idea

A start-up idea centered around providing customers with a new or improved product or service or a better way of performing old functions.

new market idea

A start-up idea centered around providing customers with an existing product or service not available in their market.

new technology idea

A start-up idea involving new or relatively new technology, centered around providing customers with a new product or service.

opportunity recognition

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

paradox of attraction

The self-contradictory idea that an attractive market opportunity is likely to draw multiple competitors, thereby diminishing its attractiveness.

pivot

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

resources

The basic inputs that an entrepreneur can use to start and/or operate a business.

serendipity

A facility for making desirable discoveries by accident.

start-up

A new business venture created “from scratch.”

strategy

A plan of action followed to create a competitive advantage and help an organization achieve superior performance.

SWOT analysis

An assessment that provides a concise overview of a firm’s strategic situation.

tangible resource

An organizational resource that is visible and easy to measure.