Modern Management: Concepts and Skills - Chapter 2 Flashcards

Flashcards covering key concepts from Chapter 2, 'Management and Entrepreneurship: Handling Start-Ups and New Ventures', including definitions of entrepreneurship, types of opportunities, evaluation, exploitation, financing, and distinctions between commercial, social, and corporate entrepreneurship.

What is entrepreneurship?

It is the identification, evaluation, and exploitation of entrepreneurial opportunities.

What is an entrepreneurial opportunity?

An occasion to create new products or services that can be sold at a price greater than their cost of production.

What are the five types of entrepreneurial opportunities?

Creation of new products and services; discovery of new geographical markets; creation or discovery of new raw materials or alternative uses for existing ones; discovery of new methods of production; and new methods of organizing.

What are the key aspects of opportunity identification?

Entrepreneurial alertness, information asymmetry, social networks, cross-cultural experience, and identification of means-ends relationships.

What must entrepreneurs determine during opportunity evaluation?

If they have a good idea or viable opportunity to provide the desired outcomes.

What is a Feasibility Analysis?

A study of the practicality of an idea to support a business.

What is the 'Law of Small Numbers' in entrepreneurial risk?

Relying on small samples of information to make decisions.

What is the 'Illusion of Control' in entrepreneurial risk?

Overestimating the extent to which an individual can control the outcome of an opportunity.

What are the activities and investments committed during opportunity exploitation?

Activities and investments committed to gain returns from new products or services.

When should entrepreneurs exploit an opportunity?

When customers will value new products or services (providing market demand), there is a perception of support from important stakeholders, and there is a perception that management is capable.

What are the three forms of external financing mentioned for exploitation?

Angel Investors, Venture Capitalists, and Bank Financing.

What is the key difference between Angel Investors/Venture Capitalists and Bank Financing regarding ownership?

Angel Investors and Venture Capitalists provide money in exchange for equity (ownership) in the company, while banks are more interested in a firm’s ability to pay back a loan.

How do Angel Investors and Venture Capitalists commonly differ?

Venture Capitalists tend to make large investments, while Angel Investors make smaller investments and often in industries where they have expertise.

What is Commercial Entrepreneurship?

Individuals or corporations pursuing opportunities for the purpose of generating sales and profits.

What is Social Entrepreneurship?

Recognition, evaluation, and exploitation of opportunities that create social value as opposed to personal or shareholder wealth.

What are key differences between Commercial and Social Entrepreneurship?

Mission (profits vs. public value), availability of resources (external investing vs. donations), and performance measurement (quantitative measures like profit vs. social good).

Why are networks of relationships important in social entrepreneurship?

Large networks provide sources of capital and help identify potential employees and volunteers.

In social entrepreneurship, how does capital acquisition differ from commercial firms?

Social ventures often lack access to traditional investors or bank loans, relying mostly on donations for funding.

What is Corporate Entrepreneurship?

The process in which an individual, or group, creates a new organization within a corporation, working closely with the 'parent' company.

What is 'Sustained Regeneration' in corporate entrepreneurship?

When firms develop new cultures, processes, or structures to support new product innovations in current markets as well as introduce existing products into new markets.

What is 'Organizational Rejuvenation' in corporate entrepreneurship?

Improving a firm’s ability to execute strategies and focusing on new processes instead of new products.

What does 'Strategic Renewal' involve in corporate entrepreneurship?

When a firm attempts to alter its own competitive strategy.

What is 'Domain Definition' in corporate entrepreneurship?

When a firm proactively seeks to create a product market position that competitors have not recognized.