Recognizing Potential Markets & Entrepreneurial Opportunities

24 question-and-answer flashcards covering the entrepreneurial process, mindset, sources of opportunities, and the Five Forces of Competition model.

What are the three sequential stages in the entrepreneurial process of creating a new venture?

1) Creation of an entrepreneurial idea 2) Identification of entrepreneurial opportunities 3) Opening/launching of the entrepreneurial venture

How does an "Entrepreneurial Mind Frame" influence entrepreneurs during a crisis?

It keeps them positive and optimistic, enabling them to turn problems into inspiration for innovative solutions.

What drives entrepreneurs according to the concept of "Entrepreneurial Heart Flame"?

Passion—a deep desire to achieve goals and find satisfaction in the process of discovery.

What is meant by "Entrepreneurial Gut Game"?

The entrepreneur’s intuition and self-confidence—the belief that their aspirations can be achieved.

Name the three internal traits that form the entrepreneurial mindset described in the lecture.

Entrepreneurial Mind Frame, Entrepreneurial Heart Flame, and Entrepreneurial Gut Game.

List the five primary sources of entrepreneurial opportunities discussed.

1) Changes in the environment 2) Technological discovery and advancement 3) Government thrusts, programs, and policies 4) People’s interests, hobbies, and preferences 5) Past experiences and acquired expertise

How can changes in the environment become a source of entrepreneurial ideas?

Alterations in the physical, societal, or industry environment create new needs or problems that entrepreneurs can address with innovative products or services.

What three elements make up the physical environment that can trigger business ideas?

Climate, natural resources, and wildlife.

Which four forces constitute the societal environment affecting opportunity recognition?

Political, economic, sociocultural, and technological forces.

Name the six components of the industry environment listed in the notes.

Competitors, customers, creditors, employees, government, and suppliers.

What model is also called the “Five Forces of Competition”?

The Forces of Competition Model, which analyzes buyers, suppliers, substitute products, potential new entrants, and rivalry among existing firms.

In the Five Forces model, who are the “buyers”?

Individuals or organizations that pay for a firm’s goods or services and can exert bargaining power over price and terms.

According to the notes, what circumstance LESSENS the bargaining power threat of buyers?

When several suppliers are available, buyers could integrate backward, switching costs are low, the product is a high share of buyer’s cost, or buyers purchase large volumes.

Who are considered “potential new entrants” in an industry?

Companies or businesses that have the ability and intention to penetrate or start operations in that industry.

Mention three factors that create high entry barriers for potential new entrants.

Substantial capital requirements, strict government policy, and difficulty accessing distribution channels (others include economies of scale, high product differentiation, and high switching cost).

What is meant by “rivalry among existing firms”?

Ongoing competition between current businesses within an industry for market share.

List two factors that intensify rivalry among existing firms.

A high number of competing firms and increased production capacity (others include diversity of rivals, high fixed costs, slow industry growth, undifferentiated products).

Define a “substitute product”.

A different product that serves the same purpose for consumers, allowing them to switch if conditions change (e.g., margarine for butter).

State two conditions that increase the threat of substitute products.

Low switching costs for customers and substantially lower prices of the substitute (also rapid improvement in substitute quality, high product differentiation, changing customer tastes).

In the Five Forces model, who are the “suppliers”?

Entities that provide the inputs—materials, equipment, services—needed for a business’s operations.

Cite two indicators of strong supplier power listed in the lecture.

Suppliers are few but sell high volumes, and they have the ability for forward integration (other indicators: lack of substitutes, high switching cost, unique products).

How can past work experience lead to a new venture opportunity?

Skills and expertise gained in a field (e.g., an accountant trained in a large firm) can be leveraged to start a related business, such as opening one’s own accounting firm.

Give an example of technological discovery turning into a business opportunity mentioned in the lecture.

An individual skilled in engine repair invents additional engine parts that significantly reduce fuel consumption, leading to a potential business venture.

Why are government thrusts, programs, or policies considered opportunity sources?

They set priorities and create projects that generate needs and markets entrepreneurs can serve with new products or services.