Louisiana Tech MGMT 340 Test 1 - Son Le

Entrepreneurship

Process by which individuals pursue oppurtunities without regard to resources they currently control for purpose of pursuing future goods and services

Corporate Entrepreneurship

Behavior orientation exhibited by established firms with an entrepreneurial emphasis that's PROACTIVE, INNOVATIVE, and RISK-TAKING

Entrepreneurial Firms

Typically proactive innovators and not against taking calculated risks

Reasons people become entrepreneurs

1. To be their own boss

2. To pursue their own ideas

3. Pursue financial rewards (often secondary)

4 characteristics of successful entrepreneurs

1. Passion for the business

2. Product/Customer Focus (making sure you have good products to satisfy customers)

3. Tenacity Despite Failure (never giving up)

4. Execution Intelligence (ability to effectively execute a business idea )

5 entrepreneurship myths

1. Some people are born to be entrepreneurs and it can't be taught (false)

2. Entrepreneurs are gamblers (false: most successful people take risks of some sort)

3. Entrepreneurs are motivated primarily by money (false: money is usually a secondary objective)

4. Entrepreneurs should be young and energetic (false: any age can be one)

5. Entrepreneurs love the spotlight (false: there aren't too many entrepreneurs that are so famous that people can name more than 5)

Salary-substitute start-up firm

Small firms that yield a level of income for their owner or owners that is similar to what they would earn when working for an employer

Lifestyle start-up firm

Provide owner(s) the opportunity to pursue a particular lifestyle and earn a living while doing so

Entrepreneurial start-up firm

Bring new products and services to market

Entrepreneurial process

Step 1. Deciding to become an entrepreneur

Step 2. Developing successful business ideas

Step 3. Moving from an idea to an entrepreneurial firm

Step 4. Managing and growing the entrepreneurial firm

Opportunity

Favorable set of circumstances that creates a need for a new product

Window of opportunity

Time period in which a firm can realistically enter a new market

Difference in an idea and opportunity

An idea is a thought or notion that may or may not an opportunity but an opportunity is an actually chance for success/a need for your idea.

An idea without an opportunity won't be successful.

3 ways to identify opportunities

1. Observing trends (economic trends, social trends, technological advances, and political actions/regulatory changes)

2. Solving problems (recognize problems and find ways to solve them)

3. Find gaps in the marketplace (products a consumer needs or wants that aren't available in a particular place or at all)

Social forces

Satisfying a social need rather than a transparent need the product fills.

Changes in social trends alter how people and business behave/prioritize

(Aging population, module device usage growth, etc.)

Technological forces

Advances in technology allowing more to be possible

Legal and regulatory forces

New laws being created that may make things illegal or open up the market for them

Economic forces

Evaluating who has money to spend and what they spend it on.

Entrepreneurial opportunity recognition characteristics

1. Prior Experience (in an industry that you're recognizing the opportunity in helps)

2. Cognitive Factors

Entrepreneurial alertness (ability to notice things without deliberately searching)

3. Social Networks

(Help network entrepreneurs to identify their ideas through social contacts)

4. Creativity (process of generating a novel or useful idea)

1st step of the creative process

Preparation

(Background, experience, and knowledge an entrepreneur brings to an opportunity)

2nd Step of the creative process

Incubation

(When the person considers an idea or thinks about a problem)

3rd step of the creative process

Insight

(Flash of recognition when the solution to a problem is seen or an idea is born)

4th step of the creative process

Evaluation

(Looking at the viability of an idea/scrutinizing it)

5th step of the creative process

Elaboration

(Details are worked out and idea is now valuable/the point when a business plan would be written)

Feasibility Analysis

The process to determine if a business idea is viable

Product/service feasibility analysis (purpose)

Assessment of overall appeal of product/service being offered

Product/Service Feasibility Analysis

(2 primary components)

1. Product/Service Desirability

(Affirm the proposed product/service is desirable/meets a need through a concept test)

2. Product/Service Demand

Determine if there's a demand for the product/service through face-to-face with potential customers)

Industry/market analysis

Assessment of the overall appeal of the industry and the target market for the proposed products/service

Industry/market components

1.Industry attractiveness

2. Target Market attractiveness

Organizational feasibility analysis

Determines whether proposed business has sufficient management expertise, organizational competence, and resources to successfully launch

Organizational feasibility analysis primary components/issues

1. Management prowess

2. Resource sufficiency

Financial feasibility analysis

Preliminary financial assessment that considers the total start up cash needed, finance performance of similar businesses, and the overall financial attractiveness of the proposed venture

Standard business models

Depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders

Advertising business model

Business model based on providing advertisers access to highly targeted customer niches

(Ex. of a standard business model)

Peer-to-peer business model

A model in which a business ask as a matchmaker between individuals with a service to offer and others who want the service

(Ex. of a standard business model)

Disruptive business models

Rare business models impactful enough that they disrupt or change the way business is conducted in an industry

Core strategy

How the firm plans to compete relative to its competitors.

Primary elements include business mission, basis of differentiation, target market, and product/Marketscope

Business mission

Describes why the business exists and what its business model is supposed to accomplish

Basis of differentiation

What causes consumers to pick one company's products over another's

Target market

A place within a larger market segment that represents a narrower group of customers with similar interests

Product/MarketScope

Defines the products and markets on which it will concentrate

Resources

The inputs a firm uses to produce, sell, distribute, and service a product or service

(Core competencies and key assets)

Core Competencies

Specific factor or capability that supports a firms business model and sets it apart from its rivals

Key assets

The assets a firm owns that enable it's business model to work

Financials

The only section of the firms business model that describes how it earns money

(revenue streams and cost structure)

Revenue streams

The ways in which the firm makes money

Cost structure

Describes the most important costs a business incurred to support its business model

Operations

Primary elements are: product/service production, channels, and key partners

Product/service production

Focuses on how a firms products and or service are produced

Channels

Companies channels describe how it delivers its product/service to its customers

Can be direct, through intermediaries, or through a combination of both

Key partners

Partners that perform key roles

(Ex. Partnerships with suppliers)

Industry analysis

A business analysis that focuses on the potential of the industry

Threat of substitutes

#1 on five forces model

Means that a market is more attractive if the threat of substitutes/competitors is low

Threat of New entrants

#2 on five forces models

Industries are more attractive when the threat of entry is low and there are less barriers to entry

Economies of scale

(Barrier to entry)

Occurs when mass producing a product results in lower average costs

Capital requirements

(Barrier to entry)

The need to invest large amounts of money to gain entrance to an industry

Government and legal barriers

(Barrier to entry)

Things such as software patents are trademarks and copyrights for the four major barriers to entry in an industry

Rivalry among existing firms

#3 on five forces model

The major determinant of industry profitability is the level of competition already in the industry

Bargaining power of suppliers

#4 on five forces model

Industries are more attractive when the bargaining power of suppliers is low

(Intel can control premium price from most PC companies)

Bargaining power of buyers

#5 on five forces model

Industries are more attractive when the bargaining power of buyers is low

Direct competitors

Businesses that offer products or services that are identical or highly similar to those of the firm completing the analysis

Indirect competitors

Offer close substitutes to the product of the firm completing the analysis sells

Future competitors

Companies that are not yet direct or in direct competitors but could move into one of these roles at any time

Business plan purpose

1. To force a firms founders to systematically think through each aspect of their new venture

2. Create a selling document for a company to present itself to potential investors, suppliers, and business partners.

Marketing plan

A type of business plan that focuses on how the business will market and sell its product/service

Product/service design and development plan

A type of business plan that covers developing a completely new product or service

Operations plan

A type of business plan that outlines how your business will be run and how your product/service will be produced

Audiences for a business plan

Firms employees - look for the businesses future strategies and goals to help them make sure they're being consistent with the overall plans and direction of the farm

Investors another external stakeholders - looking for a realistic business plan that has a viable idea and offers financial returns with low risk

ESSAY: Methods/approaches to identifying/generating business ideas

1. Brainstorming -Generating several ideas about a specific topic

2. Focus groups-people familiar with the topic that are brought together to respond to questions

3. Library and Internet research-provide insights and help create the best ideas when merged with the general notion of an idea

ESSAY: how to develop a Business model

The proper time to start preparing and determining a company's business model is following the initial validation of the business idea but also before flushing out the operational details of the firm