Chapter 3 packet notes

Question 1

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

Answer 1

Opportunity Recognition

Question 2

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

Answer 2

Entrepreneurial Alertness

Question 3

• Products that serve clear and important needs.
• Products that customers know about.
• Products that customers can afford.
• A good idea is not the same as a good opportunity.

Answer 3

Good Investment Qualities

Question 4

• Opportunity Recognition
• Entrepreneurial Alertness
• Good Investment Qualities

Answer 4

Identifying Startup Ideas

Question 5

• To develop a commercial market for new product or service.
• Wanting the challenge of succeeding (or failing) on your own.
• To tap into unique resources that are available.
• To avoid undesirable features of existing companies.

Answer 5

Creating a New Business from Scratch- Motivations to Start a Business

Question 6

• Type A
• Type B
• Type C

Answer 6

Kinds of Startup Ideas

Question 7

Are centered around providing customers with an existing product not available in their market.

Answer 7

Type A Ideas (New Market)

Question 8

Involve new ideas, involve new technology, centered around providing customers with a new product.

Answer 8

Type B Ideas (New Technology)

Question 9

Are centered around providing customers with an improved product.

Answer 9

Type C Ideas (New Benefit)

Question 10

• The unexpected
• The incongruous
• Process needs
• Structural change

Answer 10

Industry or Enterprise Factors

Question 11

Unanticipated events lead to either enterprise success or failure.

Answer 11

The Unexpected

Question 12

What is expected is out of line with what will work.

Answer 12

The Incongruous

Question 13

Current technology is insufficient to address an emerging challenge.

Answer 13

Process Needs

Question 14

Changes in technology, markets, etc,. after industry dynamics.

Answer 14

Structural Change

Question 15

• Demographics
• Changes in perception
• New knowledge

Answer 15

Human and Economic Factors

Question 16

Shifts in population size, age structure, ethnicity, and income distribution impact product demand.

Answer 16

Demographics

Question 17

Perceptual variations determine product demand.

Answer 17

Changes in Perception

Question 18

Learning opens the door to new product opportunities with commercial potential.

Answer 18

New Knowledge

Question 19

• Industry or enterprise factors
• Human and economic factors

Answer 19

Change-Based Sources of Entrepreneurial Opportunities

Question 20

1. Borrow ideas from existing products and services or other industries.
2. Combine two businesses into one to create a market opening.
3. Begin with a problem in mind.
4. Recognize a hot trend and ride the wave.
5. Explore ways to improve a product or service’s function.
6. Think of how to streamline a customer’s activities.
7. Adapt a product or service to meet customer needs in different ways.
8. Imagine how market for a product or service could be expanded.
9. Use “green” technologies to makek the product or service more environmentally friendly.
10. Keep an eye on new technologies.

Answer 20

Applying Innovative Thinking to Business Ideas

Question 21

Studying context of venture to identify and determine business ideas that qualify as opportunities.

• General Environment
• Industry Environment
• Competitive Environment

Answer 21

Outside-In Analysis

Question 22

Encompasses factors influencing business in a society.

Answer 22

General Environment

Question 23

Combined forces impacting a firm and its competitors.

Answer 23

Industry Environment

Question 24

Focus on the strength, position, and likely moves and countermoves of competitors in an industry.

Answer 24

Competitive Environment

Question 25

* Political/legal * Technological * Sociocultural * Global * Demographic * Economic

Answer 25

Trends in the General Environment

Question 26

* Threat of new competitors. * Threat of substitute products or services. * Intensity of rivalry among existing competitors. * Bargaining power of suppliers. * Bargining power of buyers.

Answer 26

Major Factors Offsetting Market Attractiveness

Question 27

* Who are the new venture's current competitors? * What unique resources do they control? * What are their strengths and weaknesses? * How will they respond to the new venture's decision to enter the industry? * How can the new venture respond? * Who else might be able to observe and exploit the same opportunity? * Are there ways to co-opt potential or actual competitors by forming alliances?

Answer 27

Competitor Analysis

Question 28

Assessing the firm's internal competitive potential. * Resources * Capabilities * Core Competencies

Answer 28

Inside-Out Analysis

Question 29

Basic inputs that girm uses to conduct its business. * Tangible resources * Intangible resources

Answer 29

Resources

Question 30

Visible and easy to measure.

Answer 30

Tangible Resources

Question 31

Invisible, difficult to quantify.

Answer 31

Intangible Resources

Question 32

Integration of various organizational resources that are deployed together to the firm's competitive advantage.

Answer 32

Capabilities

Question 33

Resources and capabilities that provide a firm with a competitive advantage over its rivals.

Answer 33

Core Competencies

Question 34

* Provides concise overview of a firm's strategic situation. * Helps identify opportunities that match the venture.

Answer 34

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

Question 35

* Will the opportunity lead to others in the future? * Will the opportunity build skills that open the door to new opportunities in the future? * Will pursuit of the opportunity be likely to lead to competitive response by potential rivals?

Answer 35

Seeking Competitive Insight

Question 36

* Important core competencies * Financial strengths * Innovative capacity * Skilled or experienced management * Well-planned strategy * Effective entry wedge * A strong network of personal contacts * Positive reputation in the marketplace * Proprietary technology

Answer 36

Strengths

Question 37

* Inadequate financial resources * Poorly planned strategy * Lack of managerial skills or experience * Inadequate innovation capacity * Negative reputation in the marketplace * Inadequate facilities * Distribution problems * Limited marketing skills * Production inefficiencies

Answer 37

Weaknesses

Question 38

* An untapped market potential * New product or geographic market * Favorable shift in industry dynamics * High potential for market growth * Emerging technologies * Changes allowing overseas expansion * Favorable government deregulation * Increasing market fragmentation

Answer 38

Opportunities

Question 39

* New competitors * Rising demands of buyers or suppliers * Sales shifting to substitute products * Increased government regulation * Adverse shifts in the business cycle * Slowed market growth * Changing customer preferences * Adverse demographic shifts

Answer 39

Threats

Question 40

* Strategy * Strategic decision * Sustainable competitive advantage

Answer 40

Important Strategic Terms

Question 41

Plan of action that coordinates resources and commitments of an organization to achieve superior performance.

Answer 41

Strategy

Question 42

A decision regarding the direction a firm will take in relating to its customers and competitors.

Answer 42

Strategic Decision

Question 43

A value-creating industry position likely to endure over time.

Answer 43

Sustainable Competitive Advantage

Question 44

* Broad based strategy * Differentiation- based strategy * Focus strategy

Answer 44

Selecting Strategies that capture opportunities

Question 45

Seeking an advantage in cost or differientiation.

Answer 45

Broad-Based Strategy

Question 46

Requiring the firm to be the lowest-cost competitor.

Answer 46

Cost-Based Strategy

Question 47

Emphasizing the uniqueness of the firm's product or service.

Answer 47

Differentiation-Based Strategy

Question 48

Targeting a specific market slice (niche) using either a cost or a differentiation-based strategy.

Answer 48

Focus Strategy

Question 49

* Restricting focus to a single subset of customers. * Emphasizing a single product or service * Limiting the market to a single geographical region. * Concentrating on superiority of product or service.

Answer 49

Focus Strategy Implementation

Question 50

* Niche market shields from direct competition * Allow development of unique expertise

Answer 50

Advantages- Focus Strategies

Question 51

Focus market can quickly erode if: * Competitors successfully imitate the strategy * Segment erodes or demand disappears. * Segment's differences from other segments narrow. * New firms subsegment the industry.

Answer 51

Disadvantages- Focus Strategies

Question 52

* Judging a business opportunity * Market factors * Fatal flaws * Competitive advantage * Management capability * Industry Attractiveness

Answer 52

How Feasible is my Idea?

Question 53

A preliminary assessment of a business idea that gauges whether or not the venture envisioned is likely to succeed.

Answer 53

Feasibility Analysis

Question 54

A circumstance or development that alone could render a new business unsuccessful. * Market potential: acceptance, accessibilitiy, growth and size. * Power of competitors * Strength of competitive advantage. * Startup costs * Management capability

Answer 54

Fatal Flaws

Question 55

Leader's grasp of cirtical enterprise success factors and ability to execute on these factors.

Answer 55

Industry Attractiveness

Question 56

* Fit the venture with leader's mission, aspirations, and comfort level with risk involved. * Leader's connections to others who will be essential to making the venture work.

Answer 56

Management Capability