Using Internal and External Analysis to Assess New Business Ideas

Question 1

Entrepreneurs can look for needs in the marketplace and then determine how to use their own capabilities to pursue those opportunities.

Answer 1

Outside-In Approach

Question 2

Entrepreneurs can first evaluate their capabilities and then identify new products or services they might be able to offer to the market.

Answer 2

Inside-Out Approach

Question 3

• General Environment
• Industry Environment
• Competitive Environment

Answer 3

Outside-In Analysis Considerations

Question 4

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

Answer 4

General Environment

Question 5

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

Answer 5

Industry Environment

Question 6

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

Answer 6

Competitive Environment

Question 7

• Economic trends
• Politicallegal trends
• Sociocultural trends
• Global trends
• Techological trends
• Demographic trends

Answer 7

The General Environment

Question 8

• Changes in the rate of inflation
• Interest rates
• Currency exchanged rates

Answer 8

Economic Trends

Question 9

• Societal currents that may affect customer demand
• Opening up new markets and forcing others into decline.

Answer 9

Sociocultural Trends

Question 10

• Changes in tax law and government regulations that may pose a threat to existing companies or devastate an inventive business concept.

Answer 10

Politicallegal Trends

Question 11

Reflect international developments that create new opportunities to expand:

• Markets
• Outsource
• Invent abroad

Answer 11

Global Trends

Question 12

Developments that grow out of these spawn or wipe out many new ventures. Developments:

• The creation of high-quality, affordable, virtual-reality hardware that could radically transform entertainment and communications.
• The Internet of things, which connects and combines the limited computing power embedded in devices in the home and office to make advanced automation possible.
• The fast-falling price of 3-D printing, which makes the creation of just about any suitable product possible, as well as fast, inexpensive, and completely customizable
• The exponential growth and availability of data collected online, or big data, that make high-powered analytics and decision making faster and less expensive.

Answer 12

Techological Trends

Question 13

• Population size
• Age structure
• Ethnic mix
• Wage distribution

Answer 13

Demographic Trends

Question 14

• Threat of new competitors
• Threat of substitute products or services
• Intensity of rivarly among existing competitors
• Bargaining power of suppliers
• Bargaining power of buyers

Answer 14

The Industry Environment: 5 Factors that determine the nature ad degree of competition in an industry.

Question 15

The five factors that determine the nature and degreee of competition in an industry weigh equally with the potential attractiveness and _____ of a target industry.

Answer 15

Profitability

Question 16

Entrepreneurs who understand industry influences can better identify:

Answer 16

High Potential Startup Opportunities

Question 17

It is important to determine the strength, position, and likely responses of rival businesses to newcomers.

Answer 17

The Competitive Environment

Question 18

• Who would be 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 see and exploit the same opportunity?
• Are there ways to co-opt potential or actual competitors by forming alliances?

Answer 18

Several questions about the competitors like to be encountered in the marketplace

Question 19

A further step in analyzing the competition. To identify the thinking that _____ their rivals’ moves, which is often based on the assumption that business must operate in a certain way because they always have.

• Example: Blockbuster vs Netflix- if things aren’t done differently, companies are left vulnerable.

Answer 19

Shapes

Question 20

• Building on internal resources and capabilities
• Core competencies and competitive advantage

Answer 20

Inside-Out Analysis

Question 21

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

• Cash for investment
• Knowledge of critical technologies
• Access to essential equipment
• Capable business partners

Answer 21

Resources

Question 22

Those organizational resources that are visible and easy to measure.

• An office building
• Manufacturing equipment
• Cash reserves

Answer 22

Tangible Resources

Question 23

Those organizational resources that are invisible and difficult to assess.

• intellectual property
• a favorable reputation
• network of contacts and relationships

Answer 23

Intangible Resources

Question 24

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

Answer 24

Capabilities

Question 25

Are often used interchangably, but are not the same.

Answer 25

Resources and Capabilities

Question 26

Do not work on their own.

Answer 26

Resources

Question 27

Those capabilties that distinguish a firm competitively and reflect its focus and personality. * Make it possible to achieve competitive advantage

Answer 27

Core Competencies

Question 28

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

Answer 28

Competitive Advantage

Question 29

An assessment that provides a concise overview of a firm's strategic situation. This integrates Internet and Externaly Analyses. * Strengths * Weaknesses * Opportunities * Threats

Answer 29

SWOT Analysis

Question 30

Because SWOT analysis focuses on the \_\_\_\_\_, the entrepreneur needs to consider whether the targeted opportunity will lead to other opportunities in the future.

Answer 30

Present