MGMT 310 Exam 1
Terms in this set (49)
Explain entrepreneurship and discuss its importance
is the process by which individuals pursue opportunities without regard to resources the currently control.
Describe corporate entrepreneurship and its use in established firms
Is the conceptualization of entrepreneurship at the firm level. All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. Position of firm is entrepreneurial intensity.
3 main reasons people become entrepreneurs
1. Desire to be their own boos
2. Desire to pursue their own ideas
3. Financial rewards
4 Characteristics of a successful entrepreneur
1. Passion for the business
2. Product/customer focus
3. Tenacity despite failure
4. Execution intelligence
5 Myth of Entrepreneurship
1. Born, not made- everyone has the potential
2. Entrepreneurs are gamblers- setting goals
3. Entrepreneurs are motivated by only money
4. They should be young and energetic
5. They love the spotlight- not actually out for public attention
Explain how entrepreneurial firms differ from salary-substitute and lifestyle firms
Salary-substitute: basically provide their owner or owners a similar level of income to what they would be able to earn in a conventional job
Lifestyle: firms that provide their owner and owners the opportunity to pursue a particular lifestyle, and make a living at it
Entrepreneurial: firms that bring new products and services to the market regardless of resources
Discuss the changing demographics of entrepreneurs in the United States.
6.2 million women owned businesses in 2002 (20-30%)
Growing number of organizations that support women owned businesses (women getting more funded as well)
Minority- increase in minority owned, biggest by latinos (11 to 23%)
Seniors- Also increasing, because of corporate downsizing
Young- not as high as it used to be
Discuss the impact of entrepreneurial firms on economies and societies.
Economic: innovation- creating something new. Small businesses outperform larger counterparts in obtaining patents.
:small businesses are the creator of most new jobs
Society: dramatic impact on society. All of the things that make our lives easier (exp: uber, netflix)
Identify ways in which large firms benefit from the presence of smaller entrepreneurial firms.
many entrepreneur firm created business models around producing products and services that help larger firms become more efficient and effective
Explain the 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.
Explain why it's important to start a new firm when its "window of opportunity" is open.
An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business.
The market must be open of it
Explain the difference between an opportunity and an idea.
Opportunities are more than just ideas- thought, impression, notion, based on individual perceptions.
Describe the three general approaches entrepreneurs use to identify opportunities.
1. Observing trends- trends create opportunities to pursue
2. Solving a problem
3. Finding gaps in the marketplace
Identify the four environmental trends that are most instrumental in creating business opportunities.
1. Economic forces: economic trends help determine areas that are ripe for new start ups and areas to avoid
2. Social: social trends alter how people behave. These trends provide opportunities for new businesses to accommodate the changes
3. Tech advances: Technology creates opportunities. Products can emerge from technology
4. Political: political action and regulatory changes also provide opportunity. Company created to help other companies with a law
List the personal characteristics that make some people better at recognizing business opportunities than others.
1. Prior experience
2. Cognitive factors- Some people believe that entrepreneurs have a "sixth sense" that allows them to see opportunities that others miss.
3. Social Networks-People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks
Identify the five steps in the creative process.
Describe the purpose of brainstorming and its use as an idea generator.
Is a technique used to generate a large number of ideas and solutions to problems quickly. A brainstorming "session" typically involves a group of people, and should be targeted to a specific topic
Describe how to use library and Internet searches to generate new business ideas.
Talk to a reference librarian, who can point out resources.
Simply browsing through several issues can spark an idea
Explain the purpose of maintaining an idea bank.
to store ideas, either physical or repository
Describe three steps for protecting ideas from being lost or stolen.
1. Put the idea into tangible form, date the idea, and author name
2. idea should be secured
3. avoid making an inadvertent or voluntary disclosure of the idea (dont discuss in elevator)
Explain what a feasibility analysis is and why it's important
Feasibility analysis is the process of determining whether a business idea is viable. To determine whether an idea is worth pursuing
Discuss the proper time to complete a feasibility analysis when developing an entrepreneurial venture.
The proper time to conduct a feasibility analysis is early in thinking through the prospects for a new business
Describe the purpose of a product/service feasibility analysis and the two primary issues that a proposed business should consider in this area.
An assessment of the overall appeal of the product or service being proposed. Before development, it should be what the customers want.
Would people like it? Would people buy it?
Explain a concept statement and its contents.
A concept statement is a one-page description of a business that is distributed to people who are asked to provide feedback on the potential of the business idea
Describe the purpose of a buying intentions survey and how it's administered.
Instrument that is used to gauge customer interest in a product or service. It consists of a concept statement or a description of a product or survey with a short survey attached to gauge customer interest
Describe the purpose of industry/target market feasibility analysis and the two primary issues to consider in this area.
an assessment of the overall appeal of the industry and the target market for the proposed business.
Industry attractiveness, Target market attractiveness
Discuss the characteristics of an attractive industry.
Are young rather than old
Are early rather than late in their life cycle
Are fragmented rather than concentrated (i.e. a few firms control the market)
Are growing rather than shrinking
Are selling products and services that customers "must have" rather than "want to have"
Are not crowded
Have high rather than low operating margins
Are not highly dependent on the historically low price of key raw materials
Describe the purpose of organizational feasibility analysis and list the two primary issues to consider in this area.
conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to launch the business.
Management expertise, Resource sufficiency
Explain the importance of financial feasibility analysis and list the most critical issues to consider in this area.
Is the final component of a comprehensive feasibility analysis.
Total start up cash needed, financial performance of similar businesses, overall financial attractiveness of the proposed venture.
Explain the purpose of a business plan.
A business plan is a written narrative, typically 25 to 35 pages long, that describes what a new business plans to accomplish
Describe the two primary reasons for writing a business plan.
1. A firms employees
2. Investors and other external stakeholders
Describe who reads a business plan and what they're looking for.
1. Employees: helps them operate in sync and move forward in a consistent and purposeful manner.
2. Investors/Stakeholders: it must make the case that the firm is a good use of an investors funds or the attention of others
Explain the difference between a summary business plan, a full business plan, and an operational business plan.
Summary: 10-15 pages, works best for new ventures in the early stages to test the waters
Full: 25-30 pages, for new venture that are at the point of needing funding or financing. Blueprint.
Operational: 40-100 pages, meant for internal audience, works best as a tool for creating a blueprint for a new venture's operations, guidance for managers
Explain why the executive summary may be the most important section of a business plan.
The executive summary is a short overview of the entire business plan, It provides a busy reader with everything that needs to be known about the new venture's distinctive nature. Investors will ask for the executive summary
Describe a milestone and how milestones are used in business plans.
Incorporating the venture, completion of prototypes, rental of facilities, obtaining critical financing, starting production, first sale
Explain why it's important to include separate sections on a firm's industry and its target market in a business plan.
It's important to include a section in the market analysis that deals with the behavior of the consumers in the market. The more a start-up knows about the consumers in its target market, the more it can tailor its products or services appropriately
Explain why the "Management Team and Company Structure" section of a business plan is particularly important.
many investors and others who read the business plan look first at the executive summary and the go directly to the management team section to asses the strength of the people starting the firm
Describe the purpose of a "sources and uses of funds" statement and an "assumptions sheet."
S&UOF: provides a mechanism for reporting how a firm's performance during an accounting period
Detail the parts of an oral presentation of a business plan.
Follow directions (hit time), Smooth and rehearsed, slides look good, questions and feedback (have planned answers)
Explain the purpose of an industry analysis.
Is business research that focuses on the potential of an industry (i.e. trying to determine if entry is really feasible or if already present if the firm's competitive advantage is truly sustainable)
Identify the five competitive forces that determine industry profitability.
Power of buyers, power of suppliers, threat of new entrants, rivalry, substitutes
Explain the role of "barriers to entry" in creating disincentives for firms to enter an industry.
Economies of scale, product differentiation, capital requirements, cost advantages independent of size, access to distribution channels, government and legal barriers
Identify the nontraditional barriers to entry that are especially associated with entrepreneurial firms.
strength of management team, first mover advantage, passion of the management team, unique business model, internet domain name, inventing a new approach
List the three industry-related questions to ask before pursuing the idea for a firm.
1: is the industry accessible
2. does the industry contain markets that are ripe for innovation or are underserved
3. are there positions in the industry that avoid some of the negative attributes of the industry as a whole
Identify the five primary industry types and the opportunities they offer.
Emerging- standard operating procedures have yet to be developed
Fragmented- large number of firms of approximately equal size
Mature- experiencing slow or no increase demand
Declining- reduction in demand
Global- significant international sales
Explain the purpose of a competitor analysis.
understand the strategies and behaviors of its competitors
Identify the three groups of competitors a new firm will face.
Direct- identical or similar products
Indirect- close substitutes
Future- could come in at any time
Describe ways a firm can ethically obtain information about its competitors.
attend conferences, purchase products, study websites, email alerts, industry books, talk to customers
Describe the reasons for completing a competitive analysis grid.
a tool for organizing the information a firm collects about competitors, can help a firm see how it stacks up
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