Foundation in Entrepreneurship Final Exam Notes PDF

Preview

Summary

Belmont University Foundation in Entrepreneurship (ETP 3000) Final Exam Review and Notes...

Description

Foundation in Entrepreneurship Belmont University ETP 3000 Foundation in Entrepreneurship Final Exam Review/Preparation

Business plan: A written document describing all the aspects of a business venture, which is usually necessary to raise money and attract high quality business partners. Derivative research: Works that are new renditions of something that is already copyrighted, which are also copyrightable Direct research: talking face to face with customers, collecting data yourself Disruptive business model: Business models that are rare, that do not fit the profile of a standard business model, and that are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry. Doorway of opportunity: Maybe opportunity gap? an entrepreneur recognizes a problem and creates a business to fill it Economic forces: state of the economy, level of disposable income, consumer spending pattern. An understanding of economic trends also helps identify areas to avoid. Entry barrier: Conditions that create disincentives for a new firm to enter an industry. Ethical dilemma: A situation that involves doing something that is beneficial to oneself or the organization, but may be unethical. Failure rate for firms in an industry: As we note throughout this textbook, new ventures have a high propensity to fail. The high failure rate is due in part to what is known as the liability of newness, which refers to the fact that companies often falter because the people who start them aren't able to adjust quickly enough to their new roles and because the firm lacks a "track record" with outside buyers and suppliers

Feasibility analysis: A preliminary evaluation of a business idea to determine if it is worth pursuing. Gazelle firm: gazelle company is a high-growth company that has been increasing its revenues by at least 20% annually for four years or more, starting from a revenue base of at least $100,000 Growth rate for firms in an industry: The competition among firms in a slow-growth industry is stronger than among those in fast-growth industries. Slow-growth industry firms, such as insurance, must fight for market share, which may tempt them to lower prices or increase quality to obtain customers. In fast-growth industries, such as e-book publishing, there are enough customers to satisfy most firms' production capacity, making price-cutting less likely. Industry: A group of firms producing a similar product or service, such as Pilates and Yoga studios, and solar panels. Initial research: The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business's target market, the industry as a whole, and the particular competitors you face Legal dilemma: The realization that obedience to one law will cause you to be disobedient to another. Lifestyle firm: Businesses that provide their owners the opportunity to pursue a particular lifestyle and earn a living while doing so (e.g., ski instructors, golf pros, and tour guides). Marketing plan: The marketing plan focuses on how the business will market and sell its product or service. It deals with the nuts and bolts of marketing in terms of price, promotion, distribution, and sales.

Monopoly: the exclusive possession or control of the supply of or trade in a commodity or service.

Not-for-profit firm: a type of organization that does not earn profits for its owners. All of the money earned by or donated to a not-for-profit organization is used in pursuing the organization's objectives and keeping it running. Oligopoly: a state of limited competition, in which a market is shared by a small number of producers or sellers. Operations plan: A blueprint for a company's operations; primarily meant for an internal audience. Political changes: entire industries hinge on whether certain government regulations evolve in a manner that is favorable to the industry, new laws, e.t.c. Portal of entry: opportunity gap? An entrepreneur recognizes a problem and creates a business to fill it. Primary research: Research that is original and is collected firsthand by the entrepreneur by, for example, talking to potential customers and key industry participants. Regulatory changes: regulatory changes also provide the basis for business ideas, new regulations for industries Salary-substitute 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 (e.g., dry cleaners, convenience stores, restaurants, accounting firms, retail stores, and hairstyling salons). Secondary research: Data collected previously by someone else for a different purpose. Social forces: social and cultural trends, demographic changes, what people think is "in". An understanding of the impact of social forces on trends and how they affect new product, service, and business ideas is a fundamental piece of the opportunity

recognition puzzle. Often, the reason that a product or service exists has more to do with satisfying a social need than the more transparent need the product fills. Statutory dilemma: meet all contractual obligations on time Tactical plan: Tactical planning takes a company's strategic plan and sets forth specific short-term actions and plans, usually by company department or function. The tactical planning horizon is shorter than the strategic plan horizon. Target market: The limited group of individuals or businesses that a firm goes after or tries to appeal to at a certain point in time. Technological advances: new technologies, emerging technologies, new uses of old technologies. Advances in technology frequently dovetail with economic and social changes to create opportunities Unique business model: a particular group of consumers at which a product or service is aimed.tactac Window of opportunity: the time period in which a firm or an entrepreneur can realistically enter a new market. Entrepreneurship: the process by which individuals pursue opportunities without regard to resources they currently control Salary-substitute Firms: Type of entrepreneurial firm that is small and yields a level of income for their owner(s) that is similar to what they would earn when working for an employer Lifestyle Firms: Type of entrepreneurial firm that provides their owner(s) the opportunity to pursue a particular lifestyle and earn a living while doing so Entrepreneurial Firms: Type of entrepreneurial firm that brings new product and services to market by creating and then seizing opportunities

Opportunity: A favorable set of circumstances that creates a need for a new product, service, or business Opportunity Gap: When an entrepreneur recognizes a problem and creates a business to fill it they are recognizing a(n) The 4 essential qualities of an opportunity: 1) Attractive 2) Durable 3) Timely 4) Anchored in a product/service that creates/adds value to end user Window of Opportunity: The time period in which a firm can realistically enter a new market Idea: A thought, impression, or a notion

The 3 approaches entrepreneurs use to identify an opportunity: 1) Observing trends 2) Solving a problem 3) Finding gaps in the marketplace Opportunity identification approach: External identification by observing economic trends, social trends, technological advances, and political action Observing Trends Opportunity identification approach: Internal identification by recognizing problems and finding ways to solve them; observing daily challenges Solving a Problem Opportunity identification approach: Recognizing products that consumers need or want that aren't available in a particular location or aren't available at all Finding Gaps in the Marketplace

Opportunity Recognition: The process of perceiving the possibility of a profitable new business or a new product or service Ideas or Opportunities? Are interesting to an entire market Opportunities Ideas or Opportunities? Can provide a model that is profitable Opportunities Ideas or Opportunities? Can turn into opportunities Ideas Ideas or Opportunities? Are not grounded in market demand Ideas Ideas or Opportunities? Can be translated into a solution that is a good or service for sale Opportunities

Ideas or Opportunities? Might even be in your area of passion Ideas The response to an opportunity: A product/good/service 4 Important Trends 1. Political Action and Regulatory Change 2. Economic forces 3. Social Forces 4. Technological Advances

Personal Characteristics of an Entrepreneur (4) - prior experience - cognitive factors - social networks - creativity Strategic Window: Unique market opportunities that are available for only a particular time Porter's 5 Forces 1. Supplier Power 2. Buyer Power 3. Competitive Rivalry 4. Threat of Substitutes 5. Threat of New Entry Economic Forces: State of the economy, level of disposable income, consumer spending patterns Social Forces: Social and cultural trends, demographic changes, what people think is "in" Technological Forces: New technologies, emerging technologies, new uses of old technologies Political and Regulatory Changes: New changes in political arena, new laws and regulations STEEP: Social, Tech, Economic, Environmental, Political Type of Business Plan: 10-15 pages, works best for companies that are early in their development and aren't prepared to write a full plan Summary Plan

Type of Business Plan: 25-35 pages, spells out a company's operations and plans in much detail, used to prepare for an investor Full Business Plan Type of Business Plan: 4-100 pages, intended for an internal audience, blueprint for operations Operational Business Plan Industry Analysis: Method to (1) identify an industry's profit potential and (2) derive implications for a firm's strategic position within an industry Industry: A group of firms producing a similar product or service Competitor Analysis: A detailed evaluation of a firm's competitors Barrier to Entry: A condition that creates a disincentive way for a new firm to enter an industry Porter's 5 Forces: Competitors can enter the industry to copy what the industry entities are doing Threat of New Entrants Porter's 5 Forces: The level of competition among firms already competing in the industry Rivalry Among Existing Firms Porter's 5 Forces: The ability of suppliers to exert pressure on buyers and suppress profitability of the industries they serve Bargaining Power of Suppliers Porter's 5 Forces: The ability of buyers to exert pressure on suppliers and suppress the profitability of the industries from which they buy Bargaining Power of Buyers

Porter's 5 Forces: The extent to which substitutes suppress the profitability of an industry Threat of Substitutes Direct Competitors: Businesses offering identical or similar products Indirect Competitors: Businesses offering close substitute products Future Competitors: Businesses that are not yet direct or indirect competitors but could be at any time Target Market: The limited group of individuals or businesses that it goes after or tries to appeal to Ethical Dilemmas: A situation that involves doing something that is beneficial to oneself or the organization, but may be unethical Income Statement: Financial statement that reflects the results of the operations of a firm over a specified period of time Sales Forecast: A projection of a firm's sales for a specific period A Sales Forecast is based on: 1) Record of past sales 2) Current production capacity + demand 3) Any factors that will affect future production and demand Income Statement includes: - Revenues and expenses that are a direct result of the regular business operations - Revenue and expense info about activities that are not tied to a company's regular operations Business Model Canvas: A strategic management and lean startup template for developing new or documenting existing business models Business Model Canvas: A visual chart with elements describing a firm's value proposition, infrastructure, customers, and finances

Business Model Canvas parts (9): Key Partners, Key Activities, Key Resources, Cost Structure, Value Propositions, Customer Relationships, Channels, Revenue Streams, Customer Segments...