MGT358 Midterm 1 Study Guide (Professor Congcong Zheng) PDF

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MGT358 Fundamentals of Entrepreneurship Midterm Study Guide The midterm will have a combination of multiple choice and short answer/essay questions. The topics covered will include the following: - Define entrepreneurship as the pursuit of opportunity without regards to the resources currently held. Pr of e s s orHo war dSt e v e ns o n,t heg odf a t he rofe nt r e pr e ne ur s hi ps t udi e sa tHBS.Ac c or di ngt oSt e v e ns o n, e nt r e p r e ne ur s hi pi st hepur s ui to fopp or t uni t yb e y o ndr e s o ur c e sc ont r o l l e d. Sot hi si st hewo r ki ngde fini t i o no fe nt r e pr e ne ur s hi p. .Ent r e pr e ne ur sg e ne r al l yo nl yc o nt r o lt he i ro wnhuma n, s oc i al ,a ndpe r s onalfina nc i alc api t al , andt heo ppo r t uni t i e st he ys e e kar ef arbe y o ndt hat

- Differentiate life style entrepreneurship, social, corporate, franchise and growth oriented entrepreneurships and give examples for each type Entrepreneurs are confident in themselves and their abilities. They recognize that they don’t know everything or control all the available resources. Instead they have the ability to understand what they need. We educate ourselves or partner with others who have a needed skillset or experience. Lifestyle – focuses more on personal lifestyle rewards rather than profits Ex: Mom and Pop retail stores Social – enterprise that focuses more on solving social problems or effecting social change Ex: Toms/Warby Parker Corporate – generate new revenue growth and create value through entrepreneurial thought or action Ex: 3M/Qualcomm Franchise/Licensing – offering a product or a service labeled by a corporation that provides assistance in every aspect of business Ex: Chick-fil-A/Business Model Canvas Growth-oriented - moving the business forward in a revenue-focused manner Ex: Facebook

Chapter 2 Practicing Entrepreneurship 1. What is predictive logic? What’s the creation logic? Compare and contrast the prediction and creation approaches to entrepreneurship. What strengths and weaknesses do you see in the creation view of entrepreneurship? Predictive logic – big planning, waiting until you get what you need, expected return, linear, optimization, avoid failures at all costs, competitive, knowable. The saying, “to the extent we can predict the future, we can control it.” Creation logic – small actions, starting with what you have, acceptable loss, iterative(iterate), experimentation, embrace and leverage failure, collaborative, unknowable. The saying, “To the extent we can create the future, we don’t need to predict it.”

St r e ngt hso fCr e at i ona ppr o ac h:Fl e xi bi l i t ya ndadapt a bi l i t y ,o wne r s hi po v e rout c ome .We akne s s e s : Unc e r t a i nt yands t r e s s , noe x pe c t e ds uc c e s sg e ne r al l yf ac i ngac c e pt a bl el os so rf a i l ur e , mi s s i ng‘ bi gpi c t ur e ’ t hi nki ng

2. What are the five essential skills to building an entrepreneurial mindset? Define each skill and give an example for each. Play: · · ·

Frees the imagination Opens our mind to opportunities Helps us become more innovative

Empathy: · · ·

Understanding the emotion, circumstances, intentions, thoughts and needs of others. Allows you to connect with potential stakeholders Can help identify unmet needs

Creativity: · · ·

Requires openness to the world Entrepreneurs create opportunities instead of looking for them Taking action under conditions of uncertainty

Experimentation: · · · · · ·

Acting in order to learn Collect real-world information Test new concepts Asking questions Validating assumptions Based on action not research

Reflection: · · · ·

Helps critically analyze our feelings and knowledge Provides new perspectives Evaluate outcomes Draw conclusions

3. How would your views differ if you choose to see entrepreneurship as a process or a method/practice? What are the eight components of entrepreneurship? The process approach is based on planning and prediction, it is the predictive logic The method approach is based more on trial and error based, it is based on the creative logic The eight components of entrepreneurship are: 1. 2. 3. 4. 5. 6. 7.

Reflect on your desired impact on the world Start with means at hand Describe the idea today Circulate affordable loss Take small action Network and enroll others Build on what you learn

8.

Reflect and be honest with yourself

From the slides on “Recognizing Opportunities”

-What are the difference between opportunity and ideas? What are some key characteristics of an opportunity? An idea is a thought, an impression, or a notion. It may or may not meet the criteria of an opportunity. An opportunity is attractive, timely, durable, and anchored in a product/service that potentially adds value for buyers/users. You can identify opportunities by observing trends, solving a problem or a challenge, and by finding gaps in the marketplace.

-How could you identify opportunities? Can you give an example of opportunities that come from trends and identifying gaps in the marketplace? You can identify opportunities by observing trends, solving a problem or a challenge, and by finding gaps in the marketplace.

-What are the differences between grounded, blue sky and spaced-out ideas? Can you shape an idea from a spaced-out idea to a blue sky idea? Grounded Ideas are safe ideas that are predictable with little innovation. Blue Sky Ideas are ideas that are forward thinking Spaced out ideas are crazy, impractical ideas.

Chapter 6 Using Design Thinking From the gift-giving design exercise 1. What is a problem statement? What is a point of view? Can you give some examples of problem statement? Apr obl e ms t at e me nti sas t at e me ntabo utt hepr o bl e mt r yi ngt obes ol v e d, i taddr e s s e st hene e dandWHYi t ne e dst obeme t .Poi ntofvi e wi sani ndi v i dua l ' spe r c e pt i o noruni quewo r l dv i e w, e mpa t hi z i ngwi t h i ndi vi dual sc anhe l pusl e a r naboutt hi sandgi vei ns i g htonho wt os ol v et hepr o bl e mspr e s e nt e d. EXAMPLESOFPROBLEM STATEMENT:

2. In the design thinking process, what are the benefits of using sketches rather than words to generate ideas for products and services? Sketching forces individuals to look at a problem from a new perspective, sketches are less limiting, and allow greater use of the imagination

3. What is a prototype? What role does the prototype serve in the design thinking process? Apr ot o t y pei sas i mpl ee x pe r i me nt almode lo fapr o po s e ds ol ut i o nus e dt ot e s torval i dat ei de as ,de s i gn a s s umpt i o nsandot he ra s pe c t sofi t sc o nc e pt ua l i s a t i onqui c kl yandc he apl y , s ot hatt hede s i gne r / si nv ol v e dc an makea ppr opr i a t er e fine me nt sorpos s i bl ec ha ng e si ndi r e c t i o n.

4. What is design thinking? What are the three criteria for a successfully designed idea? De s i g nThi nki ng :Pr o c e s smo s tc ommo nl yus e dt os o l v ec ompl e xpr obl e ms ,na v i g a t eunc e r t a i ne nvi r onme nt s , a ndc r e at es ome t hi ngt hati sne wt ot hewor l d. THREECRI TERI A:

• f e as i bi l i t y —whatc a nbepos s i bl ya c hi e v e di nt hene a rf ut ur e ; • vi abi l i t y—ho ws us t ai nabl et hei de ai si nt hel ongt e r m;a nd • de s i r abi l i t y—whowi l lwa ntt ous eo rbuyt hepr oduc to rs e r vi c e .

5. What is the role of empathy in the design thinking process? Differentiate between divergent vs. convergent thinking. EMPATHY: • Enhanc e sne t wor ki ng • Pl a ysr ol ei ne ffe c t i vel e a de r s hi p • Pr omot e st e am bui l di ng • Br i ng si ns pi r a t i ont oi de a t i o nof‘ whati st hepr obl e m? ’ • He l psusunde r s t a ndnotonl yho w,butwhyp e op l et hi nkandf e e last he ydo. Di v e r g e ntt hi nki ng:Ope nso urmi ndst opos s i bi l i t i e si . e .t hepr ac t i c eofpl a y . Conv e r ge ntt hi nki ng :Mo v e sus f r om a bs t r ac tt oc onc r e t e ;f r o mo pe nne s st ounde r s t andi ng

6. What do design thinkers do in inspiration, ideation, and implementation stages? STEP 1 Inspiration: Empathize and ask ‘What is the problem?’ use divergent thinking STEP 2 Ideation: Use creativity to solve the problem, to create and answer ‘How might we solve the problem?’ STEP 3 Implementation: DO IT, Test and ask ‘How can we do it better?’ Use convergent thinking

7. What’s the difference between observation and insight? Can you give an example of insight? Obs e r v a t i o n:Theac t i o no fc l o s e l ymoni t or i ngbe ha vi o ra ndac t i v i t i e s I ns i g ht s :Ani nt e r pr e t at i o no fanobs e r v a t i ont hatpr o v i de sane wunde r s t a ndi ng EXofi ns i ght :Obs e r vi ngaf r i e ndf o r matt hi e rr e s umea ndl i ki ngt hel ook,g a i ni ngi ns i ghtt oho war e s ume s houl dl o okandho wt odot heo pe r at i onsi no r de rt of o r mati tc o r r e c t l y .

Chapter 7 Testing and Experimenting in Markets 1. What are the six steps of scientific experimentation? Describe in a few short sentences each step. 1 . As ki ngl ot sofque s t i o ns 2 . Car r yi ngoutba c kg r oundr e s e ar c h 3 . De v e l o pi nghypo t he s e s 4 . Te s t i ngt hehypot he s e sb yr unni nge xpe r i me nt s 5 . Anal y z i ngt heda t a 6 . As s e s s i ngr e s ul t s

2. What are the different types of customers? 1. 2. 3. 4.

End users—customer who actually buys and uses the product Influencers—celebrities or other trend setters Recommenders—industry experts, bloggers, those that offer opinions to the public Economic buyers—customers who approve large purchases such as retail store buyers, office managers, etc 5. Decision-makers—ultimate decision-makers such as CEOs, CFOs, or mom and dad 6. Saboteurs—those that can veto purchases or slow down the purchasing process

3. What are some of the rules of experimentation? How could entrepreneurs most effectively use the data generated from experimentation?

1 . Foc usona l ls t a ke ho l de r s .Ent r e pr e ne ur sne e dt of oc uso na l lt hes t a ke hol de r spo t e nt i a l l yi nv ol ve di nt he s t a r t up–t he s ei nc l udec us t ome r s , pa r t ne r s ,s uppl i e r s , di s t r i but o r s , e v e nr e ale s t at eage nt s . 2 . As kl o t sofque s t i o ns . Re me mbe r , e v e r yque s t i o ny o uha v eabouty o uri de ai sf e r t i l egr oundf ora n e xpe r i me nt . 3 . Thi nkl i k eas c i e nt i s tbutdon’ ta c tl i k eas c i e nt i s t . I no t he rwor ds , i t ’ si mpo r t antt ot hi nkt hr o ughy o ur h ypot he s i s , wha ty o uwantt ot e s tandho wy ouar eg oi ngt ot e s t , butdon’ tg e tbog g e ddo wni nt her i g or . 4 . Bui l dy ourl e ar ni ngi nt ot hene xti t e r at i o n. Don’ ti gnor ene gat i v ei nf or mat i o nj us ta sy oudo n’ twantt o i gno r epo s i t i v ei nf or mat i on.Ag e ne r a lr ul eo ft humbi st ha ts i xpi e c e so fi nf or mat i o ns a y i ngt hes amet hi ng c anbeaf ac t ! 5 . Ke e pt r ac kofy ourda t a. Youma yt hi nkapi e c eofi nf o r ma t i o ni snoti mpor t antbuti ti se s s e nt i a lt oke e p t r a c kofe v e r y t hi ng. 6 . Ke e py oure xpe r i me nt sl o wc os tandqui c k;andus et he mt os hapeandi mpr o vei de as . 7 . Don’ tj us tt a l kwi t hs t ak e hol de r s–i nt e r ac twi t ht he m. 8 . Don’ ti gnor eda t aj us tbe c aus ey oudon’ tl i kewha ti t ’ st e l l i ngy o u.

4. What are some common types of experiments? 1 . Tr yi ngo utne we x pe r i e nc e s( Li v ei nadi ffe r e ntc ount r y , Wor ki nmul t i pl ei ndus t r i e s , De v e l opane ws ki l l ) 2 . Ta ki ngapar tpr o duc t s ,pr o c e s s e s , andi de a s( Di s as s e mbl eapr oduc t , Vi s ual l ymapoutapr oc e s s , De c o ns t r uc ta ni de a, Mi c ha e lDe l l ( De l l )t oo ka par tac o mput e rt os e eho wi twor ke d) 3 . Te s t i ngi de ast hr oughpi l o t sandpr o t ot ype s( Bui l dapr o t ot ype , Pi l otane wpr oc e s s ,La unc hane wv e nt ur e o nt hemar ke t ,Ni c kSwi nmum ( Zappos )l a unc he spr oduc t squi c kl ya ndus e sf e e dba c kt oma kei mpr o ve me nt s )

Chapter 8: Building Business Models 1. What is a business model? - A conceptual framework that describes how a company creates, delivers, and extracts value (this helps entrepreneurs generate value and scale) - Fulfilling unmet needs in an existing market, by delivering existing products and services to existing customers with unique differentiation, and by serving customers in new markets 2. What are the four core areas of a business model? 1. The Offering → identifies potential customers the offering might be useful for and resources 2. The Customer → segments of a market that your offering is serving, plan to reach the target market, plan to maintain relationships with the market segment 3. The Infrastructure → All resources an entrepreneur must have in order to deliver the CVP (ex: people, tech, products, suppliers, facilities, cash) 4. The Financial Viability → revenue and cost structures (how will the firm make money given the cost structures of the resources/processes?) - Not just about revenue and costs 3. What are customer value proposition? Give some examples of customer value proposition for successful companies?

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Customer Value Proposition - Describes exactly what products or services your business offers and sells to customers, explains how you can help customers do something more inexpensively, easily, effectively, or quickly than before - Most important, must offer better value than the competition, must be measurable in monetary terms, must be sustainable

4. What are the nine components of the business model canvas? Describe each component in a few sentences and give examples for each component. -

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CVP:As described earlier in this chapter, the CVP is designed to solve a customer problem or meet a need. With regard to your new T-shirt business, ask yourself the following: What value do we deliver? What bundle of products and services are we offering? What are we helping customers achieve by providing a new range of T-shirts? Customer Segments: As defined above, a customer segment is a part of the customer grouping of a market. For example, gluten-free is a segment of the grouping of customers who buy food; another segment would be customers who are lactose intolerant. In Chapter 1 we saw that the caffeine-free ZOOS Greek Iced Tea would appeal to pregnant and new moms. The customer segmentation questions for the T-shirt business are: Who are your most important customers? What segment of the market would be most likely to buy your T-shirts? Channels: The value proposition is delivered through communication, distribution, and sales channels. The core question here is: What are all the ways in which you can reach your customer? For example, you could reach your customers online, through a brick and mortar store, and/or through word of mouth. Customer Relationships: Relationships can be developed on a one-to-one basis in a brick and mortar T-shirt store and/or through a purely automated process of selling the T-shirts online. Customer relationships go beyond just buying and selling; they depend on engendering positive feelings about your business, building a sense of customer identity (“I am a so-and-so T-shirt customer”), and motivating customers to want to bring their friends into the relationship. The key here is one of the most important questions an entrepreneur can answer: How do you establish and maintain relationships with your customers? Key Activities: What are the most important activities that the company participates in to get the job done? When running a T-shirt business you will need to consider such activities as stock management, sales management, and T-shirt design selection. Key Resources: Resources are what you need to develop the business, create products and services, and deliver on your CVP. Resources take many forms and include people, technology, information, and physical and financial resources. How much and which resources will you need if your company has 1,000 customers or 1,000,000? What resources do you need to accomplish the key activities? If you’re opening up a store, then you need to figure out the location and size; you also need people who are going to sell your T-shirts; space to store inventory; and a range of artists who will provide the designs for your T-shirts.

You will also need to calculate how much money you will need to set up, as well as accumulating the skills, knowledge and information you need to start your own business. - Key Partners: Entrepreneurs are not able to do everything by themselves, so partnering with suppliers, associates, and distributors is a logical option, not only for strategic purposes but also for efficiency needs. For example, you could partner with a designer who could advise you on the artwork of the T-shirts as well as providing you with a network into other designers. You could ask the questions around outsourcing: Could some activities be outsourced? Do you have a network of suppliers/buyers you could tap into or negotiate with? - Revenue Streams: Revenue is generated if a successful value proposition is delivered. Here you need to ask: How much are my customers willing to pay? How many customers do I need? How much cash can be generated through Tshirt sales in the store or T-shirt sales online? How much does each stream contribute to the total? (We will explore revenue models in further detail in Chapter 10). - Cost Structure: The cost structure represents all the expenses required to execute and run the business model. What are the most important costs inherent in the business model? Which resources are the most expensive to get? Which activities are the most expensive? Store rental, employee salaries, the cost of purchasing Tshirt materials and designs, and the cost of sales and marketing are all factors to consider when formulating a cost structure. Essay question example: Put yourself in the shoes of an entrepreneur designing a product, describe the steps of the design thinking product?...