12. Entrepreneurship

Question 1

Intrapreneurship

Answer 1

“An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities

Question 2

entrepreneur

Answer 2

the innovator who implements change within markets through the carrying out of new combinations.

Question 3

Contradiction btw strategy and entrepreneurship

Answer 3

Strategy is about the pursuit of a clear defined path, systemically defined in advance, a carefully chosen set of activities
Entrepreneurship is the epitome of opportunism, requiring ventures to pivot in new directions continuously. About adjusting with the inflow of new information & market shifts.

Question 4

Strategy can assist entrepreneurs to overcome the challenges faced by

Answer 4

1. choosing viable opportunities (OC)
2. staying focused on goal, (despite unforeseen implications)
3. Align entire organisation by identifying core values, recognising that decisions are interdependent
4. Making the necessary commitments

Question 5

Lean strategy process

Answer 5

1. Vision
2. analysis (Examination of external environment and internal resources)
3. Deliberate strategy
4. Learning (Making daily decisions and conduct experiments guided by the strategy)
5. Emergent strategy

Question 6

How can other frameworks be linked into lean strategy process?

Answer 6

For 1. Identify role of business as direction (ie PM, CSR, CSV)
For 2. Analysis, use RBV, Porter’s 5 forces to assess internal and external factors
for 3. Deliberate strategy, potentially applying Strategic diamond

Question 7

Lean strategy process is a solution to the contradiction

Answer 7

between strategy and entrepreneurship as it guards against the extremes of both rigid planning and unrestrained experimentation.

Question 8

In lean strategy framework,

Answer 8

strategy provides overall direction and alignment providing a screen for novel ideas and yardstick for evaluating success of experiments with them.

Question 9

Entrepreneurship can also be defined as

Answer 9

“the pursuit of opportunity without regard to resources currently controlled (Howard Stevenson, Harvard Business school)

Question 10

Business model canvas overview

Answer 10

Describes how the rationale of how an organisation creates, delivers and captures value (the choices it makes as to how it operates + how it operates.

Question 11

BMC is important because choices have consequences and it’s successful in that

Answer 11

1. aligns goals
2. reinforcement (internal consistency)
3. Virtuosness
4. Robustness

Question 12

9 building blocks of BMC

Answer 12

1. Customer segments
2. Value proposition
3. Channels
4. Customer relationships
5. Revenue streams
6. Key resources
7. Key activities
8. Key partnerships
9. cost structure

Question 13

customer segments for LAN

Answer 13

(1) Passenger flight business (split into low cost and premium pricing)
2. Cargo business
3. Aircraft ground services

Question 14

Value propositions LAN

Answer 14

Performance- high quality, reliable service built strong reputation building customer loyalty and making it a better preference in comparison to competitors
Getting the job done → cargo and ground services
Brand/status- reputation for quality
Price- low cost model for domestic flights catering to the needs of price sensitive customer segment –> creates accessibility for low income consumers
Cost reduction - ground services in Santiago for other aircraft
Risk reduction - for cargo of perishable goods and livestock, providing a service level guarantee
Convenience/usability- convenience of purchasing tickets online + multiple destinations

Question 15

Channels

Answer 15

1. Raising awareness among customers about a company’s products and services
2. Helping customers evaluate a company’s Value Proposition
3. Allowing customers to purchase specific products and services
4. Delivering a Value Proposition to customers
5. Providing post-purchase customer support” ( p. 26)
   Through their loyalty program

Question 16

Customer relationships

Customer relationships may be driven by the following motivations:

Answer 16

1. Customer acquisition 
Via loyalty program
Low cost model
Brand image for reliability
2. Customer retention
High quality service
Wide number of destinations
3. Boosting sales (upselling)” (p. 28)
Having sales during off-peak seasons, low cost model for domestic flights

Question 17

REvenue streams

Answer 17

A business model can involve two different types of Revenue Streams:
Transaction revenues resulting from one-time customer payments
One-off purchases of tickets
Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support
Potentially for recurring cargo flight deliveries

Question 18

Pricing model for lan (Revenue streams)

Answer 18

Domestic flights- low cost model
International flights premium pricing
Fuel surcharge add-on payment scheme

Question 19

Revenue streams ways to generate revenue

Answer 19

1. Asset sale- some asset sale via in-flight catalogue sales
2. Usage fee- use of plane fee sold via tickets, use of ground services by other airlines
3. Subscription fees
4. Lending/Renting/Leasing
5. Licensing
6. Brokerage fees
7. Advertising

Question 20

Key resources (what enables business to offer and create value propositions)

Answer 20

Physical → aeroplanes, hubs, hangars,
Intellectual → brand image, partnerships, customer databases,
Human→ critical, highly efficient ground crew, flexible pilots, well-trained customer service members
Financial

Question 21

Key activities Lan

→ Describes the most important things a company must do to make its business model work

Answer 21

Production→ delivering of service (ie the flight itself, baggage handling), in a reliable, trustworthy manner
Problem solving→ providing faster ways for domestic passengers to travel via low cost model
Platform/Network

Question 22

Key partnerships

Answer 22

1. Optimisation & economy of scale → outsourcing data management systems to experienced data businesses,
2. Reduction of risk & uncertainty → utilising complex hedge fund managing systems in order to reduce risk around the fluctuation of fuel prices
3. Acquisition of particular resources & activities → supply of aeroplanes by boeing, travel agents selling tickets
4. Four different types of partnerships
   Strategic alliances between non-competitors → oneworld alliance (put Lan on global platform along with reputable airlines
5. Coopetition: strategic partnerships between competitors → oneworld allinace enabled
6. Joint ventures to develop new businesses
   Buyer-supplier relationships to assure reliable supplies

Question 23

Cost structure

Answer 23

Cost-driven → low frill low cost model for domestic flights
Value-driven → higher quality service provided for first class passengers, and overall for long haul international flights
Fixed costs: salaries
Variable costs: fuel prices
Economies of scale- larger company with multiple hubs, and larger planes,
Economies of scope- yes! Larger scope of operations, an international airline with majority ownership of domestic airlines within LA. Has benefited from having multiple hubs so that passengers can smoothly transfer between flights and stop overs to numerous destinations

Question 24

Criticisms of BMC

Answer 24

Fails to capture external environment
Blind to levels outside organisation
Designed around SME’s and startups
Focused on some key stakeholders and not others

Question 25

BMC is less applicable to

Answer 25

established businesses

Question 26

Nature of entrepreneur

Answer 26

attempt to predict and act upon changes within markets. Bears the uncertainty of market dynamcis

Question 27

Harvey leibenstein | Entrepreneurial activity involves

Answer 27

"activities necessary to create or carry on an enterprise where not all markets are well established or clearly defined and/or in which relevant parts of the production function are not completely known”

Question 28

Strategies used by entrepreneurs

Answer 28

strategic adaption | population ecology

Question 29

Strategic adaptation (individual focused, about making of appropriate adjustments to the business and its strategic focus, as the venture evolves from an initial idea to a successful business)

Answer 29

``` Process: 1. Existence of key success (or failure) factors that enhance/reduce the chances of survival 2. Entry strategy: (New or imitation product/service/both Sponsorship (customer/self/institution)) 3. Contingent factor- effect of experience curve (the more experience a firm has in producing a particular product, the lower its production costs). ```

Question 30

population ecology (→ individual goal driven behaviour largely irrelevant → environmental selection procedures are most powerful determining factor, → Environmental selection mechanism determines the characteristics of populations of organisations)

Answer 30

As environments change, often due to innovations introduced by organizations within them, mortality rates increase for organizations experiencing high levels of resistance to change. Inertial forces guarantee that most innovations will come from new entrants and not from incumbents resisting change. Organizational inertia is caused by a combination of internal (e.g., sunk costs, impaired managerial cognition, or organizational culture and history) and external restraints (e.g., government regulations, groupthink, or barriers to entry and exit).

Question 31

Population ecology: environmental niches can be exploited by

Answer 31

specialist organizations that risk adaptation to the requirements of a smaller number of customers. Generalist organizations span many niches, but they do so sub-optimally—catering to a subset of customers in each niche in return for diversified risk.

Question 32

Process of population ecology

Answer 32

Process: Technological/demographic change Expansion of existing/founding of new organization Creation of new opportunities Contingent factor: nature of existing organisations

Question 33

Reconciling strategic adaptation and population ecology

Answer 33

1. Competence enhancing (strategic adaptation)- LAN did this by upgrading to more fuel economic aircraft, plus adapting to low cost model 2. Competence destroying (population ecology)

Question 34

Aggressive strategy is more likely to succeed under conditions of

Answer 34

competence destroying

Question 35

Competence enhancing for technological discontinuity favours

Answer 35

existing organisations