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Flashcards in Chapter 3 packet notes Deck (56):
1

Identification of potential new products or services that may lead to promoting businesses.

Opportunity Recognition

2

Readiness to act on existing, but unnoticed, business opportunities.

Entrepreneurial Alertness

3

  • Products that serve clear and important needs.
  • Products that customers know about.
  • Products that customers can afford.
  • A good idea is not the same as a good opportunity.

Good Investment Qualities

4

  • Opportunity Recognition
  • Entrepreneurial Alertness
  • Good Investment Qualities

Identifying Startup Ideas

5

  • To develop a commercial market for new product or service.
  • Wanting the challenge of succeeding (or failing) on your own.
  • To tap into unique resources that are available.
  • To avoid undesirable features of existing companies.

Creating a New Business from Scratch- Motivations to Start a Business

6

  • Type A
  • Type B
  • Type C

Kinds of Startup Ideas

7

Are centered around providing customers with an existing product not available in their market.

Type A Ideas (New Market)

8

Involve new ideas, involve new technology, centered around providing customers with a new product.

Type B Ideas (New Technology)

9

Are centered around providing customers with an improved product.

Type C Ideas (New Benefit)

10

  • The unexpected
  • The incongruous
  • Process needs
  • Structural change

Industry or Enterprise Factors

11

Unanticipated events lead to either enterprise success or failure.

The Unexpected

12

What is expected is out of line with what will work.

The Incongruous

13

Current technology is insufficient to address an emerging challenge.

Process Needs

14

Changes in technology, markets, etc,. after industry dynamics.

Structural Change

15

  • Demographics 
  • Changes in perception
  • New knowledge

Human and Economic Factors

16

Shifts in population size, age structure, ethnicity, and income distribution impact product demand.

Demographics

17

Perceptual variations determine product demand.

Changes in Perception

18

Learning opens the door to new product opportunities with commercial potential.

New Knowledge

19

  • Industry or enterprise factors
  • Human and economic factors

Change-Based Sources of Entrepreneurial Opportunities

20

  1. Borrow ideas from existing products and services or other industries.
  2. Combine two businesses into one to create a market opening.
  3. Begin with a problem in mind.
  4. Recognize a hot trend and ride the wave.
  5. Explore ways to improve a product or service's function.
  6. Think of how to streamline a customer's activities.
  7. Adapt a product or service to meet customer needs in different ways.
  8. Imagine how market for a product or service could be expanded.
  9. Use "green" technologies to makek the product or service more environmentally friendly.
  10. Keep an eye on new technologies.

Applying Innovative Thinking to Business Ideas

21

Studying context of venture to identify and determine business ideas that qualify as opportunities.

  • General Environment
  • Industry Environment
  • Competitive Environment

Outside-In Analysis

22

Encompasses factors influencing business in a society.

General Environment

23

Combined forces impacting a firm and its competitors.

Industry Environment

24

Focus on the strength, position, and likely moves and countermoves of competitors in an industry.

Competitive Environment

25

  • Political/legal
  • Technological
  • Sociocultural
  • Global
  • Demographic
  • Economic

Trends in the General Environment

26

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

Major Factors Offsetting Market Attractiveness

27

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

Competitor Analysis

28

Assessing the firm's internal competitive potential.

  • Resources
  • Capabilities
  • Core Competencies

Inside-Out Analysis

29

Basic inputs that girm uses to conduct its business.

  • Tangible resources
  • Intangible resources

Resources

30

Visible and easy to measure.

Tangible Resources

31

Invisible, difficult to quantify.

Intangible Resources

32

Integration of various organizational resources that are deployed together to the firm's competitive advantage.

Capabilities

33

Resources and capabilities that provide a firm with a competitive advantage over its rivals.

Core Competencies

34

  • Provides concise overview of a firm's strategic situation.
  • Helps identify opportunities that match the venture.

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

35

  • Will the opportunity lead to others in the future?
  • Will the opportunity build skills that open the door to new opportunities in the future?
  • Will pursuit of the opportunity be likely to lead to competitive response by potential rivals?

Seeking Competitive Insight

36

  • Important core competencies
  • Financial strengths
  • Innovative capacity
  • Skilled or experienced management
  • Well-planned strategy
  • Effective entry wedge
  • A strong network of personal contacts
  • Positive reputation in the marketplace
  • Proprietary technology

Strengths

37

  • Inadequate financial resources
  • Poorly planned strategy
  • Lack of managerial skills or experience
  • Inadequate innovation capacity
  • Negative reputation in the marketplace
  • Inadequate facilities
  • Distribution problems
  • Limited marketing skills
  • Production inefficiencies

Weaknesses

38

  • An untapped market potential
  • New product or geographic market
  • Favorable shift in industry dynamics
  • High potential for market growth
  • Emerging technologies
  • Changes allowing overseas expansion
  • Favorable government deregulation
  • Increasing market fragmentation

Opportunities

39

  • New competitors
  • Rising demands of buyers or suppliers
  • Sales shifting to substitute products
  • Increased government regulation
  • Adverse shifts in the business cycle
  • Slowed market growth
  • Changing customer preferences
  • Adverse demographic shifts

Threats

40

  • Strategy
  • Strategic decision
  • Sustainable competitive advantage

Important Strategic Terms

41

Plan of action that coordinates resources and commitments of an organization to achieve superior performance.

Strategy

42

 A decision regarding the direction a firm will take in relating to its customers and competitors.

Strategic Decision

43

A value-creating industry position likely to endure over time.

Sustainable Competitive Advantage

44

  • Broad based strategy
  • Differentiation- based strategy
  • Focus strategy

Selecting Strategies that capture opportunities

45

Seeking an advantage in cost or differientiation.

Broad-Based Strategy

46

Requiring the firm to be the lowest-cost competitor.

Cost-Based Strategy

47

Emphasizing the uniqueness of the firm's product or service.

Differentiation-Based Strategy

48

Targeting a specific market slice (niche) using either a cost or a differentiation-based strategy.

Focus Strategy

49

  • Restricting focus to a single subset of customers.
  • Emphasizing a single product or service
  • Limiting the market to a single geographical region.
  • Concentrating on superiority of product or service.

Focus Strategy Implementation

50

  • Niche market shields from direct competition
  • Allow development of unique expertise

Advantages- Focus Strategies

51

Focus market can quickly erode if:

  • Competitors successfully imitate the strategy
  • Segment erodes or demand disappears.
  • Segment's differences from other segments narrow.
  • New firms subsegment the industry.

Disadvantages- Focus Strategies

52

  • Judging a business opportunity
  • Market factors
  • Fatal flaws
  • Competitive advantage
  • Management capability
  • Industry Attractiveness

How Feasible is my Idea?

53

A preliminary assessment of a business idea that gauges whether or not the venture envisioned is likely to succeed.

Feasibility Analysis

54

A circumstance or development that alone could render a new business unsuccessful.

  • Market potential: acceptance, accessibilitiy, growth and size.
  • Power of competitors
  • Strength of competitive advantage.
  • Startup costs
  • Management capability

Fatal Flaws

55

Leader's grasp of cirtical enterprise success factors and ability to execute on these factors.

Industry Attractiveness

56

  • Fit the venture with leader's mission, aspirations, and comfort level with risk involved.
  • Leader's connections to others who will be essential to making the venture work.

Management Capability