Course Questions Flashcards
1
Q
Question (and Source)
A
Answer
2
Q
When exactly is one talking about a family business? (Case Study)
A
The assessment of when a company is a family business is not uniform, but rather based on various criteria, such as ownership, management, and the intended involvement of future generations.
3
Q
What economic significance can be attributed to family businesses? (Case Study)
A
constitute a** large proportion** of businesses globally and contribute significantly to employment and GDP.
4
Q
Do family businesses have typical strengths and weaknesses? (Case Study)
A
Yes, family businesses are characterized by distinct strengths and weaknesses arising from the interplay of family and business dynamics.
5
Q
What is the definition of a family business according to the Institute for SME Research (IfM)?
A
Where the entrepreneur or their family unite ownership and management rights .
6
Q
What is Zellweger’s definition of a family business?
A
A “dominantly family controlled company with the vision to potentially sustain it across generations.”
7
Q
What criteria does the European Commission use to define family businesses?
A
Family possesses:
25% of the decision making rights
direct or indirect
At least one family representative is formally involved in governance.
8
Q
What are the three dimensions of family influence in the F-PEC model?
A
Power: The patriarch, John Smith Sr., holds majority ownership and maintains firm control over decision-making, reflecting a high power dimension.
Experience: With three generations actively involved in the business, their extensive experience contributes to the company’s success.
Culture: The family’s emphasis on honesty and quality craftsmanship is deeply ingrained in the company’s culture, showcasing a high overlap between family and business values.
- Power dimension (ownership, control, influence)
- Experience dimension (number of generations in control)
- Cultural dimension (overlap of family and business values)
9
Q
What are the five dimensions of family influence derived from the F-PEC model?
A
Inclusion of Family Control: The entire family is involved in running the restaurant
Complexity of Family Control: The family has a complex voting system to make decisions
**Set-up of Business Activities: **The family deliberately sets up the restaurant near their home
Philosophy and Goals of Family Owners: The family’s motto is “Quality ingredients, family recipes,”
Levels of Control in Family History: The pizza recipe has been passed down through generations
10
Q
What are circular models in the context of family businesses?
A
They are Showing principles for understanding roles, connections, expectations, and problem analysis.
They map the **underlying logic **in family businesses.
11
Q
What does the two-circle model depict?
A
It describes the overlap and tension between the family system (traditional, emotional) and the corporate system (renewal, rational).
12
Q
What does the three-circle model illustrate?
A
It considers family, ownership, and management,
highlighting the role-related complexity faced by individuals in family businesses.
13
Q
How are circular models helpful in understanding family businesses?
A
they show potential role conflicts as actors face contradictory demands. This is because they have multiple roles.
I.e. Succession Planning
14
Q
What is the economic significance of family businesses in Germany?
A
employ over 50% of all employees. *
account for 45% (family-controlled) and 40% (owner-managed) of German sales.
15
Q
How does the share of family businesses vary across Europe?
A
- Ranges from 69% (Netherlands, UK) to 95% (Germany). *
- All legal structures are represented. *
- Employ 40-50% of all employees and contribute 40-70% to GDP.
16
Q
What is the economic significance of family businesses in the USA?
A
- 74.9% of companies are classified as family businesses
- Generate 64% of GDP and employ 62% of the workforce.
17
Q
What is the estimated share of family businesses in China?
A
Family businesses are estimated to make up the majority of non-government controlled companies, with a share of 85.4%.
18
Q
What is the economic significance of family businesses in India?
A
- Account for two-thirds of GDP. *
- Employ 79% of the private sector workforce.
19
Q
What is the role of family businesses in the Middle East?
A
- 75% of the private sector is controlled by about 5,000 families. * Employ about 70% of the workforce.
20
Q
What is the situation of family businesses in Latin America and Africa?
A
- Latin America: Estimated to be between 69% and 98% of businesses, with limited information available. * Africa: Rapidly growing proportion, representing the largest share of enterprises, particularly micro-enterprises.
21
Q
What are the strengths of family businesses?
A
- Few principal-agent conflicts
- Reduced costs and efficient management
- Resource advantages (deep understanding of products, markets, customers)
- Loyal investors
- Strong networks
- Long-term orientation
- Distinct corporate culture
- Commitment of family’s money, name, and reputation
22
Q
What are the weaknesses of family businesses?
A
- Dependence on the family
- Nepotism in filling positions
- Succession challenges
- Limited willingness to invest personal assets
- Declining entrepreneurial drive over time
- Role conflicts for family members involved in the business
23
Q
What support options are available for start-ups, and which sources of financing are particularly suitable for technology-driven business ideas? (Case Study)
A
incubators, accelerators, crowdfunding, business angels, private equity, corporate venture capital, and public funding programs.
24
Q
What is meant by incubators and accelerators? (Case Study)
A
- Incubators: Institutions that support companies in the early stages of development, offering consulting, coaching, rental space, and sometimes start-up capital.
- Accelerators: Institutions that help start-ups develop rapidly through coaching, often via boot camps that provide knowledge, resources, and access to networks and investors.
25
What exactly is crowdfunding? (Case Study)
Crowdfunding is a method of raising funds from a large number of people who contribute small amounts, typically via online platforms.
26
What makes someone a business angel? (Case Study)
Business angels are private individuals who invest their own capital in start-up projects, often providing additional support through their experience and network.
27
How do private equity and corporate venture capital differ? (Case Study)
* Private equity: The buying and selling of shares in unlisted companies, aiming for capital appreciation over time.
* Corporate venture capital (CVC): Investment in start-ups by corporations, often seeking strategic benefits like access to new technologies or expanding their product range.
28
What forms of public support for start-ups exist in Germany? (Case Study)
investment grants, start-up loans, loan guarantees, mezzanine capital from development banks, public holdings, consultations, and support for technology companies.
29
What are the different stages of company development and their corresponding financing needs?
* Foundation phase (seed stage): From idea to market entry, needing support services, start-up capital.
* Start-up and growth stage: From first sales to break-even and beyond, requiring further capital for expansion and consulting for adapting structures.
* Established companies (maturity stage): Stabilized business activity, needing capital for investments or bridging liquidity gaps.
30
What forms of financing are typical for the different phases of a company?
* Early stages: Founder's capital, family & friends, public/private support programs, business angels.
* Start-up phase: Public/private programs, corporate venture capital.
* Growth phase: Entrepreneurial investments, some public programs.
* Established companies: Bank loans, equity investments.
31
What are the benefits of incubators for start-ups?
* Higher survival rates (up to 85% higher than average) * Consulting and coaching services * Access to rental space, office space, and infrastructure * Support in areas like business plan preparation
32
How do accelerators support start-ups?
* Focus on coaching and rapid development * Offer boot camps with knowledge, resources, and networking opportunities * May culminate in demo days for presenting to investors
33
What are the different forms of crowdfunding?
* Classic crowdfunding (reward-based): Backers receive non-financial rewards like prototypes or early access.
* Donation-based crowdfunding: Backers contribute without expecting anything in return, often for social or charitable causes.
* Crowdinvesting (equity-based): Backers invest in exchange for equity or shares in the company.
* Crowdlending (debt-based): Backers provide loans with a fixed interest rate.
34
What distinguishes business angels from passive private investors?
* Business angels: Active investors who provide capital and additional support like expertise and network access. * Passive private investors: Typically family and friends, motivated by idealism rather than financial return.
35
What is the typical investment process for business angels?
* Deal origination (initial contact)
* Initial screening (presentation or elevator pitch)
* Due diligence (detailed examination of the business plan)
* Negotiation and contracting
* Post-investment support
* Exit
36
What is private equity?
The purchase and sale of shares in unlisted companies, aiming for capital appreciation over time.
37
What are the exit strategies for private equity firms?
* IPO (Initial Public Offering) * Trade sale * Secondary purchase * Buy-back * Liquidation
38
What is venture capital (VC)?
A form of private equity focused on high-growth potential start-ups, often involving higher risks in exchange for potential high returns.
39
What types of companies are VC firms interested in?
Complex and technically innovative companies with above-average growth potential, often in specific industries.
40
What is corporate venture capital (CVC)?
Investment in start-ups by corporations, often through subsidiaries, seeking strategic benefits and access to new technologies.
41
What are the strategic objectives of CVC donors?
* Act as the innovation arm of the company * Gain access to new technologies and expertise
* Expand business areas or product range
* Increase market share
42
What are the advantages of CVC for start-ups?
* Capital preservation * Management support * Expanded market opportunities * Benefit from the CVC donor's image
43
What are the basic possibilities for public funding for start-ups?
* Access to investor networks #
* Financial support (grants, loans, guarantees)
* Information and resources
44
What is the group's business idea, and what concerns do they have about it? (Case Study)
* The group's idea is to create a platform offering services for mechanical engineering companies. * Their concerns include: - Whether the idea is truly innovative - The specific range of services to offer - The potential for easy imitation by competitors.
45
What is an innovation in an entrepreneurial context?
The concept of innovation has multiple definitions:
* An invention that leads to entrepreneurial success, requiring investment in production and market development.
* The successful commercialization of inventions, focusing on bringing new products, processes, or services to market.
* Qualitatively new products or processes that differ "noticeably" from existing ones.
46
Which dimensions are used to describe innovations?
* Content dimension (what is new)
* Intensity dimension (how new is it)
* Subjective dimension (new for whom)
* Actor dimension (new by whom)
* Process dimension (where does it begin and end)
* Normative dimension (new equals successful)
47
What are the types of business innovations in the content dimension?
* Product innovations
* Process innovations
* Service innovations
* Market innovations
* Structural innovations
* Cultural innovations
48
What is the difference between product and process innovations?
* Product innovations introduce new or significantly improved goods or services to the market, focusing on **effectiveness**.
* Process innovations involve novel combinations of production factors, leading to cheaper, better, or faster production, focusing on **efficiency**.
49
What characterizes service innovations?
They are often called product-service systems and are characterized by: * Immateriality (intangible) * Heterogeneity (customer involvement) * Inseparability (from the provision process) * Transience (cannot be stored)
50
What are market innovations?
They involve opening up new sales or procurement markets to increase turnover, lower purchase prices, or improve service quality.
51
What are structural innovations?
They involve renewing corporate structures, such as work schedules, personnel development, or sales and logistics structures.
52
What are cultural innovations?
They represent improvements in the social sphere, such as changes in cooperation between employers and unions.
53
What is the subjective dimension of innovation concerned with?
It focuses on the target group for whom the innovation is new, ranging from an individual to all of humankind.
54
Who are the actors involved in the creation of innovation?
* Internal actors: Management, R&D, production, marketing, IT * External actors: Customers, suppliers, cooperation partners (increasingly important in open innovation)
55
What are the stages in the process dimension of innovation?
ICE IDEA
Innovation
Closer examination
empirical testing
innovation creation
development and prototyping
execution
adaptation
56
What is innovation management?
It is the dispositive design of innovation processes or the design of the innovation system.
57
What is the core task of management in innovation management?
Shaping the innovation processes or designing the innovation system.
58
What does a system-theoretical view of innovation management emphasize?
It focuses on designing the innovation system, the institution where innovation processes occur.
59
What are the key tasks of good innovation management?
* Determining the optimal level of innovation activity
* Aligning relevant goals
* Handling resistance within the company
60
What are some innovation strategies mentioned in the course book?
* First-to-market *
* Follow-the-leader *
* Application engineering * Me-too *
* Second-to-market (fast follower) *
* Late-to-market (cost minimization) *
* Market segmentation (specialist) *
* Pioneer *
* Early follower *
* Modifier *
* Latecomer *
* Persister
61
What is the stage-gate approach?
A standardized, multi-stage procedure with alternating work phases (stages) and decision points (gates) to ensure process quality in product innovation development.
62
What are the advantages of the stage-gate approach?
* Risk reduction
* Simplicity
* Transparency
* Support
* Experience
63
What is the agile-stage-gate hybrid model?
An extension of the stage-gate model that incorporates agility and user feedback in the early phases of innovation.
64
In what situations is the agile-stage-gate hybrid model particularly suitable?
It is particularly suitable for technology-driven innovations and uncertain environments.
65
What are typical selection criteria that founders use to make their decision on the legal structure? (Case Study)
* Legal structure that is customary in the trade * Liability, risk distribution, creditworthiness * Capital investment and asset protection * Management, decision-making authority (corporate governance) * Formation costs and current expenses * Tax burden * Legal requirements, trade conditions * Business volume
66
Which legal entities are generally available to founders in Germany? (Case Study)
* Sole proprietorship (Einzelunternehmen) * Partnerships (Personengesellschaften) * Corporations (Körperschaften)
67
What legal entities can founders in the USA choose from? (Case Study)
The legal situation in the United States is similar to Germany, offering both unlimited and limited liability possibilities, with no minimum capital requirement in most states.
68
What is the central term of the German Commercial Code (HGB)?
The central term of the German Commercial Code is "merchant" (Kaufmann).
69
What is the difference between 'private law' and 'public law'?
* Private law (or civil law) governs legal relations between economic operators, whether individuals or companies. * Public law deals with the activities of state authorities.
70
What is the difference between the German Civil Code (BGB) and the German Commercial Code (HGB)?
* The BGB sets out the basic provisions of civil law and applies to all participants in economic life. * The HGB sets out special rules for merchants and is applied if at least one person involved in the business has the status of a merchant.
71
Who is considered a merchant (Kaufmann) under the HGB?
A merchant is a person who carries on a commercial business.
72
What is the difference between a small business owner (Kleingewerbetreibender) and a merchant (Kaufmann) in Germany?
* A small business owner operates a commercial business that, due to its nature or size, does not require a commercially organized business operation and is not subject to the HGB. * A merchant operates a commercial business that requires a commercially organized business operation and is subject to the HGB.
73
What are the advantages of being a small business owner (Kleingewerbetreibender) in Germany?
* They are not required to conduct double-entry bookkeeping or prepare financial reports. * No inventory is taken, no annual accruals are made, and no annual accounts are published.
74
When does a sole proprietor need to be entered in the commercial register in Germany?
When the commercial enterprise, due to its nature or size, requires a commercially organized business operation.
75
What are the points of reference for determining when a sole proprietor needs to be entered in the commercial register?
* The nature of the business and its scope * The number of employees * The business assets * The loan amount * Any existing sites or branches * The turnover
76
What are the characteristics of a freelancer (Freiberufler) in Germany?
* They are exempt from trade tax. * They pursue independently exercised scientific, artistic, literary, teaching, or educational activities. * Their activities are based on their own intellectual achievements.
77
What are the different types of partnerships in Germany?
* Partnership under civil law (Gesellschaft bürgerlichen Rechts or GbR)
* General partnership (Offene Handelsgesellschaft or OHG)
* Limited partnership (Kommanditgesellschaft or KG)
* Partnership company (Partnerschaftsgesellschaft or PartG)
78
What is the difference between a GbR and an OHG?
* A GbR is a partnership that carries out a commercial activity below the threshold of being considered a merchant. * An OHG is a partnership that operates a commercial business and is subject to the HGB.
79
What are the characteristics of a limited partnership (KG)?
* It is a partnership with two types of partners: general partners and limited partners. * General partners have unlimited personal liability. * Limited partners are liable only up to their capital contribution.
80
What is a partnership company (PartG)?
* It is formed by members of freelance professions to exercise their profession together. * It does not exercise a commercial trade * All partners are liable without limitation, but liability for professional mistakes is limited to the partner who caused it.
81
What are the characteristics of corporations (Körperschaften) in Germany?
* They are independent legal entities with their own legal capacity. * They have fixed nominal capital.
82
What are the different types of corporations in Germany?
* Limited liability company (Gesellschaft mit beschränkter Haftung or GmbH) * Entrepreneurial company (Unternehmergesellschaft or UG) * Corporation based on joint stock (Aktiengesellschaft or AG) * English limited (Ltd.) * Societas Europaea (SE)
83
What is the main advantage of a GmbH for entrepreneurs?
The biggest advantage is the limited liability of the shareholders, which is restricted to the company's assets.
84
What is an entrepreneurial company (UG)?
* It is a variant of the GmbH with lower capital requirements (minimum 1 euro) and a low level of liability. * It can be converted into a GmbH once the share capital reaches 25,000 euros.
85
What are the characteristics of a corporation based on joint stock (AG)?
* It is a commercial company with its own legal personality. * The minimum share capital is 50,000 euros. * Shareholders have limited liability. * It has three executive bodies: the management board, the supervisory board, and the general meeting.
86
What is an English limited (Ltd.)?
* It is a corporation with limited liability on a share basis. * There is no minimum nominal capital requirement. * It is founded quickly and with little bureaucracy in England.
87
What is a Societas Europaea (SE)?
* It is an EU-wide legal entity * It requires a share capital of 120,000 euros * It can be managed using either a dualistic or monistic model.
88
What interests do the investors have, what is the group's own position, and how will the process be structured? (Case Study)
The case study highlights the dynamics between investors and founders in the financing process. It emphasizes the importance of understanding the investor's perspective, negotiating effectively, and having a clear evaluation of the start-up's value.
89
What view do investors have of start-ups? (Case Study)
The course book explains that investors approach start-ups with a focus on maximizing their return on investment. They are aware of the inherent risks and uncertainties associated with early-stage ventures and seek to mitigate these risks through careful due diligence and negotiation.
90
What do they mean when they talk about deal sourcing and deal screening? (Case Study)
* Deal sourcing refers to the process investors use to identify potential investment opportunities, often through networks, referrals, and industry events. * Deal screening involves evaluating these opportunities based on criteria like investment size, industry focus, stage of development, and geographic location.
91
How do entrepreneurs view investors and how do they negotiate with them? (Case Study)
Entrepreneurs view investors as crucial partners who provide not only capital but also expertise, networks, and guidance. Negotiations involve balancing the entrepreneur's desire for autonomy and control with the investor's need for returns and risk mitigation.
92
Which methods can be used to evaluate a company? (Case Study)
The course book mentions three primary methods for evaluating start-ups: * Discounted Cash Flow (DCF) method * Net Asset Value method * Market Value method It also notes that other probability and simulation-oriented methods exist.
93
What is the principal-agent problem between founder and investor?
The principal-agent problem arises from the asymmetrical distribution of information between the founder (agent) and the investor (principal). The founder has more detailed knowledge about the project, creating potential for adverse selection if they misrepresent their abilities or the project's prospects.
94
What is the typical investment strategy of Venture Capital (VC) companies?
VC companies have a defined investment strategy that includes: * Investment size * Diversification * Industry focus * Stage of investment * Geography
95
Which risks do VC companies try to minimize in their investments?
They aim to minimize risks associated with:
Bad management decisions
Lack of commitment from the founding team
Disagreements about value generation timing
Conflicts arising from new shareholders
96
What is a term sheet, and what does it typically contain?
A term sheet is a non-binding agreement outlining the key terms of the investment, including financial aspects, strategy, financing, and management arrangements. It serves as a basis for further negotiations and the final contract.
97
What is the due diligence process?
It is a detailed examination of the company's economic and legal circumstances to identify potential risks before finalizing the investment.
98
What are the key components of the investment documentation?
* Company description and capital development
* Investment details and conditions
* Investor's special rights
* Liquidation preference
* Co-sale rights and obligations
* Founder's obligations (guarantees and vesting)
99
What are the three central questions concerning the use of funds in negotiations?
* What is the source of money (new shares or founder's shares)? * What are the reasons for issuing shares (cash infusion or growth capital)? * What is the relationship with other shareholders (sole control or shared ownership)?
100
What is post-investment monitoring, and what is its purpose?
It involves observing value generation and preventing opportunistic behavior to ensure the investment aligns with the investor's expectations.
101
What are the interests of founders in negotiations with investors?
Founders are primarily interested in: * Limiting risks associated with investor commitment, new shareholders, exit timing, and financing plans * Securing the desired capital with favorable conditions * Maintaining autonomy and control over their vision and mission
102
What are some typical negotiation situations that founders encounter?
* Idea phase (internal negotiations) * Licensing negotiations * Co-founder agreements * Equity collection from family and friends * Pitch to external investors * Negotiations with team members, business angels, first customers, and regarding the term sheet
103
How can founders avoid negotiation errors?
* Clarify the interests of other parties in advance * Prepare for unexpected situations * Stay focused and flexible * Reduce tensions and apologize for misconduct * Reflect on experiences and learn from them
104
What are the three primary methods for evaluating business start-ups?
* Discounted Cash Flow (DCF) method * Net Asset Value method * Market Value method
105
What is the Discounted Cash Flow (DCF) method?
It estimates the present value of a company's future cash flows by discounting them using an appropriate cost of capital.
106
What is the Net Asset Value method?
It calculates the company's equity value by subtracting its liabilities from the estimated market value of its assets.
107
What is the Market Value method?
It determines the company's value based on the price it could achieve in the market, either through share prices (for listed companies) or benchmarking against comparable companies.
108
What factors influence the enterprise value in negotiations?
* Quality and experience of the management/founding team * Sales forecasts * Risks * Financial market environment * Price level * Time factor (time-to-market, break-even, exit)
109
What is the group's plan for their platform, and what challenges are they facing? (Case Study)
* The group plans to develop a platform with services for the mechanical engineering industry. * They face a challenge in acquiring the technical competence needed for future expansion into artificial intelligence. * They are considering collaborating with strategic partners to gain the necessary expertise.
110
What is a cooperative strategy? (Case Study)
The group wants to understand the concept of cooperative strategy and its implications for their business.
111
What are the characteristics of alliances and joint ventures? (Case Study)
The group is interested in learning about different types of cooperative strategies, specifically alliances and joint ventures.
112
How can the right "fit" of a cooperation be designed? (Case Study)
The group wants to know how to choose suitable partners for cooperation.
113
And how is the right "form" chosen? (Case Study)
The group is seeking guidance on selecting the appropriate form of cooperation for their needs.
114
What is cooperation?
Cooperation is a long-term collaboration with joint use of resources between legally independent companies.
115
What are the three approaches given as explanations for entering into cooperation?
* Market-oriented explanations
* Resource-oriented declarations
* Transaction theory
116
What does transaction theory explain about cooperation?
* Every exchange process between market participants leads to transaction costs, which should be minimized.
* Cooperations are suitable if in-house production costs are higher than external procurement, market partners have similar information, and transaction-specific investments are low.
117
What do market-oriented explanations argue about cooperation?
* The success of companies is based on positioning, building up, and defending competitive advantages. * Cooperations can help achieve this in highly competitive markets and influence the market structure.
118
What do resource-oriented declarations assume about cooperation?
* If partners have different resource endowments, the joint use of resources is advantageous.
* This is especially true when resources are difficult to substitute or imitate.
119
What are the advantages attributed to cooperations?
* Market entry or increased market power
* Transfer of skills or access to new skills
* Broadening of financial or human resources
* Faster access to business
* Lower commitment compared to acquisitions
* Distribution of costs and risks
120
What are the disadvantages of cooperations?
* Less freedom and dependence on partners
* Conflicts over the division of cooperation results
* Potential instability and employee insecurity
* High control and coordination efforts, especially internationally
121
What is a strategic alliance?
A strategic alliance is a cooperation where legally independent companies pursue a common strategy to improve their competitive position, often involving cooperation with competitors.
122
What is a joint venture?
A joint venture is an economic cooperation where a legally independent company is jointly established or acquired by the cooperating companies.
123
What is cooperative strategy?
Cooperative strategy is the process by which competing organizations work together to achieve common goals, focusing on mutual benefits.
124
How does cooperative strategy differ from competitive strategy?
* Cooperative strategy aims for mutual benefits through collaboration. * Competitive strategy aims to achieve advantages over competitors.
125
What are the six criteria for selecting potential partners for cooperation?
1. The partner's contribution creates a competitive advantage.
2. Partners should complement each other but be of similar size/strength.
3. Agreement on market focus and international orientation.
4. Low risk of the partner becoming a competitor.
5. Cooperation limits competitors' strategies.
6. Compatibility of organizational cultures.
126
What is strategic fit in cooperation?
It refers to whether the cooperation leads to a sustainable competitive advantage through a new common value chain and complementary resources and capacities.
127
What is cultural fit in cooperation?
It refers to the compatibility of the partners' corporate cultures, which is not a prerequisite but can influence the success of the cooperation.
128
What are the possible outcomes if there is not a sufficient cultural fit?
1. Coexistence of separate cultures 2. Development of a new, common culture 3. Dominance of one culture 4. Impairment of cooperation due to resistance
129
What is the MBA matrix (make, buy, and ally) used for?
It helps select the appropriate strategic approach (cooperation, in-house production, or acquisition) based on the company's relative competence and the strategic relevance of the activity.
130
How do people come up with a business idea, and what motivates them to start a business? (Case Study)
* Business ideas often stem from recognizing entrepreneurial opportunities or situations where new products or services can fulfill unmet market needs. * Motivations for starting a business can be diverse, including self-realization, financial gain, innovation, and the desire for independence.
131
Is the process of developing business models and strategies different for start-ups compared to established companies? (Case Study)
* The core principles of developing business models and strategies remain similar for both start-ups and established companies. * Start-ups face higher uncertainty due to their nascent market position, necessitating a greater emphasis on market research and validation of assumptions.
132
What are the two competing approaches to entrepreneurial opportunities?
* The discovery approach, which assumes opportunities already exist and need to be discovered. * The creation approach, which posits that opportunities are created through the entrepreneur's actions and innovations.
133
What causes opportunities according to the discovery approach?
* Opportunities arise from changes in markets or industries, such as shifts in laws, regulations, demographics, or customer demands.
134
How do entrepreneurs identify opportunities in the discovery approach?
* They actively search for changes in the market environment and possess the skills to recognize and exploit these opportunities. * They are particularly vigilant to changes in the market environment.
135
What is the role of the entrepreneur in the creation approach?
* The entrepreneur's actions and innovations lead to the emergence of new opportunities, often through a process of creative destruction.
136
What is the decision logic in the creation approach?
* It's an effectuation process where existing possibilities lead to actions, focusing on questions like "Who am I?", "What do I know?", and "Whom do I know?" to uncover new possibilities.
137
What principles guide the process of opportunity creation?
* "Sparrow-in-the-hand" principle * "Affordable-loss" principle * "Patchwork" principle * "Making lemonade from lemons" principle * "Pilot-in-control" principle
138
How does an entrepreneur assess an opportunity?
They evaluate its: * Market feasibility * Economic feasibility * Technical feasibility
139
What questions help determine if an opportunity is a viable business idea?
* Is the idea viable (market feasibility)? * Is its implementation worthwhile (economic feasibility)? * Is the idea feasible (technical feasibility)?
140
What is involved in assessing the technical feasibility of an idea?
* Examining the degree of technical possibility, innovation, patentability, and intellectual property protection.
141
How is market feasibility assessed?
* Determining if the product or service can be successfully brought to market, often requiring it to offer advantages over existing solutions.
142
What is included in the assessment of economic feasibility?
* Calculating the expected return, price, market volume, market share, and costs associated with pursuing the opportunity.
143
What are the typical goals and motives of entrepreneurs?
* Self-realization * Material remuneration * Innovation * Striving for independence
144
What differentiates entrepreneurs from non-founders in terms of motivation?
* The occurrence of a "triggering event," often a negative experience, that prompts the decision to start a business.
145
What are some barriers to establishing a new venture?
* Lack of resources (skills, information, funding) * Compliance costs (taxes, fees) * Fear of failure due to unexpected challenges and uncertainty
146
What are the three key characteristics of an entrepreneurial personality?
* Performance motivation * High self-efficacy expectation (internal locus of control) * Positive attitude towards risk
147
What are the advantages of team foundations?
* Greater problem-solving capacity * Broader experience and knowledge * Mutual support * Easier coping with departures * Reduced loneliness
148
What are the potential disadvantages of team foundations?
* Difficulties in cooperation due to unclear roles * Time needed for effective teamwork * Need for conflict resolution skills
149
What is a business model?
* An illustrated model demonstrating how a company creates value for customers and secures a return on investment.
150
What exactly is entrepreneurship? (Case Study)
* Entrepreneurship is a "process initiated and carried out by individuals, which serves to identify, evaluate, and exploit entrepreneurial opportunities."
151
Are there differences between entrepreneurs and business people? (Case Study)
* Entrepreneurs: Identify and exploit business opportunities, often making new technologies and concepts commercially viable. * Business owners: May or may not be entrepreneurs; their focus may shift towards efficiency and securing existing structures.
152
Are there different entrepreneurial theories? (Case Study)
* Yes, various theories exist, including those by Cantillon, Say, Knight, Schumpeter, Kirzner, and Lazear.
153
What economic significance is attributed to entrepreneurship? (Case Study)
* Promotes competitiveness and innovation * Creates jobs * Introduces new technologies * Compensates for job losses due to company closures
154
What is the Global Entrepreneurship Monitor (GEM)?
* The GEM is a 20-year-old project that annually collects data on the number of founders worldwide. * It provides recommendations to policymakers.
155
Who are considered early-stage entrepreneurs in the GEM?
* Adults who are starting or have been running their own business for no more than 42 months. * Includes all types of self-employment.
156
How do start-up rates differ between industrialized and developing countries, according to the GEM?
* Industrialized countries: Traditionally low start-up rates due to attractive labor market alternatives. * Developing countries: Significantly higher self-employment rates due to a lack of job opportunities.
157
What does the early-stage Total Entrepreneurial Activity (TEA) index indicate?
* The proportion of early-stage founders within the population aged 18-64.
158
What trend has been observed in the age of founders in Germany, according to the GEM?
* Founders are getting younger. * The highest TEA rate is now among 25-34-year-olds.
159
What are "nascent entrepreneurs"?
* Individuals actively involved in setting up a business but have not yet fully established it.
160
What criticisms have been raised against the GEM?
* Inclusion of "hobby start-ups" with low economic value. * Questioning the 42-month cut-off for measuring early-stage entrepreneurial activity. * The limitation of entrepreneurship to innovative ventures achieving growth.
161
How are Small and Medium-sized Enterprises (SMEs) typically differentiated from large companies?
* United States: 500 employees * Europe: 250 employees * European Union: Classification based on employee count, turnover, and balance sheet total.
162
What characterizes the German "Mittelstand"?
* Medium-sized enterprises crucial for the German economy * Often family firms * Successful internationally while retaining local roots * Unity of ownership and management
163
Are the terms "entrepreneurship" and "SMEs" synonymous?
* No, they are not identical. * Some large companies are entrepreneurial ventures. * Not all SMEs are innovative.
164
What are "serial entrepreneurs"?
* Individuals who found multiple companies sequentially, often exiting one before starting the next.
165
What are "portfolio entrepreneurs"?
* Individuals who manage multiple companies in parallel.
166
What are the central elements in the study of entrepreneurship?
* The entrepreneur * The entrepreneurial opportunity * Required resources * Chosen organizational form * The operating environment
167
Which theories of entrepreneurship focus on the person?
* Many theories, including those by Cantillon, Say, Knight, Schumpeter, Kirzner, and Lazear.
168
How did Cantillon (1755) describe an entrepreneur?
* An individual driven by profit. * Acquires goods at a fixed price and sells them later at an uncertain price. * Characterized by risk assumption.
169
What is Schumpeter's (1934, 1939) view of an entrepreneur?
* An entrepreneur is characterized by innovative behavior. * Engages in "creative destruction" by replacing the old with the new through innovation.
170
In the framework of a business plan, what essential aspects should be illustrated to describe the project comprehensively for banks and investors? (Case Study)
The essential aspects include: * Management * Structure * Products * Market * Finances
171
What purpose and objectives are associated with business plans? (Case Study)
* The central objective is to obtain support for a project. * This can involve various pursuits, such as: - Start-up project - Procurement of equity capital - Capital for external financing - Support for a board decision - Support for a joint venture partner - Sale of the company - Expansion into new markets - Introduction of new products - IPOs
172
What expectations do different target groups have of a business plan? (Case Study)
* Founders: Use it to structure their thoughts, assess feasibility, identify weak points, and establish a roadmap for their business. * Investors and supporters: Rely on it to make informed decisions about whether to support the project, focusing on the prospects of success. * Established companies: Use it as a basis for decision-making on planned projects or for cooperation with external partners. * Business plan competitions: Can be used to gain attention, build networks, and receive feedback.
173
What structure and content should a business plan have? (Case Study)
The structure and content can vary, but typically include: * Executive Summary * Company Presentation (Idea, Products/Services) * Markets, Marketing, and Sales * Management, Team, and Organization * Procurement, Suppliers, and Production * Implementation Plan and Risk Assessment * Finances and Financing * Supplementary documents and details
174
Are there any fixed guidelines for the preparation of a business plan? (Case Study)
While there are no strict legal requirements or DIN standards, there are recognized principles and best practices for creating effective business plans.
175
What are the "7 Cs" of a successful business plan?
* Clear * Crisp * Concise * Consistent * Coherent * Credible * Convincing
176
What is the main difference between business plans for start-ups and those for established companies?
* Start-ups: Describe a planned market position, with higher uncertainty. * Established companies: Can assume their current market position.
177
What are the typical expectations of investors regarding a business plan?
They expect to see detailed information on the expected return on investment, opportunities for value enhancement, investment and financial policies, and management qualities.
178
What are the typical expectations of lenders regarding a business plan?
They focus on the security of loan repayment and interest through risk hedges, balance sheet collateral, cash flow development, and the founders' commitment.
179
What is the purpose of a business plan for corporate management?
It serves as a framework for operational decisions, including periodic budgets, target/actual comparisons, and forecast calculations.
180
What are some general requirements for a well-written business plan?
* Reader-friendly language and appealing layout * Clear explanations of technical terms * Graphic implementation schedule * Objective language * Traceability, consistency, objective foundation, and completeness * Presentation of various scenarios and risks * Conciseness, structured presentation, and clear objectives * Consistency between text and figures * Realistic and justified assumptions * Documentation and evidence for important statements * Proof of entrepreneurial qualifications * Comprehensible and convincing presentation
181
What is the typical size of a business plan for start-up projects?
* Between 30 and 40 pages * Smaller projects may be 10 to 15 pages * Large company projects can be several hundred pages
182
How should the business plan be prioritized for different audiences?
* Equity investors: Focus on return on investment, value enhancement, and management qualities. * Lenders: Emphasize loan security, risk hedges, cash flow, and founders' commitment. * Corporate management: Provide a framework for operational decisions and include budgets, comparisons, and forecasts.
183
What is the executive summary, and what should it contain?
* It is a concise overview of the key facts of the project, written last but placed at the beginning. * It should be easy to understand and inspire enthusiasm. * It typically includes the purpose of the plan, company and product descriptions, market and customer overview, key people, revenue mechanism, growth potential, financial development, and financing needs.
184
What is included in the company presentation section of a business plan?
* Explanation of the business model, customer needs, benefits, and uniqueness * Presentation of the company's development, location, key figures, and founders' contributions * Description of industry structures, market volume, competitors, trends, success factors, and market position * SWOT analysis (strengths, weaknesses, opportunities, threats) * Vision, long-term goals, and strategy
185
How should products or services be described in a business plan?
* In a generally understandable way, with technical details in the appendix * Detailed presentation with customer benefits and unique selling points * Classification in the product life cycle and ancillary services * Positioning in terms of price and quality * Quality management and cooperation with partners
186
What should be included in the market and marketing section?
* Substantiated presentation of market potential and market volume * Market segmentation, competitors, and success factors * Target customers, distribution channels, and market share * Expected market growth and future developments * Influence of suppliers and customers * Competitive situation and own positioning * Marketing strategy and implementation measures (marketing mix)
187
What should be covered in the management and team section?
* Clear demonstration of competence and motivation of founders and management * Experience, skills, successes, industry knowledge, and customer relationships * Motivation for self-employment and financial ties * Need for consultants or additional staff * Organizational structure, culture, management principles, and locations
188
What should be included in the procurement, suppliers, and production section?
* Location and planned production facilities * Machinery, equipment, and investments * Production personnel needs * Production processes, critical factors, and monitoring * Dependence on suppliers and materials * Production capacities, certifications, and outsourcing possibilities * Costs and potential cooperation partners * Differentiation from competitors
189
What is the purpose of the implementation plan and risk assessment?
* Presents the planned foundation and expansion of the company over a maximum of five years * Includes milestones and objectives * Shows a realistic assessment of risks and potential problems * Derives measures to deal with challenges
190
What is included in the financial planning and financing section?
* Comprehensive and transparent financial information * Planning over five years, with varying levels of detail * Demonstration of financial viability and profitability * Best-case and worst-case scenarios * Profit planning, liquidity planning, and budgeted balance sheet * Potential sources of funds, including volume, timing, costs, and potential loss of autonomy
191
What further development is possible for the platform, and what are the technical possibilities in the field of artificial intelligence (AI)? (Case Study)
The case study highlights the group's interest in exploring the potential of digital business models and AI for their platform. They recognize the need to enhance their knowledge in these areas to make informed decisions about future development and potential collaborations.
192
What is actually considered e-business? (Case Study)
E-business refers to the use of information technology (electronic networks) to initiate, support, handle, and maintain service exchange processes between economic partners.
193
Are there already digital business models that are being used successfully? (Case Study)
Yes, the course book mentions several successful digital business models, including platforms for procurement (e-procurement), sales (e-shop), trade (e-marketplace), contact networks (e-community), and cooperation (e-company).
194
What exactly is meant by artificial intelligence? (Case Study)
Artificial intelligence (AI) refers to computer systems that imitate human intelligence, including the ability to learn, deal with uncertainty, and solve problems abstractly.
195
What is meant when people talk about globotics? (Case Study)
Globotics is a term coined by economist Richard Baldwin, characterizing the combination of globalization and robotics, including AI and technologies facilitating service job outsourcing. It highlights the impact of digitization on the service sector and global competition.
196
What are the three central building blocks of e-business?
The three central building blocks are: * Information * Communication * Transaction
197
What are the three central platforms of e-business and their objectives?
* E-procurement: Platforms for procurement * E-shop: Platforms for sales * E-marketplace: Platforms for trade
198
What additional platforms are included in a broader consideration of e-business?
* E-community: Platforms for contact networks * E-company: Platforms for cooperation
199
What is the basis of the success of e-business?
E-business achieves new added value compared to previous approaches. This can include: * Structuring value * Selection value * Matching value * Transaction value * Integration value * Communication value
200
What characterizes digital business models?
In digital business models, the creation of value or benefits is purely digital, based on digital components or activities that rely heavily on digital technologies.
201
What are the six technologies considered enablers of digital business models?
* Cyber-physical systems (CPS)/Internet of Things (IoT)/Smart Factory/Industry 4.0 * Big data * Cloud computing * Artificial intelligence (AI), extended intelligence (EI)/machine learning * Digital platforms * Blockchain technologies
202
What are the four challenges in the transition to digital business models, especially for medium-sized companies?
1. Building new skills for managers 2. Acquiring external or internal ICT specialists 3. Addressing legal uncertainty 4. Adapting to the importance of digital infrastructure
203
What are the four successful business model types for the digital age?
* Product business model * Platform business model * Project business model * Solution business model
204
What are the three areas that need solutions in digital business models?
* Front-end (customer-perceived value creation) * Back-end (activities necessary for operations) * Revenue mechanism (revenue generation and profitability management)
205
What is the "Business Model Transformation Board"?
It is an orientation framework for companies to navigate transitions between the four business model types.
206
What are the four strategic options on the "Business Model Transformation Board"?
* Expansion * Focus * Personalization * Standardization
207
What is swarm intelligence, and what are its applications?
* Swarm intelligence is a concept from bionics where individuals interact without central control, leading to increased overall efficiency. * Applications include ant algorithms for network routing and crowdsourcing for task outsourcing.
208
What is artificial intelligence (AI)?
AI refers to computer systems that imitate human intelligence, including learning, handling uncertainty, and abstract problem-solving.
209
What is the difference between weak AI and strong AI?
* Weak AI is limited to specific application areas. * Strong AI would have capabilities comparable to the human brain, including consciousness and emotions, which current systems are far from achieving.
210
What is the Turing test?
It is a test to determine if a computer can exhibit intelligent behavior indistinguishable from a human.
211
What is machine learning, and how does it work?
* Machine learning enables systems to learn from examples and recognize patterns, leading to generalizations. * It requires large amounts of training data and powerful computers. * One approach is using neural networks, which mimic the brain's structure and function.
212
What is globotics, and what are its implications?
* Globotics is the combination of globalization and robotics, impacting the service sector and global competition. * It leads to "telemigration," where jobs shift to countries with lower wages due to remote work and automation. * It necessitates developing skills in interpersonal communication, creativity, empathy, and robotics/AI development.
