Midterm Flashcards
(156 cards)
1
Q
What are the four distinct elements of the entrepreneurial process?
A
deciding to become an entrepreneur, developing successful business ideas, moving from an idea to establishing an entrepreneurial firm, and managing and growing an entrepreneurial firm.
2
Q
What are the two reasons entrepreneurship has a strong impact on an economy’s strength and stability?
A
Innovation and job creation
3
Q
What is innovation?
A
Innovation is the process of creating something new, which is central to the entrepreneurial process.
4
Q
What is creative destruction?
A
The process where entrepreneurs develop new technologies and products that over time make current technologies and products obsolete. This is beneficial for the economy because new technologies and product are often better then those they replace. Furthermore the economy is stimulated by the increasing availability which in turn increases customer demand.
5
Q
What is an entrepreneurial start-up firm?
A
Firms that bring new products and services to the market by creating and seizing opportunities regardless of the resources they currently control.
6
Q
What is a lifestyle start-up firm?
A
a firm that provides their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so.
7
Q
What is a salary-substitute start-up firm?
A
Firms that basically provide their owner or owners a similar level of income to what they would be able to earn in a conventional job.
8
Q
What are the biggest myths about entrepreneurs?
A
- Entrepreneurs are born, not made
- Entrepreneurs are gamblers
- Entrepreneurs are motivated primarily by money
- Entrepreneurs should be young and energetic
- Entrepreneurs love the spotlight.
9
Q
Why is passion for the business so crucial?
A
- The ability to learn and iterate Founders don’t have all the answers.
- A willingness to work hard for an
extended period of time - Ability to overcome setbacks and
“no’s” - The ability to listen to feedback
on the limitations of your
organization and yourself - Perseverance and persistence
when the going gets tough
10
Q
What are the four primary characteristics of an entrepreneur?
A
- Passion for the business
- Product/customer focus
- Tenacity despite failure
- Execution intelligence
11
Q
Entrepreneurial intensity is defined as what?
A
The position of the firm on the continuum of corporate entrepreneurship.
12
Q
Corporate entrepreneurship can be defined as…?
A
When firms act in an entrepreneurial manor.
13
Q
The definition of entrepreneurship is…?
A
The process by which individuals pursue
opportunities without regard to resources they currently control for the purpose of exploiting future goods and services.
14
Q
Why do people become entrepreneurs?
A
- Being their own boss. Autonomy/Freedom
- Pursuing own ideas
- Financial rewards
15
Q
What is an opportunity?
A
a favorable set of circumstances that creates
a need for a new product, service, or business.
16
Q
What is a window of opportunity?
A
The time period in which a firm can realistically enter a new market.
17
Q
What are the four essential qualities of an opportunity?
A
- Attractive
- Timely
- Durable
- Anchored in products, service that creates or adds value for its buyer or end user.
18
Q
What is an idea?
A
An idea is just a thought, an impression, or a notion.
19
Q
How can you spot/identify an opportunity?
A
- Observing trends
- Solving a problem
- Finding gaps in the marketplace
20
Q
What are the environmental trends that suggest business product, or opportunity gaps?
A
- Economic forces
- Social forces
- Technological advances
- Political and regulatory changes
21
Q
When do entrepreneurs excel in opportunity recognition?
A
- Prior industry experience
- Cognitive factors (entrepreneurial alertness)
- Having extensive social networks
22
Q
What is creativity?
A
The process of generating a novel or useful idea
23
Q
What are the five steps to generating creative ideas?
A
- Preparation
- Incubation
- Insight
- Evaluation
- Elaboration
24
Q
What are some prominent techniques for generating ideas?
A
- Brainstorming
- Focus groups
- Library and internet research
- customer advisory boards
- Day-in-the-life research.
25
What is a feasibility analysis?
A feasibility analysis is the process of determining if a business idea is viable. . If a business idea falls short on one or more of the four components of feasibility analysis, it should be dropped or rethought,
26
What four dimensions make up the feasibility analysis?
1. Product/service feasibility
2. Industry/target market feasibility
3. Organizational feasibility
4. Financial feasibility
27
Primary research can be defined as what?
Research that is collected by the person or persons completing the analysis
28
Secondary research can be defined as what?
Researching data that already has been collected. The data generally includes industry studies.
29
What does product/service feasibility analysis consist of?
1. Product/service desirability
- Is the product desirable and does it serve a need in the marketplace?
2. Product/service demand
- Can demand be discovered when talking to target customers?
30
A concept test is...?
A preliminary description of a product or service idea called a concept statement.
31
What are some characteristics of an attractive industries?
Are young rather than old
■ Are early rather than late in their life cycle
■ Are fragmented rather than concentrated
■ Are growing rather than shrinking
■ Are selling products or services that customers “must have” rather than “want to have”
■ Are not crowded
■ Have high rather than low operating margins
■ Are not highly dependent on the historically low price of a key raw material, like gasoline or
flour, to remain profitable
32
What are the main issues to consider in an organizational feasibility analysis?
1. Management prowess:
- Is the management passionate? Does the management understand the target market?
2. Resource sufficiency
- Does the proposed venture have the capability to obtain sufficient resources to move forward.
33
What does the financial feasibility analysis consist of?
total start-up cash needed, financial performance of similar businesses, and the overall financial attractiveness of the proposed venture.
34
What is a business model?
A firms plan or recipe for how it creates, delivers and captures value for its stakeholders.
35
What are three important elements of a firms business model.
1. Target market
2. Basis for differentiation
3. Key assets
36
What is a standard business model?
A standard business model depicts existing plans or recipes firms can take to determine how they will create, deliver and capture value for their stakeholders.
(e.g.)= Advertisement business model, Freemium business model, low-cost business model.
37
What is churn
Churn refers to the number of subscribers a subscriber-based business model loses each month.
38
What is a disruptive business model?
A business model that does not fit the profile of a standard business model, and are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche.
39
What is a new market disruption?
Addressing a market that previously has not been served before.
40
What is a low-end market disruption?
A type of disruption where a firm continue to improve their products or services to the point where they are better than a large majority of the industry and 'performance oversupply' exists and thus firms can compete by eradicating luxury and offering lower prices.
41
What is a core strategy
Core strategy describes how the firm plans to compete relative to its competitors. The business mission, basis of differentiation, target market, and product/market scope are the primary elements of a core strategy.
42
What is the business mission?
A business mission describes why a firm exists and what its business model must accomplish.
43
What is the basis of differentiation?
What causes the consumer to pick your product over another company's product
44
What is a target market?
A segment of a larger market that represent a narrower group of customers with similar interests.
45
What is a product/market scope?
The products and market on which a firm will concentrate
46
What are resources
Resources are the inputs a firm uses to produce, sell, distribute, and service a product or service
47
What are are core competences?
A core competency is a specific factor or capability that supports a firm's business model and sets it apart from its rivals.
48
What are key assets?
Key assets are the assets that a firm owns that enable its business model to work.The assets can be physical, financial, intellectual, or
human.
49
What are financials?
An explanation on how the firm makes money.
50
What is a revenue stream
How does the firm make money? Several ways (e.g): Advertising, commission, download fee, product sale.
51
What is a cost structure
A cost structure describes the most important costs incurred to support its business model.
52
What are operations?
Operations are both integral to a firm’s overall business model and represent the day-to-day
heartbeat of a firm. The primary elements of operations are: product (or service)
production, channels, and key partners.
53
Products (or service) production?
How are the firm's product or services produced? In-house, outsourced, contract manufacturer?
54
What are channels?
Channels describe how it delivers products or services to the customer
55
What are key partners
Partners on which start-ups rely to operate. For example suppliers.
56
What does the five forces model consist of?
1. Threat of substitutes
2. Threat of new entrants
3. Rivalry among existing firms
4. Bargaining power of suppliers
5. Bargaining power of buyers
57
What are some ways an industry can create a barrier to entry?
1. Economies of scale
2. Product differentiation
3. Capital requirements
4. Cost advantages independent of size
5. Acces to distribution channels
6. Government and legal barriers
58
Which four factors determine the nature of the rivalry among existing firms?
1. Number and balance of competitors
2. Difference between products
3. Growth rate of an industry
4, Level of fixed cost
59
Which four factors determine the bargaining power of suppliers?
1. Supplier concentration
2. Switching costs
3. Attractiveness of substitutes
4. Threat of forward integration
60
Which four factors determine the bargaining power of buyers?
1. Buyer group concentration
2. Buyer's costs
3. Degree of standardization of a supplier's product
4. Threat of backwards integration
61
What is an emerging industry?
A new industry in which standard operating procedures have yet to be developed. Often the industry leadership captures a first-mover advantage.
62
What is a fragmented industry?
An industry that is characterized by a large number of firms of approximately equal size. Establishing leader ship can be done by a geographic roll-up strategy (acquiring similar firms in different areas).
63
What is a mature industry?
An industry that is experiencing slow or no increase in
| demand, has numerous repeat (rather than new) customers, and has limited product innovation.
64
What is a declining industry?
An industry or a part of an industry that is experiencing a reduction in demand.
65
What three strategies can entrepreneurs employ within a declining industry?
1. Leadership strategy
2. Niche strategy
3. Cost reduction strategy
66
What is a global industry?
An industry that is experiencing significant international sales.
67
What is a multi domestic strategy?
A strategy where firms compete for market share on a country-by-country basis and vary their product or service offerings to meet the demands of the local market. In contrast, firms pursuing a global strategy use the same basic approach in all foreign markets.
68
What types of competitors exist?
1. Direct competitors
2. Indirect competitors
- Offering close substitutes
3. Future competitors
- Not yet visible
69
What is a new-venture team
the group of founders, key employees, and advisers that move a new venture from an idea to a fully functioning firm.
70
New firms often fail due to the liability of newness. What does this concept refer 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.
71
What are the elements of a new-venture team?
Key employees, management team, board of advisors, board of directors, lenders and investors, other people.
72
What are some common mistakes in putting together a new-venture team?
■Placing unqualified friends or family members in management positions.
■ Assuming that previous success in other industries automatically translates to your venture’s industry.
■ Presenting a “one person team” philosophy—meaning that one person (or a small group of
people) is wearing all hats with no plans to bolster the team.
■ Hiring top managers without sharing ownership in the firm.
■ Not disclosing or talking dismissively of management team skill or competency gaps.
■ Vague or unclear plans for filling the skill or competency gaps that clearly exist.
73
Do heterogeneous or homogeneous new venture teams have an edge?
Heterogeneous teams the GOAT
74
What is a skills profile?
A chart that depicts the most important skills that are needed and where skill gaps exist.
75
What are the four sources of labor that new ventures utilize?
1. Employees
2. Interns
3. Freelancer
4. Virtual assistant
76
What is a board of directors?
a panel of individuals who are elected by a corporation’s shareholders to oversee the management of the firm. Made up of inside- and outside directors.
77
What are 3 functions of the board of directors.
1. Appoint the firm's officers (key managers)
2. Declare dividends
3. Oversee the affairs of the corporation
78
What are the two roles of the board of directors?
1. Provide expert guidance
2. Lend legitimacy
- Signaling
79
What is an advisory board?
A panel of experts who are asked by a firm’s
managers to provide counsel and advice on an ongoing basis. Unlike a board of
directors, an advisory board possesses no legal responsibility for the firm and
gives non binding advice.
80
What are the three most prominent reason new ventures need funding?
1. Cash flow challenges
2. Capital investments
3. Lengthy product development cycles
81
What is a companies' burn rate?
The rate at which a company is spending capital until it reaches profitability.
82
What are sources of personal financing?
- Personal funds / sweat equity
- Friends and family
- Bootstrapping
83
What is a promissory note?
A legal agreement for loans paid out by friends and family
84
What are the appropriate steps dor debt / equity financing
1. Determine precisely how much money is needed.
2. Determine the most appropriate type of
financing or funding.
3. Develop a strategy for engaging potential investors or bankers.
85
What are business angles?
Individuals who invest their personal capital directly in start-ups.
86
What is a yield rate
The percentage of investment opportunities that are presented to angel investors that have resulted in an investment.
87
What is venture capital?
money that is invested by venture capital firms in startups and small businesses with exceptional growth potential.
88
What are limited partners
Investors who invest in venture capital funds. Profits received by limited partners is called 'carry'.
89
What are general partners?
The venture capitalists who manage the venture capital fund.
90
What is corporate venture capital?
This type of capital is similar to traditional venture capital except that the money comes from corporations that invest in start-ups related to their areas of interest.
91
What is an IPO?
The first sale of a stock by a firm to the public. Any later public issuance of shares is a 'secondary market offering'.
92
What is the Sarbanes-Oxkey act?
A federal law that
was passed in response to corporate accounting scandals involving prominent
corporations, such as Enron and WorldCom.
93
What is an investment bank?
An institution that acts as an underwriter
| or agent for a firm issuing securities.
94
What is a private placement
which is the direct sale of an
issue of securities to a large institutional investor. When a private placement is
initiated, there is no public offering, and no prospectus is prepared.
95
What is a single-purpose loan?
The lending of a specific amount of money that must be repaid within a fixed amount of time with interest.
96
What is a line of credit?
A 'borrowing cap' is established and borrowers can use the credit at their discretion. Lines of credit require periodic interest payments.
97
What are peer-to-peer lenders?
Lenders that underwrite borrowers but don't fund the loans directly. . Instead, they act as intermediaries
between borrowers and individuals or borrowers and institutional investors.
98
Vendor credit is...?
s the credit extended to a business
by a vendor in order to allow the business to buy its products and/or services
up front but defer payment until later.
99
Factoring is...?
A financial transaction whereby a business
| sells its account receivable to a third party, called a factor, at a discount in exchange for cash.
100
What is reward based crowdfunding?
Raising money by giving your investors some type of amenity or reward.
101
What is equity-based crowdfunding?
Helps businesses raise money by giving investors equity in the company.
102
What is an accredited investor?
A person who is permitted to invest in higher-risk investments such as business start-ups.
103
What is a lease?
A written agreement in which the owner of a piece of property allows an individual or business to use the property for a specified period of time in exchange for payments.
104
What are venture-leasing firms?
Firms that act as brokers, bringing
the parties involved in a lease together. These firms are acquainted with the producers of specialized equipment and match these producers with new ventures
that are in need of the equipment.
105
What is market segmentation?
Studying an industry in which the firm intends to compete and determine the different potential target markets in that industry.
106
What phases does the process of selecting a target market and positioning strategy consist of?
1. Segmenting the market
2. Selecting a target market
3. Crafting a unique positioning strategy
107
What are some criteria to test the quality of your market segmentation?
Homogeneity of needs and wants appears within the segment.
■ Heterogeneity of needs and wants exists between the segments.
■ Differences within the segment should be small compared to differences
across segments.
■ The segment should be distinct enough so that its members can be easily
identified.
■ It should be possible to determine the size of the segment.
■ The segment should be large enough for the firm to earn profits.
108
What is a product-attribute map?
A map that illustrates a firm's positioning strategy relative to its major rivals.
109
What is a tagline?
A catchy phrase that's used consistently in a company’s literature, advertisements, stationery, and even invoices, and thus becomes associated with that company
110
What is a brand?
The set of attributes—positive or negative—that people associate with a company
111
What is brand management?
A program used to protect the image and value of an organization's brand in consumer's minds.
112
What does creating buzz mean?
Creating awareness and a sense of anticipation about a company and its offerings.
113
What is brand equity?
The term that denotes the set of assets and liabilities that are linked to a brand and enable it to increase a firm’s valuation.
114
What is a marketing mix?
The set of controllable, tactical marketing tools that it uses to produce the response it wants in the target market.
115
What are the 4 P's?
1. Product
2. Price
3. Promotion
4. Place
116
What is a reference account?
an early user of a firm’s product who is willing to give a testimonial regarding
his or her experience with the product.
117
What is cost-based pricing?
The list price is determined by adding a markup percentage to a product’s cost.
118
What is value-based pricing?
The e list price is determined
| by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion.
119
What is a price-quality attribution?
This means that consumers naturally assume that the higher-priced product is
also the better-quality product.
120
What is promotion?
Promotion refers to the actions the firm takes to communicate the merits of its product to its target market.
121
What is Advertising?
Making people aware of a product in hopes of persuading them to buy it.
122
What is public relation (PR)
Public relation refers to efforts to establish and maintain a company’s image with the public
123
What are the steps involved in putting together an advertisement?
1. Identify the purpose of the ad
2. Determine the target audience
3. Select a medium
4. Create the ad
5. Select a place and time for the ad to appear
6. Fulfill expectations
124
What is guerrilla marketing?
a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques.
125
What is Place (or distribution)
Place, or distribution,
| encompasses all the activities that move a firm’s product from its place of origin to the consumer.
126
What is a distribution channel?
The route a product takes from the place it is made to the customer who is the end user.
127
What is disintermediation?
The process of eliminating layers of middlemen, such as distributors and wholesalers, to sell directly to customers
128
What are the steps of a sales process?
1. Prospect for (or gather) sales leads
2. Make the initial contact
3. Qualify the lead
4. Make the sale presentation
5. Meet objections and concerns
6. Close the sale
7. Follow up
129
What is intellectual property?
Any product of human intellect that is intangible but has value in the marketplace.
130
What are the four common mistakes firms Make in regard to Intellectual Property?
1. Not properly identifying
all their intellectual property
2. Not using their intellectual
property as part of their overall plan for success
3. Not fully recognizing
the value of their intellectual
property
4. Not legally protecting
the intellectual property that
needs protecting
131
What is a patent
A patent is a grant from the federal government
| conferring the rights to exclude others from making, selling, or using an invention for the term of the patent.
132
What is a utility patent?
The the most common type of patent and cover what we
| generally think of as new inventions.
133
What are the three basic requirements for a patent?
1. It must have utility
2. It must be different from what has come before
3. It must not be obvious to a person of ordinary skill in the field
134
What is a business model patent?
A patent that protects an invention that is, or facilitates, a method
of doing business.
135
What is a design patent?
Design patents are the second most common type of patent and cover the
invention of new, original, and ornamental designs for manufactured products. Whereas a utility patent protects the way an invention is used and works,
a design patent protects the way it looks.
136
What are plant patents?
Protect new varieties of plants that can be reproduced asexually.
137
Assignment of invention of agreements are...?
When an employer creates an invention, the employer can assign a patent through this agreement.
138
What is the process of obtaining a patent?
1. Make sure the invention is practical
2. Determine the type of application to file
3. Hire a patent attorney
4. Conduct a patent search
5. File a patent application
6. Obtain decision from U.S. patent and trademark office.
139
What is patent infringement
Patent infringement takes place when one party engages in the unauthorized
use of another party’s patent.
140
What is a trademark?
A trademark is any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those products or services from others.
141
What are service marks?
Similar to trademarks; are used to identify the services or intangible activities of a business, rather than a business’ physical products.
142
What are collective marks?
Trademarks or service marks used by the members of a
| cooperative, association, or other collective group.
143
What are certification marks?
Marks, words, names, symbols, or devices used by a person other than its owner to certify a particular quality about a good or service.
144
What is protected under trademark law?
Words, number and letters, designs or logos, sounds, fragrances, shapes, colors, trade dress.
145
What is excluded from trademark protection?
Immoral or scandalous matter, deceptive matter, descriptive marks, surnames.
146
What is the process of obtaining a trademark
1. Select an appropriate mark.
2. Perform a trademark search.
3. Create rights in the trademark.
147
What is a copyright?
A copyright is a form of intellectual property protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work.
148
What is protected under copyright?
- Literary works
- Musical compositions
- Computer software
- Dramatic works
- Pantomimes and choreographic works
- Pictorial, graphic, and sculptural works
Excluded:
Idea-expression dichotomy
149
What is a copyright bug?
The little c logo.
150
When does copyright infringement occur?
When one work derives from another, is an exact copy, or shows substantial similarity to the original work. To prove infringement, a copyright owner is required to show that
the alleged infringer had prior access to the copyrighted work and that the work is substantially similar to the owner’s.
151
What is fair use?
The limited use of copyrighted material for different purposes.
152
What is a trade secret?
Any formula, pattern, physical device, idea, process, or other information that provides the owner of the information with a competitive advantage in the marketplace.
153
When does something qualify for trade secret protection? When its...
■ Is not known outside the company
■ Is known only inside the company on a “need-to-know” basis
■ Is safeguarded by stringent efforts to keep the information confidential
■ Is valuable and provides the company a compelling competitive advantage
■ Was developed at great cost, time, and effort
■ Cannot be easily duplicated, reverse engineered, or discovered
154
What are some physical measures for trade secret protection?
- Restricting acces
- Labeling documents
- Password protecting confidential computer files
- Maintaining logbook for visitors
- Maintaining logbooks for access to sensitive materials
- Maintaining adequate overall security measures
155
What is an intellectual property audit?
An audit conducted to determine the intellectual property a company owns.
156
What two reasons are there for firm's to conduct an intellectual property audit?
1. it is prudent for a company to periodically determine if its intellectual property is being properly protected.
2. For a company to conduct an intellectual property auditis to remain prepared to justify its value in the event of a merger or acquisition.
