Test 2

Question 1

Window of opportunity

Answer 1

time period in which a firm can realistically enter a new market

opens when market for a new product is established

closes when market matures

Question 2

Opportunity gap

Answer 2

basically a problem, set of circumstances that create need for a new product

Question 3

Opportunity recognition

Answer 3

Process of perceiving the possibility of profitable new business

Question 4

Corridor principle

Answer 4

states that once an entrepreneur start a firm, “Corridors” leading to new venture opportunities become apparent (becomes easier to see new opportunities in the industry than it is for someone looking from the outside)

Question 5

Entrepreneurial alertness

Answer 5

Ability to notice things without engaging in deliberate search (since they have more knowledge of an area and tend to be more alert to opportunities in that area than others)

Question 6

Five steps to generating creative ideas

Answer 6

1. preparation (background)
2. incubation (Considers)
3. insight (solution to problem is born)
4. evaluation (idea is analyzed)
5. elaboration (idea is transformed into new product)

Question 7

Customer advisory boards

Answer 7

meet to discuss needs wants and problems that may lead to new business ideas

Question 8

Day in the life research

Answer 8

sending teams of testers to homes and businesses of its users to see how products are working and seek insights for new products ideas

Question 9

how can entrepreneurial ventures encourage/protect new ideas

Answer 9

focal points (idea bank ex is intranet)
intellectual property (product of human intellect that is intangible but has value) protected by patents, copyrights, etc.

Question 10

steps when potentially valuable idea is generated

Answer 10

1. put in tangible form
2. secure the idea, restrict access
3. avoid making voluntary disclosure of idea (don’t talk about it)

Question 11

industry analysis

Answer 11

business research that focuses on the potential of an industry

-is it accessible
-does it contain markets that are ripe for innovation/underserved
-are there positions in the industry that avoid the negative attributes

Question 12

Competitor analysis

Answer 12

evaluation of firm’s competitors

Question 13

what are the two types of trends most important to analyze

Answer 13

1. environmental: can shift in favor or against the industry
2. business trends: ex some firms are able to move their business online while others don’t have this advantage

Question 14

five forces model

Answer 14

By Harvard professor Michael porter
framework for understanding structure of an industry
comprised of forces that determine industry’s profitability
each factor impacts average rate of return for firms by applying pressure on industry profitability

Question 15

barrier to entry

Answer 15

conditions that creates a disincentive way for new firm to enter industry

Question 16

economies of scale

Answer 16

makes difficult for new firms to enter unless theyre willing to accept cost disadvantage

occurs when mass producing a products results in lower average cost

(difficult for new firms to match a huge companies that has gotten to the level of mass production)

Question 17

capital requirements in barriers to entry

Answer 17

the need to invest large amounts of money to gain entrance to an industry

can win trust in investors through expertise and innovations and surpass this barrier

Question 18

cost advantages independent of size in barriers to entry

Answer 18

ex existing competitors may have purchased land/equipment earlier when the cost was far less than new entrants would have to pay

Question 19

access to distribution channels in barriers

Answer 19

hard to gain shelf space in grocery stores where large number of offerings from major producers are already available to consumers

Question 20

how can firms enter and overcome barriers to entry

Answer 20

partnering with other firms
must create barriers to entry of their own once in the industry to reduce threat of new entrants (ex: patent, copyright, or economies of scale)

Question 21

rivarlry amongst firms in barriers

Answer 21

level of competition
sometimes prices are pushed below level of cost when super competitive
then, wide losses occur

Question 22

competition in slow vs fast growth industries

Answer 22

slow: stronger competition since might be tempted to lower prices or increase quality (ex: insurance)

fast: lower competition since there are enough customers to satisfy most firms’ production capacity making price cutting less likely

Question 23

what is threat of backward integration in bargaining power of buyers

Answer 23

buyer might enter supplier’s industry

ex: Pc industry can keep price of computer monitors down by threatening to make its own monitors if the price gets too high

Question 24

value of five forces model

Answer 24

helps firm understand dynamics of the industry
1. helps determine if they should enter
2. can they carve out an attractive position in that industry

Question 25

Emerging industries

Answer 25

new industry which standard operating procedures have yet to be developed First mover advantage: gained by first company to est significant position in new market low barriers to entry no pattern of rivalry

Question 26

Fragmented industry

Answer 26

large number of firms approximately equal size geographic roll- up strategy: consolidate industry and est leadership, one firm starts acquiring similar firms that are located in different geographic areas

Question 27

Mature industries

Answer 27

experiencing slow or no increase in demand repeat customers limited product innovation

Question 28

declining industries

Answer 28

reduction in demand do not meet tests of an attractive opportunity Strategies: leadership strategy (become a dominant firm) niche strategy (focus on a narrow segment that could be encouraged to grow through process innovation) cost reduction strategy (lower cost than incumbents through improvements, creates value for consumers)

Question 29

global industries

Answer 29

International sales multi domestic strategy (vary product to meet demands of local markets) global strategy (same basic approach in all foreign markets)

Question 30

Types of competitors

Answer 30

Direct: identical or similar products Indirect: close substitutes Future: not yet direct or indirect, could move into these roles at any time

Question 31

competitive intelligence

Answer 31

info to learn about its competitors

Question 32

Definition of opportunity

Answer 32

The set of forces that come together in the external environment to create a market opening from which profits or returns can be realized

Question 33

Sources of opportunities

Answer 33

1. who you are, what you know, who you know (means) 2. Economic forces (spending patterns, business cycles) 3. Social forces (income distribution, trends, demographic changes) 4. Technological advances (new nrg sources, new use of est techs) 5. political and regulatory changes

Question 34

idea vs opportunity

Answer 34

idea is a thought, or impression opportunity is an idea that has qualities of being attractive, timely, and is anchored in product that creates value for buyers

Question 35

Technology adoption curve INNOVATORS

Answer 35

eager to try new ideas substantial financial resources first to give opinions

Question 36

Technology adoption curve EARLY ADOPTERS

Answer 36

integrated in social system more than innovators opinion leaders

Question 37

Technology adoption curve EARLY MAJORITY

Answer 37

Adopts new ideas just before average member of social system willingly follows innovation company needs to get here to achieve mainstream adoption

Question 38

Technology adoption curve LATE MAJORITY

Answer 38

Accepts later, skeptical

Question 39

Technology adoption curve LAGGARDS

Answer 39

Last group

Question 40

What are the Porter 5 forces

Answer 40

1. threat of substitutes 2. threat of new competitors 3. bargaining power of suppliers 4. bargaining power of buyers 5. rivalry among existing competitors