Podcast
Questions and Answers
What is the Total Addressable Market (TAM)?
What is the Total Addressable Market (TAM)?
Which type of customer relationship is driven by customer acquisition?
Which type of customer relationship is driven by customer acquisition?
Which of the following best defines Serviceable Obtainable Market (SOM)?
Which of the following best defines Serviceable Obtainable Market (SOM)?
What segment type focuses on consumer values and lifestyles?
What segment type focuses on consumer values and lifestyles?
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Which aspect of customer relationships enhances existing sales?
Which aspect of customer relationships enhances existing sales?
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What defines geographic segmentation in market analysis?
What defines geographic segmentation in market analysis?
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Which characteristic is NOT typically used in demographic segmentation?
Which characteristic is NOT typically used in demographic segmentation?
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How does psychographic segmentation differ from demographic segmentation?
How does psychographic segmentation differ from demographic segmentation?
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In behavioral segmentation, what is primarily analyzed?
In behavioral segmentation, what is primarily analyzed?
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Which of the following best describes geo-demographic segmentation?
Which of the following best describes geo-demographic segmentation?
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What is a primary purpose of demographic segmentation?
What is a primary purpose of demographic segmentation?
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Which of the following is an example of psychographic segmentation?
Which of the following is an example of psychographic segmentation?
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What benefit does behavioral segmentation provide to marketers?
What benefit does behavioral segmentation provide to marketers?
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Which customer characteristic is typically analyzed in demographic segmentation?
Which customer characteristic is typically analyzed in demographic segmentation?
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What is a potential drawback of solely using demographic segmentation?
What is a potential drawback of solely using demographic segmentation?
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What is the main risk that an entrepreneur accepts when starting a business?
What is the main risk that an entrepreneur accepts when starting a business?
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Which factor is most significant when evaluating the survival rate of new start-ups today?
Which factor is most significant when evaluating the survival rate of new start-ups today?
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What is a primary purpose of a business plan?
What is a primary purpose of a business plan?
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Which of the followings best describes a value proposition?
Which of the followings best describes a value proposition?
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How does the Business Model Canvas aid entrepreneurs?
How does the Business Model Canvas aid entrepreneurs?
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What trend has been observed in the survival rates of start-ups over the years?
What trend has been observed in the survival rates of start-ups over the years?
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What role does innovation play in small businesses?
What role does innovation play in small businesses?
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What defines a small business owner in the context of entrepreneurship?
What defines a small business owner in the context of entrepreneurship?
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Study Notes
Lecture Objectives
- Understanding entrepreneurship
- Describing the process of starting a business
- Introducing the Business Model Canvas
Entrepreneurship
- Entrepreneur: A businessperson who takes risks and seizes opportunities
- Entrepreneurship: The process of identifying and pursuing business opportunities
- Small Business Owner: An independent business owner with a limited market impact
SME Definition in Malaysia
-
Manufacturing:
- Medium: RM15 million - RM50 million sales turnover or 75-200 employees
- Small: RM300,000- RM15 million sales turnover or 5-75 employees
- Micro: Less than RM300,000 sales turnover or fewer than 5 employees
-
Services and Other Sectors:
- Medium: RM3 million-RM20 million sales turnover or 30-75 employees
- Small: RM300,000 - RM3 million sales turnover or 5-30 employees
- Micro: Less than RM300,000 sales turnover or fewer than 5 employees
SMEs in Malaysia
- 98.5% of businesses in Malaysia are SMEs
- SMEs by size:
- Medium: 2.3%
- Small: 21.2%
- Microenterprises: 76.5%
- SMEs by sector:
- Services: 89.2%
- Manufacturing: 5.3%
- Construction: 4.3%
- Agriculture: 1.1%
- Mining & Quarrying: 0.1%
- 20.6% of SMEs are women-owned
Importance of Small Business
- Job creation
- Innovation
- Contributions to big business
Stages of Growth for Entrepreneurial Company
- Existence
- Survival
- Success
- Takeoff
- Resource maturity
Trends in Small-Business Start-Ups
- Historically, 95% of startups failed within 5 years
- Currently, 44% of startups survive at least 4 years
Why Startups Fail
- No Market Need: 42%
- Ran Out of Cash: 29%
- Not the Right Team: 23%
- Get Outcompeted: 19%
- Pricing/Cost Issues: 18%
Business Plan
- A document that specifies business details prepared before opening a new business
- Determines business viability
- Acts as a strategic guide
- Helps obtain financing
Outline of a Business Plan
- Executive Summary
- Industry and Company
- Market Research and Analysis
- Economics of the Business
- Marketing Plan
- Manufacturing and Operations Plan
- Management Team
- Financial Plan
- Proposed Company Offering
- Critical Risks
- Appendix
Questions About Business Plans
- What could be the downside of having a business plan?
Business Model Canvas
- Introduced by Alexander Osterwalder in 2004 as a strategic planning tool
- Illustrates and develops business models
- Describes how an organization creates, delivers, and captures value
- Acts like an executive summary for a business plan
- Supports quick adjustments and modifications.
- Consists of nine building blocks
Customer Segments
- A group of people sharing similar wants and needs
- The business aims to serve identified segments
Identifying Customer/Market Segments
- Geographic segmentation: Dividing markets based on geographic units (countries to neighborhoods)
- Demographic segmentation: Identifying segments using demographic characteristics (age, income, gender, etc.)
- Geo-demographic segmentation: Combining geographic and demographic traits for segmentation
- Psychographic segmentation: Identifying segments through psychographic characteristics (lifestyles, personalities, etc.)
- Behavioral segmentation: Identifying segments based on observed behavioral patterns
- Table 11.1 shows demographic variables (age, education, family life cycle, family size, income, nationality, race, religion, gender)
Market Segmentation
- Dividing a market into customer categories or segments
Total Addressable Market (TAM), Serviceable Available Market (SAM), Serviceable Obtainable Market (SOM)
- TAM: The total potential market
- SAM: The portion of the total market that the company serves
- SOM: The portion of the SAM that the company can realistically reach
Channels
- How a company reaches its customer segments to deliver a value proposition
- Questions to consider:
- Preferred channels of the target customer segment?
- Current channels used and their effectiveness?
- Which are most cost-effective?
- Integration with customer routines?
Channels (Phases)
- Awareness: How to raise awareness of the company
- Evaluation: Helping customers evaluate the value proposition
- Purchase: Enabling purchase of products/services
- Delivery: Delivering the value proposition to customers
- After Sales: Providing post-purchase support
Customer Relationships
- The types of relationships a company establishes with customer segments
- Factors that drive relationships:
- Customer acquisition
- Customer retention
- Boosting sales
Customer Relationships (Categories)
- Personal assistance (e.g., call centers)
- Self-service
- Automated services (simulating personal services)
- Communities
Revenue Streams
- The cash generated by the company from each customer segment
- Questions to consider:
- How much value are customers willing to pay for?
- Current payment approaches and customer preferences?
- Contributions of each revenue stream to overall revenue?
Types of Revenue Models
- One-time charge
- Subscription
- Advertising
- Freemium
- Pay-as-you-go
Key Resources
- Key assets required for a business model
- Examples: physical, intellectual, financial, and human
Key Activities
- Important actions a company takes to effectively operate
- Examples: production, problem-solving, and platform/network creation
Key Partnerships
- Network of suppliers and partners that make a business model work
- Types of partnerships:
- Strategic alliances (non-competitors)
- Coopetition (competitors)
- Joint ventures
- Buyer-supplier relationships
Cost Structure
- All costs incurred to operate a business model
- Types of costs
- Fixed costs
- Variable costs
- Pricing
- Profit margin
- Break-even analysis
- Revenue per year
Readings
- Business Essentials, Ebert & Griffin, 11th Global Edition, Chapter 3
- Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (Osterwalder & Pigneur, 2010)
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Description
This quiz explores the fundamentals of entrepreneurship, focusing on the process of starting a business and the significance of small and medium-sized enterprises (SMEs) in Malaysia. It introduces key concepts such as the Business Model Canvas and the definitions of various business sizes within the Malaysian context. Test your knowledge and understanding of entrepreneurship in this vibrant business environment.
