Entrepreneurship & Innovation Chapter

• These notes will cover key points for the chapter on Entrepreneurship and Innovation

Key Points to Agree On

• The study material is in English, and the exam will be in English
• The notes in Arabic provided to ease the understanding
• Do not blindly memorize the Arabic translation
• Focus on understanding and memorizing the English material
• It's not necessary to memorize word for word, strive for understanding
• The material is lengthy and detailed but also interesting and useful for entrepreneurship
• Invest time in understanding the material
• By understanding the material, you can achieve a good grade

Regarding Colors and Formatting

• Blue text indicates the key information written in the slides
• Black text represents the translation to help better understand the blue text
• Red text highlights the titles and important headings within the material
• Orange text marks essential points that could potentially be tested, "Underlined in the Text"
• Green text represents direct notes, written between parentheses ()

New Business Planning Process

• For many entrepreneurs, the easiest part of launching a business coming up with an idea for a concept or approach
• Business success requires much more than just a great new idea
• Five critical steps guide the process from idea generation to growing a successful business
• Following these steps increases the entrepreneur's chances for launching a successful and sustainable business

Idea Assessment

• Examining a market need, developing a solution, and determining the entrepreneur's ability to turn the idea into a business
• Best business ideas start with a group of customers with a need
• Entrepreneurs identify business ideas for any need
• The idea assessment process helps entrepreneurs to examine ideas and identify the promising solutions
• Examining multiple business ideas ensures that the entrepreneur doesn't overlook ideas that could lead to success

Feasibility Analysis

• Determines if an entrepreneur's idea can be a foundation for a successful business
• It addresses the question: Should we proceed with this business idea?
• Its role is to filter out ideas that lack the potential for building a successful business
• If the idea fails, the entrepreneur drops it and moves on
• If the idea passes the analysis, the entrepreneur moves to the planning process

Business Model

• Answers the question: How would we proceed with this business idea?
• Developing a business model helps the entrepreneur to understand all that is required to launch and build the business
• This is where the entrepreneur tests the concept, uses what they learned from real customers to refine the model, and allocates resources

First Step: Idea Assessment

• Successful entrepreneurs understand that going from ideas to launching a venture is like a funnel
• When an entrepreneur sees a market need, they generate ideas to address it
• Each step in the new planning process narrows those ideas to launch a well-researched and tested business

Use an Idea Sketchpad

• Use an idea sketch pad to address key questions relating to:
  • Customers
  • Offering
  • Value proposition
  • Core competencies
  • People

Customers

• Start with customers who have a clear need that is not being addressed
• It may be met inadequately or not at all

Offering

• Describe the product or service to offer
• Are you offering a product, a service, an experience, or a combination?
• What are its key features?
• Describe it in detail and sketch an image if you can

Value Proposition

• Why will your product or service be important to the customers?
• Why would your offering be valuable to the user/buyer?
• How does it address unfulfilled needs

Core Competencies

• Does your offer include any technologies or unique features that will help differentiate it from competitors?
• Is it based on intellectual property

People

• Identify the key people on the team
• Who are the founding entrepreneurs?
• Do they have the skills and knowledge needed to turn the idea into a start-up?
• Answering these questions can reveal gaps or weaknesses in their ideas

Feasibility Analysis:

• If the sketchpad looks promising, move to the next step with a feasibility analysis
• Placing answers to the questions of the sketchpad helps visualizing gaps
• A more practical chapter will begin to speak in details

Second Step: Feasibility analysis (FA)

• Consists of four interrelated components
  • Industry and market FA
  • A product or service FA
  • A financial FA
  • An entrepreneur FA

Industry market feasibility analysis

• When evaluating the feasibility of a business idea, an analysis of the industry and targeted market matters
• It serves as where you start

The Focus in this phase is two-fold:

• Determining how attractive an industry is overall for a new business
• Evaluating the possible niches a small business can occupy
• Identifying how attractive the field/industry is in general, as a place of establishment for new businesses

Assess Industry Attractiveness

• Assess the industry through six components force:
• Sociocultural
• Technological
• Demographic
• Economic
• Political and legal
• Global factors

Sociocultural Factors

• Social and cultural change can lead to dramatic changes
• They can create whole new industries and fundamentally transform existing industries

Example

• In the 1970s and 1980s, women entered the workforce at higher rates
• This led to:
  • A dramatic increase in size of the American workforce
  • Competition for jobs previously dominated by male workers
  • Growth in daycare industry
  • Women's business attire
  • Restaurant industry
  • Automobile industry

Technological Factors

• lead to the development of new products and entirely new industries
• The internet changed how people consume information
• News became available online resulting decline of people reading print newspapers

Demographic Factors

• The demographic factors are:
  • Age
  • Ethnicity
  • Origin
  • Gender
  • Marital status,
  • Income
  • Education level
  • Employment status

Economic Factors

• Many companies struggle during downturns, some businesses grow during these times
• E-learning business during the pandemic which allowed students opportunity affordable education

Political and legal

• the doctor deleted it -

Global factors

• Open global markets allow business to seek customers and suppliers from all corners of the world

To determine the attractiveness of an industry

• Entrepreneurs should ask these questions to evaluate the macro trends to estimate said attractiveness
• How large is the industry?
• How fast is it growing?
• Is it profitable as a whole?
• Characterized by high profit margins or razor-thin margins?
• Are its products or services essential to customers?
• What future trends are shaping the industry?
• What threats does the industry face?
• What opportunities does it face?
• How crowded is it?
• How intense is the level of competition?
• Is the industry young, mature, or in between?

After Evaluating the marco envirnment

• Focus on competitive environment

Porter's Five Forces Model

• The Five Forces is a useful tool for analyzing a specific industry
• Measures the level of competitiveness and how attractive it is to work in

The Five forces

• the companies compete and, hence, the attractiveness of the industry includes:
• Rivalry among companies in the industry
• Bargaining power of suppliers
• Bargaining power of buyers -Threat of new entrants
• Threat of substitute products or services.

The forces

• interact to determine the setting where companies compete and attraction

The most import force for the industries attractiveness is the rivalry

• Rivalry among Companies

Industry can be more attractive when:

• Number of competitors is large, or, at the other extreme, quite small (5)
• Competitors are not similar in capacity or size
• Industry is growing fast

And the most attractive thing is when we can sell a differentiated product

when we can sell a differentiated product or service exists

Bargaining power of suppliers in the industry

• The greater the leverage of key raw material or components suppliers, the industry becomes less attractive
• This comes hand in hand with less raw Material and components supplier.

The Industry is more attractive

• When many suppliers sell commodity product
• With the availability of substitutes
• Companies can switch between products since switching cost are usually low
• Element represent small product’s final cost

Bargaining power of the buyers

• When buyer or consumers influence is high comes with number which is very small

For low cost is switching to competitors products.

• The influence if the buyers is strong is less appealing

The industry became more attractive

• Buyers want differentiate products then purchase of any products
• Customers have trouble getting informations about supply cost prices.

The Industry is more attracted when:

• Advantage economies of scale are absent
• When advantages companies achieve produce low average cost

Economic advantages of an increased production output.

• Product cost arises from increase output

Economy of scale occur marginal cost decreasing

• From reducing borrowing of New infrastructure from improvement

Becoming more attractive for enterers when :

• Cost are not related to company size
• Buyers aren’t loyal to existing brands

Threat of Substitutes:

• Service or project or industry has turned its heat and gets more attracted.

Many factories have closed glass doors over the years, or newspaper readership rate decline

• When can be industry more attractive: quality is available and customers have to chose

Five force matrix - power sector 5.

• can evaluate potential revenue and reasonable profits by survey factors.
• this make it easy for investors to make a decision

is the industry good for bussines

• Can answer question if the industry is a good house

Product or service , analysis or feasibility

Analysis product in order if it’s suitable for client and get revenue If a product or service for to get sources needed for product

- two main question of customer service in industry and services and profit from customer service

Are the customers looking to buy are service.

A product or service feasibility analysis determines the degree to which a product or service idea appeals to potential customers and identifies the resources necessary to produce

Primary resource and collect fist hand resource to analyze

To answer these questions entrepreneurs need feedback from potential customers a secondary research : gather data that has being complete it and analyze.

Primary research

Data that has be being complete and analyze A tool and customers services and questionnaires

A customer buy is an important amount to decide in the area and web for

Focus

A test to give the correct answer with information from customer service

Protypes

A test to implement on customers to touch test look and feel so inventor even before to

Test home - sending research in the customer home to observe

• Research windsheld in customer area looking for customers businesses what do like and not like

In home trials

Sending researches into customers homes to observe the product service expensive