The Entrepreneurial Process

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Questions and Answers

Which of the following BEST describes the primary focus of the entrepreneurial process?

  • Maintaining the status quo in existing business operations.
  • Adapting existing business models to new technologies.
  • Minimizing risks in established markets.
  • Creating a new venture by identifying, evaluating, and exploiting opportunities. (correct)

During which phase of the entrepreneurial process is a detailed operational and financial strategy developed?

  • Develop a Business Plan. (correct)
  • Identifying and Evaluating the Opportunity.
  • Manage the Enterprise.
  • Determine the Resources Required.

In the context of the entrepreneurial process, what does 'harvesting' primarily involve?

  • Accumulating initial capital from investors and loans.
  • Deciding on the future of the organization and examining actual versus planned growth. (correct)
  • Gathering market research to refine the product or service.
  • Implementing day-to-day management strategies and controls.

Why is it crucial to distinguish between 'critical' and 'helpful' resources in Phase 3 of the entrepreneurial process?

<p>To allocate resources effectively, ensuring the most important needs are met first. (A)</p> Signup and view all the answers

According to the material, how does an entrepreneur typically identify good business opportunities?

<p>By being alert to possibilities suggested by consumers and channel members.. (C)</p> Signup and view all the answers

Which aspect is considered the MOST challenging part of opportunity analysis for an entrepreneur?

<p>Assessment of the opportunity. (B)</p> Signup and view all the answers

In the entrepreneurial process, what is the primary purpose of developing a business plan?

<p>To exploit the opportunity defined. (B)</p> Signup and view all the answers

In managing an enterprise (Phase 4), what two elements are MOST important for an entrepreneur to implement?

<p>A management structure and control system. (C)</p> Signup and view all the answers

As outlined, what should opportunity analysis primarily focus on?

<p>Providing a solid basis for decision-making regarding the feasibility of the opportunity. (B)</p> Signup and view all the answers

According to the material, which of the following contributes LEAST to the identification of a business opportunity?

<p>The return on investment. (A)</p> Signup and view all the answers

What should an entrepreneur primarily evaluate when assessing the 'fit' of an opportunity?

<p>How the opportunity aligns with their skills, experience and goals. (C)</p> Signup and view all the answers

Which of the following is NOT explicitly identified as part of the opportunity evaluation process?

<p>The business's societal impact and ethical considerations. (D)</p> Signup and view all the answers

What is the purpose of assessing an entrepreneur's present resources as part of determining resources required?

<p>To understand what new resources are needed. (C)</p> Signup and view all the answers

In the Timmons Model of the Entrepreneurial Process, what element is depicted as balancing opportunity and resources?

<p>Team (A)</p> Signup and view all the answers

According to the material, what role do channel members of the distribution system play in identifying business opportunities?

<p>They are useful sources of information and opportunities. (D)</p> Signup and view all the answers

Why is it important not to underestimate the amount and variety of resources needed in the entrepreneurial process?

<p>To ensure the business can adapt effectively to changing market conditions. (D)</p> Signup and view all the answers

According to the material, which of the following is NOT considered a building block of successful entrepreneurship?

<p>Operational Management Behavior (C)</p> Signup and view all the answers

Which aspect of 'Entrepreneurial Management Behavior' involves utilizing connections to benefit the company?

<p>Networking (B)</p> Signup and view all the answers

Which of these is an example of a 'Strategic Management Competency' for entrepreneurship?

<p>Human relations (B)</p> Signup and view all the answers

According to the Building Blocks of Successful Entrepreneurship, what does 'Knowledge & technical skills' encompass?

<p>Product/service knowledge (D)</p> Signup and view all the answers

According to the Building Blocks of Successful Entrepreneurship, what are 'Innovation', 'External focus' and 'Team leader' examples of?

<p>Personal Attributes (A)</p> Signup and view all the answers

What is the relationship between opportunity, resources and team in the Timmons Model of the Entrepreneurial Process?

<p>The team balances between the opportunities available and the very limited resources. (A)</p> Signup and view all the answers

What is meant by 'Effectual decision-making' in the context of 'Entrepreneurial Management Behavior'?

<p>Basing decisions on factors an entrepreneur can control, and being flexible. (B)</p> Signup and view all the answers

Which entrepreneurial process phase is most closely associated with managing cash flow?

<p>Manage the Enterprise. (A)</p> Signup and view all the answers

What does the final 'harvesting' phase in the entrepreneurial process mainly focus on?

<p>Planning the organization's future direction. (B)</p> Signup and view all the answers

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Flashcards

Entrepreneurial Process

The process through which a new venture is created by an entrepreneur.

Identify & Evaluate Opportunity

Phase 1 of the entrepreneurial process that involves identifying and evaluating potential business ventures.

Opportunity Evaluation

Involves assessing the creation and length of the opportunity, its real value, risks, and competitive advantage.

Opportunity Analysis

A plan that focuses on the opportunity providing the basis to make a decision.

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Develop a Business Plan

Phase 2 of the entrepreneurial process; a business plan must be developed in order to exploit the opportunity defined.

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Determine Required Resources

Phase 3 of the entrepreneurial process; assessing the resources needed for the venture.

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Manage the Enterprise

Phase 4 of the entrepreneurial process; employing resources through business plan implementation.

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Harvesting

Phase 5 of the entrepreneurial process; Deciding the future of the organisation.

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Building Blocks of Entrepreneurship

Skills, attributes, and behaviors that form the basis of successful entrepreneurship.

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Entrepreneurial Management Behavior

Includes opportunity identification, resource leveraging, and creativity.

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Knowledge & Technical Skills

Includes product/service knowledge and understanding of the market/industry.

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Strategic Management Competencies

Include marketing, finance, and human relations.

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Personal Attributes

Innovation, determination, external focus, and team leadership.

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Study Notes

  • The entrepreneurial process is the process through which an entrepreneur creates a new business venture.
  • The entrepreneurial process finds, evaluates, and develops opportunities by overcoming resistance to new creations.
  • The entrepreneurial process includes five phases: identifying and evaluating the opportunity, developing a business plan, determining required resources, managing the enterprise and harvesting.

Phase 1: Identifying and Evaluating the Opportunity

  • Capitalizing on good business opportunities requires entrepreneurs to be alert to possibilities.
  • It is helpful to engage with consumers, business associates, retailers, wholesalers and manufacturers.
  • Evaluation considers the creation and length of opportunities, its value, risks and returns, skills and differential advantages.
  • Opportunity analysis focuses on the opportunity, providing a basis for decision-making through:
    • A description of the product/service and its competition.
    • An assessment of the market.
    • An assessment of the team.
    • Specifications of activities and needed resources.
    • Sources of capital to finance the venture.
  • The most challenging part of opportunity analysis is assessing the opportunity.

Phase 2: Develop a Business Plan

  • Developing a business plan can aid in order to exploit opportunities.
  • A good business plan is important for developing opportunities, determining and obtaining resources, and managing ventures.

Phase 3: Determine the Resources Required

  • Assessing needed resources begins with evaluating the entrepreneur's existing resources.
  • It's important to distinguish critical resources from helpful ones and avoid underestimating resource amounts and variety.

Phase 4: Manage the Enterprise

  • Managing the enterprise involves using resources by implementing the business plan.
  • This includes setting up a management structure and a control system.

Phase 5: Harvesting

  • This phase will decide the future of the organization.
  • Actual growth is compared against the planned growth.
  • A final decision will regard stability and or expansion of the business.

Timmons Model of the Entrepreneurial Process

  • The Timmons Model of the Entrepreneurial Process includes opportunity, resources and team variables.
  • Communication, business plans, fits and gaps, exogenous forces, leadership, creativity, capital market context, and a founder will be very important too.

Building Blocks of Successful Entrepreneurship

  • There is no clear “identikit” for a successful entrepreneur, but skills, attributes and behaviors play a role.
  • The building blocks can be separated into four groups: Entrepreneurial management, technical skills, strategic management and personal attributes.

Entrepreneurial Management

  • Opportunity identification comes from entrepreneurial management.
  • Resource leveraging, networking, effectual decision-making, and creativity and innovation are equally important.

Knowledge & Technical Skills

  • Product and/or service knowledge is a key technical skill.
  • Market and industry understanding are also vital.

Strategic Management Competencies

  • Marketing, finance and human relations are strategic management components.

Personal Attributes

  • Innovation, determination, an external focus and team leadership are key personal attributes.

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