Entrepreneurship WS 2024/2025 Past Paper PDF

Introduction to Entrepreneurship WS 2024/2025 Dr. Dinah Murad 1  Plan for the Semester Date Topic 15/10/24 Introduction and Business Ideas 29/10/24 Business Models and Value Proposition...

Introduction to Entrepreneurship WS 2024/2025 Dr. Dinah Murad 1  Plan for the Semester Date Topic 15/10/24 Introduction and Business Ideas 29/10/24 Business Models and Value Proposition 12/11/24 Customer: Market Research and Validation 26/11/24 Business Planning and Strategy 10/12/24 Financial Planning and Fundraising 7/1/25 Operations and Execution 21/1/25 Innovation, Risk Management, and Scaling 30/1/2025 Exam (60 minutes, multiple choice) 12:00-13:00 med2market – scientific marketing consulting 2 21/01/25 Innovation, Risk Management, and Scaling ¤ Recap ¤ Exam Readyness Check ¤ Innovation ¤ Risk Management ¤ Scaling 3 What do you remember? ¤Implementation needs: ¤ transform your vision into SMART defined goals, find the right metrics ¤create a roadmap that is aligned to you business model ¤prototype and MVP are key: e.g. for pitches, involving people ¤continue gathering feedback, pivot if necessary and stay flexible and adjust your plan ¤Execution: from vision to launch ¤apply the key metrics and address challenges to the right people ¤manage feedback loops ¤eye on competition and alternative solutions to your service ¤reflect on your journey and report ¤reward & celebrate 4 21/01/25 Innovation, Risk Management, and Scaling ¤ Recap ¤ Exam Readyness Check ¤ Innovation ¤ Risk Management ¤ Scaling 5 Entrepreneurship, general Why are Intrepreneurs and new businesses important? Why should you start with why? Business Ideas: how to generate them? How to find out if they might work? What’s most important if you start a business? Problem - Solution: value proposition Challenges, why startups fail (fear of failure, personal reasons, wrong market demand, competition issues) "What are the essential Vision and strategic planning components that contribute to Ability to innovate and adapt entrepreneurial success?" Effective resource management Strong leadership and decision-making skills 6 Business Models Business Models, Canvas, Lean Canvas, … Which are useful for startups? Why are the Canvas based business models useful? "Which components are Problem included in the Lean Canvas Solution model?" Key Metrics Unfair Advantage (Secret sauce) 7  Value Proposition What elements defines a value proposition canvas: pain points, gains, customer jobs, pain relievers etc. Starting with why „What statements are correct for Focus on Customer needs the value proposition canvas“ Matching product features with customer needs Pain Killers Cost Structure 8 Customer quantitative, qulitative Market Research, Customer Insights Validation Customer PERSONA Customer Journey Touch Points TAM, SOM, SAM They uncover the underlying motivations What are the key contributions behind consumer behavior. of Consumer Insights to market They assist in refining products to better research? meet consumer needs. They provide strategic guidance by understanding consumer motivations. They enhance the effectiveness of marketing strategies. 9  Business Planning Vision, GOAL - SMART GOALS, Strategy, Execution, Resources, Roadmap Alignment to Customer Value Creation in BMC: overview of value (weight side) and costs (left side) GOALS defined in a SMART way What components should be in What should be delivered roadmaps? milestones Deadlines 10  Strategy as usual: start with WHY vision, mission short- and long-term strategy put all your parameters together: competition situation, market knowledge, SWOT analysis, market positioning, customer value proposition, success factors As teams are key success factors Shared vision and goals for success, what applies? Complementary skill sets among team members Open communication and trust Mutual respect and collaboration 11 Financial Planning understand Cost structure CAC, LTV, Development Costs, Expansion Costs, CDC Burn rate Assumptions are ok refine financial planning and pivot, prioritise What financial indicators are Profit margins essential for evaluating a Cash flow startup's performance? Return on investment (ROI) Break-even point 12 Funding a Startup Revenue from sales (super, if it works from the beginning) Bootstrapping different investors: business angels, Venture Capital companies, Crowdfunding unlikely: going public Limited access to capital can restrict What are the disadvantages of growth opportunities. Bootstrapping? Personal financial risk is significantly higher. Slower scaling due to constrained resources. Increased pressure on founders to generate revenue quickly. 13 Implementation Vision, GOAL - SMART GOALS, Strategy, Execution, Resources Alignment to Customer Value Creation in BMC: overview of value (weight side) and costs (left side) What elements belong to the Clear communication of roles and implementation process? responsibilities Realistic timelines for project milestones Continuous monitoring and adjustment of strategies Allocation of necessary resources 14 Execution Apply Key Metrics mit all costs reach milestones, focus on next, reward and celebrate regular dashboard reviews, match deliverables with GOALS managing responsible people, clear responsibilities agile management: stay on track, survey and track customer feedback, adapt changes, pivot What is key factors for ensuring Establishing clear priorities based on the effective of a startup's strategic goals strategy? Allocating resources to activities with the highest impact Regularly reviewing and adjusting plans based on performance metrics Ensuring a balanced focus on both product development and market expansion 15  Innovation can be everything from line extension, product relaunch, new channel,… for: product attractiveness, more customers, traction, growth, scalability, protection agains competition, following trends What elements belong to the Clear communication of roles and implementation process? responsibilities Realistic timelines for project milestones Continuous monitoring and adjustment of strategies Allocation of necessary resources 16  Risk Management regular risk assessments to identify vulnerabilities Diversify revenue streams to minimize dependency risks Develop contingency plans for critical operations Maintain financial reserves for unforeseen challenges Foster a culture of adaptability and innovation Monitor industry trends to anticipate external risks Identifying potential risks that could What are the essential steps in impact the project or organization the risk management process? Assessing the likelihood and impact of each identified risk Developing strategies to mitigate or manage the identified risks Continuously monitoring and reviewing risks throughout the project lifecycle 17  Scaling Scaling options in all parts of the BMC, customer, partners, revenue streams can be linked to risks due to wrong timing, under-funding, wrong market evaluation, lacking infrastructure What are the key challenges Maintaining operational efficiency startups face when scaling their Managing increased demand operations? Building infrastructure to support growth Ensuring consistent product or service quality 18 21/01/25 Innovation, Risk Management, and Scaling ¤ Recap ¤ Exam Readyness Check ¤ Innovation ¤ Risk Management ¤ Scaling 19 Why do companies need innovation? ¤ Innovation is essential for companies to remain competitive, adapt to changing environments, and drive long-term growth. Here are the primary reasons ¤ Market competitiveness ¤ Market change ¤ Efficiency & Cost Reduction ¤ Growth (additional markets, customer segments) ¤ better problem solving/customer satisfaction Dodgson, M., Gann, D., & Salter, A. (2008). The Management of Technological Innovation: ¤ attracting talent & investments Strategy and Practice.Oxford University Press. Crossan, M. M., & Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A systematic review of the literature. Journal of Management Studies, 47(6), 1154–1191. DOI: 10.1111/j.1467-6486.2009.00880.x.  Competition is good for the people. It creates innovation, alternatives and fair prices. Therefore it‘s worth the fight. Hubert Burda  What is an innovation? New Product? New Size? New Claim, but same product? New Package? Line Extension? New channel? New Business Model (DVD to streaming)? Innovation as a „Secret sauce“? Example female company Bold Marketing Messages Feminine Hygiene Products Subscription Model (Organic Tampons) Support Charity & Political Activism Imagine a new detergent Organic Less volume Less packaging needed Easy on the environment Cheaper to produce 21/01/25 Innovation, Risk Management, and Scaling ¤ Recap ¤ Exam Readyness Check ¤ Innovation ¤ Risk Management ¤ Scaling 25  What can be risks? Product Development Risks Market Entry Risks Incomplete market research leading to product Ine ective marketing or branding strategies. misalignment. Choosing the wrong sales channels or Failure to iterate based on customer feedback. markets. Poor quality control or reliability issues in the Ignoring competitive analysis. product. Team Risks Financial Risks Lack of a cohesive company culture. CAN YOU CONTROL THEM? Mismanagement of budgets or resources. Ine cient leadership or management. Inadequate pricing strategy. Misalignment of roles and responsibilities. Overestimation of revenue or underestimation Compliance and Legal Risks of costs. Failure to protect intellectual property. Operational Risks Non-compliance with local or industry Ine cient processes or lack of clear work ows. regulations. Poor hiring decisions leading to skill gaps. Inadequate contracts with vendors or Inadequate planning for scaling operations. partners. ffi ffi ff fl  What can be risks? Market Risks Environmental Risks Unexpected changes in consumer behavior or Natural disasters a ecting operations or supply demand. chains. Market saturation or emergence of stronger Climate change in uencing raw material competitors. availability or costs. Economic downturns or recessions. Global Events Political and Regulatory Risks Pandemics or global health crises. CAN YOU CONTROL THEM? Changes in laws or regulations a ecting the business. Geopolitical con icts disrupting international Political instability in key markets. business. Trade restrictions or tari s impacting supply chains. Shifts in global trade policies or alliances. Technological Risks Investor Risks Disruptive innovations by competitors. Changes in investor sentiment or nancial market Rapid technological changes making the product conditions. obsolete. Reduced availability of venture capital or funding Cybersecurity threats and data breaches from external sources. sources. fl fl ff ff ff fi  How to handle risks With Assumption Mapping you can identify the most important risks of your business model. Your business model is based on many assumptions that you do not yet know if they really apply. If important assumptions turn out to be wrong, the entire business model may fail. Therefore you should find out early whether these assumptions are valid. With Assumption Mapping you can make such risks visible and prioritize them. In this way, you can find out which assumptions you should test next. By testing risky assumptions, you can reduce risks and increase the odds of success of your business idea. Assumption Mapping. Source: Bland/Osterwalder (2020), p. 29ff. Ries, Eric (2012): Lean Startup: Fast, risk-free and successful company foundation. Redline publishing house.  Risk mitigation through proactive strategies ¤ Conduct detailed market and competitive analysis. ¤ Build a minimum viable product (MVP) to test assumptions. ¤ Diversify revenue streams to reduce dependency. Dropbox: started with an MVP creating ¤ Establish clear operational and financial a simple demo video to test user contingency plans interest and adoption before investing resources in fully developing the product. McGrath, R. G., & MacMillan, I. (2000). Discovery-Driven Planning. Harvard Business Review. Blank, S. (2013). The Four Steps to the Epiphany: Successful Strategies for Products that Win.  Tesla Tesla is an excellent example of proactive risk mitigation through innovative approaches. Before the mass production of the Model 3, Tesla used a pre-order system that required customers to place a refundable deposit to reserve their vehicle. This strategy had multiple bene ts: 1.Market Demand Validation: By tracking the number of pre-orders, Tesla could assess the demand for the Model 3 before committing signi cant resources to mass production. This reduced the risk of overproduction or misaligned market expectations. 2.Financial Risk Mitigation: The deposits from customers provided Tesla with an upfront cash in ow, which helped reduce nancial strain during the production ramp-up phase. 3.Customer Engagement: The pre-order process created anticipation and loyalty among early adopters, ensuring a ready customer base once the product launched. This proactive strategy allowed Tesla to address uncertainties related to production costs, market demand, and nancing, making it a textbook example of risk mitigation. fl fi fi fi fi  Risk Management through Resilience and Adaptability ¤ Create a flexible business model for rapid adjustments. ¤ Foster a culture of continuous learning and innovation. ¤ Maintain liquidity for emergency responses. ¤ Build strong networks to share resources Netflix: Transformed itself from a DVD during crises. rental company to a streaming giant and later to a producer of its own content by responding flexibly to technological and market changes. Teece, D. J. (2010). Business Models, Business Strategy and Innovation. Long Range Planning. Ries, E. (2011). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.  Resilience and Adaptability: LEGO In the early 2000s, Lego faced declining sales and nancial challenges. The company streamlined its product portfolio, focusing on core o erings like classic brick sets. It also embraced digital innovation, such as partnerships with franchises (Star Wars, Harry Potter) and launching The Lego Movie. These actions revitalized Lego, opening new revenue streams and securing its recovery. fi ff Key Ideas for Risk Management ¤ Conduct regular risk assessments to identify vulnerabilities ¤ Diversify revenue streams to minimize dependency risks ¤ Develop contingency plans for critical operations ¤ Maintain financial reserves for unforeseen challenges ¤ Foster a culture of adaptability and innovation ¤ Monitor industry trends to anticipate external risks ¤ Build strong partnerships to share resources and insights 21/01/25 Innovation, Risk Management, and Scaling ¤ Recap ¤ Exam Readyness Check ¤ Innovation ¤ Risk Management ¤ Scaling 36 Scaling - multifactorial  Scaling - a multifactorial You can't cover everything yourself. Key partners like external suppliers or The key activities show what you really need in order to offer your product/ Every product/service creates value and is perfectly tailored to your customer Customer relations represent the type of relationship that you build with your This includes your users and paying customers. These are all outsourcing of activities may help you service. segment. customers. people for whom you create value here. What type of relationship does each with your offer. What Key Activities do our Value What value do we deliver to the of our Customer Who are our Key Partners? Propositions require? customer? Segments expect us to establish and For whom are we creating Who are our key suppliers? Our Distribution Channels? Which one of our customer’s problems maintain with them? value? Which Key Resources are we Customer Relationships? are we helping to solve? Which ones have we established? Who are our most important acquiring from partners? Revenue streams? What bundles of products and services How are they integrated with the rest customers? Which Key Activities do partners are we offering to each Customer of our business model? 7 4 perform? Segment? How costly are they? Which customer needs are we satisfying? It defines what resources and This is where the channels and contact infrastructure are needed to offer your points, with which your customers interact, product/service. provide at the same time added value. Through which Channels do our Custo- What Key Resources do our Value mer Segments want to be reached? Propositions require? How are we reaching them now? Our Distribution Channels? How are our Channels integrated? Customer Relationships? Which ones work best? Revenue Streams? Which ones are most cost-efficient? How are we integrating them 8 6 2 with customer routines? 3 1 Once you understand how your business model infrastructure works, you will also know what your The revenue streams or revenue models make it clear how and in what form you want to generate cost structure and financial planning should look like. revenue. A pricing strategy is important. What are the most important costs inherent in our business model? For what value are our customers really willing to pay? Which Key Resources are most expensive? For what do they currently pay? Which Key Activities are most expensive? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? 9 5 Business Model Canvas. Source: Osterwalder et al. (2010), p. 17ff.  Scaling - a multifactorial You can't cover everything yourself. Key partners like external suppliers or The key activities show what you really need in order to offer your product/ Every product/service creates value and is perfectly tailored to your customer Customer Segments: Expanding Customer relations represent the type of relationship that you build with your This includes your users and paying customers. These are all outsourcing of activities may help you service. segment. customers. here. What Key Activities do our Value What value do we deliver to the into new customer segments or What type of relationship does each of our Customer people for whom you create value with your offer. Segments expect us to establish and Who are our Key Partners? Who are our key suppliers? Propositions require? Our Distribution Channels? customer? Which one of our customer’s problems markets to scale reach. maintain with them? For whom are we creating value? Which Key Resources are we Customer Relationships? are we helping to solve? Which ones have we established? Who are our most important acquiring from partners? Revenue streams? What bundles of products and services How are they integrated with the rest customers? Which Key Activities do partners are we offering to each Customer of our business model? 7 4 How costly are they? perform? Segment? Which customer needs are we satisfying? Channels: Adding or optimizing It defines what resources and infrastructure are needed to offer your distribution and sales channels to This is where the channels and contact points, with which your customers interact, product/service. reach more customers. provide at the same time added value. Through which Channels do our Custo- What Key Resources do our Value mer Segments want to be reached? Propositions require? How are we reaching them now? Our Distribution Channels? How are our Channels integrated? Customer Relationships? Revenue Streams? Customer Relationships: Which ones work best? Which ones are most cost-efficient? How are we integrating them 8 6 2 1 3 Implementing scalable customer with customer routines? support or engagement strategies. Once you understand how your business model infrastructure works, you will also know what your The revenue streams or revenue models make it clear how and in what form you want to generate cost structure and financial planning should look like. revenue. A pricing strategy is important. What are the most important costs inherent in our business model? For what value are our customers really willing to pay? Which Key Resources are most expensive? For what do they currently pay? Which Key Activities are most expensive? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? 9 5 Business Model Canvas. Source: Osterwalder et al. (2010), p. 17ff.  Scaling - a multifactorial You can't cover everything yourself. The key activities show what you really Every product/service creates value and is Customer relations represent the type of Key Activities: Streamlining or Key partners like external suppliers or outsourcing of activities may help you need in order to offer your product/ service. perfectly tailored to your customer segment. relationship that you build with your customers. This includes your users and paying customers. These are all people for whom you create value What type of relationship does each automating processes to handle here. Who are our Key Partners? What Key Activities do our Value Propositions require? What value do we deliver to the customer? of our Customer Segments expect us to establish and with your offer. For whom are we creating larger volumes. Who are our key suppliers? Which Key Resources are we Our Distribution Channels? Customer Relationships? Which one of our customer’s problems are we helping to solve? maintain with them? Which ones have we established? value? Who are our most important acquiring from partners? Revenue streams? What bundles of products and services How are they integrated with the rest customers? Which Key Activities do partners are we offering to each Customer of our business model? 7 4 perform? Segment? How costly are they? Key Resources: Ensuring access to Which customer needs are we satisfying? resources (e.g., talent, technology, It defines what resources and infrastructure are needed to offer your This is where the channels and contact points, with which your customers interact, product/service. provide at the same time added value. production capacity) that can scale. What Key Resources do our Value Through which Channels do our Custo- mer Segments want to be reached? Propositions require? How are we reaching them now? Our Distribution Channels? How are our Channels integrated? Customer Relationships? Which ones work best? Key Partnerships: Leveraging Revenue Streams? Which ones are most cost-efficient? How are we integrating them 8 6 2 3 1 partnerships to enter new markets with customer routines? or increase efficiency. Once you understand how your business model infrastructure works, you will also know what your The revenue streams or revenue models make it clear how and in what form you want to generate cost structure and financial planning should look like. revenue. A pricing strategy is important. What are the most important costs inherent in our business model? For what value are our customers really willing to pay? Which Key Resources are most expensive? For what do they currently pay? Which Key Activities are most expensive? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? 9 5 Business Model Canvas. Source: Osterwalder et al. (2010), p. 17ff.  Scaling - a multifactorial You can't cover everything yourself. Key partners like external suppliers or The key activities show what you really need in order to offer your product/ Every product/service creates value and is perfectly tailored to your customer Customer relations represent the type of relationship that you build with your This includes your users and paying customers. These are all outsourcing of activities may help you service. segment. customers. people for whom you create value here. What type of relationship does each with your offer. What Key Activities do our Value What value do we deliver to the of our Customer Who are our Key Partners? Propositions require? customer? Segments expect us to establish and For whom are we creating Who are our key suppliers? Our Distribution Channels? Which one of our customer’s problems maintain with them? value? Which Key Resources are we Customer Relationships? are we helping to solve? Which ones have we established? Who are our most important acquiring from partners? Revenue streams? What bundles of products and services How are they integrated with the rest customers? Which Key Activities do partners are we offering to each Customer of our business model? 7 4 perform? Segment? How costly are they? Which customer needs are we satisfying? It defines what resources and This is where the channels and contact infrastructure are needed to offer your points, with which your customers interact, product/service. provide at the same time added value. Through which Channels do our Custo- What Key Resources do our Value mer Segments want to be reached? Propositions require? How are we reaching them now? Our Distribution Channels? How are our Channels integrated? Customer Relationships? Which ones work best? Revenue Streams? Which ones are most cost-efficient? How are we integrating them 8 6 2 with customer routines? 3 1 Cost Structure: Achieving economies of scale by reducing costs as Once you understand how your business model infrastructure works, you will also know what your The revenue streams or revenue models make it clear how and in what form you want to generate operations grow. cost structure and financial planning should look like. revenue. A pricing strategy is important. What are the most important costs inherent in our business model? For what value are our customers really willing to pay? Which Key Resources are most expensive? For what do they currently pay? Which Key Activities are most expensive? How are they currently paying? Revenue Streams: Adding new revenue models or expanding existing ones How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? to generate higher income. 9 5 Business Model Canvas. Source: Osterwalder et al. (2010), p. 17ff. Potential risks and threats of scaling - 1 ¤ Operational Risks ¤ Overloading Infrastructure: Existing systems may not handle increased demand (e.g., production, IT, logistics). ¤ Quality Control Issues: Maintaining product or service quality becomes challenging as volume grows. ¤ Talent Shortages: Difficulty in hiring and training skilled employees quickly. ¤ Financial Risks ¤ Cash Flow Strain: High upfront investments in scaling (e.g., marketing, equipment) can outpace revenue growth. ¤ Overestimating Demand: Expanding too quickly into new markets or segments without sufficient validation. ¤ Increased Fixed Costs: Scaling often leads to higher operational expenses that may not be immediately sustainable Potential risks and threats of scaling - 2 ¤ Market Risks ¤ Brand Dilution: Losing the unique identity or exclusivity of the product/service in efforts to scale. ¤ Competitive Response: Larger competitors may react aggressively to defend their market share. ¤ Market Saturation: Overexpansion into areas with limited demand can lead to wasted resources. ¤ Strategic Risks ¤ Loss of Focus: Expanding too broadly or into unrelated areas, diluting core competencies. ¤ Overreliance on Partners: Scaling often involves partnerships that may not be reliable long-term. ¤ Misalignment with Culture: Rapid growth can disrupt the organizational culture and values. Potential risks and threats of scaling - 3 ¤ Technological Risks ¤ System Failures: Scaling often requires new technology, which may be prone to glitches or cyber risks. ¤ Inadequate Integration: Poorly integrated systems can lead to inefficiencies and errors. ¤ Regulatory and Compliance Risks ¤ Legal Challenges: Expanding into new regions may involve navigating complex legal and regulatory environments. ¤ Compliance Gaps: Scaling operations without adhering to local regulations can result in penalties or reputational damage.  Example Amazon How it scaled: Amazon started as an online bookstore and expanded into a global e-commerce powerhouse by diversifying its product offerings, introducing Amazon Web Services (AWS), and utilizing cutting-edge logistics and technology. Its scalable infrastructure allowed it to handle growing demand while maintaining efficiency. Why it worked: Amazon invested heavily in technology, supply chain automation, and customer-centric innovations, enabling seamless scaling without sacrificing quality or customer experience.  Example: Starbucks How it scaled: Starbucks grew from a small coffee shop in Seattle to a global brand by standardizing its operations and customer experience. It entered international markets through joint ventures and partnerships while adapting to local tastes. Why it worked: Starbucks maintained its brand identity and quality while strategically expanding into high-potential markets, ensuring consistency in its offerings  Example: WeWork How it scaled: WeWork aimed to disrupt the office space industry by rapidly expanding its coworking spaces worldwide, often in high-cost urban areas. Why it failed: The company scaled too quickly without a sustainable business model, incurring massive operational costs. Its valuation was overhyped, and it lacked profitability, leading to financial instability and a highly publicized downfall. For Exam, quick preparation 30/01/25 ¤ look at slides 5-17 ¤ browse through homework ¤ browse through key learnings ¤ use you common sense 48 Exam 30/01/25 Good luck - you will make it! 49