Technopreneurship Midterms Exam PDF

WHAT IS A BUSINESS MODEL? THE BM CANVAS Business models are an analytical Business Model Generation, By A. tool used to assess the economic viability Osterwalder & Y. Pigneur of a business concept 10,000-feet overview of a business: how it is str...

WHAT IS A BUSINESS MODEL? THE BM CANVAS Business models are an analytical Business Model Generation, By A. tool used to assess the economic viability Osterwalder & Y. Pigneur of a business concept 10,000-feet overview of a business: how it is structured Focusing on whether the business 'makes sense', i.e. can be profitable, sustain competition, scalable A business model is a simple representation of the complex reality of a particular organization. Business models are useful for understanding how a business is organized, who interacts with whom, what goals and strategies are being pursued, what work the business performs, and how #1: CUSTOMER SEGMENTS it performs that work. Who is(are) the target customer(s)? BUSINESS MODELING Mass market Vs niche We need to learn how to create a Single segment Vs multi-segments business model that represents the reality Multi-sided platforms (serving of a business. several interdependent customer WHY SHOULD YOU CARE ABOUT segments) BM'S? #2: VALUE PROPOSITION BMs are useful to think through all Perceived value may be a critical aspects of a business: A checklist combination of ECONOMIC value (benefits BMs are useful to communicate to customer) and SOCIAL value (benefits your business concept through a 'common to others) language'  #3: DISTRIBUTION CHANNELS #7: KEY ACTIVITIES Direct: What key activities are critical to the success of our BM? Esp. to deliver the Sales Force value proposition Online Own stores Problem solving Production Indirect: Delivery Partner stores (physical/online) Network Wholesalers (physical/online) #8: KEY PARTNERSHIPS Key question: who takes care of after- Buyer-supplier relationships sales service? Strategic alliances with non-rivals #4: CUSTOMER RELATIONSHIPS Co-opetition: partnership with rivals Can be based on simple contract, or What CR do we want to establish and a structured dedicated organization maintain with our target customers? (e.g. Joint-Venture) Self-service #9: COST STRUCTURE Personal assistance Automated service (= hybrid) What are the cost drivers of our Communities business? Co-creation Reflection in terms of: #5: REVENUE STREAM(S) Product Costing, but also Activity- Cash we generate from each customer Based Costing (ABC) segment Variable Vs Fixed costs => Break-even point Asset sale: transfer of ownership => Size-related economies Usage fee => Scalability Subscription Licensing THE BM CANVAS : EXAMPLE Brokerage fee Advertising Consumer data sale to third-party Can mix: e.g. "freemium" #6: KEY RESOURCES Most important assets required to run the business ops Physical Intellectual/intangible Human Financial  PATTERNS IN BM'S TRY VARIOUS COMBINATIONS Razor-and-blades Free / Premium / Freemium "Long Tail": Selling a large number of items in small quantities (e.g. businesses offering a large catalog) Multi-sided platforms Open Source BM INNOVATION: CHALLENGE INDUSTRY NORMS LIMITS AND CAVEATS The BM approach focuses on economic imperatives (break-even point, sustainability of operational profits), NOT competitive positioning A BM may be great on paper, but implementation is everything BUSINESS MODELING VS. SOFTWARE MODELING A software model is a model of software applications and databases and other information technology artifacts. A business model is a model of a business, a model of what people do and how they interact.  WHAT IS A BUSINESS PLAN? emphasis placed on different aspects of the business. A Business Plan is a written document that defines the goals of your Depending on your business and business and describes how you will attain your intended use, you may need a very those goals. It is worth your considerable different type of Business Plan: investment of time, effort, and energy. Mini-plan: Less emphasis on critical A Business Plan sets objectives, details. Used to test your assumptions, defines budgets, engages partners, and concept, and measure the interest of anticipates problems before they occur. potential investors. A Business Plan identifies key areas Working Plan: Almost total emphasis on of your business so you can maximize the details. Used continuously to review time you spend on generating income. business operations and progress. Key investors will want to look at Presentation Plan: Emphasis on your Business Plan before providing marketability of the business concept. capital. Used to give information about the business to bankers, venture capitalists, A Business Plan helps you start and and other external resources. keep your business on a successful path. ASSEMBLING A BUSINESS PLAN You should prepare a Business Plan, although, in reality, many small Every Business Plan should include business owners do not. some essential components: 10 REASONS WHY YOU NEED A Overview of the Business: STRONG BUSINESS PLAN Describes the business, including its products and services. 1. To attract investors. 2. To see if your business ideas will The Marketing Plan: Describes the work. target market for your product and explains 3. To outline each area of the how you will reach that market. business. The Financial Management Plan: 4. To set up milestones. Details the costs associated with operating 5. To learn about the market. your business and explains how you will 6. To secure additional funding or pay for those costs, including the amount loans. of financing you may need. 7. To determine your financial needs. The Operations and Management 8. To attract top-level people. Plan: Describes how you will manage the 9. To monitor your business. core processes of your business, including 10. To devise contingency plans. use of human resources. HOW DETAILED SHOULD YOUR PLAN BE? Business plans differ widely in their length, appearance, content, and the SEVEN COMMON PARTS OF A GOOD Visuals that help the reader see BUSINESS PLAN important information, including highlight charts, market share Business plans must help investors projections, and customer demand understand and gain confidence on how charts. you will meet your customers’ needs. PART 2: BUSINESS CONCEPT Seven common parts of a good Business Plan are: The business concept shows evidence that a product or service is viable 1. Executive Summary and capable of fulfilling an organization's 2. Business Concept particular needs. 3. Market Analysis 4. Management Team The Business Concept section: 5. Marketing Plan Articulates the vision of the 6. Financial Plan company, how you plan to meet the 7. Operations and Management unique needs of your customer, and Plan how you plan to make money doing PART 1: EXECUTIVE SUMMARY that. Discusses feasibility studies that The Executive Summary of a you have conducted for your Business Plan is a 3-5 page introduction to products. your Business Plan. Discusses diagnostics sessions you The Executive Summary is critical, had with prospective customers for because many individuals (including your services. venture capitalists) only read the Captures and highlights the value summary. proposition in your product or service offerings. The Executive Summary section includes: PART 3: MARKET ANALYSIS A first paragraph that introduces A Market Analysis defines the target your business. market so that you can position your ❖ Your business name and business to get its share of sales. location. A Market Analysis section: ❖ A brief explanation of customer needs and your Defines your market. products or services. Segments your customers. ❖ The ways that the product or Projects your market share. service meets or exceeds the Positions your products and customer needs. services. ❖ An introduction of the team Discusses pricing and promotions. that will execute the Identifies communication, sales, Business Plan. and distribution channels. Subsequent paragraphs that provide key details about your business, including projected sales and profits, unit sales, profitability, and keys to success.  PART 4: MANAGEMENT TEAM Explains the external market in which the business is competing. The Management Team section Sets goals to direct future marketing outlines: efforts. Organizational Structure: Highlights the Sets clear, realistic, and hierarchy and outlines responsibilities and measurable targets. decision-making powers. Includes deadlines for meeting those targets. Management Team: Highlights the track Provides a budget for all marketing record of the company’s managers. You activities. may also offer details about key employees Specifies accountability and including qualifications, experiences, or measures for all activities. outstanding skills, which could add a competitive edge to the image of the PART 6: FINANCIAL PLAN business. The Financial Plan translates your Working Structure: Highlights how your company's goals into specific financial management team will operate within your targets. defined organizational structure. The Financial Plan section: Expertise: Highlights the business Clearly defines what a successful expertise of your management and senior outcome entails. The plan isn't team. You may also include special merely a prediction; it implies a knowledge of budget control, personnel commitment to making the targeted management, public relations, and results happen and establishes strategic planning. milestones for gauging progress. Skills Gap: Highlights plans to improve Provides you with a vital your company’s overall skills or expertise. feedback-and-control tool. In this section, you should discuss Variances from projections provide opportunities and plans to acquire new early warnings of problems. When information and knowledge that will add variances occur, the plan can value. provide a framework for determining the financial impact and the effects Personnel Plan: Highlights current and of various corrective actions. future staffing requirements and related Anticipate problems. If rapid costs. growth creates a cash shortage due PART 5: MARKETING PLAN to investment in receivables and inventory, the forecast should show The Marketing Plan section details this. If next year's projections what you propose to accomplish and is depend on certain milestones this critical in obtaining funding to pursue new year, the assumptions should spell initiatives. this out. The Marketing Plan section: The Financial Plan is the most Explains (from an internal essential part of your Business Plan. It perspective) the impacts and results shows investors the timeframes you have of past marketing decisions. scheduled to make profits.  Some elements of the Financial PART 7: OPERATIONS AND Plan include: MANAGEMENT Important Assumptions The Operations and Management Key Financial Indicators section outlines how your company will Break-even Analysis operate. Projected Profit and Loss The Operations and Management Projected Cash Flow section includes: Projected Balance Sheet Business Ratios Organizational structure of the Long-term Plan company. Provides a basis for projected operating expenses and DIFFERENT FINANCIAL PLANNING financial statements. Because these OPTIONS statements are heavily scrutinized Short-term Forecast: Projects either the by investors, the organizational current year or a rolling 12-month period by structure has to be well-defined and month. This type of forecast should be realistic within the parameters of the updated at least monthly and become the business. main planning and monitoring vehicle. Expense and capital requirements to support the Budget: Translates goals into detailed organizational structure. Provides actions and interim targets. A budget a basis to identify personnel should provide details, such as specific expenses, overhead expenses, and staffing plans and line-item expenditures. costs of products/services sold. ❖ The size of a company may These expenses/costs can then be determine whether the same model matched with capital requirements. used to prepare the 12-month IMPORTANT CONCEPTS DURING forecast can be appropriate for EXECUTION budgeting. ❖ In any case, unlike the 12-month Leadership forecast, a budget should generally Communication be frozen at the time they are Focus approved. Tracking Focus and leadership are keys to Strategic Forecast: Incorporates the success in execution strategic goals of the company into the Poor execution leads to losses in projections. For startup companies, the the business world just as it initial Business Plan should include a does in sports month-by-month projection for the first year, followed by annual projections for a FACTORS LEADING TO POOR minimum of three years. EXECUTION Cash Forecast: Breaks down the budget Multitasking – doing several things at and 12-month forecast into more detail. once The focus of these forecasts is on cash Procrastination (student syndrome) – flow, rather than accounting profit, and putting things off until the last minute periods may be as short as a week in order to capture fluctuations.  FORCES PUSHING FOR LATE- Given a baseline (original plan plus PROJECT REQUIREMENTS CHANGE approved changes), you can determine how well the project is meeting its goals ❖ Competition intros new version of with EVA competitive product with unanticipated KILLER features You must enter actual information ❖ New work is undiscovered late in periodically to use EVA. the project COST CONTROL INPUT FORM FOR ❖ A “Wouldn’t It be Great if…” BUSINESS SYSTEMS REPLACEMENT scenario happens PROJECT ❖ End-users want changes because they now know more about their requirements than they did 18 months ago ❖ Developers want changes because they have a great emotional and intellectual investment in all of the system’s details CONTROLLING CHANGES TO THE PROJECT SCHEDULE ❖ Perform reality checks on schedules ❖ Allow for contingencies?? ❖ Don’t plan for everyone to work at EARNED VALUE ANALYSIS TERMS 100% capacity all the time Budgeted cost of work performed ❖ Hold progress meetings with (BCWP), also called earned value, is the stakeholders and be clear and percentage of work actually completed honest in communicating schedule multiplied by the budget for the activity issues Budgeted cost of work scheduled COST CONTROL (BCWS), also called planned value, is Project cost control includes that portion of the approved total cost estimate planned to be spent on an activity ❖ monitoring cost performance during a given period ❖ ensuring that only appropriate project changes are included in a Actual cost of work performed revised cost baseline (ACWP), also called actual cost, are the ❖ informing project stakeholders of total direct and indirect costs incurred in authorized changes to the project accomplishing work on an activity during a that will affect costs given period Earned value analysis is an SCHEDULE VARIANCE (SV)— AHEAD important tool for cost control OR BEHIND EARNED VALUE ANALYSIS (EVA) Defined as the difference between the budgeted cost of work performed and EVA is a project performance the budgeted cost of work scheduled measurement technique that integrates scope, time, and cost data = BCWP – BCWS = EV - PV  Is also equal to Earned Value (EV) schedule has called for. Are you really minus Planned Value (PV) under budget? Indicates the deviation between the Summary work content performed and the work Business Plans are critical for the content scheduled to be performed for the success of a company. control period Different businesses will require COST VARIANCE (CV)—OVER OR different types of Business Plans. UNDER All Business Plans have some Defined as the difference between essential sections that explain the core the budgeted cost of work performed and aspects of the company. the actual cost of work performed In order to help your company have = BCWP – ACWP = EV - AC a better chance of gaining interest and Is also equal to Earned Value (EV) investors, a Business Plan should include minus Planned Value (PV) seven essential sections: A positive CV indicates a lower ❖ Executive Summary actual cost than budgeted ❖ Business Concept ❖ Market Analysis for the control period, while a negative CV ❖ Management Team indicates a cost overrun ❖ Marketing Plan WHY EARNED VALUE ANALYSIS? ❖ Financial Plan ❖ Operations and Management Plan You can’t tell what your true cost variance is because you don’t know where Focus and leadership are keys to you are relative to schedule success in execution Suppose you are behind schedule Earned Value Analysis is one of the but also you have spent less than what the best tool to monitor execution.  PRODUCT DEVELOPMENT validate various aspects of the product before proceeding with full-scale It is the process of creating, production. designing, and bringing a new product to the market. This can take many forms, including physical prototypes (physical models or It involves a series of steps, from mock ups) and digital prototypes conceptualization to market introduction, (computer generated simulations or aimed at delivering a product that meets wireframes) specific customer needs or solves a particular problem. The primary objectives of prototyping are to identify and address The process typically encompasses design flaws, verify that the product research, design, engineering, testing, and meets user requirements, and reduce manufacturing, all geared to ward ensuring the risks associated with developing a full that the final product is viable, functional, product that may not meet customer and marketable. expectations. Key stages in product development Prototypes enable iterative may include: development, facilitate stakeholder idea generation communication, and can save time and market research resources in the long run by catching and concept development resolving issues early in the product design development process. prototype development SIGNIFICANCE OF EFFECTIVE testing PRODUCT DEVELOPMENT commercialization 1. Innovation and Competitive “The ultimate goal of product Advantage: Effective product development is to introduce innovative and development drives innovation by creating competitive products that provide value to new products or enhancing existing ones. customers and generate revenue for the organization.” 2. Meeting Customer Needs: Product development is centered around identifying PROTOTYPING and meeting customer needs. It is a crucial phase within the 3. Revenue Generation: Successful product development process. product development leads to the creation It involves the creation of a of marketable and saleable products. preliminary, often simplified, and 4. Brand Reputation: Launching well- representative model or sample of the developed products that perform as product to test, evaluate, and refine its promised and meet customer expectations design and functionality. enhances a company's reputation Prototypes serve as tangible 5. Risk Mitigation: Through systematic representations of the product concept, product development processes, allowing designers, engineers, and stakeholders to visualize, test, and businesses can identify and mitigate risks successful, sustainable ventures. It was early in the development cycle. popularized by Eric Ries in his book "The Lean Startup." SIGNIFICANCE OF EFFECTIVE PROTOTYPING The core idea behind the Lean Startup is to apply the scientific method 1. Reducing Costs and Time: Prototyping to the process of building and growing allows for early identification and a startup or developing a new product. It rectification of design flaws and issues. emphasizes continuous experimentation, 2. User-Centered Design: Prototypes validated learning, and a build-measure- provide a tangible representation of the learn approach. product, allowing designers and KEY PRINCIPLES OF THE LEAN stakeholders to gather feedback from STARTUP users and make improvements based on real-world usage, ensuring that the final 1. Build-Measure-Learn: Instead of product aligns with user expectations. developing a product in isolation and launching it when it's "perfect," the Lean 3. Iterative Improvement: Prototyping Startup encourages creating a Minimum supports iterative development, where Viable Product (MVP)–a basic version of changes can be made, tested, and refined the product with just enough features to in successive iterations. gather feedback. After release, you 4. Stakeholder Communication: measure how users interact with it and Prototypes facilitate effective learn from their behavior. communication among team members, 2. Validated Learning: The focus is on stakeholders, and investors by providing a learning rather than assuming. The goal is visual and interactive model that helps to test hypotheses and assumptions convey the product's design and through experimentation and feedback. functionality. This process helps identify what works and 5. Risk Mitigation: By testing the what doesn't, enabling more informed prototype, businesses can identify decisions. technical, usability, or market-related 3. Innovative Iteration: The Lean Startup issues early on and address them before is characterized by iterative development. committing to full-scale production. After learning from the MVP, you make 6. Proof of Concept: Prototypes can data-driven adjustments and iterate the serve as proof of concept, demonstrating product, repeating the build-measure-learn the feasibility of a product idea and cycle until you achieve product-market fit. attracting investors or partners who can 4. Pivot or Persevere: When the data provide the necessary resources for further indicates that your current approach is not development. working, you have the option to pivot, LEAN STARTUP which means making a fundamental change in your productor strategy. The Lean Startup is a methodology Alternatively, if the data shows promise, and a set of principles for developing you persevere by doubling down on your businesses and products that aim to current direction. reduce waste, improve efficiency, and increase the likelihood of creating 5. Minimum Viable Product (MVP): An KEY CHARACTERISTICS OF AN MVP MVP is the most basic version of your 1. Minimal Features: An MVP includes product that allows you to collect the only the core features that are necessary maximum amount of validated learning to address the primary problem or need of with the least effort. It's not about building the target audience. It omits all non- all features but about validating your essential or "nice-to have" features to keep assumptions with minimal resources. development simple and cost effective. 6. Continuous Deployment: Continuous 2. Quick Development: MVPs are deployment or continuous delivery is the developed rapidly, often in a matter of practice of frequently and automatically weeks or months, as opposed to the more deploying new code or features to extended development cycles of full- production. This allows for rapid testing featured products. and iteration. 3. Testing Hypotheses: MVPs are 7. Customer Feedback: Engaging with designed to test specific hypotheses or customers and getting their feedback is an assumptions about the product's value, integral part of the Lean Startup process. user behavior, and market demand. These Feedback helps refine the product and hypotheses guide the development improve the customer experience. process and provide a basis for future 8. Lean Thinking: The methodology also decision-making. draws from lean manufacturing principles 4. Gathering Feedback: The MVP is to reduce waste. This includes minimizing released to a select group of early users or unnecessary work, avoiding customers who provide feedback on its overproduction, and eliminating features functionality, usability, and value. This that don't provide value. feedback is crucial for making informed MINIMUM VIABLE PRODUCT (MVP) product development decisions. It is a fundamental concept in the 5. Iterative Improvement: Based on user Lean Startup methodology and product feedback and data, the MVP is iterated development. upon, gradually adding features and refining the product to better align with It is the most basic version of a customer needs and preferences. This product or service that includes just iterative process continues until the enough features to satisfy early product achieves "product-market fit." customers and gather essential feedback 6. Risk Reduction: By starting with an MVP, businesses reduce the risk of The primary purpose of an MVP is investing significant resources in a product to validate assumptions, test that may not find market acceptance. It hypotheses, and learn about the allows them to adapt and pivot if necessary product's viability and market based on early insights. acceptance with minimal effort and resources. 7. Market Validation: Successful MVPs can validate the product concept and demonstrate to investors or stakeholders that there is demand for the solution. 8. Cost Efficiency: MVP development is FEEDBACK LOOP cost-effective, as it avoids overbuilding It is a process that involves features that may not be necessary or collecting, analyzing, and acting upon appreciated by users. feedback from users, stakeholders, or ITERATIVE DEVELOPMENT the market. It is a methodology that involves It's closely tied to iterative breaking down the product development and is critical for making development process into manageable data-driven decisions. cycles or iterations. FEEDBACK LOOP: HOW IT WORKS? During each iteration, a specific set 1. Collect Feedback: Gather feedback of features or improvements is designed, from users, customers, or stakeholders. developed, tested, and implemented. This can be in the form of surveys, user PRIMARY OBJECTIVES OF ITERATIVE testing, reviews, support requests, or any DEVELOPMENT other relevant communication. 1. Continuous Improvement: Iterations 2. Analyze Feedback: Examine the allow for a continuous process of learning feedback to identify patterns, common and refinement. Each cycle builds upon the issues, and areas for improvement. Look insights gained from the previous one, for both positive and negative feedback. resulting in a product that continually gets 3. Adapt and Improve: Based on the better. analysis, make informed decisions on how 2. Risk Mitigation: By dividing the to adapt the product. This might involve development process into smaller steps, adding new features, refining existing iterative development reduces the risk of ones, or addressing user concerns. unexpected issues arising late in the 4. Repeat: Continue the cycle by collecting project. If an issue is identified in an early more feedback after implementing iteration, it can be addressed before it changes. The process is ongoing and becomes a major problem. iterative. 3. Adaptation: The ability to adapt and FEEDBACK LOOP BENEFITS respond to changing circumstances is a key advantage of iterative development. It Customer-Centricity: It ensures that the allows the product to evolve to better meet product remains customer-focused and user needs and market demands. responsive to user needs. 4. User-Centered Design: Iterative Continuous Improvement: By development encourages user feedback at addressing issues and making each stage. This feedback informs design improvements in response to feedback, the decisions, ensuring that the product aligns product becomes better over time. with user expectations. Market Relevance: Staying in touch with user feedback allows the product to remain relevant and competitive in the market. Data-Driven Decisions: Rather than Early Issue Detection: It helps identify relying on assumptions, decisions are issues and challenges early in the based on real data and user experiences. development process, reducing the cost and effort required for fixes.