Stuvia Summary Book - Entrepreneurship Theory & Practice PDF

Summary Book - Entrepreneurship Theory & Practice (Minor Entrepreneurship, ETP) geschreven door L29 www.stuvia.com Gedownload door: marascreciu03 | mara.screciu03@yaho...

Summary Book - Entrepreneurship Theory & Practice (Minor Entrepreneurship, ETP) geschreven door L29 www.stuvia.com Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Summary Entrepreneurship Theory and Practice Book Barringer & Ireland (2019) Entrepreneurship - successfully launching new ventures Ilse Lampe, 2021 Inhoud CHAPTER 1 Introduction to Entrepreneurship............................................................................................................ 2 CHAPTER 2 Recognizing opportunities and generating ideas.................................................................................... 7 CHAPTER 3 Feasibility Analysis.................................................................................................................................. 10 CHAPTER 4 Developing an Effective Business Model............................................................................................... 12 CHAPTER 5 Industry and Competitor Analysis.......................................................................................................... 15 CHAPTER 9 Building a New-Venture Team............................................................................................................... 17 CHAPTER 10 Getting financing and funding.............................................................................................................. 19 CHAPTER 11 Unique Marketing Issues...................................................................................................................... 22 CHAPTER 12 The importance of intellectual property............................................................................................. 25 Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 1 Introduction to Entrepreneurship Introduction to entrepreneurship There is tremendous interest in entrepreneurship around the world Global Entrepreneurship Monitor (GEM) is a joint research effort that tracks entrepreneurship Of particular interest to GEM is total early-stage entrepreneurial activity (TEA) The GEM study also identifies whether its respondents are starting a new business to take advantage of an attractive opportunity (most important) or because of necessity to earn an income (less important) One criticism of entrepreneurship, is that most new businesses fail → This is not true ○ The percentage of firms that do fail shows that a motivation to start and run a business isn’t enough ○ Motivation must be coupled with a solid business idea, good financial management, and effective execution to maximize chances for success Describe entrepreneurship, corporate entrepreneurship, and the characteristics of entrepreneurial firms What is entrepreneurship and why is it important? Inventors and entrepreneurs differ from each other An inventor creates something new An entrepreneur assembles and then integrates all the resources needed— the money, the people, the business model, the strategy, the risk-bearing ability — to transform the invention into a viable business Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to resources they currently control for the purpose of exploiting future goods and services An entrepreneur’s behaviour finds him trying to identify opportunities and putting useful ideas into practice The tasks called for can be accomplished by either an individual or a group and typically require creativity, drive, and a willingness to take risks Established firms with an orientation toward acting entrepreneurially practice corporate entrepreneurship All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial The position of a firm on this continuum is referred to as its entrepreneurial intensity ○ Entrepreneurial firms are typically proactive innovators and are not averse to taking calculated risks ○ Conservative firms take more of a “wait and see” posture, are less innovative, and are risk-averse One of the most persuasive indications of entrepreneurship’s importance to an individual or a firm is the degree of effort undertaken to behave entrepreneurially Firms with higher entrepreneurial intensity regularly look for ways to cut bureaucracy Discuss three main reasons people decide to become entrepreneurs Why do people become entrepreneurs? There are three primary reasons: Be Their Own Boss ○ This doesn’t mean that entrepreneurs are difficult to work with or that they have trouble accepting authority ○ Instead, many entrepreneurs want to be their own boss because either they have had a long-time ambition to own their own firm or because they have become frustrated working in traditional jobs ○ Some entrepreneurs transition from a traditional job to owning their own business more gradually ○ By starting a business part-time individuals can gain valuable experience, tuck away the money they earn, and find out if they really like the business before deciding to leave their job Pursue Their Own Ideas ○ Some people are naturally alert, and when they recognize ideas for new products or services, they have a desire to see those ideas realized ○ Corporate entrepreneurs who innovate within the context of an existing firm typically have a mechanism for their ideas to become known ○ Established firms often resist innovation, and employees are left with good ideas that go unfulfilled ○ Because of their passion and commitment, some employees choose to leave the firm employing them in order to start their own business as the means to develop their own ideas ○ Many entrepreneurs experience tremendous satisfaction when their entrepreneurial idea catches on, and they see the positive results it creates Pursue Financial Rewards ○ This motivation, however, is typically secondary to the first two and often fails to live up to its hype ○ Most entrepreneurs do not earn more than someone with the same responsibility in a traditional job Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Identify four main characteristics of successful entrepreneurs Characteristics of successful entrepreneurs Although many behaviours have been ascribed to entrepreneurs, several are common to the successful ones Those in new ventures and those who are already part of an entrepreneurial firm share these qualities: 1. Passion for the Business Frequently, it’s the passion for an idea that gets a business going and keeps it going when times are tough Making a difference in people’s lives is the primary motivator behind many social enterprises, which are often started by people who set aside promising careers to pursue a social goal Each of these reasons reflects a personal attribute that passion engenders Removing just one of these qualities would make it much more difficult to launch and sustain a successful entrepreneurial organization. A note of caution: While entrepreneurs should have passion, this is not the only thing they need Instead, your passion should be consistent with your skills and it should be in an area that represents a legitimate business opportunity 2. Product/Customer Focus The two most important elements in any business are products and customers While it’s important to think about management, marketing, finance etc. none of those functions makes any difference if a firm does not have good products with the capability to satisfy customers “Everything we build has to provide real value to both our users and customers” The best measurement of whether you are successful at delivering something valuable is if our customers are willing to pay A product/customer focus also involves the diligence to spot product opportunities and to see them through to completion 3. Tenacity Despite Failure Because entrepreneurs are typically trying something new, the possibility of failure exists Developing a new business idea may require a certain degree of experimentation before success is attained The litmus test for entrepreneurs is their ability to persevere through setbacks and failures Entrepreneurs should also have tenacity to overcome personal obstacles along with professional ones 4. Execution Intelligence The ability to fashion a solid idea into a viable business is a key characteristic of successful entrepreneurs This ability is thought of as execution intelligence, and it is often the factor that determines whether a start-up is successful or fails The ability to effectively execute a business idea means developing a business model, putting together a new venture team, raising money, establishing partnerships, managing finances, leading employees etc. It also demands the ability to translate thought, creativity, and imagination into action and measurable results One way early-stage companies learn execution intelligence is by participating in start-up incubator and accelerator programs Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Explain five common myths regarding entrepreneurship Common myths about entrepreneurs There are many misconceptions about who entrepreneurs are and what motivates them to launch firms to develop their ideas Some misconceptions develop because of the media covering atypical entrepreneurs Myth 1: Entrepreneurs are born, not made This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs No one is “born” to be an entrepreneur and that everyone has the potential to become one. Whether someone does or doesn’t is a function of environment, life experiences, and personal choices However, there are personality traits and characteristics that are commonly associated with entrepreneurs ○ E.g. being creative, energetic, self-confident, visionary, decisive Myth 2: Entrepreneurs are gamblers A second myth about entrepreneurs is that they are gamblers and take big risks The truth is, entrepreneurs are usually moderate risk-takers, as are most people The idea that entrepreneurs are gamblers originates from two sources ○ First, entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than managers or rank-and-file employees ○ Second, many entrepreneurs have a strong need to achieve and often set challenging goals, a behaviour that is sometimes equated with risk-taking Myth 3: Entrepreneurs Are Motivated Primarily by money It is naïve to think that entrepreneurs don’t seek financial rewards However, money is rarely the primary reason entrepreneurs start new firms and persevere Myth 4: Entrepreneurs should be young and energetic Entrepreneurial activity is fairly evenly spread out over age ranges The percentage of owners is quite evenly distributed across 4 major age categories The majority of business owners have work experience prior to launching a new venture Although it is important to be energetic, investors often cite the strength of the entrepreneur (or team of entrepreneurs) as their most important criterion in the decision to fund new ventures “We would rather fund a strong entrepreneur with a mediocre business idea than fund a strong business idea and a mediocre entrepreneur” What makes an entrepreneur “strong” is experience in the proposed business, skills and abilities that will help the business, a solid reputation, a track record of success, and passion about the business idea ○ The first four of these five qualities favor older rather than younger entrepreneurs Myth 5: Entrepreneurs Love the Spotlight Some entrepreneurs are flamboyant; however, the vast majority of them do not attract public attention Many entrepreneurs, because they are working on proprietary products or services, avoid public notice Describe the three types of start-up firms Types of start-up firms There are three types of start-up firms: Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Salary-substitute firms are small firms that yield a level of income for their owner or owners that is similar to what they would earn when working for an employer Dry cleaners, convenience stores, restaurants, accounting firms, retail stores, and hairstyling salons are examples of salary-substitute firms The vast majority of small businesses fit into this category Salary-substitute firms offer common, easily available and not particularly innovative products or services to customers Lifestyle firms provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so Lifestyle firms include personal trainers, golf and tennis pros, owners of bed & breakfasts, and tour guides These firms are not innovative, nor do they grow quickly Commonly, lifestyle companies promote a particular sport, hobby, or pastime and may employ only the owner or just a handful of people Entrepreneurial firms bring new products and services to market The essence of entrepreneurship is creating value and then disseminating that value to customers In this context, value refers to worth, importance, or utility Entrepreneurial firms bring new products and services to market by creating and then seizing opportunities Dropbox, Facebook, and Uber are well known, highly successful examples of entrepreneurial firms Having recognized an opportunity, the entrepreneurs leading companies of this type create products and services that have worth, are important to their customers, and provide a measure of usefulness to their customers that they wouldn’t have otherwise. One characteristic of entrepreneurial firms, is that they partner with other firms and organizations, often to obtain the boost they need to realize their full potential. Discuss the changing demographics of entrepreneurs in the United States Changing demographics of entrepreneurs Women Entrepreneurs While men are still more likely to start businesses than women, the number of women-owned businesses is increasing Minority Entrepreneurs There has been a substantial increase in minority entrepreneurs in the United States An important factor facilitating the growth of minority entrepreneurs is the number of organizations that promote and provide assistance Senior Entrepreneurs The number of seniors starting businesses is substantial and growing The increase in senior entrepreneurs is attributed to a number of factors, including corporate downsizing, an increasing desire among older workers for more personal fulfillment in their lives, and growing worries among seniors that they need to earn additional income to pay for future health care services Many people in the 60 and older age range have substantial business experience, financial resources that they can draw upon, and excellent vigor and health, which make them ideal candidates to start businesses in many industries In addition, the steady increase in life expectancy means that Americans are not only living longer, but are living healthier longer, and are likely to remain engaged in either a job or an entrepreneurial venture longer in their lives than earlier generations Millennial Entrepreneurs A desire to pursue an entrepreneurial career is high among millennials While encouraging, the statistics don’t fully reflect the direction entrepreneurial millennials are taking The biggest obstacles preventing them from acting on their entrepreneurial desires are lack of finances, lack of desire to start a business, fear of failure, and a lack of knowledge of the business start-up process Other factors may include the attractiveness of corporate jobs, student debt, lack of savings, and risk aversion Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Discuss the positive effects of entrepreneurship and entrepreneurial firms on economies and societies The positive effects of entrepreneurship and entrepreneurial firms Entrepreneurship’s importance to an economy and the society in which it resides was expertly articulated in 1934 by Joseph Schumpeter In his book The Theory of Economic Development, Schumpeter argued that entrepreneurs develop new products and technologies that over time make current products and technologies obsolete Schumpeter called this process creative destruction ○ Because new products and technologies are typically better than those they replace and the availability of improved products and technologies increases consumer demand, creative destruction stimulates economic activity ○ The new products and technologies may also increase the productivity of all elements of a society The creative destruction process is initiated most effectively by start-up ventures that improve on what is currently available Small firms that practice this art are often called “innovators” or “agents of change” The process of creative destruction is not limited to new products and technologies; it can include new pricing strategies (e.g., Warby Parker in eyewear), new distribution channels (such as e-books for books), or new retail formats (such as IKEA in furniture and Whole Foods Market in groceries) Economic Impact of Entrepreneurial Firms For two reasons, entrepreneurial behavior has a strong impact on an economy’s strength and stability 1. Innovation Innovation is the process of creating something new, which is central to the entrepreneurial process Small innovative firms are 16 times more productive than large innovative firms in terms of patents per employee 2. Job Creation According to the SBA, small businesses create a substantial number of new jobs in the US A key factor for the ability of small firms to create jobs is their skill when it comes to wisely and effectively deploying capital resources Entrepreneurial Firms’ Impact on Society Entrepreneurial firms’ innovations have a dramatic impact on a society Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us However, innovations do create moral and ethical issues with which societies are forced to grapple Entrepreneurial Firms’ Impact on Larger Firms Entrepreneurial firms also positively impact the effectiveness of larger firms The evidence shows that many entrepreneurial firms have built their entire business models around producing products and services that increase the efficiency and/or effectiveness of larger firms Explain the entrepreneurial process The Entrepreneurial process The entrepreneurial process we discuss in this book consists of four steps: Decision to become Developing successful Moving from an idea Managing and growing an entrepreneur business ideas to an entrepreneurial an entrepreneurial firm firm The double-headed arrow between the decision to become an entrepreneur and the development of successful business ideas indicates that sometimes the opportunity to develop an idea prompts a person to become an entrepreneur Decision to Become an Entrepreneur ○ Usually, a triggering event prompts an individual to become an entrepreneur (e.g. losing your job) Developing Successful Business Ideas ○ Many new businesses fail not because the entrepreneur didn’t work hard but because there was no real opportunity to begin with ○ Developing a successful business idea includes opportunity recognition, feasibility analysis, the development of an effective business model, industry analysis, and writing a business plan Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 2 Recognizing opportunities and generating ideas Explain the difference between opportunities and ideas The difference between opportunities and ideas An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business An entrepreneur can decide to launch a firm, search for and recognize an opportunity, and then starts a business (externally simulated venture) An entrepreneur recognizes a problem or an opportunity gap and creates a business to address the problem or fill the identified gap (internally simulated venture) The key to opportunity recognition is to identify a product or service that people need and are willing to buy, not one that an entrepreneur wants to make and sell An opportunity has four essential qualities: It is (1) attractive, (2) timely, (3) durable, and (4) anchored in a product, service, or business that creates or adds value for its buyer or end-user For an entrepreneur to capitalize on an opportunity, its window of opportunity must be open It is the time period in which a firm can realistically enter a new market An idea is a thought, an impression, or a notion An idea may or may not meet the criteria of an opportunity Before getting excited about a business idea, it is crucial to understand if the idea fills a need and satisfies the criteria for an opportunity Describe the three general approaches entrepreneurs use to identify opportunities Three Ways to Identify Opportunities 1. Observing trends The first approach to identifying opportunities is to observe trends and study how they create opportunities for entrepreneurs to pursue ○ The most important trends to follow are economic trends, social trends, technological advances, and political action and regulatory changes ○ When looking at environmental trends to discern new business ideas, there are two caveats to keep in mind: 1. It’s important to distinguish between trends and fads New businesses typically do not have the resources to ramp up fast enough to take advantage of a fad 2. The trends are interconnected and should be considered simultaneously when brainstorming new business ideas Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen 2. Solving a problem The second approach to identifying opportunities is to recognize problems and find ways to solve them ○ Many companies have been started by people who have experienced a problem in their own lives, and then realized that the solution to the problem represented a business opportunity ○ Some business ideas are gleaned by recognizing problems that are associated with emerging trends ○ On some occasions, individuals see problems that are rather obvious, but for some reason, no one has addressed them in a meaningful way ○ Social ventures, a new type of entrepreneurial venture, are launched for the purpose of solving a range of social problems including poverty, hunger, and a lack of access to services such as water 3. Finding gaps in the marketplace There are many examples of products that consumers need or want that aren’t available in a particular location or aren’t available at all ○ Product gaps in the marketplace represent potentially viable business opportunities ○ Gaps in the marketplace are commonly recognized when people become frustrated because they can’t find a product or service they need and recognize that other people feel the same way ○ Sometimes gaps in the marketplace are noticed via serendipity or chance, similar to the way that problems that need to be solved are spotted Discuss the personal characteristics of entrepreneurs that contribute to their ability to recognize business opportunities Personal characteristics of the entrepreneur The term opportunity recognition refers to the process of perceiving the possibility of a profitable new business or a new product or service That is, an opportunity cannot be pursued until it’s recognized Now let’s look at some specific characteristics shared by those who excel at recognizing an opportunity 1. Prior industry experience By working in an industry, an individual may spot a market niche that is underserved It is also possible that while working in a particular area, an individual builds a network of social contacts in that industry that may provide insights that lead to opportunities But, people outside an industry can sometimes enter it with a new set of eyes, and as a result innovate in ways that people with prior experience might find difficult 2. Cognitive factors Opportunity recognition may be an innate skill or a cognitive process Entrepreneurs may have a “sixth sense” that allows them to see opportunities that others miss, called entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in deliberate search 3. Social networks People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks There is a difference between solo entrepreneurs (those who identified their business ideas on their own) and network entrepreneurs (those who identified their ideas through social contacts) ○ Network entrepreneurs find more opportunities Relationships with other people are called “ties” ○ Strong-tie relationships are characterized by frequent interaction, such as ties between coworkers, friends, and spouses (harder to get new business ideas because they have ideas the entrepreneur already has) ○ Weak-tie relationships are characterized by infrequent interaction, such as ties between casual acquaintances (easier to get a new business idea) 4. Creativity Creativity is the process of generating a novel or useful idea ○ Opportunity recognition may be, at least in part, a creative process Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Five steps to generating creative ideas: 1. Preparation: the background, experience, and knowledge that an entrepreneur brings to the opportunity recognition process 2. Incubation: the stage during which a person considers an idea or thinks about a problem 3. Insight: the flash of recognition when the solution to a problem is seen or an idea is born (‘eureka’) 4. Evaluation: the stage of the creative process during which an idea is subjected to scrutiny and analyzed for its viability 5. Elaboration: the stage during which the creative idea is put into a final form: The details are worked out and the idea is transformed into something of value, such as a new product, service, or business concept The opportunity recognition process: Identify and describe techniques entrepreneurs use to generate ideas Techniques for generating ideas 1. Brainstorming Brainstorming is simply the process of generating several ideas about a specific topic Some people and groups construct mind maps to organize their thoughts An individual’s imagination is the only limiting factor to brainstorming You can use a bug report to teach brainstorming 2. Focus groups A focus group is a gathering of 5 to 10 people who are selected because of their relationship to the issue being discussed Focus groups usually work best as a follow-up to brainstorming, when the general idea for a business has been formulated, but further refinement of the idea is needed Usually, focus groups are conducted by trained moderators ○ The moderator’s primary goals are to keep the group “focused” and to generate lively discussion 3. Library and internet research The best approach to utilizing a library is to discuss your general area of interest with a reference librarian 4. Other techniques Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas Other companies conduct varying forms of anthropological research, such as day-in-the-life research Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 3 Feasibility Analysis Explain what a feasibility analysis is and why it’s important Feasibility Analysis Feasibility analysis is the process of determining if a business idea is viable A mental transition must be made when completing a feasibility analysis from thinking of a business idea as just an idea to thinking of it as a business The figure separates the investigation portion from the planning and selling portion Completing a feasibility analysis requires both primary and secondary research While a feasibility analysis tests the merits of a specific idea, it allows ample opportunity for the idea to be revised, altered, and changed as a result of the feedback and the analysis Describe a product/service feasibility analysis, explain its purpose, and discuss the two primary issues that a proposed business should consider in this area Product/Service Feasibility Analysis Product/service feasibility analysis is an assessment of the overall appeal of the product or service being proposed Product/Service desirability o Does it make sense? Is it reasonable? Is it something real customers will buy? o Does it take advantage of an environmental trend, solve a problem, or fill a gap in the marketplace? o Is this a good time to introduce the product or service to the market? o Are there any fatal flaws in the product or service’s basic design or concept? o To answer these: Interviews! o A concept test involves showing a preliminary description of a product or service idea, called a concept statement, to prospective customers and industry experts to solicit their feedback o Includes the product, target market, benefits, competitors, management team o Show it to at least 25 people o Find a “product/market fit” between the benefits your product offers and what your prospective customers need and require Product/Service demand o Methods: (1) talking face-to-face with potential customers, (2) utilizing online tools, such as Google AdWords and landing pages, to assess demand, and (3) library, Internet, and gumshoe research o A landing page is a single web page that typically provides direct sales copy o A gumshoe is an investigator that scrounges around for information wherever they can be found Describe an industry/market feasibility analysis, explain its purpose, and discuss the two primary issues to consider when completing this analysis Industry/Target market feasibility Industry/target market feasibility is an assessment of the overall appeal of the industry and the target market of the product or service being proposed An industry is a group of firms producing a similar product or service, such as computers A firm’s target market is the portion of the industry that it goes after or to which it wants to appeal Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Industry Attractiveness o Information about this is available in IBISWorld, Mintel and BizMiner Target Market Attractiveness o Find a market that is large enough for the proposed business but yet is small enough to avoid attracting larger competitors o Information from more than one industry and/or market must be collected and synthesized to make an informed judgment Explain what an organizational feasibility analysis is and its purpose and discuss the two primary issues to consider when completing this analysis Organizational Feasibility Analysis An organizational feasibility analysis is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch Management prowess o The passion the solo entrepreneur or the management team has for the business idea and the extent to which the management team or solo entrepreneur understands the markets in which the firm will participate o Managers with social networks have an advantage o A potential new venture should have an idea of the type of new-venture team that it can assemble o A new-venture team is the group of founders, employees, and advisers that either manage or help manage a new business in its start-up years o Managers may benefit from finding partners to help them launch their business, or mentors Resource sufficiency o Focus is on nonfinancial resources o E.g. a labor pool, intellectual property protection, office space, support of local governments o Look at Google patents, Trademarkia etc. o To test it a firm should list the 6 to 12 most critical nonfinancial resources Describe what a financial feasibility analysis is, explain its importance, and discuss the most critical issues to consider when completing this analysis Financial Feasibility Analysis For feasibility analysis, a preliminary financial assessment is usually sufficient Total start-up cash needed o List all the anticipated capital purchases and operating expenses needed to get the business running o Explain where the money will come from Financial performance of similar businesses o Substantial archival data o Ask owner to share sales o Observation and legwork Overall financial attractiveness of the proposed venture o Weigh the rate of return against: o The amount of capital invested o The risks assumed in launching the business o The existing alternatives for the money being invested o The existing alternatives for the entrepreneur’s time and efforts Describe a feasibility analysis template and explain why it is important for entrepreneurs to use this template A Feasibility Analysis Template First Screen template (see appendix 3.2 for the template) Business ideas at the feasibility analysis stage should always be seen as fluid and subject to change Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 4 Developing an Effective Business Model A business model is a firm’s plan or recipe for how it creates, delivers, and captures value for its stakeholders Foundational to a firm’s ability to succeed Proper time to determine a company’s business model Describe business models and discuss their importance Business Models and Their Importance A firm’s business model represents the core aspects of its business It also describes how the core aspects fit together and support one another Identify and describe the two general types of business models—standard and disruptive Standard Business Models Used commonly by existing firms as well as by those launching an entrepreneurial venture Standard business models depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders There are several different types (Table 4.1) There is no perfect business model E.g. Subscription business models have a recurring revenue, but they also have churn = the number of subscribers that a subscription-based business loses each month So, to they offer a high level of customer service A firm’s business model takes it beyond its own boundaries Many companies feature the participation of others as an integral part of their business models The issues from chapter 1-3 still apply! E.g. the strength of the opportunity must be assessed and the feasibility of the idea must be validated Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Disruptive Business Models Disruptive business models, which are rare, are models that do not fit the profile of a standard business model, and are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry E.g. Dell, Google, Salesforce.com, Uber There are different types of disruptive business models 1. A new market disruption addresses a market that previously wasn’t served 2. A low-end market disruption is possible when the firms in an industry continue to improve products or services to the point where they are better than a sizable portion of their clientele’s needs or desires This “performance oversupply” creates a vacuum that provides an opportunity for simple, typically low-cost business models to exist They are also introduced to offer a simpler, cheaper, or more convenient way to perform an everyday task Explain the components of the Barringer/ Ireland Business Model Template that entrepreneurs can use to develop a business model for their firm The job of the entrepreneur is to configure their firm’s business model in a manner that produces a viable and exciting business Barringer/Ireland Business Model Template 1. A core strategy describes how the firm plans to compete relative to its competitors Business’ mission or mission statement o Can act as a financial / moral compass → It is an anchor around which decisions are made o You should always start with this box o A business’ mission statement should: 1. Define its “reason for being” 2. Describe what makes the company different 3. Be risky and challenging but achievable 4. Use a tone that represents the company’s culture and values 5. Convey passion and stick in the mind of the reader 6. Be honest and not claim to be something that the company “isn’t” Basis of differentiation o Always focus on benefits for customers Target market Product or market scope o You should be clear about your initial scope and project 3–5 years into the future in terms of anticipated expansion Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen 2. Resources are the inputs a firm uses to produce, sell, distribute, and service a product or service Core competencies A core competency is compelling if it not only supports a firm’s initiatives, but is also difficult for competitors to imitate and substitute Key assets Physical assets include physical space, equipment, vehicles, and distribution networks Intellectual assets include patents, trademarks, copyrights, and trade secrets, a company’s brand and its reputation Financial assets include cash, lines of credit, and commitments from investors Human assets include a company’s founder, its key employees, and its advisors 3. Financials describes how it earns money Revenue streams (Table 4.3) You can have a single or several streams The nature of the way businesses make money also varies Cost structure Identify whether the business is a costdriven or value-driven business, identify the nature of the business’ costs (fixed vs. variable), and identify the business’ major cost categories Financing/Funding Most businesses incur costs prior to the time they generate revenue Some businesses can draw from personal resources, others can be funded through their own profits In many cases, funding is needed Three categories of costs to consider: capital costs, one-time expenses, and provisions for ramp-up expenses 4. Operations are both integral to a firm’s overall business model and represent the heartbeat of a firm Product (or service) production If a firm sells physical products, they can be manufactured or produced in-house, by a contract manufacturer, or via an outsource provider If a firm is providing a service, a brief description of how the service will be produced should be provided Channels Many businesses sell direct, through a storefront and/or online Some companies sell strictly through intermediaries (e.g. Amazon) Some firms employ a sales force that calls on potential customers to try to close sales (expensive) Key partners A supplier (or vendor) is a company that provides parts or services to another company Firms partner with other companies to make their business models work (4.4) The advantages include gaining access to a particular resource, risk and cost sharing, speed to market, and learning The disadvantages include loss of proprietary information, management complexities, and partial loss of decision autonomy One trend in partnering, is to use freelancers to do jobs that are outside a firm’s core competencies Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 5 Industry and Competitor Analysis Explain the purpose of an industry analysis Industry analysis Is the industry accessible? Does the industry contain markets that are ripe for innovation or are underserved? Are there positions in the industry that will avoid some of the negative attributes of the industry as a whole? Think about your position at both the company level and the product or service level Studying industry trends o Evaluate environmental trends (Economic trends, social trends, technological advances, and political and regulatory changes) o Evaluate business trends (Outsourcing, moving functions online etc.) o Participate in trade associations, trade shows, trade journals etc. Identify and discuss the five competitive forces that determine industry profitability The Five Forces Model The framework is comprised of the forces that determine industry profitability These forces determine the average rate of return for the firms competing in a particular industry or a particular segment of an industry Well managed companies avoid these forces: Threat of substitutes Industries are more attractive when the threat of substitutes is low (Price can’t be too high, look at the propensity of buyers to substitute alternatives) Threat of new entrants Industries are more attractive when the threat of entry is low A barrier to entry is a condition that creates a disincentive for a new firm to enter an industry 1. Economies of scale 2. Product differentiation 3. Capital requirements 4. Cost advantages independent of size 5. Access to distribution channels 6. Government and legal barriers Rivalry among existing firms Some industries are fiercely competitive to the point where prices are pushed below the level of costs → industry-wide losses occur Four factors that determine rivalry: 1. Number and balance of competitors 2. Degree of difference between products 3. Growth rate of an industry 4. Level of fixed costs Bargaining power of suppliers Industries are more attractive when the bargaining power of suppliers is low Factors that impact power suppliers: 1. Supplier concentration 2. Switching costs 3. Attractiveness of substitutes 4. Threat of forward integration Bargaining power of buyers Industries are more attractive when the bargaining power of buyers (a start-up’s customers) is low Factors that affect power customers: 1. Buyer group concentration 2. Buyer’s costs 3. Degree of standardization of a supplier’s products 4. Threat of backward integration Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Explain the value that entrepreneurial firms create by successfully using the five forces model The value of the five forces model Along with helping a firm understand the dynamics of the industry it plans to enter, the five forces model can be used in two ways To help a firm determine (1) whether it should enter a particular industry (Table 5.2) and (2) whether it can carve out an attractive position in that industry (Figure 5.2) Identify the five primary industry types and the opportunities they offer Industry types and the opportunities they offer Emerging industries A first-mover advantage is a sometimes-insurmountable advantage gained by the first company to establish a significant position in a new market Has a high level of uncertainty, but usually low barriers to entry and no real rivalry yet Fragmented industries Establish industry leadership, through a geographic roll- up strategy, in which one firm starts acquiring similar firms that are located in different geographic areas Mature industries Declining industries Adopt a leadership strategy, pursue a niche strategy, cost reduction strategy Global industries Firms that pursue a multidomestic strategy compete for market share on a country-by-country basis and vary their products to meet the demands of the local market Firms pursuing a global strategy use the same basic approach in all foreign markets Explain the purpose of a competitor analysis and a competitive analysis grid Competitor Analysis A competitor analysis is a detailed analysis of a firm’s competition Identifying competitors: The information that is gathered by a firm to learn about its competitors is called competitive intelligence Completing a competitive analysis grid Is a tool for organizing the information a firm collects about its competitors Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 9 Building a New-Venture Team A new-venture team is the group of founders, key employees, and advisers that move a new venture from an idea to a fully functioning firm Explain the concept called liability of newness Liability of newness as a challenge New ventures have a high propensity to fail This is due in part to the liability of newness, which refers to the fact that companies often falter because people who start them aren’t able to adjust quickly enough to their new roles and because the firm lacks a “track record” with outside buyers and suppliers Overcome this by: Assembling talented and experienced teams, persuading high-quality individuals to join as directors or advisers to gain legitimacy Attending workshops and events, that are sponsored by development centers Joining a start-up accelerator that provides mentors, investors, experts etc. Describe a new-venture team and discuss the primary elements that form such a team Creating a New-Venture Team Often, several start-ups develop what the same idea at the same time The key to success is not the idea but rather the ability of the initial founder or founders to assemble a team that can execute the idea better than anyone else: Put together as strong a team as possible The founder or founders of a venture Size of the founding team o Teams can add more talent and ides, and psychological support o But a lot can go wrong in a team o Teams that have worked together before, have an edge (e.g. trust) o Teams with heterogeneous members generate conflict → better decisions o Pitfalls team: o Members may not get along and there might be conflict about who is CEO o Avoid this by developing a formal organizational chart in the beginning Qualities of the founders: The management team and key employees A skills profile: a chart that depicts the most important skills that are needed and where skills gaps exist New ventures use four different sources of labor to get their work done: Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen The roles of the board of directors Is a panel of individuals who are elected by a corporation’s shareholders to oversee the management of the firm, it is legally required to have one o An inside director is a person who is also an officer of the firm o An outside director is someone who is not employed by the firm Responsibilities: (1) appoint the firm’s officers (the key managers), (2) declare dividends, and (3) oversee the affairs of the corporation Providing expert guidance and legitimacy in the eyes of others are two ways a board of directors can help a new firm get off to a good start and develop what will become a sustainable competitive advantage o Well-known and respected board members bring instant credibility to the firm → Signaling Identify professional advisers and explain their role with a new-venture team The role of professional advisers Professionals become an important part of the new venture team and fill “talent holes” Board of Advisors Is a panel of experts who are asked by a firm’s managers to provide counsel and advice on an ongoing basis Possesses no legal responsibility and gives nonbinding advice → Favorable Purpose of a board of advisors is to provide guidance and lend legitimacy to a firm Guidelines: A board of advisors should not be organized just so a company can boast of it Look for board members who are compatible and complement one another in terms of experience and expertise You should carefully spell out to the individual the rules in terms of access to confidential information Caution your advisers to disclose that they have a relationship with the venture before posting positive comments about it or its products on blogs or on social networking sites Lenders and investors The amount of time and energy a lender or investor dedicates to a new firm depends on the amount of money involved and how much help the new firm needs Lenders and investors help new firms by providing guidance and lending legitimacy and assuming the natural role of providing financial oversight Explain why a new-venture team might use consultants to obtain advice Other professionals Consultants Consultants fall into two categories: paid consultants and consultants who are made available for free or at a reduced rate through a nonprofit or government agency Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 10 Getting financing and funding Describe the importance of financing for entrepreneurial success The importance of getting financing or funding Many entrepreneurs go about the task of raising capital haphazardly, because they lack experience in this area and because they don’t know much about their options A business owner may place too much reliance on some sources of capital and not enough on others Explain why most entrepreneurial ventures need to raise money during their early life Why Most New Ventures Need Funding Three reasons why you need to raise money during your early life: Cash flow challenges A company’s burn rate is the rate at which it is spending its capital until it reaches profitability A firm usually fails if it burns through all of its capital before it becomes profitable It is usually difficult for a new firm to get a line of credit from a bank Solution: look for investment capital, bootstrap their operations, or try to arrange some type of creative financing Capital investments Firms often need to raise money early on to fund capital investments This becomes difficult because of the expenditures on equipment, property etc. Delay or avoid these types of expenditures by leasing space or co-opting the resources of alliance partners Lengthy product development cycles A slow pace of product development requires substantial up-front investment before the anticipated payoff is realized Identify and describe the three sources of personal financing available to entrepreneurs Sources of personal financing Personal fonds Friends and family Request should be in a businesslike manner When it is a loan, prepare a promissory note Request help only from those who are in a legitimate position to offer assistance Agreement can be made via an attorney Bootstrapping Minimizing start-up expenses by aggressively pursuing cost-cutting techniques and money-saving tactics: Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Identify and explain the three steps involved in properly preparing to raise debt or equity financing Preparing to raise debt or equity financing Step 1: Construct cash flow statements and projections for needed capital expenditures Step 2: Equity financing (or funding) means exchanging partial ownership of a firm, usually in the form of stock, in return for funding ○ The stock is typically sold following a liquidity event, which is an occurrence that converts some or all of a company’s stock into cash Debt financing is getting a loan Step 3: Prepare an elevator speech (or pitch) Identify and contact the best prospects Be prepared to provide the investor or banker a completed business plan and make a presentation of the plan if requested Explain the three most important sources of equity funding that are available to the entrepreneurial firm Sources of equity funding Disadvantage: losing some control Advantages: access to capital, investors can give assistance, money doesn’t have to be paid back The investor receives a return on the investment through dividend payments and by selling the stock Business angels ○ Individuals who invest their personal capital directly in start-ups ○ The yield rate is defined as the percentage of investment opportunities that are brought to the attention of angel investors that result in an investment ○ Valuable because of their willingness to make relatively small investments Venture capital ○ Money that is invested by venture capital firms in startups and small businesses with exceptional growth potential ○ They come in later than angel investors ○ The investors who invest in venture capital funds are called limited partners ○ The venture capitalists, who manage the fund, are called general partners ○ The percentage of the profits the venture capitalists receive is called the carry ○ Venture capitalists are extremely well connected in the business world ○ Subsequent investments are made in rounds → follow-on funding ○ The due diligence process: the process of investigating the merits of a potential venture and verifying the key claims made in the business plan ○ Corporate venture capital: money comes from corporations that invest in start-ups related to their areas of interest Initial public offering (IPO) ○ An IPO is the first sale of stock by a firm to the public ○ Any later public issuance of shares is called a secondary market offering ○ An investment bank is an institution that acts as an underwriter or agent for a firm issuing securities ○ A preliminary prospectus describes the offering to the general public (called ‘Red herring’), the final prospectus sets a date and issuing price for the offering ○ Going public on a road show, where you have meetings in key cities ○ A variation of the IPO is a private placement: the direct sale of an issue of securities to a large institutional investor Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Describe common sources of debt financing entrepreneurial firms use Sources of debt financing Debt financing involves getting a loan or selling corporate bonds Two types of loans: A single-purpose loan: a specific amount of money is borrowed that must be repaid in a fixed amount of time with interest A line of credit: a borrowing “cap” is established and borrowers can use the credit at their discretion (periodic interest payments) Advantages: no ownership is surrendered, interest payments on a loan are tax deductible Disadvantages: it must be repaid, lenders often impose strict conditions on loans and insist on ample collateral to fully protect their investment Commercial banks Banks are risk averse, banks look for customers who will reliably repay their loans Lending to small firms is not as profitable as lending to large firms SBA Guaranteed loans Commercial banks, savings and loans, credit unions, and other specialized lenders are eligible to participate in the SBA Guaranteed Loan Program ○ E.g. the 7(A) Loan Guaranty Program Other sources of debt financing Online lenders Peer-to-peer lenders (are intermediaries) Vendor credit: credit extended to a business by a vendor in order to allow the business to buy its products and/or services up front but defer payment until later Factoring: a financial transaction whereby a business sells its account receivable to a third party, called a factor, at a discount in exchange for cash Describe several creative sources of financing entrepreneurial firms may choose to use Creative sources of financing and funding Crowdfunding Is the practice of funding a project or new venture by raising monetary contributions from a large number of people ○ Rewards-based crowdfunding allows entrepreneurs to raise money in exchange for some type of amenity or reward ○ Equity-based crowdfunding helps raising money by tapping individuals and professional investors who provide funding in exchange for equity in the business ○ An accredited investor is a person who is permitted to invest in higher-risk investments such as business start-ups Leasing A lease is a written agreement in which the owner of a piece of property allows an individual or business to use the property for a specified period of time in exchange for payments Venture-leasing firms that act as brokers, bring the parties involved in a lease together SBIR and STTR grant programs Other grant programs Strategic partners In exchange for access to plant and equipment and established distribution channels, new ventures bring an entrepreneurial spirit and new ideas to these partnerships These arrangements can help new ventures lessen the need for financing or funding Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 11 Unique Marketing Issues Explain the three steps (segmenting the market, selecting a target market, and establishing a unique market position) entrepreneurial firms use to identify their customers Selecting a market and establishing a position A three-step process to determine your customers: Segmenting the market Market segmentation: study the industry in which the firm intends to compete and determine the different potential target markets in that industry A new firm typically has only enough resources to target one market segment Segmented by geography, demographic variables, behavioral variables, product type etc. Requirements for market segmentation: Selecting a target market The market must be sufficiently attractive, and the firm must be able to serve it well Most firms target a niche market within the segment ○ A niche market is a place within a market segment that represents a narrow group of customers with similar interests Crafting a unique market position Determining which position in a market to occupy and in which to compete is a strategic call on the part of a company based on its mission, its overall approach to the marketplace, and its competitive landscape Develop a product attribute map: illustrates a firm’s positioning strategy relative to its major rivals To support their positioning strategy, firms often develop a tagline: a catchy phrase Define a brand and explain why it is important to an entrepreneurial firm’s marketing efforts Branding A brand is the set of attributes—positive or negative—that people associate with a company You can monitor the integrity of your brands through brand management: which is a program used to protect the image and value of an organization’s brand in consumers’ minds Brands are built through a number of techniques, including advertising, public relations, sponsorships Creating buzz, means creating awareness Brand equity is the term that denotes the set of assets and liabilities that are linked to a brand and enable it to increase a firm’s valuation: Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Be alert to the starting of co-branding relationships Co-branding is when two companies form a partnership to combine their brands Can be short-term and long-term Identify and explain the 4Ps of marketing activities (product, price, promotion, and place) used by entrepreneurial firms The 4Ps of marketing for new ventures A firm’s marketing mix is the set of controllable, tactical marketing tools that it uses to produce the response it wants in the target market Product, price, promotion, and place (or distribution) → 4Ps 1. Product The good or service it offers to its target market A service is an activity or benefit that is intangible and does not take on a physical form Should add value for the customers Core product vs actual product A reference account is an early user of a firm’s product who is willing to give a testimonial regarding his or her experience with the product 2. Price Determines how much money a company can earn o Use cost-based pricing: the list price is determined by adding a markup percentage to a product’s cost o Use value-based pricing: the list price is determined by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion Make a price-quality attribution: Higher price = Better quality 3. Promotion The actions the firm takes to communicate the merits of its product to its target market Advertising: ○ Raise customer awareness ○ Explain a products’ comparative features and benefits ○ Create associations between a product and a certain lifestyle Public relations ○ Efforts to establish and maintain a company’s image with the public ○ Is not paid for directly ○ Press release, media coverage, blogging, newsletter etc. ○ Prepare a press kit: a folder that contains background information about the company ○ Attend trade shows: an event at which the products or services in a specific industry are exhibited and demonstrated Social media ○ Social plug-ins are tools that websites can use to provide their users with personalized and social experiences Other promotion-related activities ○ Viral marketing, which facilitates people to pass along a marketing message about a particular product ○ Guerrilla marketing is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen 4. Place (or distribution) All the activities that move a product from its place of origin to the consumer A distribution channel is the route a product takes from the place it is made to the customer who is the end user ○ Selling direct (= Disintermediation) ○ Selling through intermediaries ○ Exclusive distribution arrangements give a retailer the exclusive rights to sell a company’s products Describe the seven-step sales process an entrepreneurial firm uses to identify prospects and close sales Sales process and related issues A firm’s sales process depicts the steps it goes through to identify prospects and close sales Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen CHAPTER 12 The importance of intellectual property Define the term intellectual property and describe its importance The importance of intellectual property Intellectual property: any product of human intellect that is intangible but has value in the marketplace Two rules for deciding if you need to protect your intellectual property: 1. Is it related to your competitive advantage? 2. Does the item have value in the marketplace? Four key forms of intellectual property Patents, trademarks, copyrights and trade secrets Intellectual property laws exist to encourage creativity and innovation by granting individuals who risk their time and money in creative endeavors exclusive rights Explain what a patent is and describe different types of patents Patents A patent is a grant from the federal government conferring the rights to exclude others from making, selling, or using an invention for the term of the patent A patent owner can legally make or sell the patented invention only if no other patents are infringed on by doing so Types of patents: Utility patents: new inventions (20 years) ○ One year after first use deadline: Requirement for patent application ○ Business method patent: protects an invention that is, or facilitates, a method of doing business Design patents: the invention of new, original, and ornamental designs for manufactured products (14 years) Plant patents: protect new varieties of plants that can be reproduced asexually (20 years) Who can apply for a patent? The inventor of a product Assignment of invention agreement Rights of an invention can be sold The process of obtaining a patent: Provisional patent application → “Patent pending” Patent infringement: When one party engages in the unauthorized use of another party’s patent Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Describe a trademark and explain the process entrepreneurs use to obtain one Trademarks Trade marks: Any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those products or services from others Service marks: used to identify the services or intangible activities of a business, rather than a business’ physical products Collective marks: Trademarks or service marks used by the members of a cooperative, association, or other collective group Certification marks: Marks, words, names, symbols, or devices used by a person other than its owner to certify a particular quality about a good or service They are renewable every 10 years Trademark law protects words, numbers, designs etc. The process of obtaining a trademark Secondary meaning arises when, over time, consumers start to identify a trademark with a specific product (Chapstick and lip balm) Intent-to-use trademark application: When you use the trademark, you will maintain your rights, when you don’t use it for 6 months, you lose the benefits Trademark infringement: the unauthorized use of a trademark in a manner that is likely to cause confusion Define a copyright and identify what a copyright can protect Copyrights A copyright is a form of intellectual property protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work Idea–expression dichotomy: an idea is not copyrightable, but the specific expression of an idea is How to obtain a copyright: Copyright protection can be enhanced for anything written by attaching the copyright notice, or “copyright bug” Further protection can be obtained by registering a work with the U.S. Copyright Office Copyright infringement: when one work derives from another, is an exact copy, or shows substantial similarity to the original work Fair use: the limited use of copyrighted material for purposes such as criticism Describe a trade secret and understand the common causes of trade secret disputes Trade secrets A trade secret is any formula, pattern, physical device, idea, process, or other information that provides the owner of the information with a competitive advantage in the marketplace Marketing plans, employee rosters etc. Trade secrets are governed by a patchwork of various state laws: Economic Espionage Act Uniform Trade Secrets Act What qualifies for secret protection? Trade secret disputes Arise most frequently when an employee leaves a firm to join a competitor Trade secret protection methods Physical measures: passwords, logbooks etc. Written agreements: e.g. in contracts Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen?  Stuvia - Koop en Verkoop de Beste Samenvattingen Explain what an intellectual property audit is and identify the two primary reasons entrepreneurial firms should complete this type of audit Conducting an intellectual property audit An intellectual property audit is conducted to determine the intellectual property a company owns Why conduct an audit? To determine if the intellectual property is properly protected To remain prepared to justify its value in the event of a merger or acquisition The Process of Conducting an Intellectual Property Audit Step 1: Develop an inventory of the intellectual property Step 2: Identify works in progress to ensure that they are being documented in a systematic, orderly manner Step 3: specify the firm’s key trade secrets and describe how they are being protected Gedownload door: marascreciu03 | [email protected] € 912 per jaar Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. extra verdienen? Powered by TCPDF (www.tcpdf.org)