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Introduction to Enterpreneurship - Coggle Diagram
Introduction to Enterpreneurship
Lecture 1
The 5 Dimensions of Entrepreneurial Orientation
Innovativeness:
The tendency to support new ideas, novelty, experimentation, and creative processes.
Proactiveness:
The capacity to anticipate and act on future needs and desires.
Risk-taking
: Taking bold actions by venturing into the unknown.
Autonomy:
The ability to be independent and act without being hindered by organizational constraints or traditions.
Competitive Aggressiveness:
The tendency to intensely and directly challenge competitors.
Entrepreneurial Orientation
The attitude, processes, practices, and decision-making activities that lead to new market entry. It is what drives entrepreneurial action and is characterized by five key dimensions.
Entrepreneurship
s
Kirzner
's View
A process of discovery driven by "
entrepreneurial alertness
". Entrepreneurs identify and exploit unnoticed opportunities and market inefficiencies through arbitrage, moving markets toward equilibrium.
Example: Blue bottle (Coffee shop)
Entrepreneurial Alertness
A concept from Kirzner. It is the ability of entrepreneurs to notice and
recognize market opportunities
, inefficiencies, and unmet demands that others have overlooked
Schumpeter
's View
The process of "
creative destruction
" where entrepreneurs act as disruptive innovators, introducing new combinations (products, processes, business models) that transform economies and break the status quo.
Example: Uber, Airbnb, Alibaba
Creative Destruction
A concept introduced by Schumpeter. It describes the process by which
radical innovations
from new ventures (start-ups) disrupt and destroy existing markets and industries, paving the way for new economic structures
Entrepreneursvs non- Entrepreneurs
Effectuation
An entrepreneurial decision-making logic that focuses on using
available resources
(who I am, what I know, who I know) creatively, focusing on
affordable loss
rather than expected returns, and
adapting to surprises and co-creating the future
.
It is flexible and adaptive
.
Predictive (Causal) Logic
Traditional
, linear decision-making used by large companies. It involves
setting a clear goal
, conducting extensive planning and
forecasting based on data
, and then acquiring the necessary resources to achieve that pre-defined goal.
The Big Five Personality Dimensions
Human personality
Openness to experience
: Being curious, original, creative.
Conscientiousness:
Being organized, systematic, dependable.
Extraversion
: Being outgoing, talkative, sociable.
Agreeableness:
Being affable, trusting, kind.
Neuroticism:
The tendency to experience negative emotions like anxiety (a low score is associated with being calm and self-confident).
Lecture 2
Idea vs. Opportunity
Business Idea
A
thought
, conception, or mental impression of a
potential product or service
. It is often creative but not necessarily workable or viable as a business. It is the starting point.
Business Opportunity
A
viable and workable idea
that is anchored in a product or service which creates or adds value for its buyer or end-user. It represents a chance for progress under favorable circumstances.
The Four Essential Qualities of an
Opportunity
Attractive
: It must be appealing to the market.
Durable
: The window of opportunity must be open long enough to be exploited.
Timely
: The idea must be right for the current market context.
Anchored in a Product/Service that Creates Value
: It must solve a problem or fulfill a need for the customer.
Idea Generation
The creative process of developing
potential business concepts
. It is imaginative but does not necessarily address a clear market need. Example: Thinking of a wearable device that monitors hydration.
Opportunity Recognition
The process of
identifying a market need or problem
and determining that a business can be built around it. It transforms an idea into a feasible venture by assessing its timeliness, attractiveness, and value creation. Example: Recognizing a market for a hydration monitor because many people with busy lifestyles suffer from dehydration.
Sources of Ideas
Serve a Need (Pain of Customers)
: Identifying ideas based on customer pains, such as frustrations, fears, and obstacles. (e.g., solving the pain of expensive airline luggage fees).
Create a Need (Gain of Customers)
: Identifying ideas based on customer gains, such as desires, goals, and strategies for success. (e.g., creating a new social media platform for connection).
Triggers for Entrepreneurial Activities
Technological events (e.g., breakthroughs, digitalization)
Market events (e.g., deregulation, insolvencies)
Social events (e.g., world cups, festivals)
Societal changes (e.g., environmental awareness, urbanization)
Quick Evaluation Criteria
Is there a clear
Problem
being solved?
Is there a well-defined
Customer
?
Is there a
Willingness to Pay
for the solution?
Lecture 3
Feasibility Analysis
A systematic and structured approach used to
assess the viability and potential success
of a new business idea before significant resources are invested. Its purpose is to identify potential challenges and assess if the business can generate sustainable profits
Four Components
Product/Service Feasibility:
Analyzes whether the product/service is technically viable to develop and deliver. It assesses technical requirements, capabilities, technology, resources, and the development timeline.
Industry/Target Market Feasibility:
Evaluates the market potential. It involves assessing industry and market size, defining target customer segments, analyzing competition, and understanding market trends.
Organizational Feasibility
: Assesses whether the founding team and organizational structure can successfully implement the idea. It evaluates the management team's skills, resource availability, and the chosen legal/organizational structure.
Financial Feasibility
: Analyzes the financial aspects of the business. It involves defining the revenue model, understanding the cost structure, calculating the break-even point, and determining funding requirements.
Validation Strategies
Minimum Viable Product (MVP):
A simplified version of a product with just enough features to attract early-adopter customers and validate a product idea early in the development cycle.
Customer Interviews/Surveys:
Direct engagement with potential customers to gain qualitative insights into their needs, pain points, and willingness to pay.
Landing Pages
: A single web page used to test market interest and demand for a product or service before it is fully built.
Pre-orders/Crowdfunding:
Methods to validate customer interest and willingness to pay by securing orders or funding before full-scale production.
Prototyping:
Showcase the products its design, functionality, and value proposition.
Market Entry
The critical stage of moving from idea development and validation to actual participation in the market. It involves strategic decisions on timing and positioning.
Market Entry Timing Strategies
Fast Follower
: A company that enters the market shortly after the first mover.
Pros:
Lower risk by learning from the first-mover's errors, can improve on the existing offering.
Cons:
First-mover may have captured significant market share; struggle with differentiation.
Late Entrant
: A company that enters a mature or highly developed market.
Pros:
Benefits from a stable, predictable market; can focus on a niche; may have lower entry costs.
Cons:
Difficult to compete with entrenched incumbents; may have to compete mainly on price.
First-Mover:
The first company to enter a market with a new product or service.
Pros:
Establish brand loyalty, set industry standards, first access to resources.
Cons:
High risk and costs, followers can learn from their mistakes.
Lectura 4
Theory of Planned Behavior
A psychological model that predicts an individual's intention to engage in a behavior (like starting a business). It is determined by three factors:
Subjective Norm:
The perceived social pressure from others (e.g., family, friends) to perform or not perform the behavior.
Self-Efficacy:
The individual's belief in their own ability to successfully perform the tasks required to start the venture.
Attitude
: The individual's positive or negative evaluation of performing the behavior (desire and commitment).
Entrepreneurial Human Capital
The specific knowledge, skills, and experience an individual possesses that are relevant to launching and running a new venture. It can be acquired through
Education
Experience
Entrepreneurial (or Founding) Team
Two or more individuals who jointly establish, manage, and own a new business. Team-based ventures are more common in technology-driven sectors and developed regions.
Team Heterogeneity
Skills
(e.g., different functional expertise like marketing, finance, technology).
Demography
(e.g., age, gender).
Personality
(e.g., different traits from the Big Five model).
Advantages
: Comprehensive knowledge, better problem-solving, wider networks, and greater adaptability.
Disadvantages:
Potential for conflict, slower decision-making, and coordination challenges.
Measures of New Venture Success
Survival
: The venture continues to exist and has not exited the market.
Growth:
An increase in size, commonly measured by Sales/Revenue or Employment. Sales is the most frequently used measure.
Well-being:
The entrepreneur's life and job satisfaction, often driven by autonomy and task variety.
Liability of Newness
A theory stating that new organizations (start-ups) have a higher risk of failure because they lack established routines, stable relationships with customers and suppliers, and legitimacy (reputation). Founders often underestimate the time and resources needed.
Over-Optimism (Cognitive Bias)
The tendency of entrepreneurs to overestimate their chances of success and their control over outcomes. This bias is especially common when there is little hard data and a strong emotional commitment to the idea. While it can provide motivation, it can also lead to poor planning and persistence with failing ideas.
Liability of Smallness
The concept that smaller organizations face a higher risk of failure because they often start below the minimum efficient scale (the size needed to be cost-competitive) and have fewer resources to withstand challenges. Larger start-ups (with more initial investment) generally have a higher survival rate.
Liability of Adolescence
The pattern where the probability of a venture failing increases shortly after its launch (peaking around 9-15 months) before eventually decreasing. This happens because it takes time for the founders to assess the venture's true viability and exhaust their initial resources ("honeymoon period" or initial financial buffer).