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MGT 358 Midterm Review Study Guide
1. What is entrepreneurship?: •"entre"- between
•"prendre" - to take
- The process by which individuals pursue opportunities without regard to resources they currently control (Stevenson and Jarillo)
- The art of turning an idea into a business (Fred Wilson)
2. Startups and Small Businesses: Key difference between startups and small businesses: high growth!
3. small businesses: • Local restaurants, barbershops, plumbers are mostly small businesses but not startups, except in a few
unusual cases
4. Scalable Startup: • Make something lots of people want
• Reach and serve all those people
• More competition for a greater prize
5. Why become an entrepreneur?: •Be their own boss
- Pursue their own ideas
- Pursue financial rewards
6. Pros of starting a business right after college: •Stamina - long work hours
- Poverty - nothing to lose
- Other students/your friends - cofounders
- Innocence - passion and persistence!
7. Advantages of working for a startup: •Greater Opportunity to get rich through stock options
- Feel more important
- Feel more secure
8. Disadvantages of a working for a startup/small business: •Lower guaranteed pay, large fluctuations in
income possible
- Fewer benefits
- Expected to have many skills
- More responsibilities
9. What are Growth-oriented Ventures (GoVs)?: • Average annualized growth greater than twenty percent per
annum, over a three-year period...Growth is thus measured by the number of employees, sales, profits etc.
- Gazelles
- Due to their rapid growth such firms are also labeled as "gazelles"
10. Unicorns: •A unicorn company, or unicorn startup, is a private company with a valuation over $1 billion
.•As of July 2022, there are over 1,100 unicorns around the world.
11. Dragons: • They are rarer than Unicorns
- These startups not only have high valuations, but are also profitable for investors (that is, a VC firm that has a Dragon in its portfolio can cover the whole fund based on the returns the get from the Dragon)
12. Zebras: • Companies that are profitable as well as are solving a societal problem
- Beyond profits and growth
17. Social entrepreneurship: Is a mission-driven individual who uses a set of entrepreneurial behaviors to
deliver a social value to the less privileged, all through an entrepreneurially oriented entity that is financially independent, self-sufficient, or sustainable.
18. Social entrepreneurship characteristics: *Involves entrepreneurial actions taken to develop
ventures that primarily focus on generating societal benefits (doing good)
- Social ventures are not motivated by personal gains
- Social ventures are ditterent from commercial and non-profit firms - need to generate profits
- Criticism - All business are social ventures as they deliver societal benefits (e.g., creating job opportunities in the communities)
19. B Corp: • A third-party certification that firms can apply for based on the certain requirements (social, environ-
mental, transparency)
20. Benefit Corporation: • Ditterent from B corp
- A legal structure, protect company missions to go beyond maximize the financial returns to shareholders
21. What is An Opportunity?: a favorable set of circumstances that creates a need for a new product, service or
business.
22. How is an Idea different from an Opportunity: An idea is a thought, an impression, or a notion
23. Four Essential Qualities of an Opportunity: 1. attractive
2. timely
3. durable
4. anchored in a product, service, or business that creates or adds value for its buyer or end user
24. Three Ways to Identify an Opportunity: 1. observing trends
2. solving a problem
3. finding gaps in the marketplace
25. First Approach: Observing Trends: Environmental Trends Suggesting Business or Product Oppor- tunity
Gaps
26. FADS: • Behaviors or objects that have short term popularity
- Reflect popular style or taste, which fades quickly
- Can be profitable business opportunity if you can catch the opportunity at the right time
- Catching the wave at the right time and riding it
27. Trend 1: Economic Trends: More women in the workforce
28. Trend 2: Social Trends: • Social trends alter how people and businesses behave and set their priorities.
- Examples:
- Increasing interest in health, fitness, and wellness
- Emphasis on alternative forms of energy
- The number of Americans ages 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060
29. Trend 3: Technological trends: •Advances in technology frequently create business opportunities.
30. Trend 4: Political Action and Regulatory Changes: An Example: Shakespeare Squared
-Opportunity identification/creation
- Financing: -Proof-of-concept funding -Friends, family, and fools (FFFs)
- Bank loans
- Grants
- Personal Assets/Cash
35. Stage Two: Seed: •Key Task:
- Find Product-Market Fit & Organize -Product-market fit: a product satisfies a strong market demand
- Financing:
- Startup/Series A
- Grants
- Bootstrapping
- Angels
- Perhaps VC (mostly not here)
36. Stage Three: Start up: •Key Task:
- Validate and execute business model; Achieve revenue growth!
- Financing:
- Early Stage Financing
- Bootstrapping
- Angels
- VC
37. Stage Four: Growth: •Key Task:
- Market expansion and profitability
- Financing:
- Bootstrapping
- VC
- Equity Markets
38. Stage Five/Six: Maturity/Exit: •Key Task:
- Profitability & long-term value creation (or exit)
- Financing:
- Bootstrapping
- VC
- Equity Markets
- Mezzanine Financing
7. Build on what you learn.
8. Reflect and be honest with yourself.
43. Applying the entrepreneurial mindset to your life - challenging the existing assumptions:
•1. Make a "before" list with all of your assumptions about how you spend your time, including when you wake up each morning, the specific days and hours you work each week... •2. Then consider alternatives to all of these by creating an "after" list. •3. Mix and match
44. Entrepreneurs V. Intrapreneurs: •Entrepreneurs are people that notice opportunities and take the initiative to
mobilize resources to make new goods and services.
- Intrapreneurs also notice opportunities and take initiative to mobilize resources, however they work in large companies and contribute to the innovation of the firm.
- Intrapreneuship is also known as corporate entrepreneurship.
- Intrapreneurs often become entrepreneurs.
45. Intrapreneurship: •Learning organizations encourage intrapreneurship. •Organizations want to form:
- Product Champions: people who take ownership of a product from concept to market.
- New Venture Division: allows a division to act as its own smaller company.
- Rewards for Innovation: link innovation by workers to valued rewards.
- Reduce potential competition
46. Buying an existing business: • Quicker, easier start-up
- Employees bring knowledge/relationships
- Seller may help with transition
- Established reputation/customer relationships
- Reduced risk due to established business structure and customer base
- It might cost less to buy than to start a similar company
47. Franchising: Is a method of distributing products or services involving a franchisor, who establishes the brand's
trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.
- Business Franchising
- Distribution Franchising
48. Family Business: • Two or more family members involved
- Majority ownership/control
- There are 5.5 million family-owned businesses in the United States.
- Family Businesses generate 57% of the GDP.
- Family Businesses employ 63% of the U.S. workforce.
- International Family Businesses contribute 64% of the GDP or $5,907 billion ($5+ trillion)
49. What's a first-mover advantage?: Initial occupant of a strategic position or niche gains access to resources
and capabilities that a follower cannot match Advantages that come to firms that make important strategic and technological decisions early in the development of an industry
54. Why is entrepreneurial mindset important?: • Actions matter. Experience and knowledge without
confidence to take action limits what one can achieve
55. What is entrepreneurial mindset?: • a set of skills that enable people to recognize and capitalize
opportunities, overcome failures and learn from them, and succeed under ditterent situations.
56. Growth vs fixed mindset - Carol Dweck: • A growth mindset is the belief that intelligence can be
developed
57. Entrepreneurial alertness: • Entrepreneurial alertness is an important capability that enables entre- preneurs to
recognize opportunities
- Three distinct elements of entrepreneurial alertness:
- scanning and search
- association and connection
- evaluation and judgment
58. Entrepreneurial Identity: • Entrepreneurial identity refers to a person's set of meanings, including attitudes and
beliefs, attributes, and subjective evaluations of behavior, that define him or herself in an entrepreneurial role (Hoang & Gimeno, 2015)
59. Identity centrality: • Identity centrality refers to the enduring relative importance an individual ascribes to
a particular identity component or domain (Stryker & Serpe, 1994)
60. Entrepreneurial persistence: • Entrepreneurial persistence describes the perseverance of entrepre- neurs in
face of challenges
- Overcoming setbacks
- Continuing undaunted in face of adversity -The entrepreneurial path is littered with obstacle
- It is not a matter of if you will encounter challenges or failures, but when you will encounter them and what do you do then
- Entrepreneurs who display persistence/grit/ resilience are more likely to succeed
61. Entrepreneurial Passion: • Work stops when you love what you do
- Entrepreneurial passion is consciously accessible, intense positive feelings experienced by engagement in entrepre- neurial activities associated with roles that are meaningful and salient to the self-identity of the entrepreneur.
- Passion is the fuel that entrepreneurs need to keep going. Research shows that passion is a key predictor of entrepreneurs' creativity, persistence, and venture performance. In other words, the more passionate the entrepreneur, the more likely they are to succeed.
- Passion can be harmonious or obsessive
62. Entrepreneurial Self-Efficacy: • Entrepreneurial self-efficacy is the perception of confidence that
individuals have in their ability to start and launch a business
- It reflects the confidence a person has in their entrepreneurial abilities
- Education, work experience, institutional support, mentors have been found to influence entrepreneurial self-efficacy
