6082018BUS502 EntrepreneurshipBusiness Mod.docx

6/08/2018
BUS502 Entrepreneurship
Business Model and Value Proposition Canvas – Part 2
Week 4
Learning Objectives
To introduce the business model and value proposition
canvases
To understand the different components of these canvases
To explore how these canvases can help with the business
model development
To explore business models and value propositions of existing
organisations
To utilise the canvases for the business development as part of
assignment 2
What is a Value?
Before we look at the Value Proposition Canvas, let’s talk
about values:

How do you define value?
What aspects of products or services do you value and in what
way?
– Examples?
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The Elements of Value Pyramid
Products and services deliver fundamental elements of value

that address four kinds of needs:
Functional
Emotional
Life changing
Social impact
https://hbr.org/2016/09/the-elements-of-value
The Elements of Value Pyramid
Extends Maslow’s ‘hierarchy of needs’
Does not accept on its face a consumer’s statement that a
certain product attribute is important; instead explores what
underlies that statement.
Companies can improve on the elements that form their core
value, which will help set them apart from the competition and
meet their customers’ needs better.
What do customers really value?
For example, when someone says her bank is “convenient,” its
value derives from some combination of the functional
elements saves time, avoids hassle, simplifies, and reduces
effort.

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And when the owner of a $10,000 Leica talks about the quality
of the product and the pictures it takes, an underlying

lifechanging element is self- actualization, arising from the
pride of owning a camera that famous photographers have used
for a century.
The life-changing element motivation is at the core of Fitbit’s
exercise-tracking products.
More Examples

https://chiefexecutive.net/30-elements-can-help-ceos-attain-
product-nirvana/
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Further information

Bain & Company (the creator of the elements of value)
http://www.bain.com/publications/business- insights/elements-
of-value.aspx
http://www.bain.com/bainweb/media/interactive/el ements-of-
value/
(interactive tool)
The B2B Elements of Value
… if you are focussing business- to-business
40 distinct elements of value
More value – greater loyalty
Interactive tool here: http://www.bain.com/bainweb/
media/interactive/b2b- eov/index.html
Both Elements of Value articles are on Learnline!
https://hbr.org/2018/03/the-b2b-elements-of-value
Value Proposition Canvas
The Value Proposition Canvas zooms into the details of two of
the building blocks of the Business Model Canvas.

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The main aim is to create a fit between your value proposition
and the customer segments you target.
The set of value proposition benefits that you design to attract
customers.
The set of customer characteristics that you assume, observe,

and verify in the market.
Value Proposition Canvas Explained (3:12)
https://youtu.be/ReM1uqmVfP0

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Customer Profile
Customer Jobs
Describes what customers are trying to get done in their work
and in their lives, as expressed in their own words.
Customer Pains
Describes bad outcomes, risks, and obstacles related to
customer jobs.
Customer Gains
Describe the outcomes customers want to achieve or the
concrete benefits they are seeking.

Customer Jobs
Functional jobs
Trying to perform or complete a specific task or solve a
problem
E.g. mow the lawn, eat healthy, write a report, or help clients as
a professional
Social jobs
Want to look good or gain power or status
E.g. look trendy as a consumer or be perceived as competent as
a professional
Personal/emotional jobs
Seek a specific emotional state, such a feeling good or secure
E.g. seeking peace of mind regarding one’s investment as a
consumer or achieving the feeling of job security at one’s
workplace
Customer Jobs
Supporting jobs
Performed in the context of purchasing or consuming value
either as consumers or a professionals
Buyer of value: e.g. comparing offers, deciding with product to
buy, standing in checkout line, completing purchase, or taking
delivery of product or service
Cocreator of value: e.g. posting product reviews and feedback,
or even participating in the design of a product or service

Transferrer of value: e.g. related to the end of a value
proposition’s life cycle, such as cancelling a subscription,
disposing of a product, transferring it to others, or reselling it
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Customer Pains
Undesired outcomes, problems, and characteristics

Pains are functional (e.g., a solution doesn’t work, doesn’t
work well, or has negative side effects),
social (“I look bad doing this”),
emotional (“I feel bad every time I do this”),
or ancillary (“It’s annoying to go to the store for this”).
This may also involve undesired characteristics customers
don’t like (e.g., “Running at the gym is boring,” or “This design
is ugly”).
Customer Pains
Obstacles
Prevent customers from even getting started with a job or that
slow them down
E.g., “I lack the time to get this job done accurately,” or “I
can’t afford any of the existing solutions”
Risks (undesired potential outcomes)
What could go wrong and have important negative
consequences
E.g., “I might lose credibility when using this type of
solution,” or “A security breach would be disastrous for us”
Customer Gains

Required gains
Gains without which a solution wouldn’t work.
For example, the most basic expectation that we have from a
smartphone is that we can make a call with it.
Expected gains
Relatively basic gains that we expect from a solution, even if it
could work without them.
For example, since Apple launched the iPhone, we expect
phones to be well-designed and look good.
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Customer Gains
Desired gains
Gains that go beyond what we expect from a solution but would
love to have if we could. These are usually gains that customers
would come up with if you asked them.
For example, we desire smartphones to be seamlessly
integrated with our other devices.
Unexpected gains
Gains that go beyond customer expectations and desires. They
wouldn’t even come up with them if you asked them.
Before Apple brought touch screens and the App Store to the
mainstream, nobody really thought of them as part of a phone.
Example: “Business Book Reader”
Ranking Jobs, Pains, and Gains
Although individual customer preferences vary, you need to
get a sense of customer priorities.
Investigate which jobs the majority consider important or
insignificant.
Find out which pains they find extreme versus merely
moderate.

Learn which gains they find essential and which are simply
nice to have.
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Ranking Jobs, Pains, and Gains
Value Map

Products and services
A value proposition is built around these
Pain relievers
How do the products and services alleviate customer pain?
Gain creators
How do the products and services create customer gains?
Products and Services
A list of what you offer (what do your customers ‘see’?), incl.
supporting products and services
Physical/tangible
Goods, such as manufactured products.
Intangible
Products such as copyrights or services such as after-sales
assistance.
Digital
Products such as music downloads or services such as online
recommendations.
Financial
Products such as investment funds and insurances or services
such as the financing of a purchase.

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Pain Relievers
Ask yourself: Could your products and services…
produce savings?
In terms of time, money, or efforts.
make your customers feel better?
By killing frustrations, annoyances, and other things that give
customers a headache.

fix underperforming solutions?
By introducing new features, better performance, or enhanced
quality.
put an end to difficulties and challenges your customers
encounter?
By making things easier or eliminating obstacles.
wipe out negative social consequences your customers
encounter or fear?
In terms of loss of face or lost power, trust, or status.
Pain Relievers (cont’d)
eliminate risks your customers fear?
In terms of financial, social, technical risks, or things that could
potentially go wrong.
help your customers better sleep at night?
By addressing significant issues, diminishing concerns, or
eliminating worries.
limit or eradicate common mistakes customers make?
By helping them use a solution the right way.
eliminate barriers that are keeping your customer from adopting
value propositions?
Introducing lower or no upfront investment costs, a flatter
learning curve, or eliminating other obstacles preventing
adoption.
Gain Creators

create savings that please your customers?
In terms of time, money, and effort.
produce outcomes your customers expect or that exceed their
expectations?
By offering quality levels, more of something, or less of
something.
outperform current value propositions and delight your
customers?
Regarding specific features, performance, or quality.
make your customers’ work or life easier?
Via better usability, accessibility, more services, or lower cost
of ownership.
create positive social consequences?
By making them look good or producing an increase in power or
status.

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Gain Creators
do something specific that customers are looking for?
In terms of good design, guarantees, or specific or more
features.
fulfil a desire customers dream about?
By helping them achieve their aspirations or getting relief from
a hardship?
produce positive outcomes matching your customers’ success
and failure criteria?
In terms of better performance or lower cost.
help make adoption easier?
Through lower cost, fewer investments, lower risk, better
quality, improved performance, or better design.
Example: “Business Book Reader”

Check for Fit
Are you addressing essential customer gains?
Fit?
Are you addressing extreme customer pains?

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10 Characteristics of Great Value Propositions
Are embedded in great business models
Focus on few pain relievers and gain creators, but do those
extremely well
success
Focus on the most significant jobs, most severe pains, and most
relevant gains
Differentiate from competition in a meaningful way
Address functional, emotional and social jobs all together
Outperform competition
Focus on jobs, pains, or gains that a substantially on at least one
large number of customers have or dimension
pay a lot of money
pains,
and gains
Tutorial?
We will be developing a value proposition canvas.

If needed, we will also continue developing business ideas or
you will have the opportunity to discuss some ideas that you
have for your assignment.
Preparation for next week
In week 5, we will focus on some strategic aspects and legal
issues (see text book).
Most importantly:
You should have a clear idea about what your business idea is –
if not, get in contact with your lecturer or the unit coordinator!
Start drafting your business model and value proposition
Research evidence to support your opportunity development
36

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Thank you for your attention
37
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Mercantilism
Mercantilism was the dominant economic policy of the 17th
and18th century.

Mercantilism dictated that exports must exceed imports, markets
at ports should be monopolized, and colonies should not trade
with foreign nations.
Britain’s plan was to pay off its debt by following these policies
Navigation Acts
This policy was instituted officially with the passage of
the Navigation Acts in 1651, which restricted colonial trade
solely with Britain, requiring all goods shipped to and from the
colonies to be transported on British ships.*
*Period of Salutary Neglect: Definition & Effects. Study.com
Navigation Acts
While the Navigation Acts became the backbone for this
mercantilist policy, they proved difficult and costly to enforce.
Most colonial merchants found it easy to bypass these laws and
rampant smuggling occurred. The colonies traded frequently
with the French, the Spanish, and the Dutch.*

Salutary Neglect
Not surprising, the illicit trade made New England merchants
very wealthy, and much of that wealth was used to purchase
tremendous amounts of British manufactured goods.
Britain's first Prime Minister, Sir Robert Walpole, assumed his
position in 1721 and quickly realized that Britain was benefiting
economically from this illegal trade.*
Salutary Neglect
Salutary neglect was the unofficial British policy of lenient or
lax enforcement of parliamentary laws regarding the American
colonies during the 1600s and 1700s.
This policy was followed to keep colonial allegiance while
allowing Britain to focus its attention on European policies.
Paxton Boys
on December 14, 1763, when a group of armed men
from Paxton, Pennsylvania, attached the Conestoga Native
Americans, living on the small reserve of land.
A few weeks after the original attack, 50 or 60 armed men on
horseback attacked the surviving Conestoga Indians who had
been placed under protective custody in the jailhouse at
Lancaster.

Paxton Boys
By early1764 nearly 250 "Paxton Volunteers," gathered and
headed for Philadelphia intending to kill several hundred
Indians under the protection of the Pennsylvania government.
Benjamin Franklin and a small militia force stopped the group
before anything further happened. but a pamphlet war quickly
ensued that explicated the grievances of the frontier inhabitants
Regulators
In 1764, several thousand people from North Carolina, mainly
from the western region, were extremely dissatisfied with the
wealthy North Carolina officials, whom they considered cruel,
arbitrary, tyrannical and corrupt.
Regulators
Local inland agricultural community suffered from a deep
economic depression because of severe droughts throughout the
previous decade, thereby losing income.
As income was cut off, the local planters often fell into debt.
The merchants, in turn, relied on lawyers and the court to settle
disputes.
Regulators attacked lawyers and the courthouse

French and Indian War
In the mid-18th century, both the British and French wanted to
extend their control into the area west of the Appalachian
Mountains, called the Ohio Territory.
Both already had fur traders doing business with Native
Americans there and pioneers living on the frontier.
The French believed they had exclusive rights to the land since
their explorers had been there first.
They tried to force the English out by capturing several of their
trading posts and destroying an Indian village that supported
English traders in 1752
When the French built Fort Duquesne in 1754 near present-day
Pittsburg, Britain let the colonists form a militia.
The Virginia militia, under the command of Major George
Washington, was mobilized to ask the French to vacate the Ohio
territory peaceably.
They refused, but Washington didn't have a large enough force
to overpower Fort Duquesne.
Source: French and Indian War Causes and Effects, study.com

Washington returned the following year with more men and
proceeded to build his own stockade nearby, called Fort
Necessity.
The French captured the new fort in 1756, and when word
reached England, King George II declared war.
France and Britain would fight until 1763
Treaty of Paris
The Treaty called for
France to give England all of Canada and the eastern half of
Louisiana.
In exchange, France kept control of a few Caribbean sugar
islands and two fishing islands along the Canadian coast.
Spain gained control of the western half of the Louisiana
Territory. Spain also traded Florida in exchange for Cuba. The
Mississippi River was left open to all of the nations.
Pontiac’s Rebellion
To complicate matters, the Ottawa tribe, under the leadership
of Chief Pontiac, mounted a rebellion in 1763, against the
British at Detroit.
This attack encouraged other tribes in the Great Lakes to also
rebel, leading to a larger conflict known as Pontiac's Rebellion.

Even though the British put down this rebellion, King George
III felt uneasy about the turbulent circumstance in this area.
Source: Proclamation Line of 1763: Definition & Explanation,
study.com
Proclamation Line
After the French and Indian War, settlers thought that they
would have access to the Ohio River Valley.
However, King George III issued the Proclamation Line of
1763, which prevented this.
Britain already had a large debt following the French and Indian
War and could not afford to take on more financial burdens,
including protecting settlers on the frontier.
They also preferred having the colonists settled close to the
coast to watch them.
study.com
Proclamation Line
Thus, settlers were forbidden were prohibited from moving into
the area to the west of the Appalachian Mountains.
Moreover, any settlers who already purchased lands from the
natives in this area had to leave.
The British treasury had been drained by years of war that had
taken place across the globe, but most potently in Europe and
North America.

study.com
Financial Problems
Britain needed to money to pay for the war, so they started to
impose mercantilist policies on the colonies
Britain restricted the colonies to only using goods produced
within the British Empire.
This was done through the passage of a series of laws that
directly targeted the colonies, but did not ask for the consent of
the colonies to pass laws affecting them.
List of Economic Policies Put into Effect
Sugar Act (Apr 1764)
Currency Act (Sep 1764)
Stamp Act (Mar 1765)
Quartering Act (May 1765)
Declaratory Act (May 1766)
Townshend Act (June 1767)
Tea Act (May 1773)
Sugar Act

Seeking to make their taxation more effective and stamp out
smuggling, Parliament passed the Sugar Act.
This law lowered the tax on molasses to 3 cents/gallon but also
improved the process of tax collection.
In spite of the lower costs, the Act actually increased state
revenue by collecting tax from sources that otherwise did not
pay.
It also established a system of courts in Nova Scotia to
prosecute smugglers -- the burden of proof rested on the
defendant and cases were decided by a judge instead of a jury.
Currency Act
The Currency Act outlawed the use of colony specific currency
in lieu of imposing a singular currency throughout the British
Empire. In effect, this caused considerable deflation in many
colonies whose currency became useless.
Stamp Act
The Stamp Act required that all legal documents, newspapers,
playing cards, and other papers to have a government issued
stamp, for which there was a charge.
This was the first new tax actually imposed on the colonies by
parliament. It also required that taxes be paid in specie (gold
and silver.)

Quartering Act
The Quartering Act attempted to cut upkeep costs facing the
army by shifting the burden from the crown to the locals.
The law required colonies to provide housing for the soldiers in
barracks, taverns, and vacant buildings as well as providing
them with firewood, candles, beer, and other items.
Declaratory Act
Boycotts against British goods in the colonies successfully
undermined business enough that Parliament was inclined to
repeal the Stamp Act.
However, looking to save face in the wake of the Stamp Act’s
defeat, Parliament passed the Declaratory Act.
The Declaratory Act stated Parliament’s right “to legislate for
the colonies in all cases whatsoever.”
Townshend Acts
Named after the chancellor of the exchequer, Charles
Townshend, the Townshend Acts were passed 1767.
Seeking a way to pay for imperial officers without relying on
colonial assemblies, Townshend proposed a series of taxes on
goods that were only produced in Britain, such as tea, papers,

paint, lead, and glass.
A new customs headquarters was likewise established in
Boston. This new institution also had expanded power to search
houses and ships for goods suspected to be smuggled.
Response to the Townshend Act
John Dickinson published his famous critique of British tax
policy in the colonies, specifically aimed at the Townshend
Acts, known as “Letters from a Farmer in Pennsylvania” in June
1767.
Dickinson argued that since the purpose of the tax was to pay
the salaries of government officials, it should be the role of
colonial government assemblies to raise the money needed and
not a tax imposed by parliament.
Boston Massacre
One of the most noteworthy and sensationalized events of the
break from Britain was the Boston Massacre.
Following months of rising tension between colonists and
British officials, a mob gathered around a garrison of British
troops, cursing at them, throwing snowballs, and rocks.
In response, the soldiers fired into the crowd, killing five men.
Most of the soldiers were later put on trial and acquitted, being
ably defended by John Adams.

Tea Act
On the same day of the Boston Massacre, Parliament voted to
repeal the Townshend Act.
Parliament still insisted on retaining the right to tax the
Americas in some fashion; thus in 1773 the Tea Act was passed.
The Tea Act established a monopoly over tea sales by the
British East India Company, allowing them to cut the price of
tea to the point were it was unprofitable to smuggle Dutch tea.
Furthermore, only 5 men in all the colonies were authorized to
sell tea, allowing the East India Company to further track the
sale of tea.
Sons of Liberty
Fearing that the Tea Act was just another way to get tax money
from the colonists indirectly, many protested by avoiding to
drink tea.
As the radical opposition group known as the Sons of Liberty
grew in influence, it became increasingly common for tea ships
to leave port before unloading their goods, due to pressure from
the Sons.
Not wishing to concede to the Sons of Liberty, Boston governor
Thomas Hutchinson barred the ships from leaving.

Boston Tea Party
The immediate response to Hutchinson’s decree ensuring the tea
reached its destination was vandalism by the Sons of Liberty.
In the midst of the December cold, a band of men from the Sons
of Liberty gathered together dressed as native Americans,
boarded the tea ships at harbor and threw the tea being
transported into Boston Harbor.
Post-Townshend Acts, cont’d
Outraged, the British government passed the Coercive Acts, also
known as the Intolerable Acts. The Coercive Acts included;
The Boston Port Act- Closed down Boston's port until the East
India Company was paid for the tea lost. This punished all
Bostonians for the crimes of a few.
The Massachusetts Government Act- Changed the
Massachusetts government structure so that all of the elected
officials were put in place by either the governor, parliament, or
the king. This effectively eliminated any self determination
within the colony.
The Administration of Justice Act- Allowed the governor to try
royal officials outside of Massachusetts should they be accused
of a crime there.
The Quartering Act- In order to more effectively house soldiers
in the colonies, Parliament passed a law requiring the colonies
to provide housing for troops garrisoned in their towns.
Quebec Act
The 1774 Quebec Act dictated that the area of Quebec and the

Ohio River Valley could rule in a traditional French style and
foster the growth of Catholicism in their territory.
This angered colonist from New England and the Central
Colonies, since they had already begun settling the Ohio River
Valley.
Grievances in NJ
It was a crime to cut down any white pine trees on lands not
enclosed by fences
English men of money owned millions of acres of forests, and
they were making profits from cutting down the white trees and
using them for masts;
They didn’t want competition, so it was illegal to cut down any
pine trees on unenclosed lands, as most of the lands in New
Jersey were.
Grievances in NJ
England passed a law making it a crime for colonists to make
any article of iron.
The law was passed in the interest of the iron manufacturers of
England.
Nevertheless the mines at Charlotteburg and Ringwood
continued to be worked; the iron was taken by wagon through
Paterson to the river at Passaic where it was loaded on vessels
and taken to England.

Continental Congress
The first meeting of the Continental Congress occurred in 1774,
with it being comprised of 55 delegates from the thirteen
colonies.
The Congress aimed to establish self determination within the
colonies, though only some of the more radical members
actively sought confrontation (and eventually succession) from
Britain.
Lexington and Concord
Having gained information that rebel munitions were being
stored by the militia at Concord, British soldiers were
dispatched to confiscate them.
En route, they were confronted by local militiamen. When the
British ordered the militia soldiers to break formation,
confusion in the ranks broke out and a shot was fired (source
conflict whether an American or British soldier fired first.)
This “shot heard around the world” turned out to be the first in
a prolonged conflict between the British and the colonies.
Lexington and Concord
The battles of Lexington and Concord were the first of the

American Revolution.
The militia forces retreated from the superior British forces
initially. However, as the British continued on their way to
Concord, they were regularly harassed by ad hoc bands of
militia “minutemen” who showed up along the edges of the road
and fired on the British troops.
The British mission was ultimately a failure, with them
suffering relatively heavy casualties and being unable to
procure the Concord munitions since they were moved ahead of
time.
Second Continental Congress
The Second Continental Congress added Benjamin Franklin,
Thomas Jefferson, and John Hancock to a roster of delegates
which already contained John Adams, Samuel Adams, Patrick
Henry, and George Washington from the First Continental
Congress.
Reacting to the growing mass of militia men surrounding the
British encircled at Boston, the Congress eventually adopted the
militiamen as the Continental Army and on July 8th 1775
declared the need for the colonists to take up arms against
Britain.
The also elected George Washington to act as commander in
chief to the Continental Army.

Common Sense
In January, 1776, Thomas Paine published “Common Sense.”
This seething critique of the British monarchy argued that there
could be no reconciliation between the colonies and the crown,
with independence being the only option.
Paine likewise went to great lengths to strip the monarchy of its
traditional justifications for power, claiming they had no right
to rule since only the people could decide where power comes
from.
July 4th, 1776 the Congress passes a declaration of secession
from the British government: the Declaration of Independence.
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Entrepreneurial Strategy and Legal Aspects
Week 5
Learning Objectives

To understand that the essential act of entrepreneurship
involves new entry
To be able to think about how an entrepreneurial strategy can
first generate, and then exploit over time, a new entry
To understand how resources are involved in the generation of
opportunities
To be able to assess the attractiveness of a new entry
opportunity
Copyright © 2017 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
Learning Objectives
To acknowledge that entrepreneurship involves making
decisions under conditions of uncertainty
To be able to assess the extent of first-mover advantages and
weigh them against first-mover disadvantages
To understand that risk is associated with newness, but there
are strategies that the entrepreneur can use to reduce risk

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Learning Objectives
To identify and distinguish intellectual property assets of a new
venture including patents, trademarks, and copyrights
To identify procedures that can protect a venture’s trade
secrets, including licensing to either expand a business or start
a new venture
To illustrate important issues related to contracts, insurance,
and product safety and liability
Introduction

Entrepreneurship can be scary – it’s about dealing with
uncertainties and taking risks
Understanding your customers and the environment that you
are operating in, is therefore one of the most important aspect
of starting a business
From idea to business start – there are a lot of iterations and
revisions
The Business Model in Context
https://youtu.be/aGkrNYh4MUE

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New Entry
Includes:
New product or service in an established or new market
Established product or service in a new market
A new organization (e.g. start-up)
Entrepreneurial strategy
Set of decisions, actions, and reactions that generate, and
exploit, a new entry over time

New Entry and Focus for Assignment 2 & 3
Your business opportunity
development should refer to:
A new organisation
s
A market within Australia
It is NOT about:
Opening a business based on an existing business idea or
model
A market outside Australia

Unless such idea or model has been advanced with something
new!
Be innovative!
Based on a new or advanced busines idea
Entrepreneurial Strategy:
The Generation and Exploitation of New Entry Opportunities

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Generation of a New Entry Opportunity
Resources
Inputs into the production process
Source of competitive advantage
Basic building blocks to a firm’s functioning
Can be combined in different ways
Provide capacity to achieve superior performance when they
are:
Valuable Rare Inimitable
Creating a resource bundle that is valuable, rare, and inimitable
Entrepreneurial resource
Ability to obtain, and recombine, resources into a bundle that
is valuable, rare, and inimitable
Drawn from the unique experiences and knowledge of the
entrepreneurs
Market knowledge
Information, technology, know-how, and skills that provide
insight into a market and its customers
Technological knowledge
Provides insight into ways to create new knowledge

Assessing the attractiveness of a new entry opportunity
depends on:
The level of information
Willingness to make a decision without perfect information
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Information on a new entry
Prior knowledge and information search
More knowledge ensures:
Entrepreneur starts from a position of less ignorance
Less time is spent on information search
‘Costs’ of information search: time and money
Window of opportunity: Favorable environment for
entrepreneurs to exploit a new entry
Speed is of the essence!

https://marketbusinessnews.com/financial-glossary/window-of-
opportunity-definition-meaning/
Comfort with making a decision under uncertainty
Likelihood that the window of opportunity will close leads to
the dilemma of choosing between
Error of commission:
Negative outcome from acting on the perceived opportunity
Error of omission:
Negative outcome from not acting on the new entry
opportunity

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The Decision to Exploit or Not to Exploit the New Entry
Opportunity
Factors That Influence the Decision to Enter the Market Now
or to Delay Entry

Entry Strategy for New Entry Exploitation
Environmental instability and first-mover
(dis)advantages
Firm performance depends upon the fit between external
environment and resources
First movers are unaware of key success factors
Emerging industries

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Potential size, growth, and the key dimensions along which a
market will grow
Difficulty in estimating:
Demand
uncertainty

Difficulty in assessing whether:
The technology will perform
Alternate technologies will emerge and leapfrog over current
technologies
Technological uncertainty
In changing market conditions:
Persistence and determination can inhibit the ability to adapt
Adaptation
Customers’ uncertainty and first-mover (dis)advantages
Uncertainty for customers
Difficulty in accurately assessing whether the new product or
service provides value
Overcome customer uncertainty by:
Informational advertising
Highlighting product benefits over substitutes
Creating a frame of reference for potential customers
Educating customers through demonstration and documentation

Lead time and first-mover (dis)advantages
Lead time
Grace period in which the first mover operates in the industry
under conditions of limited competition
Lead time can be extended by:
Building customer loyalties
Building switching costs
Protecting product uniqueness
Securing access to important sources of supply and distribution

1
13/08/2019
Risk Reduction Strategies for New Entry Exploitation
Risk
Probability, and magnitude, of downside loss
Derived from uncertainties over:
Market demand
Technological development
Actions of competitors
Strategies to reduce uncertainties
Market- scope strategies
Imitation strategies

Market Scope Strategies
Narrow-scope strategy
Offers small product range to a small number of customers to
satisfy a particular need
Focuses on:
Producing customized products
Localized business operations
High level craftsmanship
High-end of the market
Market Scope Strategies
Broad-scope strategy
Offers range of products across different market segments
Helps gain better understanding of the whole market
Opens the firm up to many different “fronts” of competition
Reduces risks associated with market uncertainties
Increases exposure to competition

1
13/08/2019
Imitation Strategies
Copying practices of other Advantages
Help develop skills necessary to be successful in the industry
Provide organizational legitimacy
Reduce costs associated with R&D
Reduce customer uncertainty over the firm
Make the new entry look legitimate from day one

Acquiring a “proven formula” for new entry from a franchisor
Imitation Strategies
Types of imitation strategies
Franchising “Me-too” strategy
Copying existing products/services and attempting to build an
advantage through minor variations
Legal Issues regarding New Entry
Intellectual property
Protect your ‘business idea’
Avoid infringing on others’ intellectual property
Contractual agreements
Protecting your ‘business idea’ in partnerships

Liability issues
Making your products and services safe
Protection via insurance cover
1
13/08/2019
Intellectual Property
Need for lawyer (legal advice re type of venture)

Important assets to the entrepreneur
Patents, trademarks, copyrights, or trade secrets held by the
entrepreneur
Patents
Contract between the government and an inventor
Grants protection from others making, using, or selling a
similar idea
Issued by the Patent and Trademark Office (PTO)
USTPO for international
European Patent Office
Utility patent
For duration of 20 years
Include plant patent
Design patent
For duration of 14 year

Patents
The provisional application
Provides evidence of being first to market
Establishes date of conception of invention
Determines rights to the patent based on the concept of first to
file
The patent application
Complete history and description of the invention
Lists claims for the product’s usefulness

10
13/08/2019
Trademarks
Distinguishing word, name, or symbol used to identify a
product
Can last indefinitely
Can be filed solely on the basis intent to use
Copyright © 2017 McGraw-Hill Education. All rights
reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.

Copyrights
Prevent others from printing, copying, or publishing any
original works of authorship
Increasingly relevant due to growth in use of Internet
Registered with the Library of Congress
Applicable for duration of 70 years
Trade Secrets And
Non-Competition Agreements
Protection against disclosing information that could be
damaging to business
Applicable as long as the idea or process remains a secret
Not covered by federal law but
recognized under a governing body of common laws
Requires employee training and implementing of security
procedures

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Licensing
Contractual agreement giving rights to others to use
intellectual property in return for a royalty or fee
Useful when firms:
Intend to grow their business in new markets but lack resources
Need permission to copy or incorporate the patent, trademark,
or copyright with their ideas

Type of Licensing
Patent license agreements
agreements
Copyright license agreements
Specify how the licensee would have access to the patent
agreement
Involve rights to use or copy books, software, music,
photographs, plays

Product Safety and Liability
Responsibility of a company to meet legal specifications
regarding a new product
The Consumer Product Safety Act - Created a commission
responsible for:
Prescribing safety standards
Regulating labeling and advertising
Determining fines as well as product recalls

10
13/08/2019
Types of Insurance and Possible Coverage
Property
Casualty
Life
Workers’ compensation
Bonding
Tutorial?
We will continue using the two canvases.
Please bring a draft of your business model canvas and value
proposition canvas.
You will have the opportunity to discuss and receive feedback
and suggestions!
If needed, we will also be able to help you with developing
your business ideas.

In week 6, we will start with preparation for assignment 3 and
will discuss how to develop a business plan (read chapter 7 in
the text book).
Week 6 is also the last chance to get some feedback on your
business idea. Bring both your canvases to the tutorial!
39
10

13/08/2019
Thank you for your attention
10
16/07/2018

The Entrepreneurial Mind-Set
Week 1
Learning Objectives
To introduce the concept of entrepreneurship and explain the
process of entrepreneurial action
To describe how structural similarities enable entrepreneurs to
make creative mental leaps
To highlight bricolage as a source of entrepreneurs’
resourcefulness
Copyrriightt © 2017 McGrraw-Hiillll Educattiion.. Allll
rriightts rreserrved.. No rreprroducttiion orr diisttrriibuttiion
wiitthoutt tthe prriiorr wrriitttten consentt off McGrraw-Hiillll
Educattiion.. 2
Learning Objectives (cont’d)
To introduce effectuation as a way expert entrepreneurs
sometimes think
To develop the notion that entrepreneurs cognitively adapt
To introduce different forms of entrepreneurship as discussed
in the literature

Educattiion.. 3
1
16/07/2018
The Nature of Entrepreneurship
Entrepreneurial opportunities
Situations in which new goods, services, raw materials, and
organizing methods:
Can be introduced
Sold at greater than their cost of production
Educattiion.. 4
Entrepreneurial action:
Involves creation of new products or processes

Involves entry into new markets
May occur through a newly created organization or within an
established organization
Educattiion.. 5
Entrepreneurial thinking
An individuals’ mental processes of overcoming ignorance to:
Decide whether a signal represents an opportunity for someone
Decide whether that opportunity is applicable to the individual
specifically
Process feedback from action steps taken
Educattiion.. 6

2
16/07/2018
Definition of Entrepreneurial Mind-Set
Naumann (2017)
7

How Entrepreneurs Think
Entrepreneurs should:
Think structurally Engage in bricolage Effectuate Cognitively
adapt Learn from failures
Educattiion.. 8
Think structurally
Superficial similarities:
Basic elements of the technology resemble the basic elements
of the market
Structural similarities:
Underlying mechanisms of the technology resemble the
underlying mechanisms of the market

Educattiion.. 9
3
16/07/2018

Bricolage
Applying combinations of the resources at hand to new
problems and opportunities
Taking existing resources and tinkering and/or reframing them
so they can be used in new ways
http://rymamm.blogspot.com/2010/10/bricolage.html
Educattiion.. 10
Starts with a desired outcome
Focuses on the means to generate that outcome
Starts with what one has
Selects among possible outcomes
Effectuation
Causal process
Effectuation
process

– Entrepreneurial mind-set:
Ability to rapidly sense, act, and mobilize, even under
uncertain conditions
Educattiion.. 11
Causal vs. Effectual Reasoning
http://www.effectuation.org/?page_id=207
12

4
16/07/2018
Brief Guide to Effectuation
https://youtu.be/oC-yWrC0P1_3E
http://www.yourlocalfruitshop.com.au/seasonal-produce/lemon/
When life gives you lemon …
… make lemonade!

http://avcr8teur.blogspot.com/2009/07/lemonade-stand.html
14
How Entrepreneurs Think Cognitive adaptability
Describes the extent to which entrepreneurs are:
Dynamic, flexible, self-regulating and engaged in the process of
generating multiple decision frameworks
Focused on sensing and processing changes in their
environments and then acting on them
Metacognitive awareness: Ability to reflect upon, understand,
and control one’s thinking and learning
http://www.cjlt.ca/index.php/cjlt/article/view/26414/19596
Educattiion.. 15

5
16/07/2018
Achieving cognitive adaptability
Increase entrepreneurs’ understanding of the nature of the
environment
Comprehension questions
Stimulate thinking about similarities and differences of current
situations with situations previously faced and solved
Connection tasks
Identify strategies that are appropriate for solving the problem
or pursuing the opportunity

Strategic tasks
Stimulate entrepreneurs to think about their understanding and
feelings as they progress through the entrepreneurial process
Reflection tasks
Educattiion.. 16
Increasing cognitive ability helps in:
Adapting to new situations
Being creative
Communicating one’s reasoning behind a particular response
Educattiion.. 17
Growth vs. Fixed Mindset

https://www.big-change.org/growth-mindset-research-2/
18
6
16/07/2018

The Intention to Act Entrepreneurially
Entrepreneurial intentions
Motivational factors that influence individuals to pursue
entrepreneurial outcomes
Entrepreneurial self-efficacy
Conviction that one can successfully pursue entrepreneurial
outcomes
Perceived desirability
Degree to which a potential entrepreneurial outcome is
evaluated as favorable or unfavorable
Educattiion.. 19

Entrepreneur Background and Characteristics
Facilitates integration and accumulation of knowledge thus
providing a larger opportunity set
Education • Casts a wider net for the discovery or generation of
potential opportunities
Chronological age – Usually between the ages 22 and 45
Age
Past work experience of an individual
Work
history
Educattiion.. 20
Age shift of Entrepreneurs in Australia
21
https://www.nbnco.com.au/content/dam/nbnco2/documents/smal
l%20Business-big-thinking-nbn-report.pdf

7
16/07/2018
Role Models and Support Systems
Role models:
Individuals whose example an entrepreneur can aspire to and
copy
Moral-support network:
Individuals who give psychological support to an
entrepreneur
Professional- support network:
Individuals who help the entrepreneur in business activities

Educattiion.. 22
Possible forms of Entrepreneurship
Corporate entrepreneurship / Intrapreneurship
Small businesses / family businesses
Start-ups
Social entrepreneurship
Sustainable entrepreneurship
Female entrepreneurship
Indigenous entrepreneurship
Migrant entrepreneurship
Lifestylepreneur
23
Find examples of different types of entrepreneurs (e.g. start-up,
social, sustainability, etc.) that inspire you.
List and add link to the website/source.
What in particular inspired you for each of them?
Think about possible business ideas and identify some current
trends – this is important for your writing assessments!
24

8
23/07/2018
Creating Business Ideas
Week 2
Learning Objectives
To identify various sources of ideas for new ventures

To discuss methods available for generating new venture ideas
To discuss creativity and the techniques for creative problem
solving
To discuss the importance of innovation
Learning Objectives
To understand an opportunity assessment plan
To discuss the aspects of the product planning and development
process
To discuss aspects of e-commerce and starting an e- commerce
business
To further discuss forms of entrepreneurship
Trends of the Next Decade
Wearable Trend

Smart watches
Smart cameras
Augmented reality
Green Trend
Energy efficiency
Energy storage
Hybrid systems
Resource (re)use
Payments
Lending

Digital currencies
Mobile
Maker Trend
DIY
Design
Craft
Trends of the Next Decade (cont’d)
Mobile Trend
Technology

Content
Interactions
Health Trends
Wellness
Nutrition
Health care
The future is Fitness mobile
Internet of Things
Smart devices

Embedded Wifi
Linked to mobile and wearable technology
Sources of New Ideas
Consumers
Entrepreneurs should:
Formally or informally monitor potential ideas
Ensure that the idea represents a large enough market to
support a new venture
Existing products and services
Formally monitor and evaluate competitive products and
services on the market
1
23/07/2018

Sources of New Ideas
Distribution channels
Help suggest and market new products
Federal government
Taking cue from pending patents
Ideas evolve in response to government regulations
Research and development
Formal endeavor connected with one’s current employment
Methods of Generating New Ideas
Focus groups
Open in-depth discussion led by a moderator
Problem inventory analysis
Obtaining new ideas and solutions by focusing on problems
Used to test a new product idea

Methods of Generating New Ideas
Brainstorming
Group method for obtaining new ideas and solutions
Rules of brainstorming
No criticism
Freewheeling is encouraged
Quantity of ideas is desired
Combinations and improvements of ideas are encouraged
Brain writing
Form of written brainstorming
Creative Problem Solving
Method for obtaining new ideas focusing on the given
parameters

Can be stifled by perceptual, cultural, emotional, and
organizational factors
Creative Problem-Solving Techniques
Brainstorming
Reverse brainstorming
Brainwriting

Gordon method
Checklist method
Free association
Forced relationships
Collective notebook method
Attribute listing method
Big-dream approach
Parameter analysis
… and others
Illustration of Parameter Analysis

2
23/07/2018
Types of Innovation
Breakthrough
Extremely unique innovations that establish the platform on
which future innovations can be developed
Should be protected by patents, trademarks, and copyrights
Technological
Advancements in the product/market area

Needs to be protected
Ordinary
Extend technological innovation into a better product or
service or one that has a different market appeal
Result of market analysis and pull and not technological push
Innovation
Defining a new innovation
Newness of a product or service can be attributed to:
Consumer concept
Change in the package or container
Change of service delivery
Modifications in the appearance of the product (industrial
market)
Classification of new products

Consumer’s viewpoint
Determines newness in terms of its effect
Degree of newness depends on:
Level of behavioral change or new learning required by the
consumer
Firm’s viewpoint
An innovative entrepreneurial firm should:
Make a distinction between new products and new markets
New products - Defined in terms of amount of improved
technology
Market development - Based on the degree of segmentation
Continuum for Classifying New Products
New Product Classification System

Product Planning and Development Process
Product life- cycle
Stages each product goes through from introduction to decline
Product planning and development process
Stages in developing a new product
3
23/07/2018

Product Planning and Development Process
Evaluation criteria
Market opportunity Competition Marketing system Financial
factors Production factors
The Product Planning and Development Process
E-commerce and Business Start-up
Offers entrepreneurs an opportunity to be creative and

innovative
Factors that facilitate growth
Widespread use of personal computers
Adoption of intranets in companies
Acceptance of the Internet as a business communications
platform
Faster and more secure systems
Using E-commerce creatively
An entrepreneur has to decide whether he or she will run the
Internet operations:
Within the company or outsource these operations to Internet
specialists
Integrate front-end and back-end activities
Integrate customer orders, with distribution channels and
manufacturing capabilities
Allow flexibility for specific customer orders

Web sites
Important features include:
Ease of use
Search capability
E-mail response system
Speed
Compatibility with different browsers and platforms
Doing E-Commerce as an entrepreneurial company
Essential criteria
Economic and convenient delivery of products
Products should cater to a wide market
Feasibility of shipping outside own geographical location
Significant cost reductions
Ability to economically draw customers to its Web site

4
23/07/2018
Fastest Growing SME sectors in Australia
25
https://www.nbnco.com.au/content/dam/nbnco2/documents/smal
l%20Business-big-thinking-nbn-report.pdf
Preparation task from last week
Find examples of different types of entrepreneurs (e.g. start-up,
social, sustainability, etc.) that inspire you.
List and add link to the website/source.
What in particular inspired you for each of them?
What examples did you find?
Corporate Entrepreneurship
Organisations that excel or promote corporate
entrepreneurship?
27
Sustainable Entrepreneurship

Organisations or individuals that focus on sustainable
entrepreneurship?
28
Social Entrepreneurship
Organisations or individuals that focus on social
entrepreneurship?
29
In week 3, we will start exploring the business model canvas
with examples from existing businesses. Have a look at the
canvas, as well as explore some of the material on the
Strategyzer website (links on Learnline).

We will also continue developing business ideas and you will
have the opportunity to discuss some ideas that you have for
your assignment 2. Therefore, start using the canvas and/or
briefly describe on one page what your business proposition is.
(See tips on Learnline)
30
5

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