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Which of the following is true of an entrepreneur? Check all that apply.

a) An entrepreneur operates a business.

b) An entrepreneur does not have a say over what goods and services his company produces.

c) An entrepreneur faces huge risks if things do not go well for the business.

d) Being an entrepreneur is not a risky endeavor.

e) An entrepreneur is usually an inventor.

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Casey Durgan
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3 Jan 2019

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Your Home Is a Good Place, Inc.

INTRODUCTION: In 2006, Bill Norwalk, a 50-something entrepreneur with a decidedly independent streak, was at the cusp of a major change in his business. Norwalk's background in marketing started with a bachelor's degree in business and a marketing major. He had taken his marketing training to heart and developed a novel way of satisfying homeowner customer needs, one which had the potential to launch a new industry. Like many entrepreneurs with a good idea, Norwalk was confronting the issues of implementation and the attainment of critical mass. Should the business expand and attract new customers as well as contractors, suppliers, and other facilitators and how? How could the business increase the number of affiliates and draw from an appropriate customer base? Norwalk concluded that the best thing to do when you do not know that to do is get outside help. He decided to hire a consultant to prepare a situational analysis (SWOT) and a marketing plan for the business. BACKGROUND: Bill Norwalk grew up in Ohio, one of three children in a middle class family. He spent his formative years playing ball, going to Scouts, and being a member of his local church. Norwalk went to college at Miami University, where he got a bachelor's degree in business. After graduation he worked construction and eventually started his own business as a DJ at bars and at wedding receptions. All through his life he displayed an independent streak, doing things his way. When he was 40, his customers and friends convinced him to start installing music systems as a sideline. His experience and taste in matching sound equipment made him the perfect entrepreneur, some-one who knew what he wanted and was sufficiently risk-prone to be willing to work for it. In 2006, Norwalk was tired of working for someone else and searched for a way to use his entrepreneurial talents. He realized that his success would necessitate doing business his way. Your Home Is a Good Place, Inc., was a novel channel intermediary that employed convenience as a strategic marketing variable. It differed from traditional home improvement by providing the well-to-do homeowner with a one-stop shopping experience. Gone was the need to search out an architect or design firm and get plans. Gone was the need to then locate one or more independent contractors and put up with their continual mess while the constructive destruction processes took place. Instead, people with incomes of $100,000 or more came to the suite of showrooms at YHGP. There, on the model site, end-users could glimpse a vision of how their homes could be transformed into a luxurious playground. Home improvement is all about making one's personal environment more comfortable and at the upper levels of consumption, making it uniquely different from what the neighbors own. As such, it includes much more than basic bathroom, bedroom and/or kitchen de-sign. Unfortunately, consumers do not have the time or, in the majority of cases, the talent to visualize the elements that would make their place both tasteful and unique. Customers could walk the site visiting showroom kitchens, living rooms, bedrooms, game rooms, libraries, entertainment home theaters, pool areas, and even home putting greens for the avid golfer. If you could dream it, Norwalk could get it built. If you could not, Norwalk could locate people to dream it up for you. For example, there was an indoor driving range simulator and an outdoor putting green for the golf enthusiast. In the bath area, there were complete luxury bath spaces. No more visits to the lumber yard or home store to examine a bathtub in one place, sink in another and shower in another space with the faucets in yet another. The consumer could see the complete package with wall treatments and lighting, and Norwalk could put clients together with all the people needed to accomplish their dreams. Luxury bedrooms, kitchens and home theaters were also provided for viewing. At YHGP the consumer could literally see how different wall or floor finishes and construction techniques came together to produce an extremely unique and satisfying life-improving living space, hence the name Your Home Is a Good Place, Inc. The ease of selection was just the beginning. Once a design concept was born in the consumer's 'mind YHGP personnel would take charge of the details of preparing the construction plans obtaining and contracting with construction contractors, dealing with financing agencies' obtaining building permits, and finalizing the contracts. YHGP would arrange for coordination between the various participants and see that the contractors minimized the me'' they created and that they cleaned up their work spaces before they left at the end of the day, so that there would be no more mess for the homeowner. YHGP differed in concept from typical home store/hardware store or design center. These businesses exist as a ready-made industry in place to cater to the do-it-yourself (DIY) consumers in terms of providing the tools and components. However, most DIY projects tend to be relatively small and are undertaken by people whose primary objects is to save money. Norwalk realized that his niche was elsewhere. Consumers who have large amounts of disposable income and who want to undertake a major redesign of their space have to overcome these problems: (1) design and architectural changes including permits and safety inspections; (2) sourcing of appliances and components for the Projects, e.g., faucets for baths and speakers for home theaters; (3) provision of professional contracting labor; (4) financing for the project; and (5) dealing with the uncertainty during construction. Customers could see the central theme of the YHGP concept at a pavilion located in central Michiana on a leased site. Berrien and Cass counties in Michigan as well as Elkhart, La Porte, Marshall, St. Joseph and Starke in Indiana made up the market area. Local organizations and their statistical reporting recognized a larger 15-county area Michiana area, though Norwalk felt it was too large to serve effectively and efficiently. YHGP differed from traditional businesses because it required little of the entrepreneur’s cash up front. Norwalk convinced local contractors, landscapers, designers, architects, appliance suppliers and others to donate their work or products to develop a series of show-case rooms on the leased site. Each model environment was chock-full of design ideas to spur the creative juices 01 potential clients.

THE SUPPLY SIDE: In return for donations of labor and material, the contractors and other facilitators (including local advertising outlets, which provided the publicity/advertising) got to show-case their wares in the "whole enchilada" pavilion. The supply-side participants got a ready source of potential clients, access through YHGP-coordinated job scheduling and help with obtaining building permits and inspections. Some of the suppliers of labor and contracting as well as components included painters and wallpaper hangers, rough-in carpenters, finish carpenters and cabinet makers, masons, electrical contractors, plumbers, landscapers, faux finishers, sound design engineers, roofing contractors, welders and other certified tradespeople. Additional players were land surveyors, movers, HVAC contractors, insulation contractors, and solar/wind/alternative energy designers and installers. Not everyone who provided home remodeling services in the Michiana area was allied with Norwalk. A significant number were direct competitors, though they did not have the advantages provided by YHGP. THE DEMAND SIDE: YHGP was located in the town of Mishawaka, Indiana, in the middle of the Michiana area. While not officially recognized by the U.S. government (thus no official metropolitan statistics), the Michiana area had two associations of area government agencies. MACOG, the Michiana Area Council of Governments, representing four of the seven counties, was located in Indiana. The Southwest Michigan Planning Commission, SWMPC, represented the remaining three counties in Michigan (http://swmpc.org and www.macog.com). U.S. census data is available for the seven counties in Michiana (2000 and 2006 data were combined) (see Exhibit 1). Cass, Marshall and Starke (Michigan) and Elkhart, La Porte, St. Joseph and Berrien counties (Indiana) had approximately 856,000 residents. The median household income in Michiana's counties varied over a range of $37,000 to $57,000. The entrepreneur's vision for YHGP was to serve only di private dual customers whose household income exceeded $100,000 and whose project cost averaged $10,000. Norwalk felt that anyone who had an income below this level would be most likely to use the DIY process to serve their needs. Norwalk had not considered other options for customers. Although Norwalk considered any private individual with an income above $100,000 as a potential consumer of his services, there were limits on even this. For example, renters and people living in new homes were less likely to purchase upgrades than were others. Additionally, Norwalk wondered if age or other demographic factors might have an impact on those who might purchase. THE INTERSECTION OF SUPPLY AND DEMAND:Norwalk's concept went beyond the idea of a general contractor who subcontracted out portions of a job. YHGP coordinated projects from start to finish. In the beginning, when a customer was considering an environmental improvement, Norwalk showed them what could be done. YHGP arranged for complete plans to be drawn up, for the permits for construction, and for the financing. During construction, Norwalk worked with the contractors to see that proper building site "etiquette" was maintained. That meant that each day's mess was contained to the ex-tent possible, with the work stopped and the debris cleaned up before the crews quit for the day. Homeowners had a less stressful experience because of this. As such, customers were more likely to pay the bills which were submitted by Norwalk on time. YHGP's billing schedule billed for work on a percentage of work completed. This improved Norwalk's and the contractors' cash flows. Norwalk had six employees on staff. Norwalk was worried that he did not have the right mix of employees. Some skills were needed that his employees did not have and some dysfunctional behavior was present. For example, the chief of operations, David, was the business manager who made things happen, but stifled initiative in the process. Rory served as project manager in charge of scheduling and service calls. He was a compliant type who wanted everyone to be happy, but could not discipline workers. David had to step in when work was not progressing. Priscilla did sales and estimating. She was aggressive and probably was that way from a background in radio station sales management. Sam also did d sales and was very good at taring clients. Even though he was a self-starter, he could not initiate a sale with a new client. Rowdy was an installer and gopher (as in "Go for coffee!”) who did what was needed, but exhibited no initiative. The bookkeeper, Johanna, was a classic pencil pusher. She would start at the top of a stack of paper and work down in order, item until the work was done.

THOUGHTS: Because YHGP had few employees and relied instead on partnerships with independent contractors, expansion, in Norwalk's opinion, was as easy as bringing on a firm that wasn't currently employed by YHGP. Additionally, in harder times, Norwalk would not have to fur-lough employees. Norwalk felt that his primary contacts in the customer market were women. Women wanted a complete packaged solution rather than a piecemeal approach. Some could come to the firm after viewing one of the TV home remodeling shows and want to duplicate those concepts. Since YHGP was new, it had yet to develop a well-known image in consumers, Often a new concept is slow to catch fire with consumers. Norwalk was worried about building a brand identity in Michiana. YHGP got paid a flat percentage of the bill, typically 10 percent. Since Norwalk, arranged all of the details with both buyer and supplier, and tied everything up in staff package, consumers were not aware of the facilitating charge. The various sub contra neat negotiated with Norwalk or his staff beforehand, and because they were guaranteed their cut when the contract was signed, they did not object to the fee either. At this point, Norwalk could personally oversee all contracts. However, he worried that at some point in the future, he would need one or more project supervisors to maintain quality. Norwalk felt that if he could gain five customers a month at a minimum total bill of $10,000 each YHGP Would be successful.

CURRENT MARKETING ENDEAVORS: One element of Norwalk's plan was demonstrated in his promotional endeavors. Large home improvement purchases are often facilitated by the availability of credit and almost never occur without some form of promotion. He worked with banks and credit unions, realtors, radio stations and regional automobile dealers to develop promotions that used these facilitators' money and resources to attract business for the supply-side participants. For example, he would put together a deal with a local car dealer, a bank and a radio station. The bank would offer financing, the car dealer a one-year lease on a new car and the radio station would promote a package where a Your Home Is a Good Place, Inc., client could receive the whole package as an incentive. Each business participant got the enhanced promotional effects and Norwalk's business got a cut of the overall price of the development package up front for no cash outlay. These monies were used to pay YHGP staffers and for daily operations. Other promotional events revolved around social meetings of regional groups of professionals like doctors. A catered dinner would be provided (at the caterer's expense in ex-change for the publicity and an introduction to the group) at the YHGP showrooms. Before and after the dinner, the invited guests would have access to architects, bankers and other professionals who might be involved in the transactions, and to the model showrooms demonstrating possible changes to their living spaces. The networking opportunities pro-vided convenience for all parties and usually resulted in new contracts. YHGP got no direct income from these events.

After reading the case study, answer the following question: Who are they? Where did they come from? What industry? What is their position in the market? 4 P's (Discuss the product, place, promotion and price) Environmental Forces (Discuss how each affects the company) Customers and Target Market (Who do they serve?) Current Situation — SWOT, Competition, Market Share, Stock prices. Etc. What is the problem? Alternatives —possible strategic solutions Recommendation

Entrepreneurship

1. Discuss what steps Craig took to develop and grow his business. (7 marks)

2. Illustrate the role Craig played in contributing towards the economy (8 marks)

clearrisk | craig rowe

Business is risky, but that is Craig Rowe’s business - risk management to be precise. Craig,

the President of ClearRisk Inc., becomes animated and energized as he explains his line of

work. “Risk,” he says, “is not negative. It is when there is opportunity for a downside or an

upside.” Risk management is about formalizing the decision making process. People are

constantly assessing risks, whether it is instinctively in crossing the street or deliberately in

weighing the pros and cons of buying a car. “Business people,” he says, “engage in the same

process whether in deciding where to build a head office or whether to buy another company.”

the entrepreneur

Craig spent almost 20 years in the insurance industry, where he started right out of high

school. Over the years, he attained various insurance designations and completed many

business courses and ample on-the-job training. Craig is naturally entrepreneurial and also

operated his own consulting company and became involved in several insurance industry

associations. This allowed him to develop a large network of connections.

Craig found himself thinking and talking more and more about risk management. He realized

that if businesses did some basic things to manage risk they would save money. In 2001 he

wrote a book on the topic and later adapted the ideas in to a workshop which he presented

throughout Canada and the United States. Insurance industry professionals and other business

people noticed Craig and saw the logic in his message. Soon he was being invited to speak to

various associations and was asked to assist in writing material on risk management. When

dealing with clients of his consulting business, he noticed the same set of steps and questions

could be applied to different realities in different types of companies. He was sure that there

was something that could be packaged and sold to assist these companies.

He went in search of risk management software. He found some, but none applicable to small

and mid-sized companies and organizations. So he decided to build it. He teamed with David

d’Entremont who had the background provide technical expertise. Together they founded

ClearRisk. They developed a business plan which became their roadmap, even though it was

constantly being adapted to take into account new realities, circumstances and goals. Craig estimates they are on version 30 by now!

Craig decided to leave his job and pursue ClearRisk full-time. It was not an easy decision to

make as Craig had a young family at the time. He had to engage in his own risk management

process and weigh his options. He had almost 20 years of solid insurance industry experience.

He had an extensive network of contacts. He had entrepreneurial experience through his

consulting business. He knew the market. He knew what his customers needed and he knew

that he could develop a product to meet that need. He found a solid business partner to

complement his skills. So the timing was right and after 10 years of thinking, dreaming and

percolating ideas, Craig made the leap in 2006.

Craig says that the biggest challenge facing ClearRisk and any business, whether it is in

starting, sustaining or growing the business, is cash. ClearRisk needed capital to develop its

product. For any business to have credibility with lenders and investors, that initial money has

to come from the business owner. Craig and David secured an operating line of credit from the

bank based on personal guarantees.

Step 2 was to seek more financing to start implementing the business. Craig says that it is

important to look for money before you need it because you are building relationships and

confidence and convincing people that you are creditworthy. A business plan is a necessity but

“everyone invests in people.” This applies to accessing financing from Business Development

Bank of Canada (BDC), Atlantic Canada Opportunities Agency (ACOA), or any government

organization, as well as private lenders and investors. It is necessary to raise private money to

leverage government money.

Another important factor in developing ClearRisk was being accepted by Memorial University’s

Genesis Centre, a facility which provides business and technical support to new and emerging

technology businesses. This added to their credibility and attracted the attention of angel

investors. Angel investors are business people with financial resources available to invest in

new promising businesses.

Technological businesses are expensive to grow and ClearRisk’s growth has been made

possible by private investors and organizations such as Growth Works (a venture capital

company). Ownership of the company is now shared with these investors and ClearRisk is a

corporation with multiple shareholders. One of the tradeoffs in taking money from investors is

that ownership becomes shared. Craig says, “You can have a big piece of something small or

a small piece of something big.” He chose the latter.

Craig’s idea has grown immensely. He keeps the numbers to himself, but says sales have

grown exponentially. His primary market is North America and the ClearRisk software has been

launched in French and Spanish. Customers do not pay an upfront fee; instead, they pay an

annual fee for the software and support. ClearRisk is constantly improving its products. The

team is always enhancing features and improving functionality. Currently, they offer three

programs to consumers: ClearRisk™ Manager, which enables an organization to build and

implement a risk management plan; ClearRisk™ Tracker, which facilitates tracking insurance

claims; and ClearRisk™ Trainer, an online instructional program which increases awareness of

risk and its management. The latter two products are offered in partnership with other

organizations.

ClearRisk’s web-based business is global; however, Craig is cautious about expanding beyond

North America. The insurance industries in the USA and Canada are relatively interconnected

and homogeneous. It would be very difficult to provide support to countries with different

regulations and different languages. ClearRisk offers a web-based software service so they

use web-based marketing, rarely using traditional media. They access all forms of social media

such as Facebook, Twitter, MySpace, and blogs and find the approach cost effective and high

impact. Social media facilitates the use of in-bound marketing.

In addition to web-based marketing, ClearRisk is now getting calls from referrals. Clients are

spreading the word to other businesses seeking a similar product. The demand for ClearRisk’s

product is expanding but Craig resists growing the team too quickly. Craig prefers a small team

and likes the dynamics of small groups. However, more sales people are needed and they will co-op

and computer science students to his company. He likes to hire young people. It is

rewarding to see them take shape and become leaders.

Craig speaks favorably about starting a new business in Newfoundland and Labrador. He

says that the provincial climate is positive. In addition to the practical and financial support

available, the provincial government has done a lot to assist business in recent years, including

reducing taxes and red tape and increasing funding.

When Craig reflects on the path his career has taken, he gives special acknowledgement to

Paul Johnson of Johnson Insurance as a business icon and an inspiration. Mr. Johnson

inherited his father’s small insurance office and built it into an innovative, billion-dollar

Company. Not only was Mr. Johnson a great businessman, he was a community-minded

Philanthropist. This is evident today throughout the capital city in the parks, trail ways, and the

Johnson Geo on Signal Hill. Mr. Johnson has influenced Craig’s professional and

Community life. In addition to Craig’s entrepreneurial success he is firmly rooted in his

Community; he currently serves as Chair of the YM/YWCA.

Craig has advice for young people who dream of starting their own businesses. He says to be

Informed, to go in with open eyes and to seek honest opinions from knowledgeable people. He

advises that an entrepreneur should realize that “the odds are against you, but you need the

tenacity and perseverance to stick with it. It is important to understand your industry, to

understand the need for your product or service and ultimately to understand the risks before

you make the leap.” In business, managing risk is everyone’s business!

1. Discuss what steps Craig took to develop and grow his business.

2. Illustrate the role Craig played in contributing towards the economy

The primary costs of FDI to host countries are:

Loss of sovereignty and patriotism

Adverse effects on competition and exports

Capital outflow

Loss of sovereignty, adverse effects on competition, and capital outflow

____ suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantage by specializing in the production of certain goods or services.

The radical view

The free market view

Pragmatic nationalism

Expropriation

What are the benefits of FDI to home countries?

Repatriated earnings from profits from FDI.

Increased exports of components and services to host countries.

Learning via FDI from operations abroad.

All of these answers

When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:

Create knowledge spillover

Discover a new market for its goods

Overcome and combat market failure through FDI

Acquire location advantages or neutralize the first mover’s location advantages

Most countries practice:

Pragmatic nationalism

Free market based FDI

Government embracing radical view

French patriotism

FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their responses to overcome imperfections and failures.

True

False

Most countries practice a totally "free market" view.

True

False

8. Outsourcing is the process of turning over an organizational activity to an outside supplier, located in a foreign country, which will perform it on behalf of the local firm.

True

False

Financial, physical, and technological resources and capabilities are all tangible assets.

True

False

A firm's resources and capabilities are tangible assets a firm uses to choose and implement its strategies.

True

False

An example of low power distance would be when subordinates address their bosses on a first-name basis.

True

False

Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors.

True

False

A country with low-masculinity has a more subtle differentiation between the gender roles.

True

False

Setting up subsidiaries abroad so the work can be performed in-house but in the foreign location is also called captive sourcing.

True

False

Managers in low uncertainty avoidance countries rely more on experience and training than managers in high uncertainty avoidance countries who rely more on rules.

True

False

Informal institutions include laws, regulations, and rules.

True

False

The United States is often classified as a collective society.

True

False

A pure market economy characterized by the "invisible hand" of market forces is noted by

John Stuart Mill

Adam Smith

Aristotle

Amatya Zen

Culture is defined in the text as:

The communication between members of similar location.

The collective programming of the mind, which distinguishes the members of one group or category of people from another.

The main component of formal institutions.

The attitudes and behaviors characteristic of a particular social group or organization.

When an expat employee returns to her or his current employer but the employer does not provide attractive opportunities, she/he often may be hired by a competitor firm. Why?

Competitor firms are also interested in globalizing their business.

Former expats bring instant expertise and experience.

Competing firms will pay a higher premium for expertise.

All of these answers

The government taking a "hands-off approach" is known as:

Laissez faire

Command economy

Mixed economy

Liberal approach

Expatriate managers make ideal candidates for top management positions.

True

False

____ are defined as rights associated with the ownership of intellectual property.

Patents

Copyrights

Trademarks

Intellectual property rights

In a collective society:

Family units are highly valued.

Being an entrepreneur is a popular mindset

Being different than your neighbor is important.

Outsiders are easily trusted.

Which of the following definitions best defines an expatriate manager?

A manager who works outside his or her native country

A manager of great expertise

An ex-manager rehired for advisory purposes

None of these answers

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