BU111-CH2.docx

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Department
Commerce 
Course
COMM 101
Professor
Leanne Hagarty
Semester
Fall

Description
Chapter 2---Understanding Entrepreneurship Entrepreneurship:  Identifying an opportunity and accessing resources to capitalize on it.  Small business – owner-managed, not dominant in market, <100 employees o 97.8% of all businesses in Canada are small o Contribute >26% annually to GDP o Provide more jobs than large businesses o New ventures lead in new products and services Three main steps in Entrepreneurial Process: 1) Influenced by PEST 2) Successful only when entrepreneur, opportunity and resources match. 3) Begins with entrepreneur identifying an opportunity then accessing resources. Screening: o Weeding out bad ideas o Save times, money Three-Step of "Screening" Process (PS: Screening for viability & competitive advantage.) (1) Idea creates or adds value for customer.  Solving a problem, meeting a need. o the problem is significant enough, don’t create ideas that is already exist.  Customers are willing to pay for it. (2) Idea provides a competitive advantage that can be sustained.  Product is unique in a valuable way or is better than others. o How is it different and better from existing products and substitutes? If your good is commodity it means it’s the same with others. o Are differences valuable to customers? o Is it something that existing firms can easily do or may want to imitate  Can the idea be protected legally?  Ex: Patten, a new manufacturing process, made the competitors difficult to copy because the huge cost of changing new product (3) The idea is marketable and financially viable.  Are there enough customers who are willing to buy it? What is the market demand likely to be? Where would you sell it?  Who are the key competitors and what are the forces that affect profitability?  Is the market growing, shrinking, concentrated, fragmented? o concentrated means only having a few dominant players (monopoly ) Safety point: does the idea have low exit costs?  Long time to profitability? OR Greater up-front investment needed? = riskier venture VIDEO: APPLYING THE SCREEN: GREEN GYM 1) Solve the safety problem, solve the monitory problem, children, obesity, lose weight 2) Chinese, cheap labor 3) Social obesity How to "Screen"?  Using PEST analysis to assess environment. Is it supportive of your idea?  Using Five Forces to determine ease of entry and profitability of industry.  Using Five Forces, PEST, and market exploration to ensure uniqueness of idea.  Using research of market (library databases) to evaluate how bi
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