1.

The components of Canvas Business Model

The main purpose of a business canvas is to describe how your business

intends to make money, which is the main goal of any business.
The business model canvas (BMC) contains nine boxes representing core
elements of a business and may serve as an excellent pitch deck template to
attract investors or talk to customers. The sections are: customer segments,
value proposition, channels, customer relationships, revenue streams, key
resources, key activities, key partners, and cost structure. Each section is
filled in with information about the company’s business model.
The left side of the BMC focuses on your business and internal factors of
your enterprise which you can control like Key Activities, Key Resources,
Key Partners, and Cost Structure.

The right side of the canvas represents external factors and things you can’t
influence directly like your Customer Segments, Customer Relationships,
Distribution Channels, and Revenue Streams.

The center of the framework is the Value Proposition, which serves as an

exchange point between your business and your customers.

2. Some personal questions determine the skill of an entrepreneur

Before making the final decision about going into business, the entrepreneur needs
to ask a number of personal questions. Ten of the most important ones are these:
o Are you a self-starter?
o How do you feel about others?
o Can you lead people?
o Can you take responsibility?
o Are you an organizer?
o Are you a hard worker?
o Can you make decisions?
 o Can people rely on your words?
o Can you stick with it?
o How good is your health?

3. Entrepreneurship, entrepreneur, the characteristics of

entrepreneurs

Entrepreneurship is defined as the process by which individuals pursue

opportunities without regard to resources they currently control for the purpose of
exploiting future goods and services. Others, such as venture capitalist Fred
Wilson, define it more simply, seeing entrepreneurship as the art of turning an idea
into a business.
Entrepreneurship is more than the mere creation of a business.
Entrepreneurs are individuals who recognize opportunities where others see
chaos and confusion. They are aggressive catalysts for change within the
marketplace.

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Personal characteristics of Entrepreneurs:
- Prior experience
- Cognitive Factors
- Social Networks
- Creativity

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Common characteristics associated with entrepreneurs are:
- Total commitment, determination, and perseverance
- Drive to achieve and grow
- Opportunity and goal orientation
- Taking initiative and personal responsibility
- Persistent problem-solving
- Realism and sense of humor
- Seeking and using feedback
- Internal locus of control
- Calculated risk-taking and risk-seeking
- Low need for status and power
- Integrity and reliability

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There are 4 main characteristics of successful entrepreneurs. These are:

- passion for their business,
- product/customer focus,
- tenacity despite failure,
- execution intelligence.

Passion for their business - is in the context of a new firm or an existing business.
This passion typically stems from the entrepreneur’s belief that the business will
positively influence people’s lives.

Product/customer focus - is exemplified by Steven Jobs, the late co-founder of

Apple Inc. It it’s important to think about management, marketing, finance, and
the like, none of those functions makes any difference if a firm does not have good
products with the capability to satisfy customers.
Tenacity despite failure - Because entrepreneurs are typically trying something
new, the possibility of failure exists. The test for entrepreneurs is their ability to
persevere through failures.

Execution intelligence - business idea means developing a business model, putting

together a new venture team, raising money, establishing partnerships, managing
finances, leading and motivating employees, and so on. It also demands the ability
to translate thought, creativity, and imagination into action and measurable results.

4. The reasons people decide to become entrepreneurs

The three primary reasons that people become entrepreneurs and start their own
firms are:
- to be their own boss,
- pursue their own ideas, and
- realize financial rewards.

Əlavə Məlumatdır:
To be their own boss - many entrepreneurs want to be their own boss
because either they have had a long-time ambition to own their own firm or
because they have become frustrated working in traditional jobs.

Pursue their own ideas - Some people are naturally alert, and when they
recognize ideas for new products or services, they have the desire to see those
ideas realized. When this happens, employees are left with good ideas that go
unfulfilled. Because of their passion and commitment, some employees choose
to leave the firm employing them in order to start their own businesses as the
means to develop their own ideas.
Pursue financial rewards - is typically secondary to the first two and often
fails to live up to its hype. The average entrepreneur does not make more
money than someone with a similar amount of responsibility in a traditional
job. The financial lure of entrepreneurship is its upside potential.

5. Identify the main characteristics of successful entrepreneurs

There are 4 main characteristics of successful entrepreneurs. These are:

- passion for their business,
- product/customer focus,
- tenacity despite failure,
- execution intelligence.
Əlavə Məlumatdır:
Passion for their business - is in the context of a new firm or an existing business.
This passion typically stems from the entrepreneur’s belief that the business will
positively influence people’s lives.

Product/customer focus - is exemplified by Steven Jobs, the late co-founder of

Apple Inc. It it’s important to think about management, marketing, finance, and
the like, none of those functions makes any difference if a firm does not have good
products with the capability to satisfy customers.

Tenacity despite failure - Because entrepreneurs are typically trying something

new, the possibility of failure exists. The test for entrepreneurs is their ability to
persevere through failures.

Execution intelligence - business idea means developing a business model, putting

together a new venture team, raising money, establishing partnerships, managing
finances, leading and motivating employees, and so on. It also demands the ability
to translate thought, creativity, and imagination into action and measurable results.
6. Explain the myths associated with entrepreneurship

There are many misconceptions about who entrepreneurs are and what motivates
them to launch firms to develop their ideas. Some misconceptions are because of
the media covering atypical entrepreneurs, such as a couple of college students
who obtain venture capital to fund a small business that they grow into a
multimillion-dollar company.

Common myths are:

myth 1: Entrepreneurs are Born, not made;
myth 2: Entrepreneurs are gamblers;
myth 3: Entrepreneurs are motivated primarily;
myth 4: Entrepreneurs Should Be young and energetic;
myth 5: Entrepreneurs love the Spotlight;
myth 6: Entrepreneurship is unstructured and chaotic;
myth 7: All Entrepreneurs need is money;
myth 8: Entrepreneurs must fit the profile;
myth 9: Entrepreneurs are always investors;
myth 10: Most entrepreneurial initiatives fail;

7. The differences between opportunity and idea through examples,

the importance of differentiation

- An opportunity is a favorable set of circumstances that creates a need for a new

product, service, or business.
- An idea is a thought, an impression, or a notion. An idea may or may not meet
the criteria of an opportunity.
Not all ideas are opportunities. Once an opportunity is recognized, a window
opens, and the market to fill the opportunity grows. At some point, the market
matures and becomes saturated with competitors, and the window of opportunity
closes. For example, Yahoo, the first search engine, appeared in 1995, and the
market grew quickly, with the addition of Lycos, Excite, and several others.
Google entered the market in 1998, sporting advanced search technology. Since
then, the search engine market has matured, and the window of opportunity is less
prominent. Today, it would be very difficult for a new start-up search engine firm
to be successful unless it offered compelling advantages over already established
competitors or targeted a niche market in an exemplary manner.

In this situation Yahoo's business idea crated with opportunity. Because there is
gap in marketplace. But Google have an idea for more technology.
This is a critical point because many entrepreneurial ventures fail not because the
entrepreneurs that launched them didn’t work hard, but rather because there was no
real opportunity, to begin with. Before getting excited about a business idea, it is
crucial to understand whether the idea fills a need and meets the criteria for an
opportunity.

8. The types of opportunities and opportunity identification

approaches

Four Essential Qualities of an Opportunity are:

- Attractive;
- Timely;
- Durable;
- Anchored in a product, service, or business that creates or adds value for its
buyer or end user;
Three Ways to Identify an Opportunity are:
- Observing Trends;
- Solving a Problem;
- Finding Gaps in the Marketplace;

9. The competitive forces that determine industry profitability

The five forces model is a framework entrepreneurs use to understand an

industry’s structure. This framework is comprised of the forces that determine
industry profitability. Professor Michael Porter developed this important tool.
The parts of the Big Five Force are:
- Threat of Substitutes;
- Threat of New Entrants;
- Rivalry Among Existing Firms;
- Bargaining Power of Suppliers;
- Bargaining Power of Buyers;

Əlavə Məlumatdır:
Threats of Substitutes: In general, industries are more attractive when the threat
of substitutes is low. This means that products or services from other industries
can’t easily serve as substitutes for the products or services being made and sold in
the focus firm’s industry.
Threat of New Entrants: In general, industries are more attractive when the threat
of entry is low. This means that competitors cannot easily enter the industry and
successfully copy what the industry incumbents are doing to generate profits.
There are a number of ways that firms in an industry can keep the number of new
entrants low. These techniques are referred to as barriers to entry. A barrier to
entry is a condition that creates a disincentive for a new firm to enter an industry.
Rivalry Among Existing Firms: In most industries, the major determinant of
industry profitability is the level of competition among the firms already
competing in the industry. Some industries are fiercely competitive to the point
where prices are pushed below the level of costs. When this happens, industry-
wide losses occur. In other industries, competition is much less intense and price
competition is subdued.
Bargaining Power of Suppliers: In general, industries are more attractive when
the bargaining power of suppliers is low. In some cases, suppliers can suppress the
profitability of the industries to which they sell by raising prices or reducing the
quality of the components they provide. If a supplier reduces the quality of the
components it supplies, the quality of the finished product will suffer, and the
manufacturer will eventually have to lower its price. If the suppliers are powerful
relative to the firms in the industry to which they sell, industry profitability can
suffer.
Bargaining Power of Buyers: In general, industries are more attractive when the
bargaining power of buyers (a start-up’s customers) is low. Buyers can suppress
the profitability of the industries from which they purchase by demanding price
concessions or increases in quality. For example, even in light of the problems it
has encountered over the past several years, the automobile industry remains
dominated by a handful of large automakers that buy products from thousands of
suppliers in different industries. This enables the automakers to suppress the
profitability of the industries from which they buy by demanding price reductions.
Similarly, if the automakers insisted that their suppliers provide better-quality parts
for the same price, the profitability of the suppliers would suffer.

10. The ways in which enterprises can obtain a strategic advantage

through innovation

Strategic advantages through innovation are:

Mechanism Strategic Advantage Example

Novelty in product or Offering something no Introducing the first ...
service offering one can else fountain pen, camera,
 dishwasher, etc.
Novelty in the process Offering it in ways others Internet banking, online
cannot match – faster, bookselling, etc.
lower costs, etc.
Legal protection of Offering something Blockbuster drugs like
intellectual property which others cannot do Zantac, Prozac, etc.
unless they pay a lisence
or other fee
Add/extend the range of Move basis of Japanese car
competitor factors competition manufacturing
Timing First mover advantage Amazon.com, Yahoo –
others can follow, but the
advantage ‘sticks’ to the
early movers
Robust/platform design Offering something CD, DVD, MP3, Intel
which provides the and AMD with
platform different variants of their
microprocessor families
Rewriting the rules Offering something Typewriters vs. computer
which represents a word processing, ice vs.
completely new product refrigerators, electric vs.
or process concept gas or oil lamps
Reconfiguring the parts Rethinking the way in Zara, Benetton in
of the process which bits of the system clothing, Dell in
work together computers, Toyota in its
supply chain
management
Transferring across Recombining established Polycarbonate wheels
different application elements for different transferred from
contexts markets application market like
rolling luggage into
children’s toys –
lightweight micro-
scooters
Complexity Offering something Rolls-Royce and aircraft
which others find it engines
difficult to master
11. The concept and process of innovation, the types of innovation,
the sources of innovative ideas through examples

Innovation is the process of creating something new, which is central to the

entrepreneurial process.

We are talking about change, and this can take several forms. The ‘4Ps’ of
innovation are:

• Product innovation – changes in the things (products/services) which an

organization offers;
• Process innovation – changes in the ways in which they are created and
delivered;
• Position innovation – changes in the context in which the products/services are
introduced;
• Paradigm innovation – changes in the underlying mental models which frame
what the organization does.

12. The techniques used to generate ideas

In general, entrepreneurs identify more ideas than opportunities because many

ideas are typically generated to find the best way to capitalize on an opportunity.
Several techniques can be used to stimulate and facilitate the generation of new
ideas for products, services, and businesses. They are:
- Brainstorming
- Focus Groups
- Library and internet research
- Other Techniques

Əlavə Məlumatdır:
- Brainstorming: In general, brainstorming is simply the process of generating
several ideas about a specific topic. The approaches range from a person sitting
down with a yellow legal pad and jotting down interesting business ideas to formal
“brainstorming sessions” led by moderators that involve a group of people.
In a formal brainstorming session, the leader of the group asks the participants to
share their ideas. One person shares an idea, another person reacts to it, another
person reacts to the reaction, and so on. A flip chart or an electronic whiteboard is
typically used to record all the ideas. A productive session is freewheeling and
lively. The session is not used for analysis or decision-making—the ideas
generated during a brainstorming session need to be filtered and analyzed, but this
is done later. We show the four strict rules for conducting a formal brainstorming
session in Table 2.4. As you’ll see, the number one rule for a brainstorming session
is that no criticism is allowed, including chuckles, raised eyebrows, or facial
expressions that express skepticism or doubt. Criticism stymies creativity and
inhibits the free flow of ideas.

- Focus Groups: A focus group is a gathering of 5 to 10 people who are selected

because of their relationship to the issue being discussed. Focus groups are used
for a variety of purposes, including the generation of new business ideas. Focus
groups typically involve a group of people who are familiar with a topic, are
brought together to respond to questions, and shed light on an issue through the
give-and-take nature of a group discussion. Focus groups usually work best as a
follow-up to brainstorming, when the general idea for a business has been
formulated—such as casual electronic games for adults—but further refinement of
the idea is needed. Usually, focus groups are conducted by trained moderators. The
moderator’s primary goals are to keep the group “focused” and to generate lively
discussion.

- Library and internet research: A third approach to generating new business

ideas is to conduct library and Internet research. A natural tendency is to think that
an idea should be chosen, and the process of researching the idea should then
begin. This approach is too linear. Often, the best ideas emerge when the general
notion of an idea—like creating casual electronic games for adults—is merged
with extensive library and Internet research, which might provide insights into the
best type of casual games to create.

- Other Techniques: Firms use a variety of other techniques to generate ideas.

Some companies set up customer advisory boards that meet regularly to discuss
needs, wants, and problems that may lead to new ideas. Other companies conduct
varying forms of anthropological research, such as day-in-the-life research. Intuit,
the maker of Quicken, Quickbooks, and TurboTax, practices day-in-the life
research. The company routinely sends teams of testers to the homes and
businesses of its users to see how its products are working and to seek insights for
new product ideas.

13. Product/customer focus is one of the characteristics of the

successful entrepreneur

A second defining characteristic of successful entrepreneurs is a product/customer

focus. This quality is exemplified by Steven Jobs, the late co-founder of Apple
Inc., who wrote, “The computer is the most remarkable tool we’ve ever built ... but
the most important thing is to get them in the hands of as many people as
possible.” This sentiment underscores an understanding of the two most important
elements in any business—products and customers. While it’s important to think
about management, marketing, finance, and the like, none of those functions makes
any difference if a firm does not have good products with the capability to satisfy
customers. This philosophy is affirmed by Alex Algard, the founder of
WhitePages.com. WhitePages.com started in 1997 to provide consumers a free,
accurate, and fast online alternative to telephone directory assistance. It is one of
the most trusted and comprehensive sources for consumers to quickly find
relevant, accurate contact information in North America.
A product/customer focus also involves the diligence to spot product opportunities
and to see them through to completion. The idea for the Apple Macintosh, for
example, originated in the early 1980s when Steven Jobs and several other Apple
employees took a tour of a Xerox research facility. They were astounded to see
computers that displayed graphical icons and pull-down menus. The computers
also allowed users to navigate desktops using a small, wheeled device called a
mouse. Jobs decided to use these innovations to create the Macintosh, the first
user-friendly computer. Throughout the two and a half years the Macintosh team
developed this new product, it aintained an intense product/customer focus,
creating a high-quality computer that is easy to learn, fun to use, and meets the
needs of a wide audience of potential users.