Explain the Four Types of Entrepreneurial Ventures, and Describe Their Underlying Characteristics

Entrepreneurship & Venture Finance (GEB 5114)

Study Questions for Midterm Exam

University of Florida, Spring 2017

Dr. Michael Morris

1. Explain the four types of entrepreneurial ventures, and describe their underlying characteristics.  Which type of venture is the one you are addressing your business plan.  What would be the implications of these underlying characteristics for that venture?

Survival, Lifestyle, Managed growth, and Aggressive growth. There is a sheet in the reading explaining each of these. We are definitely perusing an aggressive growth model. It is a technology based product so it is high on the technology investment side, and we will be scaling our management focus, and as it grows we would have to look toward private investor/venture capital firm to finance.

1. What do we mean by a product/service depth and breadth chart to capture the venture’s revenue drivers?  What does such a chart of table tell us and what are some of its potential implications?

It includes the particular products or services being sold, the nature of the product/service mix, and the relative depth and breadth of this mix. In addition, the value proposition is defined by whether the firm provides access to the product or service, or sells the actual product or service by itself, or sells the product or service as part of a bundle or total system. Other issues include whether the firm makes the product or service, outsources product manufacture or service delivery, licenses others to make and sell, acquires the product and re-sells it, or acquires the product and then modifies and re-sells it. Finally, the value proposition is affected by whether the product or service is provided directly by the firm or through an

intermediary.

1. Why is it useful to approach entrepreneurship as a process?  Explain the implications of the fact that it is a process. Identify the major stages in the entrepreneurial process, and three issues that need to be addressed at each stage if you were launching CLOCKY.  Apply these stages to the venture for which you are doing your business plan.  In which stage in the process is the most entrepreneurial behavior required?

Entrepreneurship as a process-

Identify an opportunity > Develop the concept > Determine the required resources > Acquire the necessary resources > Implement and Manage > Harvest the venture

1. Are entrepreneurs born? NO Does and individual have to have the ‘right stuff’ to start a venture? NO/YES Is there a particular prototype that one has to fit in terms of key characteristics you must have? NO Tie in to your answer the key traits, skills and cognitive styles associated with entrepreneurship and where these traits come from.  What does all this suggest about the founders of ZIPCAR.

• Achievement motivation        - Organizational skills
• Internal locus of control                - Opportunistic
• Calculated risk-taking                - Adaptively/versatility
• Tolerance of ambiguity                - Initiative/energetic
• Independence                        - Resourcefulness
• Persistence/perseverance/tenacity – Creativity
• Self- confidence                - Perceptiveness
• Dedication/Strong work ethic        -Assertiveness - Persuasiveness

1. What does it mean to say something is more entrepreneurial or less entrepreneurial? Explain the concept of entrepreneurial orientation or EO and its underlying dimensions. What is the entrepreneurial grid and how does it capture the strategy for entrepreneurship of a given organization?  Where would you place three of the companies in the cases in the grid? What is the relationship between EO and company performance, and why is it strongest under conditions of environmental turbulence?

Your depth and breadth chart captures your product lines or revenue drivers.  Breadth is the number of product lines or revenue drivers (e.g., we sell copiers, toner, and service contracts) and depth is the number of options or variants under each product line (we have three types of service contracts).  One uses it to assess where revenues will derive from versus where profits will derive from, and hence it is useful in formulating strategy for different products---e.g., which ones to invest more in, which ones to push with promotions or incentives or commissions.  It is also useful in evaluating relationships among product offerings, and the extent to which items are perceived by customers to be substitutes for one another, complements or unrelated---again with implications for your marketing actions

Using the factors described in Figure 1, a two-dimensional matrix has been created that we shall refer to as the entrepreneurial grid. This grid is illustrated in Figure 2, and five possible scenarios have been highlighted. The scenarios, which have been labeled periodic/incremental, continuous/incremental, periodic/discontinuous, dynamic, and revolutionary, reflect the variable nature of entrepreneurial intensity. For example, an organization responsible for numerous entrepreneurial events that are highly innovative, risky, and proactive will fit into the revolutionary segment of the entrepreneurship matrix and will exhibit the highest levels of entrepreneurial intensity. Similarly, where few entrepreneurial events are produced, and these events are only nominally innovative, risky and proactive, the organization can be described as periodic/incremental in terms of its (modest) level of entrepreneurial intensity.

[pic 1] [pic 2]

1. Describe the different types of entrepreneurs, and the need for a fit between type of entrepreneur and types of venture.  Which type of entrepreneur is closest to your own self-concept?  What implications might this have for your future endeavors?

• The personal achiever – High need for achievement. Need for performance feedback. Desire to plan and set goals. Strong individual initiative. Strong personal commitment, and identification with their organization. Internal locus of control. Belief that work should be guided by personal goal, not those of others.

• The super salesman – Capacity to understand and feel another, to empathize. Desire to help others. Belief that social processes are important; social interaction and relationships

are important • Need to have strong positive relationships with others • Belief that the salesforce is crucial to carrying out company strategy • Background of fewer years of education and more years of business experience, and especially selling experience, than other entrepreneurs

• The real manager - –Unless he/she over-manages the early stage venture, is able to grow the venture significantly

• Desire to be a corporate leader • Desire to compete • Decisiveness • Desire for power • Positive attitudes to authority • Desire to stand out from the crowd

• The expert idea generator - Desire to innovate • Love of ideas, curious, open-minded • Belief that new product development is crucial component of company strategy • Good intelligence:

–Thinking is at center of their entrepreneurial approach –Intelligence as a source of competitive advantage