Entrepreneurship

Prepared by: Ali Baig

Sap id: 70070409

Section: BSCS-4C

Submitted to: Sir Khwaja

Dated: 15 January, 2020

Q1. What are the four primary components of a firm’s
business model? Define the term “core competencies”
and describe why it’s important for a firm to have one or
more core competencies.

Business Model
 A firm’s business model is its plan or diagram for how it
competes, uses its resources, structures its relationships,
interfaces with customers, and creates value to sustain itself on
the basis of the profits it generates.
 The term “business model” is used to include all the activities
that define how a firm competes in the marketplace.

Components of a Business Model

There are four components of a business model

Core Strategy
The first component of a business model is the core strategy, which
describes how a firm competes relative to its competitors.

Primary Elements of Core Strategy

 Mission statement
 Product/market scope
 Basis for differentiation
Strategic Resources
 A firm is not able to implement a strategy without resources, so the
resources a firm has affect its business model substantially.
o For a new venture, its strategic resources may initially be
limited to the competencies of its founders, the opportunity
they have identified, and the unique way they plan to serve
their market.
 The two most important strategic resources are:
o A firm’s core competencies
o Strategic assets

Partnership Network
 A firm’s partnership network is the third component of a business
model. New ventures, in particular, typically do not have the
resources to perform key roles.
 In most cases, a business does not want to do everything itself
because the majority of tasks needed to build a product or deliver
a service are not core to a company’s competitive advantage.
 A firm’s partnership network includes:
o Suppliers
o Other key relationships

Customer Interface
 The way a firm interacts with its customer hinges on how it
chooses to compete.
o For example, Amazon.com sells books over the Internet
while Barnes & Noble sells through its traditional bookstores
and online.
 The three elements of a company’s customer interface are:
o Target customer
o Fulfillment and support
o Pricing model
Core competencies
A core competency is a resource or capability that serves as a source of
a firm’s competitive advantage. Examples include Sony’s competence in
miniaturization and Dell’s competence in supply chain management.

Importance
The most important advantage of having core competencies is
having a long term competitive advantage. These competencies
help in bridging the gap between performance and opportunity,
thus helping a company in being a potential leader in the industry.
Q2. What are the four main financial objectives of entrepreneurial
ventures? Differentiate between “historical” and “pro-forma”
financial statements. If you were the founder of an
entrepreneurial firm would you set-up an advisory board?
Why or why not?

Profitability
It is the ability of a company to earn a profit.
 Many start-ups are not profitable during their first one to three
years while they are training employees and building their brands.
 However, a firm must become profitable to remain viable and
provide a return to its owners.

Liquidity
It is a company’s ability to meet its short-term financial obligations.
 Even if a firm is profitable, it is often a challenge to keep enough
money in the bank to meet its routine obligations in a timely
manner.

Efficiency
It is how productively a firm utilizes its assets relative to its revenue and
its profits.
 Southwest Airlines, for example, uses its assets very productively.
Its turnaround time, or the time its airplanes sit on the ground while
they are being unloaded and reloaded, is the lowest in the airline
industry.
Stability
It is the strength and vigor of the firm’s overall financial posture.
 For a firm to be stable, it must not only earn a profit and remain
liquid but also keep its debt in check.

Historical Financial Statements

It reflect past performance and are usually prepared on a quarterly and
annual basis.
o Publicly traded firms are required by the SEC to prepare
financial statements and make them available to the public.

Pro Forma Financial Statements

Are projections for future periods based on forecasts and are typically
completed for two to three years in the future.
 Pro forma financial statements are strictly planning tools and are
not required by the SEC.

Advisory Board
Advisory Boards consist of a group of individuals selected by the
entrepreneur who provide advice and help the company succeed. They
are separate from a formal Board of Advisors. Entrepreneurs can select
advisors based on needed skills or voids to fill within their company.
Reasons for an advisory board

An advisory board can give a company and its management team a

priceless opportunity to gain valuable insight, knowledge, and advice
without having to learn the hard way, set aside time for outside training,
or risk making costly mistakes that could have been avoided if the team
had more relevant experience. Introducing the CFO to the best source
for debt refinancing is just one example that can bring dollars to a
company’s bottom line.

Advisory boards help management scout the marketplace, gauge future

trends, and seek new strategic positions, as well as provide a catalyst in
the company’s efforts to build repeat, quality customers. American
Express, Molson Coors Brewing, and Toyota are among those large
companies that have assembled committees of key customers and
valued experts to introduce profitable connections and possible
partnerships and, in some cases, to help benchmark. And they have
very active boards of directors as you can imagine.

Unlike a board of directors, your advisory board has no authority over

the CEO or the management of your company. Your organizational
filings have no requirements to have or listen to advisory boards. Thus,
there is no risk in ignoring their advice, except losing the benefit that
might come from taking it. Similarly, your advisory board members have
no legal exposure or fiduciary responsibility to your company, which can
make it easier to attract the people you want to hear from.
Q3. Suppose that you have started a new venture. How would you
promote your products through social media? Differentiate
between “cost based” and “value based” pricing. Describe
market penetration strategy with the help of two examples

In recent years, social media has gone from a new idea to an

absolute must for marketers. Of all the new media marketing
platforms, social has most thoroughly turned traditional marketing
on its head. With older outbound marketing strategies, messages
are sent to potential customers, and communication is one way. 

On social media, customers and businesses can directly interact.

Both parties can ask each other questions, repost each other’s
content and work on forming relationships. Getting started with
social media marketing can be intimidating, so here are eight tips
for effectively promoting your business on social networks.

1. Choose the Right Platforms

When determining which channels to use, you should consider your

customers and your business. It’s important that you create accounts on
the platforms your target audience uses, so they can easily connect with
you. Conduct some research to determine what sites your audience
probably uses, and then use them too. 

2. Create a Calendar

Scrambling to create posts at the last minute can lead to low-quality

content. A lack of organization can lead to repeated posts or a lull in
your presence on one of your channels. Creating social media content
calendars can help avoid those mistakes and lead to more effective
posts. Content calendars also help you create goals and strategies for
meeting them, and track your progress toward them.

3. Encourage Engagement

Social media should, of course, be social. That doesn’t only apply to

those who use the sites for fun. Businesses need to be interactive, too.
In order to take advantage of social capability, you need to encourage
interaction.
Post content that people want to read, ask questions and like, repost
and comment on other users’ posts. Doing research on your audience
can help you figure out what they might like. 

4. Don’t Over-Promote

One trap that businesses often fall into is treating social media too much
like regular advertising. You don’t want to blatantly promote yourself in
every post. You need to create content that people will actually enjoy
and want to see.

Promoting yourself is okay every once in a while. Some marketers go by

the one-in-seven rule, which says that for every one directly promotional
post, six others should be content-based. In these other six posts, you
could share articles, comment on current events or ask a question. You
don’t have to entirely avoid mentioning your brand in these posts; just be
careful not to sell too hard.

5. Share Video

Visual content works well on social media. Video content, especially, is

ideal for grabbing people’s attention as well as conveying your
personality and passion to your customers. 

Visual content stands out as people scroll through their social feeds, so
they’re more likely to view it and engage with it. It also allows you to say
more than you could in a typical post without taking up much room.
Create interesting, narrative-driven video in order to get the best
reaction.

6. Address Problems Quickly

Hopefully you receive mostly positive feedback on social media.

Occasionally you may encounter someone who is upset, argumentative
or has something negative to say about your company.

You should carefully monitor mentions of your brand on social channels,

so you can catch issues before they escalate. If you spot a problem,
engage with the person by publicly apologizing if necessary and offering
to solve the problem over a direct message exchange. This way, people
who see the post know you were responsive but don’t have to see all the
specifics of the issue.
7. Build a Community

Instead of trying to get as many followers as possible, focus on finding

customers who are interested, loyal and engaged. These people are
more likely to repost your content, like your posts and become
customers.

When you build a community around your brand, the people within that
community will engage with each other and help to promote your
content. You could even try reaching out to exceptionally influential
social media users and asking them to help you by reviewing a product
or mentioning you in a post.

8. Provide Value

Perhaps the most important thing you can do on social media is provide
value to your followers. Create something that your audience will find
useful. It could be something that tells them something they didn’t know
before, makes them laugh, entertains them or anything else that’s
beneficial in some way. 

Cost Based Pricing Value Based Pricing

The list price is determined by The list price is determined by

adding a markup percentage to estimating what consumers are
a product’s cost. willing to pay for a product.

Market Penetration Strategy

It is a strategy to enter into a new market. It's also used as a metric to
measure the percentage of market share a service or product is able to
capture. Professionals from the retail space should always consider
applying both definitions to their expansion plans for the best results.

Examples