School of Law

Bachelor of laws

Course: Entrepreneurship

Group Assignment on

Chapter Summery

Sumitted by

Hundaol Hordofa:-LGE⁄2786⁄13

Kedir Hussen IDNo:- LGE⁄5610⁄13

Minda Tesga:- LGE⁄1357⁄13

Musse Solomon LGE/4356/13

Submitted to: Yalew Alemayehu (MBA)

September, 2021
Addis Ababa, Ethiopia
CHAPTER 4 SUMMARY

Product ⁄service development

Basically, a product is a tangible offering to a customer, whereas a service is an intangible offering.

The former is usually a one-time exchange for value. In contrast, a service usually involves a
longer period of time. The value of a product is inherent in the tangible offering itself, for example,
in the can of paint or pair of pants. In contrast, the value of a service often comes from the eventual
benefit that the customer perceives from the time while using the service. In addition, the customer
often judges the value of a service based on the quality of the relationship between the provider
and the customer while using the service.

Product development includes a wide range of activities, ranging from the time that there is a new
idea for a product and up to the ongoing management activities to produce and provide the product
to customers. (The latter is referred to by the phrase "product management.") How a product is
developed depends very much on the nature of the organization and its products, for example,
retail, manufacturing or wholesale. It also depends on the culture of the organization, for example,
whether products are developed intentionally and explicitly or unintentionally and implicitly.

There are at least five different common approaches to developing a new product. Some
approaches seem to start out slow and soon stop altogether. Other approaches start out fast and
then end in a flurry of confusion. Still, other approaches start out carefully and go on to make a
huge difference for their customers. The approaches include:

1. “Build It and They Will Come” Approach

2. Seat-of-the-Pants Approach
3. Incremental Planning Approach
4. Business Planning Approach
5. Business Development Approach

There are a variety of models, or sequences of phases, that people use to develop a product or
service, including:
 1. Fuzzy front-end, including often informal sharing and clarification of ideas for the new
product.
2. Product design, including activities that result in a detailed set of specifications for the
product's design.
3. Product implementation, including refining the specifications by testing them, often
through development and use of a sample (or prototype) of the product.
4. Fuzzy back-end, including producing the new product and rolling it out to potential
markets.

The following article suggests five phases similar to the above in product development, including
the following.

1.Idea generation (creativity and innovation, brainstorming, competitor research)

2.Research and development (market research, design thinking, prototyping, feasibility testing)

3.Testing (focus groups, customer surveys

4. Analysis (feedback, interviews, pricing, problem solving and decision making, financial
projections

CHAPTER 6 SUMMARY

Business financing

Business Finance is a general term that refers to the raising of capital to finance a capital need of
a company. The need for business finance can be triggered by a number of different things
including the startup, expansion, acquisition or exit of a company.

Throughout its life cycle, companies have a continuous need for capital, yet the type of capital
needed will always vary from stage to stage. When in the early stage, companies have a need for
development finance or venture capital.
Venture capital is for companies that have a product but need business finance in order to bring
the product to market and to scale their distribution platform. Venture capital is provided by
venture capital firms who specialize in certain sectors.

Unlike venture capital, development finance is suited for established companies that are looking
to expand their scale through a specific project or capital expansion.

Once companies pass out of the startup and expansion stage, they need adequate working capital
to fund their day to day operations. Working capital finance is a key component of all strong
balance sheets as it mitigates the timing risk between collections and payments.

Working capital is technically the difference between a company’s current assets and current
liabilities. In the context of business finance, the term refers to the amount of money needed to
support the normal working capital level of an operating business.

Capital is generally defined as the excess of asset value over liability value. When bankers analyze
a company’s balance sheet, they are very attuned to the level of capital.

This tells them how much money has been retained from earnings or contributed by the owners to
capitalize the business. Companies with a strong capital position have strong balance sheets.

Companies with weak capital positons are often overleveraged and more prone to defaulting on a
loan.

At a middle market size where revenues are generally over $20 million, most companies seek
capital beyond their local markets. Usually, the business finance needs of the company have
outstripped the resources of the owner or the local market.

The next step in the business finance continuum is the capital markets or a funding platform.
Capital markets are markets where companies can raise either debt or equity capital.

Capital markets can be private capital markets or they can be public capital markets where
companies must register. Middle market sized companies are usually better served by entering the
private capital market through utilizing a funding platform.
A funding platform is an efficient way to reach many lenders in a rapid time period. Funding
platforms come in all shapes and sizes. In the middle market, lender funding platforms are
maintained by firms that have transactional process expertise and strong relationships with many
lenders.