Solution Manual For Griffins Fundamentals of Management 9th Edition Ricky W Griffin

Solution Manual for Griffinâ€™s Fundamentals of Management, 9th Edition Ricky W.
Griffin
Solution Manual for Griffinâ€™s Fundamentals of

Management, 9th Edition Ricky W. Griffin
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CHAPTER 5
Entrepreneurship and New Venture
Management
CHAPTER SUMMARY
Chapter 5 deals with entrepreneurship and new venture formation. Planning and decision making are
essential ingredients in the success of any new and growing venture. Moreover, entrepreneurship ideas
and processes can also contribute directly to effective planning and decision making.
LEARNING OUTCOMES
After studying this chapter, students should be able to:
1. Describe the role of entrepreneurship in society.
2. Understand the major issues involved in choosing strategies for small firms and the role of
international management in entrepreneurship.
3. Discuss the structural challenges unique to entrepreneurial firms.
4. Understand the determinants of the performance of small firms.
MANAGEMENT IN ACTION
Putting the Greek into Yogurt
He is not even Greek! The opening vignette features the story of the Turkey-born, U.S. immigrant who
launched Chobani (Turkish for shepherd), the enormously successful Greek yogurt brand. Hamdi
Ulukaya set up shop in an old Kraft Foods yogurt plant in upstate New York and launched his highly
successful product. The case details his journey from idea to launch.
Management Update: Hamdi Ulukaya was named the U.S. Entrepreneur of the Year in 2012 and
World Entrepreneur of the Year in 2013 by Ernst & Young. He also won the Small Business
Administration’s Entrepreneurial Success of the Year Award in 2012 and was named one of TIME
magazine’s 100 Most Influential People in the World in 2017.
LECTURE OUTLINE
I. The Nature of Entrepreneurship
A. Entrepreneurship is the process of planning, organizing, and assuming the risk of a
business venture. An entrepreneur is someone who engages in entrepreneurship.
B. A small business is one that is privately owned by an individual or a small group of
individuals and has sales and assets that are not large enough to influence its environment.
Teaching Tip: Point out to your students a sample of small businesses around campus—convenience
stores, dry cleaners, local restaurants, clothing shops, and so forth.
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 5: Entrepreneurship and New Venture Management 71
II. The Role of Entrepreneurship in Society

Entrepreneurs and small businesses play three important roles in U.S. society. They create jobs,
foster innovation, and contribute to the success of large businesses.
A. Job Creation
1. Small business is an important source of new jobs in the United States.
2. Entrepreneurial business success, more than business size, accounts for most new job
creation.
3. Jobs are created by entrepreneurial companies of all sizes, all of which hire and lay off
workers.
a. Small firms often hire at a faster rate than large firms, but are also more likely to
eliminate jobs at a far higher rate.
b. Small firms are usually the first to hire in times of economic recovery, but are
also the first to lay off workers during economic downswings.
Discussion Starter: Ask if any of your students ever took a job with a new firm just as it was starting
out. Ask them to recount their experiences.
B. Innovation
1. Small businesses create many new innovative products and services. Examples include
the personal computer, air conditioning, and the self-developing photograph.
2. Most of today’s innovative software is supplied by relatively new start-up companies;
however, not all successful new start-ups are Internet-based enterprises. Entrepreneurs
have also achieved success in diverse fields such as specialized dog training and
handcrafted musical instruments.
C. Importance to Big Business
1. Most of the products made by big manufacturers are sold to consumers by small
businesses.
2. Moreover, small businesses provide big businesses with many of the services, supplies,
and raw materials they need.
Discussion Starter: The role of small business seems to have escalated in recent years. Many of the
thousands of U.S. workers and managers who were displaced by downsizing and layoffs in the late
1980s and early 1990s launched new enterprises. Though many failed, others succeeded and have
continued to thrive.
III. Strategy for Entrepreneurial Organizations
Three strategic challenges facing small firms are choosing an industry in which to compete,
identifying distinctive competencies, and writing a business plan.
A. Choosing an Industry
The major industry groups that include successful new ventures and small businesses are
services, retailing, construction, financial and insurance, wholesaling, transportation, and
manufacturing. Each group differs in its requirements for employees, money, materials, and
machines. In general, the more resources an industry requires, the more difficult it is to start
a business and the less likely it is that the industry is dominated by small firms.
1. Services
a. Primarily because they require few resources, service businesses are the fastest-
growing business segment of small-business enterprise.
b. No other industry offers a higher return on time invested.
c. Services appeal to the talent for innovation typified by many small businesses.
Teaching Tip: Point out the large number of small service and retail businesses that likely exist around
your campus.
72 Chapter 5: Entrepreneurship and New Venture Management
2. Retailing
a. Retailers sell products manufactured by other firms directly to consumers.
b. Entrepreneurs who start small businesses favor specialty shops. These let them
focus limited resources on narrow market segments.
3. Construction
Many construction projects are small, local projects that lend themselves to small
business.
4. Financial and Insurance
Small businesses may be affiliates of or sell products provided by larger national firms.
5. Wholesaling
a. Wholesalers buy products from manufacturers or other producers, and then sell
them to retailers. They usually buy products in bulk and store them in quantity at
convenient locations for retailers.
b. Wholesalers need fewer employees than manufacturers, retailers, or service
providers.
c. They also serve fewer customers than other providers.
6. Transportation
Smaller, local transportation markets, such as city taxi services or charter airlines
services, may be effectively served by small business.
7. Manufacturing
Due primarily to disadvantageous economies of scale, small businesses historically
have not performed as well as large ones in manufacturing. However, technology
innovations in an industry often shift the economies-of-scale curve, thereby creating
opportunities for small businesses.
Teaching Tip: With the growing role of computers and other technology in the creation of new
products and product ideas, the disadvantages of manufacturing for small businesses become less
significant. Use of technology can shift an industry’s economies of scale, making it less expensive to
produce products in small quantities.
B. Emphasizing Distinctive Competencies
Distinctive competencies are the aspects of business that the firm performs better than its
competitors. The distinctive competencies of small business usually fall into three areas: the
ability to identify new niches in established markets, the ability to identify new markets, and
the ability to move quickly to take advantage of new opportunities.
1. Identifying Niches in Established Markets
a. An established market is a market in which several large firms compete
according to well-established criteria.
b. A particular niche (a segment of a market that is not currently being exploited)
may not be adequately served by the big businesses that dominate older,
established markets.
Extra Example: Many retailers sell women’s attire, but Eddie Bauer was the first retailer offering all
of its women’s products in tall sizes. In doing so, Eddie Bauer found an unexploited niche.
2. Identifying New Markets
Discovery of new markets happens either by transferring products or services to a new
geographic market or by inventing new products that create an entire industry.
Extra Example: Ann Taylor achieved success when she identified a new market for women’s business
attire that is professional and feminine at the same time.
3. First-Mover Advantages
Small firms can be more flexible than larger ones, enabling them to obtain first-mover
advantages that come from being the first to exploit an opportunity before any other
firm does.
Extra Example: Dell Computer has thrived as a result of its first-mover advantage in direct
marketing—selling online and shipping directly to consumers. Dell has been able to maintain its
dominance in this segment of the industry because of its “head start.”
C. Writing a Business Plan
1. Another key ingredient to entrepreneurial success is the preparation of a strong
business plan, a document that summarizes the business strategy and structure.
Teaching Tip: The website Bplans (www.bplans.com) offers sample business plans. It is interesting to
look at the variety of businesses that are the subject matter of these plans.
2. Business plans should answer the following questions:
a. What are the entrepreneur’s goals and objectives?
b. What strategies will the entrepreneur use to obtain these goals and objectives?
c. How will the entrepreneur implement these strategies?
3. Business plans should also include the entrepreneur’s qualifications for this particular
business, his or her sales and other forecasts, and information about financial planning.
Group Exercise: Have small groups of students sketch the basic issues they would need to consider if
they were going to start a specific type of new business.
D. Entrepreneurship and International Management
Big business is traditionally associated with international expansion, but many smaller
companies are moving into foreign countries. The risks are high, but so are the potential
rewards.
IV. Structure of Entrepreneurial Organizations
A. Starting the New Business
The entrepreneur must commit to business ownership and then choose an industry and
market. Choosing an industry and market requires would-be entrepreneurs to assess not only
industry trends but also their own skills.
1. Buying an Existing Business
a. If successful, an existing business has already proved its ability to draw
customers at a profit.
b. It has also established working relationships with lenders, suppliers, and the
community.
c. The track record of an existing business gives potential buyers a much clearer
picture of what to expect than any estimate of a new business’s prospects.
2. Starting from Scratch
a. Reasons for starting a business from scratch rather than buying an existing
business are that the business does not suffer the ills effects of a prior owner’s
mistakes and the start-up owner is free to choose lenders, equipment, inventories,
locations, suppliers, and workers.
b. However, the risks of starting a business from scratch are greater than those of
buying an existing business.
(1) Founders of new businesses can make only predictions and projections
about their prospects.
(2) Success or failure depends heavily on identifying a genuine business

opportunity—a product for which many customers will pay well but which
is currently unavailable to them. To find openings, entrepreneurs must study
markets and answer the following questions:
(a) Who are my customers?
(b) Where are they?
(c) At what price will they buy my product?
(d) In what quantities will they buy?
(e) Who are my competitors?
(f) How will my product differ from those of my competitors?
Teaching Tip: If possible, point out examples of local firms that have been started from scratch and
examples in which a business has been sold to a new owner.
B. Financing the New Business
1. Personal Resources
Personal resources, the savings of the entrepreneur and money borrowed from his or
her friends and family, are the most important source of money.
2. Strategic Alliances
Strategic alliances with established firms are becoming more common.
3. Lenders
a. Although lenders provide much smaller portions of start-up funds than the
personal resources of owners, they are still important.
b. Getting money from lenders, however, requires extra effort.
(1) Banks and private investors usually want to see detailed outlines of
proposed businesses and markets, owners’ backgrounds, and other sources
of funding.
(2) Government loans have strict eligibility guidelines.
4. Venture Capital Companies
Venture capital companies are groups of small investors seeking to make profits on
companies with rapid growth potential. Most of these firms do not lend money; rather,
they invest it, supplying capital in return for stock.
5. Small-Business Investment Companies
Small-business investment companies (SBICs) are companies that borrow money from
the Small Business Administration (SBA) and lend it to entrepreneurs.
6. SBA Financial Programs
a. Several SBA programs offer funds to qualified applicants.
(1) In order to qualify, firms must meet standards of size and independence and
also must be unable to get private financing at reasonable terms.
(2) Because of these and other restrictions, SBA loans have never been a major
source of financing for small businesses.
b. The SBA also provides bank loan guarantees in some cases.
C. Sources of Management Advice
Entrepreneurs have numerous sources that they can turn to for help in launching and running
their new businesses, including advisory boards, management consultants, the SBA, and
networking.
1. Advisory Boards
Some small businesses create boards to provide advice and assistance.
2. Management Consultants
Management consultants are experts who charge fees to help managers solve problems.
They often specialize in one area, such as international business or small business, and
can bring an objective and trained outlook to problems and provide logical
recommendations. However, they often charge a lot of money for their services.
3. The Small Business Administration
The SBA offers small business four major management-counseling programs at
virtually no cost: the Service Corps of Retired Executives (SCORE), the Active Corps
of Executive (ACE) program, the Small Business Institute (SBI), and the Small
Business Development Center (SBDC) program.
Teaching Tip: Arrange for a local speaker from one of the SBA’s programs to visit the class for a few
minutes and discuss various new business assistance programs.
4. Networking
Many small-business owners are discovering the value of networking—meeting
regularly with one another to discuss common problems and opportunities and, perhaps
most important, to pool resources.
D. Franchising
1. A franchising agreement is a contract between an entrepreneur (the franchisee) and a
parent company (the franchiser). The franchisee pays the franchiser a fee for the use of
its trademarks, products, formulas, and business plans. The franchiser provides
management and marketing expertise, a national image, and in some cases financing.
2. Franchising potentially reduces the entrepreneur’s risks, but it also provides less
control and profit potential, and it usually involves a substantial start-up cost.
Discussion Starter: Entrepreneur Magazine publishes an annual list of the fastest-growing franchises
in the United States each year. Visit www.entrepreneur.com/franchises/fastestgrowing and explore the
list with students. In what industries are the fastest-growing franchises located in? Why are these types
of firms popular choices for franchising?
Teaching Tip: Point out some local businesses, especially near campus, that are franchised.
V. The Performance of Entrepreneurial Organizations
A. Trends in Small-Business Start-Ups
1. Emergence of E-Commerce
The Internet has provided fundamentally new ways of doing business. Savvy
entrepreneurs have been able to create and expand new businesses faster and more
easily than ever before.
Teaching Tip: Point out to students how the increased personal and business use of the Internet has
helped small business. For an investment of just a few thousand dollars, a small business can reach
customers and suppliers nationwide.
2. Crossovers from Big Business
More businesses are being started by people who have opted to leave big corporations
and put their experience and know-how to work for themselves.
3. Opportunities for Minorities and Women
Entrepreneurship creates opportunities for women and minorities to reach higher
achievement and be more independent. Small businesses owned by minorities and
women are growing rapidly.
4. Better Survival Rates

The failure rate among small businesses has been declining in recent years.
B. Reasons for Failure
1. Incompetent or inexperienced managers may not have the know-now how to make
basic business decisions or understand the basic concepts and principles of
management.
2. If the entrepreneur is unable or unwilling to make the required commitment of time
and effort, then a new venture may fail through neglect.
3. Weak control systems fail to signal impending problems, and serious consequences can
result.
4. Insufficient capital is the reason for many new business failures, as some entrepreneurs
are overly optimistic about how soon they will start earning profits.
C. Reasons for Success
1. Hard work, drive, and dedication on the part of the entrepreneur are all critical to
success. Long hours and effort are also required.
2. Careful analysis of market demand for proposed products or services is imperative if a
business is to succeed.
3. Managerial competence on the part of the entrepreneur is crucial.
4. Luck plays a role in the success of some businesses.
Teaching Tip: Emphasize that not everyone is cut out to be an entrepreneur. Indeed, many people who
try it end up going back to work for someone else.
Discussion Starter: Ask students if they have an interest in being an entrepreneur or if they intend to
go to work for someone else.
END-OF-CHAPTER
Questions for Review

1. Describe the similarities and differences between entrepreneurial firms and large firms in terms of
their job creation and innovation.
Jobs are created by entrepreneurial companies of all sizes, all of which hire workers and all of
which lay them off. Although small firms often hire at a faster rate than large ones, they are also
likely to eliminate jobs at a far higher rate. Small firms are also usually the first to hire in times of
economic recovery, whereas large firms are generally the last. However, large firms are also the
last to lay off workers during economic downswings. Both entrepreneurial and large firms are
innovative and have developed new products.
2. What characteristics make an industry attractive to entrepreneurs? Based on these characteristics,
which industries are most attractive to entrepreneurs?
Many entrepreneurs are starting their businesses with limited resources, and therefore, attractive
industries are those in which a small start-up investment is sufficient. Another attractive
characteristic is an industry in which a few large firms dominate, because that typically creates
market niches that entrepreneurs can successfully fill. Yet another attractive quality is the low
economies of scale, highly specialized skills, and customization required by some crafts and
trades. These trades are often uneconomical for large firms, but can be profitable for small ones.
Thus, services, retailing, construction, financial and insurance, wholesaling, and transportation are
popular choices for entrepreneurs, while manufacturing tends to be dominated by large firms.
3. Describe recent trends in new business start-ups.

One of the most significant recent trends in small business start-ups is the rapid emergence of
digital commerce. Because the Internet has provided fundamentally new ways of doing business,
savvy entrepreneurs have been able to create and expand new businesses faster and more easily
than ever before. Workers opting to leave their jobs at large firms for self-employment is another
important trend, as is increased entrepreneurial opportunities for women and minorities. Small
business failure rates have been declining recently, encouraging entrepreneurship.
4. What are the different sources of advice for entrepreneurs? What type of information would an
entrepreneur be likely to get from each source? What are the drawbacks or limitations for each
source?
Entrepreneurs may get advice from advisory boards, management consultants, the SBA, and
networking with peers. Advice can cover a variety of topics, from marketing to financing to
human resources. The advice obtained from advisory boards is only as good as the members of the
board. The same holds true for management consultants, who also may charge high fees. The
SBA provides advice at virtually no cost, but again, quality varies depending on the expertise of
the volunteer advisors. Networking can be one of the most effective sources of advice because the
advice is practical and relevant.
5. What are the basic reasons why small businesses succeed and what are the basic reasons they fail?
One common reason for new business success is a combination of hard work, drive, and
dedication on the part of the entrepreneur. Market demand, managerial competence, and luck are
also important. Reasons for failure include inexperienced or incompetent management, lack of
dedication, weak control systems, and insufficient capital.
Questions for Analysis

1. Entrepreneurs and small businesses play a variety of important roles in society. If these roles are
so important, do you think that the government should do more to encourage the development of
small business? Why or why not?
This is an opinion question, with no absolutely right or wrong answer. Instead, the quality of an
answer depends on how well it is justified. At present, the government already has numerous
programs in place to help new businesses, such as the SBA’s SCORE and ACE programs. In
addition, most state and local governments also have new business development programs. The
real issue, then, is whether current programs are sufficient or if more are needed.
2. Consider the four major reasons for new business failure. What actions can entrepreneurs take to
minimize or avoid each cause of failure?
Incompetence or inexperience can be counteracted by business training and education, as well as
by experience working in that type of business. Neglect can be avoided by a more serious time
commitment. Weak control systems are avoidable if owners pay closer attention to potential and
developing problems. Insufficient capital or overly optimistic financial projections can be solved
if entrepreneurs work with experts to determine a realistic budget and to obtain the necessary
funds in advance.
3. The U.S. automotive industry is well established, with several large and many small competitors.
Describe the unexploited niches in the U.S. auto industry and tell how entrepreneurs could offer
products that fill those niches.
Students’ answers will vary. They might point out that there are few automobiles for very modest
prices, such as the $10,000–$15,000 range. They might also note the sameness of the sedans,
SUVs, and trucks that most Americans buy. There might be an opportunity for a completely
different type of vehicle, or for the revival of old favorites, such as the station wagon.
4. List five entrepreneur-owned businesses in your community. In which industry does each business
compete? Based on the industry, how do you rate each business’s long-term chances for success?
Explain your answers.
Students will choose different companies, of course. They should correctly identify the industry. It
is possible that they will identify a variety of success factors such as economies of scale and the
existence of unfilled market niches.
5. Using the information about managing a small business presented in this chapter, analyze whether
you would like to work in a small business—either as an employee or as a founder. Given your
personality, background, and experience, does working in or starting a new business appeal to
you? What are the reasons for your opinion?
This makes an excellent outside-of-class assignment. There will likely be a wide variety of
answers.
Experiential Exercise
Negotiating a Franchise Agreement
a. Purpose
This exercise expands students’ understanding of the importance of negotiation skills for
franchisees and franchisers.
b. Format
Individual students perform the first two steps, and the last step is done in small groups.
Class discussion should be used for the follow-up questions.
c. Follow-Up Questions
1. Did doing both Step 1 and Step 2 in advance help or hinder your negotiations?
Students’ answers will vary, but you can point out to students that successful
negotiations are most likely when both parties understand their own position, as well as
the position of the other party.
2. Can a franchising agreement be so one-sided as to damage the interests of both parties?
How so?
When one party in a negotiation imposes that party’s will on the other party, the result
is likely to be dissatisfaction for both parties. For example, consider what would
happen in this negotiation situation if the franchiser (the restaurant owner) negotiated
terms that would ensure that most of the ventures’ profits would return to the
franchiser, leaving the franchisee with little profit. In the short run, such an
arrangement would seem to benefit the franchiser, while it would clearly not be
advantageous for the franchisee. However, in the long run, even the franchiser would
suffer, because the franchisee could become unhappy, make a lot of complaints, try to
turn other franchisees against the franchiser, perform substandard work and damage
the franchiser’s reputation, and eventually leave the franchise agreement, requiring the
franchiser to expend time and money in finding another franchisee.
Building Effective Conceptual Skills

a. Exercise Overview
This exercise encourages students to think through the factors that lead to small-business
success and to apply those ideas to their situation.
b. Format
The conceptual skills exercise is a two-step activity with Step 1 done individually and Step 2
in groups. The entire exercise will take about 20 minutes.
c. Exercise Task
1. Form a small group of four or five classmates, and discuss your respective lists. Look
for instances in which the same type of business appears on either both of your lists or
one of your lists and one of a classmate’s lists. Also look for cases in which the same
business appears on one or more than one list with either similar or dissimilar
prospects for success.
Differences in students’ interests and knowledge of local market conditions will lead to
different answers to this question.
2. At this point, how important do you regard personal interest as a factor in small-
business success?
Students might point out that without personal interest, entrepreneurs are unlikely to
invest the significant amount of time and energy that a small business requires.
However, personal interest alone isn’t enough to create a viable enterprise.
3. How important do you regard market potential as a factor in small-business success?
Market potential is critical to small business success. Without it, even the most
dedicated entrepreneur will not succeed. However, personal interest creates energy and
enthusiasm, which is also a necessary component of success. Students will probably
agree that both personal interest and market potential are absolutely vital.
Skills Self-Assessment Instrument

An Entrepreneurial Quiz
Note: This skills exercise is located in MindTap®.
a. Purpose
This assessment is designed to measure the students’ readiness to start their own businesses
and become entrepreneurs based on their own self-reported perceptions.
b. Format
Students should respond individually and privately to the items in this self-assessment,
although class or small-group discussion should follow to expand upon the points illustrated
in the assessment.
c. Scoring and Interpretation
Students determine their entrepreneurial skills by totaling the numbers assigned to each
response.
• A total score of 24–30 indicates that the student has what it takes to run his or her own
business.
• A total score of 17–23 indicates that the student would find challenges in running his
or her own business and should consider looking for a partner who is strong on the
points on which the student is weak.
• A total score of 10–16 indicates that the student would find starting and running his or
her business would be quite challenging and that even bringing in a partner would not
be enough to make that challenge surmountable.
On the Job Video
Bissell Brothers Brewing Company

Note: This video case is located in MindTap®.
1. Why would you consider Peter and Noah Bissell entrepreneurs?
Peter and Noah Bissell engage in entrepreneurship, the process of planning, organizing, operating,
and assuming the risk of a business venture. Even though they had no financial background or
experience in running a small business, they were “passionate about beer and making it.” They
were dedicated and willing to work hard. They carried out the major tasks of brewing the beer,
packaging it, and distributing it. These qualities are typical of entrepreneurs.
2. As entrepreneurs, how do Peter and Noah Bissell handle risk?
Entrepreneurs are risk takers. When a space became available for the brewing company, Peter
explains that he did not have the funds on hand, but he realized that “if he didn’t jump on the spot,
someone else would.” He took the risk of acquiring the brewery and then figured out how to get a
bank loan and how to attract investors. This example shows that successful entrepreneurs like
Peter conduct a careful analysis of market conditions to gain insight about market demand for
products. Peter explains that he is always “juggling, moving pieces,” and working in an
atmosphere of uncertainty in the business environment.
3. What do you think is the driving force at Bissell Brothers Brewing Company?
Peter and Noah maintain complete control over the brewery. They make all decisions and enjoy
the challenge of creating new styles of beer, hiring creative people, using innovation, remaining
flexible, and meeting the goals set forth in their business plan. While being your own boss is
“never smooth sailing,” it is also never boring because there are new hurdles to overcome in
growing the business. As entrepreneurs, Peter and Noah are highly motivated to start out in a new
direction and feel the personal satisfaction of business success.
MANAGEMENT AT WORK
Leaping to Constructions
Project Frog (which stands for Flexible Response to Ongoing Growth), founded in 2006, is a San
Francisco-based builder of component structures designed for onsite assembly. Unlike current
component manufacturers, Project Frog buildings are customizable. Project Frog uses “smart
manufacturing” when designing and manufacturing the building components. The result is a building
requiring less construction, producing less waste and improving on energy efficiency standards.
Case Questions
1. What are Project Frog’s distinctive competencies? In what ways has it succeeded in emphasizing
them?
Project Frog has distinctive competencies. It can identify work plans, and it has the necessary
tools to evaluate the strengths and weaknesses of individuals and organizations and the tools to
assist the development of an individual’s learning plan. Project Frog also utilizes “smart
manufacturing,” where it has an opportunity to rethink everything and use energy-efficiency
fixtures, temperature control systems, and ultimately componentize the buildings, allowing all
buildings to be customizable.
It succeeds in emphasizing its distinctive competencies by being eco-friendly and developing
innovative classroom designs that improve student performance. In addition, all of the buildings it
designs perform 40 percent better than California’s strict energy-code standards.
2. Now that it has a foothold in school construction, Project Frog has set its sights on an even more
promising sector—healthcare construction. Why is the construction of healthcare facilities
consistent with Project Frog’s distinctive competencies? Why does the company see this sector as
such a promising area of growth?
Construction of healthcare facilities are consistent with Project Frog’s distinctive competencies
because Project Frog focuses on waste reduction and saves water and electricity over time. Its
buildings are also cheaper to construct than traditional buildings. There is a need to build more
medical facilities and also save costs. These needs are compatible with Project Frog’s
competencies, which is why Project Frog sees this sector as a promising area of growth.
3. The Center for Green Schools reports that students’ ability to learn can be enhanced by
improvements in indoor air, acoustics, thermal comfort, and daylighting. Former president Bill
Clinton says that “we should be right now engaged in retrofitting every school in America for
sustainability.” What about you? Judging from your own experience—whether positive, negative,
or somewhere in between—do you think that the environmental quality of school facilities is an
important factor in helping students to learn? How did the schools you attended measure up on
environmental support for learning? How about the classroom that you’re sitting in now?
Students’ answers will vary. The question of retrofitting every school is a positive thing. There are
some schools that lack more resources than others. Having a high environmental quality in school
facilities is an important factor in helping students to learn because not only is there better quality
of air, but also lighting is better, acoustics are better, and there is an overall improved learning
environment, including automatic flushing toilets, automatic dispensing sinks, lots of windows,
and an overall cheerful environment.
4. As the case informs us, RockPort Capital played a crucial role in providing Project Frog with
financing at an early stage of its development ($8 million in 2008). In 2011, GE Energy Financial
Services led a second round of funding totaling $22 million. A third round, in 2013, netted
$20 million, mostly from Convergent Capital Management (CCM), bringing the total to
$50 million. All three investment firms are venture capital companies. Check out each of these
companies on the Internet (you probably don’t have to go much further than the home page).
You’ll find that each company has different investment criteria. It should also be clear that Project
Frog was a good investment match for each one. Why?
RockPort Capital is a good investment match with Project Frog because it invests in areas of
alternative energy, mobility, and sustainability. GE Energy Financial Services is a good
investment match for Project Frog because it has more than 35 years of experience in managing
energy assets through multiple economic cycles and a global portfolio that includes both
conventional and renewable power and oil and gas infrastructures. CCM is an investment
Solution Manual for Griffinâ€™s Fundamentals of Management, 9th Edition Ricky W. Griffin
company that focuses on investing in companies that have proprietary technology, processes,
and/or products. The companies it invests in must have adequate liquidity and experienced equity
backing and must be positioned within a strong industry. Based on what CCM looks for, Project
Frog presents an excellent investment opportunity.
YOU MAKE THE CALL

Putting the Greek into Yogurt
1. What ingredients (no pun intended!) led Hamdi Ulukaya’s success with Chobani?
Ulukaya’s motivation came from his displeasure at the yogurt manufactured by Dannon, Yoplait,
and other companies and sold in U.S. grocery stores. These manufacturers produced yogurt using
a different process that left whey in the yogurt, resulting in a thinner, less creamy product. To
Ulukaya, these yogurts tasted poorly in comparison to the yogurt he grew up with in Europe. He
saw an opportunity and capitalized on it. Of course, luck played a part because it so happened that
a yogurt plant was for sale. Finally, using a combination of personal savings (from a prior
business) and a timely loan from the Small Business Administration, he had the financial
ingredients to launch his business.
2. What are the distinctive competencies illustrated by Ulukaya?
Growing up in a dairy farm in Turkey, chances are Ulukaya was very familiar with milk and milk
processing. He also had with him his mother’s recipe for Greek yogurt. He probably identified a
niche area (Greek yogurt) in an established market and was able to move fairly quickly to
capitalize on the opportunity.
3. Comment on the role that globalization has played in Chobani’s success.
Students have to understand that Ulukaya came over to the United States from Turkey to study
English. He probably sensed that there were people who, because of exposure to Europe, had
tasted European-style yogurt. He, thus, saw an opportunity and an unserved market that happened
to come by because of globalization.
4. If Ulukaya were to ask you what strategy he should adopt going forward, what advice would you
give him?
At the end of the case, it is clear that Dannon and Yoplait pose a threat because they have entered
the Greek yogurt market. These are companies with much more resources than Chobani. Chobani
was a first mover but it has to cement its first-mover advantage by establishing its brand name and
distinctiveness.
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II. The Role of Entrepreneurship in Society

(2) Success or failure depends heavily on identifying a genuine business

4. Better Survival Rates

Questions for Review

3. Describe recent trends in new business start-ups.

Questions for Analysis

Building Effective Conceptual Skills

Skills Self-Assessment Instrument

On the Job Video

Bissell Brothers Brewing Company

82 Chapter 5: Entrepreneurship and New Venture Management

YOU MAKE THE CALL

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