WOLDIA UNIVERSITY

INSTITUTE OF TECHNOLOGY

School of Mechanical and Chemical Engineering

Department of Mechanical Engineering

Entrepreneurship for Engineers

By: Shumye G.
 PART TWO
Starting Technology based new venture

Outlines:
֍ Introduction
֍ Important aspects of Technology in Business
֍ Formation, development, and growth of technology-based
new enterprises
֍ Technology transfer for business development
֍ Innovation in Technology based business
֍ Business Model Cavity
Introduction
The innovative capacity of an entrepreneur and more
accurately, of companies operating in that field, is a key
determinant of its capability to enhance the economic
development and to upgrade the standard of living of a
country.
It is widely accepted that one of the indicators of this
innovative capacity is the rate of creation of New
Technology-Based firms (NTBF).
The development of small firm formation and growth has
become increasingly important to the health of developed
economies in general, and to the creation of new
innovative industrial sectors in particular.
 Cont’d
Technology incubators, which play a role in accelerating
the commercialization of Resolved & Developed outputs
and the transfer of technology, have contributed to
startups of high technology-based enterprises in the
newly industrializing economies of developing and
developed economies of the world.
Strengthening and promoting technology based ventures
through incubation programmes for new technology based
enterprises is necessary for them to survive in a
competitive society.
 How to form and develop Technology based ventures?

 Government policies:
Credit programmes with State-subsidized rates
Share programmes by Government venture-capital companies
 Grants by the Government, especially for creating jobs and for
research
Security programmes by the Government for taking over part of
the risk of the credit institutions for enterprises
Advisory services.
 Other support activities for enterprises with both public and private
sector involvement, include:
* Business consulting services: Assistance with business
development, developing business plans, tax advice, and so forth;
 Cont’d
Technical consulting services: More specialized services are
provided such as networking assistance between enterprises
and science and technology organizations, technology
transfer, the exchange of similar experiences and the
identification of potential for cooperation
Financing support activities: Offer optimal conditions to
enterprises, especially SMEs, in terms of rent and costs of
spaces, infrastructure and services. Offer also assistance with
accessing and using financial sources such as corporate
financing, business angels, venture capital, and so forth;
Intellectual property assistance: Assistance with
developing and patenting new and improved technology,
including bringing it to the market for profit;
International assistance: Assistance with the global
networking of incubation and innovation centers for
information exchange and technology transfer
 Factors contributing to the Success of High Technology
based Enterprises
The main catalytic factors for the success of high
technology-based enterprises are :
National policies,
Research and development institutions
 Technological entrepreneur development
Innovative finance support systems & protecting
intellectual property
Science and technology parks
 Promoting and developing strategic business
alliances and networking
 Standardization, quality control and marketing.
 Technology transfer for business development
Technology transfer is the process by which
existing knowledge, facilities or capabilities are
utilized and marketed to fulfill public and private
needs.
 It is the process by which basic science research and
fundamental discoveries are developed into practical
and commercially relevant applications and
products.
Technology transfer processes constitutes technology
transfer, technology promotion, technology
arrangement, technology innovation, technology
development, technology research, technology
assessment, technology information and
 Drive for obtaining new technology
 Cost: Technology can cut costs in many ways: reducing material,
labor or distribution costs. Example: material costs can be reduced
by replacing lower cost material or by reducing the material required
to make a product.
 Speed of delivery: The key competitive priority may be the speed of
delivery, as measured by lead time required to deliver a product.
Example, Automated guidance vehicle(AGV), Electronic Data
Interchange(EDI)
 Quality: Technologies help to improve the quality and reduce the
production costs.
 Flexibility and customization: The global market place of 1990s is
characterized by short product lifecycles, increased product veriety,
and extensive customization. To retain and increase market share in
such competitive environment, firms have to be more flexible in their
operations.
* Increased production volume
The Entrepreneurship Process
Entrepreneurship and Technological Change
 New Industry Formation & technology
New industries are born when technological change
produces a new opportunity that an enterprising
entrepreneur seizes.
Disruptive or metamorphic technologies that destroy
previous technologies and create new industries display a
different pattern of behavior.
The pattern of growth, shakeout, stabilization, and
decline of industry can be interrupted at any time by the
entry of another disruptive technology.

Reading assignment
*Steps in Technology Transfer
* Promotion and Commercialization of technology-based innovation
Reference: Entrepreneurship for Engineers, Hand-out
 Business model canvas
The business model canvas is a shared language, a
defacto standard for describing, visualization,
assessing and change business models that describe
the rationale of how an organization creates, delivers
and captures value.
The concept of business model is vested in the
traditional 5Ws of business.
What Who
How
Where Why
If we start on the right hand side of the above
graphic and work our way to the left hand side
the question to ask include:
Who is the targeted market ( and customers)
for your product/ service?
Why do they need your product/ service?
What is the solution you will offer to them?
Where and When will you make your solution
available to them?
How will you generate the solution?
 The 9 Business building blocks from the basis for a handy tool,
which is called the Business Model canvas. It is a hand on tool
that fosters understanding, discussion, creativity and analysis.
8. Key 7. Key Activity 2. Value 4. Customer 1.Customer
partners What will you Proportion relations segments
Which partners have to do create Which
do you need and deliver your Which relationship will Which kind
and /or which value customer you maintain of
can be useful proportion? problems with your customer
to replace 6. Key Resources do you customer do you
activates and which assets are solve and serve?
resources to required to create or needs do
create and the value and you
deliver your deliver the value satisfy?
value proposition?
proportion
3. Delivery
channels
How do you
bring value
proportion to
 1. Customer segment
Customer segment defines the different groups of
people or organization a business targets to reach and
serve.
Customer comprise the heart of any business
model. Without (profitable) customer, no business can
survive for long. In order to better satisfy customers, a
business may group them in to distinct segments with
common needs behaviors or other attributes.
There are many ways of segmenting your customer
base. You will need to choose the one that best suits
your start up business. Here some of the common
ways are industry type, geographical area
(Metropolitan, urban or rural), gender
 2. Value Proportion
It refer the package of the products and services
that create value for a specific customer segment.
It is the reason why customers turn to one business or
product/ service over other. It solves a customer
problem or satisfies a customer need. It also
describes the uniqueness of a business.
Some value proportions may be innovative and
represent a new or disruptive offer. Others may be
similar to existing market offers, but with added
features and attributes.
 3. Delivery channels
Channels describes how a business reaches (and
communication with) its customer segments to deliver
a value proposition.
Channels are customer touch points that play an
important role in the customer experience. It serve
several functions, including:
Raising awareness among customer about a
company's product and services
Helping customer evaluate a company’s value
proposition
Allowing customer to purchase specific product and
services
Delivering a value proposition to the customer
 4. Customer relations
It describes the type of relationships a business
establishes with specific customer segments.
A business should clarify the type of relationship it
wants to establish with each customer segment.
It my be driven by motivation such as customer
acquisition or customer retention.
The customer relationships called for by a company’s
business model deeply influence the overall customer
experience.
 5. Revenue stream
It represents the cash a company generates from each
customer segment ( cost must be subtracted from
revenues to create earnings)
Each revenue stream may have different pricing
mechanism such as fixed list prices, bargaining,
auctioning, market dependent, volume dependent,
volume dependent or yield management.
A business model can involve two different types of
revenue steam:
a. Transaction revenues resulting from one time customer
payments, and
b. Recurring revenues resulting from ongoing payments
to their deliver a value proportion to customer
 6. Key Resources
It refers to the assets ( equipment, systems, platforms)
required to deliver on the value proposition to the
identified customer segment.
Key resources are needed to sustain and support a
business. These resource can be categorized into four
main categories:
a. Physical resources: such as raw material, buildings,
vehicles, storage facility, machines etc.
b. Human resources or staff: such as a talented
engineer or marketing expert
c. Intellectual resource: such as your brand, patents,
copyrights, partnerships and customer databases.
d. Financial resources: such as cash, credit etc.
 7. Key Activity

It describes the most important work processes a

business must do to generate and deliver its products/
services, to make its business model work.
Every business model calls for a number of key
activities. These are the most important actions a
business must take to operate successfully. Like key
resources, they are required to create and offer a
value proposition, reach markets, maintain
customer relationships and earn revenues.
 8. Key partners
It describes the network of suppliers and partners that
make the business model work.
We can distinguish between four/4/ different type of
partnerships:
1. Strategic alliances between non competitors
2. Cooperation : strategic partnership between
competitors
3. Joint ventures to develop new business
4. Buyer supplier relationships to assure reliable
supplies
 9. Cost structure
Cost are structure under fixed costs and variable
costs.
Fixed cost is something you need to pay at some
interval (every month or week) regardless of how you
produce and sell and variable cost as expenses that
depend on how much your produce and sell.
Cost structure refers to all costs incurred to operate a
business model. This includes creating delivering
value, maintaining customer relationships, and
generating revenue all incur costs. Such costs can be
calculated relatively easily after defining key resources,
key activities and key partnership.