Lecture Entrepreneurship - Chapter 4 - William D. Bygrave, Andrew Zacharakis, Sean Wise (Download Tai Tailieutuoi - Com)

Entrepreneurship
Canadian Edition
William D. Bygrave, Andrew
Zacharakis, Sean Wise
Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Zacharakis & Sean Wise, Fall 2014, ©2014, Toronto, Wiley
UNDERSTANDING YOUR BUSINESS
MODEL AND DEVELOPING YOUR SRATEGY
Chapter 4

Zacharakis & Sean Wise, Fall 2014, ©2014, Toronto, Wiley 2
Learning Objectives
• The Business Model

• Learning Objective 4.1 Describe the two components of
the business model.
• The First-Mover Myth
• Learning Objective 4.2 Explain why the first-mover
advantage is a myth.
• Long Tail Theory
• Learning Objective 4.3 Describe the long tail theory.
• Formulating a Winning Strategy
• Learning Objective 4.4 Describe the components required
to formulate a winning business strategy.

Today’s Key Concepts
• Business Model • Better, Faster or

• Revenue Model Cheaper?
• Starting Strategy • The World is Flat
– Differentiation • Entry Strategy
– Low cost • Expansion Strategy
– Niche
• Business Model
• Business Model Canvas
• First Mover Advantage
• First Mover Myth

Your First Steps Are to…
Select a business model

Determine a basic strategy category
 Differentiation
 Low cost
 Niche

What Is a Business Model?
• A business model describes the rationale of how an

organization creates, delivers, and captures value, in
economic, social, cultural or other contexts.
• Business model = revenue model – cost model
– The revenue model breaks down all the sources
of revenue that your business will generate.
– The cost model identifies how you are spending
your resources to make money. It includes your
cost of goods sold (COGS) and your operating
expenses.
• Business Model has 9 components

9 Parts of a Business Model
• Key partners – Who are our suppliers and service providers

• Key activities – What do we do with our resources?
• Value proposition – What problems need to be solved? What
product does it best?
• Customer relationships – How do we interact with our customers?
• Customers – Who are our users and who are our paying
customers?
• Channels – How do our customers find, buy, and use the product?
• Revenue – Where does revenue come from?
• Key resources – What goods, services, and infrastructure do we
use?
• Costs – What is the total cost of production?

Building a Business Model

Business Model Canvas

Lean Startup Canvas

Create a Business Model
Revenue Sources of
Model Revenue
Business Cost of
Model Goods
Cost Model Sold
Operating
Expenses

Amazon’s Revenue and Cost Model Requires High Volume
$60.0
Revenues just exceed costs 48.1

REVENUES & COSTS ($ Millions)
$40.0
34.2 Operating
Expenses
24.5
$20.0
19.2 Cost of
14.8 Revenue
$-
Other
Electronics
$(20.0) Media
(14.2) (18.3)
(23.0)
$(40.0)
(32.4)
(46.7)
$(60.0)
2007 2008 2009 2010 2011

To succeed as a successful first mover you must…
 Be first (or very early) into the market

 Capture a large percentage of the market quickly
 Create switching costs so customers stick with you
First movers rarely win and it’s an expensive strategy to take

First Mover’s Are Often Surpassed
Industry First Mover Current Leader

Social Networking Friendster Facebook
Video Games Atari Nintendo
Web Browser Mosaic Google
Internet Search Engine Excite Google
Word Processing Software WordStar Microsoft Word
Personal Computer Altair Dell
Email Juno Yahoo Mail
Diet Soda No-Cal Diet Coke
Presentation Software Harvard Graphics Microsoft PowerPoint
Online Bookseller Book Stacks Unlimited Amazon
ATM Machines Docutel Diebold

To win, your strategy must be to be one, or more, of these…
Cheaper Faster
e o f
d o n
An u s t
m
Better s e
the 10x
be

People Are the Advantage
Values
Selection Structure
Founders need to create a culture and align the employees

they select with the values and structure of the company

Develop Entry Strategy
Benchmark
Devise Initial Market

Test
Create a Platform
Benchmark the Competition: The JetBlue Example

Drive Growth Three Ways
Franchising
Product mix
expansion
Geographic
expansion
Growth
Franchising Has Three Main Benefits
 Replicability
 Established and proven methods
 New sources of revenue

 Royalties and fees from franchisees
 New capital funds growth
Franchising works best with service businesses that are easy to replicate.
Be sure to monitor franchisees to maintain brand purity

Top Franchisors Do Well

Drive Growth with Product Mix
 Tangents and adjacencies

 What makes sense with current offerings?
 Spread current costs
 New products  revenues more than costs
 Maintain same distribution channels
Build on the base that was already created from

existing products. Share resources, relationships and
channels with current lines?

Three Items to Consider before Expanding Geographically
 Customers
 Go where they are
 Mimic proven success strategies
 Vendors
 Can you use the same vendors?
 Any new costs? Leverage volume for better pricing
 Distribution
 Same channels?
 Leverage volume

Global 2.0
• It used to be, conquer the homeland before going

aboard
• But today’s startups are global from day 1
• The World is Flat, but you can still choose a
beachhead
– e.g. Facebook
Beachhead
Harvard
Ivey League
Any School
Alumni
Friends and Family of Alumni
All English Speakers

Mass Adoption Anyone

There are 8 basic ways to expanded internationally

International expansion has risks
Means Pros Cons

Technology Transfer - Reduces entry costs - Risk of losing the technology
Technology - Creates revenue, conserves - Doesn’t extend the brand
Licensing resources
Outsourcing - Cost-saving - Managing partners
Exporting - Cheap and easy - Extra sales and transport costs
- Moral hazard
Foreign Direct - Physical presence - Expensive
Investment - Control of assets
Franchising - Licenses an operational system - Risk of damaging the brand
name
Venture financing - Enabling and enacting - Can lead to mergers and
mechanism acquisitions with foreign
companies
Mergers and - Established infrastructure - Very expensive
acquisitions - Company can grow quickly

Case: Zumba Fitness
Discussion Questions
1. What business models could Zumba use?
2. Develop a revenue and cost model diagram for each
of the options.
3. Which of these models would you recommend that
they implement and why?
4. What are the key revenue and cost drivers for your
recommended model?
5. What do you feel are the key aspects to
implementing this model?

Recap
• Determine revenue and cost structure

• Choose a strategy
• Find a Beachhead
• Create a culture
• Seek and select people who fit culture and
goals
• Plan entry approach, including benchmarks
• Plan growth drivers

COPYRIGHT
Copyright © 2015 John Wiley & Sons Canada, Ltd. All rights
reserved. Reproduction or translation of this work beyond that
permitted by Access Copyright (The Canadian Copyright Licensing
Agency) is unlawful. Requests for further information should be
addressed to the Permissions Department, John Wiley & Sons
Canada, Ltd. The purchaser may make back-up copies for his or
her own use only and not for distribution or resale. The author and
the publisher assume no responsibility for errors, omissions, or
damages caused by the use of these programs or from the use of
the information contained herein.


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Entrepreneurship

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

• The Business Model

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

• Business Model • Better, Faster or

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Select a business model

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

• A business model describes the rationale of how an

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

• Key partners – Who are our suppliers and service providers

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Revenues just exceed costs 48.1

2007 2008 2009 2010 2011

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

 Be first (or very early) into the market

First movers rarely win and it’s an expensive strategy to take

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Industry First Mover Current Leader

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Founders need to create a culture and align the employees

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Devise Initial Market

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

 New sources of revenue

 New capital funds growth

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

 Tangents and adjacencies

Build on the base that was already created from

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

 Mimic proven success strategies

 Any new costs? Leverage volume for better pricing

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

• It used to be, conquer the homeland before going

Friends and Family of Alumni

All English Speakers

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Means Pros Cons

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

• Determine revenue and cost structure

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

Entrepreneurship, Canadian Edition by William D. Bygrave, Andrew

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