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New Venture Creation (2e): Instructor’s manual
© 2018 Paul Burns Page 1
INSTRUCTOR’S MANUAL
New Venture Creation (2e): Instructor’s manual
© 2018 Paul Burns Page 2
CONTENTS
How to use this manual and the PowerPoint slides 3
New Venture Creation Framework 3
Some general tips on case teaching 6
Other resources 6
Teaching notes:
Chapter 1: What you bring to entrepreneurship 7
Chapter 2: Finding your business idea 13
Chapter 3: Understanding your industry and markets 19
Chapter 4: Structuring your business model 25
Chapter 5: Crafting your value proposition and branding 31
Chapter 6: Developing your marketing mix 37
Chapter 7: Communicating your value proposition 42
Chapter 8: Scalability and growth 48
Chapter 9: Legal foundations 53
Chapter 10: Managing operations and risk 57
Chapter 11: Managing and leading people 63
Chapter 12: Financial resources 70
Chapter 13: Preparing and using financial forecasts 74
Chapter 14: Preparing, using and validating the business plan 77
Suggestions for assessments 81
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© 2018 Paul Burns Page 3
HOW TO USE THIS MANUAL AND THE
POWERPOINT SLIDES
The Instructor’s Manual and PowerPoint slides follow the chapter structure of the book. The
PowerPoint slides are set for sequential access following the chapter structure. Many show
the two symbols below in the bottom left-hand corner. These symbols contain embedded
hyperlinks to relevant websites or videos. These are activated in ‘slide show’ mode by
simply clicking on the symbol.
This internet symbol takes you to a relevant website.
This video symbol links to a relevant short video clip that can be used in class.
The Manual contains chapter-by-chapter:
Brief notes relating to the chapter content, including these embedded PowerPoint links;
Brief notes on the case questions;
Links to additional websites and videos that you may wish to use with students, using the
same symbols. These videos are typically longer than those in the PowerPoint slides and
you may want to get students to view them before or after class. To activate these links,
simply click on the symbol.
Suggested discussion topics for each chapter.
Students do not have access to the Instructor’s Manual or PowerPoint slides.
NEW VENTURE CREATION FRAMEWORK
The book uses the New Venture Creation Framework to get students to explore whether
entrepreneurship is for them, to find a business idea, research it and then develop a
business model that will help them launch a new venture. An integral part of this process is
the exercises at the end of each chapter. These can also be downloaded as a digital
Workbook from the companion website macmillanihe.com/burns-nvc-2e. The Workbook
exercises can then be completed, changed and updated at a pace and frequency dictated by
you or the students. If you require, you can collect the Workbook exercises to monitor
students’ progress. The exercises build systematically into a business model and business
plan. Chapter 14 of the book contains instructions for how the students can cut and paste
the Workbook exercises into a pro forma business plan, ready for editing.
Students also have access to a Framework Worksheet that replicates the business model
contained within Phase 2 of the New Venture Creation Framework. This is available on the
companion website as a Microsoft® Word document and can be printed off and written on. It
is reproduced on the next page.
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© 2018 Paul Burns Page 4
Marketing plan
Marketing mix
Pricing Channels
Communications
Scalability
Resources
Capital available: Human, social & financial
Capital needed: Human, social & financial Operations plan
Risks Partnerships
Key activities / Critical success factors / Strategic options
Financial plan
Sales, costs & profit Breakeven
Cash flow Balance sheet
Market segments and value propositions
Target market segment(s) Value proposition(s)
Customer relationships / Branding
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The Framework Worksheet is also available on the companion website as a Microsoft®
PowerPoint slide which has simulated sticky notes that can be written on and ‘posted’ onto
the Worksheet slide. The Framework Worksheet can be used to summarize and report on
students’ progress as they undertake the Workbook Exercises and develop their own
business model. It can be used to help identify patterns, ensure consistency and develop
the processes needed to deliver the students’ business models, as well as trying out ‘what
if?’ scenarios to test them. Slide 4, Chapter 4 is a demonstration slide that allows you to
show how this works.
The PowerPoint slide can be used for group discussions and class presentations. If you
wish, you can use it to monitor students’ progress in developing their own business model
by organizing regular ‘progress presentations’ or collecting copies of the slide.
New Venture Creation contains the following cases where students are asked to complete
as many elements of the Framework as possible using the Framework Worksheet slide:
Three retail business cases [Flying Tiger Copenhagen (6.2, 8.3, 10.7), Lush (6.7) and
Jack Wills (7.7)];
Two service business cases [easyJet (4.4) and Mobike (6.5)];
Five manufacturing business cases [Clippy (7.6), Crocs (8.7), Brompton (8.8), Cobra
(9.7) and Kirsty’s (10.8)].
Students can then use it in class for case presentation purposes. Completed slides and
notes are provided as part of your resources. You may also wish to get students to review
the business models for these businesses by sector, asking students to compare and
contrast them, highlighting themes from the three different sectors.
Although instructions about how to use these facilities are contained in the book, students
will probably need to have the digital Workbook and the Framework Worksheet slide
demonstrated to them.
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SOME GENERAL TIPS ON CASE TEACHING
In all case teaching, remember to ask questions and get the class to participate. Use
open and closed questions to solicit different types of response.
Try investing a little time in your teaching and, if possible, bring the product (or a video
clip) into the classroom for students to touch and feel. It can bring the case to life.
Remember to summarize the main teaching points in writing whether on a PowerPoint
slide, an interactive whiteboard computer screen (try overwriting the questions) or on a
conventional whiteboard. The class need to know clearly what the main teaching points
are.
Try linking the case with teaching themes from the chapter (and sometimes other
chapters) and comparing and contrasting one case with another. Don’t be afraid to revisit
cases you might have taught in the past to reinforce important themes.
OTHER RESOURCES
The Learning Resources section of the companion website for this book additionally contains
the following resources for students:
Flashcards of the key terms highlighted in the book and defined in the glossary.
Interactive chapter-by-chapter self-assessment quizzes.
A Guide to UK Sources of Help, Advice, Information and Funding.
A Guide to UK Laws and Regulations.
A Guide for Australian Entrepreneurs, produced by Dr Russell Manfield.
Video and audio cases, featuring interviews with entrepreneurs, a networking expert and
a banking professional.
Video interviews with me, Paul Burns!
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© 2018 Paul Burns Page 7
TEACHING NOTES
Chapter 1: What you bring to entrepreneurship
Student learning outcomes
Understand your motivations for wanting to start your own business
Critically assess the resources you would bring to your business
Critically assess whether you have entrepreneurial character traits
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2/3/4 Use these slides to explain the New Venture Creation Framework and its links to
the chapters and the Workbook exercises in the book. Explain that Phase 2 of the
Framework comprises the business model, stressing the importance of this and
how it is likely to change as students explore their business idea. Stress the need
for consistency of the model and how each element must reinforce the other.
Introduce students to the Framework Worksheet and demonstrate how it can be
used with its sticky notes for case presentations and/or keeping track of the
development of their business model. A more detailed explanation about how this
works is included in the presentation on slide 4 in Chapter 4. You may prefer to
use this slide here. Explain how you intend to use the Worksheet on this course.
5 Central to entrepreneurship is the idea that entrepreneurs spot or create
opportunity arising out of change, and it is important for students to realize that
the world we live in is changing more rapidly than ever before and therefore there
are more entrepreneurial opportunities than ever. Explore other influences of
change in your country.
6 Students always want definitions. You can use this slide to introduce them to the
definitions flashcards on the companion website.
This summary definition emphasizes that entrepreneurs are action-orientated.
They get things done. They thrive on change. They innovate (you might explore
what this means to students) and take risks. Use this to remind students that there
are definitions of all the terms used in the flashcards on the website. The definition
has a history of development from Cantillon in 1755.
7 Entrepreneurship is not limited to those who start their own commercial
businesses. You need to explore with students what entrepreneurship means in
different contexts.
8 Explore with students the motivations and aspirations for start-up entrepreneurs
and the potential ‘scale’ of their start-up. The media tends to glorify those
entrepreneurs setting up high-growth businesses, but I prefer not to be
judgemental. Other start-ups can be just as satisfying. However, it is these high-
growth firms that generate the greatest economic effect.
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9 Read et al. (2011) intend these myths to encourage students to attempt to create
their own new venture. In going through the points on this slide, ensure you
reconcile potential conflicts (e.g. how entrepreneurs accept risk but make every
attempt to mitigate it). Explore with students their preconceptions about
entrepreneurship and whether they are true or not. Also use this opportunity to
explain more about what this course will cover.
10 Material Pleasures
1. Like any artistic or craft endeavour, this is essentially a lifestyle business.
However, these entrepreneurs can also become wealthy if their work is
recognized and high prices can be charged. Scale is not important so much as
the exclusivity of the work (brand).
2. The debate here revolves around public vs. private costs and benefits. With
growth in businesses, jobs are usually created and wealth is spread around
more.
11 Kiran Mazumdar-Shaw
This case is an opportunity to ‘get real’ with students. Most businesses do not
grow. You can use this case to explore what it takes to grow like this; in short, a
lot of hard work and a business idea that meets the needs of customers and has
some defensible competitive advantage. You might also explore the advantages
of partnering, particularly between different countries with different resources and
customer needs.
The link here is to a 38-minute interview with Kiran Mazumdar-Shaw about her
entrepreneurial journey, which is probably too long to show in class (click on icon).
It is the sort of interview you might come back to at the end of the course because
it raises many issues about the entrepreneurial journey.
12 Ask students what they see as their barriers to entrepreneurship - they will easily
offer ideas. Ask those who are attracted to it why they are. Ask those who are not
attracted to it what might push them into it. The strong combination of both push
and pull factors is what tends to mould growth-orientated entrepreneurs.
13 Monkey Music
1. This is a lifestyle business that has grown.
2. Fixed costs were kept to a minimum (e.g. use of church hall) and the franchise
model used to similar effect.
3. Franchising is a way of growing with less risk, explained in Chapter 7.
The embedded video is a short promotional video showing kids at Monkey Music.
14 Statistics show that there is a high failure rate for start-ups. In the UK some 50%
of businesses cease trading in their first 3 years. This slide serves to emphasize
how the chances of having a successful start-up can be enhanced and what will
be covered in this course.
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Ask students what their drivers are to start a business. What do they want from
the business? Ask them what resources they bring to the business.
Students thinking of starting their own business need to draw up an inventory of
their resources. Not only will this be valuable to them, it should also help to boost
their confidence that the business can succeed. Introduce them to the concepts of
bootstrapping and lean start-up, in the context of minimizing the resources they
need.
15 Souqalmal
1. Ambareen Musa brings a lot to the business: good education (including MBA),
good general business experience across a wide area (but in particular
finance), international exposure, experience of an internet business,
experience of intrapreneurship.
2. It should be self-evident how these elements of social and human capital are
directly relevant to starting up an online financial services comparison website.
The added ingredient is the ability to spot the opportunity in the country where
Souqalmal was set up.
16/17/
18/19/
20/21
‘Trait theory’ has a long history that you may want to recount and is the labour
market economists’ view of the influences on start-ups. However, some
economists do not agree that character traits influence people to start a business.
Nevertheless, I find that using this framework, and the GET2 test in particular,
offers students the opportunity for self-reflection. Do they really want to be
entrepreneurs? Do they have what it takes? Do they need to change any of their
underlying traits?
The embedded hyperlink is to GET2 test.
This is where you can encourage students to test themselves and reflect on their
character traits. Demonstrate the link to the website. Stress that students need to
look at the results honestly and objectively. Self-reflection is an important quality
for self-development.
Subsequent slides explain the five character traits. The GET test results are
printed out in the form of a summary report with a ‘meter’ or gauge indicator.
Remember that the results are to be taken individually as well as overall -
students must score above average on every character trait to be able to say they
are really entrepreneurial in character. Details of how the meter readings are
arrived at are given below:
Need for achievement: 12 questions. A score of 9 (75%) is average and above
this is considered entrepreneurial.
Need for autonomy: 6 questions. A score of 4 (67%) is average and above this
is considered entrepreneurial.
Creativity: 12 questions. A score of 8 (67%) is average and above this is
considered entrepreneurial.
Risk taking: 12 questions. A score of 8 (67%) is average and above this is
considered entrepreneurial. These are characteristics associated with a high
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score – someone who is willing to take measured risks.
Locus of control: 12 questions. A score of 8 (67%) is average and above this
is considered entrepreneurial – that is the respondent has a high internal locus
of control.
22 Adam Schwab
1. Adam Schwab brings a lot to the business: good education, legal and
accounting skills, but primarily an entrepreneurial character (explore what this
means).
2. Many lessons: failure is a learning experience, perseverance is important,
partnerships can add value, good business ideas can come from other
countries etc.
The embedded video is a 10-minute conference presentation by Adam Schwab
about his company.
24 Whether entrepreneurs are ‘born’ or ‘made’ is an old chestnut. We are what we
are and we absorb all sorts of influences. But it is worth getting students to
catalogue their cultural influences from nationality, education, etc. Only by
understanding these influences might they believe they can change.
The embedded video is a 5-minute ‘Think!’ piece by me discussing this issue.
25 One influence will be national culture. The four dimensions Hofstede used need to
be explained. Although Hofstede’s study is old and cultures will have changed,
this is a useful study to help students discuss national influences.
26/27 These slides show where different countries align using Hofstede’s dimensions. In
particular, it shows where the USA was in Hofstede’s study. Whilst the USA
probably was the most entrepreneurial nation at the time of this study (1970s),
remember this was a study of IBM employees and was not intended to measure
entrepreneurship. Nevertheless the descriptors for these dimensions do seem to
be consistent with the entrepreneurial character. Where might your country lie?
28 Sadaf Gallery
1. This is a case where cultural and social factors are important. Oman is a
conservative Muslim country but one where women have more freedom than
in many other Arab countries. Being officially registered as an ‘entrepreneur’
gives access to much state support but means that the individual must give up
any other paid employment. Consequently men often remain in employment
whilst running a business part-time. Women register as ‘entrepreneurs’, but
predominantly in female-orientated businesses, and not always to maximize
income. This is a socially respected route for them to take and one that allows
them to socialize more easily, particularly with other women.
2. Lessons include: importance of family support, importance of contacts and
networks, the potential profitability of up-market, low-volume businesses, the
need to refocus the business as information is gained about customer needs.
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3. Sahar is a very important role model, particularly in a country trying to
encourage entrepreneurship.
29 Golden Krust
History shows migrants are strongly entrepreneurial (push-factors) but this
business was set up 7 years after moving to the USA. Students are left to
speculate about the motivations (push and pull).You might also get students to
discuss the advantages and disadvantages of working as a family business.
The embedded video is a short history of Golden Krust.
30 Steve Jobs
1. Get students to provide evidence from the case and video on the following
character traits:
Need for achievement – look at his hopes for NeXT and return to Apple
(bouncing back from failure). His pride in Apple is evident from the iTunes
clip in the video;
Need for autonomy – he never worked for anyone else. Drive and
determination;
Internal locus of control – he believed he was right. He really did want to
control everything and everyone – a ‘control freak’ - and was intolerant of
poor performance;
Creativity – link to market, not invention. Simplicity of use;
Risk taking – numerous business starts, product launches etc.
2. Much of his success comes down to four fundamental things:
His ability to link innovative, technological ideas with the needs of
customers and the market place. He was not an inventor. Much of what he
did with technology was to make it simple to use by ordinary people.
His vision about what the market might become rather than what it was.
He looked forward rather than backwards and always believed he was
right. He was famously disdainful of market research and focus groups.
He usually got his timing (just) right, introducing new products just when
the market wanted them and ahead of competitors. He anticipated
customer demand very well.
His drive and determination pushed through product innovations. He was
totally focused on achieving ‘product perfection’, almost at any cost.
Was this all down to luck? I doubt it. Being in the right place at the right time
so often does not happen just by luck.
The first embedded video is an obituary for Steve Jobs, listing his achievements.
The two subsequent embedded videos are interviews with Walter Isaacson about
the entrepreneurial leadership qualities of Steve Jobs, based upon his book.
There are numerous other video clips of Steve Jobs on YouTube that you may
wish to use.
Too long to show in class, the last clip on the left is a 20-minute discussion with a
colleague on the character traits and leadership qualities of entrepreneurs.
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Suggested group discussion topics
1. Is now a good time to start your own business?
2. Do you dream of starting your own business? If so, why? If not, why not? What do you
think would be the main challenges you would face?
3. What are the pros and cons of running your own business?
4. Is it better to start a business when you are young or to wait until you are older? Why is
this?
5. What barriers to entrepreneurship do you face? How might they be overcome?
6. What would ‘push’ or ‘pull’ you into entrepreneurship?
7. What are the main challenges facing a start-up today?
8. Do you think the definition of an entrepreneur in this chapter is adequate?
9. How does an entrepreneur differ from an intrapreneur or a social entrepreneur?
10. Can a traditional manager become an intrapreneur? What are the blocks or barriers and
how can they be overcome?
11. Is an owner-manager of a small firm automatically an entrepreneur?
12. How are social and civic entrepreneurs different to commercial entrepreneurs?
13. Are entrepreneurs born or made?
14. Can character traits really predict who might start up a business?
15. Which entrepreneurial character traits might have negative implications? What are they
and how might they be countered?
16. What does self-efficacy mean? Is it a good or a bad thing for entrepreneurs?
17. Are entrepreneurs delusional?
18. Are entrepreneurs gamblers?
19. Are entrepreneurs control freaks?
20. Can education and training make you more entrepreneurial?
21. Should arts students who want to be self-employed be taught entrepreneurship?
22. Should all students at university be taught entrepreneurship?
23. Does your country have an entrepreneurial culture?
24. How can an entrepreneurial culture be encouraged?
25. What would it take to get you to start up your own business?
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Chapter 2: Finding your business idea
Student learning outcomes
Critically assess the dimensions of your creative potential
Develop your creativity and discovery skills
Scan the environment for business opportunities
Come up with a business idea by either creating or spotting an opportunity
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2/7 These typologies are useful to help students focus on the ‘ideal’ business idea for
them. ‘New-to-the-world’ industries may hit the headlines but are unpredictable
and risky. Having said that, we should try to develop business ideas that are as
different as possible to existing businesses.
The embedded video is a short HBR animation explaining radical or disruptive
innovation.
Too long for class, the second link is to a 12-minute discussion with a colleague
about finding a business idea.
3 These are examples of incremental product/service innovation. Retail businesses
have changed a lot over the years and the internet has spawned further changes,
causing some retailers to close (e.g. video rental) and others to change their
business model.
4 These are examples of radical product/service innovation. The internet has not
only spawned millions of new businesses but also caused many to alter their
business model. It is still the source of numerous business ideas and the focus of
the major case in the next chapter. Give examples from the book or your own
country.
The embedded video is an 8-minute HBR interview with Scott Anthony on how to
spot disruptive innovation opportunities.
The embedded link is to the AULIVE website, where you can see hundreds of
innovations (as well as products and patents). Many have explanatory videos.
5 Summly App
Barriers can include: technical knowledge, time, resources, finance, access to
markets etc.
6 Swatch
This is all about breaking away from ‘dominant logic’ and it is about encouraging
the discovery skills, in particular just asking the questions ‘Why?’ and ‘Why not?’
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8 These are the three types of market conventions that Chaston (2000)
recommends you challenge. Link this with the work by Kim and Mauborgne
(2005), particularly the idea of re-orientating analysis from customers to non-
customers.
10 DUPLAYS
The embedded video is an interview with Ravi Bhusari and Brian Sigafoos. Show
this first. It should spark a discussion about barriers for expats, which include:
work permits, red tape and other restrictions, lack of free time, funding, etc.
11 One of the techniques for spotting opportunity is to look critically at the value
chain (Porter, 1985), questioning both cost and value to the customer. Indeed the
internet has proved to be a major technical innovation that has allowed value
chains to be decoupled and new markets to be created.
12 Bloom & Wild
Students need to understand the value chain and hence the industry. That means
that they probably need to have worked in it, but it also means that they will need
to research the alternatives they are exploring to see whether they are feasible.
The embedded 1-minute video clip explains this business idea.
13 TutorVista
The barriers revolve around having the ability to spot an opportunity or unsolved
problem in one country and then match it to a resource in another. The service
needs to be marketed in one country and the resource assembled and organized
in another. Effective communication systems are essential, as are quality control
systems. All in all, this is not as straightforward a business to operationalize as
many students might think.
The embedded 1-minute video clip explains the business idea.
14 Mamanpaz
This is just about basic marketing – adapting a business idea to the specific needs
of customers.
15 OnMobile
There are two simple points to this brief case:
1. Timing is vital.
2. Ideas can come from other countries – they do not have to be original.
16 Enabled Employment
The lesson is that opportunity can come from adversity. Jessica May used
lessons from her ‘problem’ to create an ‘opportunity’ - just as entrepreneurs learn
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lessons from failure (or experiments) and have the tenacity to never give up.
17 Unless students have an existing business idea, they are likely to have to go
down the ‘spotting’ opportunity route. This slide is intended to emphasize that,
whether you ‘create’ or ‘spot’ an opportunity, it must be practical and linked to
market need. It also acts to outline the approach we shall take to spotting
opportunity.
Spotting opportunity involves discovering unmet needs either by looking at
change itself or products/services that do not meet these changing needs.
Creating opportunity involves either disruptive innovation or market paradigm
shift. The latter can be encouraged by questioning why the marketing mix for
existing products/services is appropriate – the sectoral, performance and
customer conventions that Chaston (2000) outlines. These often create the
‘dominant logic’ of the industry. You might want to explore the concept of ‘blue
ocean strategy’ (Kim and Mauborgne, 2005) in more detail.
18 Ask students what thinking ‘outside the box’ really means before you show the
short video clip.
This short embedded video clip illustrates clearly what thinking ‘outside the box’
really is. It is all about questioning the rules – the status quo or the ‘dominant
logic’. Thinking ‘outside the box’ can be disruptive and is often not easy.
19 This slide can be used to explain the AULIVE creativity test. The test has some 40
questions and takes longer than the GET test. Results should support the GET
result for the creativity trait, but does not necessarily measure the same thing. If it
does not agree with the GET result, they should explore possible reasons.
Encourage students to take the test. It is free.
The embedded link is to the AULIVE test.
20 This quote from Stephen Johnson’s excellent book serves as an introduction to
the equally excellent RSA Animates video on creativity.
The embedded video is a short RSA animates video explaining Stephen
Johnson’s views on the link between connectivity and creativity.
21 This slide outlines the discovery skills and what they mean. Use it before viewing
the embedded video, making sure to draw parallels to some of the AULIVE
creativity attributes (slide 19).
The embedded video is a short HBR interview with Jeff Dyer.
This is an important session that you can easily expand on by using the following
five short, individual videos by Hal Gregson on each of the discovery skills.
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The last link is to a short additional video by Jeff Dyer on experimenting.
22 Great Ormond Street Hospital
Was it just serendipity that brought this together – motor racing and medical
emergencies? How can you ever know about things you do not know about? All
you can do is to increase the chances of this sort of cross-fertilization through
‘connectivity,’ by practising the discovery skills outlined earlier. Nothing is certain.
It is all about ‘playing the odds.’
23 Swarfega
This is an opportunity to explore the discovery skill of ‘association’. How do you
acquire it? How do you use it?
24 The five discovery skills link with Stephen Johnson’s ‘connectivity’ (which overlap
‘networking’ and ‘associating’) and some of the AULIVE creativity skills. This slide
pulls these approaches together and allows you to reinforce the teaching point.
28 Henry Ford
1. Probably all of them but in particular, from the case, ‘networking’, ‘observing’
and ‘associating’.
2. Exercises will help but the real answer must be to practise them in everyday
life.
26 This slide gives you the opportunity to explain to students how to use these five
techniques. The techniques are all used to spot business opportunities.
27 The Million Dollar Homepage
This question is posed for general discussion. Are entrepreneurs just lucky or do
they make their own luck?
The embedded link is to the Million Dollar Homepage.
29 Fetchr
Problems might include: high cost of delivery fleet; making app available to, and
taken up by, consumers, particularly in countries with postal addresses;
persuading delivery companies to pay them a commission; safeguarding their IP.
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31/32/
33
These techniques are to help explore inadequacies or opportunities arising out of
existing products or services, including Boyd and Goldenberg’s five principles for
thinking ‘inside’ the box. Explain the principles before showing the video. What we
want to encourage is for students to think inside, outside and all around the box –
seeing opportunities wherever they might be. It’s all about thinking differently and
questioning everything.
The embedded video is a HBR interview with Kevin Coyne showing how the five
principles can be operationalized.
34 Nikwax
It is often easier to spot an inadequate product than to do something about it.
Correcting the inadequacy might require specialist skills, time and money. Getting
the product to market can present huge difficulties because, by definition, there
are existing industry competitors. IP must be secure.
35 Maggie’s
1. This is the opportunity for any students thinking of starting a social enterprise
to start applying the principles outlined in the chapter. Review the differences
between a commercial and a social enterprise and what additional elements of
creativity might be needed.
2. The techniques could be applied to the design of the building, the facilities and
services it houses, and the approaches Maggie’s might have to raising
finance.
The embeded video is a short animation explaining the concept behind these
centres.
Suggested group discussion topics
1. Discuss how easy or difficult it is to find business ideas based on the different sorts of
new venture typologies.
2. Discuss the importance of motivations in finding a business idea that you will enjoy.
3. Discuss the meaning of innovation.
4. In the context of entrepreneurship, what does creativity mean?
5. Discuss whether creative skills are good in all organizations. Explain why they might be
important or not in different occupations.
6. Discuss the differences between creativity, invention and innovation, and the links with
entrepreneurship.
7. Assess the case for frequent incremental innovation, rather than infrequent radical
innovation. Are the two mutually exclusive? How can these be measured?
8. Compare the barriers you face to being creative with the barriers faced by the rest of the
group. Compile a list of the major barriers and how they might be overcome.
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9. Using your AULIVE creativity test results as a base, discuss whether these dimensions
adequately measure creativity compared to other measures covered in the text. Is there
any overlap with the GET2 test dimensions?
10. Discuss whether people can be trained to be more creative. If so, explain how.
11. Discuss how you might improve your ‘connectivity’ and discovery skills. Are there
exercises that might help?
12. Every product or service is different. Discuss.
13. Discuss why it is so important to be different to competitors.
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Chapter 3: Understanding your industry and markets
Student learning outcomes
Define and describe your market or industry
Assess the degree of competition in your market/industry and the likely effect on
profitability
Undertake a SWOT analysis on yourself and your competitors
Review future trends in your industry and assess how they might affect you
Critically evaluate whether your business idea matches your aspirations
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
4 Video gaming
1. It is a growing market that is still fragmented but in the process of
consolidation. It is moving from national to global.
2. Ask students for their views.
Strengths include: Skilled workforce, national networks etc.
Weaknesses include: International competitors, distribution networks, lack
of Western local market knowledge etc.
Threats include: International competitors, Western local market
knowledge etc.
Opportunities include: Potential for international dominance, ability to
source pieceworkers for new developments etc.
3. The best entry point has probably passed now, but there is always room for a
truly innovative or niche game and the structures exist to leverage this IP.
5 Online dating
1. This is very important; though close geographical proximity is not necessarily
needed for an online business. However, close attention would need to be
paid to cultural and language issues.
2. Get students to describe the market: Growing, fragmented and national.
Questionable economies of scale – customers becoming disillusioned - but
possibility of economies of scope. Opportunities for niche start-up still exist.
3. Technology is easy to copy, so branding and swift local market dominance are
important.
4. They face the threat of purchase by larger competitors who want their brand,
market share and possibly their technology.
5. This is a personal question that is designed to focus students on what they are
looking for from a start-up.
6/7 Most students will have to undertake some desk research into their business idea
– the market and the competition it faces. You need to supplement this slide with
details of local information sources.
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Unless founders are dealing with radical innovation or market paradigm shift, the
questions to which research might provide answers are:
Is there sufficient market demand?
Can targets be achieved, within cost and operating parameters of business?
8/9/10
/11
Some students may undertake field research. Examples might include
questionnaire surveys or focus groups, observation of possible retail locations etc.
Ask students what they might seek to find out from different research approaches.
12 Temple & Webster
1. Reaction typically was to set up their own (non-member) websites, but not to
necessarily engage in the new concept of flash sales. Ask students about the
pros and cons of online vs. bricks-and-mortar shops.
2. Establish own brand (marketing), secure up-market branded merchandise
(merchandising) and be able to offer this at a substantial discount
(operations).
The first short embedded video explains the original Temple & Webster business
model.
The second short embedded video is an interview with the founders.
13 Students need to try to define the size of the target market segment they wish to
serve and the % of this they aim to capture. These definitions help them hone in
on this.
15 Porter’s Five Forces is basic strategy teaching. Students need to use it on the
industry they want to enter. Remember to introduce the concept of switch costs.
This analysis is, however, firmly rooted in the present and not the future. Students
need to think about how the forces might change after they enter the industry.
The embedded video is a HBR interview with Michael Porter about his 5 Forces
model.
16 The internet market in China
1. The most important difference is that China is not a ‘free market’. The market
is highly regulated and protected by the state. Local and national party
contacts are important.
2. Yes, depending on the specific internet market targeted, but the above point
must be factored in. What is more, the market is already consolidated and any
start-up in direct competition with these established big companies is unlikely
to do well.
3. Base this discussion around Porter’s Five Forces and how they affect different
market structures and conditions.
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4. This is a personal question that is designed to focus students on their
particular start-up.
17 Internet start-ups in Iran
1. It is a new market that will grow, with little established competition.
2. The most important difference is that the market is also highly regulated,
although the regulations are not always clear. It is not a ‘free market’.
However, this is a new industry and there are no established companies.
3. The lifting of sanctions creates opportunities and threats. Get students to list
them. Their extent depends to some extent on the reaction of the State.
4. The challenge is to establish brand and market dominance quickly.
20 Novo Nordisk
This question is designed to focus students on their particular business idea.
14/18/
19/21
These four slides allow you to outline the well-known SWOT analysis.
The important point is to focus on the future. But who knows who future
competitors might be – and how they might react? Who knows what the basis of
competition might be in the future? The techniques listed on the right of the slide
might be used to predict who they might be and/or where they might come from,
as well as the basis for the competition. The really important point is to stay close
to customers’ needs – the odds are that they will change.
22 These are the important questions that they may seek to explore with the
techniques from the previous slides.
23 Bill Gates and Microsoft
Predicting the future is virtually impossible. The best we can do is sketch out
alternative possibilities. However, even this is problematic. There are the ‘known-
unknowns’ which you might be able to develop scenarios to look at. But there are
also the ‘unknown-unknowns’ – like the 2001 Twin Towers attacks in the USA –
which nobody could have dreamt of.
24 Convergent US technology markets
This is a fascinating case that shows how a new market/industry is being formed
from developing technologies. It shows how five companies, created relatively
recently and who are dominant in their own sectors, are creating this new market.
The short embedded video, produced by Microsoft, explores what the near future
of mobile technology might look like.
1. If we look at the individual companies:
Amazon comes to the war by selling physical and virtual goods on the
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internet. It now produces a range of tablets that facilitate access to its
sites. These will need to accommodate search engines and provide
access to social media sites.
Apple is probably the current leader in this war and has an enormous cash
mountain to fund developments. It provides hardware, proprietary software
and internet access. It also sells virtual products like music downloads and
books, and has Apple TV.
Facebook is the best known of the social media sites. It is challenging
Google in the provision of information.
Google is the main provider of all sorts of information via the internet. It
owns YouTube. It generates most of its income from advertising on
computers that use its search engine, but has failed to find a way of
replicating this model on mobile devices. It has partnered with smartphone
producers such as Samsung to offer an Android operating system and has
recently started selling its own tablets (linked to its own internet sales
sites). In my opinion they are the main contenders in this battle with Apple.
Microsoft is the sleeping giant who ignored the growth of the internet for
too long. It comes to the market from software. It produces some hardware
devices and has partnered with Nokia to offer new proprietary
smartphones using Microsoft operating systems and services.
We are seeing computing increasingly taking the form of a mobile, internet-
linked platform, witnessed by the growth in sales of smartphones and tablets
at the expense of desktops and even laptops. This is being accelerated by the
advent of cloud computing which encourages the development of devices with
less storage - and therefore devices that are usually smaller and cheaper. All
these devices use search engines, which gather data on individuals. They also
provide access to social media sites that are increasingly competing with
search engines for information provision. Many of these devices have built-in
proprietorial access to sites that allow purchase of downloads and physical
goods (e.g. all Apple devices, the Amazon Kindle). Access to other sites is
more difficult. Devices from different manufacturers have varying degrees of
difficulty communicating and connecting with each other (e.g. Apple vs.
Microsoft).
2. These markets are consolidated and global, moving from ‘growing’ to ‘mature’.
The interesting thing is to look to the future. As the case states: ‘The battle
now is to become the sole provider of all our digital requirements, offering a
vast range of services tailored to our ‘needs’, all day, every day, anywhere,
from the best online platform – a kind of ‘digital utility’… The reward is not just
the profit from the goods or services that may be purchased but also the digital
footprint of users (identified by their IP address) – their internet surfing and
buying habits, likes and dislikes, times of day on the internet and even their
location.’
So the rewards are to become a monopolistic supplier of a vast range of
goods on a global basis and to gain valuable information on users. These
companies already enjoy dominant positions in their traditional markets (and
therefore enjoy high levels of profitability) but fear that the new ‘cyber-market’
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might undermine their position. In moving into this new market, they
accelerate its development. At the same time, they move from their dominant
market position to one of high competition. The risk is that they will not win the
race and will end up not dominating this new market. Hence there is an
emphasis on speed of development. Ask students whether there are dangers
in this. The recent case won by the EU against Google indicates these are not
to be taken lightly.
3. The Chinese companies are in the same position in China and are protected
from external competition in their home market by the government. However,
this protection is probably at the price of information on users being already
shared with government agencies. Will these Chinese companies be allowed
to compete in Western markets?
4. These are risky markets to enter, given the dominant position of these five
companies. However, niche business can always flourish and there is always
the opportunity, if very successful, to sell the business to one of them.
25 This is the first go/no-go decision point and an opportunity, together with the
Nuffnang case, to explore students’ understanding of how to go about selecting a
business idea. This is the point where they can review what they know and what
they do not know about the business idea they have come up with. The next phase
will get students to develop a business model. In doing this, they may have to
revisit many elements of the original idea and the research phase before the
business is finally launched.
The embedded video is an 11-minute discussion on the topic.
26 Nuffnang
This open question allows you to explore the students’ understanding so far of
how to go about selecting a business idea.
Suggested group discussion topics
1. Why is market research important? What information can it generate for a start-up?
2. How do you define an industry and a market?
3. What information can you get from desk/field research? How would you use the different
sorts of information? What are the advantages and disadvantages of each?
4. Market research tells you nothing of importance about a radical innovation or completely
new markets. Discuss.
5. How important is market research as the business grows? What information might you be
looking for?
6. The better your idea, the more likely there is to be competition. Discuss.
7. Is it easier to start up in a fragmented or consolidated market?
8. Competition is always fiercest in the most attractive markets/industries – those where
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there is greatest customer demand, and therefore profit potential. Discuss.
9. Why are there business opportunities in mature and/or declining markets?
10. At what stage(s) are industries likely to develop a ‘dominant logic’ and become
complacent?
11. Should a start-up always be attracted to an industry where there is little competition?
12. Is it better to have big company or small company competitors?
13. Why might an entrepreneur perceive themselves as having no competition?
14. If the future is so important, what is the point of looking back and doing market research?
15. How has the internet affected competition in the context of Porter’s 5 Forces?
16. We spent most of the twentieth century creating mass markets and will spend most of the
twenty-first breaking them down. Discuss.
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Chapter 4: Structuring your business model
Student learning outcomes
Understand the meaning of the terms ‘effectuation’ and ‘lean start-up’
Understand the importance of developing a planning framework for your new venture
and how a business model is developed and used for this purpose
Understand the different sorts of business models that have been developed
Understand the characteristics of a good business model
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2 Sarasvathy’s effectual reasoning is reflected in the approach to start-ups
adopted in this book. Some might say this negates the need for a systematic
development of strategies for entrepreneurial endeavours. However, I do not
believe this. Strategic frameworks are an aid to logical, strategic thinking –
whether or not they are used as a formal planning tool. They are just as useful to
help develop emergent, incremental strategies.
The embedded video is a short animation explaining effectuation.
3 MOMA
Lessons include: solutions to your problems can become a business idea;
perseverance is important; try out a business idea without investing too much
money (lean start-up); be prepared to modify original idea; channels of
distribution are important for some businesses.
4 It is important that you demonstrate how the NVC Framework Worksheet can be
used to develop the business model and how the PowerPoint slide with its sticky
notes will be used for case presentations where required.
The Worksheet sticky notes can be written on when the slide is in ‘normal’ mode
and the slide then used for case presentation in ‘slide show’ mode. Students can
download the Worksheet from the companion website. I suggest you
demonstrate in class how this facility can be used by taking the slide out of ‘slide
show’ mode, returning to ‘normal’, then writing on one sticky note, moving it
around, bringing another forward (or sending back), deleting another and then
returning to ‘slide show’ mode to demonstrate the effects.
This Worksheet with its sticky notes is first used for the easyJet case later in this
chapter (slide 16). If you wish, you can demonstrate its use there.
5/6 The NVC Framework Worksheet is an alternative to Osterwalder and Pigneur’s
Business Model Canvas, which is generally used to look at existing business
models, whereas the Framework Worksheet is designed to facilitate the
development of a start-up business model and its conversion into a business
plan. The Lean Canvas was Maurya’s attempt to modify the Canvas so that it
better fitted the needs of a start-up. You can compare and contrast the two and
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then discuss the three models, making sure that students understand the
concepts used.
The six short embedded video animations show how the Canvas can be used. If
you do not show them all in class, I would recommend that students view them
on their own. They demonstrate how useful this approach to developing a
business model can be.
7 This slide takes you through the elements in the NVC Framework using the Worksheet.
8 Streetcar (now Zipcar)
This is the story of how a business idea developed into a market paradigm shift.
The idea originated in the USA, but the UK founders were the first in the UK to
copy the idea, demonstrating how ideas from around the world can often be
successfully transplanted from one country to another.
1. Streetcar offered convenient, reliable, low-cost personal transport that was
environmentally friendlier than car ownership. The car can be hired for
shorter periods – as little as the necessary journey time – and, once you are
a member, with minimal organizational formality. The target market is
younger, city dwellers.
2. Streetcar shifts the paradigm by removing the idea of product ownership from
the service a car provides. It shifts the paradigm by removing the
organizational formalities from car hire and minimizing the time that you
might use the vehicle.
3. The advent of electric vehicles coincides with restrictions on access to cities
by petrol- and diesel-powered vehicles because of pollution. Electric vehicles
cover limited distances and need charging points, which will be available at
the Zipcar parking areas. With fewer mechanical moving parts, pure electric
vehicles should be cheaper and more reliable than alternatives.
4. Zipcar bought Streetcar to secure market share in a new overseas market
(UK), at the same time as eliminating local competition. It was seeking to
secure market dominance. Avis bought Zipcar because this was a new
business idea (external corporate venturing) that complimented their current
market offering and one where they could probably achieve economies of
both scale and scope
The embedded video explains the original Streetcar concept in its early years.
9/10/11
/12/13
These generic strategies need to be explained to students in detail. The concept
of business imperatives and how to decide upon them will also need to be
explained.
The video clip embedded in slide 10 brings to life the dichotomy between low
cost and differentiation.
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The video embedded in slide 11 is a short animation explaining the link with
competitive advantage.
14 ARED
1. As currently configured, the business model would not work in developed
countries – labour is too expensive and internet access is often free.
However, we see the equivalent in automated smartphone charging stations.
As technology increases, so does battery life, so even these booths may
become obsolete.
2. The problems revolve around having social objectives. When the entity is a
social enterprise, these are usually legally binding. If the entity is a normal
commercial one, the founder has considerably more discretion. You can use
this case to explore the pros and cons of a commercial vs. a social
enterprise, particularly in developing countries.
15/16 easyJet
1. The aim of this case is to get students to understand the detail that is
involved in following a low-cost strategy. Slide 16 sets out elements of the
business model in the Framework Worksheet.
2. The absolute critical factor is flight safety. Operational imperatives revolve
around ‘sweating’ the assets and keeping operating costs low. Since so
many of these involve small details, almost all are ‘critical’ to the success of
the business model:
Tight airline scheduling;
No delays;
No ‘slack’ – no spare aircraft;
Using low-cost airports;
Flight crews working longer hours;
Smaller cabin crew;
All operations slimmed down;
Ticketless flights;
Single class cabins;
Tight baggage allowances;
No aerobridges;
Point-to-point flights.
3. This is a balancing act and easyJet has successfully repositioned itself to
better suit customer needs (e.g. selection of airports, seat allocation etc.).
Customers increasingly see through the false low-cost claims of some
competitors. For example, with ‘additional’ charges or by using such ‘out of
the way’ airports that travel costs to/from the airport are disproportionately
high. The point is that ‘low cost’ is not ‘lowest cost’. It depends upon
customer needs and might be better described as ‘best value for money’.
What is more, any low-cost company can still differentiate itself from
competitors in some non-price ways. The two strategies are not mutually
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exclusive.
4. Essentially this is about introducing benefits that customers are willing to pay
additional amounts for. These are often features of the existing service that
lead to customer dissatisfaction (no seat reservation, destination airport etc.
Again, this is a question of judgement. ‘Low cost’ need not always go with
‘low price’. easyJet has a recognized and highly regarded brand (unlike some
competitors) and now has some of the characteristics of flagship carriers,
which helps to differentiate it from competitors and allows it to charge a
higher price (sometimes not that different from some flagship carriers).
However, it still follows its low-cost operating imperatives.
The first embedded video outlines easyJet’s business model and how it
operates.
The second embedded clip is from an interview with easyJet’s founder, Stellios
Haji-Ioannou, explaining some of the original innovations in the business model
and his thoughts about how the model has changed.
17 Quad / Morgan / Escape to the Cape
1. These are focused, small market segments and business models that require
a high price to be charged to enable the appropriate quality of product or
service to be delivered.
2. Pros include: high price; good brand reputation; focused market segment etc.
Cons include: small market segment; vulnerability to external factors (e.g.
legislation, recession) etc.
18/19 Many students will have business ideas based on the internet. But often
monetarizing these models can be difficult. These slides give some examples of
how that can be achieved and highlight some important strategic issues.
20 These additional, more detailed business models are from Osterwalder and
Pigneur (2010). Explain how each generates income, without going into too
much detail, but clearly demonstrating how any idea on its own is not good
enough. It needs to generate sustainable income.
21 Web 2.0
This is an open question but the likely answer is ‘not very’. The conclusion
(which Henry Ford and Steve Jobs would agree with) is that market research is
unlikely to tell you much about radical innovations that potential customers may
not understand how to use. This has implications for the risks (and returns)
associated with different types of new ventures.
The short embedded video gives an explanation of the terminology surrounding
Web 2.0 - useful for later in the course.
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22 Pinterest
1. Advertising & pay-per-click.
2. It can discourage them from trying to develop new ideas or they can learn
from the experience in a positive way and build on it.
24/25 Assessing whether a business idea is commercially viable depends
fundamentally on market demand and this is not always easy to assess,
particularly for more radical innovations (as Henry Ford and Steve Jobs
understand). Lean start-up advocates that the product/service is not launched in
a ‘perfect state’, but rather in its ‘minimum viable’ state, then using customer
feedback in an iterative fashion to further tailor the product/service to the specific
needs of customers – a process Ries calls ‘validated learning’. In this way,
valuable time and money are not invested designing features or services that
customers do not value. The approach is particularly useful for technology-based
products (e.g. Jack Cator case).
The link on the left is to a one-hour video lecture by Eric Ries explaining the lean
start-up concept, which you might ask students to view in their own time.
27 Amanti Cupcakes
This is a lifestyle business but there is an element of salary-substitute. Take the
opportunity to discuss what this means.
28 TruffleShuffle
1. Low risk, low investment, learn from customers.
2. Experimenting, but also possibly observing. Revisit the concept of discovery
skills.
29 These 15 characteristics need to be explained in detail as they form the basis for
evaluating a business idea. Students are asked to undertake a preliminary
evaluation of their own business idea in Workbook exercise 4.3. It may be
worthwhile reviewing the results for individual students in order to highlight the
issues they face in developing their business model. Students will be asked to
repeat the exercise once they have fully developed their business model in
Workbook exercise 13.9.
30/31 Hide My Ass! and Jack Cator
A role model for student entrepreneurs. As well as business lessons, you can
also use the case to bring out the character traits of entrepreneurs (Chapter 1),
many of which are evident in the case and video. Remember to link it with the
concept of lean start-up (slide 24).
The embedded video is of Jack Cator explaining what he has learned from his
start-up experience. There is so much in this that I would strongly recommend
using it in class despite its length (12 minutes). There is so much wisdom on
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such a young head. Emphasize that all these points are covered in the 15
characteristics of a good business idea listed on slide 29.
Suggested group discussion topics
1. What is a business model and why do you need one?
2. Is an innovative business model as good as an innovative product or service?
3. Why might effective business models change?
4. Is effectual reasoning logical?
5. If entrepreneurs do not like traditional, formal planning, why should I develop a
framework to explore the launch of my business?
6. What are the advantages and disadvantages of using a flexible framework like the New
Venture Creation Framework to explore the launch of my business?
7. How is the New Venture Creation Framework different to the Business Model Canvas?
8. How is the ‘Lean’ version of the Business Model Canvas different to the original?
9. The cheapest way to undertake market research is to start up and monitor your
progress. Discuss.
10. Lean start-up only works for high technology businesses. Discuss.
11. How important is ‘first-mover advantage’?
12. There are always ways to find out whether a market for a product or service really
exists. Discuss.
13. Are there really only three generic business models?
14. Customers always want the cheapest product. Discuss.
15. What are the advantages and disadvantages of a business model relying on customer
focus?
16. What are the advantages and disadvantages of a business model relying on low
cost/low price?
17. What are the advantages and disadvantages of a business model relying on
differentiation?
18. What are the advantages and disadvantages of the niche business model?
19. How might the business model for a social enterprise differ from that of a commercial
enterprise?
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Chapter 5: Crafting your value proposition and branding
Student learning outcomes
Identify the values on which your start-up is based
Develop a vision for your start-up and write its mission statement
Identify and describe your target customer segment(s)
Understand the importance of values-driven marketing and the social and commercial
benefits of CSR
Develop a value proposition for your product or service, appropriate for each target
market segment
Understand how to develop a brand identity consistent with your value proposition
Decide whether your business is to be a commercial or social enterprise
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
3 Ferrero
This is a general question for class discussion. Values and beliefs are important
because they give meaning, direction & an ethical underpinning to the business.
Commercially, they can be useful to underpin the brand and help motivate staff.
4 Ask selected students to describe the market segments that they might be selling
to. Press them to be as specific as possible. Ask the class for feedback.
5/6/7 Students need to express their value proposition succinctly in as few words as
possible. They need to understand the differences between features and benefits.
The template (slide 7) might help them do this – although I am certain they will
refine it as they work through the book. Get students to write down their value
propositions, using the template and ask those you selected to define their target
market segments to read this out so that the class can provide feedback.
8 Apple MacBook Pro
This value proposition not only uses superlatives based on previous excellent
Apple products but also claims a number of unique qualities for the product. Get
the class to translate these features into real and emotional benefits for a
customer.
9 Dell Corporation
1. Get the class to list the advantages and disadvantages. The point is that
physical features and the benefits they confer can always be copied, even
when IP can be protected. It is more difficult to replicate emotional and
service benefits.
2. The better known the brand to the customer the more difficult it is to
recognize or believe in a change in its value proposition. However, it can be
done (e.g. when Volkswagen purchased Skoda and changed its reputation).
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This is because changing the value proposition may also involve developing
key competencies not yet available within the company. Internal barriers
might include the dominant logic within the organization, inertia, cost etc.
10/11 Linking values with branding is important from a marketing viewpoint. These
slides can be used to start a discussion about just what branding for a small
business with limited resources is like, and the values that might be incorporated
into it.
12 Relationships are difficult to establish without shared values. Values-driven
marketing involves branding but seeks to establish a relationship with customers
based upon these shared values. This is the link with CSR.
The embedded video is a short clip from a lecture by Philip Kotler on the topic.
13 The values of a business come from the founders. If they do not set about to
imprint values onto the business they create, then they cannot expect to
complain if the values that evolve are not to their liking.
The embedded video with Michael Porter emphasizes the importance of shared
values in creating economic value.
15/16/
17
The point of these slides is to encourage students to have a clear identity for
their product/service and/or business. The development of a clear brand image –
consistently applied across all the marketing mix – will help them refine their
value proposition. This underpins the attractiveness of the business to investors.
Do stress that branding is not just about product recognition, good branding is
also about brand values – what the brand represents. An effective brand is
recognized by the heart as well as the head.
The embedded video gives a brief introduction to branding.
19 Apple iMac
The reasons for this are made clear in the case, but you need to link this to the
earlier Apple case (slide 8), and more generally to how Apple uses design to
create competitive advantage.
The embedded video is about how Apple uses design to define its brand identity.
It can help stimulate a discussion about the role of design in differentiation, for
product excellence, operational excellence, even customer intimacy. It is worth
discussing how design and branding might play a part in differentiating a
company following a low-cost strategy (e.g. easyJet and their excellent web
design) or a customer intimacy strategy (e.g. Morgan and their distinctive product
design).
21 The design thinking concept is not a firm set of rules but a general approach to
problem solving in business, beginning with the end user or customer.
The first embedded video explains the design thinking concept as a five step
process, although it is produced by Stanford University in order to promote its
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courses.
The second embedded video explains how Apple uses design thinking and it
links well with the two cases in the text (5.2 and 5.4). It is based upon a Harvard
business case study that was the winner of an ECCH case award in 2013. It is an
excellent vehicle around which to have a class discussion about design thinking in
general and Apple’s approach to its use in particular.
22 Zound Industries
1/2. This is a design-led brand. The first sentence describing each of the four
product ranges gives details of the target market and the value proposition.
Each product range is clearly delineated and focused on the particular target
market.
3. This fashion brand is targeted at the young and students will probably know
more about competitors than you or I. Ask them who the brand’s competitors
are and how the Zound products compare.
4. This is for discussion. Because it is a technology-based fashion brand,
designs will tend to have a short product life and designs will have to be
renewed regularly. If technology changes, then that also will have to be
upgraded. Sustainability depends on the company’s ability to do this and
weather the vagaries of a fashion brand.
The embedded video shows the range of products made by Zound.
25 The short embedded video explains how CSR can also be commercially
beneficial.
27 Ecotricity
This is an example of a large-scale, environmentally friendly commercial
business. Its green credentials are very much part of its brand and marketing
strategy, now and in the future. You can use this case to discuss whether there
are conflicts between CSR and commercial viability.
The embedded video shows Dale Vince talking about the company, its aims and
what is in store in the future.
28 Goodone
1. This is an example of a small-scale, socially ethical but commercial business.
Many students will identify with it.
2. This raises the issue of how you measure success. You are left with the
impression that money or profit might be needed to sustain the business, but
maximizing it is not the objective of Nin. You can use this as an open
question about how you measure success. Are only growth businesses
successful? Are sustainable lifestyle businesses successful? To be
successful do you need to have a wider social or ethical purpose? The
answer probably lies in whether Nin is happy or not.
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3. This explores the debate around public vs. private costs and benefits. With
growth in businesses, jobs are usually created and wealth is subsequently
spread around more. However, unlike the Material Pleasures case in Chapter
1, this is a business with social objectives, which probably helped Nin obtain
the soft grants, loans and training she received.
The embedded video is an interview with Nin Castle explaining what the
business is about.
29 Richard Branson & Virgin
1. Virgin has been described as a lifestyle brand that has certain intrinsic values
modelled on its founder, Richard Branson. Ask the class to give you words
that describe the Virgin brand and put these up on a whiteboard. Next, ask
them what the Virgin brand brings to the product or service. Generally, the
answer will be fun, excitement, adventure, service etc. The challenge then is
to link that to the various products or services the brand has been placed on.
How does it bring these qualities to the product or service? Try it with a few
of the obvious ones like planes and trains. Then try it with some of the less
obvious ones – like Cola – and you will see why they have been less
successful. Ultimately the brand must add something to the product or
service. At one time, linking the Virgin brand to trains seemed like a step too
far, given the state of Britain’s aging railways. Now, with new high-speed
trains, good punctuality, ‘trendy’ and good customer service (particularly for
first class) and whacky advertisements, the game seems to have paid off and
passenger miles are soaring. The Virgin brand is the main asset of the
company that it uses to partner with other companies which generally handle
the day-to-day operations. The brand identity underpins its marketing activity
and influences the organizational culture.
2. Virgin has been successful because of the ability of Richard Branson to find
entrepreneurial opportunities to infuse the Virgin brand and ethos into the
product or service. Virgin usually opens a new venture in partnership with
individuals or an organization that understands the product or service and the
industry it is in – and, essentially, how it operates or is made. Virgin brings its
brand, some marketing flair and a different way of looking at the business.
Capital might come from another source altogether. In this way, Virgin gets to
take equity in many new ventures and is willing to take a risk on their
success, rather than simply licensing its Virgin brand. It also influences, to a
greater or lesser extent, the venture and how the brand might be used, which
is one reason why it has proved so durable. So, rather than putting in capital,
Virgin puts in the brand and their own entrepreneurial marketing flair. In
exchange it takes equity – a ‘branded venture capital company.’
3. The Virgin brand does currently rely on its founder, Richard Branson.
However, one danger the brand faces is that the entrepreneur would do or
say something to damage or even kill it. There have been a number of brand
‘scares’ around Virgin related to the intricate and secretive way the company
conducted its business, but these just seem to have enhanced its sense of
mystery and excitement. The question in the future is whether the Virgin
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brand can survive the departure of Richard Branson. Can the values
underpinning it continue after his departure? Can the brand continue to mean
something without its charismatic founder? Who can or will take over as the
apostle and preacher of these values, or can it all be done from a ‘corporate
headquarters’? If you look at the precedents, they are not good. However,
unlike other businesses which have declined once the founder has left, this is
not a single business brand. It has been transferred and stretched
successfully. The day-to-day operations of Virgin Airlines are run from a
corporate headquarters and they are not those of Richard Branson. The
brand has already been transferred in that sense.
The embedded video explains Virgin’s branding strategy and the role Richard
Branson has played. This involves the traditional use of PR, CSR and social
media.
30/31 Do stress the importance of values. They underpin branding and values-driven
marketing. They should reflect those of the founder and be real rather than
artificial. The same values and vision are also important when it comes to
leadership (Chapter 11). Students are asked to reflect on their own values in the
Workbook exercises.
32 Get students to try to write down their mission statement using the template and
ask those you selected before to read it out so that the class can provide
feedback.
33/34/
35
These real-life examples of vision and mission statements, along with the
underpinning values are worth discussing. Ask students whether they are
consistent with each other? What role do they play in guiding the organizations?
Ask students what differences they would expect between the values, vision and
mission of a commercial and a social enterprise.
Suggested group discussion topics
1. Why are values in business important? Are they ever dangerous?
2. What might cause you to change your core values and beliefs?
3. Why are ethics in business important?
4. Can you make more money being ethical or unethical in business?
5. The law defines the extent of our ethical and social responsibility. Discuss.
6. The law says that avoiding tax is legal but evading it is illegal. Large multinationals like
Starbucks, Google or Dell are therefore perfectly within their rights to move profits
around the world to countries with low tax rates. Discuss.
7. Companies that move profits around the world to countries with low tax rates have an
unfair competitive advantage. Discuss.
8. Is it ethical to make a profit from ethical and social values?
9. Marketing is just about selling. Discuss.
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10. Customers buy services not products. Discuss.
11. Relationships are based on trust. How do you build trust with customers?
12. Why is branding so important?
13. What makes a good brand?
14. Is creating a brand more or less difficult for a small company than a big company?
15. How can a start-up develop a brand without the resources big companies have to
publicize it?
16. How can you ‘communicate’ a brand image?
17. Why do you need a mission statement?
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Chapter 6: Developing your marketing mix
Student learning outcomes
Understand the difference between features and benefits, and how features might be
engineered to provide valued benefits for customers
Understand how to develop a marketing mix that supports your brand identity and
delivers your value proposition to your target customer segments
Decide on your channels of distribution
Set your selling price(s)
Use profit data to make commercial decisions
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2 The marketing mix comprises the features that confer benefits to the target
market segment(s), and they can be configured in an appropriate way to deliver
those benefits. The marketing and operating plans should be constructed in such
a way as to deliver the marketing mix.
3/4 The English Pub
1. This was a real plan for a single pub. The pub chain had another overall plan
that outlined how it would expand (for example by profiling target locations).
The objective was to fill the pub throughout the day, every day, and maximize
sales.
2. This strategy is for a large pub in a city centre. Location and size are vital
elements for this plan to work. It attracts a large volume of passing trade
(shoppers and office workers) and the size of the premises allows it to
simultaneously accommodate different customer segments with different
needs by using different elements of the marketing mix, highlighting the
differing critical success factors throughout the day.
A pub is a high fixed cost business and it therefore needs to maximize the
customers that use it. It therefore targets different market segments with
different value propositions (marketing mix) at different times of the day. The
contribution margin on drinks is also high - typically 60-70%. It therefore can
discount and price differentially to ensure it attracts the maximum number of
customers.
The case demonstrates how a business might have a number of different target
markets for the ‘same’ product/service.
5/6/7/8 In my experience, distribution channels for physical goods (and sometimes
services) as well as web or mobile products/services are much ignored by
students, in particular the fact that selling through them can rapidly erode
margins. Whilst the internet has made direct access to customers more viable,
other routes to market are still important as they can give access to a wider
market more quickly. And, whilst these different routes are not necessarily
mutually exclusive, students must understand that their pricing strategy through
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different routes needs to be consistent.
9/10 Flying Tiger Copenhagen
This is the first of a three-part case about this Danish store chain. Other cases
follow in Chapters 8 and 10.
Slide 10 sets out elements of the business model in the Framework Worksheet.
These will be built upon as the case progresses. Explain how the marketing mix
is consistent and reinforces the value proposition. Subsequent cases will show
how the company has achieved its rapid roll-out whilst minimizing risk and capital
and how it deals with its operating risks. You can, if you prefer, take all three
cases together.
The embedded video takes a trip around a typical Tiger store.
11/12/
13
Pricing their product/service offering is always an issue for students. Many will
want to sell the ‘best’ product at the ‘lowest’ price. I use slides 12 and 13 to get
them to think through the advisability of this approach. Whilst ‘price elasticity of
demand’ might mean very little, the reality of this arithmetic usually works.
Try starting in the bottom left of the matrix in slide 12: ‘If your margin is 20% and
you drop your prices by 15%, you need a massive 300% increase in sales to
keep the same level of profitability’. Moral: don’t drop prices and assume
increased sales will generate increased profits, unless your margins are high.
Starting in the bottom left of the matrix in slide 13: ‘If your margin is 20% and you
can increase your prices by 15%, you can afford to lose 43% of your sales and
still keep the same level of profitability’. What is more:
Lower sales might allow you to offer better service to justify the price
increase;
Alternatively, lower sales might allow you to cut fixed sales and
administrative costs and therefore make higher profits;
Lower sales might require lower stock holding, less warehouse and office
space and therefore capital requirements might be cut.
Moral: try to charge as high a price as possible for your product/service.
14/15 Property Fox
Slide 15 sets out as many elements of the business model as we can at this
stage. Even with so much still unknown, the Worksheet is useful in highlighting
what needs to be clearer in proving that this business model will work.
This is an unproven business model that relies on partnerships and online
support to provide a low-cost, low-price service. The risks therefore revolve
around low customer take-up and the failure of the partners to deliver the
promised service. Whilst this is a novel idea, so little is known about the
marketing strategy that the prospects for the business remain uncertain.
The short embedded animation explains the Property Fox concept.
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16 Abel & Cole
1. Students can easily build up a picture of this target market. It is wealthy
(middle class), ethical, eco-conscious, health and food conscious, time-short
urban dwellers. The value proposition involves ethically produced, organic,
local food delivered to your home.
2. Everything must be consistent from products to packaging, from service
delivery to charity giving. Ask students to explain some of the details
associated with this.
3. Because this is expected from the products and services offered and the
target market is able to afford this.
4. The main danger with any expensive product/service offering is that when
money gets tight in times of recession, customers look to cut back their
expenditure. They can do this by sourcing organic groceries themselves or
buying non-organic.
The embedded video outlines the company’s product/service offering.
17/18 Mobike
1. Slide 18 sets out as many elements of the business model as we can at this
stage. Even with so much still unknown, the Worksheet is useful in
highlighting what needs to be clearer in proving that this business model will
work. This is a model that requires a lot of capital with high fixed costs, one
that has unproven customer take-up. It might be competing with other bicycle
providers. It depends upon the bikes being located in appropriate places, with
sufficient bikes to reliably meet demand. This means bikes have to be
maintained, tracked and moved around. There is no history to go on
regarding the damage to and theft of these bikes. It would be easy to
conclude that, until the business model is proven, this is a high-risk venture.
2. The ability to charge a premium price is crucial because of the high
breakeven, but so is customer take-up (volume). So a balance must be
achieved. Mobike charges a higher price because of its distinctive design and
other features. The question is whether these confer real benefits to
customers who just want to travel a short distance, perhaps between
transport hubs.
3. The distinctiveness is that bikes do not have to be left in set locations. But
this can be a disadvantage to customers if they cannot find them and could
potentially become a public inconvenience if left in undesirable places. This
could also impose high costs on the business as they relocate the bikes to
more convenient locations.
4. This is an unproven business model with high capital requirements, high
costs and high associated risks. The model needs to be established. But then
what is to stop competitors coming into this new market?
The embedded video explains the Mobike concept.
You may now wish to return to the other service Case insight, easyJet (Case 4.4)
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to compare and contrast the business models.
19 Zaytouneh (now Atbaki)
This is a general question intended to stimulate classroom discussion.
20/21/
22
These slides demonstrate how important it is to understand financial information
and in particular to be able to calculate your contribution margin. Allocating
scarce resources in slide 22 is particularly useful for retail ventures deciding on
shelf space. It might be worth returning to these slides when you reach Chapter
13 and students better understand breakeven calculation.
23/24/
25
Lush
The aim of this case is to get students to try to understand how a value
proposition can be constructed from a number of relatively minor features that
are configured in such a way as to make it unique.
1/2. Slide 24 sets out elements of the business model in the Framework Worksheet.
3. As with all retail businesses, an appropriate location is vital, but otherelements of the marketing mix must be consistent. To gain competitiveadvantage, a product/service does not always have to be uniquelyinnovative – only the marketing mix. Lush has managed to effectivelydifferentiate itself from competition by putting together a unique mixture offeatures. The Lush brand should represent its values (slide 25).
4. Anita Roddick (Body Shop) once said cosmetics ‘will not make the heartsing’. Mark may have been influenced by this insight, made in relation toBody Shop’s ethical stance (although cynics might observe that sellers ofcosmetics rely heavily on dreams and aspirations to sell their products,and only the nature of the dreams and aspirations have changed). Theethical stance may be based on Mark’s heartfelt principles, butcommercially they attempt to differentiate Lush from its competitors. Theyare important.
You should compare slide 24 to slide 10 for Flying Tiger Copenhagen - another
high street retailer with many similarities. Ask students to compare and contrast
the two and explain any differences.
The embedded videos set out the ten principals of Lush. They are a little long
and you may want to get students to watch it beforehand. The section on failure
in Part 2 is very pertinent to issues around entrepreneurial character and
innovation. Mark set up Lush because his Cosmetics to Go business had gone
bankrupt and he had no money left from the sale of his original business,
Constantine and Weir. It all appears to be a mix of luck and desperation in that
Lush started life as a shop selling the stock of the bankrupt company, Cosmetics
to Go. The constant theme in the three businesses is cosmetics with a natural,
ethical, environmental selling angle.
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Suggested group discussion topics
1. What is the difference between marketing and selling?
2. If you have a great product or service, all you need to do is make customers aware of it
and they will flock to buy. Discuss.
3. What is the difference between the marketing mix, the value proposition and the
business model?
4. Is market segmentation art or science?
5. How can you group together customers in a useful way?
6. Costs determine price. Discuss.
7. Is there really a limit to the price you can pay for a product or service?
8. Can you really sell less and make more profit?
9. How can you charge different prices for the same product or service?
10. Different customers are happy to pay different prices for the same product. Discuss.
11. Why are people willing to pay quite high prices for bottled water when it is free from the
tap?
12. Which strategy is best – ‘supply-push’ or ‘demand-pull’?
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Chapter 7: Communicating your value proposition
Student learning outcomes
Understand the customer buying process and how the marketing mix can be used to
encourage customers to become repeat customers and advocates of your
product/service
Understand how to find prospective customers throughout your distribution chain
Enhance your face-to-face sales skills
Write a press release
Draw up a communications campaign that helps launch your business
Develop a marketing strategy that launches the business
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2 The customer journey is a way of getting students to realize that they are not just
trying to make a one-off sale - they are trying to develop a long-term relationship
with customers, so that they repeat purchase. Whilst they may need to focus in
the short-term on Stage 1 (Launch), they will quickly need to move on and, once
established, will need to develop strategies that address all these stages in the
customer loyalty chain.
Ask students how and where they will find their first customers and how they will
initially get them to purchase their product/service. Encourage them to think
about how they will encourage customer loyalty.
3 Huddle
1. Pros include: low-cost marketing, dedicated users once signed up.
Cons include: low revenue (free use) to start, takes time to build.
2. The model applies to Stage 1 consumers only. Once the product has been
positively evaluated, the model relies on consumers (individuals) influencing
customers (companies) to purchase. It can cut short the delays associated
with corporate purchases.
3. Yes. Get the class to provide examples.
The embedded video is a brief interview with Alastair Mitchell about cloud
computing and Huddle.
4/5/6 Some founders will have to sell face-to-face, others will not. However, I believe
that trying to sell their product/service in a role play will help all founders better
understand how to market it. They must understand features and benefits.
Selling skills are best taught using Workbook exercise 7.6. These three slides act
as a skills briefing for this exercise.
7/8 Encourage a discussion of these different communications tools, bringing out the
advantages and disadvantages of each. Of course, not all tools are available to
every business. Get students to come up with ideas for gaining publicity at the
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launch of a new business.
The first embedded video is a very short clip about the importance of social
media to the Virgin Group. This medium is one where small businesses can
excel – so long as the message is catchy. Link the use of social media with
guerrilla marketing.
There are many entertaining short videos on YouTube about guerrilla marketing.
This one shows some of the many innovative ideas that have been used to grab
people’s attention. Ask students for their ideas about how to market their
product.
The third embedded video is an example of the power of advertising – in this
case a short TV advertisement for Virgin Virtual Group. Ask students what brand
messages are contained in this video.
9 BicycleSPACE
1. It is an important communications tool. It promotes the company to Stage 1
customers and cements relationships beyond to Stage 4. Clearly shown in
the video, BicycleSPACE is as much about socializing - meeting people - as
about bicycles. It would be interesting to see how much revenue this
generates.
2. No, but it facilitates it by communicating details of social events. Face-to-face
relationships can be built at these events or in the shops.
The short embedded video is one promoting BicycleSPACE in Washington DC.
10 Instant Pot
This case is a vehicle for a general discussion about the use of internet retailers
like Amazon and the use of social media to promote products internationally. It
also acts to remind students that you do not have to become a large organization
to sell internationally. Partnering can reduce capital requirements, costs and risk.
The embedded short video is a short review of the Instant Pot.
11 American Giant
Lessons include: plans can go wrong (even conservative ones); stick to the
principles of the business; communicate honestly with customers.
The embedded short video is about the company.
13 This slide summarizes the communications imperative for each of the four stages
of the customer journey outlined in the previous slide.
You can often consolidate the learning from the selling exercise and integrate it
with what is needed for a communications campaign by getting students to draw
up a press release for their business – Workbook Exercise 7.3.
16 Good Hair Day
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1. Subcontracting manufacturing reduced start-up investment and costs,
allowing a focus on selling. Focusing on sales to hair salons reduced
marketing costs, relying instead on face-to-face selling, and allowed the
company to charge a higher price. In time, it developed the brand as one for
‘professionals’.
2. This question is all about underlining the importance of consistency in the
marketing mix – which is only as strong as its weakest link. Explore the
reasons for consistency in GHD’s mix and what might have been the
consequences of inconsistency.
17/18 Planning distribution channels and how they are to be used is a much neglected
issue by students. Link this to the work covered in the previous chapter. How will
they get their product or service to market and how will they incentivize the
distributor to stock and ‘push’ it? How will competing products find a route to
market? Is there space for an alternative model? Ask students: ‘What are the
alternatives to using distributors? And what are the advantages and
disadvantages?’
19/20 Clippy
Clippy is an example of a small-scale, lifestyle business start-up. It will never be
a multinational business, but it does give its founder a lifestyle and income that
she is happy with.
1. Slide 20 sets out elements of the business model in the Framework
Worksheet.
2/3. This has gone beyond a lean start-up. The major elements of strategy have
been driven by the desire to keep overheads low. Clippy was manufactured
in the UK because turnaround was quicker and terms of trade offered
extended credit. We can speculate that a Chinese manufacturer might have
been cheaper and may have required a larger production run. So the issue
is speed and cash flow versus cost. With a new product, where there is no
established market and cost/price is not a major selling point, the decision to
manufacture in the UK is understandable. As sales volumes increase, the
decision might change. She is trying to create a niche for herself (celebrity
endorsement), selling in (relatively) small volumes.
Other low-cost elements of marketing strategy:
Work from home with family help, subcontract manufacture;
Focus on promotion and sales;
Get free PR, either personal or through celebrity adoption;
Sell initially to family and friends, initial promotion by word of mouth;
Sell from market stall and internet.
4. We might expect that growth will come by selling more Clippies in the UK
and, perhaps, in overseas markets (Japan). We are not given any concrete
plans to show how this might be achieved (other than increasing the number
of retail outlets selling the product) and students might question whether
Clippy is just a fad or fashion and in fact, far from sales increasing, they are
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likely to decline. A quarter of sales still come from the website, despite having
250 boutiques selling the bag. Calypso also has plans to increase the
product range and you can get details of these from the website. This is a
good question to explore the issue of barriers to entry. If a business idea is
so good, what is to stop large competitors with greater resources coming in
with imitation products? Clippy could be on shaky ground if this simple bag
concept really takes off, which may be why the major driver of strategy
seems to have been the desire to keep overheads low.
The first embedded video is a very brief web advert for Clippy. Many students
may not realize that these can be made. The issue is how much they cost to
make and how many people will watch them.
The second embedded video clip is a longer excerpt from a TV sales channel,
demonstrating and evaluating Clippy. Discuss the pros and cons of using these
low-cost marketing communication channels.
22/23 Jack Wills - University Outfitters
1. Much of clothing has little to do with functionality or design and more to do
with branding. This case shows how a brand identity - concerned with an
aspirational lifestyle - can be established without spending a lot of money.
Show the videos first. Before addressing the case questions, ask if any
students have shopped in the store. Get students to give you words that
describe the brand. They might come up with the following: British; Young;
Establishment; Aspirational; Up-market (snobby); University; Party; Fun etc.
Notice the brand values have nothing to do with functionality or design. In
Peter Williams’ words: ‘I wanted to create a brand that … (was) an
aspirational response to that 18-21 British university thing.’ Ask any students
who have shopped in the store what they purchased and why. If you have
any Seasonnaires in class, be sure to get their experiences and views.
2. The approach to creating brand awareness can probably be summed up as
‘awareness by infection’. The use of Seasonnaires to make the clothing look
‘right’ - an ‘in-group’ to use Hofstede’s phrase - means that selection of these
young people is extremely important. So too are the things they do. This is
why the company make such extensive use of videos – with so many on
YouTube. This makes certain that you associate the brand with particular
activities, like parties, or certain sports, like polo or rowing.
This association with certain types of people and the development of an ‘in-
group’ through clothing is not unique. For example, the US brand Hollister
has similar associations and Nike has long advertised on the back of sporting
personality association rather than functional capabilities.
Advantages:
Cheaper than conventional advertising;
Personal - generate an emotional relationship;
Does not depend on the product’s functional characteristics (is this a
similar brand to Virgin?);
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Might be transferable.
Disadvantages:
Personal – could be damaged by one bad experience;
Requires genuine enthusiasm from staff (staff training and involvement
important);
Approach might be size limiting.
3. Slide 23 sets out elements of the business model in the Framework
Worksheet.
4. One theme in this chapter is the need to have consistency in the marketing
mix. Explore this using slide 23.
Show the embedded videos before addressing the case questions. The first is a
seasonal look at the clothing on offer in Christmas 2017.
The second embedded video is aimed at recruiting Seasonnaires in 2016 – an
important marketing device for the company. Ask the students what it tells you
about the brand image. There are many videos about Jack Wills on YouTube, so
do check for more up-to-date ones.
Suggested group discussion topics
1. How do you get a customer to become aware of your product or service?
2. Is social media the most cost effective way of promoting your product or service?
3. You can build trust by using social media. Discuss.
4. Just what is guerrilla marketing?
5. How can guerrilla marketing be combined with social media?
6. PR is free and influential. Discuss.
7. Would you pay a reporter or newspaper to give you PR?
8. Advertising is the most expensive way of one person talking to another. Discuss.
9. Advertising is all about gimmicks – getting noticed. Discuss.
10. What is the role of pricing in persuading customers to make a trial purchase?
11. Compare and contrast the communication strategy for a high-priced, technology-based
product with that for a low-priced consumable.
12. How can you have one communications strategy if you have a number of different
products or different market segments that you are selling to?
13. How does the communications strategy fit in with the overall marketing strategy?
14. What methods of selling would you consider unethical?
15. If sales are important, sales people should be remunerated based on the sales they
generate. Discuss.
16. Business is all about sales, nothing else matters. Discuss.
17. A complaint is a complaint. Can how a business handles complaints ever be a positive
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influence on reputation?
18. In a global market place, how can you ever dominate a market?
19. How do you get a customer to become an advocate of your product or service?
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Chapter 8: Scalability and growth
Student learning outcomes
Critically evaluate the strategic options for growth and understand the implications for a
start-up
Understand how to go about selling into new markets
Understand what is involved in product development
Use the Growth Share Matrix to communicate marketing strategies for a portfolio of
products
Show advanced knowledge of the effects of the product portfolio on cash flow and how
the product portfolio can be managed
Critically evaluate the use of acquisition as part of a growth strategy and the
advantages and disadvantages of diversification
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
3 Invoice2go
Selling into foreign markets is far easier these days because of the internet. It
allows specialist product/service offerings to be sold globally. However, in order
to achieve a growing market presence, most businesses will have to enter
foreign markets. And most will do this gradually as they find out more about the
market and therefore reduce their risks.
5/6 Franchising is an effective way of rolling out many business ideas quickly, but
the franchise format needs to be tried and tested first with turnkey operational
systems.
The embedded video explains the origins of franchising.
7 Ahmed Khan & McDonald’s
A straightforward case that links to slide 6.
8/9 Flying Tiger Copenhagen
Slide 9 sets out further elements of Tiger’s business model, based on the
Framework Worksheet in slide 10, Chapter 6. The key change is bringing in
50:50 partners which increases local skills, knowledge and capital and reduces
many risks. However, the company needs a turnkey retail system like a franchise
retailer and then faces the risk of the local partner failing.
10 Selling into foreign markets without a local presence has never been easier
because of the internet, and many start-ups will never open a foreign subsidiary.
However, to achieve rapid market penetration they may need to consider these
options. Remember to tie this into issues about channels of distribution, covered
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in Chapters 6 and 7.
If you want some first-hand advice on tapping into emerging markets, this
embedded video is a 6-minute interview with Christian Arno of Lingo24 - a
company which we return to in Chapter 12.
11 Figleaves
This case is about selling products online – making sure that the customers’ web
experience is good and fears about purchasing the product ‘unseen’ from an
unknown retailer are reduced. The lessons are about getting product credibility
through celebrity association, local website advertising (and click-ons), and ease
of purchase through different currencies (which hides the fact that you might be
purchasing from overseas).
12 Zoobug
1. Advantages include: larger markets, diversified market risk
Disadvantages include: extra costs, distributor risk etc.
2. Problems include: difficulties in developing distributor relationships, lack of
market knowledge etc.
The embedded video shows the Zoobug product range.
15 Mind Candy & Moshi Monsters
1. Moshi Monsters appears to be at the end of its life cycle and any hope for
growth comes from other products. These are fickle ‘fashion’ markets often
with short product life cycles. In these markets, you need to plan ahead to
develop and launch a portfolio of products quickly. One product idea may not
make a viable business, although it might be something that can be sold on.
2. In many ways, this is a blueprint for a lean internet start-up: systematic
development of ‘product’ through different media, incremental approach to
costs and investment, learning from limited launch, etc. However, the
fickleness of children’s games meant that the market disappeared before the
company could take full advantage of it. Was it just a fad, or could the
product have grown even bigger? Students can offer their own opinion.
3. The case underlines the importance of not relying too much on expensive
loan capital to finance growth.
21/22 Crocs™
1. Slide 22 sets out elements of the business model in the Framework
Worksheet. Crocs’ competitive advantage rests in three things:
The Croslite compound and its IP;
The fashionable Croc clogs;
The Croc brand (but what does this represent?) and the ability to transfer
this to other products.
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2. Although the original Crocs product is in the mature phase of its life cycle,
they still constituted some 30% of company sales. And the clogs seem to
have become fashionable again (see the link on the left). It begs the question
of how long a mature market can last for different types of products.
The case underlines the following issues for class discussion:
The vulnerability of being a one-product, fashion-based company;
The problems of scalability (building demand and capacity) within an
achievable timescale that matches the window of opportunity. There are
two obvious alternatives. Firstly, aim for profit rather than sales growth.
Alternatively, try to stretch the timeframe for growth. Crocs were never
cheap, but were not expensive. An alternative strategy might have been
to price higher and work with lower sales. Prices could be lowered as the
market declines. It might have been possible to ‘stage’ the roll-out across
the world. Both alternatives risk imitators being able to capitalize on the
success of Crocs and the possibility that they might go out of fashion
before the full potential is reached;
The risks associated with the production of fashion items and how they
might be mitigated;
The risks associated with manufacturing compared to subcontracting
(particularly for a fashion product).
3. Get the class to differentiate between Croc the clog and Croc the company
producing shoes. The clog is a unique fashion shoe that has been a
tremendous success. However, all products have a finite life and fashion
products usually have a shorter life than most. Factor in that the clog is made
from durable Croslite and it is quite predictable that sales of the original clog
should decline over time. The company was very successful in selling the
clog into new markets across the globe – focusing on the ‘fashion’ market. At
the same time, the company invested heavily in the production of the shoe
(backward vertical integration) rather than subcontracting this activity. By
2009, the market was saturated, the fashion fad had passed, and the
company was left with excess production capacity and costs out of step with
its revenues. Up to 2009, the company was unsuccessful at generating new
products. They had purchased new business lines like Jibbitz at a premium
price to bolster their growth but they did not sell well to the existing Croc
customers (new products to existing customers) and did not attract new
customers (new products to new customers), perhaps because of the image
of Crocs.
4. Crocs have now successfully broadened their product range based upon the
advantages of their Croslite shoe base. As well as broadening their fashion
range, they are now selling into non-fashion markets for workers who want
comfortable footwear. They have closed down a number of their
manufacturing bases but have diversified into retail by opening Croc shops.
These actions, together with a return to fashion of the original clog, have
returned the company to profitability.
Fashions come and go. Many students may never have heard of the brand;
others may still look on the brand as ‘cool’. The first embedded video is from the
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USA in 2009, at the height of the backlash against Crocs and when the news
came out that they were about to go into liquidation.
The second embedded video is an annoying (but funny) little song promoting the
‘virtues’ of Crocs from 2010. The reason for including it is because it
demonstrates how Crocs were resurrected just one year later.
23 When I did my MBA, the diversification box in the matrix was called the ‘Wally
box’ – a high-risk option for existing firms that led to becoming a low-yield
conglomerate. ‘Stick to the knitting’ was the mantra. This probably dates me
because so many high-growth firms seem to practise product and market
development side by side. They partner with other companies that have product
or market knowledge they do not have. They also use acquisition (corporate
venturing) to gain rapid market dominance, particularly in overseas markets.
These strategies cause them to move towards what we might call diversification.
We saw this in Case insight 3.8, as these tech companies competed to create
and dominate a ‘new-to-the-world’ industry.
24 We should never underestimate the importance to privately or family-owned
firms of diversification as a means of spreading risk. The simple examples are
businesses that diversify the weather risk by running different businesses in
winter and summer. One example was an entrepreneur who ran a successful
business in France in the winter offering ski instruction, and went back to
Scotland to run their horticultural business in the spring and summer.
26/27/
28/29
Brompton Bicycle
1. Slide 27 sets out elements of the business model in the Framework
Worksheet. You might compare this to the Mobike case in Chapter 6, where
there are lots of unknowns.
2. The founder has made use of the many ladders and bridges of support
available to an innovative new business. However, the development of the
business has been a struggle that has tested his perseverance. Throughout
he has struggled with inadequate resources but has managed to minimize
the finance required and the fixed costs (therefore risk) he faced – a ‘lean
start-up’.
3. The case shows how the company has practised both product and market
innovation. Slide 28 sets out these strategies.
4. Slide 29 sets out a SWOT analysis.
The question of future growth strategy is difficult, since we do not know how
well the shops are doing, but this would seem to be one of the riskier options,
given that the firm has little expertise in retailing. Developing ‘new products’
would also seem problematic, given that the company has such a specialist
market niche (folding bikes for city dwellers); however electric Bromptons
must be an opportunity they pursue. Any attempt to move downmarket would
be a mistake as it would damage the brand. Although it does rent out bikes,
as we have seen, the new pick-up and drop-off rental market being
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pioneered by Mobike (Chapter 6) is unproven and risky.
The embedded video demonstrates the folding Brompton Bicycle and reflects on its current popularity.
30 Reliance Industries
1. Because it was a family-owned business and diversification spread family
risk.
2. This may change as family ownership is diluted, they lose control, and the
wider stock market ownership come to realize that business diversification
does not add value for them. As a result, the share price will suffer and
pressure will mount to break up the business.
Suggested group discussion topics
1. Penetrating your existing market is a low-risk option and should therefore always be the
strategy you pursue first. Discuss.
2. What are the barriers to reaching an international market?
3. Selling internationally is risky, but not selling internationally may be more risky. In what
circumstances might this be true?
4. How can you minimize your risk of exposure to currency fluctuations?
5. In what circumstances might product development be a lower-risk strategy than market
development, and vice versa?
6. How useful is the Growth Share Matrix?
7. How might you go about creating a scale for the Growth Share Matrix? Give practical
examples.
8. In what circumstances might you want to ‘shoot a Dog’?
9. Give examples of product expansions and extensions.
10. Can a ‘Problem Child’ be profitable? Explain with examples.
11. You never diversify. Discuss.
12. Why might you want to own a diversified company?
13. Why might you decide to pay a premium to acquire other companies rather than to grow
organically?
14. What is synergy and how can it be achieved?
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Chapter 9: Legal foundations
Student learning outcomes
Understand the ways you might be able to safeguard your business idea
Decide on the appropriate legal form for your business or social enterprise
Understand and recognize the causes of business failure, the influences on them and
how they interact
Explain what options are open to a sole trader, partnership or company that is insolvent
Understand the responsibilities of the board of directors of a company
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2 Before you go into this in any detail, do check whether any students have IP to
protect. My view is that pursuing legal protection can be expensive and has a
number of significant shortcomings for start-ups, and may only be appropriate for
significant innovations.
The short embedded video is on counterfeiting.
3 Trunki
1. This lawsuit cost Magmatic a lot of money and took a long time. Initially the
case was successful because the competitor, a Hong Kong-based company,
was established and was not just out to ‘rip off’ the design but intended to roll
it out as a distinct branded product. However, the subsequent appeal rested
on the detail that was included in the CRD not being present in the copy. The
dilemma for designers is therefore how much detail to include in a CRD.
2. This case illustrates how difficult and expensive it can be to protect your
copyright.
The embedded video shows Rob Law and Trunki.
4 Xmi
1. It is usually worthwhile for distinct or new technology products. But pursuing
your IP in law can be very expensive and take a long time. Discuss the pros
and cons.
2. Speed to market and effective branding are the two main commercial means
of combating counterfeiting.
5/6/7 These slides relate to business forms in the UK and US and may need to be
adapted for the legal framework in your country.
8 - 14 These slides relate to UK forms of social enterprise.
15 External influences
You might say any external factors are just ‘bad luck’ and any individual will have
little influence over the economy or changes in the market place - although these
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causes may be due to a failure to undertake appropriate research before
launching the business. Closing a business because other opportunities come
along is not really failure.
Internal influences
Lack of management capability and bad decisions are related factors. And often
the unwillingness to extend financial support by a bank stems from this rather
than ‘lack of financial resources’. An interesting question is why so few
entrepreneurs seem to learn from their mistakes. Could it be something to do
with their high locus of control, or is it down to this ‘grieving process’ (Shepherd
2003; Shepherd and Kuratko, 2009)?
16 The English Grocer
1. This was a lifestyle business start-up. There is little information in the case
about its success before the external events and one of the questions that
might be raised is whether the business model was sufficiently robust or
whether these external factors were just ‘excuses’ that mask other more
fundamental problems.
2. Certainly the external factors were beyond Peter’s control (bad luck), but was
the closure all down to this? Was the business model sufficiently robust?
Was there anything that Peter could have done to counter these influences,
after all, other retailers survived?
17 Starbucks Australia
Many attempts to expand overseas fail – particularly in the retail sector.
Customer needs do vary from country to country and competition can come from
unexpected quarters. We explored low-risk ways to enter overseas markets in
Chapter 8. Ask the class whether Starbucks’ entry to the Australian market was
undertaken in a sensible fashion. What could it have done differently?
18 Alex Meisl
This case is an opportunity to explore how students might deal with business
failure, should it happen to them.
1. Maintaining a personal relationship with all creditors was a brave and good
decision. It acts as a cathartic experience for the individual concerned and
can maintain good business links after the event. Explore with students the
likely effects of not dealing with it like Alex.
2. The important thing is to learn from failure and not to make the same
mistakes.
21 ZedZed.com
1. Get students to refer back to the personal qualities entrepreneurs need
(Chapter 1), in particular need for achievement and locus of control. You also
need to learn from failure.
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2. A question to stimulate personal reflection.
22/23 Cobra Beer
Cobra Beer is a case that demonstrates one of the consequences of
incorporation. This ‘pre-pack’ form of sale in the UK is one that is designed to
save jobs in a failed business. However, it has been criticized as being open to
abuse.
1. Slide 23 sets out elements of the business model in the Framework
Worksheet.
2. I first wrote about Cobra Beer as a start-up. Karan Bilimoria was an
accountant which possibly explains why he was so familiar with a ‘pre-pack’
sale. Cobra was always more of a marketing concept than a different beer. It
was indeed less gassy than some lager beers, but brewing was
subcontracted to another brewer in the UK. It relied upon sales through
Indian restaurants by and large - shunning established distribution channels -
but related products, like wine, did not sell well. Cobra sales grew
spectacularly (£177 million by 2009) but the company never made a profit,
investing money in marketing. I would leave it to your class to debate
whether this was a ‘success’. One of the advantages of being linked to Coors
in the future is that Cobra has access to established distribution channels
that might open up new markets for it.
3. Customers paid for the product, which paid for the marketing that
underpinned Cobra’s growth. Unfortunately there were also loans and
creditors contributing cash and resources. And many creditors – particularly
the smaller ones – lost their money as a result of the pre-pack sale. Bilimoria
said he also lost some £20 million and that he will repay the creditors that lost
money. I’d leave students to debate fairness. Ask them to draw up a list of
advantages and disadvantages of this sort of sale.
24 Do highlight the difference between management and the role of directors, in
particular the legal responsibilities they have. Non-executive directors can bring
particular advantages to start-ups, particularly those that plan to grow rapidly.
They can bring credibility, an outward perspective and a wealth of contacts. Do
ask whether any students plan to look for non-executive directors, why they want
them and who they might be planning to approach.
Suggested group discussion topics
1. Is spending time and money on legally safeguarding your IP worthwhile?
2. How might you go about protecting your IP without resorting to law?
3. A big company with plenty of resources can always ‘steal’ your idea, even with
legal safeguards. Discuss.
4. Under what circumstances might a partnership business form be more attractive
than a sole trader?
5. Under what circumstance might a sole trader or partnership business form be
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more attractive than a limited liability company?
6. What are the advantages and disadvantages of having externals on a board of
directors?
7. Is it better to set up a new venture with social objectives as a commercial
enterprise or social enterprise?
8. What are the advantages and disadvantages of each of the legal forms of social
enterprise?
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Chapter 10: Managing operations and risk
Student learning outcomes
Identify the key activities needed to launch and operate different sorts of business
Prepare Gantt charts and undertake critical path analysis
Undertake a risk management process that identifies, assesses, mitigates and monitors
the risks faced by business
Understand how risk might be reduced through networks and partnering, financial and
legal structures and appropriate approaches to financing the venture
Understand the importance of keeping contribution margins high and fixed costs low
Identify the critical success factors and strategic options for your business
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
6/7,
9/11,
13/14
These slides are about the key activities for different types of business. Because
each student will be focused on his or her business and not interested in much
else, the challenge will be to find a way of involving them and not just going
through the slides as checklists.
You might try grouping students into sectors reflecting their own business
interest and getting them to compile the lists or asking them to jot down the key
activities for their business, and then going around the class pulling together the
responses for different types of business.
6/7 Ask students how they would go about deciding on the appropriate location for a
retail business. You will need to make the distinction between prime and
secondary sites and their respective uses. Ask students what factors might
determine the location of a service and then a manufacturing business.
8 Ice Cream Mama
1. This is a distinctively Arabic or Omani ice cream sold from ‘popular locations’
(near to cinemas and high-footfall shopping malls). This is an impulse buy,
prompted mainly by children, so location is a vital element of the marketing
mix. The stores and the advertisement stress the local Omani connection.
Link this to other retail cases such as Flying Tiger Copenhagen, Lush, Cotton
On Group etc., pulling together common themes.
2. Uniqueness – other ice creams are more ‘international’ – with a professional
presentation. Again, the stores and the advertisement stress the local Omani
connection.
3. Possibly, particularly other Arab countries. In other countries there are many
established brands, but there may be a place for a distinctive Arab brand.
Ask students how they might test the market in a low-cost, low-risk way (e.g.
franchising).
The embedded video is a short Ice Cream Mama advertisement in Arabic.
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10 Cotton On Group
1. CSFs include: timing of design, production and planning through its supply
chain (it has a vertically integrated business model with direct sourcing),
cheap prices (low cost), location of inexpensive stores.
2. Reputation or brand risk from potential poor quality goods or unethically
sourced goods means that it may have to move away from this model or
involve itself more in the manufacture, thus increasing costs.
3. The idea of attracting customers to a store and keeping them in it are not
new but are becoming increasingly important with the advent of internet
shopping. Explore with students how dwell time might be extended. Tie this
into the other retail cases: Flying Tiger Copenhagen, Lush and Jack Wills.
How do these retailers attract customers and increase dwell time?
12 Made.com
This is a general question intended to stimulate discussion and thought about the
students’ own business ideas.
The embedded brief video is about the company and what it does.
13/14 These slides apply not only to manufacturing businesses, but also to those that
are involved with a production or assembly process, for example restaurants and
many service businesses. Press students to whom this applies to select the
process that best fits their activity.
18 This slide shows students which of these risks pose the greatest threat to their
business. High impact + high probability are high risk. But those with low
controllability are the greatest danger. Both need to be monitored closely.
However, only the controllable risks are the ones you can do anything about and
might be mitigated.
19 Once you have shown this slide, ask students to refer back to the list they
prepared earlier (two slides ago). Ask them to:
1. Assign a likelihood of occurrence to these risks (high, low);
2. Prioritise these risks in terms of which might have the greatest impact on
their business (high, low);
3. Note which risks they might be able to affect or control (control, no control).
The resulting list is one that they can develop their risk management strategy
around.
20 These are the options they have for those controllable risks. Ask students to
think through what they might do to manage the risks they face. Spend some
time discussing how you identify key risk indicators and monitor them.
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26 Smak Parlour
1. Lean start-up is all about minimizing risk – through customer knowledge and
minimizing initial launch costs and investment.
2. This is a general question intended to stimulate discussion and thought about
the students’ own business ideas.
The short embedded video is about Smak Parlour.
27 These are the seven generic strategies for managing risk. Explain the remaining
ones in detail.
The ideal business should have high margins and low fixed costs. Unfortunately,
few such business opportunities exist. It is always a good idea to give examples
of industries with different cost characteristics (e.g., a hotel or retail business has
high fixed costs; a consultancy is likely to have high contribution margins etc.).
28 Richard Branson and Virgin
The Virgin Group is a complex, interlocking set of companies mostly set up in
partnership with other organizations. Each company is virtually independent and
there is little obvious operating synergy between them, other than the shared
brand. They are not controlled by a head office in a conventional sense. In
reality, it is stretching the term to call it a ‘group’ at all and there continues to be
considerable secrecy surrounding the group and how it conducts business.
Richard Branson does indeed seem to have spun a web of some considerable
complexity. If one company were to go out of business it would not mean the end
of the Virgin Group (and some Virgin ventures have not been commercially
successful). This tactic of forming numerous small, legally independent
companies is one practised by many less successful entrepreneurs. What is
more, there is always a strategic partner involved in the smaller operating
company. They normally have the operational knowledge and skills for that
business, whereas Virgin brings the brand and experience in marketing (that is
why Virgin is called a ‘branded venture capital company’). This is a way of
mitigating the risk of each new venture.
Advantages of this structure include:
Reduces risk;
Encourages initiative and entrepreneurship;
Makes the most of economies of scope;
Can adapt to the different structural and cultural needs of subsidiaries;
Reduces the need for capital for expansion;
Spreads operating expertise to other partners.
Disadvantages include:
Success depends on operating ability of partners;
Failure can damage brand;
Structures may be inappropriate in subsidiaries;
Brand could be stretched too far.
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The embedded 2-part video is a very down-to-earth interview with Steven
Murphy, CEO of Virgin Group, about how the company operates. They are an
excellent 15-minute insight into Virgin activities – without the ‘Branson effect’.
Because of the length, you may want students to watch this out of class.
29 Gordon Ramsay
This case highlights nicely one of the disadvantages of family business – the two
can get in the way of each other. Although it promised high profits, essentially
Ramsay’s business model relied too much on him personally and was therefore
not operationally viable. He needed to change it and decide where he should
focus the most valuable resource he had – his own time. This is now focused on
PR and the brand ‘Gordon Ramsay’ is leveraged throughout the world by others.
31/32/
33/34
Flying Tiger Copenhagen
1. Slide 32 sets out further elements of the business model based on theFramework Worksheet in slide 9, Chapter 8.
2. Slide 33 sets out a SWOT analysis, leaving students to suggest someweaknesses, which may be local. Show how this can be derived from thebusiness model.
3/4. Slide 34 sets out a list of critical success factors based upon the SWOT and strategic options. Show how this can be derived from the SWOT analysis and emphasize the importance of understanding the business model.
You may now wish to return to the other retail Case insights to compare and
contrast the business models and go on to compile the critical success factors
and strategic options for the other retailers. There are three retail cases where
we have used the Worksheet: Flying Tiger Copenhagen (6.2, 8.3, 10.7), Lush
(6.7), Jack Wills (7.7).
35 Not all students will need to draw Gantt Charts and you therefore might decide
not to cover it. This simplified chart is for the opening of a store. It is based on
the mind map in Figure 2.4 and the pre-launch key activities checklist in Table
10.3. Take students through the timing of this store opening plan. Are there any
things it does not cover?
The embedded video demonstrates how to create a Gantt Chart in Excel 2010.
36/37 Kirsty’s
This shows how a young, single mother managed to launch her own business
with the backing of investors from the Dragons’ Den TV series.
1. Slide 37 sets out elements of the business model in the Framework
Worksheet.
2. The products were unique but the major risk was that a major competitor
would emerge that had greater access to distribution channels, was better
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able to service the needs of supermarkets and had better brand awareness
with customers. Kirsty therefore had to roll out the products as quickly as
possible and gain brand awareness and loyalty from customers by building
close relationships. This involved both elements of ‘push’ and ‘pull’
strategies.
3. Finding partners: Dragons with contacts in supermarkets, expertise in
merchandising and money; and with subcontracting manufacturers.
4. Risk of competitors still remains. She needs to roll out the products and
develop the brand as quickly as possible. CSFs still remaining:
Secure contracts from supermarkets and other outlets;
Subcontract manufacture;
Develop website;
Develop new products;
Counter competitors’ reactions.
5. She must penetrate her UK market as quickly as possible and probably
extend her range of food offerings so as to gain brand awareness and loyalty.
Only once she has established herself in the UK would she be advised to
look for new markets by exporting. Students might have many other
suggestions such as manufacturing. They may also comment that new
product development may shift the customer focus and value proposition.
The first embedded video is a follow-up to the Dragons’ Den pitch Kirsty made,
with the Dragons giving the reasons for wanting to invest.
The second is an interview with Kirsty about how she got her business off the
ground. It is best shown after students have answered the case questions.
You may now wish to return to the other manufacturing Case insights to compare
and contrast the business models and go on to compile the critical success
factors and strategic options. There are five manufacturing cases where we have
used the Worksheet: Clippy (7.6), Crocs (8.7), Brompton (8.8), Cobra (9.7) and
Kirsty’s (10.8).
Suggested group discussion topics
1. The three most important decisions for a retail business are location, location, location.
Discuss.
2. Ignoring the products for sale, what are the characteristics of a retail website that
would encourage you to revisit it? What characteristics would cause you not to return?
What is the relative importance of these?
3. Why are the imperatives for a service and manufacturing business so similar (Table
10.6)?
4. What types of business are the most complicated to launch: retail, internet, service or
manufacturing? How might this complexity be simplified?
5. When does a ‘key activity’ become a ‘critical success factor’?
6. If you focus too much on risk, you will ignore opportunities. Discuss.
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7. Can you really predict the risks a business might face?
8. If you cannot measure risk, you might as well ignore it. Discuss.
9. Setting an ‘affordable loss’ is a little too much like gambling – all or nothing. What is
needed is a way of gauging how much and when to invest in a business. Discuss.
10. What are the advantages and disadvantages of partnering with other
individuals or organizations?
11. How do you decide who to partner with?
12. What sort of businesses can set up franchises?
13. Why might being a franchisor be an attractive way of rolling out a business
quickly?
14. You never get rich being a franchisee. Discuss.
15. It is said that the best businesses have high margins and low fixed costs. How might
you go about structuring a business in this way?
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Chapter 11: Managing and leading people
Student learning outcomes
Assess the skills needed for your business and how these might be met
Understand the different ways of employing people and how to go about recruiting
them, including drawing up a job description and person specification
Understand the factors that determine the selection of an effective team and identify
your preferred Belbin team roles
Creatively address how your business might be structured and the appropriate culture
created, given its size, the tasks to be undertaken and the environment in which it
operates
Understand and explain how leadership style can be tailored to different circumstances,
and evaluate your preferred leadership style
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
3/4/5 It is always worth reminding students that they do not have to ‘own’ any assets to
be able to use them (e.g. partnership). The same principle applies to people –
they do not have to recruit full-time employees for the founder to be able to
access all the skills needed. They should think creatively about how to source all
the skills they need through different networks. You may also want to include
elements of local employment law at this point.
The shareholders’ agreement is probably the last thing founders want to think
about, but sorting this out in advance of potential disputes is always prudent.
Students should be advised to take professional advice.
6/7 Ask students to list the pros and cons of using professional advisors. Then ask
them to list the skills needs of the business, the role embodying these skills, their
importance, and then jot down how they intend to fill them.
8 You certainly need to cover the topic of building the venture team. If you want to
cover Belbin, however, you probably need to get them to take the test first and
use the results to better understand what the test explains. I sometimes use this
test alongside team building activities.
The embedded video is a short animation explaining Belbin’s nine team roles.
The embedded hyperlink is to the Belbin website.
12 Google
Informal, flat lines of communication are fast and can be particularly effective
when working in small groups (spiders web) and when managers have decision-
making powers delegated to them. Moving from team to team means information
and knowledge get transferred. Having 20% free time means that staff have
more autonomy and there is ‘slack’ to work on innovations.
Encourage students to discuss this freely, but at the end point out the sort of
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commercial environment Google operate in. Ask them to consider the sorts of
businesses this would not work in.
13 Based upon Birkinshaw’s 2003 paper, this slide emphasizes the need for balance
between control and autonomy. However, the paper was based upon BP and,
because of the Deepwater Horizon disaster, BP is now perhaps famous for ‘too
little’ control at the time, showing what a fine line this can be. Introduce the
concept of risk and the risk index here (Chapter 10). Is it appropriate for there to
be balance or autonomy in high-risk areas?
17 This slide takes students through the process of creating or influencing
organizational culture. Do stress that, whilst culture might be influenced by these
factors inside an organization, it is not immune from external environmental
factors. Remind students of Hofstede’s work on national cultures (Chapter 1).
Founders create the culture of a start-up by doing what they do. By thinking
about what they do in advance, they can create an entrepreneurial culture that
becomes an asset for the business, part of its ‘brand’ (Chapter 5).
18 AirAsia
This is all about ‘walking the talk’. A leader must believe in and ‘live’ the culture
they promote. AirAsia is a service business – happy staff can create happy
customers. At the same time, AirAsia is a low-cost carrier and (Like easyJet in
Chapter 6) it must focus on its critical success factors if it is to deliver its value
proposition.
The embedded short video is of Tony Fernandes explaining how he goes about
creating AirAsia’s organizational culture and the effect on branding.
19 The concept of strategic thinker and learner comes from Davies B. and Davies
B.J. (2010) ‘The Nature and Dimensions of Strategic Leadership’, International
Studies in Educational Administration, 38(1).
20/21 The concept of authentic leaders and their emotional intelligence comes from
various sources, including:
George B. (2003) Authentic Leadership: Rediscovering the Secrets to
Creating Lasting Value, San Francisco: Jossey-Bass.
George B. and Simms P.E. (2007) True North: Discover your Authentic
Leadership, San Francisco: Jossey-Bass.
Brubaker, D.L. (2005) ‘The Power of Vision’, in D.L. Brubaker and L.D. Coble
(eds.) The Hidden Leader, Thousand Oaks, CA: Corwin Press.
The embedded video is a brief HBR animation explaining EI.
22 - 26 These slides are about leadership style and contingency theory, emphasizing
that the ‘appropriate’ style depends upon a number of factors that are picked off,
one by one.
Task: Most entrepreneurs are quite task-focused. Get students to complete the
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questionnaire in Exercise 11.6. They can find where they fall by tabulating their
answers on the matrix at the end of the book. You can then use this to discuss
which styles might be most appropriate in certain situations and how leadership
style can be adapted to suit these situations.
Group: Use some simple examples of the leadership style which is most
appropriate with certain groups. For example, with researchers or consultants,
autonomy is high and therefore a participative or consultative leadership style is
most appropriate.
Context: This looks in particular at conflict. We all face conflict and the changing
challenges of leading a start-up are likely to lead to more than most. If you want,
you can get students to complete the Thomas-Kilmann Conflict Modes
Instrument to find out their approach to conflict situations.
27 This slide introduces the main leadership paradigms and asks the question of
students: ‘What is the context of entrepreneurship?’
The embedded video is an animation explaining 10 leadership paradigms.
The hyperlinks on the left are to Sashkin’s Leader Behaviour Questionnaire
(visionary leadership). This is a useful basis for getting students to reflect on
their leadership qualities. The ‘colleagues’ needed for the 360-degree
questionnaire can be fellow students.
28/29 Like contingency theory, the concept of an ‘appropriate’ organizational
architecture depends upon the environment within which the organization
operates. You would not want an organization to act entrepreneurially in certain
environments (basically in those that are stable and predictable). Explore this
with students. Get them to jot down words that describe the entrepreneurial
environment.
The leader controls all the levers of architecture. They are the tools that create
an entrepreneurial organization, and only if they create an enduring
entrepreneurial organization can they probably be called an entrepreneurial
leader.
30 Ask students to jot down words that describe an entrepreneurial culture. Explore
why they use these words, comparing or contrasting them to the words they used
to describe an entrepreneurial environment. This slide has some of the key
words that might appear on their cultural web.
31 A summary slide.
The embedded video is a 5-minute talk by me about how large companies can
become entrepreneurial.
32 These are 10 entrepreneurial leadership attributes taken from my book Corporate
Entrepreneurship: Innovation and Strategy in Large Organizations (3rd edition),
2013, Palgrave, which explain the concept of entrepreneurial architecture and
how it can be developed. A new edition is due in 2019.
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The embedded video is an interesting 18-minute TED talk by Simon Sinek about
how leaders inspire action. Perhaps too long for class, but well worth getting
students to watch.
If this is an area of interest, on the left are two video discussions with a colleague
about corporate entrepreneurship.
33/34 Steve Jobs & Apple
1. Get students to provide evidence from the case and video on the following
character traits:
Need for achievement – look at his hopes for NeXT and return to Apple
(bouncing back from failure). His pride in Apple is evident from the iTunes
clip in the video;
Need for autonomy – he never worked for anyone else. Drive and
determination;
Internal locus of control – he believed he was right. He really did want to
control everything and everyone - a ‘control freak’ - and was intolerant of
poor performance;
Creativity – link to market, not invention. Simplicity of use;
Risk taking – numerous business starts, product launches etc.
Much of his success is down to four fundamental things:
His ability to link innovative, technological ideas with the needs of
customers and the market place. He was not an inventor. Much of what
he did with technology was to make it simple to use by ordinary people.
His vision about what the market might become rather than what it was.
He looked forward rather than backwards and always believed he was
right. He was famously disdainful of market research and focus groups.
He usually got his timing (just) right, introducing new products just when
the market wanted it and ahead of competitors. He anticipated customer
demand very well.
His drive and determination pushed through product innovations. He was
totally focused on achieving ‘product perfection’, almost at any cost.
2. The web on slide 34 sets out the culture of Apple at the time when Jobs was
in charge (according to Lashinsky) and it is the opposite of what you might
expect from a successful, entrepreneurial company based in the USA.
Apple’s culture was one of fearful control and secretiveness, where staff were
micromanaged. Failure is not an option at Apple where product excellence is
the main objective – a cult of product.
There may be a number of reasons why Apple’s culture has worked:
The culture mirrors the personality profile of Apple’s founder, Steve Jobs.
He is secretive and controlling.
Fear is the strongest motivator of all, but usually it lasts for only a short
period when an organization is under severe threat. Apple seems to have
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been able to perpetuate this motivation with Steve Jobs elevated to
almost a deity. There was also a feeling that it was ‘Apple vs. the rest of
the world’. This generated a sense of family (Hofstede’s in-group).
It is important that the launch of new technological products, particularly
physical ones such as smartphones, tablets, computers, are kept secret.
Otherwise the company might be left with unsold stocks of old models.
What is more, physical elements of design are easily copied. This is less
of an issue with non-physical products like software, where the benefits of
the new product are less visible and tangible.
Most Apple employees are engineers. They might be characterized as
task- and product-focused. They are proud of Apple’s product excellence
and technological achievements and probably less concerned about the
social interactions required to achieve this.
Any culture attracts like-minded people who feel they can ‘fit’ within it.
Engineers can buy into the cult of product excellence.
The similarity between Apple’s organizational structure and the spider’s web of smaller entrepreneurial organizations is remarkable (see the diagram at the start of Lashinsky, A. (2012) Inside Apple: The Secrets Behind the Past and Future Success of Steve Jobs’s Iconic Brand, London: John Murray – you can usually access it in the sample on Amazon if you can’t get a copy). However, Apple also makes extensive use of project teams when working on new products. This spider’s web structure enables the entrepreneur to control the organization directly but raises many issues regarding span of control.
Advantages:
Direct control by entrepreneur;
Speed of response;
Knowledge is vested in one person.
Disadvantages:
Demotivating for staff;
Problems of scalability;
Overreliance on the entrepreneur.
The main point is that Apple’s culture is consistent with the structure of the
organization, as well as the founder’s leadership style. There is architectural
consistency. Steve Jobs was an outstanding entrepreneur. What is more, he
had the capability to single-handedly control an organization with this
structure and culture. The question is: ‘What will it become without him?’
3. Jobs was one of the greatest entrepreneurs of our lifetime. His actions -
rather than his character traits - speak for themselves:
He revolutionized the computer and communications industries;
He revolutionized the digital content industry (including music);
He revolutionized how films could use computer generated animations.
4. Despite all his achievements, he was not a likable character:
His drive (coming from locus of control) led him to be intolerant of those
who did not perform as he demanded;
His need for control led him to adopt an autocratic, dictatorial almost
bullying leadership style;
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His need for control led him to micromanage many things and become
‘almost pathologically controlling’;
His self-confidence or self-belief (coming from locus of control) appeared
as ‘arrogance’.
The point about asking this question is to get students to realize that
entrepreneurs are not ‘superheroes’. They are normal people. And some of
the entrepreneurial character traits, in extremis, have their ‘dark side’.
The embedded video is a short obituary for Steve Jobs; highlighting his great
achievements, it sets the background to this case. Show this at the beginning of
the case. There are many other short video clips of Steve Jobs on YouTube.
35 Steve Jobs & Apple
These are the leadership qualities highlighted by Walter Isaacson, author of The
Real Leadership Lessons of Steve Jobs (HBR April 2012). Explore what these
mean with students and whether these, on their own, constitute being a great
entrepreneurial leader.
The first two embedded videos are from a two-part interview with Walter
Isaacson. Although they are lengthy, if you have the time, it is worth playing them
to fire up the debate about Steve Jobs and the nature and role of entrepreneurial
leadership.
Suggested group discussion topics
1. How do the skills needed by the founder and the role of the founder change as the
business grows?
2. Is Greiner’s model an accurate predictor of the growth process?
3. Is operational capability more important than strategy at start-up?
4. How do you determine the degree of control you should exercise over staff?
5. Why and in what circumstances is staff autonomy important?
6. How does the role of leader differ from that of manager?
7. How does the role of leader differ from that of entrepreneur? Are there any similarities?
8. Leaders are born, not made. Discuss.
9. Explain what the job of leader involves.
10. What personal qualities do leaders need? Explain.
11. How do you build trust as a leader?
12. What is culture and how can it be created or developed in an organization?
13. Culture is the cement that holds the organization together. Discuss.
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14. Why is organizational culture important?
15. What is the contingency theory of leadership?
16. Why is the ability to handle conflict important for an entrepreneur?
17. How do the leadership paradigms reconcile with contingency theory?
18. What is entrepreneurial leadership? How is it distinctive or different?
19. Is an entrepreneurial leader the same as entrepreneurial leadership? Explain the
difference.
20. What do you understand by the term ‘entrepreneurial architecture’ and how can it be
shaped?
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Chapter 12: Financial resources
Student learning outcomes
Understand the principles of prudent financing
Describe the sources of finance available to start-ups and small firms, and evaluate
which are appropriate for different needs
Understand how banks assess lending to start-ups and small firms, and how they
monitor performance
Understand how business angels and venture capitalists assess investments in start-
ups and small firms, and how they might work with the founder
Make a preliminary assessment of the finance needed for your business
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2 The important principle here is that the prudent financier would seek to match the
term of the finance with the longevity of the asset. Even with this simple principle,
there is judgement involved as to what amounts to ‘permanent’ working capital.
This session is an opportunity to bring in bankers or business angels to discuss
how they operate. Failing this, the embedded video links to an interview with a
banker about the importance of the business plan (see the video with David
Eales).
4 Hotel Chocolat
Most retailers (selling direct to the general public) could issue similar bonds to
customers but they need to have good customer relationships and their
customers’ details on a database.
The embedded video is an interview with Peter Harris, co-founder, in 2013 about
the company’s ‘Chocolate Bond’. Run the video after discussing the case.
5 Lingo24
This question is designed to facilitate a class discussion. The issue is about
control and whether the founder is willing to have 100% of a small ‘pot’ or a
smaller percentage of a larger ‘pot’ of money.
The first short embedded video is about the company’s service and what it
offers.
The second, featuring Christian Arno, is about its achievements in 2011.
10 SPCG
This case is intended as a vehicle for a general discussion about the problems of
finding finance for new technology – but also the rewards that can come from
being persistent and first into a particular market. Funding opportunities and
sources will vary from country to country.
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The short embedded video is about the company and features its founder.
11 Grameen Bank
Funding sources for the bank can include governments, NGOs and other donor
agencies. However, the local solidarity lending group are also important
stakeholders for Grameen as they can identify viable local projects and help
ensure that there is social pressure to keep bad debts low. Explore the difficulty
of coordinating so many stakeholders.
The embedded video is about Muhammad Yunus and Grameen Bank. There are
others on YouTube.
19 Purplle.com
Business angels are for high-growth companies that require equity finance and
possibly the expertise of outsiders. They can be used to leverage extra
borrowing, but will look for high returns and expect an exit route in about 5 years.
20 The embedded short animation explains how crowdfunding works. It explains
how crowdfunding has the potential to turn the traditional research and
investment model on its head.
21 Zopa
1. Refer back to the new venture typologies in Chapter 2. This is a new-to-the-
world market and is therefore unproven and very risky.
2. The point here is to demonstrate that the risks associated with a risky start-
up transfer to an investor, who may have very limited information and control
over how the founders manage the start-up. Is their risk therefore even
greater than the founder’s?
The embedded video shows how the Zopa crowdfunding site works.
22 Kickstarter / Hamijoo
1. Kickstarter tends to fund niche projects, often with an arts or social
orientation and targeted towards a younger audience who are not necessarily
looking for financial returns.
2. This is all about comparing a growing Western market to an emerging Iranian
market (see market typologies and the Iranian Case insight in Chapter 3).
Both have many opportunities but some different threats.
3. An open question, depending on the threats.
The embedded video shows the top 5 Kickstarter projects for 2015.
The additional clip is a 10-minute video about how to set up a Kickstarter project,
and is probably best for interested students to watch out of class.
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23 InSpiral / FarmDrop
Crowdfunding is high risk because it is still largely unregulated. Because it tends
to be used for smaller projects that have often failed to obtain more
‘conventional’ finance, the projects themselves can often be riskier and it is rarely
possible to do the sort of ‘due diligence’ work that a ‘conventional’ investor might
undertake.
26 Crowdcube
This case is a vehicle for a general discussion about how crowdfunding has the
potential to revolutionize the investment industry, benefiting particularly SMEs.
However, it is easy to overstress the benefits to SMEs and neglect the risks
investors face, and therefore the advice is not to invest too much in any one
project and to undertake as much due diligence as possible. One way of doing
this in class is to show an investment project video and ask students whether
they would invest and what additional information they might require before
doing so.
The first embedded video is a short animation explaining how Crowdcube works.
The second video is a short BBC feature on crowdfunding generally and on
Crowdcube in particular, showing the founder Luke Lang.
27 TransferWise
Advantages include: ability to raise large amounts of capital, reputation,
knowledge and networks of investors etc.
Disadvantages include: loss of control and interference, need to generate
continued growth etc.
The embedded video is a 1-minute promotional video about the company.
The additional clip is a 26-minute interview with Taavet Hinrikus, founder of
TransferWise. Because of its length, you may want students to watch this out
of class.
Suggested group discussion topics
1. Since it costs so much to recover a bad debt, it is little wonder that banks are reluctant
to lend without collateral or a good knowledge of the loan applicant. Discuss.
2. If you were a bank manager, what would you be looking for in a loan applicant?
3. What sources of start-up finance most attract you? Why?
4. There is no such thing as limited liability for an owner-manager. Discuss.
5. Is there discrimination in lending?
6. Lending is about discriminating between ‘good’ and ‘bad’ borrowers. Discuss.
7. Why might entrepreneurs not go to banks to seek finance?
8. Why do so many women not want to seek external finance and, if they do, then seek so
little compared to men?
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9. Should peer-to-peer funding and crowdfunding be regulated?
10. What are business angels looking for in an investment?
11. If you were a business angel, what would you be looking for in an investment?
12. What are the advantages and disadvantages of having a business angel invest in a
firm?
13. Where might the interests of the owner-managers and external investors conflict?
14. Why do so many entrepreneurs (like Richard Branson) that float their companies on the
stock market subsequently buy them back and delist them?
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Chapter 13: Preparing and using financial forecasts
Student learning outcomes
Understand the relevance and importance of different measures of financial
performance
Develop the financial forecasts for your new venture – income statement, breakeven,
cash flow statement and balance sheet
Evaluate these forecasts of financial performance
Understand how companies are valued
Understand how financial information can be used to monitor and control performance
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
6/7/8/9 These slides outline the important concept of breakeven using diagrams, formula
and calculations. Double check that students understand what is meant by fixed
and variable costs, contribution margin etc. You might want to refer back to the
pricing slides in Chapter 6.
There are a number of operating imperatives coming from these diagrams that
are worth stressing (again) to students:
High breakeven and/or fixed costs businesses are higher risk and need to
focus on achieving (or exceeding) their breakeven sales;
Low contribution margin businesses need to focus on controlling their
variable costs;
High contribution margin businesses can better afford to discount the selling
price and price differentially.
10/11 These are two approaches to estimating sales and/or profit that students might
take in developing their own financial forecasts. Link them back to slide 4.
14/15/
16
These slides demonstrate the importance of cash flow. Death Valley is formed by
the cash needs of a start-up, and can be used to explain what can be done to
ensure the business crosses the valley safely. The slides show how cash flow
lags behind sales and profit, and if a firm is lucky enough to underestimate its
sales growth, then the cash flow will take longer to become positive and the
maximum borrowing is likely to be higher than originally estimated. The cash flow
forecast maps out Death Valley – its length and depth.
Make certain students understand the difference between profit and cash flow.
Ask them: ‘What is profit?’ The likely answer is: ‘Sales – costs’. But ask them
what this represents and they probably will flounder. The answer, of course, is
that profit is an increase in all the assets of the business, not just cash, as a
result of trading in the period.
25 Most entrepreneurs are shy of numbers and often accountants do not help by
providing indigestible mounds of paper. These financial metrics provide a simple
dashboard of the information needed to manage any business. They alert the
entrepreneur to potential problems that require investigation and (possibly) more
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information and action.
26 There will always be additional metrics of performance that are specific to a
business. Ask students to write down the metrics they need for their business.
Check that every student has an understanding of what is required. Alternatively
review the results of Workbook exercise 13.8.
27 The English Pub
1. These controls are important because a pub, like any retailer, handles cash
and goods (stocks) – and both can go missing. Sales and margins dictate the
volume and profitability of business. In the case of a pub, there needs to be a
careful balance between staff costs and sales (productivity) – too few staff
and you lose sales; too many and profit suffers. Breakeven is all about the
balance between fixed costs and margins.
2. It is very easy for a pub to have poor financial control. A pub chain with good
pub-based financial and marketing control systems should be worth more in
any trade sale.
28/29 Make the point that valuing a business is very similar to pricing any product. The
same company (product) can have a different value (price) to different investors
(target market segments), depending on the underlying value proposition.
A PE ratio is just a benchmark – and one that varies over time, in different
economic circumstances. And the major question for a new business with growth
potential but no track record is: ‘How do you decide on the profit figure you use?’
One answer to this, popular in the USA, is to delay valuation but set out the
details of how it will be determined at some point in the future.
Suggested group discussion topics
1. Why is cash not the same as profit?
2. What would you do to make sure you get through Death Valley?
3. Profit is something that an accountant can manipulate. It is not objective and therefore
means nothing. Discuss.
4. Can you really forecast sales? How might you go about doing it?
5. How important are the assumptions on which sales forecasts are based? Why is this?
What can you do to test them?
6. Are fixed costs really fixed?
7. Are wages a fixed or a variable cost?
8. How easy is it to calculate a contribution margin?
9. What are the limitations of breakeven analysis?
10. If you have a portfolio of products with different contribution margins, breakeven is a
meaningless concept. Discuss.
11. Entrepreneurs make decisions based on instinct, not by using financial analysis.
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Discuss.
12. You cannot determine profit in a SME because there are just too many ways the owner-
manager can manipulate it. Therefore any form of financial analysis will not work.
Discuss.
13. Can you really control a business by monitoring only six financial metrics?
14. Behind every successful entrepreneur, there is an accountant. Discuss.
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Chapter 14: Preparing, using and validating the business plan
Student learning outcomes
Undertake a strategic review
Explain the purpose, structure and content of a business plan
Draw up a business plan for your new venture
Recognize the information needs of bankers and equity investors
Be able to present the plan effectively
These outcomes will only be achieved if students undertake the Workbook exercises
Slide # Teaching and case notes
2 Whilst business planning is important, it is certainly not always necessary to
produce a business plan. You can use the NVC Framework to help plan a start-up
without producing a formal business plan. This can take the form of any aide-
mémoire or a formal business plan. The formal plan, typically, is for external use.
You need to start by identifying with students the purpose of this planning process
and the audience for any plan. If you require students to produce a formal
business plan for assessment purposes, this is when you need to outline what you
require from them and what your assessment criteria are.
3 - 16 Usually, if external finance is needed, a formal business plan needs to be
produced. There are many different formats for formal business plans and there
are numerous websites that students can access to see ‘typical’ plans. Many of
these plans will be very different. However, usually, the larger the start-up, the
more detailed and larger the plan. Plans seeking equity finance are usually more
detailed and larger than plans seeking loan finance. The format in these slides is
intended as a ‘universal format’ and one that can be adapted to suit particular
circumstances.
The slides go through the content of the business plan in detail.
17 Reminder of the 15 characteristics from Chapter 4. By now students should be
able to evaluate their business idea.
18 Remind students that they must keep in mind who they are writing the plan for
and tailor it specifically for them.
The embedded video shows Peter Jones from Dragons’ Den giving his ‘Ten
Golden Rules’ for entrepreneurial success. It is an opportunity to recap.
19 The numerous Dragons’ Den episodes on YouTube are excellent for showing
what makes a good and a bad presentation – and it is not just about the
presentation but also about how questions are answered.
The two embedded videos are about Trunki (Chapter 9). This was an
unsuccessful Den pitch that turned into a successful business. Part 1 shows the
pitch and highlights why it failed. It shows how simple things can make a pitch go
wrong and dent the credibility of the entrepreneur.
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Part 2 shows the subsequent outcome. It also nicely emphasizes the importance
of profit and cash flow, as opposed to sales growth.
20 Get students to prepare a 2-minute ‘pitch’ for their business idea, using the
executive summary in their business plan as the basis.
The embedded video explains what an ‘elevator pitch’ is.
21 wiGroup
The first business idea was insufficiently innovative and faced competition from
banks. However, the altered idea was more innovative, offering benefits to a
range of different users. By offering the app for free to users through app stores,
customers grew rapidly, creating a ‘bandwagon’ effect that pulled in retailers and
merchants, and encouraged them to use the other services that the company
offered. Key to its success was gaining wide market coverage in South Africa as
quickly as possible.
The first embedded video is a WiGroup corporate video promoting the company.
The second embedded video is a more informative TechReport on the WiGroup
mobile offerings in the South African market.
22/23/
24
These are slides about strategy development and review. Slide 22 explains how
strategy is often developed in small businesses as they move from crisis to crisis
– a process entirely consistent with the approach outlined in this book. This is an
opportunity to reinforce principles taught during the course.
The embedded videos are short clips from two professors on what makes a good
strategy. The first is Michael Porter and the second is Donald Sull.
25 audioBoom
Lean start-up allows you to change your business model as you gain more
knowledge about customer needs – called pivoting. This is important for radical
innovations, particularly in technology, where user behaviour is unknown.
However it can take time – and time is money (and opportunity). Google might say
‘chase users’ and income will follow, but audioBoom has had to change its entire
business model three times so far, and still has to prove itself. This requires a lot
of investment and has taken quite some time.
The embedded video is a 15-minute interview with CEO Robert Proctor about how
he plans to make the business generate cash. A little long, so you might get
students to watch it before class.
26 A slide showing harvest options. A trade sale is probably the most popular and
applies only to a going concern. The purchaser is likely to be a competitor. Many
firms of accountants will act for entrepreneurs seeking this option and will have
lists of larger companies interested in acquisitions. You need to frame floatation in
terms of the options available in your country.
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27 Moonpig
1. To purchase innovative technology or market share. A company coming into a
new market might want to buy market knowledge and take out competition, as
well as purchasing market share. Purchasing competitors is a strategy that
you often see in rapidly growing new markets, where the purchaser is seeking
market dominance.
2. The answer lies in the possibility of high levels of future income, particularly in
high-growth new markets where dominance may enable the purchaser to
charge a premium price. Alternatively, the purchaser may have easier access
for getting innovative technologies into established markets through its
distribution channels, enabling it to capitalize quickly on the innovation. This is
particularly the case in the pharmaceutical industry.
3. The aim of this question is to get students to think through what they want
from their venture and how they might prepare for it.
The embedded video is a short TV advertisement that explains the Moonpig
business model.
Suggested group discussion topics
1. What is the difference between a business model and a business plan?
2. What are the advantages and disadvantages of following pre-prepared business plan
formats?
3. How can computer-based systems help develop a business plan? What advantages do
they offer? Are there any drawbacks?
4. What form do you think a business plan should take for your own, internal use?
5. The best business plan is a short business plan. Discuss.
6. For what purposes might a social enterprise prepare a business plan? How would this
affect the contents?
7. What different things do lenders and investors look for in a business plan? How does this
affect the contents?
8. Lenders and investors put their money with people, not plans. Discuss.
9. In a rapidly changing world, is planning really of any use?
10. Every business graduate can produce a good business plan, but not even one per cent
can become entrepreneurs. Discuss.
11. What does an elevator pitch teach you? Why is this important?
12. What is involved in ‘pivoting’?
13. How can you review the effectiveness of strategy if you do not know what might have
happened if it had been different?
14. How can you make a SWOT analysis as objective as possible?
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15. What are competencies and capabilities and why are they important? Explain and give
examples.
16. How would you go about undertaking a SWOT analysis on an established SME?
17. In different contexts strengths can be weaknesses and opportunities can be threats.
Discuss.
18. Everything can be copied; therefore competitive advantage can never be sustained
indefinitely. Discuss.
19. How are the reoccurring crises facing the growing firm likely to affect the entrepreneur
and what might be the consequences?
20. How do entrepreneurs develop strategy? Explain and give examples.
21. If your business model is constantly changing to suit changing circumstances, when (if
ever) should you write a business plan?
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SUGGESTIONS FOR ASSESSMENTS
The most obvious assessment for an entrepreneurship course is the preparation of a
business model or business plan based upon a business idea that either comes from the
student or is allocated to them by the instructor. The business idea can be real or imaginary.
The assessment can be undertaken either individually or in groups. The Workbook exercises
allow students to build their business model step by step as they work through the textbook,
and allow you to monitor their progress in doing so.
If students are required just to submit a business model, Workbook exercise 14.1 facilitates
this using previous exercises. If they are required to submit a formal business plan,
Workbook exercise 14.2 facilitates this using previous exercises. Suggested marking criteria
might include:
Clarity, consistency and originality of value proposition(s)
Clear identification of target market segment(s)
Comprehensiveness of market and competitor analysis
Consistency/originality of core marketing & entry and/or growth strategies
Comprehensiveness and accuracy of financial projections
Comprehensive identification of resources required and financing
Identification of material risks and their mitigation
Realism and practicality of plan
Overall presentation, including clarity of English
The assessment might also include an ‘elevator pitch’ (Workbook exercise 14.3) or
presentation of their business plan (Workbook exercise 14.4)
An additional assessment, particularly useful for postgraduate students, is the preparation of
a reflective report as to whether or not they have the character traits and other
characteristics of an entrepreneur, and to reflect on the implications of this for their future.
This could be based upon the interactive GET psychometric test outlined in Chapter 1.
Suggested marking criteria might include:
Critical evaluation of profile from GET report
Objective evaluation of these results based upon supporting or contradictory
evidence from their life (examples of their actions and behaviours) and from other
sources (e.g. other psychometric tests such as the AULIVE creativity test outlined in
Chapter 2)
Analysis of antecedent influences on their life development such as education, family
background, work experience etc., linking specific influences with specific character
traits wherever possible
Reflection, conclusions & implications for their career aspirations
Students should be required to submit the GET test and any other test results.
