Krannert Graduate School of Management
Purdue University
MANAGEMENT OF NEW ENTERPRISES:
EMPHASIS IN SMART GRID EMERGENCE
MGMT 484
COURSE SYLLABUS – SPRING 2013
Section TBD
Room TBD
INSTRUCTOR
OFFICE
PHONE
EMAIL
OFFICE HOURS
CATALYST
TEXT &READINGS
EMERGENCY POLICY
John Burr, Ph. D.
Krannert Building 432
765-496-2271
jburr@purdue.edu
(I encourage you to use e-mail to contact me outside of class).
Wednesday 10am-11:00am or by appointment
Course policies, slides, homework assignments, and guidance can be
found on Katalyst (http://katalyst.mgmt.purdue.edu ).
You should check this site REGULARLY.
Required course packet available in Union
In the event of a major campus emergency, course requirements,
deadlines and grading percentages are subject to changes that may
be necessitated by a revised semester calendar or other
circumstances. The Katalyst web page will be the central way to get
information about changes in this course. Please assure that your email
address is validated for communications through Katalyst system so that
communications can be sent directly to you.
COURSE DESCRIPTION:
According to Global Economic Monitor Survey, conducted under the auspices of the Kauffman
Foundation, approximately 1 person in 8 in the US was involved in either starting or managing a new
business. (Interestingly enough, the numbers are higher for men as compared to women and for African
Americans as opposed other ethnic groups.) Many others are actively contemplating creating a startup,
and still others work for small firms. Moreover, even rank and file managers are increasingly asked to act
like entrepreneurs. Sometimes such activity is formalized, in which case it is dubbed intrapreneurship, or
entrepreneurship within the confines of a corporation. Clearly, the profile of entrepreneurship and
entrepreneurs has never been higher. Further, institutional changes have made it easier for everyone,
especially young entrepreneurs to venture out on their own. You should be especially interested in
knowing that a significant number of Krannert graduates work for themselves or for companies with
fewer than 500 people.
While the word entrepreneur may suggest an image of a small team or sole proprietor starting something
from scratch, there is also the perspective of corporate entrepreneurship. Entrepreneurship exists in both
settings. Corporate entrepreneurs are small teams of people tasked with doing something new. They face
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
similar challenges as those entrepreneurs who may be backed by small teams of resourced advisors. This
course addresses the continuum, from the individual starting with nothing to teams of well resourced
people making large strategic decisions in unchartered waters.
Importantly we also focus on areas of future opportunity. Many feel that the energy and power sector will
represent a network which is 100 to 1000 times larger than the internet. Anecdotally this is proving to be
true. Merger and Acquisition activities represent firm’s recognition of opportunity. M&A represents the
firm which was once started by a few people being able to cash out on their investment as someone
wished to acquire their firm. From the data below, we see that investment and number of deals in the
Energy and Power sector dwarf the numbers from many other well capitalized sectors.
Management of New Enterprises (Mgmt 484) is a capstone course that gives you a solid glimpse at the
process of conceiving, structuring and creating a startup. Accordingly, like other courses in Strategic
Management, we take on the perspective of the general manager, who in our context is the entrepreneur,
and draw heavily upon knowledge and skills developed in other courses. Our perspective is illuminated
by a combination of the case method (which approximates an apprenticeship setting and standard tools
are brought to bear on data appropriate to the situation at hand), contact with master practitioners (where
there is an opportunity to appreciate the human side of the equation and to ask questions) and most
importantly, by doing. This last point is extremely important, since entrepreneurship (like most activities)
is most effectively learned by engaging actively in it. Towards this end all students will actively work on
a new business idea and formulate a business plan for it. This constitutes an important part of the start-up
process. While it is perfectly reasonable to expect that some of these ideas may evolve into new ventures,
success in the course is not dependent on this outcome. Rather, our intent is to lay the groundwork for
those who may wish to be better prepared to become successful entrepreneurs at a future time. Some will
gain experience, accumulate capital and contacts, and move fairly quickly to be involved in
entrepreneurial ventures. Others may find that their careers move in unexpected ways. Even if you plan
to begin working with an established organization, entrepreneurship may later become an attractive
alternative.
2
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
Entrepreneurship can be both exciting and challenging. Entrepreneurial ventures often pioneer in the
creation of new industries and are major engines of change in our economy. Growth-oriented smaller
firms create most of the new jobs. Many other new firms, although less innovative and growth-oriented,
enable entrepreneurs to control their own destiny and to do the kind of work they want to do. However,
many new ventures fail and others fall short of their founders’ goals. Much depends on the entrepreneur,
and that person’s vision, drive, capabilities, and reputation.
This course should help you to understand what is involved in entrepreneurship. It should be understood
that no single course will make you an entrepreneur. However, this course should help you to appraise
this alternative more fully and to develop capabilities which should help you be successful if you later
follow this path.
CONFIDENTIALITY POLICY
Throughout the semester, students will be exposed to proprietary information from other students and
faculty. It is the policy of the course instructors that all such information is to be treated as confidential.
By enrolling in and participating in MNE, students agree not to disclose this information to any third
parties without specific written permission from students or faculty, as applicable. Students further agree
not to utilize any such proprietary information for their own personal commercial advantage of for the
commercial advantage of any third party.
COURSE REQUIREMENTS
Your course grade is a function of the requirements listed below.
A. Participation (20%) – Active participation is an extremely important component of any casebased class. Class participation includes four aspects: attendance, class discussion, unscheduled
quizzes, and six optional assignments. Students are also encouraged to be class reporters to earn
extra participation points (see Class 1 slides on Katalyst for details).
Entrepreneurship is inherently collaborative – a social process. Entrepreneurs find opportunities,
adapt, change, and improve themselves by listening and learning from others. Please come to
class prepared to participate in the day’s activities. Coming prepared entails having read the
assigned readings for that day and having analyzed the cases based on the study questions.
How is Participation graded? Every student starts off with a low
“C” (i.e., 75%) for participation and accumulates points through
their contributions to case discussions. Class participation points
are based on the quality of the student’s discussion to key issues in
the case, not on attendance. You can drop below a “C” for
participation if you: (1) demonstrate that you are poorly prepared
for discussion, or (2) have more than two unexcused absences.
What is a “quality”
contribution? A
quality contribution
does not recite facts
from the case, but
integrates perspectives
or demonstrates
analytical rigor.
I will provide you with feedback at the mid-point of the course and will be pleased to
meet with you to help develop strategies to increase your contribution to the
classroom discussion.
3
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
Class attendance is part of the learning process. Given the many demands that
students have, two absences are allowed without an impact on the attendance grade.
Please email me in advance of any absences. Use the two absences carefully, since
there is no tracking of excused or unexcused absences.
If you miss more than two classes, please see instructor for additional work within
one week from that class. If you do not submit any additional work in time, for every
absence beyond two, 5 points are deducted from the attendance grade. In some (not
all) circumstances, it may be possible to attend the other section of the class. Please
notify me if you would like to do so.
B. Special Topic Projects (20%) – Student teams (formed by the instructor) will prepare a report
and give a presentation on a special project. The purpose of this assignment is to deepen your
knowledge on a topic pertinent to the start-up process, and to share that knowledge with the rest
of the class. The topics selected by the instructors represent critical content for would-be
entrepreneurs, and should prove helpful in completing business plan assignments. The eligible
topics are listed below. See Appendix D for detail, including due dates.
Special Topic
Deciding the Form of Business Entity
Placing a Value on a Start-up
Buying an Existing business
Financing the Venture: Money, Money, Money!
Angel Investors: You Don’t Have to Die to go to Heaven
Entrepreneurs and Geographic Clusters
Appendix
D-1
D-2
D-3
D-4
D-5
D-6
The questions to address in this project are provided in detail at the end of the syllabus. In
general, there are three components to this assignment:
i.
In lieu of a 5-page report , your presentation slides should be submitted with
detailed notes that explain the contents in your slides and list the information
source;
ii.
a 20 minute class presentation; and
iii.
a list of 10 possible quiz questions and answers to be distributed to the class.
C. Quizzes (25%)
There will be three open-book quizzes on Special Topics Presentations and Cases/Readings.
Questions will be multiple choice and/or true/false.
D. Business Plan (35%)
There are three components to the Business Plan assignment.
1.) Industry/Market Analysis (IMA) and Presentation (10%). See Appendix C for detail.
2.) Written Business Plan (20%). The final report includes the revised IMA part.
3.) Business Plan Presentation (5%).
While we wish all business plans can result in potentially profitable ventures, it is usually the
exception. Accordingly, we will not evaluate the quality of your plan based on the feasibility of
venture success or the likelihood of profitability. Rather we will evaluate the quality of your plan
base on the thoroughness of the analysis. In the end, you may decide to “pull the plug” on your
venture, or you may decide to modify the venture concept, or you may decide that there is a
4
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
strong possibility that you can achieve profitability by going forward with the venture. You can
achieve a high grade under any of these scenarios, providing that your analysis is comprehensive
and accurate.
Notice: All Group Work
Each Business Plan Team should have 5 persons.
In order for a group to do well, each member must be actively involved in the research, discussion, and
preparation of the final report and presentation. Failure to actively participate cheats both you and your
other team members. Thus, there is little tolerance for free riding. It is primarily your responsibility to
eliminate free riding. The incentive alignment mechanism will be the peer evaluation at the conclusion
of the course. Individual members who have not contributed to the group reports will have the final grade
for group assignments adjusted to reflect their actual contribution level (see Appendix E).
5
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
FINAL GRADING SCALE
Each student’s grade is determined by adding the points for each of the individual requirements. The
grading scale below indicates the points associated with each letter grade.
Course Points
970 – 1000
920 – 969
900 – 919
870 – 899
820 – 869
800 – 819
770 – 799
720 – 769
700 – 719
670 – 699
650 – 669
< 650
Final Grade
A+
A
AB+
B
BC+
C
CD+
D
F
If at any time you have a concern about grades, the material in the course, or other issues that can improve
your future, feel free to discuss these with me.
GUIDELINES FOR ALL COURSE ASSIGNMENTS (PLEASE READ CAREFULLY)
All assignments must be typed in 12 pt. font, 1” margins, double-spaced and organized for easy reading.
Do not exceed the page limit requirement!
Unless otherwise instructed, all written work must be handed in at the beginning of class on the date due.
When submitting assignments by email, please follow these guidelines:
 Submit in single Word document file labeled as follows: yourlastname_484_assignment name
 The subject line of the email should contain the same label in above point.
6
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
SCHEDULE AND ASSIGNMENTS1
DATE
1/15
1/17
1/22
PLEASE
NOTE:
4:30-6:20
1/24
1/29
CONTENT
Module I: What is an Entrepreneurial Manager?
Class 1:
-
Course Introduction
Distribute syllabus
Course design
Course grading and administration
Class 2: Lecture on the Fundamentals of Entrepreneurship
Read: “The Questions Every Entrepreneur Must Answer”, Harvard Business Review,
Reprint 96603.
Read: “How to prepare for a case discussion?”
Key Learning Objectives:
- Defining entrepreneurship
- Reasons why entrepreneurial opportunities exist
- Importance of entrepreneurship to economy
Class 3: Special Afternoon Presentation
Starting from 4:30 pm this Tuesday, you are asked to attend the video presentation of
“Start-up.com”. It will last approximately 110 minutes. This will replace a class later in
the semester.
Location: Rawls 2079
Key Learning Objectives:
- Entrepreneurs with different types of personal traits
- The role and process of venture capital
- Starting a business with friends?
Module II: Recognizing Opportunity and Developing Business Model
Class 4: “Beta Golf” Harvard Business School Case 9-898-162
Read: “Value Innovation: The Strategic Logic of High Growth”, Harvard Business Review,
R0407P.
Key Learning Objectives:
- Why is it so difficult to commercialize an innovation?
- The process of identifying and nurturing an opportunity at Beta Golf
- Alternatives of capitalizing on an opportunity
Class 5: “R&R” Harvard Business School, Case 9-386-01
Assignment (O)2: Calculate the break-even level for each major stakeholder
(e.g. Bob Reiss, Sam Kaplan, the Designer, TV Guide, R&R) (see Excel spreadsheet
posted to Katalyst)
How to do breakeven analysis?
http://entrepreneurs.about.com/od/businessplan/a/breakeven.htm
http://hbsp.harvard.edu/multimedia/flashtools/breakeven/index.html
1
Instructor reserves the right to adjust schedule as needed --- some topics may run longer.
“Assignment (O)” indicates Optional Assignment. It is designed to help you better prepare for the case discussion.
Completing optional assignment will help you earn participation points. All assignments are due at the start of class.
Late assignments are not accepted and cannot be made up.
2
7
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
Key Learning Objectives:
- Renting versus owning resources
- Calculating break-even levels for different stakeholders
- Entrepreneurship and sustainability
1/31
2/5
2/7
2/12
2/14
Class 6: Lecture on Financial Statement Analysis / Entrepreneurial Finance
Read: “Introduction to Financial Ratios and Financial Statement Analysis” Harvard
Business School, Note 9-193-029;
Assignment (O): Calculate ratios for Anheuser-Busch (see Excel spreadsheet posted to
Katalyst)
Key Learning Objectives:
- Review financial statements
- Overview key financial ratios
- Discuss importance of non-financial metrics
Class 7: Business Concept Presentations
- Group Assignment Due!
- Form a 5-person group first.
- Each group needs to submit a one-page description of your concept (Appendix B
explains what should be included in the description).
- Each group needs to give a 10-min presentation of the business idea in class.
- This is the first step of your final project (“Business Plan” project)!
NO CLASS – To Compensate for Start-Up.com Video
Class 8: “Zipcar: Refining the Business Model,” Harvard Business School, Case 9-803096
Assignment (O): Calculate revenue/car or person, cost/car or person for Zipcar (see
Excel spreadsheet posted to Katalyst)
Read: “Why Business Models Matter”, Harvard Business Review, 80(5): 86
Key Learning Objectives:
- Opportunity recognition: transfer an idea from Country A to Country B?
- The importance of revising business models
- How does pricing structure affect profitability?
Class 9 : Intro to the Smart Grid
“ The Smart Grid” Harvard Business School, Case 310072-PDF-ENG
Key Learning Objectives:
- Outline the complex strategic and economic issues for Grid
- Understand growth where marginal utility is not fully transparent
Module III: Writing An Effective Business Plan
2/19
Class 10: Consumers View of the Smart Grid and Technology Diffusion
Preparing and Appraising Business Plans
Read: “Writing a Business Plan: The Basics” Chapter 5 in Entrepreneur’s Toolkit
Key Learning Objectives:
- Components of a business plan
- Process of writing the plan
8
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
2/21
2/26
2/28
3/5
3/7
The theoretical framework from Mullins (posted on Katalyst) — use it to guide
your final “Business Plan” project
Class 11: Special Topics Presentations
- D-1: Deciding the Form of Business Entity
- D-2: Placing a Value on a Start-up
- D-3: Buying an Existing Business
Class 12: “Beautiful Legs by Post,” Harvard Business School, Case BAB071
Key Learning Objectives:
- A writing sample of a business plan (survey method)
- How to evaluate a business plan?
- What resources are needed? (reflected by the business plan)
Class 13: Industry / Market Analysis (IMA) Presentations – Team Assignment
presentation slides and the IMA report DUE 3/1
Class 14: Industry / Market Analysis (IMA) Presentations – Team Assignment
- Presentation slides and the IMA report DUE 3/6
Class 15: Industry / Market Analysis (IMA) Presentations – Team Assignment
- This is the second step of your final project (the “Business Plan” project)!
- Presentation slides and the IMA report DUE: 3/8
Module IV: Assembling Resources and Managing Uncertainty
3/12
3/14
3/19
Spring Break
Spring Break
Class 16: Gathering Primary Data for Your Business Plan
- How to do library research?
- In-class exercise
Quiz 1: Cases & Readings through Modules I & II (ends in Class 8)
3/21
Class 17: Lectures on technological and financial uncertainty
Read: “How Venture Capitalists Evaluate Potential Venture Opportunities”, HBS 9805-019.
Read: “Managing Risk and Reward in the Entrepreneurial Venture” Harvard Business
School, Note 9-803-176
Read: “A Note on Pre-Money and Post-Money Valuation (A&B)”, HBS 9-801-446.
- Intellectual Property Protection
Venture Capital Financing
3/26
Class 18: Special Topics Presentations – Team Assignment Due
- D-7: Financing the Venture: Money, Money, Money!
- D-8: Angel Investing: You Don’t Have to Die to go to Heaven
- D-9: Entrepreneurs and Geographic Clusters
Quiz 2: Special Topics D1-D6 (presentations of 2 sections included)
Cases & Readings: Class 9 - Class 17
3/28
Class 19: “Ockham Technologies: Living on the Razor’s Edge.,” Harvard Business
School, Case 9-804-129
9
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
Read: “Reminders for Owner-Managers Regarding the Board of Directors of Private
Companies” Harvard Business School, Note 9-805-154
Assignment (O): Positives and negatives of the CEO’s performance, Compare two
financial offers (see the document posted to Catalyst)
Key Learning Objectives:
- Understanding the challenges of attracting strategic human resources in a startup firm.
- Issues in equity splitting
Board composition and the wise use of limited resources of a start-up
Module V: Managing the Growing Venture
4/2
4/4
4/3
4/9
4/11
Class 20: “Sirtris Pharmaceuticals: Living Healthier, Longer”, Harvard Business School
Case HBS 808112.
Key Learning Objectives:
- An example from an industry with huge uncertainty
- How do uncertainty and rewards evolve throughout the process?
- Collaborate with a bigger partner?
- Motives for and consequences of diversification for a start-up
Class 21:
No class session – meet in groups for business plan project
- Study my IMA feedback to continue to work on the project.
- Be sure to arrange a meeting place in advance!
Class 22: “Noodles & Co.”, Harvard Business School, Case 803174
Read: “Franchising,” Richard Ivey School of Business, Note 9A99D014
Assignment (O): Calculate the Herfindahl-Hirschman (HHI) Index for the franchising
chains. And calculate Noodles’ G&A/Sales ratios for 2000-2002 based on the data in
Exhibit 1. (see document posted Katalyst)
Key Learning Objectives:
- Is franchising entrepreneurship?
- Assess franchising as an expansion alternative
- Evaluate if Noodles’ concept (particularly profit margin) is attractive to
franchisees.
Module VI: When a Market does not yet exist; Gaps and Voids
Class 23: “Kate Spade” Harvard Business School, Case 9-800-002
Read: “Evolution and Revolution as Organizations Grow” Harvard Business Review,
Reprint 98308; “Bootstrap Finance: The Art of Start-Ups,” Harvard Business Review,
Reprint 92601.
Assignment (O): Calculate the pre- and/or post-money valuation of Kate Spade in each
financing offer (see Excel spreadsheet posted to Katalyst)
Key Learning Objectives:
- The merits and challenges of bootstrap finance
- Expansion in multiple dimensions (volume, product markets, geography)
- Managing rapid growth (culture and organizational structure)
Class 24: “Nissan’s Electric Vehicle Strategy in 2011” – SM189 – PDF - ENG
Key Learning Objectives:
10
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
- Making decisions with technology uncertainty
- Predicting adoption rates
- Working with multiple alliances including competitors
Quiz 3: Special Topics D7-9,
Cases & Readings: Class 19 - Class 24
4/16
4/18
4/23
4/25
4/30
5/2
Class 25 (see footnote 3)3
No class session – meet in groups for business plan project
Be sure to arrange a meeting place in advance!
Class 26 (see footnote 3)4
No class session – meet in groups for business plan project
- Be sure to arrange a meeting place in advance
Class 27: Business Plan Presentations
Class 28: Business Plan Presentations and Peer Evaluations– Written Plans DUE
Class 28: Business Plan Presentations and Peer Evaluations– Written Plans DUE
Class 29: Final Lecture & Course Review
3
Alternative plan: If there are more than six groups in the section, we will need to have regular class sessions in
which some groups will present their business plan projects. See Katalyst for announcement if the plan is executed.
4
Alternative plan: If there are more than six groups in the section, we will need to have regular class sessions in
which some groups will present their business plan projects. See Katalyst for announcement if the plan is executed.
11
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
POLICIES REGARDING ACADEMIC INTEGRITY
ACADEMIC INTEGRITY
“Purdue University values intellectual integrity and the highest standards of academic conduct. To be prepared to
meet societal needs as leaders and role models, students must be educated in an ethical learning environment that
promotes a high standard of honor in scholastic work. Academic dishonesty undermines institutional integrity and
threatens the academic fabric of Purdue University. Dishonesty is not an acceptable avenue to success. It diminishes
the quality of a Purdue education which is valued because of Purdue’s high academic standards” (S. Akers,
Academic Integrity, A Guide for Students, 1995, revised 1999).
DEFINITION OF ACADEMIC DISHONESTY
Purdue prohibits “dishonesty in connection with any University activity. Cheating, plagiarism, or knowingly
furnishing false information to the University are examples of dishonesty” (University Regulations, Part 5, Section
III, B, 2, a). Furthermore, the University Senate has stipulated that “the commitment of acts of cheating, lying, and
deceit in any of their diverse forms (such as the use of ghost-written papers, the use of substitutes for taking
examinations, the use of illegal cribs, plagiarism, and copying during examinations) is dishonest and must not be
tolerated. Moreover, knowingly to aid and abet, directly or indirectly, other parties in committing dishonest acts is in
itself dishonest” (University Senate Document 72-18, December 15, 1972).
PURDUE UNIVERSITY CODE OF HONOR
(University Regulations, Part 5, Section II, 2002-2003)
“The purpose of the Purdue University academic community is to search for truth and to endeavor to communicate
with each other. Self-discipline and a sense of social obligation within each individual are necessary for the
fulfillment of these goals. It is the responsibility of all Purdue students to live by this code, not out of fear of the
consequences of its violation, but out of personal self-respect. As human beings we are obliged to conduct ourselves
with high integrity. As members of the civil community we have to conduct ourselves as responsible citizens in
accordance with the rules and regulations governing all residents of the state of Indiana and of the local community.
As members of the Purdue University community, we have the responsibility to observe all University regulations.
To foster a climate of trust and high standards of academic achievement, Purdue University is committed to
cultivating academic integrity and expects students to exhibit the highest standards of honor in their scholastic
endeavors. Academic integrity is essential to the success of Purdue University’s mission. As members of the
academic community, our foremost interest is toward achieving noble educational goals and our foremost
responsibility is to ensure that academic honesty prevails.”
“NO LAPTOP, NO CELL PHONE” POLICY
Laptop
Students should not use laptop during class. The instructor has the right to ask the student to turn off the laptop. If
you have to take notes on a laptop, do not cruise the internet during class.
Cell phone
Krannert has a policy, posted in many classrooms, that cell phones should be turned off during class.
1.
Students may have cell phones with them during class, but they should be turned off or muted.
2.
If a cell phone "rings" during class, the instructor has the right to ask the student to turn off the phone and
cease its usage.
3.
Phones, laptops, iPad, and other equipment may not be on the students desks during presentations or
quizzes
4.
If a student persists in using the cell phone after being requested to cease, the instructor:
A.
may tell the student to leave the classroom, if the student refuses, the instructor can contact the
Krannert Dean's Office or have the campus police contacted to have the student removed.
B.
may impose a grade penalty.
---- 5 points will be deducted from the student’s participation grade category each time the
student’s phone rings.
C.
A disruptive student can be referred to the Dean of Students Office for further action.
This policy would also apply to the use by students in class of other personal property that may be disruptive of the
normal conduct of classroom activities by the instructor.
12
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
13
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX A
Resources for Developing Business Ideas
Business Opportunities Handbook: Online
http://www.busop1.com/busop.html
Features articles about running a small business. Also lists business opportunities
Where Really Bad Ideas Come From
http://www.inc.com/magazine/19981015/1114.html
This great article by Ron McLean talks about how entrepreneurs learned from their failures
Where Great Ideas Come From
http://www.inc.com/magazine/20021015/24773.html
This is a corollary article written by Susan Greco
What’s Your Unique Business Idea?
http://www.toolkit.cch.com/text/P03_1010.asp
This article helps you assess whether your idea is viable.
Creativity Web – Resources for Creativity and Innovation
http://members.optusnet.com.au/~charles57/Creative/index2.html
Yes, it is located in Australia, where it appears they are very much interested in creativity. On
this site, you will find many links to resources on various aspects of creativity.
Purdue Office of Technology Commercialization
http://www.prf.org/otc/
Purdue’s OTC facilitates the commercialization of intellectual property developed at Purdue
University. According to the office’s web site:
Purdue’s intellectual property is an asset we strive hard to protect, market and license. We
work hand-in-hand with Purdue faculty-, staff- and student-entrepreneurs to provide the
resources needed to better understand Purdue policies related to intellectual property and
the processes whereby this intellectual property (patents, copyright, trademarks, and
tangible research property) can become an actual product or service. To ensure the longterm success of the innovations, we take the process one step further – at times – and help
our inventors form startup companies complete with investor support and qualified
management teams.
14
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX B
Developing a Business Concept*
A business concept is a concise description of an opportunity that contains four elements: The
product/service, customer definition, value proposition (benefit to customer), and distribution channel.
Assume that your business concept is about importing unique types of furniture from all parts of the
world. By answering the following questions, you can arrive at an effective business concept that can be
tested.
1) What is the product or service being offered? In this case it is a product – furniture – and a
service that will provide U.S. retailers with access to furniture that they could not achieve on their
own.
2) Who is the customer? The customer is the smaller U.S. retailer of furniture.
3) What is the benefit? The retailer can purchase from one supplier (you, the importer) to find
unique pieces of furniture from many parts of the world. In short, the benefits are convenience
and access.
4) How do you get the product or service to the customer? You plan to reach the customer
through a combination of catalog service, web site, and showroom. You will warehouse the
furniture and deliver direct to the customer.
The complete concept statement might look like this:
Worldwide imports provide smaller U.S. furniture retailers with the ease and convenience of
worldwide access to unique pieces of furniture. Worldwide will reach its customers through a
catalog service, web site, and showroom, and will deliver direct to the customer from its
warehouse.
The business concept for Amazon.com was to offer an Internet-based service that allowed
customers to search for and order discounted books for fast delivery from a warehouse.
The company has since extended the concept to other products.
It is important to state your business concept in a couple of clear and concise sentences, so that when
someone asks you about your new business, you can get the information out quickly rather than
stammering and talking around the key points. Some entrepreneurs refer to this two-sentence statement
as their “elevator pitch”. Here is an example of an effective concept statement done in elevator pitch
style.
I’m working on a concept for a health education company called Smart Choice Software that
helps young college students learn about the dangers of substance abuse. I plan to develop and
distribute interactive software on CE-ROM that delivers objective, non-threatening, entertaining,
and flexible programs to my customers, college and university health centers, to help them reduce
the overall costs of dealing with drug and alcohol related issues.
* Extracted from Allen, Kathleen R. (2003). Launching New Ventures: An Entrepreneurial Approach, 3rd Edition, Houghton Mifflin Company:
Boston, pp. 103-104.
15
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX C
Industry / Market Analysis
There are two components to this assignment: (a) the written report; and (b) the presentation.
A. The Written Report - The written report should be 5-8 double-spaced pages in length, plus any
exhibits you choose to include. Your report will be evaluated on the comprehensiveness and clarity
with which you address the following points – to the extent, of course, that they are pertinent to your
proposed opportunity. Use sub-headings and bullet points where appropriate rather than pure text.
Macro-Market – Market Attractiveness
o What sort of business do you want? One with potential to become a huge business, or a small
‘lifestyle’ operation servicing a niche market? Without answering this question first, you
cannot assess for your particular opportunity the meaning of the others below.
o How large is the market you are seeking to serve? In how many ways have you measured it?
o How fast has it grown over the past one/three/five years?
o How fast will it grow over the next six months or two/five/ten years?
o What economic, demographic, socio-cultural, technological, regulatory, or natural trends can
you identify that will affect your market, and what effect, favorable or otherwise, will these
trends have on your business?
This information can be found from secondary sources – library materials or information from the
internet – and from primary sources too. What information on market trends can you glean from
talking to your potential customers, suppliers, or competitors?
Micro-Market – Target Segment Benefits and Attractiveness
o What customer’s pain will your offering resolve? How strong an incentive do your customers
have to give you their money? Will the fish bite?
o Who precisely are the customers that have the pain? Do you have detailed, current and
accurate information about who they are, where they live or do business, or what they do?
o What benefits does your offering provide that other solutions don’t?
o What evidence do you have that customers will buy what you propose to offer?
o What evidence can you provide to show that your target market has the potential to grow?
o What other segments exist that could benefit from a related offering?
o Can you develop capabilities that are transferable from one segment to another?
Macro-Industry – Industry Attractiveness
o What industry will you compete in? Define it carefully.
o Is it easy or difficult for companies to enter this industry?
o Do the suppliers in this industry have the power to set terms and conditions?
o Do buyers in this industry have the power to set terms and conditions?
o Is it easy or difficult for substitute products to steal your market?
o Is competitive rivalry intense or genteel?
o Based on all five forces, what is your overall assessment of the industry? Just how attractive
or unattractive is it?
o If your industry is a poor performer overall, are there persuasive reasons why you’ll fare
differently? If not, move on.
16
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
B. The Presentation - The presentation should be made by one or two representatives of the team.
The intent is: i) to inform the class on the progress of your project (we can learn from one another);
and ii) to get feedback from class or instructor. You should approach the presentation as if you were
reporting to an investor group whether or not your industry and market investigations support the
further development of your business concept.
Source: John Mullins (2003). The New Business Road Test. Published by FT Prentice Hall
17
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX D-1
MGMT 484 Special Topic Assignment
Assignments may be modified depending on class size
Deciding the Form of Business Entity
The questions to address in this project are:
1) Explain the advantages and the disadvantages of the major forms of business ownership:
sole proprietorship, partnership, and corporation.
2) Explain how an S corporation differs from a regular corporation.
3) Explain what advantages a limited liability company offers over an S corporation. A
partnership.
4) Interview three small business owners. What form of ownership did each choose? Why?
Prepare a brief report summarizing your findings, and explain advantages and
disadvantages those owners face because of their choices.
The deliverables for this project should be submitted via email and include:
1) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4) List of 10 possible quiz questions to be included in future quizzes. These questions
should pertain to questions 1-3. At least five of these questions need to be multiplechoice format. Make sure your presentation addresses the answers to your questions.
Also, make sure you have provided the instructor an electronic version of these questions.
18
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
19
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX D-2
MGMT 484 Special Topic Assignment
Placing a Valuing on A Start-up
The questions to address in this project are:
1) Explain the process of evaluating an existing business.
2) Describe the various ways of determining the value of a business.
3) Interview an entrepreneur who purchased an existing business, or an investor (venture
capitalist, angel investor) who contributed capital to a start-up, and ask the following
questions:
a. How did you determine the value of the business?
b. How close was the price paid for the business to the value assessed prior to the
purchase?
The deliverables for this project should be submitted via email and include:
1) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4) List of 10 possible quiz questions to be included in future quizzes. These questions
should pertain to questions 1-3. At least five of these questions need to be multiplechoice format. Make sure your presentation addresses the answers to your questions.
20
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX D-3
MGMT 484 Special Topic Assignment
Buying an Existing Business
The questions to address in this project are:
1) What advantages can an entrepreneur who buys a business gain over one who starts a
business “from scratch”.
2) Why is it so difficult for buyers and sellers to agree on a price for a business?
3) Interview an entrepreneur who purchased an existing business and ask the following
questions:
c. Why did you decide to buy the business instead of start your own business?
d. What were the “sticky” points during the negotiation?
e. How did you research, or perform due diligence, on the business you eventually
bought?
f. Have you discovered any surprises (positive or negative) about the business since
you have purchased it?
g. Knowing what you know now, would you revise the due diligence process in any
way to avoid the negative surprises?
The deliverables for this project should be submitted via email and include:
1.) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2.) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3.) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4.) List of 10 possible quiz questions to be included in future quizzes. These questions
should pertain to questions 1-3. At least five of these questions need to be multiplechoice format. Make sure your presentation addresses the answers to your questions.
21
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
appendix D-4
MGMT 484 Special Topic Assignment
Pricing for Profit
The questions to address in this project are:
1) Describe the strategies (penetration, skimming, and sliding down the demand curve) a
small business could use in setting the price of a new product.
2) Explain pricing techniques for retailers and provide examples
3) Explain pricing techniques for manufacturers and provide examples
4) Explain pricing techniques for service firms and provide examples
5) Interview two successful small retailers and ask the following questions: Do you seek a
specific image through your prices? What role do your competitors play in pricing? Do
you use specific pricing techniques such as odd pricing, price lining, leader pricing, or
geographic pricing? How are discounts calculated? What markup percentage does the
firm use? What is your cost structure?
The deliverables for this project should be submitted via email and include:
1.) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2.) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3.) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4.) List of 10 possible quiz questions to be included in future quizzes. At least five of these
questions need to be multiple-choice format. Make sure your presentation addresses the
answers to your questions.
22
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
appendix D-5
MGMT 484 Special Topic Assignment
Estimating Sales: Pulling a Rabbit out of the Hat
The questions to address in this project are:
1) What are the four key questions that must be answered in the sales forecast of a new
venture?
2) Explain the difference between a demand-side approach to estimating sales in a new
venture, and a supply-side approach. Provide an example of each.
3) Compare judgmental, time-series, and causal forecasting models.
4) Interview an entrepreneur who purchased an existing business and ask them which sales
forecasting method they used to estimate their ventures initial sales. How close were
they to their estimate? What forecasting method do they currently use? How seasonal is
their business, and how do they adjust for seasonality in their forecasting?
The deliverables for this project should be submitted via email and include:
1.) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2.) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3.) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4.) List of 10 possible quiz questions to be included in future quizzes. At least five of these
questions need to be multiple-choice format. Make sure your presentation addresses the
answers to your questions.
23
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX D-6
MGMT 484 Special Topic Assignment
Financing the Venture: Money, Money, Money!
The questions to address in this project are:
1) Why is it so difficult for most small business owners to raise the capital needed to start,
operate, or expand their ventures?
2) List and describe the three types of capital a small business needs for its operations.
3) Define equity financing. What advantages does it offer over debt financing?
4) What is the most common source of equity funds in a typical small business? If an owner
lacks sufficient equity capital to invest in the firm, what options are available for raising
it?
5) Interview 3 local small business owners about how they financed their businesses. From
where did their initial capital come? Ask the following questions:
a. How did you raise your starting capital? What percent did you supply on you
own? What percent was debt capital and what percent was equity capital?
b. How much money did you need to launch your business? Where did subsequent
capital come from? What advice do you offer others seeking capital?
The deliverables for this project should be submitted via email and include:
1.) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2.) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3.) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4.) List of 10 possible quiz questions to be included in future quizzes. At least five of these
questions need to be multiple-choice format. Make sure your presentation addresses the
answers to your questions.
24
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX D-7
MGMT 484 Special Topic Assignment
Angel Investors: You Don’t Have to Die to Go to Heaven
The questions to address in this project are:
1) What is an angel investor? Assemble a brief profile of the typical private investor. How
can entrepreneurs locate potential angels to invest in their businesses? Describe the angel
investment process.
2) Discuss the niche that angel investors fill in the entrepreneurial process.
3) Provide a description of how angel investing is changing and evolving and a current
description of the state of the industry.
4) Contact a local angel investor and ask him or her what kinds of businesses do they prefer
to invest. What screening criteria does he or she use? How are deals typically
structured?
5) Go to the “Band of Angels” website and be prepared to describe how it operates.
http://www.bandangels.com/
The deliverables for this project should be submitted via email and include:
1.) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2.) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3.)
In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4.)
List of 10 possible quiz questions to be included in future quizzes. At least five of these
questions need to be multiple-choice format. Make sure your presentation addresses the
answers to your questions.
25
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX D-8
MGMT 484 Special Topic Assignment
Entrepreneurs and Geographic Clusters
The questions to address in this project are:
1) What constitutes a geographic cluster of firms?
2) What are the potential advantages and disadvantages of locating a start-up firm in a
geographic cluster
3) In what industries does Indiana have geographic clusters of similar firms? Speculate as
to why this might be the case.
4) Contact a small business owner in one of these industries and ask the following
questions:
a. How does your firm benefit from being located in Indiana, where there is a
concentration of similar firms?
b. Why did you start your firm in this location?
c. Would you consider moving to a new location?
The deliverables for this project should be submitted via email and include:
1.) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;
2.) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3.) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4.) List of 10 possible quiz questions to be included in future quizzes. At least five of these
questions need to be multiple-choice format. Make sure your presentation addresses the
answers to your questions.
26
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX D-9
MGMT 484 Special Topic Assignment
Differences in Entrepreneurship Around the World
The questions to address in this project are:
1) Provide evidence that nations differ in their rates of entrepreneurship? In addition to the
United States, include countries from at least 2 of the continents of South America,
Europe, Asia, or Australia.
2) What are the reasons for such differences?
3) Interview 3 people from countries other than the United States and ask them to speculate
on why their country’s rate of entrepreneurship differs from the U.S.
The deliverables for this project should be submitted via email and include:
1.) One (1) sheet handout summarizing the major conclusions of your research of the topic to
be distributed to your classmates and the instructor. The purpose of the handout is to
provide a reference tool for your classmates should they need information on the topic at
some point in their future career;w
2.) PowerPoint presentation of not longer than 20 minutes (including Q&A) to be delivered
in class;
3.) In lieu of a formal report on the topic, your slides should include written detail,
supporting facts, arguments, and sources of information in the Notes area of the slides.
The slides (along with the notes) will be turned in to the Instructor and posted on Catalyst
for your classmates’ use; and
4.) List of 10 possible quiz questions to be included in future quizzes. At least five of these
questions need to be multiple-choice format. Make sure your presentation addresses the
answers to your questions.
27
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
APPENDIX E
PEER EVALUATION SAMPLE FORM
IT IS REQUIRED THAT EVERY CLASS MEMBER RETURN THIS FORM
DUE BY DECEMBER 8 (THURSDAY)
(All ratings are confidential.)
Please circle your class time:
3:00pm
4:30pm
One of the enduring difficulties of using group projects in a class is assessing the contributions of
individual group members to the final product of the group. Consequently, in evaluating group project
work and assigning grades, I like to have input from the members of the groups that participated. In this
regard, I would like you to evaluate each of your group members on the following scale:
1 = this group member did virtually nothing on the project.
2 = this group member gave minimal input, i.e., he or she came to some meetings and did a few things to
contribute.
3 = this group member gave a fair amount of input, i.e., he or she came to most meetings and contributed
in meaningful ways.
4 = this group member substantially contributed to the project, i.e., at almost all meetings, made strong
contributions to data collection, analysis, writing, organizing, etc.
5 = this group member was a mainstay of our project, a major contributor.
Before you assign a score to each group member, please consider your responsibility in this task.
Evaluation is always unpleasant. It is always hard to decide what is "fair". On the other hand, it
will be something you face the rest of your managerial career and it is not to be taken lightly.
Equity is not just a perception; it is real. Members of organizations who contribute more should
expect more. Be fair, be honest, but be frank. Students who receive an average rating that is less
than 3 but greater than or equal to 2, i.e., 2.0 to 2.99, by other team members will have at least
10% deducted from their group work point total; students who have an average rating less than 2
will have 20% deducted. The instructor reserves the right to make other adjustments if necessary.
(1)
(2)
(3)
(4)
(5)
Fill in section time and team number below;
List the names of all the team members (including your own next to “myself”);
Record a rating (1-5) next to each person's name, including your own;
Provide comments (this is required);
Save as “LastName Peer ratings 484-0x group y,” replacing x with your section number and y with
your team number, e.g. Smith Peer ratings 484-01 group 5;
(6) Submit it to me in person or via email.
28
MGMT 484: MANAGEMENT OF NEW ENTERPRISES
Group #:
Special Topic Project:
Team member name
Rating (1-5)
(your name here)
Group #:
Business Plan Topic:
Team member name
Rating (1-5)
(your name here)
Comments:
Where appropriate, class grades will be adjusted to reflect individual contributions.
29