CHAPTER 1 : INTRODUCTION TO TECHNOLOGY

ENTREPRENEURSHIP

Definition of entrepreneurship
Identification,evaluation and exploitation of previous unexploited
opportunities.

a) Discuss the three phases of the entrepreneurial process. (9 marks)

Idea Search &
Generation Phase
• This phase is also known as the opportunity formation or opportunity discovery phase
• Both the terms ‘idea’ and ‘opportunity’ indicate the possibility of bringing something new to the
market
• Individuals or groups of individuals enter this phase by either:
– Actively searching for business possibilities that they can offer in a better, more creative or
efficient form or
– Discovering a solution for their own problem experienced at work, play or in the marketplace
that has the potential of being shared with others who are willing to pay for the solution
• In technology entrepreneurship, this idea formation or discovery phase may be recognizable
by the fact that the business idea or problem solution involves creating a new technology or
adapting an existing technology
• Technology refers to devices, processes, tools, methods and materials applied to industrial
and commercial purposes.

Idea Evaluation &

Development Phase
• This phase is characterized by efforts to better understand what it will take to bring the idea or
opportunity into a full-fledge economic activity or business
• In technology entrepreneurship, some key activities at this stage include
– doing the research and development work to invent or innovate a new technology-based
product, process or service
– preparing the initial technology blueprint
– concept testing
– prototyping,
– market testing

Idea Exploitation
Phase
• This phase is generally characterized by the decision to pursue the business opportunity or not
• The decision at this phase can take three basic forms (Fig 2):
– proceed to exploit the opportunity
– abandon the current idea and go back to search for other ideas
– terminate the process totally and not pursue any other business ideas
Key dimensions of entrepreneurship
Risk
Creativtivity
Opportunity & Innovation
Pro activeness
b) Discuss four (4) key dimensions or ingredients of entrepreneurship.
(12 marks)
• Entrepreneurship encompasses several dimensions or ingredients that help explain what
makes it a unique concept
• The key dimensions of entrepreneurship include:
– Risk:
• Risk indicates elements of uncertain outcomes or events that is inherent in the process of
exploiting an opportunity and starting a business

• Entrepreneurs take risks in order to obtain the higher rewards that come from higher risk but
are careful to evaluate the risk first.

• Success comes from taking a calculated, carefully-thought out approach to risk where
everything possible is done to identify and minimize potential problems

– Creativity & innovation:

• Entrepreneurship is characterized by newness or the specific effort of bringing something new
and something different to the market.
• Being creative and innovative are essential dimensions of newness
• Creativity focuses on thinking of new things while innovation focuses on doing new things

– Opportunity exploitation
• Entrepreneurship is focused on taking advantage or exploiting of previously unexploited
opportunities
• The exploitation of opportunities often result in the creation of a new enterprise or business as
well as the wealth associated with it
• The new enterprise should be beneficial to the society and make a positive change

– Pro-activeness:
• Pro-activeness refers to the propensity to act on information, ideas and opportunities in a
timely and speedy manner
• Acting at the right time and in the right manner on the superiority of an idea or opportunity can
differentiate between better success or less success or even between success and failure

Technology Entrepreneurship
 Radical
  Incremental
 c) Differentiate between incremental and radical innovation. (10 marks)
 Incremental
 • Steady improvements
 • Based on sustaining technologies
 • Obedience to cultural routines and norms
 • Can be rapidly implemented
 • Immediate gains
 • Develop customer loyalty

 Radical Innovation
 • Fundamental rethink
 • Based on disruptive technologies
 • Experimentation and play/make-believe
 • Need to be nurtured for long periods
 • Worse initial performance, potential big gains
 • Create new markets

The Entrepreneurial Process

Idea search & Idea evaluation & Idea

Generation phase development phase exploitation
phase

Ide discovery R&D Business Start-

up

Idea screening Concept testing Technology

commercialization

Prototyping monitoring &

evaluation

Test Marketing

Technology blueprint

CHAPTER 2 : CREATIVITY,INNOVATION AND TECHNOLOGY

 ENTREPRENEURSHIP

Resources of creative

1. Knowledge in the required fields

2. Intellectual abilities to recognize connections,redefine
problems and envision and analyze possible practical ideas
and solutions
3. Inventive thinking about the problem in novel ways
4. Motivation towards action
5. Opportunity oriented personality and openness to change
6. Contextual understanding that supports creativity and
mitigates risk

Creative techniques

PROBLEM REVERSAL – look at the

opposite of things, see things inside out,
backwards or upside down.

FORCED ANALOGY - gain new insights by

forcing a relationship between almost
anything.

ATTRIBUTE LISTING - break down the

“thing” into smaller parts or characteristics
and develop ideas to improve on them.
MIND MAPPING - starts in the centre of the page
with the main idea, and works outward in all
directions, producing a growing and organized
structure composed of key words and key images.

BRAINSTORMING – generating ideas based on

the principle of suspending judgments.
Styles of creative intelligence

Intuitive

Innovative

Imaginative

Inspirational
b) Explain the four (4) different styles of creative intelligence.(8 marks)
Four styles of creative intelligence:
• Intuitive – focuses on results and relies on past experience to guide actions
• Innovative – concentrates on-problem solving, is systematic, and relies on data
• Imaginative – is able to visualize opportunities, is artistic, enjoys writing, and thinks “out of the
box”
• Inspirational – focuses on social change and the giving of self toward an end

Creative

Thinking new things

• Creativity can be defined as the production of new and

useful ideas as well as the ability to discover new ways of
looking at problems and opportunities.
 • It is the ability to use imagination to develop new ideas, new
things or new solutions. These generation of ideas should
lead to improved efficiency or effectiveness of a system

• Creative ideas often arise when creative people observe

established solutions, practices, or products and think of
something new or different.

• Creating the “NEW”

Knowledge

Products

Processes

Services

Markets

Business models

Raw materials

Innovation

Doing new things

• Innovation is the specific instrument of entrepreneurs, the

means by which they exploit change as an opportunity for a
different business or a different service (Drucker, 1985).

• Innovation is the ability to apply creative solutions to

problems and opportunities to enhance or to enrich people’s
lives
 • Entrepreneurs innovate by converting opportunities into
marketable ideas (Kuratko, 2004).

• Creativity is thinking new things while innovation is

doing new things.

• Invention on the other hand is often a product of

research.

• Invention is the extreme and riskiest form of

innovation and often associated with development of
a new or better product or process (Burns, 2008).

• Not all inventions lead to a commercially viable

output.

Types of Innovation

Invention

Extension

Duplication

Synthesis

 INVENTION - Creating a totally new product, service or

process. Examples: aeroplanes (Wright
brothers), light bulbs (Thomas
Edison), personal GPS (Peter Maire)

 EXTENSION - Introducing different application or new use

of existing product, service or process

Examples: laptop, PDAs, walkman

 DUPLICATION - Creative replication of an existing

concept
 Examples: Franchise businesses
such as Chicken Rice Shop

 SYNTHESIS - Combining existing concepts or factors into a

new formulation or use.

Example: combining functions of a

telephone, video and camera.

Sources of innovation

Within social within company

• Within the company or industry

– Unexpected occurrence - unexpected discovery such

as penicillin

– Incongruities – the gap between what is and what

should be; arise whenever a difference exists between
expectations & reality.
 – Process needs – require entrepreneurs to innovate
and answer a particular needs such as time-saving
devices

– Structural change – caused by industry and market

changes due to new developments such as advances in
technology.

• Within the social environment

– Demographic changes – for example changes in

population, consumer preference and geographical
locations.

– Perceptual changes – perceptions can cause mood

swings and major changes in ideas, for example fitness
craze is resulted by perceived needs to be healthy &
physically fit

– New knowledge – the basis of development of

something brand new.

CHAPTER 3 : OPPORTUNITY ANALYSIS

Definition of entrepreneurial opportunity

Situations in which new product, services and processes can be

introduced and sold at greater than the cost of production

• Opportunities are an integral component of the

entrepreneurial process
 • Entrepreneurial opportunities are defined as situations in
which new products, services and processes can be
introduced and sold at greater than the cost of production
According to Bruce R. Barringer and R. Duane Ireland, the entrepreneur must hit the
"window of opportunity" for which the opportunity exists.
a) Explain the concept of "window of opportunity".(6 marks)
• Often when referring to opportunities, the term “window of opportunity” is used
• The entrepreneur must hit the “window of opportunity” for which the opportunity exists
• Window of opportunity is defined as that too often short period of time during which an
opportunity must be acted on or missed
• It also describes the time period in which a firm can realistically enter a new market
• The “window of opportunity” is deemed to be “open” or “close” to denote the degree of
attractiveness or exploitation possibilities at a particular time
• The term “open” refers to the opportunity lending itself to be exploited at that time
because it has value and potential for wealth creation
• The term “close” refers to the opportunity potential diminishes due to it being exploited
by another entrepreneur or at that period of time has become out-of-date or obsolete

Characteristic of an Attractive Opportunity

 Timely
 Solvable
 Important
 Profitable
 Context
b) Identify and explain four (4) characteristics of an attractive opportunity.(8 marks)
• Timely
- a current need, unmet demand or problem (e.g. vaccine for bird flu, drugs to prevent obesity)
• Solvable
- a problem that can be solved in the near future with accessible resources (e.g. a cure for
cancerous diseases, a more efficient public transport to reduce congestion and traffic jams)
• Important
– The customer deems their problem or need important to them (e.g. energy-saving air
conditioner or petrol saving devices that work)
• Profitable
– the customer will pay for the solution and allow the enterprise to profit (e.g. security products,
multi function printers)
• Context
– a favorable regulatory and industry situation (e.g. on-line business transaction , genuine
investment schemes that promised high returns)

Evaluate the opportunity

Internal Factors External Factors

Capabilities Market

Resources Financial

Interest technical

• Capabilities • Market
• the ability or quality – involves determining
(knowledge, the size of the market
experience, and skill) and
necessary to develop customers
the business venture • Financial
• Resources – involves determining
• include financial, the costs to be
physical, and human incurred in
resources consistent developing the
with the magnitude of business venture
the business venture • Technical
• Interest – involves determining
• the will, commitment, the requirements to
and passion to pursue proceed with the idea
the business venture that include
 machineries, raw
materials, the
processes and
infrastructure

CHAPTER 4: FEASIBILITY STUDY

Definition Feasibility Study

Preliminary evaluation of a business idea, conducted for the

purpose of determining whether the idea is viable or worth
pursuing

• A feasibility study is the preliminary evaluation of a business

idea, conducted for the purpose of determining whether the
idea is viable or worth pursuing.

• Feasibility study takes the guesswork out of the business

launch and provides an entrepreneur with a more secure
notion that a business idea is feasible or viable.
 • Normally a feasibility study will be conducted to determine
the viability of an idea before proceeding with the
development of the business.

Purpose

provide a thorough examination of all issues and assessment

of probability of business success
give focus to the project and outline alternatives
narrow business alternatives

surface new opportunities through the investigation process

identify reasons not to proceed

provide quality information to decision making

 A feasibility study is the preliminary evaluation of a

business idea, conducted for the purpose of determining

whether the idea is viable or worth pursuing.

 Feasibility study takes the guesswork out of the business

launch and provides an entrepreneur with a more secure

notion that a business idea is feasible or viable.

 Normally a feasibility study will be conducted to

determine the viability of an idea before proceeding with

the development of the business.

Composition
Is there a demand for Determination of
the product? market opportunities
and risks
Who else are producing
similar products? Analysis of the
 market
organizational
technical
financial

CHAPTER 5 :TECHNOLOGY BASED BUSINESS IDEA BLUEPRINT

Outline

Coverpage

Table

The body of business blueprint

1. EXECUTIVE SUMMARY
2. PRODUCT OR SERVICE DESCRIPTION
3. TECHNOLOGY DESRIPTION
4. MARKET ANALYSIS AND STRATEGIES
5. MANAGEMENT TEAM
6. FINANCIAL ESTIMATES
7. PROJECT MILESTONES
8. CONCLUSIONS
9. APPENDICES

b) Discuss the body of a technology-based business idea blueprint to eventually

commercialize this new discovery. (10 marks)
OVER PAGE
TABLE OF CONTENTS
THE BODY OF BUSINESS BLUEPRINT
1. EXECUTIVE SUMMARY
2. PRODUCT OR SERVICE DESCRIPTION
3. TECHNOLOGY DESCRIPTION
4. MARKET ANALYSIS AND STRATEGIES
5. MANAGEMENT TEAM
6. FINANCIAL ESTIMATES
7. PROJECT MILESTONES
8. CONCLUSIONS
9. APPENDICES

CHAPTER 6: NEW PRODUCT DEVELOPMENT

Definition of new product

The process by which entrepreneur designs and creates new

product or service that will be sold to customers

Defining new product

Completely new product

• New-to-the world products

– The first of its kind (new inventions)

– Create new market

• New to the firm (new product lines)

– New to the company but not new to the marketplace

 Signicant improvement

o Addition to existing lines

 Subsets to the new product lines

 Perhaps targeted to different market segments

o Improvements and revisions to existing products

 New products to replace existing products with

cosmetic and functional enhancements

o Cost reductions

 Offer no new benefits to the consumer other than

possibly reduced price

 Provides enormous added-value to the firm

(financial rewards too)

o Repositioning

 New applications to existing products

 More to do with consumer perception rather than

technical development

Product development process

R&D
– helps company to response to market changes more
effectively
– understand the attitudes of customers towards the new
technology that is going to be introduced

Product design
• Product design refers to the conceptual translation of a new
product idea or concept
• It includes design of the product and its architecture
(physical design), artistic design (aesthetics) as well as the
required parameters to satisfy the market needs
• When designing the product, the basic product performance
criteria must be taken into consideration. This includes:
• Performance
• The main characteristics of the product or services
• Reliability
• The consistency of performance and dependability
• Safety in use
• Risk of injury or harm
• Durability
• The useful life of the product
• Special features
• extra characteristics

Concept testing
• Concept testing is the initial test for most new product
designed
• It involves the process of using quantitative and qualitative
methods to evaluate consumer response to a product idea
prior to the introduction of product to the market
 • It involves showing a preliminary description of the product
or service idea to prospective customers to gauge customer
interest and purchase intent
• If strong acceptance is found, the next step will be the
preparation of the prototype
• The main purpose of concept testing are:
• To choose the most promising alternative from a set of
alternatives
• To get an initial notion of the commercial prospects of a
concept
• To find out who is most interested in the concept
• To indicate what direction further development work
should take
Build prototype
• A prototype is the first physical depiction model of the new
product or service
• It is usually in a rough or tentative mode
• This model has the essential features of the proposed
product or services but the model is open to modification
• Prototypes can be used to elicit comments from designers
and users to learn more about the product
• One of the objectives of having prototype is it permits
usability testing

Test marketing
• Test marketing is usually carried out prior to a full-scale
launching of a new product
• In test marketing, the new developed product will be
introduced to a representative sample of population to
assess the market’s reaction
• The purpose of carrying out test marketing is to predict sales
and profits from a major product launch
Commercialization

CHAPTER 8 : COMMERCIALIZATION OF NEW TECHNOLOGY-

BASED PRODUCT

Option to commercialize R&D

1. Outright safe of the R&D output before securing IP

2. Get into licensing agreement with established private
organization after securing IP
3. Get into Assignation agreement with buyer
4. Spin-off starting a new venture from within the established
research organization
5. Spin-out by starting a new venture independent of the
research organization where the new technology-based
product was developed
Risk of a new venture

TECHNOLOGICAL UNCERTAINTY

STRATEGIC UNCERTAINTY

UNCERTAINTY IN FIRST TIME BUYERS

1. Technological uncertainty is associated with:

– To determine order winning product configuration.

– To determine the most efficient production technology
 – To determine the level of difficulty to develop this
technology.
2. Strategic uncertainty
– New products are often characterized by the absence of
a proven marketing strategy. Hence firm needs to
utilize more resources in order to ensure success.
3. Uncertainty in first-time buyers
– Customers of a new venture normally are first time
buyers. The marketing task is to substitute what buyers
used to purchase and to encourage these buyers to
make initial purchase of the new products.
–
Technology life cycle
 The s curve of technological process

Technology progresses through a three-stage technological life

cycle (TLC):

1. The new invention period known as the embryonic stage.

  The new invention period is characterized by a period of
slow initial growth. This is because experimentation and
initial problems are worked out of the system.

2. The technology improvement period is characterized by

rapid and sustained growth. also known as the growth stage.

3. The mature technology period or maturity stage.

 The mature technology period starts when the upper

limit of the technology is approached and progress in
performance slows down. This occurs when the
technology reaches its natural limit.

 The technology become vulnerable when technological

substitution takes place or when the technology
becomes obsolete. That is when better new technology
emerges.

 Investment in the on going technology at this stage

may be riskier even though some may thrive in the
declining technology.

CHAPTER 9 : FINANCING TECHNOLOGY VENTURE

The need for finance

to determine start up cost

shortfalls of revenues over expenses
fixed assets,replacement
 growth
Entrepreneurs involved in technology-based ventures could face major challenges for
financing their business ventures.
a) Describe the four (4) reasons for the need to finance their business ventures.(8 marks)
To determine start-up cost:
The initial investment into the business might include:
One-time start-up costs (such as: research & development costs, incorporation
costs, rental & utility deposits, fixtures & equipment, and renovation); and
Initial working capital (inventory, rent, utility, advertising, and office supplies).
Shortfalls of revenues over expenses:
Even before the business becomes profitable, the entrepreneurs will still need to pay
the suppliers and fixed costs of running the business.

Fixed assets replacement:

Eventually, the fixed assets will break down or become obsolete and the
entrepreneurs will have to reinvest in new fixed assets.
Growth:
Expansion of current operations may mean additional costs related to such costs as
advertising, payroll, warehousing, or research and development.
Stages of financing

pre- commercializa
pre R&D commercialization tion
growth
and R&D
&
expansi
b) Any commercialization effort requires capital. Discuss the different types of financing at the
different stages of product development. (16 marks)
Generally, funds for technology ventures are raised in stages. Staging of financing allows
investors to deal with the uncertainty of the validity of the idea and the untested nature of the
management in the company.

Financing stages are typically tied to the following stages of business development:
• Research & Development: Pre-seed financing
• Pre-Commercialization: Seed financing
• Commercialization: First round financing
• Growth & Expansion: Second & Third round financing

Pre-Seed Financing
A relatively small amount of capital is provided to an inventor or entrepreneur to prove a
specific concept for a potentially profitable business opportunity that still has to be
developed and proven. The funded work may involve product development (as opposed
to "pure" research), but it rarely involves initial marketing.
Seed Financing
• Financing is provided to newly formed companies for use in completing product
development and in initial marketing. These companies may be in the process of being
organized or may have been in business a short time.
• In either case, products have yet to be sold commercially. Generally, such businesses
have assembled key management, have prepared their initial business plan, and have
conducted at least initial market studies.

First-Round Financing
 Financing is provided to companies that have expanded their initial capital and now
require funds to initiate commercial-scale manufacturing and sales.

Second-Round Financing
 Working capital is provided for the expansion of a company which is producing and
shipping products and which needs to support growing accounts receivable and
inventories. Although the company clearly has made progress, it may not yet be showing
a profit at this stage.

Third-Round Financing
 Funds are provided for the major expansion of a company which has increasing sales
volume and which is breaking even or which has achieved initial profitability. Funds are
utilized for further plant expansion, marketing, and working capital or for development of
an improved product, a new technology, or an expanded product line.
CHAPTER 10 : GROWTH AND EXIT STRATEGIES
 New Market development diversification

market
Market penetration Product development
existing

existing new

product

• Ansoff (1965) developed a growth strategy matrix based on:

 Existing or New Products

 Existing or New Markets

• Based on the two dimensions of product and market , Ansoff

identified four main growth strategies:

 Market Penetration

 Market Development

 Product Development

 Diversification
Exit strategies
REFRENCHMENT DIVESTMENT
LIQUIDATION HARVESTING

 Retrenchment occurs when a business regroups by

reducing cost and asset to reverse declining sales and
profits. Retrenchment include activities such as:

 Selling off assets to raise needed cash

 Pruning product line
 Closing down businesses that are performing poorly
 Reducing the number of employees
 Declaring bankruptcy
• Retrenchment is best used when:
• A business has distinctive competencies but has failed to
meet its objectives
• A business is plagued by inefficiency, low profitability, and
poor employee morale
• When a business has grown so large so quickly that major
reorganization is needed
• Divestment, sometimes also termed as divestiture, is a
strategy to end a business
• This is done cautiously by selling part of the venture for cash
to be reinvested in a more promising business
• Divestiture can be used when:
• A business has pursued a retrenchment strategy but
failed to accomplish needed improvements
• A business needs more resources to be competitive
than what the company can provide
• When one particular division is responsible for a
business’s overall poor performance
 • When a division does not fit well with the rest of the
business
• Liquidation involves the selling all of a company’s assets
for their tangible worth. Liquidation is a recognition of
defeat
• Liquidation is undertaken when both retrenchment and
divestiture have been unsuccessful
• Liquidation enables stockholders to minimize their losses
• Liquidation may be a good strategy when:
• There is a need to orderly raise cash to pay off creditors
• The organization seeks to minimize losses
• When an organization’s only other alternative is
bankruptcy
• Harvesting is a strategy pursued by a business in an effort
to cash out and harvest the profit
• In contrast to retrenchment, divestiture and liquidation,
harvesting is associated more with the owners’ personal
reasons for terminating the venture. These reasons may
include:
• Boredom and burnout
• Lack of operating and growth capital
• No heirs to leave the business to
• Desire for liquidity
• Aging and health problems
• Desire to pursue other interests
• By pursuing the harvesting strategy, business owners could
sell out the venture for cash at market value