Chapter 8- Entrepreneurship lecture International University- HCMcity

1. Technology Ventures: From Idea to OpportunityChapter 8: Summary
Even if you are on the right track, you’ll
get run over if you just sit there
Will Rogers
What forms do new businesses take and what are corporate
ventures?
The appropriate legal and organizational format used to organize a new
venture will vary according to several factors such as context, people,
legal and tax consequences, and cultural norms. New ventures can range
from small businesses or consulting services to high-growth, high-
potential enterprises. Other organizations start out operating in a niche
market and grow into a broader one. An important contrast to these
independent ventures is the corporate new venture. It emerges within
larger existing enterprises and is granted autonomy so it can fulfill its
promise.
Summary

2. Technology Ventures: From Idea to OpportunityChapter 8: Organizational Forms
Organizational Forms:
•Independent venture: new venture not owned or controlled by an
established corporation.
•Corporate venture: new venture started by an existing corporation.
•Nonprofit organization: Corporation, member association, or charitable
organization that provides a service but does not earn a profit, nor does
it distribute dividends or payments to its employees, donors, or
volunteers. Today, these organizations are often called not-for-profit.

3. Technology Ventures: From Idea to OpportunityChapter 8: Organizational Forms
Organizational Forms (continued):
•Family-owned: includes two or more members of a family who hold
control of the firm.
•Franchise: legal arrangement in which the owner of a business format
has licensed it to an individual or local firm, called a franchisee. The
franchisor is the organization that owns and operates a firm that
controls the business format and its associated trademarks and logo.

4. Technology Ventures: From Idea to OpportunityChapter 8: concept
Imitation or replication of a successful enterprise
can lead to success
Examples:
Wal-Mart
Starbucks
Williams-Sonoma

5. Technology Ventures: From Idea to OpportunityChapter 8: Types of New Business Ventures
Types of New Business Ventures:
Small business is a sole proprietorship, a partnership, or a
corporation owned by a few people.
Niche business seeks to exploit a limited opportunity or market
to provide the entrepreneurs with independence and a slow-
growth buildup of the business.
High-growth business aims to build an important new business
and requires a significant investment to start up.

6. Technology Ventures: From Idea to OpportunityChapter 8: Types of New Business Ventures
Types of New Business Ventures (continued):
Radical innovation business seeks to commercialize an important
new innovation and build an important new business.
Nonprofit organization is a corporation or a member association
initiated to serve a social or charitable purpose.
Corporate new venture (CNV) is that started by an existing
corporation for the purpose of building an important new business
unit as a solely owned subsidiary or a spin-off as a new independent
company.

7. Technology Ventures: From Idea to OpportunityChapter 8: Table 8.1
Type
Revenue
Growth
Planned
for Most
Likely
Size
Description Objective
1.Small
Business
Slow Small Sole proprietorship, and
family business
Provide independence and wealth to
partners by serving customers
2.Niche Slow to
Medium
Small to
Medium
Slow growth of corporation Provide steady, lower-risk growth, good
income
3.High Growth Fast Medium
to Large
Fast growth, needs large
initial investment
Important new business
4.Radical
Innovation
Fast Large Requires R&D and seeks
disruptive innovation
To commercialize an important innovation
5.Non-Profit
Organization
Slow Small to
Medium
Serves members or a
social need
To serve a social need
6.Corporate
New Venture
Medium
to Fast
Large Independent unit of an
existing corporation
To build an important new business unit
or separate firm
The Six Types of New Ventures

8. Technology Ventures: From Idea to OpportunityChapter 8: Table 8.6
• Newness and Novelty of the Product Relative to the
Firm's Existing Products
• Independence or Semi-Autonomy from Existing
Corporate Structure
• High Potential for Significant Innovation
• Unique Entrepreneurial Team Leadership Capabilities
Characteristics of Corporate New Ventures

9. Technology Ventures: From Idea to OpportunityChapter 8: Table 8.7
Strengths Weaknesses
Ready access to capital May be subjected to a corporate
budget process
Access to capabilities of corporate
employees
Multiple control and review levels
Suppliers willing to help in the design
process
Limited autonomy
Emphasis on the marketing plan Limited access to strong
entrepreneurial talent
Gain from brand equity of parent firm Risk-reward may be less
attractive than for an independent
entrepreneur
Access to processes and technologies of the
parent
Limited to parent firm's
technologies and processes
The Strengths and Weaknesses of a Corporate New Venture

10. Technology Ventures: From Idea to OpportunityChapter 8: Table 8.7 continued
The Strengths and Weaknesses of a Corporate New Venture (cont.)
Strengths Weaknesses
Ready access to capital May be subjected to a corporate budget process
Access to capabilities of
corporate employees
Multiple control and review levels
Suppliers willing to help in
the design process
Limited autonomy
Emphasis on the marketing
plan
Limited access to strong entrepreneurial talent
Gain from brand equity of
parent firm
Risk-reward may be less attractive than for an
independent entrepreneur
Access to processes and
technologies of the parent
Limited to parent firm's technologies and
processes

11. Technology Ventures: From Idea to OpportunityChapter 8: Table 8.11
1. Identify and screen opportunities. Create a vision. Designate a venture
champion and an entrepreneurial team.
2. Refine the concept and determine feasibility. Prepare the concept and vision
statement. Draft a brief Business Plan Summary or Outline for review and
gathering support.
3. Prepare a complete Business Plan. Identify the person to lead the new venture.
4. Determine the best form of the corporate new venture: internal new venture
unit; spin-out, subsidiary, or internal project.
5. Establish the Corporate New Venture with talent, resources, and capabilities
transferred from the parent company.
The Five-Step Process for Establishing A Corporate New Venture

12. Technology Ventures: From Idea to OpportunityChapter 8: Exercise
A new firm plans to develop and offer a computer
design program for creating and machining hip
replacement joints. Describe the cluster this firm
should locate within. What sources of legitimacy
should it focus on? Should it outsource the
software programming of its design software
product?

13. Technology Ventures: From Idea to OpportunityChapter 8: Cluster
Cluster: Geographic concentration of interconnected
companies with an existing infrastructure system.

14. Technology Ventures: From Idea to OpportunityChapter 8: Table 8.4
The Characteristics for Innovation in a Cluster Setting
•High Quality Human Resources
•Research in Local Universities
•Availability of Investment Capital
•Representative Customers
•Suppliers and Compl3mentors
•Competitors
•Consultants, Attorneys, and Accountants

15. Technology Ventures: From Idea to OpportunityChapter 8: Principle
An important, vigorous new business venture can emerge
from a large firm when afforded the appropriate balance of
independence, resources, and people to respond to the
opportunity.

16. Technology Ventures: From Idea to OpportunityChapter 8: Venture Challenge
VENTURE CHALLENGE
1)Using table 8.1, describe the specific type of new
venture selected by your team.
2)Assuming your venture was developed as a
corporate venture, describe the advantages and
disadvantages of this approach using table 8.7

17. Technology Ventures: From Idea to OpportunityChapter 8: DVD Videos
DVD Videos
“Thinking about Sustainability for Non-Profit
Organizations”
Kavita Ramdas (Global Fund for Women)
“Classes of Innovations in the Product
Leadership Zone”
Geoffrey Moore (Mohr Dardon Ventures)