I can honestly say this was one of the most interesting business classes I have ever taken (and I’ve taken a LOT of them!) In undergrad, I took all of my classes with other classmates who were also majoring in business – no one had any real world experiences to bring to the table, so we all were learning the same thing at the same time.  This class was the first business class I’ve taken with the majority of students having an engineering background, and I really enjoyed the different aspects this brought to the classroom.  I enjoyed hearing the comments that people made and the different perspectives that people had on certain topics.

In terms of the class itself, I enjoyed many aspects of it.  For a four hour class, I was surprised at how quickly it went by every week.  I enjoyed the discussions we had about the topics we were learning about and the case studies.  I thoroughly enjoyed Professor Schufeld’s (sp?) visit – I felt that he explained finance in way that was very easy to learn for people who have never taken a finance class before.  I also really enjoyed the first book report – I liked that we were able to pick a book that interested us and write about it in whatever way we wanted.  I was also extremely pleased with my business plan group – I thought I was matched up with people who all complemented each others’ abilities and worked very well together. 

I didn’t particularly enjoy the textbook report, mainly because I felt it was very difficult to write a 5 page paper on an entire textbook without much guidance as to what the paper was supposed to contain, especially when the paper was such a substantial piece of our grade.  Although I liked the freedom to write about whatever I wanted to, I was very nervous to receive my grade because I had NO idea if I was on the correct path or not.  I also did not like the first finance lecture – I felt that it was way too focused on T accounts and journal entries and not focused enough on the financial statements that we were originally supposed to create. 

Overall, I was very pleased with the information we learned and the way class was run.  Thanks Shari!

The Closing Bell Pub’s market size depends on four different cuts of data – 1) demand, 2) addressable market, 3) realistic opportunities vs competition and 4) targeted selection of “winnable” market opportunities. 

First, I will discuss demand.  The alcohol industry seems to be practically inelastic – throughout the toughest economic times… downturns, recessions, even depressions, alcohol sales and consumption don’t seem to budge.  A Gallup poll done in 2010 shows that 67% of Americans consume alcohol, which is the highest rate since 1985.  Of those 67%, beer proves to be the most popular, with 41% chosing it over wine and liquor.    For these reasons, we feel that a brewpub will be successful business to start.

Second, addressable market is in The Closing Bell Pub’s favor as well.  Our brewpub is going to be located in the financial district in Boston, MA.  There are 4.5 million people living in the Greater Boston area, and 3.1 million of those people consume alcohol.  With an addressable market of 3.1 million people, we are confident that The Closing Bell Pub will win enough of the market share to turn a generous profit.

Third, we feel that The Closing Bell Pub will have realistic opportunties versus our competition.  Out of the 180 other bars in the Boston area, there are none that offer a similar interactive bar experience, which is our main competitive advantage over other bars in the area.  Aside from that, we are confident that our vast selection of beer as well as our delicious housebrews are going to make us stand out as the premier bar in Boston. 

Lastly, our target market is working professional males, age 24 – 34 who make an annual salary of $50,000 or more.  According to the 2010 Gallup Poll, this is the highest percentage of beer drinking individuals on the East Coast.  In the Greater Boston area, there are 955,000 indnviduals who fit the profile of our target market.  We are confident that The Closing Bell Pub will draw in members from our target market by offering high quality beers at reasonable, ever-changing prices. 

 In conclusion, We feel that we have a favorable market to open up The Closing Bell Pub in Boston’s financial district for the reasons mentioned above.

 

The idea of entrepreneurship within a large corporation initially sounds very appealing to many companies. There is an opportunity for new growth, the possibility to leverage current assets and synergies between existing and new businesses, a chance to generate excitement among shareholders and new talent, and the potential to hedge against competitive and disruptive threats. The benefits also go the opposite way – the new firm can already have an established market presence by branding itself as a member of the existing corporation, obtain resources for R&D, manufacturing and technology, and have access to the current supply chain and distribution channels.

Although initially appealing, entrepreneurship within an existing corporation can generate many challenges that could potentially outweigh the benefits.

First, it presents many strategic challenges for the startup. If the startup is relying on resources from the corporation, it could take a back seat to funding other near-term projects that the corporation is focusing on, or it could succumb to the cyclic nature of some industries and have to wait until an economic boom until funds are shared. Another strategic challenge is that corporations often view their startups the same way they view their current businesses, which could directly conflict with the objectives of the startup.

Second, the startup firm could experience challenges relating to incentives or organizational activities. Many large corporations incentivize their leaders to be risk adverse and focus on near-term projects which are almost guaranteed wins for the corporation. This mentality could prove difficult for a startup, whose goals are almost always long term in nature, and investing in a startup involves a significant amount of risk. In addition to the risk avoidance, the organizational position of the startup can be a difficult decision to make, and can often times negatively affect both sides. On one hand, if the startup is positioned under a current business unit or segment of the company, it may be forced to operate under the same guidelines as the established firm, but on the other hand, if it is left to operate independently it could become isolated from the organization and have misaligned objectives.

Lastly, corporate entrepreneurship creates challenges with decision making. When assessing a new opportunity, financial metrics such as discounted cash flow and net present value are often used, which can underestimate the value of a new business. They cause management to make decisions based on timeframes that are too short to account for successful implementation of a new business.

Even though these significant challenges exist, there are ways to potentially resolve the problems. First, management practices have to shift from a core-based mindset, to one in between core and startup. Instead of having hard-pressed financial goals, management can have a different set of goals for their new businesses, eventually evolving to the financial goals once the firm is more established. Another way to attempt to resolve these problems is to separate the core business from the startup business, while still keeping the essential synergies intact. Having the startup business focus on completely new products, while having the core business focus on innovations to existing products could prove to be beneficial in the long run. Both the core and startup companies have the entrepreneurial mindset, but one focuses on more “disruptive” innovations, while the other focuses on minor upgrades. The last resolution is to ensure that the startup venture receives the resources it needs from the startup firm.

In conclusion, an existing firm may experience many challenges while extending an entrepreneurship arm, but if both parties are willing to cooperate, it is possible to make these startups successful.

Pinterest is the new buzz in social media.  It doesn’t have as many followers as Facebook or Twitter, but the number of users is steadily increasing (the number of pageviews increased by 2,000% since June of 2011), especially among the female population.  After seeing what Facebook and Twitter have done for businesses, I was curious about the uses of Pinterest to promote a company, so I found a few articles that touch on this subject.

 

Pinterest is a social media tool where you create boards on which you can “pin” pictures onto for things you are interested in, such as recipes, home décor, jewelry, new products, travel, etc.  For example, one of my Pinterest boards is devoted to interior decorating, where I post pictures of things I would like to someday do to my house (i.e. paint colors, furniture, decoration, etc).  Each user can have multiple boards and multiple pins on each board, which their friends can follow and “repin” if an idea appeals to them.  Pinterest, in essence, is a place to discover new products.

 

In class, we discuss how Google uses prior search history to determine what kind of advertisements to show its users.  Pinterest is in a similar, if not better, situation where it knows exactly what each user likes and wants based on their pins, so they can advertise specific stores, and even specific products.  If I had a pin on a board because I liked the paint color “Storm” by Benjamin Moore, the advertising could be so advanced as to have an add linking to that exact color on BenjaminMoore.com so all I had to do was hit “Checkout” and it would be on my doorstep in a matter of days.  

 

In addition to the advertising potential, Pinterest can be a dream come true for new small businesses.  They can create boards for items they sell such as “New Products”, “Sale Items” or “Insider Trends”, which will show up on their followers news feeds.  They could encourage users to repin their items by offering small incentives, so when someone repinsone of their products, it will show up on all of their followers news feeds and create a very inexpensive way of advertising.

 

I believe that we will start to see more buzz around Pinterest in the near future.  With the clear advantages it has for advertisers and small businesses, I wouldn’t be surprised if Pinterest became “the next big thing” in social networking.

When I first started reading this article and saw when it was published (2001), I was skeptical about the relevance it was going to have in this day in age. With the internet now being a necessity in so many of our lives, I wondered how the article was going to possibly convince me that the internet actually weakens industry profitability while also creating a greater need for strategy. I was quickly surprised at how fast my viewpoint changed.

Before I get into the 5 forces, I wanted to touch on an interesting concept that I hadn’t thought about before I read this article. As a finance professional, I am always interested in the financial ramifications of such a giant shift in the way business is conducted. Many people automatically assume that the internet drastically improves a companies’ profitability due to the sheer volume increase of customers. This article brought up a few good points refuting that statement – mainly that since many of the strategic differentiators of a company are now obsolete with the internet, the customer is more focused on price, which actually erodes margins. Although revenues may increase significantly, total EBIT and ROS may stay the same or even decrease.

While looking at Michael Porter’s Industry Structure model, it is apparent that the internet has a negative effect on many of these forces. Take the bargaining power of suppliers as an example. Prior to the internet, a company would carefully research and choose suppliers based on their qualifications, location, etc, putting the power in hands of the company. With the implementation of the internet, power has shifted to the suppliers now that information is easily accessible and virtually all companies have equal access to suppliers. You can also see the shift in power from the company to the suppliers when we look at the direct access the customer has to the suppliers, therefore eliminating the need for a “middleman”, which is in many cases, the company.

Another force to examine is barriers to entry. Before we used the internet as a primary way to shop, we used to physically visit stores, which created a need for a sales force in those stores, a physical location to view the products, etc. The internet has now made it so that you do not even have to have a location for your company – you can run an online business from your living room, which significantly decreases the amount of capital needed to run a business. Once costs to operate a business decrease, the amount of new entrants will surely increase.

Lastly, I wanted to touch on rivalry among existing competitors. Now that the internet has reduced costs needed to run a business and expanded the geographic scope, you have many new entrants into the marketplace, therefore creating additional competition. With the increased number of new competitors, the need for a differentiation strategy becomes more and more essential. It becomes extremely difficult to compete on price alone, with so many companies willing to operate with paper thin margins just to generate revenue, so the company needs to have something else that makes them stand out.

In conclusion, although the internet has done a lot of good for the marketplace, there is a deeper level that we need to examine to determine WHY certain companies on the internet have made it, and why others have not.

The term “creative abrasion” was coined by Jerry Hirshberg, Nissan Design International’s founder and president, and refers to the bringing of two people or teams together with different thought and work styles to collaborate in hopes of generating ideas that rub against each other in productive ways.  Hirshberg also called this idea “hiring in divergent pairs”, where he hires two people to work together who are polar opposites of each other.

There are pros and cons to the creative abrasion concept.  In theory, the idea makes sense – if two people with very different opinions converge on a project, the result will be a mix of the two mindsets, which probably wouldn’t have been developed if only one of the team members was working on it.  Creative abrasion creates new ideas and concepts while encouraging creativity. 

In addition to coming up with new ideas, another pro to creative abrasion is forcing each teammate to constantly think outside of their comfort zone.  The dialogue between teammates requires each party to truly listen and understand the other viewpoints.  Eventually, this “out of the box” thinking will stick, and the result will be more creative ideas.

Although creative abrasion may seem like a great idea, there is some truth in the “abrasion” piece of the phrase.  When two people or teams with very different viewpoints work together, conflicts are bound to arise.  It may be difficult for some teams to see past this obstacle and embrace the diversity as they should. 

Another potential issue with this concept is that in order for it to work, all parties have to have respect for their teammates and be willing to consider ideas other than their own, which isn’t always the case.  Some people have the “my way or the highway” mindset, which doesn’t mix well with creative abrasion.

Personally, I am in favor of creating a creative abrasion environment… in the right setting.  As I mentioned before, if the personality of the participants plays a huge role in whether creative abrasion works or not.  As long as the individuals involved are willing to listen to each other and respect one another’s opinions, I truly believe creative abrasion can create amazing ideas.

Being a first mover to market refers to the first significant company to enter a previously untouched market.   Many people assume that being first to market results in an automatic success – there is no existing competition and you have the authority to make all the rules, however, there are many risks involved in being first to market as well.

The first entrant to a market gets to call the shots – they get to dictate price, they have no competitors, they have the technological advantage / intellectual property rights to the product, all which can result in monopoly-like market share and sky-high margins.  

The first mover sets standards for many aspects of the product such as quality and price, and if the right balance is achieved, they could create barriers to entry strong enough to keep the potential competition out for a significant amount of time.  Also included in this is establishing a reliable supply chain and distribution network, which puts the power in the hands of the first mover.  Being first to market also allows the company to control the branding of the product or market and therefore create customer loyalty. 

While all of these advantages may seem very appealing, there are also significant risks associated with being a first mover, which can sometimes outweigh the benefits.

One of the main disadvantages is the financial risk associated with being first to market.  In addition to the research and development costs needed to enter into a new market or develop a new product, significant money needs to be spent on advertising the product and educating customers about what the product does and what its’ benefits are over other substitutes.   In addition to educating customers, you also need to educate your supply chain on why your new product will be a success and why they should include your product in their business model. 

Sometimes being a spectator in a new market can actually make you more successful in the long run.  You have the ability to watch where the mistakes are made, how the market is evolving and observe niches in the market where you could potentially focus your business on in the future. 

In conclusion, there are risks and benefits of being a first mover, and there is no defined answer as to whether a first mover or a first follower has the clear advantage.