MBA 622 FINAL STUDY GUIDE
Startup resources include: - Answers -people, physical assets, financial resources, and
intellectual resources
Resource decisions are related the four key activities of the business: - Answers -the
value proposition or solution, distribution channels, customer relationships, and revenue
generation
Risk can be divided into three broad categories: - Answers -1. Deal-killer risks
2. Path-dependent risks
3. Low hanging fruit with high ROI
Deal-killer risks - Answers -existential risks that might prevent the business from
launching in the first place
Path-dependent risks - Answers -risks that arise from a decision to take what turns out
to be the wrong path
Low-hanging fruit with high ROI - Answers -risks that are easy and cheap to overcome;
and if you do overcome them, there is great reward
Commodity - Answers -the only feature differentiating the product or service from those
offered by competitors is price
Common pricing strategies at startup: - Answers --premium pricing
-price skimming
-demand based pricing
-captive product pricing
-psychological pricing
-product bundle pricing
-geographical pricing
Premium pricing - Answers -uses a high price to reflect a unique product/service and a
significant competitive advantage
Price skimming - Answers -starts with a high price to capture uniqueness and
competitive advantage. as new competitors enter the market, the price drops to stay
ahead of the competition
Demand-based pricing - Answers -Find out what customers are willing to pay for the
product and price it accordingly
,Captive product pricing - Answers -where the entrepreneur's products has
complements, charge a low price for a source product (such as a printer) and a
premium product for consumables (such as ink cartridges)
Psychological pricing - Answers -create a complex pricing structure by combining
multiple products and services into one package (ex: added car feature bundles)
Product bundle pricing - Answers -In a channel with many intermediaries (distributors,
retailers), the final price to the consumer or end user must be tolerable, given all the
markups along the value chain. Compare what the market will bear with the cost of
getting a product to market (ex: buying phone and phone service together)
Geographical pricing - Answers -used where there are price variations in different
geographical locations where the product is sold
customers recognize several prices for one product - Answers --standard price (the
price normally paid)
-sale price (the discounted price paid for specials)
-relative price (the price of the item compared to the price of a substitute product)
Simple products - Answers -those who price is transparent, or easily identified, are
most subject to downward pricing pressure
Complex products - Answers -(those that are bundled or modular) are more difficult to
compare directly across companies, so they can command a higher price.
Switching costs - Answers -the time and money it takes to change to a new product,
that may influence willingness to buy
Reference value - Answers -the price as compared to competing products aka the
expected price
Differentiation value - Answers -the customer's perception of price
maximum price you can charge for a product - Answers -reference value +
differentiation value
Economies of scale - Answers -cost of producing a product is usually tied to how many
products you can sell; the higher the volume, the lower the cost
Sensitivity analysis - Answers -financial feasibility test by creating scenarios to consider
the impact of changes
Investor interests in a new venture has four principal concerns: - Answers -1. rate of
growth
2. ROI
, 3. degree of risk
4. protection
Proofs of concept (POC) - Answers -you can provide evidence that customers in
sufficient numbers want what you're offering
Types of market evaluation - Answers --TAM (total available market)
-SAM (serviceable available market)
-SOM (serviceable obtainable market)
TAM (total available market) - Answers -total market size; your potential at scale
SAM (serviceable available market) - Answers -your segment of the market - the
portion of the market your business is focused on
SOM (serviceable obtainable market) - Answers -the share of the SAM you can
achieve; your short term sales potential
SOM/SAM = market share
intermediation - Answers -using a middle man; adding more steps to the value chain
disintermediation - Answers -reducing the amount of steps in the value chain (by
removing intermediaries)
a business captures value when it is adequately capitalized and has: - Answers --highly
regarded investors
-an experienced management team
-customers
-a unique technology, product, or service
-the ability to gradually innovate
-a rapidly expanding market
Once the new venture has passed the startup stage, additional value is created by
____. - Answers --its position in the market
-significant customers
-effective operating systems
-a strong gross margin
-positive cash flow
-a high return on equity
an industry market analysis identifies the environmental context for your business as
either - Answers -an unattractive industry or an attractive industry
Startup resources include: - Answers -people, physical assets, financial resources, and
intellectual resources
Resource decisions are related the four key activities of the business: - Answers -the
value proposition or solution, distribution channels, customer relationships, and revenue
generation
Risk can be divided into three broad categories: - Answers -1. Deal-killer risks
2. Path-dependent risks
3. Low hanging fruit with high ROI
Deal-killer risks - Answers -existential risks that might prevent the business from
launching in the first place
Path-dependent risks - Answers -risks that arise from a decision to take what turns out
to be the wrong path
Low-hanging fruit with high ROI - Answers -risks that are easy and cheap to overcome;
and if you do overcome them, there is great reward
Commodity - Answers -the only feature differentiating the product or service from those
offered by competitors is price
Common pricing strategies at startup: - Answers --premium pricing
-price skimming
-demand based pricing
-captive product pricing
-psychological pricing
-product bundle pricing
-geographical pricing
Premium pricing - Answers -uses a high price to reflect a unique product/service and a
significant competitive advantage
Price skimming - Answers -starts with a high price to capture uniqueness and
competitive advantage. as new competitors enter the market, the price drops to stay
ahead of the competition
Demand-based pricing - Answers -Find out what customers are willing to pay for the
product and price it accordingly
,Captive product pricing - Answers -where the entrepreneur's products has
complements, charge a low price for a source product (such as a printer) and a
premium product for consumables (such as ink cartridges)
Psychological pricing - Answers -create a complex pricing structure by combining
multiple products and services into one package (ex: added car feature bundles)
Product bundle pricing - Answers -In a channel with many intermediaries (distributors,
retailers), the final price to the consumer or end user must be tolerable, given all the
markups along the value chain. Compare what the market will bear with the cost of
getting a product to market (ex: buying phone and phone service together)
Geographical pricing - Answers -used where there are price variations in different
geographical locations where the product is sold
customers recognize several prices for one product - Answers --standard price (the
price normally paid)
-sale price (the discounted price paid for specials)
-relative price (the price of the item compared to the price of a substitute product)
Simple products - Answers -those who price is transparent, or easily identified, are
most subject to downward pricing pressure
Complex products - Answers -(those that are bundled or modular) are more difficult to
compare directly across companies, so they can command a higher price.
Switching costs - Answers -the time and money it takes to change to a new product,
that may influence willingness to buy
Reference value - Answers -the price as compared to competing products aka the
expected price
Differentiation value - Answers -the customer's perception of price
maximum price you can charge for a product - Answers -reference value +
differentiation value
Economies of scale - Answers -cost of producing a product is usually tied to how many
products you can sell; the higher the volume, the lower the cost
Sensitivity analysis - Answers -financial feasibility test by creating scenarios to consider
the impact of changes
Investor interests in a new venture has four principal concerns: - Answers -1. rate of
growth
2. ROI
, 3. degree of risk
4. protection
Proofs of concept (POC) - Answers -you can provide evidence that customers in
sufficient numbers want what you're offering
Types of market evaluation - Answers --TAM (total available market)
-SAM (serviceable available market)
-SOM (serviceable obtainable market)
TAM (total available market) - Answers -total market size; your potential at scale
SAM (serviceable available market) - Answers -your segment of the market - the
portion of the market your business is focused on
SOM (serviceable obtainable market) - Answers -the share of the SAM you can
achieve; your short term sales potential
SOM/SAM = market share
intermediation - Answers -using a middle man; adding more steps to the value chain
disintermediation - Answers -reducing the amount of steps in the value chain (by
removing intermediaries)
a business captures value when it is adequately capitalized and has: - Answers --highly
regarded investors
-an experienced management team
-customers
-a unique technology, product, or service
-the ability to gradually innovate
-a rapidly expanding market
Once the new venture has passed the startup stage, additional value is created by
____. - Answers --its position in the market
-significant customers
-effective operating systems
-a strong gross margin
-positive cash flow
-a high return on equity
an industry market analysis identifies the environmental context for your business as
either - Answers -an unattractive industry or an attractive industry
