Question 1.

Intellectual Property

PART A) What is benefit on Intellectual Property rights?

Intellectual Property Rights provide protection against a competitor directly copying the idea.
This helps the entrepreneur to recover their costs in developing the idea. IP helps the business
maintain their long-term competitive edge. Registered IP ensures that entrepreneurs will get all
the financial benefits from their ideas. Continued revenue will ensure the firms survival.
Registered IP is an asset. It helps convince financial institutions to invest in a business, enabling
more money to be raised for development and gives consumers confidence that products meet
appropriate standards and quality. By being able to profit from their IP, entrepreneurs are
rewarded for taking risks and developing new innovations. They can invest profits in new
projects.
Ownership of the IP enables entrepreneurs to license or franchise ideas to others without risk.
This means entrepreneurs are able to expand the market for their products and services more
easily, and can increase revenue for the business.

PART B) Explain the meanings of types of Patent, Design, Trade Mark, Copyright?

1) What is a Patent?

Patent - A property right, limited for a specific term of years, that grants the owner certain
exclusive rights against third parties in relation to using, or doing other restricted acts in relation
to, the subject matter of the invention.

2) What is a Registered Design?

A property right, renewable for a finite period that grants the owner the exclusive right of use,
and to authorise others to use, particular design features of an article. It is a total right of
ownership to the appearance of a product or part of a product. It lasts for five years at first but
may be extended over four five-year periods up to a maximum of 25 years.
Registering a design provides further protection over any protection which may exist
automatically in the design. (Legal defence) A registered design is a property which, like any
other business commodity, can be bought, sold or licensed.

3) What is a Trade Mark?

(Registered) Trade Mark: A property right, renewable for potentially indefinite terms of years,
that grants the owner certain exclusive rights against third parties in relation to using registered
trade mark (or confusingly similar marks) in relation to particular goods and/or services. (Ex,
miss-leading people Channel)
The best way to protect a name or brand is by trade mark registration. A trade mark is a sign
which can distinguish your goods and services from those of other traders.
A sign includes, for example, words, logos, pictures or a combination of these.
You can use your trade mark as a marketing tool so that customers can recognise your products
or services.
4) What is Copyright?

Copyright - A property right under which the author of certain works has the right to authorise
or prevent copying of the work, making the work available to the public, or making an adaptation
of the work. Copyright © protects the people who create, produce or invest in creative work.
Such as Software
Copyright gives the creators of certain kinds of material rights to control ways their material can
be used. These rights start as soon as the material is recorded in writing or in any other way.
There is no official registration system.
The rights cover: copying; adapting; distributing; communicating to the public by electronic
transmission (including by broadcasting and in an on demand service);
Renting or lending copies to the public; and, performing in public.

Copyright protects original literary, dramatic, musical and artistic works, published editions of
works, sound recordings (including CDs), films (including videos and DVDs) and broadcasts.
Part B) Benefits of Intellectual Property Rights types to the organisation

Part C) Why an Enterprise Would Grant/Take a Licence over Intellectual Property

Sharing Risk: Where a licensor licenses the right to manufacture and sell products, the
licensor receives revenues from that licensing but does not take the risk of manufacturing,
promoting and selling those products. On the other hand, the licensee has the right to use the IP
without the expense and risk of the research and the costs of developing the product.

Revenue Generation: An owner of IP may commercialise the IP itself and may obtain
additional income by licensing the IP to someone else to commercialise it in a different field.

Increasing Market Penetration: An owner of IP may license another business to sell in

territories that the owner cannot cover.

Reducing Costs: A business may ‘buy-in’ innovation to reduce its research and development
costs.

Saving Time: A business may get its products or services to market more quickly by acquiring a
licence to use existing IP, instead of re-inventing the wheel (sometimes referred to as an
“engineering workaround”).

Accessing Expertise: By taking a licence, a business may tap into expertise that it does not
have in-house.

Obtaining Competitive Advantage: By acquiring a licence to use IP, a business may obtain
an advantage over its competitors.

Collaboration: Businesses may want to work together to develop new products and services.

Whenever the entrepreneur considers taking or granting a licence of any IP the first step should
be to assess the needs and objectives of their business and how licensing might help meet them.

Question 2. New Product Development

A) Describe Kotter’s Eight Stage Model for New Product Development

Stage 1 - Idea Generation

Directors and senior management define the product and markets areas and determine the
overall company objectives in terms of profit and ROI. New product ideas are obtained from
several sources such as customers, competitors, employees, distributors or agents, consultants,
inventors and senior management.

Stage 2 - Idea Screening

This stage involves screening previously generated ideas to evaluate the potential for success in
the market place and to examine the idea’s compatibility with company resources and
production costs.

Stage 3 - Concept Testing

Concept development and testing should be applied to any product, service or idea. Too often,
senior management think that the generation of an idea is the end of the process and all that
remains is to produce and sell the physical product. New products can encounter many problems
in the market place that could have been avoided if time had been devoted to effective concept
development and testing.

Stage 4 - Marketing Strategy Development

When the first three stages have been successfully completed the fourth stage involves
developing a strategic plan for introducing the product into the market.

This marketing strategy consists of three areas, which generally need refining as the process
progresses.
First, the size, structure and behaviour of the target market, the planned product positioning,
and the sales, market share and profit goals sought in the first few years.
Secondly, the planned price, distribution strategy and marketing budget for the first year.
Thirdly, the long-term sales and profit objectives and marketing mix strategy over time.

Stage 5 - Business Analysis

This stage is designed to assess the business attractiveness of the product or service.
Sales, cost and profit projections are developed to ascertain whether the company’s objectives
are likely to be met. If the analysis is positive then the concept can be moved to the next phase.
However, the business analysis should be constantly monitored and refined as new information
is obtained. Typical tools used in this phase include sensitivity analysis and risk analysis.

Stage 6 - Product Development

It is at this stage that a large increase in investment is required to develop the concept into a
physical product.
The essential elements of successfully developing a physical product, described by Coxhead &
Davis (1992), are to ensure that the prime benefits described in the product-concept statement
perform as required and that production costs do not exceed the manufacturing budget.

Stage 7 - Market Testing

At this stage of the process the product is placed in ‘an authentic (reliable) consumer setting’ to
test the reaction of customers and distributors and to accurately assess market potential. This
stage of the process takes on differing degrees of importance depending on several sets of
circumstances, such as the nature of competition, industrial or consumer markets and whether
the product is new or modified.

Stage 8 – Commercialisation (we bring it to market : Kellogg-special K range)

This stage may result in the highest costs to the organisation particularly if the product requires
new manufacturing facilities. Key decisions at this stage include: the timing of the product
launch; identification of markets (regional, national or international or launch); identifying
appropriate market segments (targeting and positioning decisions) and what introductory
market strategy to adopt.
B) What is the Importance of the New Product Development Process?

The development of successful new products is one of the ways in which firms can achieve
competitive advantage. The process which carries a great deal of risk due to high failure rate of
new product launches.(Need profit to survival) For NPD to be effective companies have to
nurture an innovative corporate culture so that everyone in the organisation is encouraged to be
innovative in their work – innovation is everyone’s business.

Product development and its innovations are critical to business survival and competitive ability.
They represent future business success. High risk, it is extremely rare that a new product will
fundamentally change the value proposition within an industry. Such new product investments
require deep financial commitment.

Economic and industry cycles set the context for the importance of innovation and therefore
product development. In fast-growing market sectors product change is part of the competitive
race and significant investments are made in product development.

In mature markets, where growth has slowed, investors rely on product development to assess
the organisation’s future potential. In these mature market sectors, new developments are likely
to be incremental and small advantages can differentiate a leader from less successful followers.
(Keep you make profit)
Product development delivers a pipeline of new products that determine the organisation’s
future financial performance and signify confidence in the future of the business.

C) Discuss the benefits of product platform planning, making use of appropriate examples

Many firms find that it is not efficient to develop a single product.

Platform is product families that share similarities in design, development or production
processes. Many firms find that it is not efficient to develop a single product.

– Car industry - $3 billion price tag on a new car platform is spread out over several
models.
– Sony – four platforms for walkman launched 160 product variations.
– Boeing – passenger, cargo short- and long-haul planes made from the same platform.
– Black & Decker – uses a single electric motor for dozens of consumer power tools.

Question3. Enterprise and Innovation

A) Describe what is Enterprise?

“Enterprise is human activity that provides the initiative and carries the risk in setting up a
business. It is the ability to spot opportunities in the market and to produce a product or service
to fill a niche in the market” It has been described as a factor of production which is necessary to
get a business started.
Enterprise is important in business as it is the driving force which conceives and develops new
products and businesses.

B) Describe the Role of Entrepreneurship in the Different Phases of Economic Development

(GEM)

1. Entrepreneurship in Factor-Driven Economies: basic output (raw material)

Economic development consists of changes in the quantity and character of economic value
added (Lewis, 1954).

These changes result in:

– Greater productivity
– Rising per capital incomes
– Often coincide with migration of labour across different economic sectors in society.

Countries with low levels of economic development typically have a large agricultural sector:
provides subsistance for majority, mostly rural based. (no middle class so no market)
This structure changes as industrial activity starts to grow, triggers economic growth: Surplus
population moves from agriculture to migrate to extractive and emergent scale-intensive sectors,
often located in specific regions. (Mining, manufacturer)
As a consequence the oversupply of labour fuels subsistence entrepreneurship in regional
agglomerations, surplus workers seek to create self-employment opportunities in order to make
a living. (labour is cheap, sell lunch time sandwich-people making living)

2. Entrepreneurship in Efficiency-Driven Economies: (Industrial Sector)

As the industrial sector develops further institutions begin to emerge to maintain further
industrialisation and increase in scale in the chase of increased productivity through economies
of scale. (more output-more sell)
Typically national (macro) economic policies in scale-intensive economies shape their emerging
economic and financial institutions to favour large national businesses. (Soviet country)
Increasing economic output contributes to financial capital formation.
Niches may open in industrial supply chains that service these national incumbents (position
holders), (start produce locally)
Added to this capital market formation, the opening up of independent supplies of financial
capital from the emerging banking sector encourages opportunities for the development of
small-scale and medium-sized manufacturing sectors.
As a result, in a scale-intensive economy, it would be expected to observe that necessity-driven
industrial activity would decline and growth would come from the emergent small-scale
manufacturing sector.

3. Entrepreneurship in Innovation-Driven Economies: (Service Sector)

As an economy matures and its wealth increases it is expected that the focus of activities would
gradually shift away from industrial activity to move to the growing services sector. (Finance
service, R&D) The services sector supplies the needs of an increasingly wealthy population and
supplies the services normally expected of a high-income society.
The industrial sector evolves and experiences improvements in variety and sophistication.
Such a development would be typically associated with increasing research and development and
knowledge intensity as knowledge-generating institutions in the economy gain momentum.
This development opens the way for the development of innovative, opportunity-seeking
entrepreneurial activity that is not afraid to challenge established incumbents in the economy.
Typically, small and innovative entrepreneurial firms enjoy an innovation productivity
advantage over large incumbents, enabling them to operate as ‘agents of creative
destruction.’(Ex. Mobile, email)
To the extent that the economic and financial institutions created during the scale-intensive
phase of the economy are able to accommodate and support opportunity-seeking
entrepreneurial activity, innovative entrepreneurial firms may emerge as significant drivers of
economic growth and wealth creation.

C) Distinguish skills and characteristics associated with successful entrepreneurs

Skills: Ability people have gained through practice and knowledge. Some skills are born of
natural talent, others are developed through training, education and practice.
 Inner control – possess a strong belief in one’s own ability to control their own actions and
decision.
 Planning and Setting goals – entrepreneur’s must practice planning both for the future and
in their daily lives by setting goals and targets to be achieved.
 Reality Perception – this means and ability to see objects, people and situations as they are
rather than as we would like them to be.
 Risks and risk-taking – the financial risk of losing money, and the personal risk of failure.

Characteristics: special attribute or trait that distinguishes one person from another.
 Independent – enterprising people like to do things their own way and do not like to feel
controlled by others.
 Analytical – they have the capacity to analyse situations and data, and make quick decisions.
 Motivated – self-motivated and will work long hours to achieve their objectives.
 Ambitious – they have in built ambition and always want to achieve something new.
 Confident –they have the self-belief and confidence to begin and, more importantly,
complete, projects.
 Ruthless – more concerned with achieving their goals than with other peoples feelings.

D) The Innovation Process (sw-Inside ,ot-outside)

This model is a simplified version of Atherton and Hannon’s original model in which each factor
is expanded in the following way:
Environmental scanning includes opportunity recognition and idea generation;

Internal capabilities include technical expertise, business know-how and store of ideas;
Matching opportunities and capabilities includes problem solving, understanding needs and
identifying problems;
Commercialisation includes planning, implementation and testing commercial viability.

The essential element to bear in mind when managing the innovation process is that the
introduction of new or revised products, services and processes should be directly targeted at
improving the organisation’s competitive position in the marketplace.
In other words, there should be clear links between innovation and the creation of a sustainable
source of competitive advantage.

Examples as discussed in class.

What is meant by the Terms Incremental Innovation and Radical Innovation

Relatively Small - Scale changes to existing products and process are known as incremental
innovations (phone-verson1,2)
The introduction of completely new products or completely new ways of working are known as
radical innovations.
It is desirable that all companies aim to have a balance of incremental and radical innovations.

Question 4. Business Planning

A) What is Purpose of Business Planning?

A business plan is the written document that details the proposed venture. It is a description of a
business and its plans for the next one to three years. It explains what the business does (or will
do if it’s a new business); it suggests who will buy the product or service and why; it provides
financial forecasts demonstrating overall viability; and indicates the finance available and
explains the financial requirements.

It must describe current status, expected needs, and projected results of the new business. Every
aspect of the venture needs to be covered: the project, marketing, research and development,
manufacturing, management, critical risks, financing, and milestones or a timetable. A
description of all of these parts of the proposed venture is necessary to demonstrate a clear
picture of what that venture is, where it is projected to go, and how the entrepreneur proposes it
will get there.

The business plan is the entrepreneur’s roadmap for a successful enterprise. Business plans are
particularly important for new start up businesses, because they provide a framework for the
owner to work towards. Also if the entrepreneur wishes to raise finance from a bank or other
lender then it is essential to provide a clear business plan, so that the bank can feel confident in
making a loan.
For larger organisations the business plan is typically called the ‘corporate strategy’.
The business plan sets out the means by which an organisation will achieve its business
objectives. Without a clear plan a business will have little sense of direction.

Good business planning is an essential requirement if a business is to succeed. It is a document

setting out information about the way in which the business will operate.

The business plan is written for the owner to give a guide to run the business. It is also written
for financial backers and lenders of money such as banks. Business plans are drawn up when a
business sets up for the first time and are amended and revised when the business wants to
change – typically when it wants to expand. Written document describing all relevant internal
and external elements, and strategies for starting a new venture.
– A road map for the business.
– An integration of functional plans.
– Addresses short-term and long-term decision making for the first three years.

B) Components of a Business Plan (read additional note)

Important details to be included in a business plan include:

- the business idea/s
- the market (types of customers, size of market)
- the nature of the competition (external environment)
- details of the business owner (CV, Qualification)
- resources used in the business ( What do we have now and what do we need for future)
- the marketing mix – price, promotion, place (as well as product or service) How do we
blend them
- equipment needed by the business
- premises required by the business

Components of a Business Plan In addition it will include financial forecasts of:

- future cash flow – money coming in and out of the business;
- profit and loss account;
- a break-even calculation.

It is then possible to identify how long it will take for the business to break-even and start
making a profit. It is also possible to see if the business will run into any cash flow problems.
C) What is Benefits of the Business Planning Process?

Research shows that those businesses that produce detailed plans are far more likely to succeed
than when only a vague plan or no plan at all is prepared.
Research also shows that entrepreneurs who make realistic predictions about cash flow, break
even and profit and loss are fare more likely to be able to raise fund than those who provide
widely exaggerated claims. Valuable to the entrepreneur, potential investors, or even new
personnel.(Business plan have to fit)

It is important to these people because: It Helps determine viability of the venture in a

designated market. (What’s chance of success)
Provides guidance to the entrepreneur in organising his or her planning activities.
Serves as an important tool in helping to obtain financing.
Potential investors are very particular about what should be included in the business plan. The
thinking process required to complete the plan is a valuable experience for the entrepreneur.

Provides a self-assessment by the entrepreneur.

Forces the entrepreneur to bring objectivity to the idea. (Critical valuate)
Helps consider obstacles that might prevent the venture from succeeding.
(What if so need Develop Plan B, , ex,Vocano, empty hotel seat)
Similar to role playing.
Allows to plan ways to avoid such obstacles.
If required, the entrepreneur may decide to terminate the business endeavor.

Specifically for the entrepreneur:

The time, effort, research, and discipline needed to put together a formal business plan forces
the entrepreneur to view the venture critically and objectively.
The competitive, economic, and financial analysis included in the business plan subject the
entrepreneur to close scrutiny (examination) of his or her assumptions about the venture’s
success.
Since all aspects of the business venture must be addressed in the plan, the entrepreneur
develops and examines operating strategies and expected results for outside evaluators.

The business plan quantifies objectives, providing measurable benchmarks for comparing
forecasts with actual results.
The completed business plan provides the entrepreneur with a communication tool for outside
financial sources as well as an operational tool for guiding the venture towards success.

Specifically for the financial sources:

Details of the market potential and plans for securing a share of that market. (what’s potential
return)
The venture’s ability to service debt or provide an adequate return on equity.
Identifies critical risks and crucial events with a discussion of contingency plans.
A clear, concise document that contains the necessary information for a thorough business and
financial evaluation.