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← Unit 2: Ideas and Opportunities for New Ventures

BDI3C · Unit 2 test review

Ideas and Opportunities for New Ventures: Test Review

Everything for the Unit 2 test on one page: the key facts from all 6 lessons, the mistakes that cost the most marks, and a practice test that points you back to the lessons you need.

Key facts

Invention and Innovation

  • Invention = something new to the world (Velcro, basketball, the Internet).
  • Innovation = a new or improved version of something that exists, or a new way to make, deliver or use it (cellphones, flat-screen TVs, coloured ketchup).
  • Every successful invention or innovation satisfies a need (must have) or a want (preferred way to meet a need).
  • An invention becomes a business only when an entrepreneur organizes money, people and marketing to bring it to customers.
  • Most ventures, including student ventures, are built on innovation rather than invention.

Ideas, Opportunities and Trends

  • Idea = a thought about a possible product or service. Opportunity = an idea that can become a profitable business.
  • The four opportunity tests: customers willing to pay, can be acted on, right timing, available resources.
  • The same need can be satisfied in different ways (Western or traditional medicine; organic or conventional produce), and each way can support businesses.
  • Economic trends (youth income, gig economy, online shopping) and social trends (aging population, cultural diversity, sustainability) create new needs and wants.
  • Ventures succeed by spotting an unserved need or want and responding to it before others do.

Generating Ideas and Choosing One

  • Brainstorming rules: no criticism, go for quantity, welcome wild ideas, build on others' ideas, record everything.
  • SCAMPER: Substitute, Combine, Adapt, Modify, Put to another use, Eliminate, Reverse or rearrange.
  • Idea sources: personal observation, the internet, magazines, conversations.
  • Decision-making model: define, list alternatives, set and weight criteria, evaluate, choose, act and review.
  • Weighted score = sum of (weight × rating); weights add to 100%, and every criterion is rated so higher is better.

Marketing Research: Is There Demand?

  • Primary research is collected by you for your question (surveys, observation, interviews, focus groups, test sales). Secondary research was collected by someone else (Statistics Canada, city hall, chamber of commerce, school board, industry reports).
  • Good survey questions are neutral, ask one thing at a time, and are specific; the sample must represent the target market.
  • Target-market characteristics: demographic, geographic, socio-economic, psychographic.
  • Buyers = % who would buy × population; Sales = buyers × purchases per buyer.
  • Survey answers overstate real demand, so adjust estimates down and confirm with a test sale.

Analysing the Competition: SWOT, PEST and Porter

  • Direct competitors sell the same product to the same customers; indirect competitors satisfy the same need in a different way.
  • Market share = your sales ÷ total market sales × 100%.
  • SWOT: Strengths and Weaknesses are internal (you control them); Opportunities and Threats are external (you do not).
  • PEST: Political, Economic, Social, Technological factors in the external environment.
  • Porter's five forces: threat of new entrants, supplier power, buyer power, threat of substitutes, rivalry among existing competitors. Stronger forces mean lower profit potential.

Is the Venture Viable?

  • A viable venture can realistically start, operate and earn enough to keep going.
  • Services a venture needs: accounting, legal, banking, insurance, consulting, web. Each adds a cost and reduces a risk.
  • Six viability checks: start-up capital, target-market size, technological feasibility, personal skills and interests, regulations, competition.
  • Go = all checks pass; Revise = fixable failures; No-go = a failure that cannot realistically be fixed.
  • A no-go is a good decision, not a failure: return to the decision matrix and test the next-best idea.

Where marks get lost

  • Calling every new product an invention. Most new products, such as a new phone model, are innovations because an earlier version existed. (Invention and Innovation)
  • Thinking an invention automatically becomes a successful business. Without an entrepreneur to finance, produce and market it, an invention earns nothing. (Invention and Innovation)
  • Believing a student venture must be original to the world. Improving an existing product or serving a new group of customers is enough. (Invention and Innovation)
  • Describing a product without naming the need or want it satisfies. Customers pay for what a product does for them, not for the product itself. (Invention and Innovation)
  • Treating friends' compliments ("I'd totally buy that!") as proof of customers willing to pay. Only actual purchases or firm commitments show demand. (Ideas, Opportunities and Trends)
  • Ignoring timing. A good idea launched after the trend has peaked, or long before customers understand it, can still fail. (Ideas, Opportunities and Trends)
  • Assuming an opportunity for one entrepreneur is an opportunity for everyone. Resources and skills differ, so the same idea can pass for one person and fail for another. (Ideas, Opportunities and Trends)
  • Quoting precise statistics about trends without a source. Describe the direction of a trend unless you have checked the numbers with a source such as Statistics Canada. (Ideas, Opportunities and Trends)
  • Judging one way of satisfying a need as "wrong". An entrepreneur needs to understand why customers choose each approach, not rank them. (Ideas, Opportunities and Trends)
  • Criticizing ideas during brainstorming. Judging too early stops people sharing and kills the wild ideas that lead to good ones. (Generating Ideas and Choosing One)
  • Rating start-up cost so that a high number means expensive. Every criterion must be rated so that higher is better, or the matrix rewards the worst ideas. (Generating Ideas and Choosing One)
  • Using weights that do not add to 100% (for example 30%, 30%, 30%, 20%), which inflates every score. (Generating Ideas and Choosing One)
  • Choosing weights after seeing the ratings so a favourite idea wins. Set and agree on weights first. (Generating Ideas and Choosing One)
  • Treating a difference of 0.1 as a decisive win. Close scores mean you need more research, not that the choice is settled. (Generating Ideas and Choosing One)
  • Surveying only friends or one class. The sample must represent the whole target market or the results will be biased. (Marketing Research: Is There Demand?)
  • Writing leading questions such as "Wouldn't it be great if...?" that push people to say yes. (Marketing Research: Is There Demand?)
  • Taking survey percentages as guaranteed sales. People overstate what they will buy, so adjust down and run a test sale. (Marketing Research: Is There Demand?)
  • Forgetting to multiply by purchases per buyer, which confuses the number of customers with the number of sales. (Marketing Research: Is There Demand?)
  • Mixing up primary and secondary research: Statistics Canada data is secondary even if you looked it up yourself, because someone else collected it. (Marketing Research: Is There Demand?)
  • Putting external factors in the strengths or weaknesses boxes (for example, "the economy is good" as a strength). Strengths and weaknesses are only about your own venture. (Analysing the Competition: SWOT, PEST and Porter)
  • Ignoring indirect competitors such as free online videos or doing it yourself, which often take more customers than direct rivals. (Analysing the Competition: SWOT, PEST and Porter)
  • Claiming "we have no competition". If customers have the need, they are already meeting it some other way. (Analysing the Competition: SWOT, PEST and Porter)
  • Reading Porter's forces backwards: strong forces make an industry less attractive, not more. (Analysing the Competition: SWOT, PEST and Porter)
  • Listing PEST factors without saying how each affects the venture. Every factor should be labelled as an opportunity or a threat. (Analysing the Competition: SWOT, PEST and Porter)
  • Leaving service costs out of the plan. Bank fees, insurance and web hosting are small each month but add up over a year. (Is the Venture Viable?)
  • Treating any failed check as a no-go. If the failure can be fixed by changing the idea, the decision is revise. (Is the Venture Viable?)
  • Ignoring regulations because the venture is small. School rules, municipal permits and food-safety rules apply to student ventures too. (Is the Venture Viable?)
  • Passing the target-market check with an unadjusted survey estimate. Use the cautious figure from your research. (Is the Venture Viable?)
  • Seeing a no-go as failure. Dropping a weak idea early protects your money and time for a better one. (Is the Venture Viable?)

Practice test

24 questions from across the unit. Each one shows the lesson it comes from.

  1. Invention and Innovation
    1
    Which of the following is an invention rather than an innovation?
  2. Invention and Innovation
    2
    What made Cirque du Soleil an innovation rather than an invention?
  3. Invention and Innovation
    3
    Put these steps in the order an entrepreneur like Ron Foxcroft would follow to turn a frustration into a venture.
    1. 1Design an improved version
    2. 2Organize money, production and marketing to sell it
    3. 3Test the improved version with real users
    4. 4Notice a problem with an existing product
  4. Invention and Innovation
    4
    Name the Canadian province where Cirque du Soleil was founded.
  5. Ideas, Opportunities and Trends
    5
    Which best describes the difference between an idea and an opportunity?
  6. Ideas, Opportunities and Trends
    6
    A student wants to launch a sunscreen kiosk at an outdoor rink in January. Which opportunity test does this idea fail most clearly?
  7. Ideas, Opportunities and Trends
    7
    Which venture idea responds most directly to the aging-population trend?
  8. Ideas, Opportunities and Trends
    8
    Name one social trend that could create opportunities for a student venture.
  9. Generating Ideas and Choosing One
    9
    Which is NOT a rule of brainstorming?
  10. Generating Ideas and Choosing One
    10
    Using points weights of 3, 3, 2 and 2, an idea is rated 4, 2, 5 and 3. What is its total weighted score in points?
    points
  11. Generating Ideas and Choosing One
    11
    A team rates a costly idea 5 for start-up cost because "it costs a lot". What is wrong?
  12. Generating Ideas and Choosing One
    12
    A student reads online reviews where many people complain that reusable lunch containers leak. Which idea source is this?
  13. Marketing Research: Is There Demand?
    13
    Which is an example of secondary research?
  14. Marketing Research: Is There Demand?
    14
    A survey of 80 students finds that 20 would buy a $3 granola bar. The school has 900 students. Estimate the number of buyers in the school.
    buyers
  15. Marketing Research: Is There Demand?
    15
    A team estimates 400 buyers from a survey but cautiously assumes only half will actually buy, each buying once. How many sales should they plan for?
    sales
  16. Marketing Research: Is There Demand?
    16
    Where would you most likely find the number of students enrolled at each high school in your area?
  17. Analysing the Competition: SWOT, PEST and Porter
    17
    Which pair of SWOT categories is internal to the business?
  18. Analysing the Competition: SWOT, PEST and Porter
    18
    A student car-wash venture earns $450 in a month when total car-wash spending in the neighbourhood is $3,000. What is its market share, to one decimal place?
    %
  19. Analysing the Competition: SWOT, PEST and Porter
    19
    Match each factor for a student bake sale to its place in a SWOT analysis.
    The team's baker has won local baking contests
    The team has only one oven
    School fundraising events attract big crowds
    A grocery store across the street sells cheap cookies
  20. Analysing the Competition: SWOT, PEST and Porter
    20
    A Porter analysis finds that all five forces are strong. What does this suggest?
  21. Is the Venture Viable?
    21
    Match each service to what it provides.
    Accounting
    Legal
    Banking
    Insurance
  22. Is the Venture Viable?
    22
    A dog-walking venture passes every check except that the owner has only one free afternoon a week. Adding a partner would fix this. What is the decision?
  23. Is the Venture Viable?
    23
    Put these steps in the order a team would follow to reach a viability decision.
    1. 1Mark each check pass, concern or fail
    2. 2Choose go, revise or no-go
    3. 3Decide whether failures can be fixed
    4. 4Gather evidence from research for each check
  24. Is the Venture Viable?
    24
    Which viability check is most directly affected by a city bylaw requiring a permit for street vending?

Endless drill

Fresh numbers every time, for the calculation questions in this unit.

Endless drillnew numbers every time

Generating a problem…

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