Assignment 1

Case: 23andMe: Is This an Opportunity or Just an Interesting Idea?

Questions:

 What environmental trends are working in 23andMe’s favor? If 23andMe has uncovered a
promising business opportunity, what environmental trends have made 23andMe’s system
possible and potentially attractive to consumers?
 Of the two separate sets of information 23andMe provides its clients (ancestry and health risks),
which set do you think will prove to be of the most interest to the people who use the service?
 Which of the “points of contention” is the biggest threat to 23andMe’s business idea? How can
23andMe overcome this threat?

Student May answer the following

Environmental trends working in 23andMe’s favor:

 The aging of the population. As people get older, they tend to focus more on health-related issues.
 People are living longer. The fact that people are living longer subjects them to an increased
incidence of disease. As all of us see loved ones and people we know suffer from diseases like
Parkinson’s, and we’re more likely to wonder if we’ll get the disease ourselves.
 A focus on prevention. There is an increased focus on “preventing” rather than “treating” disease,
that’s reflected in popular magazines, books, and is talked about by doctors to their patients.
 Improved genetic testing technology that makes genetic testing affordable and non-intrusive.

All four of these trends are instrumental in making 23andMe a potentially attractive business opportunity.

Students will vary in terms of their answer to this question. While there is considerable interest
in health-related issues, there is also a strong interest in ancestry-related information in the U.S.
and elsewhere. Note the interest in Web sites like Ancestry.com. According to Wikipedia,
Ancestry.com is a subscription based Web site that has more than 5 billion records online and
more being added daily.
Assignment 2
Case: FLAVORx and CarePages: How Solving a Personal Problem Can Trigger the Recognition of a
Promising Business Opportunity

QUESTIONS

1. In this chapter, an opportunity is defined as being (1) attractive, (2) durable, (3) timely,
and (4) anchored in a product or service that creates value for its buyer or end user. To
what extent do FLAVORx and CarePages meet each of these tests of an opportunity?

Answer: Most students will argue that both FLAVORx and CarePages meet the tests of an
opportunity, and do so in convincingly.

2. Why do you think the idea for FLAVORx wasn’t developed by a large pharmaceutical
company long before Kenny Kramm came along, and the idea for CarePages wasn’t
developed by a hospital long before Eric Langshur came up with the idea?

Answer: Large companies, although they can practice corporate entrepreneurship as

explained in Chapter 1, normally focus on their core competencies and the customers they
serve, which typically leaves them little time or resources for innovation. This
phenomenon provides openings for entrepreneurs like Kenny Kramm and Eric Langshur to
innovate and create companies like FLAVORx and Care Pages.

3. Why do you think CarePages markets its product to hospitals rather than directly to
consumers, like MySpace and Facebook do?

Answer: The most likely reason that CarePages markets its product to hospitals rather than
directly to consumers is because they want the hospitals to advocate for and have a stake
in the product. If the product was marketed directly to consumers, and a consumer tried
to use it in a hospital, the hospital personnel wouldn’t know how to answer questions
about how to use the product, and might see it as a distraction or as “getting in the way”
of helping a family deal with a loved one’s need for hospitalization. In contrast, since it’s
the hospital that suggests to a patient that CarePages be used, the hospital is totally on
board regarding its use.
Assignment 3
Case: Intuit: The Value of Validating Business Ideas
Questions

1. What kinds of things do you think Scott Cook and Tom Proulx learned by actually watching
people manage their finances that they could never have learned via secondary research?

Answer: Answers will vary to this question. Cook and Proulx probably observed the
aspects of their products that worked well, and didn’t need to be changed, and aspects of
their product that consumers struggled with and needed to be improved upon. They also
probably good a sense of the overall level of satisfaction that users had with their products,
and got feedback on whether their prices their price-points were appropriate.

2. What are three examples of tips or techniques that you picked up from this case that you
would consider using if you conducted a feasibility analysis for a consumer product?

Answer: (1) set-up usability testing labs and invite both users and nonusers of the product
to visit the lab and try using the product while being observed by trained observers; (2)
adopt follow-me-home tests; (3) run surveys to see how the product is doing.

3. To what extent do you think Intuit’s industry is attractive? If Intuit conducted an

industry/target market feasibility analysis on the main industries in which it participates,
what do you believe would be the outcome?

Answer: Most students will argue that Intuit is in a very attractive marketplace. The
number of small businesses in the U.S. and across the world continues to increase,
expanding the need for Intuit’s products and services.

4. Why do you think Intuit puts so much effort into collecting primary research about its users
and their experiences? Would it be cheaper for Intuit to hire a marketing research firm to
collect data on user preferences? What would Intuit lose if it pursued this approach?

Answer: Intuit has apparently adopted the philosophy that it will collect the lion’s share of
its own research. Although hiring a marketing research firm to conduct the same research
might be cheaper, moving in that direction would cost Intuit the personal, one-to-one
interactions that is has with its customers (and potential customers).
Assignment 4
Case: Yelp! How a Willingness to Let Its Business Plan Quickly Evolve
Helped a Start-Up Get Its Offering Right

DISCUSSION QUESTIONS

1 Go to Yelp’s Web site and look up one of your favorite restaurants. What do you think? Do you
. think the company has an attractive enough offering that it will continue to increase its number of
users? Will you use the service again? Why or why not?

Answer: Most students are impressed with Yelp!’s Web site (and service) and will say they would
use it again. The service is both informative and engaging, and the social networking aspect of
Yelp!’s service is likely to resonate with a college-aged audience.

2 What are the most important assumptions that Yelp’s initial business plan is based on? How about
. its revised business plan? Compare and contrast the two.

Answer: This is a good question for an individual or group assignment. One key assumption is that
Internet usage will continue to increase. Another assumption is that people will trust reviews that
are placed online, and will actually take action (i.e. buy a product or eat at a restaurant) because of
a positive review.

3 What changes to Yelp did the company’s founders make to effectively implement their revised
. business plan? Were the changes obvious or did it take careful observation on the founders’ part
to know what changes to make?

Answer: They dropped the e-mail your friends idea and focused on providing a platform for people
to proactively write reviews of local businesses. The Web site itself was also redesigned, from
masculine colors to feminine colors based on user research that showed that the majority of people
who used the service were female. They also tweaked their name. Stoppelman worried that “Yelp”
sounded like an angry dog, which may put off women. While they didn’t drop “Yelp” they softened
it by adding a burst at the end of the word that looks like a flower or ribbon bow. The changes
were not obvious. They resulted from close observation on the part of Yelp!’s founders.
Assignment 5
Case: Panera Bread: Occupying a Favorable Position in a Highly
Competitive Industry
DISCUSSION QUESTIONS

1. How has Panera Bread establish a unique position in the restaurant industry? How has this
unique position contributed to its success? Do you think Panera Bread will reach its goal
of becoming a leading national brand in the restaurant industry? Why or why not?

Answer: Panera Bread has established a unique position in the restaurant industry. As
explained in the case, the “fast casual” position that Panera has established allows it to
capture the advantages of both fast food and casual dining. It is clear that this unique
position has contributed to Panera’s success. It provides Panera a distinct point of
differentiation between itself and many of its competitors, and allows the company to sell
a fairly large volume of high margin foods products. Most students will say that Panera
Bread will reach its goal of becoming a leading national brand in the restaurant industry.

2. Analyze the restaurant industry using Porter’s five forces model. In what ways has Panera
Bread successfully positioned itself against the forces that are suppressing the profitability
of the restaurant industry as a whole?

The Restaurant Industry

Threat to Industry Profitability

Competitive Force

Low Medium High

Threat of substitutes X

Threat of new entrants X

Rivalry among existing firms X

Bargaining power of suppliers X

Bargaining power of buyers

X
 Threat of substitutes—Panera has lessened the threat of substitutes by creating a
pleasing atmosphere in its restaurants and by making its bakery second to none.
 Threat of new entrants—Panera has lessened the threat of new entrants by
establishing a first-mover advantage (or a near first-mover advantage) in the fast-
casual portion of the restaurant industry.
 Rivalry among existing firms—Panera has lessened the threat of rivalry among existing
firms by creating a position that appeals to both fast-food consumers and casual dining
consumers. The strength of its brand creates a barrier to entry.
 Bargaining power of suppliers—This is not a major threat to Panera.
 Bargaining power of buyers—This is not a major threat to Panera.
Assignment 6
Case: IKEA and ProFlowers: Reconfiguring Industry Value Chains to
Create Competitive Business Models

DISCUSSION QUESTIONS

1. At the beginning of this chapter, the statement is made that “in everyday language, a
model is a plan that’s used to make or describe something.” Do you think IKEA and
ProFlowers have plans that effectively describe what the firms offer to customers? How
could these firms’ models be changed so they would be more appealing?

Answer: Both IKEA and ProFlowers have good plans and clearly communicate to their
customers what they are all about and how they are different than their competitors.
Most students will not recommend that major changes be made in either company’s
business plans.

2. What is IKEA’s core competency? What are its strategic assets? Is there anything about
IKEA’s business model that makes what the company is doing hard to replicate? Explain
your answer.

Answer: IKEA’s core competency is managing the network of relationships that makes the
company work. Just because IKEA doesn’t actually perform the majority of the steps in
the furniture industry value chain, doesn’t mean that the company isn’t closely involved
with each step in terms of managing its partners and supervising its suppliers. Most
students will argue that what IKEA is doing is fairly difficult and would be difficult for others
to copy, at least on the scale at which IKEA is operating. IKEA also has a strong brand that
would be difficult to replicate, at least quickly.

3. Suppose that you are the CEO of ProFlowers. You just received an e-mail from Carolyn
Anderson, a highly reputable and sought-after rose grower, who is interested in learning
more about your company. In her e-mail message to you, Ms. Andersen asks the following
question: “Describe to me your business model. Convince me that your organization has a
good story and I should be part of it.” How would you respond to this request?

Answer: This is a good question for an individual or group assignment.

Assignment 7
Case: Cirque du Soleil and Curves International: Succeeding in
Unattractive Industries Via Blue Ocean Strategies
DISCUSSION QUESTIONS

1 What are the primary lessons learned from the Cirque du Soleil and the Curves cases? How do
. these lessons help the founders of a start-up better appreciate and understand the dynamics of
the industry that they are about to enter?

Answer: The primary lessons learned from Cirque du Soleil and Curves is that a new firm doesn’t
have to approach an industry “as is”—instead, there may be unique positions in an industry or
completely new ways of approaching an industry that are very attractive. It’s normally difficult for
industry incumbents to see or pursue these unique positions or approaches.

2 What barriers to entry have both Cirque du Soleil and Curves established to deter competitors?
. Has capturing a first-mover advantage helped these firms deter new entrants from expanding their
respective industries in the same ways that Cirque du Soleil and Curves did? Which company has
established stronger barriers to entry—Cirque du Soleil or Curves?

Answer: Both Cirque du Soleil and Curves have very strong brands, which create barriers to entry.
Both companies have also benefited from capturing first-mover advantages, at least in the unique
positions that they have established in their respective industries. Another barrier to entry that
Cirque du Soleil has created is that it literally employs the majority of the top notch circus talent
available in the United States. It also has very proprietary methods for conducting its performance,
and the performances themselves are very difficult to choreograph and pull off.

Of the two companies, most students will argue that Cirque du Soleil has created the stronger
barriers to entry. There are already a number of Curves “copycat” businesses that have sprung up.
That’s hasn’t been the case with Cirque du Soleil.

3 Which of the nontraditional barriers to entry, shown in Table 5.1, were utilized by Cirque du Soleil
. and which were utilized by Curves? To what extent have these nontraditional barriers to entry
contributed to each company’s success?

Answer: In regard to the nontraditional barriers to entry listed in table 5.1, Cirque du Soleil
is benefiting from having developed a new approach to an industry, and executing the
approach in an exemplary fashion. Curves international is benefiting from developing a
unique business model and developing a new approach in an industry, and executing it in an
exemplary fashion.
Assignment 8
Case: TOMS Shoes: Combining Social Consciousness and Profits
DISCUSSION QUESTIONS

1. Based on what you know about TOMS, from the feature and the company’s Web site, what
ethical and legal issues, other than those that all firms grapple with, should TOMS be
particularly attentive to. How can TOMS avoid ethical and/or legal mishaps in these areas?

Answer: There are three things that TOMS does that don’t apply to most organizations.
First, the company employs a high number of interns (according to the case, TOMS
currently has 36 employees and 30 interns). Second, TOMS’ employees make frequent
trips to Argentina and other countries to distribute the company’s shoes. Third, the
company allows customers and other stakeholders to make the foreign trips with the
company’s employees. TOMS’s can avoid ethical and/or legal mishaps pertaining to these
three areas by establishing specific policies and procedures for how each activity is
handled. In addition, ethics training sessions should be designed to give employees
direction for (1) how to interact with interns, (2) how to maintain the company’s ethical
and legal standards across countries and cultures, and (3) how to interact with customers
and other stakeholders while on foreign trips.

2. If TOMS initiated an ethics training program, what issues do you think it would focus on
the most?

Answer: The three issues identified above.

3. Do you think consumers are willing to pay more for a product when they know that a
portion of their purchase price will go to a good cause? If so, how important is this
sentiment to TOMS? How effectively does TOMS communicate its mission and socially
conscious principles to its customers?

Answer: Most students will say that a certain percentage of consumers will pay more for
a product when they know a portion of the purchase price will go for a good cause. A
parallel is results of studies that have shown that people will pay more for “locally made”
products. One study of residents in Maine, New Hampshire, and Vermont found that 17%
to 40% of consumers in each state were willing to pay two dollars more to buy a locally
produced $5.00 food item. (Kelly L. Giraud, Craig A. Bond, and Jennifer J. Keeling,
“Consumers Preferences for Locally Made Specialty Products Across Northern New
England,” (Department of Resource Economics and Development, University of New
Hampshire, Durham, NH), 20.