TUTORIAL 5 (Topic 1, 2, & 3) : Cases

TUTORIAL 5 (Topic 1, 2, & 3)
CASES
Case 4.1
Etsy: Breaking Down a Business Model
DISCUSSION QUESTIONS
1. What is Etsys core strategy, or how the firm intends to compete in the
marketplace?
Answer: Etsys core strategy is laid out in the case. The companys mission is to
re-imagine commerce in ways that build a more fulfilling and lasting world. To
do this, its basis of differentiation flows from its mission to focus on handmade
goods, the number of buyers and sellers on its site, and the sense of community it
has created. It has two target marketsits sellers and its buyers. Its sellers are the
producers of handmade goods. Its buyers are people drawn to the site because they
want something unique, something that has a story. Etsys product/market scope
has expanded since its inception. Although the majority of items are still
handmade, on October 1, 2013, Etsy announced it would allow factory-made
goods on its site (under certain conditions).
2. What evidence can you provide to demonstrate that Etsys founders, Rob Kalin,
Chris Maguird, Jared Tarbell, and Haim Schoppik, developed a disruptive business
model as the foundation for launching their firm?
Answer: Most students will argue that Etsy does have a disruptive business model.
A disruptive business model is one that does not fit the profile of a standard
business model, and is impactful enough that it disrupts or changes the way
business is conducted in an industry. Most students will agree that its fair to say
that Etsy has changed the way people sell handmade items. As a result of Etsy,
people that sell handmade items for the first time have a robust online platform
through which they can establish an online store and make their products available
to a wide population.
3. In thinking about the firms basis for differentiation as part of its business
model, what differentiates Etsy from its competitors?
Answer: In regard to basis for differentiation, the things that differentiate Etsy
from its competitors are:
Focus on handmade goods

The number of buyers and sellers on its site
The sense of community that it has developed
4. What are Etsys three core competencies and how do these help the firm in its
efforts to be successful?
Answer: (1) the development of tools and educational materials to empower

sellers, (2) the growth of a vibrant community of buyers and sellers, and (3) the
ability to generate world-of-mouth awareness of the business. These core
competencies help all aspects of Etsys business model work. For example, Etsy
differentiates itself from its competitors by the number of buyers and sellers on its
site. It wouldnt have a large number of buyers and sellers on its site if it wasnt
for the core competencies listed above. Similarly, Etsy gleans substantial revenue
from sales commissions and listing fees. Again, it wouldnt be earning the revenue
that it does without the core competencies that attract a large number of buyers and
sellers to its site.
5. What is entrepreneurship?
Answer: The standard definition for entrepreneurship is that its the process by
which individuals pursue opportunities without regard to resources they currently
control. It can occur at the individual level, the team or group level, or at the
corporate level. There are other definitions of entrepreneurship. Fred Wilson, a
venture capitalist, defines entrepreneurship as the art of turning an idea into a
business. Both definitions focus on behaviors. In general, entrepreneurship is
associated with the task of identifying opportunities and putting useful ideas into
practice.
6. What are the five stages of the creative process for an individual?
Answer: The five stages of the creative process are as follows:
Stage 1: Preparation is the background, experience, and knowledge that an

entrepreneur brings to the opportunity recognition process.
Stage 2: Incubation is the stage during which a person considers an idea or thinks
about a problem; it is the mulling things over phase.
Stage 3: Insight is the flash of recognitionwhen the solution to a problem is seen
or an idea is born.
Stage 4: Evaluation is the stage of the creative process during which an idea is
subjected to scrutiny and analyzed for its viability.
Stage 5: Elaboration is the stage during which the creative idea is put into a final
form.
7. How would you describe the four areas that a properly executed feasibility
analysis explores?
Answer: Product/service feasibility analysis is an assessment of the overall appeal

of the product or service being proposed. Industry/target market feasibility analysis
is an assessment of the overall appeal of the industry and the target market for the
product or service being proposed. Organizational feasibility analysis is conducted
to determine whether a proposed business has sufficient management expertise,
organizational competence, and resources to successfully launch its business.
Financial feasibility analysis provides a quick financial assessment of the viability
of a business idea.

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TUTORIAL 5 (Topic 1, 2, & 3)

Focus on handmade goods

Answer: (1) the development of tools and educational materials to empower

Answer: The five stages of the creative process are as follows:

Stage 1: Preparation is the background, experience, and knowledge that an

Answer: Product/service feasibility analysis is an assessment of the overall appeal

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