MGMT 3850 Exam 1

A business plan is a written summary of ________.

-an entrepreneur's proposed business venture -a business venture's operational, financial, and marketing details -the skills and abilities of a business venture's managers

Total Quality Management (TQM)

- Quality in the product or service itself. - Quality in every aspect of the business and its relationship with the customer. - Continuous improvement in quality.

what are the six macro forces that assess industry attractiveness?

- Sociocultural - Technological - Demographic - Economic - Political and legal - Global

time compression management (TCM):

- Speed new products to market. - Shorten customer response time in manufacturing and delivery. - Reduce the administrative time required to fill an order.

TRIZ

- systematic approach designed to solve any technical problem. - Relies on 40 principles and left-brained thinking to solve problems.

The Mind-Mapping Process

-Start by writing down or sketching a picture symbolizing the problem or area of focus in the center of a blank page. -Work as quickly as possible and write down every idea that comes into your mind for 20 minutes, connecting each to the central picture or words with a line. -Don't try to force creativity. -After a brief rest, begin to integrate the ideas into a mind map.

Porter's Five forces interact with one another to determine the setting in which companies compete and, hence, the _____________ of the industry

attractiveness

Switching costs, the number of buyers, and if the items represent a relatively small portion of the cost of finished products are key considerations regarding the ________.

bargaining power of buyers

A __________ is what the customer gains from the product or service feature.

benefit

Return on investment

combining the previous two estimates to determine how much investors can expect their investments to return

Branding

communicating a USP to the target market in a consistent and integrated manner.

The Business Modeling Process: phase one

develop the business model canvas

The competitive Test:

evaluates: A company's position relative to its competitors. Management's ability to create a company that will gain an edge over its rivals.

A product or service feasibility analysis determines the degree to which a product or service idea appeals to potential customers.

true

The company's target customer should permeate the entire business, from the merchandise purchased, in the layout and decor of the store, and on the website.

true

Bootstrap Marketing Strategies

unconventional, low-cost, creative marketing strategies designed to give small companies an edge over their larger, richer, more powerful rivals

A solid business plan ________.

-forces potential entrepreneurs to look at their business idea in the harsh light of reality -requires a potential entrepreneur to assess the venture's chances of success more objectively -helps prove to outsiders, such as potential lenders and investors, that a business idea can be successful

Successful marketing requires a business owner to ________.

-understand target customers' needs, demands, and wants -offer customers products and services that will satisfy their needs, demands, and wants -provide customers with service, convenience, and value so that they will return

A Bootstrap Marketing Plan: Three Objectives

1. Pinpoint the specific target markets the company will serve. 2. Determine customer needs and wants through market research. 3. Analyze a firm's competitive advantages and create a marketing strategy to communicate its value proposition to the target market.

what are the 7 steps in The Creative Process?

1. Preparation 2. Investigation 3. Transformation 4. Incubation 5. Illumination 6. Verification 7. Implementation

_______ of the U.S. population aged 18 to 64 is engaged in entrepreneurial activity.

12.6%

Every year U.S. entrepreneurs launch more than ___________ new businesses.

6.6 mil

_______ of working adults around the world perceive entrepreneurs as having high status.

68%

Globally, nearly one in _______ adults is actively engaged in launching a business.

8

Small businesses: - Make up _____of the 28.8 million businesses in the United States

99.7%

Virtual order fulfillment

A fulfillment strategy in which a company forwards customers' orders to a wholesaler or distributor who then ships the product to the customer with the online merchant's label on it.

Patent

A grant from the Patent and Trademark Office to the inventor of product, giving the exclusive right to make, use, or sell the invention for 20 years from the date of filing the patent application.

Mind-mapping

A graphical technique that encourages thinking on both sides of the brain, visually displays relationships among ideas, and improves the ability to see a problem from many sides.

Unique Selling Proposition

A key customer benefit of a product or service that sets it apart from its competition.

Force-Field Analysis

A useful technique for evaluating the forces that support and oppose a proposed change.

Five Forces Matrix

Assign a value to rate the importance of each of the five forces to the industry on a 1 (not important) to 5 (very important) scale. Then assign a value to reflect the threat that each force poses to the industry. Multiply the importance rating in column 2 by the threat rating in column 3 to produce a weighted score. Add the weighted scores in column 3 to get a total weighted score. This score measures the industry's attractiveness. The matrix is a useful tool for comparing the attractiveness of different industries.

The Business Modeling Process: phase three

Business Prototyping

What are the three columns of force field analysis?

Center: Problem to be addressed Left: Driving forces Right: Restraining forces

Which of the following is not one of the objectives a bootstrap marketing plan should accomplish?

Determine how the company will be able to serve all customers.

Product or Service Feasibility Analysis

Determines the degree to which a product or service idea appeals to potential customers and identifies the resources necessary to produce it.

Which of the following is not a question to ask to evaluate an industry?

How sparse is the industry?

Retention Rate

Measures the percentage of customers a company retains over a period of time.

Multichannel Selling

Meet customers wherever they want to do business with a personalized shopping experience similar to that of a brick-and-mortar store experience.

Eleven Myths of E-Commerce

Myth 1 If I launch a site, customers will flock to it. Myth 2 Online customers are easy to please. Myth 3 Launching an E-Commerce Site Is Free - Or at Least Really Inexpensive Myth 4 Making money on the Web is easy. Myth 5 Privacy is not an important issue. Myth 6 I don't need a strategy to sell online. 7. The most important part of an e-commerce effort is technology. 8. Customer service is not important. 9. Flashy Web sites are better than simple ones. 10. It's what's up front that counts. 11. My business doesn't need a Web site.

The Business Modeling Process: phase four

Pivots: the process of making changes and adjustments in the business model on the basis of the feedback a company receives from customers.

Strategic Management Process

Step 1: Develop a vision and translate it into a mission statement Step 2: Assess strengths and weaknesses Step 3: Scan environment for opportunities and threats Step 4: Identify key success factors Step 5: Analyze competition Step 6: Create goals & objectives Step 7: Formulate strategies Step 8: Translate plans into actions Step 9: Establish accurate controls

The Business Modeling Process: phase two

Test the Value Proposition

Cost per Acquisition (CPA)

The amount it costs to generate a purchase (or a customer registration)

Brainstorming

The goal is to create a large quantity of novel and imaginative ideas.

Cart Abandonment Rate (CTR)

The percentage of shoppers who place at least one item in a shopping cart but never complete the transaction.

Bounce Rate

The percentage of visitors to a site who view a single page and leave without viewing other pages.

Conversion (browse-to-buy) ratio

The proportion of visitors to a site who actually make a purchase.

Latency

The time between customers' purchases.

Customer Lifetime Value

The total sales that a customer accounts for throughout his or her entire relationship with a business.

Web analytics

Tools that measure a Web site's ability to attract customers, generate sales, and keep customers coming back.

Ethics

a branch of philosophy that studies and creates theories about the basic nature of right and wrong, duty, obligation, and virtue; as it relates to human conduct.

A business plan is

a formal written document that describes the nature of a business and how it will operate

lean start-up

a process of rapidly developing simple prototypes to test key assumptions by engaging real customers

Capital requirements

an estimate of how much start-up capital is required to launch the business.

Small businesses can compete with larger rivals with bigger budgets by employing unconventional, low-cost creative techniques known as ________.

bootstrap marketing strategies

Which of the following is not one of the 5 C's of Credit?

competitive (character, capacity, capital, conditions and collateral)

Porter's Three Strategies

cost leadership, differentiation, and focus

Generation Y and Generation Z are examples of ________ changes.

demographic

To gain a better understanding of the needs of their target market, entrepreneurs can research ______________.

demographics

One of the greatest marketing mistakes small businesses make is ________.

failing to identify the target market

Because they lack the size and financial resources of their larger competitors, small companies are powerless when it comes to developing effective marketing strategies.

false

A descriptive fact about a product or service is called what?

feature

Estimated earnings

forecasted income statements.

Social responsibility

how an organization responds to the needs of the many elements in society.

A(n) ________ is the process of examining a need in the market, developing a solution for that need, and determining the entrepreneur's ability to successfully turn the idea into a business.

idea assessment

________ is the process of creating and delivering desired goods and services to customers and involves all of the activities associated with winning and retaining loyal customers.

marketing

• Idea Assessment: -The process of examining a particular _____ in the market, developing a solution for that _____, and determining the entrepreneur's ability to successfully turn the idea into a business.

need, need

The enactment of the Affordable Health Care Act in 2010 is an example of a ________ change.

political and legal

Porter's five forces model assesses industry attractiveness by surveying these five factors ________.

potential entrants, suppliers, buyers, substitutes, and rivalry among existing firms.

Potential investors tend to believe that if an entrepreneur cannot develop a good business plan, the entrepreneur ________.

probably lacks the discipline to run a business

The reality Test:

proving that: A market really does exist for your product or service. You can actually build or provide it for the cost estimates in the plan.

The value Test:

proving that: A venture offers investors or lenders an attractive rate of return or a high probability of repayment.

Entrepreneur: One who creates a new business in the face of ______ and _______ for the purpose of achieving ______ and ______________.

risk, adversity ; profit, creative value

Gazelles

small companies that are growing at 20% or more per year with at least $100,000 in annual sales; they create 70% of net new jobs in the economy

Entrepreneurial ________ - the most significant economic development in recent history.

spirit

Products or services that may be sought as alternative solutions (e.g., purchasing tax planning software rather than paying a CPA to assist with preparing your taxes) are referred to as ________.

substitute products

Rapid Prototyping

transforming an idea into an actual model that will point out flaws and lead to design improvements.

The specific group of customers at whom a company aims its good or services is referred to as a ________.

target market

The reality test that a business plan must pass to attract financing from lenders and investors involves proving ________.

that a market for the company's product or service actually does exist and that the company can actually build it for the cost estimates included in the plan

The value test that a business plan must pass to attract financing from lenders and investors involves proving ________.

that the business venture will provide lenders and investors a high probability of repayment or an attractive rate of return

The competitive test that a business plan must pass to attract financing from lenders and investors involves proving ________.

that the company can gain a competitive advantage over its key competitors

Innovation

the ability to apply creative solutions to problems or opportunities to enhance or to enrich people's lives; doing new things.

Divergent reasoning

the ability to create a multitude of original, diverse ideas.

Creativity

the ability to develop new ideas and to discover new ways of looking at problems and opportunities; thinking new things.

Convergent reasoning

the ability to evaluate multiple ideas and to choose the best solution to a problem.

Divergent

the ability to see the differences among various data and events.

Convergent

the ability to see the similarities and the connections among various and often diverse data and events.

Lift Rate

the percentage change in a company's retention rate from one time period to the next.

Vision

the result of an entrepreneur's dream of something that does not exist yet and the ability to paint a compelling picture of that dream.

minimal viable product

the simplest version of a product or service with which an entrepreneur can create a sustainable business

Time out of cash

the total cash it will take to sustain the business until the business achieves break-even cash flow.

Low capital requirements, cost advantages that are not related to company size, and the lack of brand loyalty are considerations regarding the ________.

threat of substitute products

The second essential function for a business plan is ________.

to attract lenders and investors

A feasibility analysis is the process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business.

true

Moral Management

wide-ranging method of treatment that focuses on a patient's social, individual, and occupational needs

Bargaining Power of Buyers

• Buyers' influence is high when number of customers is small and cost of switching to a competitor's product is low. • Industry is more attractive when: - Customers' switching costs are high - Number of buyers is large - Customers want differentiated products - Customers find it difficult to collect information for comparing suppliers - Items account for a small portion of customers' finished products

Rivalry Among Companies

• Strongest of the five forces • Industry is more attractive when: - Number of competitors is large, or, at the other extreme, quite small - Competitors are not similar in size or capacity - Industry is growing fast - Opportunity to sell a differentiated product or service exists

Threat of Substitutes

• Substitute products or services can turn an industry on its head. • Industry is more attractive to new entrants when: - Quality substitutes are not readily available - Prices of substitute products are not significantly lower than those of the industry's products - Buyers' costs are high

Bargaining Power of Suppliers

• The greater the leverage of suppliers, the less attractive the industry. • Industry is more attractive when: - Many suppliers sell a commodity product - Substitutes are available - Switching costs are low - Items account for a small portion of the cost of finished products

Threat of New Entrants

• The larger the pool of potential new entrants, the less attractive an industry is. • Industry is more attractive to new entrants when: - Advantages of economies of scale are absent - Capital requirements to enter are low - Cost advantages are not related to company size - Buyers are not loyal to existing brands - Government does not restrict the entrance of new companies