mgmt 442

return on investment (ROI)

A capital budgeting equation used to measure the relationship be- tween initial investment and the profits that are expected to be received from making the investment.

survey

A data-collection method using a questionnaire—in person, on phone, on paper, or on the Internet.

Characteristics of traditional small business

A firm intended to provide a living income to the owner, and operat- ing in a manner and on a schedule consistent with other firms in the industry and market

focus group

A form of data gathering using a small group led by a moderator.

cost strategy

A generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer

focus strategy

A generic strategy that targets a portion of the market, called a segment or niche.

wholesaler

A middleman business which buys (typically in large quantities) and sells (typically in smaller quantities) to businesses rather than consumers.

agent

A middleman business which rep- resents a manufacturer's product or service to other business-to- business middleman firms.

Recency

Be among the people your customers have seen in the past few days.

Four key ideas about starting an entrepreneurial business

Believe you can do it. Planning+action=success. help helps. Do well, do good

Key actions ti becoming a small business owner using the BRIE model

Boundary, resources, intention, and exchange

capital budgeting

The process of deciding among various investment opportunities to create a specific spending plan.

business life cycle

The sequence or pattern of developmental stages any business goes through during its life span.

Entrepreneurial operational competencies

key business functions, industry specific knowledge, resources, determination and opportunity

creative destruction

new production replaces outdated ones

success

occurs once the firm is established in its market.

The two most commonly used financial ratios for comparing investment alternatives

payback period and return on investment (ROI)

Family business challenges

role conflict, time management, succession

Partitioned pricing

setting a base price and charging extra for all other components.

Odd-even pricing

simply means setting a price that ends with a 9, 7, or 5. (ex: don't charge $100; charge $99.99 (or $99.97 or $99.95))

characteristics of product/service

tangibility, perishability, heterogeneity, inseparability

resource maturity

the functional areas, the market, and the products or services are all being dealt with consistently and efficiently.

price elasticity

the idea that the market's demand for a product or service is sensitive to changes in its price/ the idea of dropping the price to increase sales

client's location

these services include things such as house or office cleaning, pest control, remodeling, lawn and gardening services, carpet cleaning, and similar services which must be performed at this location.

Premium pricing

this is used for non-status symbol types of products, such as toothpaste, shampoo, or laundry detergent.

prestige pricing

this pricing is for an item considered a status symbol, such as a Rolex watch or a Mercedes automobile

three critical site selection considerations

traffic, customer ease, and competition.

emergence

when a person thinks about and takes actions toward starting a firm

4)Control of the business

who runs the business and how is decision making split among various people? - ( partnerships should have a written partnership agreement covering key issues such as ownership, profit splits, buyouts, and other matters important to the partners.)

captive pricing

you sell something, usually a base system, at a relatively low price, but the expendables it uses are relatively expensive.

major factors at play when deciding what form the business organization must take

1)Personal liability of the business owner, 2)Taxation of both the entity and its owners, 3)Complexity and organizational costs in setting up the business and maintaining that entity, 4)Control of the business, 5)Continuity of the business, 6)Ability of the business to raise capital

born international

A new firm that opens a website immediately, thus being exposed to customers from around the world.

heterogeneity

A quality of a service in which each time it is provided it will be slightly different from the previous time.

inseparability

A quality of a service in which the service being done cannot be dis- connected from the provider of the service.

perishability

A service exhibits perishability in that if it is not used when offered, it cannot be saved for later use.

Characteristics of lifestyle or part-time firm

A small business primarily intended to provide partial or subsistence financial support for the existing lifestyle of the owner

differentiation strategy

A type of generic strategy aimed at clarifying how one product is unlike another in a mass market.

e-tialer

An electronic retailer; a store that exists only on the Internet.

tangibility

An item's capability of being touched, seen, tasted, or felt.

augmented product

Core product plus features that tend to differentiate it from the competition.

ethnographic research

Data gathered by simple observation—seeing what consumers do, rather than asking them.

Flexibility rewards refer to the money made from owning a business

False

remote/firm's location

In this type of service, face-to-face meetings with the client are infrequent. (ex: medical transcription, data processing, fulfillment centers, and some consulting work.) generally are ideal for home-based businesses.

Recommendation

It is a powerful way to get help and advice. Making clear recommendations that can help your customers provides a memorable way to show that you think about, understand, and care about your customers and their business.

Off-peak pricing

Lower prices during off-peak periods in order to even out purchases (ex: Happy hours or late night specials at restaurants)

Not true about the notions of entrepreneurship?

Manufactured product are usually intangible goods

characteristics about publicity

Mentioned by media or influential entities Greater longevity than advertising Greater credibility than advertising Cost effective

characteristics of publicity

Mentioned by media or influential entities Greater longevity than advertising Greater credibility than advertising Cost effective

random discounting

Nonsystematic price reduction (ex: Sales without a discernable pattern)

The six major myths about small businesses

Not enough financing. Can't start during a recession. Profits means you have to make something. If you fail, you can't try again. Students don't possess the skills needed to start a business. 90% fail within 2 years

traffic generators

Other businesses that bring customers to the area. (ex: supermarkets, office complexes, schools, and malls)

Periodic discounting

Patterned or systematic price reduction (ex: Holiday sale, back-to-school sale)

major price lowering technique

Periodic or random discounting, Off-peak pricing, Bundling, Multiple or bonus pack, Coupons, Rebates, Loyalty and Referral Programs, Referral discount

pros and cons of hiring a part-time employee

Pros: allow de facto probationary period to test employee fit (seasonal/temp), less costly, flexibility cons: lack of commitment, quality of service decreased

pros and cons of hiring a full-time employee

Pros: take significant time away (with allocated duties), willing to take more responsibility cons: costly, increasing the risk

Mutually Accessible Location

Services using this approach often have too much specialized equipment to be readily transported and a need for at least some client involvement. (ex: Barbershops, dentist offices, video rental stores, and restaurants)

skimming

Setting a price at the highest level the market will bear, usually because there is no competition at the time (ex: Prices of plasma televisions)

payback period

The amount of time it takes a business to earn back the funds it paid out to obtain a capital asset

total product

The entire bundle of products, services, and meanings of your offering; includes extras like service, warranty, or delivery, as well as what the product means to the customer.

Guerilla marketing

The use of creative and relatively inexpensive ways to reach your customer Especially beneficial to small busi- nesses with a small marketing budget.

core product

The very basic description of what a product is—a bar of soap, a house-cleaning service.

How is success measured with respect to the quadruple bottom line?

There are four domains in which balanced entrepreneurs need to achieve success to be truly happy: the firm, the community, the family, and their own life.

potency

When you contact customers, your message has to remind them that your firm values their business. (The message is one that is remembered, and remembered for the right reasons.)

primary reasons you write a marketing plan

You can plan for most contingencies Reduce your risk of failure First step toward a business plan

frequency

You never know when your competitors will show up, so to make recency work, you have to stay in touch with customers on a frequent basis.

Employee leasing

a hybrid between outsourcing and having a paid staff. (temp agency)

price lining

an attempt to appeal to several different markets. In this situation, you might have three models of your product or service price to appeal to the high-, mid-, and low-end market.

existence

defined by having the business in operation, but not yet stable in terms of markets, operations, or finances.

three major strategic selections

differentiation, cost, and focus strategies

2)Taxation of both the entity and its owners

do owners get taxed as well as the business? - (LLC)

non direct distribution channel

e-tailer, Agent, wholesaler, and born international

business life cycle stages

emergence, existence, success, resource maturity, takeoff

Three primary rewards for starting a small business

growth, income and flexibility

takeoff

happens if a business embarks on a period of exceptional growth

Characteristics of high-growth venture

has intent to eventually go public

1)Personal liability of the business owner

how much the owner can lose if there are problems arising from the business... (Sole proprietorship and general partnership)

site selection (high customer contact)

include such diverse operations as medical or legal offices, restaurants, retail establishments, dry cleaners, and other businesses that are highly dependent on being convenient to the customer.

Characteristics of high -performing small business

intended to provide owner with a high income through sales or profits superior to traditional small businesses