DECA STUFF

Assets

Assets that are in the form of cash or tangibles that can be sold easily to generate cash add to a company's liquidity.

break-even analysis

is a financial assessment that a business uses to identify the level of sales it needs to reach the break-even point at various prices.(fixed cost and variable)

Consensus Indicator

is a measure of each group member's feelings toward a proposed decision or solution. Economic indicators are statistical measures used to as

Return on capital

is a measure of how well a business generates cash flow in relation to the capital it has already invested into itself

patent

is legal protection that provides an owner the sole rights to an invention or process for a specific time period.

External Environment

likely to impact business decision-making are competition, demographics, society and culture, the economy, the government, and technology.

Channels of distribution benefit consumers by

making a variety of products available to them. Channels of distribution benefit consumers by making a variety of products available to them. Without these channels, consumers could only buy products directly from producers, which would be impractical. Channels may lower some but not all consumer product prices. They may raise the quality of some but not all consumer products. Increased profits for businesses is not a benefit for consumers.

psychological factors

motivation, perception, learning, beliefs and attitudes

Cause

occurs when an employee's conduct seriously violates company policies or jeopardizes the company or other employees

External Change

such as development of technology, globalization of markets or new competitors on the market as well

Accounts Receivable

total amount of money owed to a business- money to be received later because of the sale of goods or services on credit

Jana noticed a problem while reviewing her company's monthly income statement. She verified that the total revenue was $4,590 and the total expenses were $1,452. However, the income statement showed a net income total of $1,383. Which of the following reflects the correct net income:

$3,138. A business's income statement, or profit-and-loss statement, is a financial summary that shows how much money the business has made or has lost over a specific period of time. A typical income statement includes revenue, operating expenses, and net income (profit). To determine the net income, subtract the total expenses from the total revenue ($4,590 - $1,442 = $3,138). It is important to verify the income statement's accuracy because businesses use the information to make important decisions about the business. If the information is incorrect (e.g., transposed numbers) and errors are not corrected, the business may make unwise decisions on the basis of faulty information.

Which of the following payback periods in a cost/benefit analysis would businesses prefer if all other things were equal:

1 year. Businesses prefer a short payback period. This is the point at which a decision begins to pay for itself. In other words, the payback period is the time it takes for the benefits of a change to repay its costs. Another term for payback period is break-even point.

When determining financing needs, what factor should businesses consider that will help decide whether they can repay the debt?

A Liquidity. Liquidity refers to a business's current assets, such as income or savings, that can be used to pay expenses. Assets that are in the form of cash or tangibles that can be sold easily to generate cash add to a company's liquidity. When determining financing needs, businesses usually consider their liquidity to decide if they have sufficient funds available to repay the debt. For example, if a business was barely covering expenses and had no liquid assets, it probably would decide not to borrow money because it would be difficult to make payments on the loan. Depreciation is a reduction in value of goods occurring over a period of time. Equity is the value of the business after all expenses and debts have been subtracted. Inventory is all the stock a business has on hand.

Cost Driver

A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.

inventory

A list of possessions or goods on hand.

Resignation

A resignation is a voluntary act by an employee.

Net income

A typical income statement includes revenue, operating expenses, and net income (profit). To determine the net income, subtract the total expenses from the total revenue ($4,590 - $1,442 = $3,138).

durable

Able to last; strong

Businesses often obtain cash to produce and sell goods by borrowing against their

Accounts receivable. Accounts receivable are all the monies owed to a business by its customers. Businesses in need of cash to continue producing and selling goods often use their accounts receivable as collateral when borrowing from financial institutions. In effect, the businesses are turning over the proceeds from their receivables to the lenders in exchange for immediate cash to continue operating. A promissory note is a legal form signed by a borrower promising to repay a loan. Liabilities are debts that the business owes. Operating expenses are all of the expenditures necessary to keep the business running.

Which of the following is an example of an intangible asset:

Accounts receivable. Accounts receivable are money that is owed to a business. They are an asset to the business, but they do not have a physical presence. Inventory, buildings, and equipment are all tangible assets—they have a physical presence.

Which of the following is a strategy for linking performance measures to financial outcomes:

Analyzing click-through rates. Businesses develop performance measures to evaluate the effectiveness of marketing activities. Businesses also need to compare the performance measures to financial outcomes to determine if the activity was worth the cost. The click-through rate for online advertising is a performance measure. By analyzing the click-through rate, businesses can link performance to financial outcomes. For example, if 200,000 people viewed a site and 8,000 of them clicked on a banner ad, the click-through rate is 4%. If the goal was to achieve a click-through rate of 2%, the activity outperformed expectations that might lead to an increase in sales, which is the financial outcome the business desires. Developing advertising budgets and paying for direct-mail pieces are promotional activities. Maintaining sales receipts is a bookkeeping activity.

James needs to hire a bookkeeper for his growing business. To determine the new employee's salary, James obtained pay data from five companies in his industry that are similar in size. The research indicated the following: Company A pays $31,205; Company B pays $29,995; Company C pays $34,800; Company D pays $42,500; and Company E pays $36,500. James decided to set his bookkeeper's salary at $35,000. What measure of central tendency did James use to set his new employee's salary?

B Mean. The mean is a measure of central tendency. Mean is a mathematical average, which involves adding together the raw data and dividing the sum by the number of individual data. In the example, James added together all of the salaries of the companies that he researched ($31,205 + $29,995 + $34,800 +$42,500 + $36,500 = $175,000). Then, Jack divided the sum by the number of individual salaries in the set of data ($175,000 / 5 = $35,000). The mode of a set of numbers is the value that appears most often in the set. The range is the difference between the largest and the smallest number in the data set. The median is the exact middle of a data set. In the example, $34,800 is the median of the data set.

Which of the following is a risk a business might face if it obtains a long-term loan from a financial institution and pays off the loan before it is due:

Being charged a penalty. When businesses obtain long-term loans, they agree to pay a certain amount of interest to the lending institution over a period of years. If a business pays off the loan before it is due, the financial institution does not get the interest it expected to receive. In such cases, the financial institution may charge the business a penalty for prepaying the loan. This penalty may be sizeable depending on the amount of the loan. A financial institution, rather than a business, loses interest on the account. A business might negotiate a variable rate for a long-term loan and pay a processing fee to originate the loan.

Basic torts relating to businesses often involve disputes concerning

Contracts- Business torts are wrongful actions against a business that cause it harm in some way. Disputes concerning contracts are often the basis for businesses suing individuals or other businesses. Many businesses have contractual arrangements with employees or vendors. If these contracts are broken, the business might be harmed and seek compensation through the legal system. Basic torts relating to businesses do not involve disputes concerning assaults, defamation, or emotional stress.

What should a successful brand promise be able to do?

C Communicate an appealing benefit. A brand promise is a business's agreement (spoken or unspoken) with customers that it will consistently meet their expectations and deliver on its brand characteristics and values. Before the business can deliver on its brand promise, it must have a product that offers an appealing benefit—one that persuades the target market to buy. For example, FedEx provides delivery services. The company's brand promise focuses on reliability. Therefore, FedEx promises to get its customers' packages to their destinations in a reliable manner—safely, quickly, and courteously—every time, which is an appealing benefit for most customers. A procedure is the step-by-step process that a person follows when performing a specific task. Customization involves making the product unique for each customer. Customization, a high-quality image, and the process by which the business delivers its products may be elements of a company's brand promise.

To effectively manage a supply chain, companies should

C Monitor the performance of all supply chain partners. To ensure the efficient production and distribution of products, companies should monitor the performance of all supply chain partners on a consistent basis. Companies should not ignore underperforming vendors—they should work with them to resolve the problem(s) or else replace them. Companies must be careful when introducing new innovations or changes to the production process. Introducing change too quickly can overwhelm the supply chain, resulting in failure to meet production quotas. Companies should stick with a single supplier when launching a new product in order to avoid overcomplicating the process.

If employees are fired because their conduct is in serious violation of company policies, they are being terminated for

Cause. Termination for cause occurs when an employee's conduct seriously violates company policies or jeopardizes the company or other employees. A termination for performance is used when an employee consistently exhibits poor performance compared to established performance criteria, or is incompetent. A resignation is a voluntary act by an employee.

Which of the following is one way that freedom in a private enterprise system is limited by laws:

Certain occupations must be licensed. Even though there are many economic freedoms in a private enterprise system, there are certain limits. Economic freedom is limited by laws that have been created to protect everyone. Workers in certain occupations must be licensed to safeguard public health and safety. Pay scales are not regulated but vary greatly depending on the occupation, area of the country, and current economic conditions. The law does not require all workers to take tests, although some businesses require applicants to take and pass ability tests before they are hired. Employees are not required to register with the state.

Collateral

Collateral is anything of value (e.g., car, home) belonging to the borrower that is pledged to the lender to guarantee that the loan will be repaid.

After writing your personal vision, what must you do to achieve it?

Commit to your vision through hard work and dedication. Your personal vision will not become a reality unless you work hard to achieve your goals. Putting your vision in a safe place and looking at it again in five years will not help you achieve your vision. Instead, you should place your vision in a place where you will see it often. Getting the highest-paying job you can find out of high school may help you save money, but it will not necessarily help you achieve your vision. You should be strategic when deciding what career path to pursue, making sure that it aligns with your vision. You do not need to spend all of your free time on self-improvement—you can still have hobbies and spend time doing things that you enjoy while pursuing your personal vision.

Which of the following is a characteristic of a business-format franchise:

Continuous assistance is provided by the franchisor. A business-format franchise is a more complex and more popular type of franchise arrangement than the product trade-name franchise. It involves a close, continuous working relationship between the franchisor and the franchisee. Examples of the businessformat franchise are McDonald's, Holiday Inn, and Jiffy Lube. Products and other materials usually must be purchased from the franchisor's list of approved vendors. The franchisee must operate under the

Limited liability, indefinite length of life, ease of expansion, legal entity, and transfer of ownership are considered advantages of a

Corporation. Corporations are advantageous due to the separate legal body that is created by a state charter. The charter limits individual liability, allows for permanency of existence, ease in transferring ownership, and a greater number of resources for financial growth. Both the sole proprietorship and partnership have unlimited liability, definitive life spans, difficulty in raising capital, and are not separate legal entities. A trade union is a group that represents people in similar occupational skill areas.

In managerial accounting, the number of hours that a business runs its machinery during the production process is classified as a(n)

Cost driver. A factor that causes a change in the cost of an activity is called a cost driver. Changes such as the amount of labor used, the number of machines used, the power used to run the machinery, and the number of hours that the machinery is operated are cost drivers. Increases in these activities increase the costs of making outputs (products), while decreases in these activities decrease the costs of making the outputs. Cost drivers are not unexpected expenses or inflexible transactions.

Managers are more likely to be able to persuade employees to follow new procedures if the managers have

Credibility. Credibility is believability. If employees believe what managers are saying, they are more likely to be persuaded to do what the managers want them to do. Managers develop credibility by always being truthful with employees. As a result, employees often like and trust managers who are credible and, therefore, are willing to follow their instructions. Having organizational skills, enthusiasm, or selfmotivation does not necessarily mean that managers will be able to persuade employees.

Why do lending institutions carefully evaluate how well a business meets certain criteria before making a loan?

D To reduce risk. There is a risk involved in making loans because a business may default and be unable to repay the bank. To reduce the risk, lending institutions use certain criteria to evaluate if the business is creditworthy. For example, a bank would run a credit check to find out if the business pays its bills on time. Also, a bank would review the business's financial records to determine if it earned sufficient income to pay expenses and also repay the loan. By carefully evaluating how well a business meets certain criteria, a bank is able to reduce the risk involved in making a loan. Lending institutions do not evaluate businesses to provide service, prevent theft, or improve relations.

Which of the following activities is an example of preparing before attempting to sell an idea:

Determining the details of your idea. Before you can "sell" your idea to others, you need to solidify the details and specifications of your proposal so that you can fully explain your idea to your audience. Explaining solutions to audience needs, overcoming objections, and affirming the audience's decision to "buy into" your idea are all steps in the selling process that come after doing advance preparation.

Which of the following should a business consider when negotiating a service or maintenance contract on a piece of equipment:

Does the cost of the contract exceed the cost of possible repairs? The business should estimate the costs of the most expensive, possible repairs and calculate if these expenses would be more or less than the cost of the service or maintenance contract. If the cost of the repair would be less than the cost of the contract, it may be wise to forgo the contract. The business would consider the need for installation and the availability of training and technical assistance when purchasing equipment. A business does not consider how much profit the seller will make on the contract.

Which of the following is a situation in which a business could use the budget information to make operating changes:

Estimated sales exceed actual sales. Budgets are only useful if a business compares the budget estimates with actual operating conditions. Businesses use the budget information to make decisions about how the business will operate and to make changes when necessary. A business knows that it must make operating changes if it compares the level of sales estimated in the budget with actual sales figures and finds that actual sales are not keeping up with the estimates. This information indicates that the business might not make the expected profit or even have a loss if changes are not made. A business probably would not make operating changes if the budget information indicates that total revenues exceed projected costs, expected profits are increasing, and accounts receivable are on target.

Which of the following is an example of a manager developing a policy that impacts customer relations:

Extending business hours on weekends. Management is responsible for developing policies, and many of these policies have an impact on customer relations. An example of a policy that usually improves customer relations is providing extended business hours on weekends. Many customers work during the week and only have free time in the evenings and on weekends. Businesses that offer extended hours on weekends are making it easy for customers to buy when it is convenient for them. Scheduling employees' work hours, using security devices, and revising bookkeeping procedures are routine business activities that managers perform on a regular basis.

Determine if the following statement is true or false: When developing an exit strategy for an entrepreneurial venture, the most important consideration is finding a suitable buyer.

False, there are many factors to consider, such as company valuation and personal goals. Entrepreneurs often leave their ventures after they achieve their objectives for their businesses. Entrepreneurs consider many factors, such as how much the business is worth, and personal considerations, such as retiring or starting another venture. There are several ways for an entrepreneur to exit a business, which include selling the business, taking his/her share of the profits and letting partners or others run the business, and closing the business. Thus, exiting a business is often complex and has many factors and options to consider, other than finding a suitable buyer.

What type of software do many businesses require be installed on computer systems as a security feature?

Firewall. Firewall software is intended to prevent unauthorized access to a computer network. Many businesses require firewall software to be installed on their computer systems because their systems are networked, and hackers could destroy or steal valuable data. Firewall software is a security feature that helps protect a business's computer network. Businesses do not install reality, spider, or media software as a security feature.

An important part of a market analysis involves collecting __________ information.

Geographic. When analyzing the market, it is important for businesses to collect several types of geographic information. First, a business considers the geographic location of customers and potential customers. Businesses need to know where their customers are. Also, a business considers the geographic location of the business. Businesses need to know if they are located in an area that has market potential or if there are too many competitors in that area. A market analysis does not involve collecting confidential, employee, or property information.

Which of the following is an example of a durable good:

House. A durable good is an item that is intended to last a relatively long time. Most houses would be considered durable goods. Haircuts, gasoline, and hamburger are eventually used up and are, therefore, classified as nondurable goods.

By joining a community organization, such as the local chamber of commerce, an entrepreneur can network with others to

Identify new venture opportunities. An opportunity is a circumstance that presents itself as a favorable means to meet an objective. Entrepreneurs look for opportunities to start businesses and if the opportunities are feasible, they act upon them. There are many ways to look for business opportunities such as watching trends, attending trade shows, and talking with friends, customers, and business associates. Entrepreneurs might join community organizations or trade associations to network with others with the goal of identifying new venture opportunities. Entrepreneurs do not join community organizations to obtain selling experiences, evaluate personal skills and abilities, or improve goods and services.

Which of the following is most likely to be a dynamic element of a business's external environment:

Increase in competition. A business's external environment is always changing and dynamic. Elements of the external environment that are likely to impact business decision-making are competition, demographics, society and culture, the economy, the government, and technology. Personnel, training, and quality control measures all represent internal elements of the business's environment.

The type of capital resources that a startup business needs to begin operating usually depends on the

Industry. Capital resources are assets, or things of value, that a firm uses on an ongoing basis to meet its objectives. The capital resources that a business needs to get up and running depends on the type of products that the business sells. For example, a snow-ski resort needs ski-lift equipment, while a landscape business needs mowing equipment, mulch, and shrubs to efficiently operate. Location, owner's preferences, and suppliers' lead time are not always primary considerations when selecting capital resources.

Which of the following is an example of a fixed operating expense:

Insurance. Insurance is a fixed operating cost—it does not increase or decrease with changes in production. Sales commissions, advertising, and travel expenses are all variable—they fluctuate with changes in production.

During the month of July, sales at Handy's Shoe Mart totaled $2,500. The cost of the shoes was $1,025. The owner paid $866 for supplies, insurance, rent, and utilities during the month. The $609 left over represents the owner's

Net profit. Net profit is the amount of money left over after operating expenses are subtracted from gross profit. Sales income is the total received from the sale of goods or services. Gross profit is the money left over after cost of merchandise is subtracted from sales income. Operating expenses are the daily costs of running a business.

Ali wants to negotiate with her boss to take on more job responsibilities. Before approaching her boss, Ali needs to determine her boss's position and

Interests. The key to successful negotiation is to focus on interests. Interests are the things that you and the other party want or need. You must consider the other party's interests as well as your own. Ability is a skill someone uses to perform a task through knowledge, training, and practice. When negotiating, one party may not necessarily know the other party's skills. Standards are specifications or statements that are used as a basis for comparing or judging goods or services. Procedure refers to the step-by-step process someone follows when performing a specific task.

To determine their human resource needs, new business owners often find it helpful to

List all the tasks involved in operating the business. Often, it helps business owners to write down every task that the business must perform in order to operate. After listing all tasks, the owners can categorize tasks by function (e.g., sales, bookkeeping) and determine in which areas they need the help or expertise of others. In most situations, asking a technical recruiter for advice, hiring consultants or freelancers, and allocating fund for payroll taxes do not help business owners determine their human resource needs.

For which of the following markets would producers use a short channel of distribution:

Local Consumers

If a business considers where the consumers are and who they are before selecting a channel of distribution, the business is considering the __________ factor.

Market. Market factors deal with where the consumers are, who they are, the information they require, and the size of their orders. Understanding the market is an important aspect of selecting the best channel of distribution. For example, it is important for businesses to know that most consumers prefer to buy products from retailers. Promotion, human, and sales are not factors that businesses consider when selecting a channel of distribution.

Products that appeal to the majority of customers are often sold through __________ marketing efforts.

Mass. Mass marketing is designing products and directing marketing activities in order to appeal to the whole market. One marketing plan can thus be used to appeal to many types of customers. Demographic characteristics, such as age, income, or occupation, and psychographic characteristics, such as lifestyles and personalities, are used to define or differentiate between segments of a market.

nondurable

Meant to be used up, Examples: shampoo, chewing gum, pizza(less than three years)

To develop repeat business and customer loyalty, a business owner might

Offer a new service. Because a business cannot survive if it does not earn a profit, and profits are generated from product sales, business owners often look for ways to improve or develop goods and services to keep the customers coming back. Increasing prices and ridiculing the competition are not activities that would increase repeat business and customer loyalty. Updating equipment does not necessarily facilitate repeat business and customer loyalty.

One reason why it is important to accurately forecast sales for a marketing plan is because the forecast is the basis of other

Operational activities. The sales forecast, the prediction of future sales over a specific period of time, is the basis for many other operational activities. The forecast affects decisions about production, distribution, purchasing, promotion, etc. Therefore, the sales forecast needs to be as accurate as possible so the business correctly plans the other operational activities. For example, if the forecast is too high, a business might produce substantially more product than it will be able to sell. A sales forecast is not the basis of pricing strategies, business reports, or management techniques.

When a supervisor evaluates an employee's performance, the evaluation should be based on the __________ standards.

Organization's. Each organization, or business, develops standards for evaluating an employee's performance. When supervisors evaluate employees, they should rate them according to established standards. An employee is more likely to resent a negative evaluation if it is based on the supervisor's standards. Evaluations are not based on the standards set by employees or competitors.

Hill Industries uses specific criteria to evaluate vendor performance, including on-time delivery rate, return rate, and number of customer complaints. These metrics are also known as

Performance indicators. A performance indicator is a measure of the success of a certain activity or entity. Businesses often set performance indicators for their own success, as well as the success and effectiveness of their suppliers. Performance indicators commonly used to evaluate vendor performance and effectiveness include on-time delivery rate, return rate, and number of customer complaints. If a vendor does not meet or exceed a particular indicator, the business is apt to discuss the measure with the vendor and develop a plan of corrective action. A consensus scale is a measure of each group member's feelings toward a proposed decision or solution. Economic indicators are statistical measures used to assess the health and direction of the economy. Return on capital is a measure of how well a business generates cash flow in relation to the capital it has already invested into itsel

internal Environment

Personnel, training, and quality control measures all represent internal elements of the business's environment.

Production cost

Production time might be included as a cost in certain types of businesses (e.g., tax preparation, manufacturing).

A business converts inputs into outputs through its __________ activities.

Production. Production is the process or activity of producing goods and services. For example, a company uses raw materials, equipment, employees, and a building to produce radios for purchase by other businesses for use or for resale. Management is the process of coordinating resources in order to accomplish an organization's goals. Accounting is the process of keeping financial records. Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Non-corporations are taxed as pass-through entities, meaning that

Profits and losses are claimed on owners' personal tax returns. Non-corporations are taxed as passthrough entities, meaning that profits and losses are claimed on owners' personal tax returns. Noncorporations are still subject to federal taxes as well as state and local taxes. Business income-tax rates are based on how much profit a business makes, not whether it is a corporation or not. Non-corporations pay payroll taxes on employees, just as corporations do.

The FPD Company keeps copies of its brochures, catalogs, and flyers on file for future reference. This is an example of a company that is maintaining __________ records.

Promotional. Promotional records are documents containing information about the various types of communication that businesses use to inform, persuade, or remind customers of their products, images, or ideas. Businesses often keep copies of their promotional materials in case they need to refer to them in the future for some reason (e.g., to answer customer inquiries). Contracts, permits, and leases are examples of records that businesses keep for regulatory and legal purposes. Inventory records contain information about the types and quantities of materials or products the business has available or on order. Asset records contain information about the things that a business owns, such as the equipment and furniture it uses to operate.

If an entrepreneur obtains a commercial bank loan to finance a new venture, s/he is often required to

Provide collateral. There are many ways for entrepreneurs to obtain financing for new business ventures. One way is to obtain a loan from a commercial bank. The loan process generally involves completing a loan application and submitting a business plan to the financial institution. In most situations, a bank will require the loan applicant to put up collateral in order to obtain the loan. Collateral is anything of value (e.g., car, home) belonging to the borrower that is pledged to the lender to guarantee that the loan will be repaid. For example, if a business fails, and the borrower cannot afford to pay back the bank loan, the bank can take the borrower's belongings (collateral) as payment for the outstanding loan. Banks do not require loan applicants to close their savings accounts, relinquish contracts, or charge interest.

Motives, perception, attitude, lifestyle, personality, and abilities are __________ factors influencing consumer behavior.

Psychological. Consumer behavior encompasses individuals' actions that determine what they buy and sell. Psychological, social, and personal factors all influence consumer behavior. Psychological factors include an individual's motives, perception, attitude, lifestyle, personality, abilities, and knowledge. Consumer behavior is also impacted by social factors such as opinion leaders, a person's family, reference groups, social class, and culture. Personal factors impacting consumer behavior are specific to a particular person and include demographic characteristics such as gender, age, ethnicity, etc. While political and economic factors may influence consumer behavior in some instances, motives, perception, attitude, lifestyle, personality, and abilities are not political or economic factors.

Ryan keeps a list of his goals to remind himself of what he's working toward. Which tip for smart goal setting is Ryan following?

Putting goals in writing. By keeping a list, Ryan has put his goals in writing. This makes them seem more solid and real, giving Ryan greater motivation to work toward them. Ryan is not necessarily tying his goals to a timetable, making his goals specific, or making his goals difficult but possible.

ratio analysis

Ratio analysis involves the calculation of ratios based on a company's financial data. It allows analysts to compare numbers within a financial statement and determine the relationships among numbers on different financial statements.

What do business employees often need to do before they are able to write proposals?

Research the problem. Proposals are intended to answer questions or provide recommendations to solve problems. Business employees often need to research a particular situation or problem before they are able to write proposals. After employees do research and gather information, they write proposals that explain the problem and the solutions. The proposal is intended to persuade the business to follow the recommendations. Employees usually do not need to analyze personal biases, contact the customer, or evaluate technical skills before they are able to write proposals.

The entrepreneurial discovery process that involves finding a way to meet an existing demand by inventing new products from available resources is based on

Science. Entrepreneurial discovery is the process of detecting and matching product and market opportunities with one another in a manner that satisfies the market and the business. Sometimes there is a market with a demand for something that is not available, and the business invents a product to satisfy the demand. For example, a scientist uses existing physical elements to develop a new vaccine to prevent a certain disease for which there is no treatment. Because the vaccine is new, the scientist (inventor) is observing and applying knowledge in a specific way, or using a scientific process. Medicine, psychology, and physics are scientific disciplines, or areas of scientific study.

An example of an internal change that could affect a business's sales forecast is a change in the

Size of the sales force. An internal change is one that occurs within the business and is under the business's control. Increasing or decreasing the number of people on the sales force is an internal change that will affect the sales forecast. For example, decreasing the size of the sales force may cause sales to fall because the remaining staff may not be able to handle as many sales. Changes in the number of competitors in the market, the length of a national recession, and the levels of consumer spending are external changes.

Small-business owners develop and use operating procedures so that everyday tasks are performed in a(n) __________ way.

Standard. Operating procedures are the step-by-step processes that employees follow when performing specific work-related tasks. By developing and implementing operating procedures, the small-business owner reduces the amount of time that s/he spends answering questions and making decisions about routine, day-to-day activities. This reduction occurs because the employees have guidelines or a standard way to complete tasks. Conducting activities in a standard way often increases employee productivity and efficiency. Everyday tasks do not always need to be performed in imprecise, diverse, or innovative ways.

Business goals are accomplished by means of marketing

Strategies. Marketing strategies are game plans for getting the job done. Budgets and salespeople are factors in a strategy, and profit is a goal of most strategies.

Which of the following is a characteristic of a profit-and-loss statement:

Summarizes expenses and revenue from sales. A profit-and-loss statement is a business's financial picture that lists all revenue and expenses for a certain time period. A profit-and-loss statement is not the same as a balance sheet. Characteristics of a balance sheet include listing assets and liabilities and showing the owner's financial position.

Dan is in the process of determining the types of computer software and telephone service that will best suit his new business and get it up and running. Dan is considering his business's

Technical needs. Entrepreneurs and startup business owners must consider many factors before they open their ventures. They must consider their financial and staffing needs, as well as their technical needs. Their technical needs might include telephone, fax, Internet, computers, software programs, and automated equipment needs. Each business's needs vary, so the technical needs of each business varies, too. The competitive advantage is the edge achieved by businesses that offer something better than their competitors.

Which of the following statements is true about business startup requirements:

The financial needs to start a new business depend on the nature of the venture. The requirements (e.g., time, money) that a person needs to start a business differ and usually depend on the nature of the business. For example, a person who starts a home-based consulting business does not require as much money for the startup as a restaurant franchisee does. The franchisee needs to lease space or build a facility, purchase kitchen equipment, obtain supplies, hire employees, and pay franchise fees, which can be very expensive. A patent is legal protection that provides an owner the sole rights to an invention or process for a specific time period. Business owners do not always invent goods or processes, so not all of them need to obtain patent protection.

Why is it important for entrepreneurs to talk with industry experts when developing new business concepts?

The industry experts typically provide useful information. Industry experts have in-depth knowledge about a specific field. Experts often know about the trends, processes, new products, and new technology that affect the industry. These experts often provide entrepreneurs with useful information as they develop the ideas for their new ventures. Talking with industry experts doesn't always improve your management skills or enhance your confidence. Industry experts might know where you can obtain financial support, but they do not always offer it themselves.

Which of the following is a characteristic of the data collection step in marketing research:

The step in which the most mistakes are made. The reason that the most mistakes are made in this step is that data collection can be a tedious chore. When researchers become bored, they may record data inaccurately. It is also the most expensive and least interesting step.

Why do interviewers usually focus on asking questions that are related to a job applicant's performance?

To determine qualifications. The purpose of an interview is to determine if the applicant meets the qualifications to perform the job. Therefore, the interview questions should relate directly to the job in terms of the applicant's education, skills, training, and work history. Businesses often take remedial action with current employees who are not performing well on the job. Applicants usually do not complain during job interviews. Interviewers usually do not plan future training while asking questions during a job interview.

Why is it often necessary to provide employees with additional training?

To improve performance. Businesses often provide additional training based on changing needs in the workplace. As technology and job responsibilities change, it is necessary to train employees to perform new tasks or tasks that have been revised. By providing training, businesses are helping employees learn new skills and improve their performance. Socialization is part of the orientation process. Businesses do not provide additional training to analyze diversity or identify sensitivity.

What is often the role of management in the achievement of quality in a business?

To lead the effort. Management sets the tone for quality in a business and leads the effort. If managers do their best to achieve quality and set an example for employees, the employees usually follow. Managers lead by setting clear goals, by making sure employees understand the goals, by giving employees the information and tools they need, and by being supportive. They also lead by behaving the way they expect employees to behave. The role of management in the achievement of quality in a business is not to assign blame or judge the staff. Management should direct and guide. It is not possible to eliminate conflict, although management often can control conflict.

Which of the following is one way that businesses use marketing information:

To predict change. Businesses need a wide variety of information in order to make decisions about how the business will market its goods or services. Businesses gather marketing information about their customers, the competition, the economy, and sales trends in order to predict what may occur in the future. The use of marketing information allows businesses to prepare for change and adapt in order to remain successful. Businesses often develop surveys and conduct research to obtain the marketing data they need to analyze in order to predict change.

Which of the following is a type of intangible business property that is protected by law:

Trademark a symbol, design, or word used by a business to identify a good or service and is registered with the government to prevent its use by others. A trademark is an example of intangible business property. Federal law protects a business's intangible property from being used by competitors. A business's inventory, acreage, and equipment are types of tangible property.

What information does a business always need to have when it conducts a break-even analysis?

Variable costs and fixed costs. A break-even analysis is a financial assessment that a business uses to identify the level of sales it needs to reach the break-even point at various prices. To conduct a breakeven analysis, the business must know the fixed costs and variable costs it will encounter to get the good or service to the end user. Production time might be included as a cost in certain types of businesses (e.g., tax preparation, manufacturing). Depreciation rate is the level at which the value of something (e.g., equipment) reduces over time.

Ethan is developing common-size financial statements so that he can compare financial performance across several different companies. Ethan is conducting __________ analysis.

Vertical. Three common types of financial statement analysis are vertical analysis, horizontal analysis, and ratio analysis. When conducting vertical analysis, an individual calculates each individual item on a financial statement as a percentage of the total. After doing so, the analyst can develop common-size financial statements that allow him/her to compare performance across several years for a single company or across several different companies. Horizontal analysis, which is sometimes known as trend analysis, involves analyzing dollar amounts on financial statements for a single company across several years. Horizontal analysis does not involve the development of common-size financial statements. Ratio analysis involves the calculation of ratios based on a company's financial data. It allows analysts to compare numbers within a financial statement and determine the relationships among numbers on different financial statements. It can also be used to compare the performance of multiple companies.

The future that you desire to create is known as a

Vision. Vision is the future you desire to create. A goal is an objective or want that you plan to fulfill. A prediction is a forecast made about the future. A mission statement is a brief summary of what a business owner wants a business to be doing.

Which of the following statements is true about new venture risk-taking:

When an entrepreneur seeks a high profit, the risk is usually higher. Risk is the chance of failure or loss. There are many types of risks that business owners face including social, career, psychic, and financial risks. The amount of risk a business owner takes varies, but financial risk is the risk that is the easiest to measure. The more money that a person invests in a business (equity or debt finance options), the more financial risk the person is taking because s/he has more money to lose. Risk-taking is often related to potential rewards. Entrepreneurs care about their profits to varying degrees.

Personal Factors

age and life-cycle stage, occupation, economic situation, lifestyle, personality and self-concept

vertical analysis

an individual calculates each individual item on a financial statement as a percentage of the total. After doing so, the analyst can develop common-size financial statements that allow him/her to compare performance across several years for a single company or across several different companies.

psychographic characteristics

any personality, value, attitude, interest, or lifestyle attribute

economic indicators

are statistical measures used to assess the health and direction of the economy.

Internal Force

changes in direction and objectives and ideology of a company or a work force.

Mass marketing

developing products and promotions to please large groups of people

Depreciation Rate

e is the level at which the value of something (e.g., equipment) reduces over time.

Social factors

family, reference groups, culture

Demographic

having certain characteristics in common, such as age, race, or gender

Inventory records

identify the type and quantity of resources and products on hand along with the current value of each.

Liquidity

refers to a business's current assets, such as income or savings, that can be used to pay expenses

Performance

used when an employee consistently exhibits poor performance compared to established performance criteria, or is incompetent.

horizontal analysis (trend analysis)

which is sometimes known as trend analysis, involves analyzing dollar amounts on financial statements for a single company across several years. Horizontal analysis does not involve the development of common-size financial statements.