Entrepreneurship Exam 3

What are the most common long term liabilities?

Bank loans

Why is it difficult to establish infringement with copyright?

Because of the fair use doctrine: -an exception to copyright protection that allows limited use of copyrighted materials ex) comment, news reporting, teaching, scholarship, research, etc

What is the Patent and trademark office?

Office of fed. gov. through which all patent and trademark applications are filed.

What are limited partnerships?

A form of company organization that permits capital investment without responsibility for management and without liability for losses beyond the initial investment

What are assets and liabilities? owners equity?

Assets: financial resources the firm owns liabilities: claims that creditors have against the company owners equity: residual interest of the firm's owners

What is secondary data? adv/disadv.

data already been compiled ex) periodicals, articles, trade association info, gov. publications, company records internal: info that exists within the venture external: available in numerous periodicals, trade association literature, and gov. public. adv: -less expensive disadv: -outdated -less useful -may not fit current problem -less valid

What is the contribution margin approach?

determined by calculating the difference between the selling price and the variable cost per unit

What are prepaid expenses?

expenses the firm already has paid but that have not yet been used -ex) insurance paid on the comapny car every six months (prepaid expense entry)

What is a trademark?

A distinctive name, mark, symbol, or motto identified with a company's products

Why does a balance sheet always balance?

Assets = Liabilities + Owners' Equity

How do you determine the value of an asset?

1) identify the resource 2) provide monetary measurement of resource's value 3) establish the degree of ownership in the resource

What are the five types of consumers?

1) innovators 2) early adopters 3) early majority 4) late majority 5) laggards

What are the conditions of information being a trade secret?

1) it is not known by the competition 2) the business would lose its advantage if the competition were to obtain it 3) the owner has taken reasonable steps to protect the secret from disclosure

What are the advantages to registering a trademark?

1) nationwide constructive notice of the owner's right to use the mark 2) Bureau of customs protection against importers using the mark 3) incontestability of the mark after 5 years

What considerations must take place for research to be effective?

- companys major strengths and weaknesses -market profile -current and best customers -potential customers -competition -outside factors: demographics, tech, trends, etc -legal changes

Critical steps to developing a social media marketing plan

-LISTEN: to what people are saying about the company -Identify; target market so mark. strategies can be organized efficiently -Categorize: social media platforms by target market relevancy -Appraise: the location, behavior, tastes, and needs of target audience, as well as competition, to determing orgs. strengths and weaknesses -Implement: choosing right tools is accomplished by finding social media sites where target audience resides -Collaborate: with platform members as eans of establsihing a mutually beneficial relationship with platform participants -Contribute; content to build reputation and become valued member -Convert: strategy execution into desire outcomes such as brand building, increased cust. satisfaction -MONITOR: the orgs. SMM initiatives

Where do the claims on a balance sheet come from?

-creditors who have a claim to firm's assets and can sue the company if these obligations are not paid -owners who have rights to anything left over after the creditors claims have been paid

Questions to establish objectives for general marketing research?

-where do potential customers go to purchase the good or service in question? -why do they choose to go there? - what is the size of the market? how much of it can the business capture? - how does the business compare with competitors? - what impact does business promotion have on customers - what types of products or services are desired by potential customers?

What are the five major consumer classifications?

1) Convenience Goods -whether staple goods, impulse goods, or emergency goods, consumers will want these goods and services but will not be willing to spend time shopping for them 2) shopping goods: -products consumers will take time to examine carefully and compare for quality and price 3) specialty goods: -products or services consumers make a special effort to find and purchase 4) unsought goods: -items consumers do not currently need or seek ex) life insurance, cemetery plots 5) new products: items that are unknown due to lack of advertising or new products that will take time to be understood

What are the key elements of effective marketing?

1) Marketing philosophy 2) market segmentation 3) consumer behavior

What are the five basic rules that entrepreneurs should follow to avoid pitfalls?

1) Never select a corporate name or mark without first doing trademark search 2) If your attorney says you have a potential problem with a mark, trust his or her judgement 3) Seek a coined or fanciful name or mark before you settle for a descriptive or highly suggestive one 4) Whenever marketing or other considerations dictate the use of a name or mark that is highly suggestive of the product, select a distinctive logotype for the descriptive or suggestive words 5) Avoid abbreviations and acronyms wherever possible, and when no alternative is acceptable, select a distinctive logotype in which the abbreviation or acronym appears

What are the two parts of a patent application?

1) Specification: the text of a patent and may include any accompanying illustrations -purpose to teach those fluent in this area of tech all they need to understand, duplicate, and use the invention: a) introduction explaining why the invention will be useful b) description of all prior art that you are aware of and that could be considered similar c) summary of invention that describes essence of tech and difference from prior d) detailed description of invention, including anything that could be remotely relevant e) examples and experimental results, in full detail 2) Claims: series of short paragraphs, each of which identifies a particular feature or combination of features, protected by a patent -define and limit the patented invention

How can trademarks be invalidated?

1) cancellation proceedings: third party challenge to the mark's distinctiveness within 5 years of issuance 2) cleaning out procedure: -failure of a trademark owner to file an affidavit stating it is in use or justifying its lack of use within 6 years of registration 3) Abandonment: the nonuse of a trademark for two consecutive years without justification or a statement regarding the trademark's abandonment 4) Generic meaning: -the allowance of a trademark to represent a general grouping of products or services

Three major factors that influence the choice of marketing philosophy?

1) competitive pressure: intensity of competition 2) entrepre. background: range of skills and abilities they possess 3) short-term focus: -generating sales in short term, etc

Key distinctions of social media marketing

1) control vs. contributions; -traditional seeks to contorl the content seen by audience and attempts to dominate territory -social media emphasizes audience contribution and relinquishes control over large parts of the content 2) trust building -trusting relationship with customer audience because they cannot fully control the content users will create 3) how social media messages are consumed -trad: one-way from firm to customers -social med. : two-way communication to an audience that is interested in responding

What are the key factors in marketing information systems?

1) data reliability 2) data usefulness or understandability 3) reporting system timeliness 4) data relevancy 5) system cost

Ways to minimize legal expenses?

1) establish clear fee structure with an attorney before any legal matters are handled 2) attorneys also operate in competitive environ. ; fee structures are negotiable 3) establish clear written agreements on all critical matters that affect business operations 4) always attempt to settle any dispute rather than litigate 5) have attorney share forms in elect. format 6) use less expensive attorney for smaller transactions

What are the factors that have to be considered for it to be considered fair use?

1) purpose and character of the use, commercial or nonprofit purpose 2) nature of the copyrighted work 3) amount and sustantiality of the portion used in comparison to work as whole 4) effect of the use upon the potential market for a value of the copyrighted work

What are the basic rules to securing a patent?

1) pursue broad, commercially significant, and patents that offer a strong position. WIDE COVERAGE 2) Prepare a patent plan in detail -Outline the costs to develop and market the innovation 3) Have your actions relate to your original patent plan ---wise to remain close to the plan during the early stages of establishing the patent 4) Establish infringement budget: A realistic budge for prosecuting violations of the patent 5) Evaluate the patent plan strategically -3 years, will patent be worth defending in that time?

What things can an owner of a copyright do?

1) reproduce the work 2) prepare derivative works based on it 3) distribute copies of the work by sale or otherwise 4) perform the work publicly 5) display the work publicly can be transferred

What are the major sections of the income statement?

1) sales revenue 2) costs of goods sold 3) operating expenses -major expenses, exclusive of costs of goods sold, in generating revenue -selling expenses: result from selling, delivering, installing a product -admin expenses: operating expenses not directly related to selling or borrowing 4) financial expense -interest expense on long-term loans 5) income taxes estimated

Procedures to form corporation?

1) subscriptions for capital stock must be taken and a tentative organization created 2) approval must be obtained from the secretary of state in the state in which corp. is formed

Adv. and disadv. of sole proprietorships

ADV: -ease of formation: less formality and fewer restrictions, little or no gov. approval, less expensive -sole ownership of profits -decision making and control vested in one owner -flexibility -relative freedom from gov. control -freedom from corp. business tax DISADV: -unlimited liability -lack of continuity (if owner dies) -less available capital -relative difficulty obtaining long-term financing -relatively limited viewpoint and experience

ADV and DISADV of corporations?

ADV: -limited liability -transfer of ownership -unlimited life -relative ease of securing capital in large amounts -increased ability and expertise DISADV: -activity restrictions -lack of representation -regulations (gov) -organizing expenses -double taxation (corporate and individual profits)

What are retained earnings?

Accumulated net income over the life of a corporation to date

Chapter 13 ?

Adjustment of debts VOLUNTARILY ONLY; creditors are not allowed to file individuals are allowed: 1) avoid a declaration of bankruptcy 2) pay their debts in installments 3) be protected by the federal court PLAN: 1) turnover of such future earnings or income of the debtor to the trustee as is necessary for execution of the plan 2) full payment in deferred cash payments of all claims entitled to priority 3) the same treatment of each claim within a particular class NO OTHER Bankruptcy petition can be filed at same time creditors may recover larger percentage than through liquidation

What is a limited liability partnership?

Allows professionals the tax benefits of a partnership while avoiding personal liability for the malpractice of other partners if group organizes as an LLP, innocent partners are not personally liable for the wrongdoing of the other partners -relatively easy to establish

What is a partnership? ADV./DISADV.?

An association of two or more persons acting as co-owners of a business for profit Adv: -ease of formation (few legal formalities and expenses) -direct rewards (sharing profits) -growth and performance facilitated (obtain more capital/more skills) -flexibility -relative freedom from gov. control and regulation -possible tax advantage Disadv: -Unlimited liability of at least one partner -Lack of continuity -relative difficulty obtaining large sums of capital -Bound by acts of just one partner -Difficulty of disposing partnership interest

What is a corporation?

An entity legally separate from the individuals who own it, created by the authority of state laws, and usually formed when a transfer of money or property by prospective shareholders takes place in exchange for capital stock in the corporation

What is a patent?

An intellectual property right granted to an inventor, giving him or her the exclusive right to make, use, or sell an invention for a limited time period design: 14 yr others: 20 yrs

What is a cash-flow budget?

Budget that provides an overview of inflows and outflows of cash during a specified period of time cash inflow sources; 1) cash sales 2) cash payments received on account 3) loan proceeds

What is capital budgeting?

Budgeting process used to determine investment decisions Relies heavily on an evaluation of cash inflows Methods: 1) payback method 2) net present method 3) internal rate of return method

What are sole proprietorships?

Business that is owned and operated by one person Enterprise has no existence apart from its owner This individual has right to all profits and bears of all liability for the debts and obligations of the business

What are fixed assets?

Consists of land, building, equipment, and other assets expected to remain with the firm for an extended period

What is the Revised Uniform Limited Partnership Act?

Contains 11 articles and 64 sections of guidelines covering things such as 1) general provisions 2) formation 3) limited partners 4) general partners 5) finance 6) distributions and withdrawals 7) assignment of partnership interest 8)dissolution 9)foreign limited partnerships 10) derivative actions 11) miscellaneous

What are the inhibitors to marketing research?

Cost: - can be expensive and some believe only major orgs. can afford it complexity: -requires relying on sampling, surveying, and stat. analysis strategic decision: -only major strat. decisions need to be supported through mark. research -belief that only restricted to major decisions irrelevancy: -many believe that marketing research data will contain info that merely supports what they already know or irrelevant info.

What are trade secrets?

Customer lists, plans, research and development, marketing techniques, and production techniques. Generally anything that makes an individual company unique and has value to a competitor could be a trade secret extend to both ideas and their expression ideal for software

What is the Federal Trademark Dilution Act?

Extended the protection available to trademark owners by creating a federal cause of action for trademark dilution

What is the bankruptcy act? Purpose?

Federal law that provides for specific procedures in handling insolvent debtors 1) to ensure that property of debtor is distributed fairly to creditors 2) to protect creditors from having debtors unreasonably diminish their assets 3) to protect debtors from extreme demands by creditors

What is the balance sheet?

Financial statement that reports a business's financial position at a specific time Snapshot of business on particular day two parts -financial resources owned by the firm -claims against these resources

What are the types of pricing models in the social media age?

Freemium: -offers a basic service for free, chargin a premium service with advanced features to paying members Affiliate : -business makes money by driving traffic, leads, or sales to another, affiliated company's website ----challenge: readers trust and targeting Subscription: -requires users to pay a fee to access a product or service ---NEED content and features every month that will be new and exciting Virtual goods model: -users pay for virtual goods on website or game Advertising: -ads are sold against the traffic of the site; more traffic the more you can charge for ads

What is a market?

Group of consumers who have purchasing power and unsatisfied needs

What are entrepreneurial tactics in market research?

Guerrilla marketing: -use of nonconventional tactics and unorthodox practices applied to marketing research Insights in ordinary patterns Tech. tools (survey monkey, etc) Customer observation Web-based surveys Focus groups Lead user research Blog monitoring: analyzing blog content to identify prominent terms or themes Archival research

What do entrepreneurs need to consider when examining legal forms of organizations?

How easily the form of business org. can be implemented Amount of capital required to implement the form of business organization Legal considerations that might limit the options available to the entrepreneur The tax effects of the form of organization selected Potential liability to the owner of the form of org. selected

What are the three kinds of resources available to entrepreneur?

Human Material Financial

What is a limited liability company?

Hybrid form of business enterprise that offers the limited liability of a corp. but tax adv. of partnership adv: does not pay taxes on entity, instead profit flows through and paid personally by company members -liability of members is limited to the amount of their investments disadv: -LLC statutes differ from state to state, thus any multistate operations can face difficulties

What are the four I's for social media strategies?

Integrate: -the best way to integrate the application into the daily life of the user is to offer incentives, prized, or discounts to the user of the application Individualize: -company to consumer individualization -customized messages to different users based on location, taste prefereces, and shopping habits Involve: -effective mobile campaigns involve user interactively with a type of story or game Initiate: companies sometimes need to initiate the creation of user-generated content in order to start a meaningful dialogue between different consumers as they communicate online

What is bankruptcy? How does it happen?

Legal process for insolvent debtors who are unable to pay debts as they become due CH. 7, 11, and 13 1) new competition enters the market 2) other firms seem to be selling products that are a generation ahead 3) the R&D budget is proportionately less than competitions 4) retailers always seem to be overstocked

What is an L3C?

Low profit, limited liability company that facilitates investments in socially beneficial, for-profit ventures Primary charitable mission Secondary profit concern UNLIKE CHARITY: -L3C is free to distribute the profits, after taxes, to owners or investors ADV: Program related investment -it is an investment with a socially beneficial purpose that is consistent with a foundations mission

How to establish sole proprietorship?

Merely needs to obtain whatever local and state licenses are necessary to begin operations

Can you protect an idea with a copyright?

NOOOOOO

What are B corporations? What two problems do they address? Requirements?

New way for businesses to solve social and environ. problems 1) corporate laws make it difficult for businesses to consider employee, community, and environ. interests in their decision making 2) lack of transparent standards makes it difficult to tell the diff. between socially proactive company and just good marketing 1) Comprehensive and transparent social and environ. performance standards 2) Higher legal accountability standards 3) Expected relations with constituencies established for public policies that support sustainable business

What is an income statement?

P & L statement Financial statement that shows the change that has occurred in a firms position as a result of its operations over a specific period reports the success or failure of the business during the period -shows whether revenues were greater than or less than expenses revenues and expenses: -rev: monies the small business has received from the sale of its goods and services exp: costs of the resources used to obtain the revenues net income: excess of revenue over expenses during the particular period under discussion

What is unlimited liability in sole propreitorships?

Personally responsible for all business debts -extends to all proprietors assets

What is the operating budget?

Preparation of the sales forecast using simple linear regression Y= a + bx estimation that current sales will increase a certain percentage over the prior period's sales

What is a marketing plan?

Process of determining a clear, comprehensive approach to the creation of customers - current marketing research -current sales analysis -marketing info system -sales forecasting

What is marketing philosophy?

Product driven: -based on belief you must "produce efficiently and worry about sales later" -production is main emphasis -new ventures that produce high-tech, state-of-the-art output sales-driven: -focuses on personal selling and advertising to persuade customers to buy company's output -surfaces when overabundance of supply in market consumer-driver: -relies on research to discover consumer preferences, desires, and needs before production begins -MOST EFFECTIVE

What are the 4Ps to 4Cs?

Product to Cocreated Promotion to communities Price to customizable Place to choice

What are pro forma statements?

Projection of a firm's financial position during a future period or on a future date

What is a copyright?

Provides exclusive rights to creative individuals for the protection of their literary or artistic productions

What is an intellectual property right?

Provides protection such as patents, trademarks, or copyrights against infringement by others result of unique discovery ex) processes, machines, products, plants, elements, etc

What is chapter 11?

Reorganization: -debtor attempts to formulate a plan to pay a portion of the debts, have the remaining sum discharged, and continue to stay in operation voluntary or involuntary -contract between the debtor and creditors plan must: 1) divide the creditors into classes 2) set forth how each creditor will be satisfied 3) state which claims or classes are impaired or adversely affected by the plan 4) provide the same treatment to each creditor in a particular class PLAN APPROVAL: -requires creditors holding 2/3rds of the amount and one-half of the number of each class of claims impaired by the plan must accept it

What is sales forecasting?

The process of projecting future sales through historical sales figures and the application of statistical techniques reliance on historical data

What are accounts, note, taxes, and loans payable?

SHORT TERM LIABILITIES accounts: -liabilities incurred when goods or supplies are purchased on credit note: -promissory note given as tangible recognition of a supplier's claim or a note given in connection with an acquisition of funds, such as bank loan taxes: -liabilities owed to the government - federal, state, and local loan: -current installment on a long term debt that must be paid this year

What is the internal rate of return method?

SImilar as NPV in that the future cash flows are discounted technique that involves discounting future cash flows to the present rate that makes the net present value of the project equal to zero project with highest IRR gets selected -NPV would use IRR method as well drawbacks: -difficulty that can be encountered ----entre. must begin with NPV of zero and work backwards through the tables

What is market segmentation?

Segment of a business plan that describes aspects of the market such as the target market, market size and trends, the competition, estimeated market share, market strategy, pricing, and advertising and promo Demographic and benefit variables benefit variables: help to identify unsatisfied needs that exist within this market ex) convenience, cost, style, trends, etc

What is the cash flow statement?

Sets forth the amount and timing of actual and/or expected cash inflows and outflows Operating activities; -refers to cash generated from or used in the course of business operations of the firm investing activities: -cash-flow effects from long-term investing activities, such as purchase or sale of plant and equipment financing activities: -cash-flow effects of financing decisions of the firm, sale of new securities, repurchase of securities, payment of dividends

What are short term liabilities? Long term liabilities?

Short: -debts that must be paid during the coming 12 months Long: debts that are not due and payable within the next 12 months

What is Chapter 7?

Straight Bankruptcy may be voluntary or involuntary Liquidation: required the debtor to surrender all property to a trustee appointed by the court -trusteee then sells the assets and turns the proceeds over to the creditors -remaining debt discharged and debtor relieved of obligations

What are S corporations? How do they become?

The business can seek to avoid the imposition of income taxes at the corporate level, yet retain some of the benefits of a corporate form (LL) 1) corp. must be a domestic corp. 2) corp. must not be a member of an affiliated group of corps. 3) shareholders of the corp. must be individuals, estates, or certain trusts......no corporation, partner, or nonqual. trusts can be shareholders 4) corp. must have 100 or fewer shareholders 5) corp must only have one class of stock 6) no shareholder of corp may be nonresident alien

What is cyberlaw?

The emerging body of law governing cyberspace domain names: should be treated as trademarks or simply as a means of access, similar to street addresses

Problem with applying trademark law to domain names

Trademark law allows multiple parties to use the same mark - as long as the mark is used for different goods or services and will not cause customer confusion

Mobile marketing

Use of portable wireless devices to connect to the internet -enables people to access data and to interact on the social web while on the move as long as they are in range of a cellular or WiFi -fast paced and high impact marketing tool -allow creation and exchange of user-generated content

What is social media marketing?

Use of social media for marketing purposes -twitter, linkedin, facebook, etc Aspects: 1) create something of value with an event, video, tweet, or blog entry that attracts attention and becomes viral in nature 2) enable customers to promote a message themselves with mutlip social media venues 3) encourage use participation and dialogue; not controlled by the organization

What is mobile marketing?

Using social media will be revolutionary and potentially more important than almost any other type of marketing

What are the key characteristics of pricing?

VALUE: -the amount a customer is willing to pay as a statement of the amount of value they perceive in the product or service Variable: -varying the components of payment, what is actually being paid for, time of payment, form of payment, terms of payment, person doing some or all of the paying Variety: -firms typically sell multiple products and services, may use the price of some items to influence sale of others Visible: -customers see and are aware of prices of most things that they buy, signals to the customer ideas about value, image, conditions, etc Virtual: -easiest and quickest to change in response to market conditions

What is a limited liability limited partnership?

Variant of the limited partnership Elected limited liability status for all of its partners, including general partners

What is a debtor-in-possession for chapter 11?

When a debtor involved in Ch. 11 proceeding continues to operate the business

What are accounts receivable?

claims of the business against its customers for unpaid balances from the sale of merchandise or the performance of services

What is evaluation?

final critical factor in marketing planning process -evaluate performance reports should be generated: attraction or loss of customers, with reasons for gain or loss, and established customer preferences

What are fixed costs and mixed costs?

fixed: one that does not change in response to changes in activity for a given period of time; rent, depreciation, salaries, etc mixed: blend of fixed and variable costs -utilities

What is marketing research?

gathering of information about a particular market followed by an analysis of that information

What is a pricing strategy?

how to price their product or service number of factors affect decision: -degree of competitive pressure -availability of sufficient supply -seasonal or cyclical changes in demand -distribution costs -product's life-cycle stage -changes in production costs -prevailing economic conditions -customer services provided by the seller -amount of promotion done -market's buying power

What is inventory?

merchandise held by the comapny for resale to customers

What is primary data?

new data that are often collected using observational or questioning methods observ methods: -adv: economically and avoid bias disadv: limited to descriptive studies questioning: surveys -involve contact with respondents experimentation: form of research that concentrates on investigating cause-and-effect relationships goal: establish the effect an experimental variable has on dependent variable

What is a budget?

planning financial operations operating budget: statement of estimated income and expenses during a specified period of time cash-flow budget: -statement of estimated cash receipts and expenditures during specified time period capital budget: -used to plan expenditures on assets whose returns are expected to last beyond one year

Qualitative vs Quantitative market research

quantitative: -involved empirical assessments that work from numerical measurements and analytical approaches to compare the results in some way -larger samples needed qualitative: -far less sample size and involved researcher into process and is able to delve deeper into the questions with the respondents -relies less on analytical testing -"subjective"

What is break even analysis?

technique commonly used to assess expected product profitability, which helps to determine how many units must be sold to break even at a particular selling price

What is the payback method of capital budgeting?

technique used to determine the length of time required to pay back an original investment problems: -ignores cash flows beyond the payback period adv: -it is simple to use -projects with faster payback period normally have more favorable short-term earnings -if firm is short on cash, may prefer to use the payback method because it provides faster return of funds

What is the net present value method?

technique used to evaluate an investment that involves a determination of future cash flows and a discounting of these flows to arrives at a present value of these future dollars discounting the future cash flows to determine their value in present period terms must find the present value of the expected net cash flows of the investment, discounted at the appropriate cost of capital, subtract from it the initial cost outlay of the project