MGMT Final

decline stage

life cycle stage which sales & profits begin a falling trend

industry analysis

research process that provides the entrepreneur with key info about the industry such as its current situation and trends

Heuristics

rules-of-thumb that are commonly used to estimate firm value in relation to some easily observable characteristic of the business.

focus strategy

a generic strategy that targets a portion of the market, called a segment or niche.ex: instead of selling mass-market gravel, they might sell decorative gravel.

franchise

a legal agreement that allows a business to be operated using the name and business procedures of another firm

intangibles

assets, such as patents or trademarks and liabilities, such as accounts payable, that have no physical existence.

spin-off

a business that is created by separating part of an operating business into a separate entity.

synergy

a combination of 2 or more orgs, substances, or other agents in which the whole is greater than the sum of its component parts

revolving credit

a credit agreement that allows the borrower to pay all or part of the balance at any time; as the loan balance is paid off, it becomes available to be borrowed again.

differentiation strategy

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

start-up

a new business that is started from scratch

net profit

amount of money left after operating expenses are deducted from the business

profit before taxes

amount of profit earned by a business before calculating the amount of income tax owed

trade name franchising

an agreement that provides only the rights to use the franchisor's trade name and/or trademarks. 2 examples are True Value Hardware and Associated Grocers Inc

replacement value

an estimate of what an identical asset would cost to be acquired and readied for service.

parallel competition

an imitative business that competes locally with others in the same industry (Might base business off of Olive garden, but use diff. ingredients and use local favorites instead)

business incubator

an organization that provides financial, technological, and managerial help to start-up businesses. They provide access to angel investors, public grants for seed money, and technology support.

ESOP

a method for employees to purchase the business from which they work

home-based businesses

businesses that are operated from the owner's home.

gross profit

funds left over after deducting the cost of goods sold

incremental innovation

imitation plus one degree of similarity; copying a business with 1 or 2 things that make your business better

growth stage

industry life cycle stage in which customer purchases increase at a dramatic rate

retrenchment

organizational life cycle stage where established firms find new approaches to improve the business ans its chances for survival

innovative strategy

overall strategic approach in which a firm seeks to do something that is very different from what others in the industry are doing

imitative strategy

overall strategic approach in which the entrepeneur does more or less what others are already doing

pure innovation

process of creating a new product or service

UFOC

standard document franchisees use to explain their operations, requirements, and costs to potential franchisees.

Net realizable value

the amount for which an asset will sell, less the costs of selling. If you were selling a building, the cost of selling would be the money spent on the real estate agent, advertising, and preparing the building for display

book value

the difference between the original acquisition cost and the amount of accumulated depreciation

caveat emptor

Latin for "let the buyer beware"

catch 22

a dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions

cost strategy

a generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeal to the customers`

discounted cash flows

cash flows that have been reduced in value because they are to be received in the future

scope

characteristic of a market that defines the geographic range covered by the market- from local to global

takeover

seizing of control of a business by purchasing its stock to be able to select the board of directors

strategic direction

the conceptualization of how a business might best move in response to the findings of a SWOT analysis - Flaunt, Fix, Fight, Flee, Find, or Fire-up

boom

type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time

maturity stage

3rd life cycle stage, marked by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies

shake out

type of life cycle stage following a "boom" in which there is a rapid decrease in the # of firms in an industry

Conversion Franchising

provides an organization through which independent businesses may combine resources. an example is Century21 real estate. Individual real estate companies combine to create a nationwide brand name and enhanced advertising effectiveness.

product distribution franchising

provides the franchisee with specific brand named products, which are resold by the franchisee in a specified territory. 2 examples are Snap-On Tools and auto dealership

business format franchising

this is exemplified by the McDonald's corporation. this includes the rights to McDonald's many trade names, specifications of the product to be sold, operating methods, marketing plan, and national advertising.

entry wedge

an opportunity that makes it possible for a new business to gain a foothold in a market

introduction stage

the life cycle stage in which the product/service is being invented and initially developed

point of indifference

the point at which a buyer is indifferent about buying or not buying the business

Due diligence

the process of investing to determine the full and complete implications of buying a business.

buyout

the purchase of substantially all of an existing business

buy-in

the purchase of substantially less than 100% of a business.

earnings multiple ratio

the ratio of the value of a firm to its annual earnings. it is firm value divided by actual or expected annual earnings.