Business Exam 2

innovative strategy

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

business-to-consumer

business-to-consumer transactions using e-commerce

poisoning the well

creating a negative impression among your employers' customers

conversion franchising

agreement that provides an organization through which independent businesses may combine resources

product distribution franchising

agreement that provides specific brand name products which are resold by the franchisee in a specific territory

the market: competition and competitive advantage

major competitors; competing product or service: market share, price, competitive advantages and disadvantages; what makes product or service unique

aggrandizing

making your business or yourself seem more accomplished than it is

growth stage

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

start-up

a new business that is started from scratch

cover letter

a one-page document on business stationery that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan

executive summary

a one-to-two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals

mission

a paragraph that describes the firm's goals and competitive advantages

conflict of interest

a situation in which a person faces two or more competing standards or goals

elevator pitch

a 30-second action-oriented description of a business designed to sell the idea of the business to another

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

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

franchise

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

decline stage

a life cycle stage in which sales and profits of the firm begin a falling trend

business-to-business

business-to-business transactions using e-commerce

the market: market and target customer

total population of people or firms you plan to sell to; target customer section: focuses attention on who would buy; demographics' relation to the product, how often they buy, and past experience

disadvantages of a stand retail business

variable income, legal requirements

part time hours

working for 35 or fewer hours a week

full time hours

working more than 35 hours a week

moonlighting

working on your own part time after your regular job

boom

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

parallel competition

an imitative business that competes locally with others in the same industry

differentiation strategy

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

advantages of an existing business

established customers, business processes are already in place, often requires less cash outlay

disadvantages of an existing business

finding a successful business for sale that is appropriate for you is difficult, existing employees may resist change, reputation may be a hindrance, facilities and equipment may be obsolete

the market: marketing strategy

overall strategy your firm pursues in the market; sales plan that shows specific ways you apply strategy to secure sales from your customers; longer-term competitive plan that shows how you protect your firm from efforts of the competition to unseat you

the organization: key personnel

sells the most important single element in the business plan - you; talks about accomplishments rather than just experience; do not limit yourself to business

scale

size of the market

asset

something the business owns that is expected to have economic value in the future

cannibalizing

taking business away from your employer

degree of similarity

the extent to which a product or service is like another

external legitimacy

the extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family

internal understanding

the extent to which employees, investors, and family members involved in the business know the business's purposes and operations

volatility

the frequency in which a business starts and stops

pure innovation

the process of creating new products or services, which results in a previously unseen product or service

buyout

the purchase of substantially all of an existing business

maturity stage

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

the organization: legal and organization structures

legal form of the business; where it is formally registered and located; licenses or certifications along with the firm's intellectual property protections, like patents, trademarks, and trade secrets

advantages of a stand retail business

little investment, variety of locations, quickly established, easily ended

disadvantages a start-up business

no initial name recognition, require significant time, very difficult to finance, cannot easily gain revolving credit, may not have experienced managers and workers

shake-out

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

vision

a very simple 5-10 word sentence or tagline (slogan) that expresses the fundamental idea or goal of the firm

trade name franchising

agreement that provides to the franchisee only the rights to use the franchisor's trade name and/or trademarks

introduction stage

an industry life cycle stage in which the product or service is being invented and initially developed

retrenchment

an organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival

imitative strategy

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

advantages of a start-up business

begin with a clean state, use the most up-to-date technologies, provide new, unique products or services, can be kept small deliberately to limit the magnitude of possible losses

scope

geographic range covered by the market

the organization: related service providers

identify your bank and banker, attorney and legal firm, accountant or bookkeeper, other consultants; major relationships established with well-known suppliers or customers; board of directors/board of advisors