Studies In Entrepreneurship Final

private placement memorandum

a specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments

blue ocean strategy

a strategy based on creating a new product or service which has no competitors

differentiation strategy

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

boom

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

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

screening plan

also called a mini-plan; gives the basic overview of the firm and a detailed look at the financials

business format franchising

an agreement that provides a complete business format, including trade name, operational procedures, marketing, and products or services to sell

conversion franchising

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

intangibles

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

me-too products

products essentially similar to something already of the market

key employee/partner plan

provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees

takeover

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

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, or treated as viable by organizations or people outside the small business or 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

4 P's of Marketing

the four major components of a marketing effort - product, pricing, promotion, and placement. Sometimes called the marketing mix

industry

the general name for the line of product or service being sold, or the firms in that line of business

growth stage

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

introduction stage

the life cycle stage in which the product or service is being invented or developed

competitive advantage

the particular customer benefits that a firm implements that keeps the firm ahead of other firms in the industry

risks

the parts of a business or business plan that expose the firm to any kind of loss - profits, sales, reputation, assets, customers, and so on

magic number

the post-tax income the entrepreneur personally seeks from the business

point of indifference

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

pure innovation

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

due diligence

the process of investigating a business to determine its value

buyout

the purchase of substantially all of an existing business

buy-in

the purchase of substantially less than 100 percent of a business

earnings multiple

the ratio of the value of a firm to its annual earnings

maturity stage

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

core product

the very basic description of what a product is - a bar of soap, a house-cleaning service

perceptual map

a graphical display which positions products, services, brands, or companies according to their scores on important strategic dimensions

Franchise

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

tagline

(also known as a slogan) memorable catchphrase that captures the key idea of a business, its service, product, or customer

start-up

a new business that is started from scratch

mission statement

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

goods

a physical product

markup pricing

a price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit

perishability

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

product distribution franchising

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

goal

an intended outcome for your business

tangibility

an items capability of being touched, seen, tasted, or felt

competitor

any other business in the same industry as yours

operational plan

business plans designed to be used internally for management purposes

niche market

a narrowly defined segment of the population that is likely to share interests or concerns

services

a nonphysical product

executive summary

a one- to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. It is typically put at the start of a business plan and is the most popular summary form for a business plan

heterogeneity

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

revolving credit

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

mass market

a customer group that involves large portions of the population

business plan

a document designed to detail the major characteristics of a firm- its product or service, its industry, its market, its manner of operation (production, marketing, management), and its financial outcomes with an emphasis of the firms present and future

entry wage

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

net profit

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

profit before taxes

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

research and development

(often abbreviated R&D) - The part of a business (and a business plan) that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm's market

test market

selling your product or service in a limited area, for a limited time

asset

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

cash flows

the actual receipt and spending of cash by a business

net realizable value

the amount for which an asset will sell, less the costs of selling

market

the business term for the population of customers for your product or service

replacement value

the cost to acquire an essentially identical asset

book value

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

total product

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

target markets

the group of people on which a market focuses promotion its sales efforts

optimum price

the highest price that will product your desired level of sales in your intended market

spin-off

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

augmented product

core product plus features that tend to differentiate it from the competition

ESOP

employee stock option plan: a method for employees to purchase the business for which they work

gross profit

funds left over after deducting the cost of goods sold

informational plans

gives potential customers or suppliers information about the company and its product or service

preselling

involves introducing your product to potential customers and taking orders for later deliveries

caveat emptor

latin: let the buyer beware

founder

people who create or start new businesses

industry dynamics

changes in competitors, sales and profits over time

elevator pitch

a 30-second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another

invention plan

a business plan that involves information to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights

scope

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

scale

a characteristic of a market that describes the size of the market- a mass market or niche market

synergy

a combination in which the whole is greater than the sum of its component parts

heuristic

a common-sense rule, a rule-of-thumb

new entrant business

a firm whose product or service is established elsewhere, but is new to this market

pioneering business

a firm whose product or service is new to the industry or itself is creating a new industry

cost strategy

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

focus strategy

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

decline stage

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

cover letter

a one-page document on business stationary (also called letterhead) that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan

proprietary technology

a product or service or an aspect of one that is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark

inseperability

a quality of a service in which the service being done cannot be disconnected from the provider of the service

industry analysis (IA)

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

vision statement

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

trade name franchising

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

parallel competition

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

proof-of-concept website

an internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest

retrenchment

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

incremental innovation

an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas

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 already doing

imitative strategy

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

discounted cash flows

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

strategic actions

competitive responses requiring a major commitment of resources

tactical actions

competitive responses with low resource requirements

generic strategies

three widely applicable classic strategies for businesses of all types- differentiation, cost, and focus