Exam 1 Business 24
competitive advantage
A benefit that exists when a firm has a product or service that is seen by its target market as better than those of competitors
cousin consortium
A business in third and subsequent generations, when children of the siblings take ownership and management positions.
sibling partnership
A business in which children of the founder become owners and managers
franchise
A business model involving a business owner who licenses trademarks and methods to an independent entrepreneur
small buisness
A business with growth potential that is small compared to large companies in an industry, has geographically localized operations, is financed by only a few individuals, and has a small management team. 1. Compare to the largest firms in the industry, the business is small; in most instances, the business has fewer than 100 employees 2. Except for its marketing function, the business's operations are geographically localized. 3. Financing for the business is provided by no more than a few individuals. 4. The business may begin with a single individual, but it has the potential to become more than a "one-person show" and may eventually grow to be a mid-sized company or event a large firm. 5. The business must have growth potential, whether or not the owner chooses to capture that growth.
paradigm shift
A change in how we fundamentally see a situation
fatal flaw
A circumstance or development that along could render a new business unsuccessful
social responsibilities
A company's ethical obligations to the community
capabilities
A company's routines and processes that can coordinate the combined use of its productive assets in order to achieve desired outcomes how to work with and integrate resources in ways that create value for customers
comprehensive plan
A complete business plan that provides an in-depth analysis of the critical factors that will determine a firm's success or failure along with all the underlying assumptions
FDD (Franchise Disclosure Document)
A detailed statement that provides the accepted format for satisfying the franchise disclosure requirements of the FTC A detailed statement of such information as the franchisor's finances, experience, size, and involvement in litigation.
business plan
A document that outlines the basic concept underlying a business and describes how Identifies the key factors for success: 1. opportunity 2. critical resources 3. entrepreneurial team 4. financing structure 5. context (or external factors)
serendipity
A facility for making desirable discoveries by accident
product and trade name franchising
A franchise agreement granting the right to use a widely recognized product or name
business format franchising
A franchise arrangement whereby the franchisee obtains an entire marketing and management system geared to entrepreneurs.
family retreat
A gathering of family members, usually at a remote location, to discuss family business matters
integrity
A general sense of honesty and reliability that is expressed in a strong commitment to doing the right thing, regardless of the circumstances.
family
A group of people bound by a shared history and a commitment to share a future together, while supporting the development and well-being of individual members
mentor
A knowledgeable person who can offer guidance based on experience in a given field
lifestyle business
A microbusiness that permits the owner to follow a desired pattern of living
reluctant entrepreneur
A person who becomes an entrepreneur as a result of some severe hardship Those who started or acquired small businesses as a result of financial hardship or other severely negative conditions
corporate refugee
A person who becomes an entrepreneur to escape an undesirable job situation Ex) Individual may also flee the bureaucratic environment of a corporation that seems stifling or oppressive to them. Ex) Quitting their jobs over bureaucratic hassles
entrepreneur
A person who relentlessly pursues an opportunity, in either a new or an existing business, to create value while assuming both the risk and the reward for his or her efforts
technician personality
A personality that focuses on an already developed technical skill, wants to be left alone to get the job done, and is primarily concerned about the present. A steady worker, experienced at doing what he or she knows best. Dislikes managing, wanting, instead to be left alone to get the job done. - Paternalistic (he or she guides the businesses much as he or she might guide family members.) - Reluctant to delegate authority - Defining marketing strategy in terms of the traditional components of price, quality, and company reputation. - Focusing on sales that are primarily personal. - Short- term oriented, with little planning for future growth or change.
entrepreneur personality
A personality that focuses on the business as a whole and providing results for the customer. - Ask the question: "How must the business work?" - See the business as a system for producing outside results for the customer, and in so doing, produces profits. - Start with a picture of a well-defined future, and then attempt to change the present to match the vision. - Develop strategies for the business by first seeing the whole picture.
manager personality
A personality that is pragmatic and likes order and planning operations - Avoid paternalism - Delegate authority as necessary for growth - Employ diverse marketing strategies. - Use different types of sales efforts. - Obtain original financing from more than two sources. Job is to prepare the business for growth by educating herself or himself sufficiently, ensuring that the company's boundary is defined by how many technicians she or he can supervise effectively or how many subordinates she or he can organize into a productive effort.
differentiation-based strategy
A plan of action designed to provide a product or service with unique attributes that are valued by consumers - likely to be successful performer in the marketplace
strategy
A plan of action that coordinates the resources and commitments of an organization to achieve superior performance
focus strategy
A plan of action that isolates an enterprise from competitors and other market forces by targeting a restricted market segment adapting their efforts to concentrate on the needs of a very limited portion of the market Small business could be competitive Can be set up in the following ways: - By restricting the target market to a single subset of customers - By emphasizing a single product or service - By limiting the market to a single geographical region - By concentrating on the superiority of the product or service
cost-based strategy
A plan of action that requires a firm to hold down its costs so that it can compete by charging lower prices and still make a profit - attracts customers who are always searching for the best deal - as result, it can be a great challenge to develop customer loyalty and generate long-term success
feasibility analysis
A preliminary assessment of a business idea that gauges whether the venture envisioned is likely to succeed 1. Strong market potential 2. an attractive industry 3. The right individual or team to execute the plan
sustainable small business
A profitable company that responds to customers' needs while showing reasonable concern for the environment
Franchise Rule
A rule that prescribes that the franchisor must disclose certain information to prospective franchisees
executive summary (overview)
A section of the business plan that conveys a clear and concise overall picture of the proposed venture and creates interest in the venture - A description of the opportunity - An explanation of the business concept - An industry overview - The target market - The competitive advantage you hope to achieve in the market - The economics of the opportunity - The management team - The amount and purpose of the money being requested (the "offering"), if you are seeking financing
product / service plan
A section of the business plan that describes the product and /or service to be provided and explains its merits
high-potential venture (gazelle)
A small firm that has great prospects for growth
microbusiness
A small firm that provides minimal profits to its owner
attractive small firm
A small firm that provides substantial profits to its owner
niche market
A specific group of customers with an identifiable but narrow range of product or service interests
family business constitution
A statement of principles intended to guid a family firm through times of crisis and change
owner-managed business
A venture operated by a founding entrepreneur
churning
Actions by franchisors to void the contracts of franchisees in order to sell the franchise to someone else and collect an additional fee
short plan
An abbreviated business plan that presents only the most important issues and projections for the business - The problem needing to be solved for customers - The strategy - Measures used to gauge success - Milestones to be met - Tasks and responsibilities of the team - The business model (to be described shortly)
nondisclosure agreement
An agreement in which the buyer promises the seller that he or she will not reveal confidential information or violate the seller's trust
SWOT analysis
An assessment that provides a concise overview of a firm's strategic situation provides a snapshot view of current conditions Outside-in and Inside-out approaches come together in the SWOT analysis to help identify potential business opportunities that match the entrepreneur and his or her planned venture. Focuses on the present Strength, Weaknesses, Opportunities, Threats
entrepreneurial opoortunity
An economically attractive and timely opportunity that creates value for interested buyers or end users. An economically attractive and timely opportunity that creates value both for prospective customers and for the firm's owner. More than merely having a good idea. Opportunities make the enterprise economically attractive for the owners while offering customers a product or service that is so appealing that they are willing to pay their hard-earned money for it.
founder
An entrepreneur who brings a new firm into existence
franchisee
An entrepreneur whose power is limited by a contractual relationship with a franchising organization
master licensee
An independent firm or individual acting as a middleman or sales agent with the responsibility of finding new franchisees within a specified territory
family business
An organization in which either the individuals who established or acquired the firm or their descendants significantly influence the strategic decisions and life course of the firm.
family council
An organized group of family members who gather periodically to discuss family-related business issues
underlying values
Beliefs that provide a foundation for ethical behavior in a firm An individual's beliefs what that person does on the job and how she or he acts toward customers and others. The business practices that a firm's leaders and employees view as right or wrong reflect their _____________
co-branding
Bringing two or more franchise brands together under one roof
co-preneurs
Couples teams who own and manage business
bootstrapping
Doing more with less in terms of resources invested in a business, and, where possible, controlling the resources without owning team. Using other people's resources. Bootstrap is a situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances of from the operating revenues of the new company.
social entrepreneurship
Entrepreneurial activity whose goal is to find innovative solutions to social needs, problems, and opportunities.
opportunity recognition
Identification of potential new products or services that may lead to promising businesses
area developers
Individuals or firms that obtain the legal right to open several franchised outlets in a given area
stakeholders
Individuals or groups who either can affected by the performance of the company
Weaknesses (SWOT analysis)
Inside the Company / Negative factors - Inadequate financial resource - Poorly planned strategy - Lack of management skills or experience - Inadequate innovation capacity - Negative reputation in the marketplace - Inadequate facilities - Distribution problems - Limited marketing skills - Production inefficencies
Strength (SWOT analysis)
Inside the Company / Positive factors - Important core competencies - Financial strengths - Innovative capacity - Skilled or experienced management - Well-planned strategy - Effective entry wedge - A strong network of personal contacts - Positive reputation in the marketplace - Proprietary technology
Market vs Industry
Market - consists of BUYERS, current or potential customers who a\re interested in purchasing a particular class of products or services to satisfy wants or needs and they must also have ability to pay for them Industry - is composed of SELLERS who compete with one another by offering identical or similar products or services for sale to the same general group of buyers
entrepreneurial legacy
Material assets and intangible qualities passed on to both heirs and society
startups
New business ventures created "from scratch."
socioemotional wealth
Non financial factors in a family firm that affect the commitment of family members to the business
code of ethics
Official standards of employee behavior formulated by a business owner
intellectual property
Original intellectual creations, including inventions, literary creations, and works of art, that are protected by patents or copyrights
Threats (SWOT analysis)
Outside the Company (Negative Factors) - New competitors - Rising demands of buyers or suppliers - Sales shifting to substitute products - Increased government regulation - Adverse shifts in the business cycle - Slowed market growth - Changing customer preferences - Adverse demographic shifts
Opportunities (SWOT analysis)
Outside the Company / Positive Factors - An untapped market potential - New product or geographic market - Favorable shift in industry dynamics - High potential for market growth - Emerging technologies - Changes allowing overseas expansion - Favorable government deregulation - Increasing market fragmentation
multiple-unit ownership
Ownership by a single franchisee of more than one franchise from the same company
transfer of ownership
Passing ownership of a family business to the next generation
organizational culture
Patterns of behavior and beliefs that characterize a particular firm
entrepreneurial alertness
Readiness to act on existing, but unnoticed, business opportunities.
business brokers
Specialized brokers that bring together buyers and sellers of businesses
new market ideas
Startup ideas centered around providing customers with an existing product or service not available in their market
new benefit ideas
Startup ideas centered around providing customers with new or improved products or services M&M >> Tasty Healthier Candy
new technology ideas
Startup ideas involving new or relatively new technology, centered around providing customers with a new product.
resources
The basic inputs that a firm uses to conduct its business
ethical relativism
The belief that ethical standards are subject to local interpretation
ethical imperialism
The belief that the ethical standards of one's own country can be applied universally. ex) Am arrogant attempt to impose American values on other societies.
general environment
The broad environment, encompassing factors that influence most businesses in a society. - political / legal (tax, govt regulation) - Sociocultural (societal currents >>> demand, new market, decline..etc) - Demographic (population size, age, ethic, wage) - Economic (rate of inflation, interest rate, currency exchange rate) - Global (outsource, invest abroad, development>>> opportunity) - Technological (P.69)
environmentalism
The effort to protect and preserve the environment
competitive environment
The environment that focuses on the strength, position, and likely moves and counter moves of competitors in an industry. - Who would be the new venture's current competitors? - What unique resources do they control? - What are their strengths and weaknesses? - How will they respond to the new venture's decision to enter the industry? - How can the new venture respond? - Who else might see and exploit the same opportunity? - Are there ways to co-opt potential or actual competitors by forming alliances?
industry environment
The environment that includes factors that directly impact a given firm and all of its competitors - Threat of New Competitors - Threat of Substitute products/services - Intensity of Rivalry among existing competitors - Barganing power of Suppliers - Bargaining power of Buyers (p.71)
due diligence
The exercise of reasonable care in the evaluation of a business opportunity. careful evaluation of a business the buyers needs to acquire background information about the business, some of which can be obtained through personal observation or discussion with the seller. Talking with other informed parties, such as suppliers, bankers, and employees of the business, is also important.
encroachment
The franchisor's selling of another franchise location within the market area of an existing franchisee
franchise contract
The legal agreement between franchisor and franchisee
piggyback franchising
The operation of a retail franchise within the physical facilities of a host store
multibrand franchising
The operation of several franchise organizations within a single corporate structure
franchisor
The party in a franchise contract that specifies the methods to be followed and the terms to be met by the other party
Nepotism
The practice of employing relatives
fair market value
The price at which the property would change hands between a willing buyer and willing seller, with both parties having reasonable knowledge of relevant facts
mentoring
The process by which a more-experienced person guides and supports the professional progress of a new or less-experienced employee
core competencies
Those capabilities that provide a firm with a competitive edge and reflect its personality. Those crucial capabilities that distinguish a company competitively and reflect its general focus and personality. These strengths make it possible to achieve a competitive advantage
intangible resources
Those organizational resources that are invisible and difficult to assess ex) patents, copy rights, an established brand, a favorable reputation, and an entrepreneur's personal network of contacts and relationships
tangible resources
Those organizational resources that are visible and easy to measure. ex) office building, manufacturing equipment, and cash revenues
pivot
To refocus or recreate a startup if the initial concept turns out to be flawed
entrepreneurial team
Two or more people who work together as entrepreneurs on one endeavor
microloans
Very small loans, often provided to entrepreneurs in developing countries
