mgmt exam 2 pt 1

Key components of an elevator pitch

Problem Product Market Competitive advantage Business/team Financial summary

Tangibility

item's capability of being touched, seen, tasted, or felt

Lean business practices

mean eliminating waste and producing a minimum viable product

Shared media

media spread by consumers with other consumers, such as social media, blogs, mobile media, and viral channels as well as traditional word of mouth

Niche Market

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

Altruism

selfless concern for the well-being of others, a value benefit for customers when marketing

Key resource acquisitions

also called bulk asset purchases, are the only way a sole proprietorship may be purchased

Intangibles

assets, such as patents or trademarks, and liabilities, such as accounts payable, that have no physical existence 1. accounts receivable 2. patents 3. licenses 4. Liabilities

Operational plans

business plan designed to be used internally for management purposes

Prototype

- name given to the first model of a product or service Some may be functioning, but built in a way that no consumer would buy it (e.g., with exposed wires and sharp edges) but shows the product can do what is promised Some look like the final product, but might not be functional Made to prove aspects of the idea and are seen as the first stop along the path of product/service creation

Both lean operations and bootstrapping share three ideas

1) Waste not, want not 2) Create, standardize, repeat 3) Keep in touch.

Four forms of franchising.

1. Trade name franchising. 2. Product distribution franchising. 3. Conversion franchising. 4. Business format franchising. Some companies sell master franchises which may sell sub-franchises.

Effectuation

An entrepreneur uses effectual reasoning when they imagine what can be accomplished with the resources at hand.

Comparable sales of other firms

Comparable sales of other firms in the same industry are commonly used to estimate the value of a business Competitive advantage: The goal of strategy after the start-up is to secure competitive advantage The major ways you cope with these competitive pressures is by using some combination of strategic actions and tactical actions.

Primary research

Conducting research to collect new data to solve a marketing information need

Focus strategy

Target a portion of the market, a segment or niche.

Earnings multiple

The earnings multiple ratio is firm's value divided by actual/expected annual earnings.

Value proposition

The relation of product or company capabilities to customer pains and gains. The challenge is to boil down those multiple items to one short mantra that describes the benefit you offer your customer. List those needs only you meet and look for a way to draw a commonality from among them. You can use a short mantra, such as "We help X do Y by doing Z." or use a longer version including your competitive advantage. The final goal for developing and testing this is how it stacks up against other offerings available to customers. Value strategy: best price, best product, best service

Four elements of a franchise agreement. The franchisor grants the legal right to sell the company's products. The franchisor provides marketing. The franchisee can use the branding. The franchisee pays a fee for rights. The franchise agreement is valued by

The rights granted. Cash flow potential to the franchisee.

Augmented product

What you describe as your good/service is the augmented product and has features that differentiate it from competitors. From total product approach (The total product is how your customers describe your good/service)

Sole proprietorship

a business owned and managed by a single individual

Paid media

a category of promotional tactic based on the traditional advertising model, whereby a brand pays for media space

The business idea is simply to create another occurrence of a common business

a hair salon, restaurant, bar or lounge, rock band, sign company, plumbing service, yard care, and so on

Scope

characteristic of a market that defines the geographic range covered by the market—from local to global. market ____ refers to the geography of your target market Secondary research: past research which has already been performed and often already published

Scale

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

Synergy

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

Mass market

customer group that involves large portions of the population

Replacement value

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

Brand ambassador

form of Earned Media? A person who represents your brand, company, product, or service to others to increase brand awareness, sales, and positive attitudes among the public. They can be paid or volunteer. They often receive your products and services to use and show off to the public. Also called a spokesperson.

Industry

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

Cost strategy

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

Cognitive dissonance

inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions 5th and final step in the personal selling process is following up to avoid cognitive dissonance

Earned media

occurs when others talk about your firm or products in the media and you did not pay them directly for the mentions, called free ink. a category of promotional tactic based on a public relations or publicity model that gets customers talking about products or services

Vision statement

simple 5- to 10-word sentence. Should be inspiring, overarching, and long term. very simple 5- to 10-word sentence or tagline that expresses the fundamental idea or goal of the firm Bill Gates and Paul Allen started Microsoft as teenagers with the vision "a computer on every desk - running Microsoft software."

Strategy

the idea and actions that explain how a firm will make its profit. All small businesses have one. It may be a blueprint for planning or a standard to compare actions against. It defines for you, your customers, and your competition how your business operates

Bricolage

the practice of using whatever you have at hand; fits in both causal and effectual

Due diligence

the process of investigating to determine the full and complete implications of buying a business - nothing is taken for granted. Conduct extensive interviews with the sellers of the business. Study the financial reports and other records of the business. Make a personal examination of the site (or sites) of the business. Interview the business' customers and suppliers. Develop a detailed business plan for the acquisition

Me-too enterprises

vast majority of start-up businesses

External legitimacy

A business plan can provide legitimacy when outsiders expect it

Buy-in

A buy-in occurs when someone acquires part ownership. Advantages - allows the purchaser to leverage inside knowledge, aids in keeping key employees. Disadvantage - key employees such as the owner or managers may be a disadvantage when they stay.

Boom

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

The key ideas of bootstrapping are simple

Do without as long as you can and cut all expenses to the bone. Borrow, barter, rent or lease rather than buy and consider offering equity if you must buy. Borrow money from yourself first. Minimize debt and limit credit card balances. Always keep track of your cash.

Bootstrapping

Finding a low-cost, or no-cost way to do something; fits both causal and effectual approaches ex: leveraging media

Due Diligence Goals

First, look for any wrongdoing - fraud, misrepresentations, or missing information. Second, look for inefficiencies, waste, opportunities, or mismanagement. Evaluating value of business and finding ways to increase value, giving us a negotiating advantage

Distinctive competencies

How your firms skills differ These benefits that differ represent your competitive advantage

Business life cycle

IS THIS PRODUCT SERVICE OR INDUSTRY LIFE CYCLE introduction stage growth stage boom shake-out maturity stage decline stage

Buyouts

LLCs, corporations, and some partnerships are subject to buyouts. Accomplished through purchasing ownership interest. The subsequent business is considered a new entity. Primary advantage is simplicity. A buyout can take place all at once, in a single point of time. An employee buyout occurs through an employee stock ownership plan (ESOP).

KPIs

Measures or metrics that identify the outcomes that are most important to the success of a business

Book value

acquisition cost minus depreciation. It is unreliable as depreciation is arbitrary and some assets have no book value.

Heuristics

Rules of thumb used to estimate firm value in relation to some easily observable characteristics of the business. Ex - in the small inn industry are that an inn should sell for approximately $100,000 per rental room. And an inn should sell for approximately four times its annual gross revenue. Can be amazingly accurate. Exist for all industries and are usually available from the group's trade association. Incremental innovation: Imitation plus one degree of similarity is incremental innovation.

Product distribution franchising

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

Trade name franchising

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

Core competencies

Skills all competitors have; Skills, knowledge, and abilities that employees must possess in order to successfully perform job functions that are essential to business operations.

Industry analysis

Studying dynamics and trends of your industry using industry analysis to identify the best way and time to enter business. 3rd step in strategic planning

Owned media

a new category of promotional tactic based on brands becoming publishers of their own content in order to maximize the brands' value to customers

Pivot

a term describing a change of direction in the thinking of an entrepreneur or a firm, often based on new data or other findings

Elevator pitch

an action-oriented description of your business designed to open the door to a more in-depth dialogue. 60-100 words Elevator pitches have four success factors - First find a hook - describe a problem people face. Second, focus on the solution your product provides. Third, provide support to prove your solution works - traction is best. Finally, always close with an ask - get the listener to make micro-commitment - contact information so you can build your network.

Business format franchising

an agreement between the franchisor who sets conditions and grants permissions, and the franchisee, who pays a fee and agrees to the conditions and standards.

Customer development funnel - Which of the following is not one of the major goals of their new

awareness interest consideration purchase unbundling up-sell cross-sell referrals

fits both causal and effectual approaches Legitimacy

belief that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors

Retrenchment

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

Business incubators

organizations that provides financial, technical, and managerial help to start-up businesses. 87% of start-ups using an incubator are still in operation after 5 years. LONG TERM

Mission statement

paragraph that describes the firm's goals and competitive advantages. can change over time

Blue ocean strategy

pure innovation which results in a new product or service. These situations are rare. Typically with a new product or service, you also have a unique setting

Spin-off

regular business practice that is done by businesses of all sizes and at all stages of development

Conversion rate

risky and makes a sale uncertain; How many prospects or leads you need to approach in order to make one sale

Takeovers

seizing of control of a business by purchasing its stock to be able to select the board of directors, a hostile event. The buyer (often called a raider) seizes control of the business without the permission of all owners

Entry wedge

there are times when an opportunity pops up and you must decide if the opportunity is right for you Seven types come up again and again. Supply shortages. Un-utilized resources. Customer contracting. Second sourcing. Market relinquishment. Favored purchasing. Government rules.

Churn

turnover rate for your customers—the percentage of customers you typically lose after their first purchase from you. Minimizing churn - keeping existing customers is more valuable than finding new ones.

Differentiation strategy

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

Co-marketing

type of media partnership where two products jointly pay to advertise together. Usually this is when customers use the two products together, like chips and salsa form of media partnership