Small and Family Business Final

Efficiency-driven economies

entrepreneurship is a way to build the middle class, and a growing retail and wholesale sector grows alongside businesses serving the needs of large industrial concerns

Entrepreneurial Process

feel, check, plan, do

Independent Entrepreneurship

form of entrepreneurship in which a person or group own their own for-profit business

Social Entrepreneurship

form of entrepreneurship involving the creation of self-sustaining charitable and civic organizations, or for-profit organizations which invest significant profits in charitable activities

Parallel competition

imitative business that competes locally with others in the same industry

Factor-driven economies

in nations where there is little manufacturing and most industry relates to farming and extracting raw materials

Innovation-driven economies

marked by a very large service sector providing high-end services to not only the resident population but also for export

Corporate governance

reconciliation of conflicts of interest between various corporate claimholders

focused cost leadership

requires competing based on price to target a narrow market. A firm that follows this strategy does not necessarily charge the lowest prices in the industry. Instead, it charges low prices relative to other firms that compete within the target market.

focused differentiation

requires the business to offer unique features to a product or service, and it must fulfill the requirements of a niche or narrow market

Against

Nepotism, legacy, inheritance

Corporate Entrepreneurship

the form of entrepreneurship which takes place in existing businesses around new products, services, or markets

Opportunity Venture Creation

untapped market, something that you can do better and make more money off of, etc.

VRIO

valuable, rare, inimitable, organized

Cost leadership

when a company projects itself as the cheapest manufacturer or provider of a particular product or commodity in a competition

Pure innovation or blue ocean strategy

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

market share gain

companies fight for market share, can buy competitors

Agency problem II

Conflict between controlling (family) shareholders and non controlling shareholders (tunneling)

Agency problem III

Conflict between shareholders and creditors

Agency problem IV

Conflict of interest between family shareholders and family outsiders

Agency problem I

Conflict of interest between owners and managers (non family firms)

Types of customers

Corporate, loyal, local, passionate

Value Creation

Customer's willingness-to-pay minus total production cost

For family firms

Substitution, human capital, politics

Effectual reasoning

Analyzing the resources available to create an attainable goal

market positioning

Find a big, fast growing market segment. Pie is growing and big enough to share.

Incremental innovation

Firm patterns itself on other firms, except for one or two key areas

invading adjacent markets

Market that doesn't differ significantly in terms of (1) cost structure, (2) stakeholders, and (3) required capabilities

Causal (predictive) reasoning

The process of setting a goal and then determining the strategy and resources required to attain the goal.

Agency Theory

When the goals of a firm's principals (owners) and their agents (managers) are aligned, there will be few "agency costs" due to shirking, opportunism, adverse selection, or moral hazard

Independent small business

a business owned by an individual or small group

Owner-managed firms

a business run by the individual who owns it

Bricolage

analyzing resources available and creating a product or service from them

Industry Life Cycle Stages

introduction, growth, maturity, decline

Necessity Venture Creation

need a better product, need a new machine, need new devices that have internet capacity once that became available, etc.

Resource-Based Theory

possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals

base retention

repeated customers, increase profitability of existing customers, extract more value from existing customers

Small and medium enterprises (SME)

the international term for small business