Entrepreneurship Final Exam

Psychographics

Data that describes a group of people in terms of their tastes, opinions, personality traits, and lifestyle habits

geographic data

Data that helps you determine where your potential customers live and how far they will travel to do business with you

emotional buying decisions

purchase decisions based on the desire to have a specific product or service

Demographics

Data that describes a group of people in terms of their age, marital status, family size, ethnicity, gender, profession, education, and income

Brainstorming

a creative problem-solving technique that involves generating a large number of fresh ideas

Sole Proprietorship

A business owned by one person

What is entrepreneurship?

The process of running a business of one's own

Appendix of a business plan

Appendix- supporting documents to back up statements made in the body of the report, provide additional information

Employees vs Entrepreneurs

Employees are people who work for someone else Entrepreneurs are people who own, operate, and take the risk of a business venture

Economic Resources

the means through which goods and services are produced

Market research steps

1) Define the Question 2) Determine the Data Needed 3) Collect the Data 4) Analyze the data 5) Take Action 6) Evaluate the Results

Competitive Analysis

Analyzing strengths and weaknesses of competition (this will help you to figure out how to have customers buy from your business)

Monopolies

Companies that have complete control over a particular product or industry and can charge customers whatever price they want

Concluding statement of a business plan

Concluding statement- summarize goals and objectives you have for your business, emphasize

Step 1 of Problem Solving Process

Define the Problem: This step includes diagnosing the problem. Write down what the problem is and why it is a problem. Try to quantify it too.

Step 4 of Problem Solving Process

Evaluate Alternatives and Select the Best Option: The decision maker next needs to evaluate the alternatives to determine the best solution. In some cases, it may be possible to quantify the costs and benefits of each alternative. In other cases, quantifying each alternative, may not be possible, and the decision maker may simply have to rank each alternative.

Step 6 of Problem Solving Process

Evaluate the Action: The problem- solving process is not complete until you evaluate your action since even a well-thought- out solution may not work.

Fixed Costs

Fixed costs are costs that must be paid regardless of how much of a good or service is produced. Fixed costs are also called sunk costs.

Step 2 of Problem Solving Process

Gather Information: Once the problem has been defined, you need to gather information that could help solve it. Relevant information may be obtained from many sources, including company records, industry data, and trade magazines. It is also a good idea to interview other people in the industry to find out what their experiences have been and to learn how they have solved similar problems.

Pricing Objectives

Goals a company hopes to accomplish through its pricing strategies Some examples are: Maximize sales, Increase Profit, Discourage competition, Attract customers, Establish an image

Goods

Goods are products you can see and touch (and sell such as a pair of shoes). Service, on the other hand, are activities that are consumed as they are produced (must be provided at the time you need them- they cannot be a store. This may include lawn mowing or a haircut).

Maslow's Hiearchy of Needs Theory

Identifies five areas of basic human needs The order is: Physiological, safety, love/belonging, esteem, self-actualization

Step 3 of Problem Solving Process

Identify Various Solutions: Most problems can be solved in various ways. Identify all possibilities before you settle on a particular solution.

Characteristics of successful entrepreneurs

Independent, self-confident, determined, goal-oriented, set and achieve high standards for themselves, creative, able to act quickly, keep up to date with technology

market economy

Individuals and businesses decide what, how, and for whom goods and services are produced

Introduction of a business plan

Introduction- Detailed description of the business and it's goals, ownership of the business and legal structure, The skills and experience you bring to the business, The advantages you and your business have over competitors

Introductory elements of a business plan

Introductory elements- cover letter, title page, table of contents, statement of purpose, executive summary

Marketing section of a business plan

Marketing- Products and services you offer, the market, the industry, and your location

Operations section of a business plan

Operations- Explain how the business will be managed on a day-to-day basis, discuss hiring and personal procedures, include information on insurance and lease or rental agreements, describe the equipment that will be necessary, and how the products or services will be produced and delivered

Opportunity Cost

Opportunity cost is the value of the next best alternative-the one you pass up in the decision to invest in a different product.

Disadvantages of entrepreneurs

Risky, face uncertain and irregular incomes, work long hours, must make all decisions by themselves

Service VS Retail Businesses

Service businesses sell services rather than products (Service Businesses: Hotels, hairdressers, and repair shops). Retail businesses sell products directly to those who consume them (Retail Business: Card Store).

layout of retail business

Some ways to do this is through appropriate lighting to the items you sell, think carefully about window displays, make the entrance inviting, use common sense when organizing the merchandise, leave at least four feet of aisle space, create attractive in-store displays, use space wisely, and place the cash register in a central location.

Supply and demand

Supplying goods and services to meet the customers demands

Step 5 of Problem Solving Process

Take Action: Once you have selected the best solution to the problem, you need to take action to implement it.

command economy

The government determines what, how, and for whom products and services are produced. Because the government is making the decisions, there is very little choices for consumers in what is available. The government may see no reason to have more than one type of the same item.

Partnership

a business owned by two or more people

customer profile

a description of the characteristics of the person or company that is likely to purchase a product or service

advantages of entrepreneurs

are their own boss, choose a business that interests them, can be creative, can make large sums of money

Corporation

business that has the legal rights of a person but is independent of its owners.

Sunk Costs

costs that have already been incurred and cannot be recovered

Variable costs

costs that vary with the quantity of output produced

use-based data

data that helps you determine how often potential customers use a particular service

Financial Management of a business plan

determine your financial needs, financial risks, costs and expenses of running your business

competition-based pricing

determined by considering what competitors charge for the same good or service.

Market Segments

groups of customers within a large market who share common characteristics

Franchise

legal agreement that gives an individual the right to market a company's products or services in a particular area

Scarcity

occurs when people's needs and wants are unlimited and the resources to produce those goods and services to meet those needs and wants are limited

Advertising

paid form of communication sent out by a business or service. It keeps a product or service in the public's eye by creating a sense of awareness and helps convey a positive image

demand-based pricing

pricing that is determined by how much customers are willing to pay for a product or service

cost-based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

market research

system for collecting, recording, and analyzing information about customers, competitors, goods, and services.

laissez-faire economy

the belief is shown that economies and businesses function best when there is no interference by the government

Traditional Economy

used in countries that are less developed and are not yet participating in the global economy. Most of what is produced is consumed and what is left over is sold or traded with people who live in nearby communities