Entrepreneurship Final Exam Study Guide

What are some basic factors affecting a successful negotiation?

Negotiation- is a process in which two or more parties reach an agreement or solve a problem through communication. ->What do you need and what do you want? -> What concessions can you make? -A concession is something you're willing to give up. ->What concessions can you ask of the other party? -> What will you do if you can't reach an agreement? I

What is the difference between outsourcing and exporting as it relates to operating activities?

Outsourcing is hiring another company or individual to handle part of a business's everyday operations or to do special projects. Exporting is moving professionals into another company.

What is the free enterprise system?

People are free to become entrepreneurs and own and operate an enterprise (business). -Another name for a market economy -There are also many investment opportunities in a market economy. Individuals can invest money in their own businesses or those of others.

What is the difference between pre-tax profit and net profit?

Pre-Tax Profit- The pre-tax profit is calculated by subtracting the operating expenses from the gross profit ($3,080 - $650 = $2,430). Net Profit (Loss)- The net profit, also called net income, is calculated by subtracting taxes from the pre-tax profit.

What is debt?

Any sum of money that is owed or due.

How important is advertising when trying to develop product branding?

A brand is a marketing strategy that can create an emotional attachment to your product in the mind of the consumer. ->Building a product image refers to creating a specific impression of it in the minds of your customers. The features of a product are what it does and how it appears to the senses (sight, sound, taste, smell, and touch). ->The benefits of a product are the reasons customers choose to buy it. ->The combination of products a business sells is called its product mix.

What is the importance of a business plan?

A business plan is a statement of your business goals, the reasons you think these goals can be met, and how you are going to achieve them -You need a complete, well-written plan before you start a business, and a good business plan will also guide you as you develop the company. -The plan for a for-profit business is significantly different from that for a nonprofit organization. *Each type of plan addresses The Three C's: concept, customer, and capital, and must include an executive summary (abstract).

What is the difference between a consumer want and need?

A consumer need is defined as something that people must have to survive, such as water, food, clothing, or shelter. A want is a product or service that people desire.

Do functional structures help to create specialization of work (i.e. job) tasks?

A functional structure is one of the most common organizational structures. -Under this structure, the organization groups employees according to a specialized or similar set of roles or tasks.

What is market research?

A market is a group of potential customers—people or businesses—who are willing and able to purchase a particular product or service. *Market research is an organized way to gather and analyze information needed to make business decisions. -For example, market research can help you decide to start a new business.

Does a market segment have well-defined characteristics?

A market segment is a grouping of consumers or businesses within a particular market that has one or more things in common. - By exploring various market segments, you can begin to form a clear picture of your target market.

What are market segments?

A market segment is a grouping of consumers or businesses within a particular market that has one or more things in common. -By exploring various market segments, you can begin to form a clear picture of your target market 1) Demographics are objective social and eco- nomic facts about people. Demographics for consumers include age, gender, marital status, family size (number of children), ethnic background, education, occupation, annual income, and whether they own a home or rent. 2) Geographics. Basing market segments on where consumers live or where businesses are located is called geographics. 3) Psychographics. Psychological characteristics of consumers, such as attitudes, opinions, beliefs, interests, personality, lifestyle, political affiliation, and personal preferences, are called psycho- graphics.

What is the purpose of the mission statement as it relates to the overall goals of the firm?

A mission statement a formal summary of the aims and values of a company, organization, or individual.

What is the term whistleblower as it relates to business ethics?

A whistleblower is a person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organization that is either private or public

How do you calculate owner's equity

Accounting term that means total assets minus total liabilities according to a company's balance sheet. -Also referred to as net worth or book value -Value of the business on a specific date if all the assets were sold and all the liabilities were paid.

What is the difference between accounts receivable and accounts payable?

Accounts Receivable is the amount of money owed to a business by its customers for credit sales Accounts Payable represents the amount of money a business owes to its suppliers for purchases made on credit.

What is the difference between an income statement and balance sheet?

An income statement is a financial document that summarizes a business's income and expenses over a given time period and shows whether the business made a profit or took a loss. -If a business's sales are greater than its expenses, the income statement will show a profit. -If a business's sales are less than its expenses, the income statement will show a negative number, a loss. A balance sheet is a financial statement that summarizes the assets and liabilities (debts) of a business. -It shows how much a business is worth at a particular time.

What is the purpose of an organizational structure?

An organizational structure is a system for dividing work, authority, and responsibility within a company. ->When you hire employees, you will need to develop an organizational structure that suits the business.

What are the three leadership styles and there meaning?

Authoritarian- The authoritarian leadership style (aw-thor-uh-TEHR-ee-un) is practiced when a leader tells employees what needs to be done and how to do it, without seeking their advice. Democratic- The democratic leadership style is practiced when a leader seeks input from employees about what tasks need to be done and how to do them but ultimately makes the final decisions. Delegating- This is practiced when a leader gives employees complete freedom to decide what tasks need to be done and how to do them.

What is capital as it relates to a business?

Capital is the cash and goods a business owns - Individuals and businesses are free to own and trade goods and invest cash in businesses.

How do entrepreneurs evaluate opportunities?

Entrepreneurs tend to be people with positive attitudes. -Instead of seeing problems, they see opportunities. *An important factor often overlooked when evaluating ideas is the opportunity cost. -Cost-benefit analysis -SWOT analysis

What are three characteristics of corporate social responsibility?

Entrepreneurs- You have legal obligations to provide a safe workplace and fair employment policies. Employees- As with employees, business owners are bound by law to treat customers fairly. -Honesty -Respect -Accessibility -Attention Suppliers- It should go without saying that you owe suppliers timely payment in the amount and method on which you agreed. You also need to respect their decisions on pricing. (Ethical Sourcing)

What is the difference between assets and liabilities?

Everything owned by the business that has a monetary value is an asset. This could include such things as cash, inventory, equipment, and supplies. Any outstanding bill or loan that must be repaid is a liability.

What is the difference between a PERT chart and a Gantt chart?

Gantt chart- a bar chart that shows schedule goals for a list of tasks and the duration (length of time) of each task. PERT chart- is a scheduling diagram that shows tasks as a sequence of steps and illustrates how those steps are dependent on each other.

Is intuition closely linked to instinct?

Inuition is the ability to understand something immediately, without the need for conscious reasoning. -This is exactly what instinct is. Doing reflex actions without the use of conscious thought.

How do you calculate profit?

Revenue - Expenses= Profit

What are some basic characteristics of an entrepreneur?

Self-assessment- evaluating your strength and weaknesses as an entrepreneur. Aptitude- is a natural ability to do a particular type of work or activity well. An attitude- is a way of viewing or thinking about something that affects how you feel about it.

What is the difference between supply and demand?

Supply is the quantity of goods and services a business is willing to sell at a specific price and a specific time. Demand is the quantity of goods and services consumers are willing to buy at a specific price and a specific time

Understand the concept of economics of one unit

The economics of one unit is a calculation of the profit (or loss) for each unit of sale made by a business. Selling Price - Expense = Profit (or Loss) -Calculate the economics of one unit by subtracting the expenses for the unit of sale from its selling price.

What is a marketing plan?

The main reason for marketing is to clearly communicate the value of your product or service. To do this successfully, you create a marketing plan- is a detailed guide with two primary parts: -Marketing goals -Strategies for reaching your goals (the marketing mix)

What is revenue?

The revenue section includes gross sales (the total revenue from all the hats sold), return sales (the total dollar amount of the hats that were returned), and net sales (gross sales - return sales). ex) Matt sells hats for $20 each. So, with gross sales of $4,800, Matt sold 240 hats ($4,800 ÷ 20 = 240).

What are financial ratios and what are they derived from?

These are relationships between important financial data that are expressed as fractions or as percentages. -One of the most effective ways for entrepreneurs to analyze their financial statements is to use these -Entrepreneurs calculate financial ratios by using the data from the financial statements. All financial ratios are calculated by dividing one number by another.

How would a virtual firm operate?

They don't have a retail outlet, so all "shopping" is done online.

What are opportunity cost?

This is the value of what you will give up to get something. -An opportunity-cost analysis examines the potential benefits that you forfeit when you choose one course of action over others.

How do cultural values affect businesses expanding into new geographical regions?

Values are intangible things that you believe are worthwhile and important. - >A value can be a quality or a way of doing something. ->The Internet is proficient at breaking down geographic barriers. *Although you could do business in a country without visiting it, understanding the culture is definitely an advantage when trying to conduct international negotiation ->A seasoned international businessperson is often the best source for advice on understanding the social and business etiquette of a different culture. ->Someone who has lived and worked in a particular country will have insights that no one else can offer.

What is the definition of scarcity?

When there is not enough supply to meet the demand, the result is a scarcity of those goods and services.

Outcomes that are acceptable but not optimal are termed ________

satisficing