MGMT Ch.5

many large organizations make decisions ___ly because each of their many layers of hierarchy has to approve an action before it can be implemented

slowly

Much of what is created in the high-technology sectors comes from ____ companies

start-up

A group of small investors seeking to make profits on companies with rapid growth potential

Venture Capital Companies

Most of these firms do not lend money: They invest it, supplying capital in return for stock.

Venture Capital Companies

Most of the products made by _____ manufacturers are sold to customers by ___ businesses

big small

Major innovations are as likely to come from ____ businesses as from big businesses

small

Using your own money and money borrowed from friends and relatives to finance the business

Personal Resources

The first step in starting a new business is the individual's commitment to becoming a ______

business owner

____ businesses provide _______ businesses with many of the services, supplies, and raw materials they need

Small big

A business that is privately owned by one individual or a small group of individuals and has sales and assets that are not large enough to meaningfully influence its environment

Small business

Investor-owned companies that borrow money from the Small Business Administration (SBA) to loan to small businesses with potential for rapid growth

Small-Business Investment Companies (SBICs)

A new business does not suffer the ill effects of a prior owner's errors.

Starting from Scratch

The risks of starting a business from scratch are greater than those of buying an existing firm.

Starting from Scratch

Partnering with established firms, such as suppliers, in a mutually beneficial relationship

Strategic Alliances

Entrepreneurial Reasons for Success 4

- Hard work, drive, and dedication by the entrepreneur - Careful analysis of market conditions that provides insights about business conditions - Acquisition of managerial competence through training or experience or by using the expertise of others - Luck

Provide advice and assistance

Advisory Boards

It has established working relationships with lenders, suppliers, and the community.

Buying an Existing Business

Someone who engages in entrepreneurship

Entrepreneur

The process of planning, organizing, operating, and assuming the risk of a business venture

Entrepreneurship

A market in which several large firms compete according to relatively well-defined criteria

Established market

Any advantage that comes to a firm because it exploits an opportunity before any other firm does

First-mover advantage

A contract between an entrepreneur and a parent company

Franchising agreement

The majority of small businesses are ____operated.

owner-

what are the most important source of money?

wner's personal resources

A document that summarizes the business strategy and structure

business plan

Each industry group ___ in its requirements for employees, money, materials, and machines.

differs

Entrepreneurial Reasons for Failure 4

- Managerial incompetence/ inexperience of the entrepreneur - Neglect in not devoting sufficient time and effort to the business - Weak control systems that do not warn of impending problems - Insufficient capital to sustain the business until it starts to turn a profit

The major industry groups that include successful new ventures and small businesses are:

- Services - Retailing - Construction - Financial and insurance - Wholesaling - Transportation - Manufacturing

To find openings, entrepreneurs must study markets and answer the following questions:

- Who are my customers? - Where are they? - At what price will they buy my product? - In what quantities will they buy? - Who are my competitors? - How will my product differ from those of my competitors?

the financial plan is made up of

1. A cash budget 2. An income statement 3. Balance sheets 4. A break-even chart

Discovery of new markets can happen in at least 2 ways:

1. An entrepreneur can transfer a product or service that is well established in one geographic market to a second market. 2. Entrepreneurs can sometimes create entire industries.

Strategy for Entrepreneurial Organizations Basic Strategic Challenges and then 3

1. Choosing an industry in which to compete 2. Emphasizing distinctive competencies 3. Writing a business plan

What are the trends in Small-Business Start-Ups?

1. Emergence of E-Commerce 2. Crossovers from Big Business 3. Opportunities for Minorities and Women 4. Better Survival Rates

3 advantages of franchising

1. Franchisers benefit from the ability to grow rapidly by using the investment money provided by franchisees. 2. The franchisee does not have to build the business step by step; it is virtually established overnight. 2. Because each franchise outlet is a carbon copy of every other outlet, the chances of failure are reduced

The Small Business Administration 4

1. Service Corps of Retired Executives (SCORE) 2. Active Corps of Executives (ACE) 3. Small Business Institute (SBI) 4. Small Business Development Centers (SBICs)

3 disadvantages of franchising

1. Some franchises have a significant start-up cost. 2. There is loss of independence for the franchisee due to the imposed operational controls of the franchiser. 2. Many franchise agreements are difficult to terminate.

The distinctive competencies of small businesses usually fall into 3 areas

1. The ability to identify new niches in established markets 2. The ability to identify new markets 3. The ability to move quickly to take advantage of new opportunities

A business plan should answer 3 questions

1. What are the entrepreneur's goals and objectives? 2. What strategies will the entrepreneur use to obtain these goals and objectives? 3. How will the entrepreneur implement these strategies?

Small businesses currently account for over ______ of all jobs in ____ sectors of the economy.

1/3 high-technology

Most U.S. businesses employ fewer than 〇 people, and most U.S. workers are employed by small firms

100

round ___ % of the new businesses started in the past decade were bought from someone else.

30

_____ of the 10 industries that added the most new jobs in 2015 were in sectors dominated by small businesses

7

the entrepreneur pays the parent company for the use of its trademarks, products, formulas, and business plans

Franchising agreement

_______ businesses outsource many routine business operations such as packaging, delivery, and distribution to smaller companies

Large

Getting money from these sources, however, requires some extra effort.

Lenders

Obtaining funding from traditional lenders (e.g., banks, independent investors, and government loans)

Lenders

Can be quite expensive

Management Consultants

Experts who charge fees to help managers solve problems

Management Consultants

Often specialize in one area, such as international business or small business

Management Consultants

Meeting regularly with one another to discuss common problems and opportunities and, perhaps most important, to pool resources

Networking

A segment of a market not currently being exploited

Niche

Provide assistance (e.g., SBA-guaranteed loans) for small businesses unable to get private financing at reasonable terms

SBA Financial Programs

_______ organizations usually cannot compete effectively on the basis of economies of scale.

Small

Organizations with higher levels of production have a major cost ___________ over those with lower levels of production.

advantage

This relationship between cost and production is called _____ increase # of product, the more cost falls

an economy of scale.

which financial plan is most important

cash budget because it tells entrepreneurs how much money they need before they open for business and how much money they need to keep the business operating.

The 2nd step in starting a new business is

choosing the goods or services to be offered that means investigating one's chosen industry and market

Although small firms often hire at a faster rate than large ones, they are also likely to ____ jobs at a far higher rate.

eliminate

The plan should describe the match between the _________'s abilities and the __________ for producing and marketing a particular product or service.

entrepreneur requirements

Jobs are created by ____ companies of all sizes, all of which hire workers and all of which lay them off.

entrepreneurial

Many smaller companies are finding ____ and growth opportunities in foreign countries

expansion

Research shows that manufacturing costs often _____ as the number of units produced by an organization increases.

fall

An important component of the overall business plan is ____ planning

financial

which translates all other activities into dollars

financial planning

Minority enterprise small-business investment companies (MESBICs) specialize in :

financing businesses that owned and operated by minorities.

Small firms are also usually the ______ to hire in times of economic recovery, whereas large firms are generally the ____.

first last

SBA loans have never been a ____ source of small-business financing

major

Small businesses consistently supply over _______ of all "innovations" introduced into the U.S. marketplace each year.

half

The contribution of small business can be measured in terms of its effects on key aspects of an economic system, including _____, innovation, and importance to big business

job creation

_____ are not able to move as quickly as small companies to take advantage of these opportunities.

large firms

Small business is a strong presence in _____ economies and will be quite important in _____ economies.

mature emerging

the government has recently begun to sponsor __________

minority enterprise small-business investment companies (MESBICs)

In general, the ____ resources an industry requires, the harder it is to start a business and the less likely it is that the industry is dominated by ____ firms.

more small

Small business—especially in certain industries—is an important source of _____ (and often well-paid) jobs in the United States.

new

When technology in an industry changes, it often shifts the economies-of-scale curve, thereby creating _________ for smaller organizations

opportunities

Although such ventures are accompanied by considerable risks, they give entrepreneurs new ______ and can be a real ______ for success

opportunities catalyst

Success or failure thus depends heavily on identifying a genuine business ________

opportunity

The track record of an existing business gives ________ buyers a much clearer picture of what to expect than any estimate of a new business's prospects.

potential

Business Plan should define strategies for _____ and marketing, _____ aspects and organization, and _____ and finance.

production legal accounting

large organizations may sometimes put a great deal of their assets at ____ when they take advantage of new opportunities

risk

The ＿＿＿＿＿ itself is one of the most important elements in the business plan

sales forecast

Consultants often recommend the first approach because the odds are better. which?

to buy an exisiting business

After choosing a product and making sure that the choice fits their own skills and interests, entrepreneurs must decide whether _____________

to buy an existing business or to start from scratch.