Unit 1 Entrpreneurship
The difference between the small business owner and the entrepreneur is that the entrepreneur:
Assumes the risk of the business
What rights do businesses have
Businesses have the right to operate, Make a profit, To use resources
Indirect Customers
Businesses that sell different products or services, but fill the same need that your customers want.
Direct Customers
Businesses that sell products or services similar to yours
Corporation
Characteristics of this type of business include having stockholders, a pension plan, board of directors, perpetual existence, and tax advantages.
Consolidations
Companies A and B join together to become a new business, company C
_____ is the practice of charitable giving by corporations; includes contributing cash, donating equipment and products, and supporting the volunteers' efforts of company employees.
Corporate philanthropy (charity)
A number of people own the business through the purchase of stock but have limited responsibility and liability.
Corporation
Disadvantages of this form of business include a lack of responsibility for business success as a result of many owners, higher taxes, and greater government regulation of operations.
Corporation
Has access to more money through the sale of stock.
Corporation
The most stable form of business organization because ownership is easily transferred from one person to another.
Corporation
In the United States, which form of business organization generates the most sales and profits?
Corporations
Product
Description of what the product or service has to offer
Price
Determination of a price that the target market will find reasonable
Andy Yocom saw prime advertising space on the flags on the golf course. He reasoned that any marketing messages would get prominent attention if they were placed on the flags since golfers focus on them when they take their shots. As a result, Yocom used his own initiative and money to start Invision Golf Group Inc. Yocom is an example of a(n):
Entrepreneur
In a general partnership, the business is owned by two or more people with one person assuming the risks, rewards, and responsibility for operations. (True or False)
False
The principle of supply and demand describes the relationship between sales and marketing. Businesses make decisions on what they will produce or supply. (True or False)
False
There are many legal requirements to start a business as a proprietorship. (True or False)
False
Purchaser of a franchise
Franchisee
Seller of a franchise
Franchisor
If all of the individuals who own a business share unlimited liability for the business's losses, these individuals are part of a(n)
General Partnership.
Political
Government policies and intervention in the economy.
Shareholders
Investors who purchase shares of stock in a corporation. Also called stock holders or stock owners.
Legal
Laws enacted on the federal, state, and local level
Social & Demographic
Looking at a sector of the population and societal shifts.
The American Red Cross is an example of a(n) ___________ corporation.
Nonprofit
An entrepreneur is a person who _____ a business.
Owns and operates
A business owned by two or more people who share the risks, rewards, and responsibility for operations.
Partnership
All parties are responsible for all debts of the business.
Partnership
John, Robert, and Charles were college friends who wanted to start a business. John has creative ability, Robert's expertise is selling, and Charles' expertise is management. However, each has limited capital. The ideal business ownership for these young men is a
Partnership
Synergy
Practice of combining business activity to increase performance while decreasing costs.
Advantages of a Family Business
Pride, Trust, Sense of Mission, Benefits Loved Ones
What type of corporation may be owned by just a few people and does not offer its shares for sale to the general public?
Private
Businesses can show their social responsibility by contributing to...
Private causes - charity.
Promotion
Process to make potential customers aware of the product or service
Disadvantages of a Family Business
Promotions not based on ability (tough to hire outside of the family), family politics, separation of work and pleasure becomes difficult.
Owners of a business have a responsibility to employees to:
Provide a safe work environment, a reasonable wage or salary, Have a work environment that is free from harassment or discrimination because of age, gender, or ethnicity
A large retailer feels that it has a duty to contribute to the well-being of society, so it donates a portion of its proceeds to a charity that helps the environment. The retailer is demonstrating
Responsibility to society
What is the major difference between S corporations and limited liability companies (LLCs)?
S corporations are taxed like a partnership;
Place
Selling and/or delivery methods and where the product or service will be sold
The owner of the business provides the resources and expertise needed to operate the business.
Sole Proprietorship
The primary disadvantage of this form of business organization is that the owner may not have the funds and expertise necessary to operate the business.
Sole Proprietorship
The simplest and most common form of business ownership
Sole Proprietorship
"To form my business, I used all of my savings and borrowed from the bank, and I'm personally liable for all of the debts." This is an example of which of the following forms of business ownership:
Sole proprietorship
What forms of business ownership have to deal with the disadvantage of unlimited liability?
Sole proprietorship and general partnership
List the three major categories of business ownership.
Sole proprietorship, partnership, corporation
For Lladro Comercial, S.A., the manufacturer of handcrafted porcelains, its employees, suppliers of the paints used to decorate its porcelains, retailers of its products, and people who benefit from its philanthropy are all:
Stakeholders
Who are the owners of a corporation?
Stockholders
Acquisition
The acquiring company obtains the majority stake in the acquired firm, which doesn't change its name or legal structure.
People
The customers in the target market segment and people involved in marketing strategies
Start-up costs
The expenses a firm must pay before it can begin to produce and sell goods
Which of the following statements about social responsibility is true?
The obligation that a business has to act socially responsible extends beyond the investors in the company to include workers, suppliers, consumers, and communities.
Value Proposition
The reason customers choose to buy a product, usually connected to the business's opportunity and competitive advantage
Advertising fees
To support TV, print, radio, etc.
A business also relies on other businesses for its success. (True or False)
True
A business should treat customers fairly and provide complete and understandable information abut the products and services they purchase (T or F)
True
A corporation may have many owners because a person can invest in the business by purchasing only a few shares of stock. (True or False)
True
An entrepreneur is a person who takes the risk of starting and operating a business with the goal of making a profit. (True or False)
True
Businesses have the responsibility to cooperate and work effectively with the businesses that support their operations. (True or False)
True
Disadvantages of corporations include a lack of responsibility for business success as a result of many owners, higher taxes paid by corporations, and greater government regulation of operations. (True or False)
True
Environmental responsibility refers to the duty of a business to protect the natural resources affected by its products and operations. (True or False)
True
If a business is dishonest in its relationships with other businesses, it will soon find that those businesses will choose not to cooperate. (True or False)
True
Social responsibility refers to the duty of a business to contribute to the well-being of society (True or False)
True
Some people refer to a corporation as an "artificial person." (True or False)
True
The competition gives customers choices and encourages businesses to produce better and less expensive products. (True or False)
True
The only social responsibility that a company has to its investors is an economic responsibility--it must make a profit. (True or False)
True
The organizational form of the business determines who owns the business, the type of ownership risk, and the role of the owner in business operations. (True or False)
True
The primary advantage of a proprietorship is that it is very easy to form and operate. (True or False)
True
The primary responsibilities a business has to its employees are to provide a safe work environment and a reasonable wage or salary for the employees' work. (True or False)
True
The simplest and most common form of business ownership is the proprietorship. (True or False)
True
Mergers
Two corporations become one
Visual Merchandising
Using artistic displays to attract customers into a store. It also refers to how products are visually promoted inside a store.
General Partner
An owner who has unlimited liability and is active in managing the firm
What type of corporation sells millions of shares and must furnish complete information to the public about its earnings, assets, and debts?
"C"
A type of state-chartered corporation that was developed to help small businesses by taxing them as individuals in a partnership is a(n) __________ corporation.
"S"
Corporate Tax Rate
21%
Initial franchise fee
A 1 time fee for "rights"
Sole Proprietorship
A business owned and managed by a single person.
Partnership
A business with more than one person, where responsibility, decision making, and capital can be shared amongst owners.
Marketing Plan
A detailed guide that includes marketing goals and the strategies to reach these goals- called the Marketing Mix. Entrepreneurs must have a detailed marketing plan in order for their business to be successful.
S-Corporation
A form of ownership with no more than 100 stockholders who must be U.S citizens. This form avoids double taxation.
Publicity
A form of promotion for which a company does not pay. It is sometimes referred to as 'free advertising'
Franchise
A legal agreement that gives an individual the right to market a company's products or services.
Limited Partner
A partner whose liability is only limited to the amount in which he/she invests.
Advertising
A public, promotional message paid for by an identified sponsor or company.
One major-common way in which many businesses demonstrate their responsibility toward employees is by providing them with
A safe working environment.
C Corps
A state chartered legal entity with authority to act and have liability separate from its owners. (Stockholders)
Unlimited Liability
A term to describe that in the event of a business failure, losses, (investment) can be unlimited.
Limited Liability
A term to describe that you only lose the amount in which you invested.
Marketing
A way of presenting a business to it's customers that clearly communicates the value of the product or service.
Public Relations (PR)
Activities aimed at creating goodwill toward a product or company.
Jon P. Farmer is the founder of Kolopua Hawaii LLC, a company that markets Pure Hawaiian Air. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. Retailing for about $5 apiece, the bottles are sold at gift shops in Hawaii, as well as to travel agents nationwide who give them to clients. As a(n) _____, Farmer's annual income exceeds $100,000 annually.
Entrepreneur
The person who takes the risk of starting and managing a business to make a profit is called a(n):
Entrepreneur
Pros of Franchising
Established product or service, management and technical service provided, equipment and supplies are cheaper.
Consumers produce and sell the products and services produced by businesses (True or False)
False
Cons of Franchising
Very expensive, decision making is limited, dependent of other franchises.
Royalty fees
Weekly or monthly paw to franchisor; usually a % of income.
Value Proposition
What a product does and how it appears to the senses (sight, sound, taste, smell, and touch).
Double taxation
When company earnings are taxed and dividends (payouts from stock) are taxed as well.
What is double taxation?
When the company and the investor/stockholder are both taxed for the income gained