Entrepreneurship Essay 7+8+9+11
List and briefly describe three specific steps that an entrepreneurial organization can take to build a strong ethical culture.
(1) Lead by example. The most important that that any entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization is to lead by example. (2) Establish a code of conduct. A code of conduct is a formal statement of an organization's values on certain ethical and social issues. The advantage of having a code of conduct is that it provides specific guidance to managers and employees regarding what is expected of them in terms of ethical behavior. (3) Implement an ethics training program. Firms also use ethics training programs to promote ethical behavior. Ethics training programs teach business ethics to help employees deal with ethical dilemmas and improve their overall ethical conduct.
Potentional payoffs for establishing a strong ethical culture
1- Improved customer loyality 2- Imporved brand reputation 3-Improved employee commitment 4- Potentional avoidance of fines
What is a brand? How does a new firm develop a brand?
A brand is the set of attributes(positive or negative) that people associate with a company. These attributes can be positive, such as trustworthy and dependable, or they can be negative, such as cheap and unreliable. The customer loyalty a company creates through its brand it one of its most valuable assets. To develop a brand, a new firm must have meaning in its customer's lives something for which customers are willing to pay. On a more pragmatic level, brands are built through a number of techniques, including advertising, public relations, sponsorships, and good performance.
What is a founder's agreement? Describe the purpose of a buyback clause and why it's important?
A founders' agreement (or shareholders' agreement) is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founders will have to remain with the firm for their shares to fully vest. An important issue addressed by most founder agreements is what happens to the equity of a founder if the founder dies or decides to leave the firm. Most founders agreements include a buyback clause, which legally obligates the departing founders to sell to the remaining founders their interest in the firm if the remaining founders are interested.
What is a skills profile and what is it used for?
A skills profile is a chart that depicts the most important skills that are needed in a startup (such as executive leadership, finance, operations, HR) on the horizontal axis and lists the members of the new venture team and the skills that each individual contributes on the vertical axis. The idea is to see whether the skills that are needed to launch a firm are adequately covered by the members of the new venture team, or whether skill gaps exist that need to be filled.
What are forecasts? What role do they play in the preparation of pro form financial statements?
Forecasts are projections of a firm's future sales, expenses, income, and capital expenditures. A firm's forecasts provide the basis for its pro forma financial statements. A well- developed set of pro forma financial statements helps a firm create accurate budgets, build financial plans, and manage its finances in a proactive rather than a reactive manner.
Describe the concept of guerrilla marketing. Why is guerrilla market particularly suitable for entrepreneurial firms?
Guerrilla marketing is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques. The point is to create awareness of a firm and its products, often in unconventional and memorable ways. Guerrilla marketing is particularly suitable for entrepreneurial firms, which are often on a tight budget but have creativity, enthusiasm, and passion to draw from. Firms often use very entertaining and engaging guerilla marketing techniques to build awareness for their products and services.
Describe the difference between historical and pro form financial statements.
Historical financial statements reflect past performance and are usually prepared on a quarterly and annual basis. Pro forma financial statements are projections for future periods based on forecasts and are typically completed for two to three years in the future. Pro forma financial statements are strictly planning tools, while historical financial statements reflect actual information.
Describe each of the four primary financial objectives of firms.
Profitability is the ability to earn a profit. Liquidity is a company's ability to meet its short-term financial obligations. Efficiency is how productively a firm utilizes its assets relative to its revenue and its profits. Stability is the strength and vigor of the firm's overall financial posture.
What is the purpose of market segmentation? How are market typically segmented? Can a company segment its market on more than one dimension?
The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential niche or target markets in that industry. This process is called market segmentation and is important because a new firm typically only has enough resources to target one market segment, at least initially. Markets can be segmented in many ways, such as by geography (city, state, country), demographic variables (age, gender, family size, income), behavioral variables (benefits sought, product usage rate, brand loyalty) and product type. Sometimes a firm segments its market on more than one dimension to drill down to a specific market that the firm thinks it is uniquely capable of serving. For example, in its market segmentation, GreatCall, the cell phone service provider for older people, probably segmented the cell phone market by age and by benefits sought. Helio (a cell phone designed for young people) likely used this same segmentation strategy by targeting younger users and featuring a more sophisticated set of options.
Describe the purpose of the income statement, the balance sheet, and the statement of cash flows.
The income statement reflects the results of the operations of a firm over a specified period of time. It records all the revenues and expenses for the given period and shows whether the firm is making a profit or is experiencing a loss. Unlike the income statement, which covers a specified period of time, a balance sheet is a snapshot of a company's assets, liabilities, and owners' equity at a specific point in time. The statement of cash flows summarizes the changes in a firm's cash position for a specified period of time and details why the change occurred. The statement of cash flows is similar to a month-end bank statement. It reveals how much cash is on hand at the end of the month as well of how the cash was acquired and spent during the month.
What is ratio analysis? Why is it important?
The most practical way to interpret or make sense of a firm's historical and pro forma financial statements is through ratio analysis. The ratios described in the textbook are divided into profitability ratios, liquidity ratios, and overall financially stability ratios. These ratios provide a means of interpreting the historical and pro forma financial ratios for a firm.
Describe the term "liability of newness" and suggest several ways that a new venture can overcome this handicap.
refers to the fact that companies often falter because the people who start them aren't able to adjust quickly enough to their new roles and because the firm lacks a "track record" with outside buyers and suppliers. Assembling a talented and experienced new venture team is one path firms can take to overcome these limitations. In addition, firms able to persuade high-quality individuals to join them as directors or advisers quickly gain legitimacy with a variety of individuals, such as some of those working inside the venture as well as some people outside the venture (e.g., suppliers, customers, and investors). In turn, legitimacy opens doors that otherwise would be closed.
