mgt 386 – Flashcards
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A significant benefit of starting your own company is
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contributing to society and being recognized for your efforts
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potential drawbacks of small business ownership include:
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a high likelihood of a lower quality of life while starting and establishing the small business
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more businesses fail because of ___ than for any other reason
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incompetent management
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one key to success with a business start-up is to begin with enough
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capital
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a key characteristic of a successful entrepreneur is
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learning to fail intelligently
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the key ingredient-the crucial element-to avoiding the failure of a new business is:
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the business plan
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Drawbacks of owning a small business include all but:
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unbalanced family life and no guarantee that the business would make profit
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the strategic management
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helps a small business develop the game plan that guides it in creating its mission, vision, goals, and objectives
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a small business "aggregation of factors that sets it apart from its competitors" is
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competitive advantage
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___ focuses everyone's attention and efforts on the same target market. it is an expression of what the owner believes in
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the company vision
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answering the question "what business am I in" defines the company's
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mission
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which of the following best expresses the relationship of a company vision to its mission
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the mission statement is the written expression of the company vision
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a mission statement should answer the following question
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what are the needs and values and wants of the target customers
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___ are positive internal factors that contribute towards accomplishment the company's objectives
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strengths
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___ are negative internal factors that inhibit the accomplishment of a firm's objectives
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weaknesses
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___ are negative external forces that inhibit the firm's ability to achieve its objectives
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threats
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every business is characterized by a set of controllable variables called____ that determines the relative success (or lack of) of market participants
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key success factors
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a small business owner would conduct a competitive analysis in order to
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avoid surprises from existing competitors and to identify potential new competitors
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a competitive profile matrix
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compares the firms and its competitors' key success factors
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____ are the broad, long-range attributes the small business seeks to accomplish: _____ are the specific, measurable milestones the company wants to achieve
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goals; objectives
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a small company following a _____ strategy seeks to build customer loyalty by positioning its goods and services in a unique fashion
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differentiation
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rather than attempting to serve the total market, the small firm pursuing a ___ strategy specializes in serving a specific target market
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focus
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the most successful strategic plans make the ____ focal
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customer
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competitive advantage
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the aggregation of factors that sets the small business apart from its competitors and gives its a unique
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the most common form of business ownership is the
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sole proprietorship
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the most critical disadvantage of the sole proprietorship is
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unlimited personal liability
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the _____ is a separate legal entity apart from its owners and may engage in business, make contracts, sue and be sued, and pay taxes
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corporation
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the primary reason entrepreneurs choose to incorporate is because of
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the limited liability of stockholders
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the corporate form of ownership has a significant advantage in that
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it is easy to transfer ownership
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which of the following is a disadvantage of the corporation form of ownership
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double taxation on profits and individuals
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the _____ is a document that states in writing all of the terms of operating the partnership for the protection of each partner involved
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partnership agreement
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in franchising, ______ pay fees and royalties to _______ in return for the right to sell its products or services under the franchiser's trade name and often to use its business format and system
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franchisee; franchiser
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_____ franchising exits when a franchisee is licensed to sell specific products under the franchiser's brand name through a selective distribution system
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product distribution
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____ franchising involves providing the franchisee with a complete business system-- the established name, the building layout and design, accounting system, etc.
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pure
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the primary advantage of buying a franchise over starting your own company is
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in the purchase of the franchiser's experiences, expertise, and products
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despite all the benefits, there are a number of disadvantages to franchises, such as:
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strict adherence to standardized operations
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The payment the franchisee makes to the franchiser based on gross sales is
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a royalty
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when buying a franchise, the potential franchisee should first
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evaluate him/herself as to the fit with the franchise
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when evaluating a franchise, the potential franchisee should
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interview both current and former franchisees
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one advantage of buying an existing business is
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equipment is installed and production capacity is known
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when buying an existing business, one should remember that
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the real reason for selling is seldom stated honestly
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the inventory in an existing business
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are rarely worth their face value
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the process of gathering information about the company, valuing the company, and performing a detailed review of all records, agreements, and compliance is called
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due diligence
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accounts receivable in an existing business
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are rarely worth their face value
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the valuation method that focuses on the value of the assets is called
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the balance sheet method
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which of the following valuation methods does not consider the future income-earning potential of a business
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balance sheet technique
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the ____ approach to valuing a business uses the value of similar business to establish the value of a company
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market
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in a business sale, the buyer seeks to
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All the above: get the business at the lowest price possible negotiate favorable payment terms, preferably over time minimize the amount of cash paid up front
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the ____ becomes the document that summarizes the due diligence and analysis that has been done to justify beginning a new business
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business plan
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the primary purpose of building a business plan is to
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provide direction, to create a target to shoot for
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the second essential purpose for creating a business plan is
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to attract lenders and investors
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which one of the following is not a test that an entrepreneur's business plan must pass
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the ability test
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a business plan
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reduces the risk and uncertainty involved in starting a new company
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the purpose of the competitors analysis section of the business plan is to
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demonstrate your company's advantage over competitors
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business plans need to pass three tests
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reality test, competitive test, and the value test
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an external test of a business plan that revolves around proving that a market exists is the
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reality test
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when presenting the business plan it is important to
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do all of these: show enthusiasms for the venture use visual aids avoid technical jargon
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the C for the five Cs that relates to the circumstances relating to the business, such as potential growth in the market, form of ownership, location, etc. is called:
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conditions
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a business plan presentation should cover
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all of the above: the company's background and its products and services with a market analysis and a description of the opportunities it presents the company's competitive edge and the marketing strategies it will use to promote that edge the management team and its members qualifications and experience
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what is the synonym for capacity
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cash flow
