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10 Cards in this Set

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  • Back
RQ 6-4 What kinds of factors encourage certain people to start a new business?
Pg 169-170
1. The “entrepreneurial spirit” the desire to create a business.
2. Independence, the desire to determine one’s own destiny, and the willingness to find and accept a challenge.
3. Desire and determination to own your own business.
4. Willingness to accept challenges.
5. Motivation. Had enough with current work or someone has lost job or someone has a new product.
RQ 6-5 What are the major causes of small-business failure? Do these causes also apply to larger businesses? Pg 171
1. Lack of experiences
2. Lack of money
3. Location is bad
4. Mismanagement of inventory
5. Poor credit granting practices
6. Poorly planned expansion
RQ 6-6 Briefly describe four contributions of small business to the American economy? Pg 172-174
1. Innovation. Small firms produce two and a half times as many innovations as large firms relative to the number of persons employed.
2. Employment. Seven out of ten industries that add the most new jobs were small-business-dominated industries.
3. Competition. Small businesses challenge larger, established firms in many ways, causing them to become more efficient and more responsible to consumer needs.
4. Fill needs of Society and other Businesses. Large business can not meet special needs of smaller groups of consumers. Such groups create almost a perfect market for small companies, which can tailor their products to these groups and fill their needs profitably.
RQ 6-7 What are the major advantage and disadvantages of smallness in business? Pg 174-176
Advantages Disadvantages
(A)Personal relationships with Customers and Employees. (D)Risk of Failure. Two out of three fail within six years. (A) Relationships between owner-managers and employees are closer. (D)Limited potential. Success may be limited by skills or demand. (A)Ability to adapt to change. (D)Limited ability to raise capital. (A)Simplified Recordkeeping. (D)Limited management skills
(A)Independence (D) Lack of opportunity (A)Keep all of the profits (A) Low cost of going into business
RQ 6-8 What are the major components of a business plan? Why should an individual develop a business plan? Pg 178
1. Introduction
2. Executive Summary
3. Benefits to the Community
4. company and Industry
5. Management Team
6. Manufacturing and Operations Plan
7. Labor force
8. Marketing Plan
9. Financial Plan
10. Exit Strategy
11. Critical Risks and Assumptions
12. Appendix
RQ 6-13 Explain the relationship among a franchise, the franchisor, and the franchise. Pg 182
Franchising is the actual granting of a franchise. A franchisor is an individual or organization granting a franchise. A franchisee is a person or organization purchasing a franchise. The franchisor supplies a known and advertised business name, management skills and training for the business. The franchisee supplies labor and capital, operates the franchise and agrees to bide by the franchise agreement.
RQ 6-14 What does the franchisor receive in a franchising agreement? What does the franchisee receive? What does each provide? Pg 185
The franchisor gains fast and well-controlled distribution of its products without incurring the high cost of construction and operating its own outlets.
The franchisee gets the opportunity to start a business with limited capital and to make use of the business experience of others.
1. This chapter cites five advantages of small business. Which of these seem to apply to Dale Northrup’s experience with the Percy Inn?
Personal relationships with Customers and Employees.
Relationships between owner-managers and employees are closer.
Ability to adapt to change. He pre-wired the inn for condos if the inn concept failed.
Independence He travels the world to rate hotels, Now wants to take time off while his assistant runs the inn.
2. This chapter cites three disadvantages of small business. Based on what you know of the Percy Inn, which of these is likely to be the biggest problem for Northrup in the coming years?
He can only raise his room rates so far before he out prices the competition.
He only has a set number of rooms to rent. Thus no growth.
3. Now that Northrup has the Percy Inn running smoothly, would you recommend that he open a second B&B to take advantage of rising tourism in Portland? Why or why not?
Advantage Disadvantage
(A) This would solve the limited potential (D) Too much time and money involved
(A) He has knowledge and experience (D) Would not be able to travel (A) Can send guest to 2nd B&B when full (D)Insufficient money (D)Quality of Percy Inn may go down