Mgmt Ch. 5

Front 1

Define 'Entrepreneurship'

Back 1

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

Front 2

Define 'Entrepreneur'

Back 2

Someone who engages in entrepreneurship.

Actively involved in organizing or operating the business

Front 3

Define 'Small Business'

Back 3

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 influence its environment

Front 4

True or False; Great wealth and failure are associated with the history of entrepreneurship and the development of new business.

Back 4

True. The history of entrepreneurship and of the development of new businesses is in many ways the history of great wealth and failure.

Front 5

Are Small Businesses a strong presence in the US economy?

Back 5

Yes. Small business is a strong presence in the economy

Front 6

A small businesses' effectiveness and economic contributions can be measured by what three things?

JIB

Back 6

1) Job Creation

2) Innovation

3) Big Business (small businesses importance to big business)

Front 7

Describe the 'job creation' economic contributions of small businesses

Jib

Back 7

Small business is...

1) Important source of new (often well-paid) jobs

2) Small Business Accounts for 96% of all US exports.

3) Entrepreneurial business success, more than business size, accounts for most new job creation

4) Small firms hire faster than large firms.

5) Small firms are likely to eliminate jobs at a far higher rate than large firms. Like all businesses, have periods hiring and firing.

Front 8

Describe the 'innovation' economic contributions of small businesses

jIb

Back 8

Small businesses supply 55% of all new innovations in the US marketplace.

Front 9

Describe the 'big business' economic contributions of small businesses

jiB

Back 9

Small firms are important to big businesses because:

1) most of the products manufactured by big firms are sold to consumers through small firms/businesses.

2) Small firms/businesses provide with many services, supplies, and raw materials that they need.

Front 10

What are three strategic challenges presented by Entrepreneurship?

C, E, W

Back 10

(1) Choosing an industry in which to compete

(2) Emphasizing distinctive competencies

(3) Writing a business plan

Front 11

True or False: The more resources an industry requires, the harder it is to start a business, and less likely the industry is dominated by small firms.

Back 11

True. Resource demanding industries are not good for small firms.

Front 12

What is the fastest growing segment of a small-business empire?

What sector??

Back 12

Services; primarily because they require few resources, service businesses are the fastest-growing segment of small-business enterprise

Offers a higher return on time invested.

Appeals to the innovative talent that is typical to small firms.

Front 13

Describe the retail industry

Back 13

Retail business sells products manufactured by other firms directly to consumers

Front 14

Describe the construction industry

Back 14

Local construction firms are often ideally suited as contractors

Front 15

Describe the finance and insurance industry

Back 15

These businesses are either affiliates of or sell products provided by larger national firms

Front 16

Describe the wholesale industry

Back 16

Wholesale business buys products from manufacturers or other producers and then sells them to retailers

Serve fewer customers

Front 17

Describe the manufacturing industry

Back 17

- Lends itself to big business

- Because of the investment normally required in equipment, energy, and raw materials, a good deal of money is usually needed to start a manufacturing business

- Economy of scale

- Costs often fall as the number of units produced by an organization increases

Small manufacturing organizations generally do not do as well as large ones
- When technology in an industry changes, it often shifts the economies-of-scale curve, thereby creating opportunities for smaller organizations

Front 18

Define a distinctive competency

Back 18

An organization’s distinctive competencies are the aspects of business that the firm performs better than its competitors

Front 19

Define an established market

Back 19

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

Front 20

Define a niche market

Back 20

Segment of a market not currently being exploited

Front 21

How does an entrepreneur discover new markets?

Back 21

Discovery occurs in two ways:

1) 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.

Front 22

What is a first-mover advantage

Back 22

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

Front 23

What is a business plan?

Back 23

Document that summarizes the business structure and strategy.

Plan should describe the match between the entrepreneur's abilities and the requirements for producing and marketing a particular product or service.

Front 24

What questions should a business plan answer?

Back 24

1) What are the entrepreneur's goals?

2) What strategies will the entrepreneur use to obtain these goals and objectives?

3) How will the entrepreneur implement these strategies.

Front 25

What are the steps to starting a new business?

Back 25

With a strategy in place and a business plan in hand, the entrepreneur can proceed to devise a structure that turns the vision of a business plan into a reality.

1) Individual must commit to being a business owner.

2) Choose the good or service to be offered.

3) Buy a business? Or start from scratch.

Front 26

What are the advantages of buying an existing business when starting up a new business?

Back 26

1) Odds of success are better to do so

2) If existing business is successful, it already proves its ability draw customers and make a profit.

3) Lenders are more willing to finance the purchase of an existing business rather than a new business because the risks are understood.

Front 27

What are the advantages of starting from scratch when starting up a new business?

Back 27

Some people prefer the satisfaction that comes from planting an idea, nurturing it, and making it grow into a strong and sturdy business.

Start up is also free to choose lenders, equipment, inventory, location, suppliers, and workers.

Front 28

True or false; Individuals starting their own businesses by purchasing an existing business are more likely to rely on their own resources.

Back 28

FALSE;

Individuals starting their own businesses through START UPS are more likely to rely on their own resources because institutions are less likely to help finance.

Front 29

Define personal resources

Back 29

An owner's personal resources, not loans, are the most important source of money.

Front 30

Define a venture capital company.

Back 30

Group of small investors trying to make profits on companies with rapid growth potential.

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

Front 31

What is a SBIC?

Back 31

Small business investment company.

Small-business investment companies seek profits by investing in companies with potential for rapid growth.

SBIC was created by the Small Business Investment Act of 1958.

SBIC is federally licensed to borrow money from the SBA and to either invest it or to lend it to small businesses.

Front 32

What are SBA Financial Programs?

Back 32

Small Business Association financial programs are for eligible firms who are unable to receive private financing at reasonable terms.

Front 33

True or False; SBA loans have been a major source of small business financing.

Back 33

False; SBA loans have never been a major source of small business financing.

Front 34

To survive and grow, small businesses also need advice regarding management. What four sources of management advice do they need?

Back 34

Advice comes in the form of four sources:

1) Advisory Board
2) Management Consultants
3) SBA
4) Networking

Front 35

What benefit does an advisory board offer?

Back 35

Small businesses can benefit from the problem-solving abilities of advisory boards

Front 36

What benefit does a management consultant offer?

Back 36

Small businesses can

1) Consult experts who charge a fee to help managers solve problems

These experts specialize in one area.

Can also bring an objective and trained outlook to problems and provide logical recommendations.

Front 37

What benefit does the Small Business Association offer?

Back 37

The SBA helps small business owners improve their management skills.

The association is designed to show small business owners how to spend money wisely.

Front 38

List the four major programs under the SBA?

Back 38

1) Score

Service corps of retired executives (free help in starting a new business)

2) ACE

Active Corps of Executives (designed to help Small businesses who cannot afford consultants)

3) SBI (small business institute. offers the talent and knowledge of students and instructors from colleges and univs)

4) SBDC

Small business development center (designed to consolidate information from various disciplines and institutions)

Front 39

What benefit does networking offer?

Back 39

Small business owners can use networking to meet regularly with other small business owners and discuss common problems and opportunities, and perhaps more importantly, pool resources.

Front 40

List the advantages of a franchise

Back 40

1) Franchisers have the ability to grow rapidly by using the investment money provided by franchisees.

2) Franchise combines the incentive of owning a business with the advantage of access to big-business management skills.

Front 41

List the disadvantages of a franchise

Back 41

1) Franchise price varies.

2) Small business owner sacrifices some independence.

3) Franchise do not guarantee success.

Front 42

True or false: There are a lot of cross overs from big business into small business?

Back 42

Increasingly more businesses are being started by people who have opted to leave big corporations and put their experience and know-how to work for themselves

Front 43

List the reasons for failure of an entrepreneurship

Back 43

1) Managerial Incompetence or inexperience

2) Neglect

3) Weak Control systems

4) Insufficient capital

Front 44

List the reasons for the success of an entrepreneurship

Back 44

1) Hard work, drive, and dedication

2) Careful analysis of market conditions help new business owners assess the probable reception of their products in the market place.

3) Managerial competence.

4) Luck