Small Business Management Test 1 Chapters 1&2

Front 1

Cash Flow

Back 1

The money coming into and flowing from a business.

Front 2

Customer Value

Back 2

-The difference between the benefits a customer receives from the product or service, and the costs associated with obtaining that product or service.
-Small business owners must think about this every day.

Front 3

Small Business Ethics

Back 3

More influenced by norms and community/peer pressure than they are by moral or religious principles, the anticipation of rewards, upholding the law, or the fear of punishment.

Front 4

Business Ethics

Back 4

Apply the virtues and discipline of ethics to business behavior.

Front 5

Growth Stage

Back 5

-Requires significant amounts of capital.
-Strategic focus is product differentiation with an increased focus on responding to customer needs and interests.
-Intense competition will result.

Front 6

Maturity Stage

Back 6

-Some competition from late entrants that will take market share away from existing companies.
-Marketing effort must continue to focus on product or service differentiation.
-Surviving firms will be larger and more dominant.

Front 7

Decline Stage

Back 7

-Typically triggered by a product or service innovation that renders the industry obsolete.
-Sales will suffer, and the business goes into decline.

Front 8

Introduction Stage

Back 8

-Industry in its infancy.
-Strategy will focus on stressing the uniqueness of the product or the service to a small group of customers.

Front 9

Industry Life Cycle (ILC)

Back 9

-Introduction Stage
-Growth Stage
-Maturity Stage
-Decline Stage

Front 10

Maturity (OLC)

Back 10

-Significantly more concern shown for internal efficiency.
-More control mechanisms and processes installed.
-Organization becomes very bureaucratic.

Front 11

Youth and Midlife Stage

Back 11

-More sophisticated structures will be adopted.
-Authority will be decentralized to lower and middle-level managers.

Front 12

Birth Stage

Back 12

-A very simple organizational structure with the owner doing everything.
-Few, if any subordinates.

Front 13

Organizational Life Cycle (OLC)

Back 13

-Birth Stage
-Youth and Midlife Stage
-Maturity Stage
-Death

Front 14

Ossification

Back 14

-Occurs when there is a lack of innovation.
-Will contribute to stalled or halted growth.
-Common traits in large corporations.

Front 15

Resource Maturity

Back 15

-The company has arrived.
-Has staff and financial resources.
-Decentralized organizational structure.
-All necessary systems are in place.
-The owner and business have separated financially and operationally.

Front 16

Two key questions during take-off stage.

Back 16

1. Can the owner delegate responsibility to others to improve managerial effectiveness?
2. Will there be enough cash to satisfy the demands of growth?

Front 17

Take-off

Back 17

-Critical time in a company's life.
-Business is becoming increasingly complex.
-Owner must decide how to grow rapidly and how to finance that growth.

Front 18

Success-Disengagement Substage

Back 18

-Managers take over owner's operational duties, strategy focuses on maintaining the status quo.
-Cash is plentiful.
-The company should be able to maintain itself indefinitely.
-The first professional managers are hired.

Front 19

Success-Growth Substage

Back 19

-Business owner pulls all the company resources together and risks them all in financing growth.
-Owner is active in all phases of the company's business.

Front 20

Success

Back 20

-Business is now economically healthy.

Front 21

Survival

Back 21

-The business is now a viable operation.
-Focal point shifts to the relationship between revenues and expenses.

Front 22

Existence

Back 22

-The beginning.
-Problems:
-Obtaining customers and establishing a base.
-Producing products or services.
-Tracking and conserving cash flow.
-Strategy is staying alive.
-Organization is simple.
-Owner does everything.

Front 23

Stages of Growth

Back 23

1. Existence
2. Survival
3. Success
4. Take-off
5. Resource Maturity

Front 24

Three reasons for failure

Back 24

-Managerial inadequacy
-Finance
-Environmental

Front 25

Business Success

Back 25

-Makes a profit.
-Makes an acceptable profit now and in the future.
-Maximizes shareholder wealth.
-Creates customers.
-Delights customers.
-The longer you survive, the higher the probability of your continued existence.

Front 26

Three issues associated with small-business failure:

Back 26

-Type of failure
-Time horizon
-Industry

Front 27

Small Business (cont.)

Back 27

-Estimated that 40% of America's scientific and engineering talent is employed by small businesses.
-Produce 13 to 14 times as many patents per employee than larger firms.
-The great generator of jobs.

Front 28

Small Business

Back 28

-Determined by that business' industrial classification.
-The industry size may be determined by the number of employees or revenues.
-Small businesses are 99.7%of the total number of businesses in the U.S.
-Accounts for 50% of GDP. Number has held steady for past 30 years.

Front 29

Robinson-Patman Act (1936) and Miller-Tydings Act (1937)

Back 29

Designed to protect small retailers from large chain retailers.

Front 30

Sherman Act (1890) and Clayton Act (1914)

Back 30

Passed with the initial intent of restricting the unfair trading practices of trusts.

Front 31

The Interstate Commerce Act (1887)

Back 31

Designed to regulate the rates charged by railroads to protect small farmers and businesses.

Front 32

Lean Inventory Management

Back 32

Refers to approaches that focus on minimizing inventory by eliminating all sources of waste.

Front 33

Digital Technology

Back 33

A broad spectrum of computer hardware, software, and information retrieval and manipulation systems.

Front 34

E-Environment

Back 34

A catch-all term that include e-business and e-commerce.

Front 35

The Three Threads

Back 35

-Customer Value
-Cash flow
-Digital Technology and the e-environment.

Front 36

Enterprise Resource Planning (ERP)

Back 36

Integrate multiple business functions from purchasing to sales, billing, accounting records, shipping, inventory control, and payroll.

Front 37

Customer Value

Back 37

The difference between perceived benefits and perceived cost.

Front 38

Five Types of Value

Back 38

-Functional
-Social
-Emotional
-Epistemic
-Conditional

Front 39

Functional Value

Back 39

Relates to the product's or service's ability to perform its utilitarian purpose.

Front 40

Social Value

Back 40

Involves a sense of relationship with other groups through the use of images or symbols.

Front 41

Emotional Value

Back 41

Derived from the ability to evoke an emotional or affective response.

Front 42

Epistemic Value

Back 42

Generated by a sense of novelty or simple fun.

Front 43

Conditional Value

Back 43

Derived from a particular context or socio-cultural setting.

Front 44

Three components of perceived cost.

Back 44

-Monetary
-Time
-Psychic costs

Front 45

Monetary Cost Component

Back 45

Should be broken down into its constituent elements: purchase cost, operating cost, service cost, and switching and opportunity costs.

Front 46

Time Cost Component

Back 46

Consists of the time required to evaluate, acquire, and purchase a product or service.

Front 47

Psychic Cost Component

Back 47

The element that can be associated with those factors that might induce stress in a customer.

Front 48

Market Segmentation

Back 48

Involves dividing the market into several portions that are different from each other.

Front 49

Geographic Segmentation

Back 49

Can be done by global or national region, population size or density, or even by climate.

Front 50

Demographic Segmentation

Back 50

Divides the market on factors such as gender, age, income, ethnicity, education, or occupation.

Front 51

Psychographic Segmentation

Back 51

Carried out on dimensions that reflect differences in personality, opinions, value, or lifestyle.

Front 52

Customer Lifetime Value

Back 52

A measure of the revenue generated by the customer, the cost generated for that particular customer, and the projected retention rate of that customer over their lifetime.

Front 53

Net Present Value

Back 53

Discounts the value of future cash flows. It recognizes the time value of money.

Front 54

Quality Function Deployment (QFD)

Back 54

An approach that takes the concept Voice of the Customer (VOC) seriously, and uses it to help design new products and services or to improve existing ones.

Front 55

Components of QFD:

Back 55

-Customer's Requirements
-Engineering Characteristics
-Relationship Matrix

Front 56

Customers' Requirements

Back 56

Where one identifies the elements desired by the customers - this section also contains the relative importance of these needs as identified by the customers.

Front 57

Engineering Characteristics

Back 57

-The means by which the organization seeks to meet customer needs.

Front 58

Relationship Matrix

Back 58

This illustrates the correlations amongst the customers' requirements and the engineering characteristics; the degree of the correlation may be represented by different symbols

Front 59

Innovation

Back 59

Involves new ways in which the product or service might be used.

Front 60

Creativity

Back 60

Generally required to produce innovative means of constructing customer value.

Front 61

Alexander Hiam's 9 factors

Back 61

-Failure to ask questions.
-Failure to record ideas.
-Failure to revisit ideas.
-Failure to express ideas.
-Failure to think in new ways.
-Failure to wish for more.
-Failure to try to be creative.
-Failure to keep trying.
-Failure to tolerate creative behavior.

Front 62

Customer Relationship Management (CRM)

Back 62

Refers to a service approach which hopes to build a long-term and sustainable relationship with customers that has value both for the customer and the company.

Front 63

Cloud Computing

Back 63

Also known as SaaS (software as a service), refers to the situation in which vendor software does not reside on the computer system of a small business.