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mgt 386

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

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