MGMT 3000 Guhde Exam 2

entrepreneurship (4)

1. process of initiating a business venture

2. organizing the necessary resources

3. assuming the associated risks

4. enjoying the rewards

how many employees do most small businesses have?

none

5 types of small business owners

1. idealists

2. optimizers

3. hard workers

4. jugglers

5. sustainers

idealists

rewarded by chance to work on something new and creative

optimizers

get personal satisfaction from being business owners

hard workers

thrive on the challenge of building a larger, more profitable business

jugglers

high-energy people who enjoy handling every detail of their own business

sustainers

enjoy chance to balance work and personal life

as the ______ population of the US has grown, so has the number of ______-owned businesses

minority

immigrants were almost ______ as likely as native-born americans to start new businesses

twice

types of businesses launched by immigrant entrepreneurs are...

increasingly sophisticated; traditional minority-owned retail stores/restaurants are being complemented by firms in financial services, software, insurance, and online businesses

______ of US population was comprised of immigrants, but they make up ______ of all business owners

13.7%, 21.7%

there has been a ______ increase in women-owned businesses since 2007

58%

why do more men than women own businesses?

there's a suggestion that women tend to be more cautious than men about borrowing money, which limits growth opportunities, particularly in high-tech fields questioned

sociologists argue that women has less access to capital because...

they have to work harder to convince others that they have what it takes to be successful

what is causing women to take a gamble in this competitive market?

cost of launching tech-related businesses falling

approximately _____ of small businesses fail within the first year

20%

by the end of the 2nd year, _____ of businesses will have failed

30%

8 traits of entrepreneurs

1. autonomy

2. entrepreneurial sacrifice

3. high energy

4. need to achieve

5. self-confidence

6. internal locus of control

7. awareness of passing time

8. tolerance for ambiguity

entrepreneurial sacrifice

ability to persevere after struggles or defeat

need to achieve

internally motivated

internal locus of control

believe that you have control over what happens to you

which two traits of entrepreneurs are most/least like those of managers in large corporations?

most: self-confidence, need to achieve

least: tolerance for ambiguity, high energy

starting an online or mobile app business (5)

1. find a market niche

2. create a professional website

3. choose a domain name

4. know when to pivot (change strategic directions)

5. use social media

primary focus of social entrepreneurship

creating social value by providing solutions to social problems

secondary purpose of social entrepreneurship

generating profit and returns

how to get the right to use the phrase "benefit/b corporation" in marketing materials

apply to a nonprofit business called b lab

to obtain certification to be a benefit/b corporation, the business must pass an impact assessment, which scores the org on what 3 things?

1. environmental sustainability

2. community impact

3. transparency

launching a start-up (4)

1. start with an idea

2. write a business plan

3. choose a legal structure

4. arrange financing

planning forces the entrepreneur to do what?

carefully think through the issues and problems associated with starting and developing the business

8 characteristics of a business plan

1. clear, compelling vision

2. clear, realistic financial projections

3. profile of potential customers and target market

4. details about the industry and competitors

5. evidence of an effective management team

6. critical risks

7. sources and uses of start-up funds and operating funds

8. summary

sole proprietorship

unincorporated business owned by an individual for profit

sole proprietorship characteristics (3)

1. few legal requirements

2. proprietary has total ownership and control

3. owner has unlimited liability

partnership

unincorporated business owned by two or more people

partnership characteristics (3)

1. easy to start

2. use a formal partnership agreement

3. unlimited liability

a formal partnership agreement specifies...

how partners share responsibility/resources and contribute expertise

partnerships often dissolve within _____ years

5

corporation

artificial entity created by the state and existing apart from its owners

corporation characteristics (6)

1. separate legal entity liable for its actions

2. limits owners' liability

3. must pay taxes on its income

4. provides continuity

5. more complex paperwork

6. can raise funds through the sale of stock to investors

majority of businesses in the US are which legal structure?

sole proprietorships

debt financing

borrowing money that must be repaid at a later date to start a business

5 sources of debt financing

1. family and friends

2. personal credit cards

3. bank loans

4. finance companies

5. small business administration (SBA)

equity financing

funds that are investing in exchange for ownership in the company

does money always come back in equity financing?

no, it only comes back if you're successful

angel financing

wealthy individual who believes in a start-up provides personal funds and advice to help the business get started

venture capital firms

group that invests money in new or expanding businesses for ownership and potential profits

crowdfunding

raising capital from small amounts from many investors, usually through social media and the Internet

what percentage of the sources of start-up capital for entrepreneurs is from personal savings?

78%

business incubator

typically provides shared office space, management support services, and management and legal advice to entrepreneurs (ex. atlanta tech village)

co-working facility

open office environment shared by multiple freelance entrepreneurs as well as corporate telecommuting employees or others who don't have a regular office

3 advantages of franchising

1. franchise power provides management help and expertise

2. known brand name

3. reliable financial projections

3 disadvantages of franchising

1. lack of control

2. franchisors dictates the prices

3. must purchase equipment, building, and new product offerings

what percent of mcdonald's are franchise operations?

93%

what does peter drucker say about objectives and goals?

any business enterprise must build a true team and weld individual efforts into a common effort; each member of the enterprise contributes something different, but they must all pull in the same direction, and their contributions must fit together to product a whole without gaps, friction, and unnecessary duplication of effort

goal + plan =

planning

4 levels of goals and plans

1. mission Statement

2. strategic goals/plans

3. tactical goals/plans

4. operational goals/plans

mission statements include... (3)

1. reason the org exists

2. how they differ from their competitors (ex. starbucks is the premiere purveyor of coffee)

3. may include statement of their values

strategic goals/plans

-senior management

-organization as a whole

-ex. increase revenue through expansion into a foreign market

strategic goals

official goals/broad statements describing where the org wants to be in the future/long term

strategic plans

define the action steps by which the company intends to attain strategic goals; blueprint that defines organizational activities and resource allocations

tactical goals/plans

-middle management

-major divisions/functions

-ex. develop marketing plan for the foreign market

tactical goals

results that major divisions and departments within the org intend to achieve

tactical plans

define what major departments/org subunits will do to implement the org's strategic plan

operational goals/plans

-lower management

-department, individuals

-ex. hire employees for new foreign market

operational goals

results expected from departments, work groups, and individuals

operational plans

developed at the lower levels of the organization to specify action steps toward achieving operational goals and to support tactical plans

what is an important component of an operational plan?

schedules

5 steps of the organizational planning process

1. develop the plan

2. translate the plan

3. plan operations

4. performance management

5. monitor and learn

develop the plan (3)

1. define mission/vision

2. set goals

3. manage goal conflict

translate the plan (3)

1. define tactical plans/objectives

2. develop a strategy map

3. define contingency plans/scenarios

plan operations (4)

1. define operational goals/plans

2. select measures/targets

3. set stretch goals

4. crisis planning

performance management (3)

use...

1. management by objectives

2. single-use plans

3. standing plans

monitor and learn

hold planning and operational reviews

4 approaches to managing goal conflict

1. build a coalition

2. modify goals by time or location

3. address conflicts with debate and dialogue

4. break down barriers and promote cross-silo corporations

coalition management

building an alliance of people who support managers and influence efforts toward achieving goals

aligned goals

are consistent and mutually supportive so that achievement of goals at lower levels permits the attainment of high-level goals

strategy maps

visual representations of the key drivers of an org's success; show how specific goals/plans in each area are linked

what does research find in regard to strategy maps?

employees work harder and find more meaning in their work when they understand how their jobs fit together into the bigger picture of the org's goals

3 bricklayers

architect christopher wren observed 3 bricklayers rebuilding st. paul's cathedral and asked what they were doing

-first bricklayer: "i'm a bricklayer. i'm working hard laying bricks to feed my family."

-second: "i'm a builder. i'm putting up a wall."

-third replied with pride "i'm a cathedral building. i'm building a great cathedral." will put in the best effort

performance management

managers use operational goals to direct employees and resources

management by objectives (MBO) was developed by who?

peter drucker

management by objectives

system whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance

management by means (MBM)

new systemic approach that focuses attention on the methods and processes used to achieve goals

model of the MBO process (4)

1. set goals

2. develop action plans

3. review progress

4. appraise overall performance

set goals (3)

1. corporate strategic goals

2. department goals

3. individual goals

while you review progress, if you take a corrective action, what do you do?

go back to develop action plans

MBO benefits (4)

1. focuses manager and employee efforts on activities that will lead to goal attainment.

2. can improve at all company levels.

3. improves employee motivation.

4. aligns individual and departmental goals with company goals.

MBO negatives

tends to be a rigid process

single-use plans

plans developed for activities that are not likely to be repeated in the future

standing plans

ongoing plans that provide guidance for tasks or situations that occur repeatedly within the org (ex. sexual harassment policy)

single-use plans include ______ while standing plans include ______

programs and projects; organizational policies, rules, and procedures

key performance indicators (KPIs)

tool used to assess what's important to an org and how well the org is progression toward achieving its strategic goal

5 characteristics of effective goals

1. specific and measurable

2. have a defined time period

3. cover key result areas

4. challenging but realistic

5. linked to rewards

4 benefits of planning

1. provide a source of motivation and commitment

2. guide resource allocation

3. are a guide to action (behavior)

4. set a standard of performance

4 limitations of planning

1. can create too much pressure

2. can create a false sense of certainty

3. may cause rigidity in a turbulent environment

4. can get in the way of intuition creativity

4 steps for planning for a turbulent environment

1. contingency planning

2. scenario building

3. stretch goals

4. crisis planning

contingency planning

define company responses to be taken in the case of emergencies, setbacks, or unexpected conditions

scenario building

forecasting technique that looks at current trends and discontinuities and visualizes future possibilities

stretch goals

reasonable yet high ambitious and compelling goals, characterized by both extreme difficulty and extreme novelty, that energize people and inspire excellence

crisis planning

preparing organization, managers, and employees to cope with catastrophic events that could destroy the firm