Entrpreneurial Foundations Exam 3

Independent Contractor

A worker whose services are essential to the business but who provides their own tools, handles their own insurance/vacation, is not protected by the FLSA, and receives a 1099-misc for earnings over $600

PEO (Professional Employer Organization)

An outsourced firm that handles HR, benefits, payroll, and workers’ compensation for a company

Just-Cause Employment

Termination based on a violation of company policy (e.g. theft); the burden of proof lies with the employer

At-Will Employment

Employment that can be terminated at any time without warning, provided the reason for firing is legal

Non-Compete Agreements

legal contracts that must be limited in geographic area, duration, and scope, while protecting a legitimate competitive interest

NDA (Non-Disclosure Agreement)

A legally enforced contract creating a confidential relationship between a business with sensitive info and a person gaining access to it

Downsizing

A permanent reduction of a company’s labor force to remove unproductive areas or create a leaner business

Outsourcing

A strategy of hiring outside help for activities like design, marketing, or production to cut costs or access specialized talent

Product life style stages

The four stages of a product: Introduction, Growth, Maturity, and Decline

Lean Manufacturing

A production philosophy focused on the elimination of waste.

Kaizen

A philosophy of continuous improvement

TQM (Total Quality Management)

A management approach focused on quality and customer satisfaction.

JIT (Just-in-time)

A strategy of producing items only when they are needed

FIFO vs LIFO

first in/first out vs last in/first out

Forward vs Backward Scheduling

Forward starts tasks as soon as possible; Backward plans tasks by working back from a deadline

Productivity Formula

Output/input

Shrinkage

The difference between recorded inventory and actual inventory, often caused by theft or spoilage.

Pareto Principle

The “80/20 rule,” stating that 80% of results come from 20% of causes

SMART Metrics

Goals/KPIs must be Specific, Measurable, Achievable, Relevant, and Time-bound

Patent

Protections for machines, processes, or compositions of matter that are novel, non-obvious, and have utility.

Copyright

The exclusive right to copy, distribute, and perform a creative work

Trademark

A word, symbol, or design that identifies the source of a product and distinguishes it from others

Price Elasticity

Inelastic buyers are insensitive to price changes; Elastic buyers are highly sensitive to price changes.

Price Skimming

Charging the highest initial price customers will pay, then lowering it over time

Penetration Pricing

Offering a low initial price to attract customers to a new product

Price Ceiling vs Price Floor

The Ceiling is set by competition and what consumers will pay; the Floor is set by production costs

Debt vs Equity

Debt involves traditional loans (banks); Equity involves trading ownership for capital

Bootstrapping

Starting and growing a business using only personal resources and operating revenue, without external investment.

The 5 C’s of Credit

Character, Capacity, Capital, Collateral, and Conditions

Angel vs Venture Capital

Angels use personal wealth for early-stage (seed) deals; VCs use pooled money for later-stage (Series A+) deals.

Balance Sheet Formula

Assets = Liabilities + Equity

Tangible vs Intangible Assets

Tangible assets have physical form (cash, equipment); Intangible assets lack physical form (patents, goodwill).

Break Even Formula

Fixed Costs/Contribution Per Unit

Cash vs Accrual Accounting

Cash records transactions when money changes hands; Accrual records them when they are earned or incurred

Journal vs Ledger

A Journal is a chronological record of all transactions; a Ledger summarizes them by category.

ISO 9001 vs 14001

9001 is for quality management; 14001 is for environmental management

Letter of Credit

A bank guarantee ensuring an exporter gets paid once goods are shipped and documentation is provided.

INCOTERMS

11 international rules defining the responsibilities and risks of buyers and sellers in shipping.

Intercultural Empathy

Fostering mutual understanding and inclusive interactions across cultural boundaries