Small Business Management: Quiz 1

High potential venture/gazelle

Small firm that has great prospects for growth

Attractive small firm

Small firm that provides substantial profits to its owner

Microbusiness

Small firm that provides minimal profits to its owner

Lifestyle business

Microbusiness that permits the owner to follow a desired pattern of living

Microloans

Very small loans , often provided to entrepreneurs in developing countries

Small business

A business with growth potential that is small compared to large companies in an industry, has geographically localized operations, is financed by only a few individuals and has a small management team

Entrepreneurial opportunity

An economically attractive and timely opportunity that creates value for interested buyers or end users

Entrepreneur

A person who relentlessly pursues an opportunity, in either a new or existing business, to create value while assuming both the risk and reward for their efforts

Bootstrapping

Doing more with less in terms of resources invested in a business, and, where possible, controlling the resources without owning them

Founder

An entrepreneur who brings a new firm into existence

Franchisee

An entrepreneur whose power is limited by a contractual relationship with a franchising organization

Entrepreneurial team

Two or more people who work together as entrepreneurs on one endeavor

social entrepreneurship

Entrepreneurial activity whose goal is to find innovative solutions to social needs, problems, and opportunities

reluctant entrepreneur

a person who becomes an entrepreneur as a result of some severe hardship

corporate refugee

a person who becomes an entrepreneur to escape an undesirable job situation

Types of motivations

Personal fulfillment, personal satisfaction, independence, financial rewards

paradigm shift

Change in how we fundamentally see a situation

Technician personality

Personality that focuses on an already developed technical skill, wants to be left alone to get the job done, and is primarily concerned about the present

manager personality

a personality that is pragmatic and likes order and planning operations

entrepreneur personality

a personality that focuses on the business as a whole and providing results for the customer

niche market

Specific group of customers with an identifiable but narrow range of product or service interests

Entrepreneurial legacy

Material assets and intangible qualities passed on to both heirs and society

Values

Rules of right and wrong, good or bad, held as significant

Morals

Individual with a broader social/cultural component

Ethics

Rules or standards held by an individual determining conduct

Deontological

ethical theory based on duty and obligation

Utilitarianism

Least harm done to all involved

Virtue

Character, not action, is determinant of ethical value

Relativism

Environment determines proper ethical behavior

Axiological

Ends justify the means, motives behind the decision is what matters

Rights theory

When a given society outlines specific rights, they are of the highest priority of society and are protected

Beneficence

Virtue, deontological, utilitarianism; do good always

Least Harm

Utilitarianism; no good outcome, choose lesser of two evils

Respect for autonomy

Relativism, rights, axiological; each individual should be allowed to determine what is right for them, when a decision applies to them and no one else

Justice

Virtue, axiological, utilitarianism; all actions must be fair to all those involved

Integrity

A general sense of honesty and reliability that is expressed in a strong commitment to doing the right thing regardless of circumstances

Responsibilities of a business

1. Economic: be profitable

2. Legal: obey the law and adhere to all regulations

3. Ethical: avoid questionable practices

4. Discretionary: be a good corporate citizen and give back

Social responsibilities

A company's ethical obligations to the community

ethical imperialism

the belief that the ethical standards of one's own country can be applied universally

Ethical Relativism

The belief that ethical standards are subject to local interpretation

Ethical decision-making process

Define the problem, identify alternative solutions to the problems, evaluate those alternatives, then make implement and evaluate the decision

social entrepreneurship

entrepreneurial activity that provides innovative solutions for social issues

Sustainable small business

Profitable small company that responds to customers' needs while showing reasonable concern for the environment

Opportunity recognition

Identification of potential new products or services that may lead to promising businesses

Entrepreneurial alertness

Readiness to act on existing, but unnoticed, business opportunities

Pivot

To refocus or recreate a startup if the initial concept turns out to be flawed

serendipity

a facility for making desirable discoveries by accident

General Environment

The broad environment, encompassing factors that influence most businesses in a society

Industry Environment

The environment that includes factors that directly impact a given firm and all of its competitors.

competitive environment

The environment that focuses on the strength, position, and likely moves and countermoves of competitors in an industry

capabilities

A company's routines and processes that coordinate the use of its productive assets in order to achieve desired outcomes

core competencies

those capabilities that distinguish a firm competitively and reflect its focus and personality

competitive advantage

A benefit that exists when a firm has a product or service that is seen by its target market as better than that of its competitors

Cost-based strategy

Plan of action requiring a firm to hold down its costs so that it can compete by charging lower prices and still make a profit

differentiation strategy

A plan of action designed to provide a product or service with unique attributes that are valued by consumers

focus strategy

A plan of action that isolates an enterprise from competitors and other market forces by targeting a restricted market segment

Paradox of attraction

This self-contradictory idea that an attractive market opportunity is likely to draw multiple competitors, thereby diminishing its attractiveness

Feasibility Analysis

A preliminary assessment of a business idea that gauges whether the venture envisioned is likely to succeed

Fatal flaw

A circumstance or development that alone could render a new business unsuccessful

Franchise

Business model involving a business owner who licenses trademarksand methods to an independent entrepreneur

Master licensee

Independent firm or individual acting as a middleman or sales agent with responsibility of finding new franchisees within a specified territory

multiple unit ownership

ownership by a single franchisee of more than one franchise from the same company

area developers

individuals or firms that obtain the legal right to open several franchised outlets in a given area

piggyback franchising

the operation of a retail franchise within the physical facilities of a host store

multibrand franchising

the operation of several franchise organizations within a single corporate structure

cobranding

Bringing 2 or more franchise brands together under 1 roof

Churning

Actions by franchisers to void the contracts of franchisees in order to sell the franchise to someone else and collect an additional fee

encroachment

The franchisors selling of another franchise location within the market area of an existing franchisee

Franchise Rule

Requires franchisor to disclose certain info to prospective franchisees

Franchise Disclosure Document

Detailed statement providing info about the franchisor that satisfies the franchise disclosure requirements of the FTC

business brokers

specialized brokers that bring together buyers and sellers of businesses

due diligence

the exercise of reasonable care in the evaluation of a business opportunity

Owner Managed Business

A venture operated by a founding entrepreneur.

sibling partnership

a business in which children of the founder become owners and managers

Cousin consortium

Business in third and subsequent generations, when children of the siblings take ownership and management positions

nepotism

practice of hiring relatives

Socioemotional wealth

Non financial factors in a family firm that affect the commitment of family members to the business

co-preneurs

couples teams who own and manage businesses

family retreat

a gathering of family members, usually at a remote location, to discuss family business matters

family council

Organized group of family members who gather periodically to discuss family-related business issues

Family business constitution

A statement of principles intended to guide a family firm through times of crisis and change