MGMT 3000 Exam 2- Guhde UGA

how many entrepreneurs in the U.S.

31 million

what % of adults have started a business at some point in their lives

55%

what % of adults have started 2 or more businesses

26%

most popular entrepreneur industry in the U.S.

1. food and restaurant, 2. retail , 3. business services

Entrepreneurship is...

initiating a business venture, organizing the necessary resources, assuming the associated risks, and enjoying the rewards

what percent of entrepreneurs are male and female

72% male and 22% female

what percent of entrepreneurs are democrat and republican

34% democrat and 22% republican

give the percentages for how many entrepreneurs are made up of for each generation

49% gen x, 36% boomers, 12% millennials, 1% gen z, oldest generation makes up MOST entrepreneurs and youngest the least

top 3 races who are the most entrepreneurs

asian, hispanic, black

what % of businesses are small business in U.S.

99.9%

what % U.S. employees are employed by a small business

50%

how small is a small business when it comes to its employees

most have NO employee, 2nd have 1-19 employees, and least have 20+ employees

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

what are the fail rates for small businesses

20% fail in 1st year , 30% by the 2nd year, 50% by the 5th year , by the end of decade, only 30% of small businesses remain, 70% failure rate!

why do small businesses fail, list the top reasons

1. no market need, 2. run out of cash , 3. not the right team

top 3 races who are the most small business owners

white, hispanic, black

traits of entrepreneurs

Autonomy, Entrepreneurial Sacrifice, High Energy, Need to Achieve, Self-Confidence, Locus of Control

social entrepreneurship

Combines the traditional entrepreneur with a mission to change the world for the better

Benefit Corporation (B Corp)

FOR PROFIT entity that includes positive impacts on society, workers, the community and the environment in addition to profit. ex. TOMS shoes: some proceeds from selling the shoes goes to helping unfortunate people around the world

Launching a Start-Up Process

1. Start with an idea, 2. Write a business plan, 3. Choose a legal structure, 4. Arrange financing

top reasons for starting a business

1. joined family business, 2. to control my future , 3. to be my own boss

top sources of new business ideas

1. in depth understanding of industry or profession , 2. market niche spotted, 3. brainstorming

business plan

document specifying business details prepared by an entrepreneur prior to opening a new business

characteristics of business plan

vision, financial projections, target market, industry, management team, risks, start up funds

Sole Proprietorship

a business owned by one person, few legal requirements, unlimited liability. MAJORITY is this

Partnership

a business owned by two or more people, partners share responsibility and resources, partners contribute expenses, unlimited liability

Corporation

artificial entity created by the state and existing apart from its owners (more complex paperwork), pays taxes on its income, limited liability

debt financing

borrowing money that must be repaid at a later date to start a business, don't have to give up ownership

equity financing

funds that are invested in exchange for ownership in the company

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 (shark tank is this)

Crowdfunding

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

top sources of start-up capital for entrepreneurs

1. personal savings, 2. credit cards, 3. family loans

Franchising

franchise owner sells right to offer products/services & their process under its brand name in exchange for selling fee and ongoing sales and fees

fastest growing franchises

1. Kona Ice, 2. MaidPro, 3. Cruise Planners

McDonald's

largest franchise in world with 93% of these being franchise operations

The importance of Goals according to Drucker

Each member contributes something different, but they must ALL pull in the SAME DIRECTION, and their contributions must fit together to produce a WHOLE WITHOUT GAPS, without FRICTION and without unnecessary DUPLICATION of effort

goal

desired future circumstances/condition that the organization attempts to realize

plan

a blueprint for goal achievement specifying the necessary resource allocations, schedules, tasks, and other actions

Planning =

Goal + Plan

mission

reason for organization's existence

Mission Statement

a statement of the organization's purpose

Strategic Goals/Plans

senior management, organization as a whole,ex. increase revenue through expansion into a foreign market

Tactical Goals/Plans

middle management, major divisions/functions, ex. develop marketing plan for the foreign market

Operational Goals/Plans

lower management, departments, individuals, ex. hire employees for new foreign market

Levels of Goals and Plans

1. Mission Statement, 2. Strategic Goals/Plans, 3. Tactical Goals/Plans, 4. Operational Goals/Plans

characteristics of effective goals

specific and measurable, defined time period, cover key result areas, challenging but realistic, linked to rewards

performance management

Managers use operational goals to direct/manage employees

Key performance indicators (KPIs)

tool used to assess what is important to an organization and how well the organization is progressing toward achieving its strategic goal

Management by Objectives (MBO)

developed by peter drucker, system whereby managers and employees define goals and use the goals to assess performance

single-use plans

plans developed to achieve objectives that are not likely to be reported in the future (ex. Expansion of Hull Parking Deck)

standing plans

ongoing plans that provide guidance for tasks or situations that occur repeatedly within the organization (ex. May commencement)

contingency planning

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

stretch goals

reasonable yet highly 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

importance of strategy

It determines which organizations succeed and which ones struggle. think long-term and consider external environment's impact

Strategic Management

Set of decisions and actions used to formulate and execute STRATEGIES that will provide a COMPETITIVELY SUPERIOR FIT between the organization and its ENVIRONMENT so as to achieve ORGANIZATIONAL GOALS

strategy

plan of action that describes RESOURCE ALLOCATION and activities for dealing with the ENVIRONMENT, achieving a COMPETITIVE ADVANTAGE, and attaining the organization's GOALS

competitive advantage

what sets the organization apart from its competitors and provides it with a distinctive edge for meeting customer needs (ex. quality, brand, customer support)

SWOT analysis

Internal: Strengths, Weaknesses

External: Opportunities, Threats

corporate level strategy

organization as a whole; the combination of business units (> 1) and product lines that make up the corporate entity (ex. Pepsico)

business level strategy

each business unit or product line & describes the basis on which the business unit (product line) competes within the industry (ex. Pepsico has quaker oatsa dn yum! locations like taco bell, KFC, pizza hut)

functional level strategy

the major functional departments within the business unit. Functional areas of business include accounting, marketing, HRM, R&D, manufacturing and others depending on the line of business

portfolio strategy

pertains to the mix of multiple strategic business units (SBUs)/product lines to provide synergy and competitive advantage

Strategic business units (SBUs)

Business divisions of an organization that have a unique business mission, product line, competitors and markets

Diversification

strategy of moving into new lines of business

merger

Occurs when two or more organizations combine to become one

joint venture

Involves a strategic alliance or program by two or more organizations

related diversification

has greater chance of allows us to achieve synergy, (Ex: Google moves into AI)

unrelated diversification

Ex. Harley Davidson selling bottled water; Starbucks selling furniture, Costco apartment building, CFA Streaming Services

Vertical Integration

Expansion into businesses that supply to the business or are distributors

forward integration

apple moved into retailing

Backward integration

Netflix produced its own content. Ex. Tesla didn't want to buy parts from someone else because Shipping issues, Quality issues, and waiting on another company. Have to pay markups; parts suppliers get paid. Backward Integration!

How does a business unit compete within industry?

1. Requires understanding of all FORCES within the industry, 2. These forces add or subtract from the PROFITABILITY of the industry

Porter's 5 forces model:

1. Potential new Entrants: If the threat is low, that is good. (Ex: airlines; costly entry) Internet reduces barriers to entry, 2. Bargaining Power of Buyers: You want buyers to have low power; to set prices to buyers. Internet gives more power to buyers, 3. Bargaining power of suppliers: Internet trends to increase bargaining power of suppliers (Ex: if you supply to Starbucks, you have no power and they'll push you around), 4. Threat of Substitute Products: Internet creates new substitution threats (Ex: air travel vs Zoom), 5. Rivalry among Competitors: Disruptive, downward pressure on prices. Try to avoid

Porter's Competitive Strategies

1. Differentiation strategy: Distinguish products. Services from competitors, 2. Cost leadership strategy: Aggressively seek efficient facilities, cost reductions, and cost controls (not price). Lower costs lead to competitive advantages you can sell for cheaper, 3. Focus strategy: Concentration on a specific region or buyer. Then follow differentiation or cost leadership strategy

Globalization strategy

use of standardized product design and advertising strategies throughout the world. Based on the assumption that a single global market exists for many consumer and industrial products (ex. Coca-Cola, which sells the same core products globally while maintaining a uniform brand image)

Multidomestic Strategy

handling of competition in each country remains independent of industry competition in other countries. Adapts product/advertising to local tastes & needs (Ex. in India, McDonald's removed beef and pork from its menu and added vegetarian options like the Aloo Tikki Burger and the Veg Maharaja Mac)

Glocalization strategy

combines global coordination to attain efficiency with local flexibility to meet needs in different countries (ex. Starbucks offers a consistent coffee experience globally but tailors its menu with local flavors (like green tea lattes in Japan).

Organizing the Vertical Structure follows...

planning

organizing

the deployment of organizational resources to achieve strategic goals

Organization structure includes:

1. the set of formal tasks assigned to individuals and departments, 2. formal reporting relationships, 3. the design of systems to ensure effective coordination of employees across departments

Division of labor

degree to which organizational tasks are subdivided into separate jobs, Also called worker specialization (the boxes in organization chart)

chain of command

an unbroken line of authority that links all employees in an organization and shows who reports to whom (the lines connecting the boxes in organization chart)

authority

the formal and legitimate right of a manager to make decisions, issue orders, direct behavior or subordinates, and allocate resources to achieve outcomes/goals. flows down, accepted by subordinates, vested in organizational positions, NOT people

responsibility

the duty to perform the task or activity as assigned

accountability

willingness or obligation to accept responsibility

delegation

the process that managers use to transfer authority and responsibility down the hierarchy

line authority

managers have formal authority to direct and control immediate subordinates

line departments

perform tasks that reflect the organization's mission → generate revenue

staff authority

authority that includes the right to advise, recommend, and counsel in the staff specialists' area of expertise

staff departments

support line departments → cost center

span of management

the number of employees reporting to a supervisor. few nonsupervisory activities and manager prefers a large span

tall structure

span of management is narrow and therefore has many hierarchical levels; many layers of management

flat structure

span of management is wide and therefore has few hierarchical levels; fewer layers of management