Bus 202 ch 4, 5, 10

Starting a business, buying an existing business, buying a franchise

Different strategies to become a business owner

New Venture

Organization that has formed within the last 12 months, that sells goods or services

Entrepreneurship

Process of identifying and capitalizing on a marketplace opportunity

Entrepreneur

Person who recognizes an opportunity within the marketplace and seizes it

Intrapreneur

An employee who develops innovative products, services, or processes within an established company, using the organization's resources and backing

Generating ideas, Screening ideas, Developing the opportunity

Entreprenurial Process

Franchise

A business model where an established company grants an individual he right to operate a business using its brand name, products, operating system, and intellectual property

Pros of buying an existing business

Esablished cliente, ease of financing, experienced employees, less risk

Cons of buying an existing business

Location may be poor, may have poor reputation, pricing strategy may need to be revisted

Pros of franchsing for Franchiser

Attain rapid growth, share advertising cost, increased investment money, increased revenue, no need to deal with local business issues

Franchising Benefits for the Franchisee

Well developed brand, lower failure rates, help with external finacning, economies of scale in buying supplies, expert advice

Reasons for business sucess

Hard work , market demand for product or serivce, managerial competence, luck

Reasons for failure

Managerial Incompetence, neglect, weak control systems, insuffcient capital

Sole proprietorship

An unicorporated business owned and operated by a single indivudal

Advantages of sole proprietorships

Freedom, simplicty, low start-up costs, tax benefits

Disadvantages

Unlimited liability, lack of continuity, difficualt to raise money, reliance on one individual

Partnership

A business structure where two or mroe individuals join

Advantages of partnership

Larger talent pool, larger money pool, ease of formation, tax benefits

Disadvantages of partnership

Unlimited liability, lack of continuity, ownership transfer is diffucult, potential conflict

Corporation

A legally established business entity that exist completely seprate and distinct from its owners

Private corporation

A corporation shares held by a few shareholders (not widely available)

Board of directors

A group of individuals elected or appointed to oversee and guide the management of a company or organization

Shareholders

Investors who buy shares of ownership in a company

Cheif Exectuive Officer

Person responsible for firms overal performance

Corporations advantages

Limited liability, continuity, professional management, easier to raise money

Corporation disadvantages

Start up costs, double taxation, regulations, stockholder revolts

Co-operative

A buiness owned, controlled, and operated by its members to meet their shared economic, social, or cultural needs

Advantages of co-operatives

Limited liability, owner continuity, on vote per member, income taxed only at the indivual member level

Disadvantages

No inventive to invest, members simply benefit from usage

North America, Europe, Asia

World trade revolves around these three major marketplaces

Brazil, Russia, India, China, South Aftice

BRICS

Absolute advantage

The ability of an entity to produce a greater quanity of a good or service than competiors using the same amount of resources,

Comparative advantage

When an enitity can produce a good or service at a lower opportunity cost then its competitors

less

If exchange rate decreases our exports become —- expensive for other countries

more

If exchange rate increases our exports become —- expensive for other countries (our currency goes up releative to the other)

Exporter or importer, international firm, multinational firm

Different levels of international involvement

Independent agent

An external person or legal entity that acts on behalf of a foreign business to promote, negotiate, or conclude sales in a foreign market in exchange for a commission, while operating as a distinct and autonomous business

Licensing agreement

A contract where a commpany in one country grants a company in another country the right to use its intellectual porperty, technolgoy, brand, or manufacturing processes in exchange for fees or royalities

Branch Offices

A direcet dependent extension of a parent company located in a foreign jurisdiction

Strategic alliance

A cooperative agreement between two or more independent entities —often actual or potential competitors—from different countries

Direct investment

A cross-border investment where an individual or enterprise in one country establishes a lasting interest and a significant degree of control or influence over the management of an enterprise in another country.

Language, social values, traditional buying patterns

Social and cultural differences that can serve as barriers to trade

Quotas

A fixed, limited, or officially assigned share, number, or proportion of something allocated to a person, group, or country

Tariff

A tax imposed by a national govenment on goods and servies imported from another country

Subsidies

Finacial aid given by a government (or another organizaiton) to an entitiy to lower costs, encourage production, or to make goods and services more affordable

Globalization

The growing interdependence and integration of the world's economies, cultures, technologies, and populations driven by cross-border trade, investment, and communication

National competitive advantage theory

Explains why certain nations become home bases for globally sucessful industries and companies

Factor conditions, demand conditions, related industries, strategies structure and rivialries

Key conditions of theory of national competitve advantage

Dumping

Selling goods abroad for less than a firm charges at home; illegal in most nations

Production/operations

The processes and activities for transforming resources into finished services and goods for customers

Time utility

Products are available when customers want them

Place utility

Products are available where they are convient for customers

Ownership utility

Customers benefit from possessing and using the product

Form utility

Products are in a form that is useful to the customer

High contact processes

The customer is in the system while the service is being preformed

Analytic processes

When a manufacturing processes breaks down resources into component parts

Synthetic processes

When a manufacutring procesess combines raw materials to produce a finished product

Low contact prcoess

The customer is no in the sytem while the service is being performed

Forecasting

Determinging future demand for products

Location, layout, quality, methods plannning

Operations planning invloves

Capacity planning

Calculating how much of a product can be produced

Location planning

analyzing proposed facility sites

Layout planning

Designing a facility to enhance production effciency

Quality planning

Ensuring that products meet a firm’s quality standards

Methods planning

Identifying specfic produdction steps and methods for perfomring them

Operations control

Production managers monitor produciton performance, manage materials, and production process

Materials management

Planning, organizing, and controling the flow of materials

Total quality management

Managing all acticities necessary for gertting high quality goods and services into the marketplace

Supply chain

The stream of all activities and companies that add value in creating a product

Information, materials, services

What flows through a supply chain

Outsourcing

Paying suppliers and distributors to perform certain business processes

Operations managment

A set of methods and technologies used in the production of a good or service

Service Operations

Production activites that yiled tangible and intangible service products

Good production

Production activites that yield tangible products

Goods

The processes and activities for transforming resources into finished services and goods for customers

Services

Intangible, unstorable, experiences consumed at the time of production

Performance quality

Features of a product and how well it performs

Quality reliablity

The consistency or repeatability of performance

Quality Ownership

The idea that quality belong to each person who creates or destroys it while performing a job

Benchamarking

Compares the quality of a firm’s output with the quality of the output of its past self or competitiors