MGMT Test 2

Entrepreneurship

* The process of **initiating** a business venture, organizing the necessary **resources**, assuming the associated **risks**, and enjoying the **rewards**

Entrepreneur

* Someone who engages in entrepreneurship

What percent of businesses in the US are small businesses?

99\.9%

(T/F) Nearly 3/4 of all US employees are employed by a small business

False, 1/2

(T/F) Over 8 out of 10 small businesses have no employees

True

What are the 5 types of Small Business Owners SHOIJ

Idealists

Optimizers

Hard Workers

Jugglers

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

(T/F) As the minority population of the US grows, so has the number of minority-owned businesses

True

How many times more likely than native born Americans are immigrants likely to start a new business

Twice as likely

What is a main reason why immigrants open businesses in the US

They appreciate the economic stability and opportunity

What sterotype about women limits their opportunity in mostly tech related fields?

Women tend to be more cautious about borrowing money than men

Most Important Traits of Entreprenuers (8) TASECACA

\-Autonomy

\-Entreprenurial Sacrifice

\-High Energy

\-Need to Achieve

\-Self-Confidence

\-Internal Locus of Control

\-Awareness of Passing Time

\-Tolerance for Ambiguity

Autonomy

Ability to run the business by theirselves

Entreprenurial Sacrifice

Ability to persevere after struggles or defeat

High Energy

Lots of energy

Need to Achieve

Internally Motivated

Self-Confidence

a feeling of trust in one's abilities, qualities, and judgment.

Internal Locus of Control

what an individual believes causes his or her experiences, and the factors to which that person attributes their successes or failures

Awareness of Passing Time

the ability to feel and understand time and the capability to plan your time

Tolerance for Ambiguity

***Being able to recognize one's feelings and intuitions quickly***

Social Entrepreneurship

\-Focuses on primarily on creating **social value** by providing solutions to social problems, with a secondary purpose of **generating profit** and returns

What Traits do Social Entreprenuers have in common with normal entreprenuers (4) SCPT

\-Creativity

\-Business Smarts

\-Passion

\-The work

Benefit Corporation

A non profit business that is allowed in many states

B Lab

The application to become a B Corp.

What do you have to do to become a B Corp certification

Focuses on primarily on creating **social value** by providing solutions to social problems, with a secondary purpose of **generating profit** and returns

Steps to Launching a Start Up (4) FLIP

\-Start with an idea

\-Write a business plan

\-Choose a legal structure

\-Arrange financing

Business Plan

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

What does planning force entreprenuers to do?

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

Sole Proprietorship

Unincorporated business owned by an individual for profit

What is the most common type of business in the US

Sole proprietorship

Partnership

Unincorporated business owned by two or more people

Corporation

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

Debt Financing

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

Equity Financing

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

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 percent of businesses fail within 5 years?

70%

Business Incubator

Typically provides shared office space, management support services, and management and legal advice to entrepreneurs

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

Franchising

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

Disadvantages of Franchising (2)

* Franchisors dictate the prices
* Must purchase equipment, building, and new product offerings

Advantages of Franchising (3) MBF

* Franchise owner provides management and expertise
* Known name brand
* Reliable financial projections

What percent of McDonald’s are franchises

93%

Goal

Desired future circumstance or condition that the organization attempts to realize

Plan

* Blueprint for goal achievement specifying the necessary **resource allocations, schedules, tasks,** and **other actions**

Planning

Determining the organization's goals and defining the means for achieving them

Levels of Goals and Plans (High to Low) MSTO

* Mission Statement
* Strategic Goals/Plans and Senior Management
* Organization as a whole
* Tactical Goals/Plans and Middle Management
* Major divisions, functions
* Operational Goals/Plans and Lower Management
* Departments, individuals

Goal

Desired future state

Strategic Goals

* Official goals; Broad statements describing where the **organization** wants to be in the future, long term

Strategic Plan

Defines the action steps by which the company intends to attain strategic goals

Tactical Goals

The results that major divisions and departments within the organization intend to achieve

Tactical Plan

* Define what major departments and organizational subunits will do to implement the organization's strategic plan

Operational Goals

* Results expected from departments, work groups, and individuals

Operational Plans

* Results expected from departments, work groups, and individuals

Organizational Planning Process (5) DTOPMML

\-Develop the Plan

\-Translate the Plan

\-Plan Operations

\-Performance Mangement

\-Monitor and Learn

Mission

* Reason for organization's existence

What does a mission statement include (3) EDV

* Reason the organization exists
* How they differ from their competitors
* May include statement of their values

Coalition Mangement

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

Strategy Maps

* Visual representations of the key drivers of an organization's success
* Show how specific goals and plans in each area are linked

Performance Management

* Managers use operational goals to direct employees and resources

3 Types of Planning Approaches OSS

\-Management by Objectives

\-Single Use Plans

\-Standing Plans

Key Performance Indicators

* 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

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

Management by Means

* New systematic approach that focuses attention on the methods and processes used to achieve goals

Single-Use Plans

* Plans developed to achieve objectives that are not likely to be repeated in the future
* Include programs and projects

Standing Plans

* Ongoing plans that provide guidance for tasks or situations that occur repeatedly within the organization
* Include organizational policies, rules, and procedures

Benefits of Planning (4) MAGP

* Provides a source of motivation and commitment
* Guides resource allocation
* Are a guide to action
* Behavior
* Set a standard of performance

Limitations of Planning (4) PCRI

* Can create too much pressure
* Can create a false sense of certainty
* May cause rigidity in a turbulent environment
* Can get in the way of intuition and creativity

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 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

Strategic Management

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

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

Factors that allow a company to produce goods or services better or more cheaply than its rivals

Corporate-Level Strategy

* Pertains to the organization as a whole and the combination of business units (more than one) and product lines that make up the corporate entity

Business-Level Strategy

* Pertains to each business unit or product line

Functional-Level Strategy

Pertains to the major functional departments within the business unit. Functional areas of business include accounting, marketing, human resource management, research and development, manufacturing, and others depending on the line of business

SWOT

Strength, Weakness, Opportunity, Threat

Internal SWOT

Strengths and weaknesses

External SWOT

* Opportunities and threats

Strategy Formulation

* Includes the planning and decision making that lead to the establishment of the firm's goals and the development of a specific strategic plan

Strategy Execution

The use of managerial and organizational tools to direct resources toward accomplishing strategic results

3 Approaches to understanding corporate-level strategy PBD

\-Portfolio Strategy

\-Boston Consulting Group Matrix

\-Diversification

Strategic Business Units

Business division of the organization that has a unique business mission, product line, competitors, and markets relative to other SBUs in the corporation

Portfolio Strategy

Pertains to the mix of SBUs and product lines to provide synergy and competitive advantage

BCG Matrix (2 Dimensions) BM

* Organizes business units along two dimensions
* **Business Growth Rate**
* **Market Share**

Star

* Rapid growth and expansion

Cash Cow

* Low business growth and high market share

Bright Prospect

* New ventures
* Risky
* A few become stars, other become divested

Dog

* Low market share and low growth rate
* Plus
* No investment required since it is not a growing business

Is the SWOT analysis at the beginning or at the end of the strategic management process?

Beginning

Diversification

Strategy of moving into new lines of business

Merger

* Occurs when two or more organizations combine to become one

Joint Venture (In terms of Diversification)

Involves a strategic alliance or program by two or more organizations