Business Exam Semester 4

entrepreneur

a person who has possession of a new enterprise, venture or idea and assumes significant accountability for the inherent risks and the outcome. they may also organize and manage the enterprise

cooperative

a business owned and operated by a group of individuals for their mutual benefit

corporation

a legal entity that is separate and distinct from the shareholders of the business

general partnership

• partners share in management and control of the business

• partners combine assets and share debts easier to borrow money

• complemented skills/capabilities

limited partnership

• one of more partners obtain limited liability in exchange for not taking an active part of the day-to-day management and decision-making (AKA. silent partner)

• more popular as it allows the entrepreneur to maintain control while receiving equity funding

what would be considered a demographic

• age

• income

• occupation

• lifestyle characteristics

4 essential aspects of marketing program (4 P’s of the marketing mix)

1. the product/service

2. the distribution system

3. promotion

4. pricing

external influences to a company

• the economy

• competition

• legal restrictions

• technology

4 main stages of product life cycle

1. introduction

2. growth

3. maturity

4. decline

what are psychographics

• life style characteristics

• special interest activities

• health care needs

• culture

product classifications

• convenience

• shopping

• specialty

convenience

purchases with minimal effort unplanned can be necessities or emergency goods

shopping

purchased only after comparisons are made

specialty

substantial brand or product loyalty

customer relationship management (CRM)

• the relationship a business owner develops and maintains with a consumer/client of prime importance

• defined as a marketing method that allows a business to maintain contact with a customer/client in order to gain a deeper understanding of their needs so to fulfill them throughout the product life cycle

applications of CRM

• nurture the customer/client

• grow the customer/client

• retain the customer/client

• win the customer/client back

motivators of potential clients

• self interest

• comfort

• something unique

• communication

marketing plan

an internal document that keeps one focused and assists in choosing appropriate methods to build and maintain a thriving practice

5 types of legal structures

1. sole proprietorship

2. partnershing

3. cooperative

4. corporation

5. joint venture

partnership

business owned by 2 or more people

joint venture

an agreement between one or more sole proprietors, partnerships or corporations to participate in a business venture

effective communication is

20 % of what you know and 80% how you feel about what you know

gross margin

determined by calculating total revenue minus the cost of goods sold. gross margin is a company’s profit before operating expenses, interest payments and taxes. gross margin is also known as gross profit

strategic competitive advantage

• the right business

• the right industry

• the right aspect of business

manager

someone who plans organizes staffs leads directs and controls an organization for the purpose of accomplishing a goal

human resource management

human resource management is the function within an organization that focuses on recruitment of management of and providing direction for the people who work in the organization. human resource managers deal with compensation hiring performance management safety, wellness, benefits, employee motivation communication, administration and training

demographics

socioeconomic groups characterized by age, income, sex, edicattion, occupation, etc. that comprise a market niche

disposable income

the amount of an individual’s income left after taxes have been paid available for spending and saving

competitive advantage

when a business has a product service or way of doing business that is viewed as being better than its competitors

primary data

data collected by the entrepreneur i.e. observation, surveys, personal interviews, test, marketing, etc

secondary data

data collected and publishes by another organization. it can consist of reports, studies and statistics

market

a place where forces of demand and supply operate and where buyers and sellers interact to trade goods, services, or cntracts or intruments, for money or barter

market potential

aggregate of all individual, firms and organizations in a particular market who have some level of interest in a particular product/service

market share

the percentage of the total market potential the proposed busines will obtain

market niche

small but profitable segment of a market suitable for focused attention by a marketer. market niches do not exist by themselves but are created by identifying needs or wants that are not being addressed by competitors and by offering products services that satisfy them

net income

what remains after subtracting all the costs from a company’s revenues. net income is sometimes called the bottom line AKA earnig or net profit

depreciation

• the cost of using capital assets

• a noncash expense that reduces the value of an asset as a result a wear and tear age or obsolescence

break even point

is the point where total revenue received equals the total costs associated with the sale of the product/service

cost of goods sold (COGS)

the costs accumulated when selling an item

income statement

a statement of revenues and expenses. this statement tells you if you are making or losing money

revenue

income earned for services rendered or items sold

expense

money spent to earn income/revenue

fiscal year

a period of 12 consecutive months chosen by the owner to represent an accounting period AKA financial year

asset

something valuable that an entity benefits from, or has use of in generating income i.e., a truck for your business

liability

an obligation to pay another party an amount in money goods or services. the balance sheet of a business lists its liabilities

unlimited liability

a legal situation where business owners or partners are fully responsible for all of a company's debts and taxes

limited liability

a legal structure that limits a person's financial risk to a set amount,such as the amount they've invested in a company.

product life cycle four stages

1. introduction

2. growth

3. maturity

4. decline

introductory stage

expenses are high, profits low or nil and sales slowly increase

growth stage

highest profit sales increasing competitors start to appear

maturity stage

sales begin to drop high competition profits start levelling off

decline

further decreasing sales and declining profits

strategies to prolong the life cycle

• appeal to a new target audience

• adjust the product/service to meet changes in consumer needs

• increase promotion

• emphasize different uses or characteristics of the product/service

• offer new product/service

non quantitative assessment of business opportunities includes

content of work analysis and how the business will affect lifestyle

secondary information includes

• industry reports

• trade magazines

• statistics Canada reports

one of the disadvantages of secondary data is that

it is out of date

the following method is not a type of primary research

a) industry studies

b) telephone surveys

c) personal interview

d) observation studies

industry studies

telephone surveys have the following disadvantage

only give a small amount of information

what is not a component of determining market potential

a) population of market

b) per capita family expenditures

c) attitudes toward product

d) adjustments to potential

attitudes towards product

net income is determined by

sales minus expenses

a cash flow statement is

cash in minus cash out

the advantages of organizing a business from scratch include

higher independence

organizing compared to buying has the following characteristics

it takes longer

the small business plan

helps the entrepreneur to focus

the target market is

the people you will sell your product to

the following is not part of location analysis

promotion

insurance is a way of

transferring risk

a sole proprietorship

• business owned. by single individual

• is simple and inexpensive to start and requires fewer forms to fill out

a disadvantage of a sole proprietorship

unlimited liability

a corporation allows for

• allows limited liability

• allows for easier raising of funds

• allows continuity

silent partners

provide only money

cooperatives and corporations are different because

cooperatives allow one vote per member where corporations allow one vote per share

equity financing is

ownership financing

reasons why owners/managers overlook some marketing activities include

• they don’t think it is necessary

• they don’t fully understand what it is

• they get too busy with the day to day activities

which of the following is not a demographic characteristic

reasons for purchasing

product life cycle is

a path of performance a product/ service moves through over time

product life cycles can be extended by

• reaching new markets

• increasing product usage

• adjustments to existing product

a convenience good

is purchased with minimum of effort

price elasticity refers to when

price goes up and demand goes down

personal selling is strong at

achieving product purchase

advertising is strong at

developing an interest in product

which of the following is not one of the 4 motivators of potential clinets to seek massage therapy

• self interest

• comfort

• self denial

• communication

self denial

A 1-2 sentence description of the position that a company wishes itself its product or its brand to occupy in the minds of a defined target audience best describes

a positioning statementv

special interest activities cultural activities and health care needs are all examples of

psychographics

the advantage of publicity over advertising is that it

• is more credible

• it is cheaper

when considering purchasing characteristics for various age groups this group have high incomes and high debt and are often looking for information before buying

people in their 30s-40s

small business’ share of total employment has _____ over the past decade

increased

evidence of small business growth includes

• increases in the number of small businesses

• increase in the number of employees in small business

• increase in government programs directed towards small business

small business is defined by using

• number of employees

• level of profits and sales

• type of ownership structure

the sector where small businesses seem to be most successful is

service

most small business managers are successful because

they identify a market niche and exploit it

the number of young people starting businesses has increased because

• they have trouble finding jobs

• they see a challenge to small business ownership

• they spot opportunities in the market

which of the following is an advantage of small business ownership

independence

which of the following is a personality characteristic of an entrepreneur

competitive

the major causes of business failure include

incompetence and inexperience

in which phase is entrepreneurship most important

startup process

the ability to see conceive and create new and unique products services is

innovation

specific areas of managerial incompetence contributing to small business failure include

• budgeting

• receivables and payables management

• handling personnel

entrepreneurial skills are required to

start a business

managerial skills are required to

maintain a business