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sole properietorship
Easy, quick, simple and affordable, Full control with minimal administration, Adaptable
The Challenges: Risk and personal exposure, Credibility - only as good as yours, Raising additional capital
partnership
Voluntary association
Unlimited liability
Mutual agency - (one bad apple)
Limited life
Limited access to $
Partners keep control
Relatively unregulated
Single taxation
coporation
Separate legal entity
Limited liability
Limited stockholder power
Unlimited life
Easy access to capital
Stockholders may lose control
Government regulation
Double taxation
general partnership
Mutual agency
Unlimited liability
Share risk/wealth equally
limited partnership
No mutual agency
Provision for limited liability for some
Do not share the risk/wealth equally
securities and exchange commission (SEC)
Sale of stock / financial reporting - Full disclosure - Due diligence ... has to be thorough in finding and reporting information
domestic corporations
Operate in state in which it is incorporated
foreign corporations
Operate in states other than their state of incorporation
alien corporations
Are organized in one country and operate in another
common stock
Voting rights (proxy)
Residual claims to assets
preferred stock
No vote
First claim on income
a preferred dividend
First claim on assets after debt
B corporation
are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.
Alignment with the "3P" approach - People, Planet and Profit
Supported by the balanced scorecard concept
Gaining credibility and recognition
limited liability company (LLC)
combines the advantages of a Corporation and Sole Proprietorship and gets rid of the disadvantages
The Good it keeps:
Pass through Taxation (Sole Proprietorship)
Flexibility (Sole Proprietorship)
Limited Liability (Corporation)
The Bad it gets rid of:
Double Taxation (Corporation)
Corporate Structure Corporation)
Unlimited Liability (Sole Proprietorship)
merger
two companies into one
horizontal acquisition
one firm buys another in the same industry
vertical acquisition
one firm buys another in the same distribution channel
innovation
is the tool of entrepreneurs where they exploit change as an opportunity to form a new business or service.
leader
create a vision, are change agents, take risks, coach
manager
create a goal, maintain the status quo, control risk, direct
systematic innovation
consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation.
Many successful innovations exploit change.
intrapenuer
Applying an entrepreneurial mindset within an established organization
A way to stimulate innovation in large, established organizations acts as an "inside entrepreneur" who focuses on innovation and creativity while operating within the goals and environment of an organization
crowdsourcing
is the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, and especially from an online community, rather than from traditional employees or suppliers.
feasibility analysis
Is not the same as a business plan
Serves as a filter, screening out ideas that lack the potential for building a successful business before an entrepreneur commits the necessary resources to building a business plan
Is an investigative tool
Asks two questions:
Are customers willing to purchase our goods or services?
Can we provide the products or services to customers at a profit?
capital requirements
Must have an estimate of how much start-up capital is required to launch the business
estimated earnings
Forecasted income statements
return on investment
Combining the estimated earning and capital requirements to determine how much investors can expect their investments to return
business plan
A systematic evaluation of a venture's chances for success
A way to determine the risks facing a venture
A game plan for managing a business successfully
A tool for comparing actual and target results
An important tool for attracting capital
A "road map" for the venture
financial forecast
Projected financial statements
Monthly for one year
Quarterly for the next two years
Income statement
Balance sheet
Cash Flow
Capital expenditures
Three forecasts: Pessimistic. Most Likely, Optimistic
equity capital
Represents the personal investment of the owner(s) in the business
Is called risk capital because investors assume the risk of losing their money if the business fails
Does not have to be repaid with interest like a loan does
Means that an entrepreneur must give up some ownership in the company to outside investors
angels
Private investors who invest in emerging business start-ups in exchange for equity stakes and some control in the company
Fastest growing segment of the small business capital market
crowdfunding
involves asking a group of people, most often online, to donate money and be financially involved in a project or business.
initial public offering (IPO)
When a company raises capital by selling shares of its stock to the public for the first time
debt financing
Financing that must be repaid with interest
guerrilla marketing
Tactic in which a company uses surprise and/or unconventional interactions in order to promote a product or service.
Different than traditional marketing in that it often relies on personal interaction, has a smaller budget, and focuses on smaller groups of promoters
vision
An encompassing explanation of why the organization exists and where it's trying to go. It is more than a goal
mission statement
An outline of the fundamental purposes of an organization
goals
The broad, long-term accomplishments an organization wishes to attain.
objectives
Specific, short-term statements detailing how to achieve the organization's goals. They are often quantified with target numerics and/or dates.
SWOT analysis
A planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats.
strategic planning
Determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals.
tactical planning
Developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done.
operational planning
Setting work standards and schedules necessary to implement the company's tactical objectives.
contingency planning
Preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives.
problem solving
The process of solving the everyday problems that occur; less formal than decision making and usually calls for quicker action.
brainstorming
Produce an idea or way of solving a problem by holding a spontaneous group discussion without criticism
PMi
Listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third column.
chief executive officer (CEO)
Introduces change into an organization.
chief operating officer (COO)
Implements CEO's changes.
chief financial officer (CFO)
Obtains funds, plans budgets, collects funds, etc.
chief information officer (CIO)
Gets the right information to the right people, so decisions can be made.
technical skills
The ability to perform tasks in a specific discipline or department.
human relations skills
Communication and motivation; they enable managers to work through and with people.
conceptual skills
The ability to picture the organization as a whole and the relationship among its various parts.
transparency
The presentation of the company's facts and figures in a way that is clear and apparent to all stakeholders.
autocratic leadership
Make managerial decisions without consulting others.
participative or democratic leadership
Managers and employees work together to make decisions.
free-rein leadership
Managers set objectives and employees are relatively free to do whatever it takes to accomplish those objectives.
rationalist
Values sound thinking
humanist
Regards people as company's top asset
politicist
Adept at politics
culturist
Communicates through stories, ceremonies, and rituals
enabling
Giving workers the education and tools they need to make decisions.
knowledge management
Finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm.
This tries to keep people from reinventing the wheel.
control function
Measures performance relative to planned objectives
Rewards people for work well done
Takes necessary corrective action
world trade organization (WTO)
Police force for the world trading system
international monetary fund (IMF)
Maintains order in the international monetary system
world bank
Promotes economic development
United Nations (UN)
Maintains international peace and security
Develops friendly relations among nations
Cooperates in solving international problems
Promotes respect for human rights
international trade
the sale of goods or services to another country
federal direct investment
investment of resources in business activities outside the home country
cultural relativism
is the belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate
righteous moralist
claims that a multinational's home country standards of ethics are the appropriate ones for companies to follow in foreign countries
naive moralist
asserts a manager of a multinational that actions are ethically justified if everyone else is doing the same thing
comparative advantage
A country should sell the products it produces most efficiently and buy from other countries the products it cannot produce as efficiently.
absolute advantage
A country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.
balance of trade
The total value of a nation's exports compared to its imports measured over a particular period.
trade surplus
When the value of a country's exports is more than that of its imports.
trade deficit
When the value of a country's exports is less than that of its imports.
balance of payments
The difference between money coming into a country (from exports) and money leaving the country (from imports) plus other money flows.
tariff
a tax levied on imports, raising the cost of imported products relative to domestic products
subsidy
is a government payment to a domestic producer
import quota
is a direct restriction on the quantity of goods imported into a country
tariff rate quota
are a hybrid of a quota and a tariff, lower tariffs within the quota, higher tariffs over the quota
voluntary export restraint
are quotas on trade imposed by the exporting country, typically at the request of the importing country's government
dumping
is selling goods in a foreign market below their cost of production, or selling goods in a foreign market at below their "fair" market value
licensing
When a firm (licensor) provides the right to manufacture its product or use its trademark to a foreign company (licensee) for a fee (royalty).
franchising
A contractual agreement whereby someone with a good idea for a business sells others the rights to use the name and sell a product/service in a given area.
contract manufacturing
A foreign company produces private-label goods to which a domestic company then attaches its own brand name or trademark. A form of outsourcing.
join venture
A partnership in which two or more companies join to undertake a major project.
strategic alliance
A long-term partnership between two or more companies established to help each company build competitive market advantages.
foreign subsidiary
A company owned in a foreign country by another company called the parent company. The most common form of FDI.
foreign direct investment
The buying of permanent property and businesses in foreign nations.
multinational corporation
A company that manufactures and markets products in many different countries and has multinational stock ownership and management.
exchange rate
The value of one nation's currency relative to the currencies of other countries.
High value of the dollar - Dollar is trading for more foreign currency; foreign goods are less expensive.
Low value of the dollar - Dollar is trading for less foreign currency; foreign goods are more expensive.
devaluation
Lowers the value of a nation's currency relative to others.
trade protectionism
The use of government regulations to limit the import of goods and services.
import embargo
A complete ban on the import or export of a certain product or the stopping of all trade with a particular country.
common market
A regional group of countries with a common external tariff, no internal tariffs and coordinated laws to facilitate exchange among members.
outsourcing
A process by which a firm contracts with other companies to do some or all of its functions.
ethics
The standards of moral behavior. Behaviors that are accepted by society as right versus wrong.
