Chapter 7 Entrepreneurship Quiz

Strategy

the idea and actions that explain how a firm will make its profit

What is a strategy?

an entrepreneur’s way to success

Most small businesses are…

imitative not innovative

What 4 things should you think of when developing a strategy?

1. Major goals you set for firm

2. Types of customers you seek and benefits you plan to offer them

3. Stage and trend of your chosen industry

4. The specific, generic, and supra-strategies you choose to pursue

Goal 

an intended outcome for your business 

Magic Number

income you personally seek from the business

Industry

general name for the line of product or service

Innovative

seeking to do something different

Imitative

doing what other people are doing

Degree of Similairity

the extent to which a product or service is like another

Similarity

like something else

Blue Ocean Strategy

a strategy based on creating a new product or service that has no competitors

Who will be more successful in the long run?

Imitators not pioneers

Market

population of customers for your product or service

Mass Market

a large portion of the population 

Niche Market

narrowly defined segment of the population likely to share the same interests or concerns

Value Benefits

the characteristics related to the product - what a customer senses in a product 

Cost Benefits 

the ways by which a firm can keep costs low for the customers 

Core competencies

the main work of a firm in a particular line of business

Industry Dynamics

changes in competitors, sales, and profits in an industry overtime

Boom

a rapid increase in sales - explosion of choices

Shake out 

The stage that follows the boom where there is a rapid decrease of businesses in that industry 

Gross Profit

Funds left over after deducting the cost of goods sold

Net Profit

Profit before Taxes

Focus Strategy

strategy that targets a portion of the market called a segment or a niche 

Entry Wedge

Government Rules

Rule changes by the government that can help small businesses compete

What happens when new products are in demand?

Supply Shortages

Strategic Action

a competitive response requiring a major commitment of resources 

Tactical Action

a competitive response with low resource requirement

What do people typically respond to a shortage with?

A tactical action first with a strategic action building up behind the scenes