MGT 365 Mid-term Review Concepts/Definitions:  Three primary rewards for entrepreneurs.

o Freedom o Profit o Independence o Satisfaction  Artisan vs. Opportunistic o Artisan = Crafsman, technical, paternalistic, slow to delegate, limited o Opportunistic = Broad-based, scientific approach, delegates, broad strategy, longer planning  Advantages of small entrepreneur firms o Customer focus o Quality performance o Integrity and responsibility o Innovation o Special Niche  Entrepreneurs willingness to assume risk o Moderate risk  Type A, Type B, and Type C ideas o Type A = new market, existing products o Type B = new technology, new product o Type C = Improved product, new benefit  What type of idea accounts for the largest number of startups? o Good opportunity  Most common source of new product ideas o Prior work experience (45%) o Others: hobbies, accidental, deliberate search, contacts, trade shows, research institutions, trade publications, journals  Michael Porter’s factors o Threat of new competitors o Threat of substitute products/services o Intensity of rivalry among existing competitors o Bargaining power of suppliers o Bargaining power of buyers  How is competitive advantage protected? o Differentiation o Patents, copyrights o New products, stay ahead of competition  SWOT analysis o Strengths, Weaknesses, Opportunities, and Threats o Starts with defining a desired end state

history and ability to work as an effective team. mission and objectives o Products or Services = Key features and benefits. and use of funds o Offering = proposal/terms to investors. personnel. strategy.      o Opportunities = external chances to make greater sales or profits in the environment o Threats = external elements in environment that could cause trouble Two broad-based strategies for building competitive advantage o Cost based o Differentiation based Concepts surrounding business plan terms Sections of the business plan o Executive summary = brief description of each succeeding section o Company overview = Vision. current stage of development. competitive advantages o Market and Comp Analysis = (see this section) o Management team = Backgrounds and roles of key individuals. proprietary position. production. administrative. type. current status. personnel needs. and financial strategies o Critical Risks = Realistically identifies major internal and external critical risks that could threaten business and plans for dealing with these o Cash Flow Statement = realistic assessment of cash requirements o Income Statement = realistic and attractive income potential o Balance sheet = Realistic assessment of working capital and fixed asset requirements o Funds Required/Used = amount. history. goals. timing. organization structure o Operating strategies = Marketing. r&d. what we are seeking and what we will give in return Benefits of writing a business plan o Have a clearly articulated statement of goals and strategies for internal use o Use as a selling document to be shared with outsiders o Shows professionalism and seriousness of commitment Primary outside users of the business plan o Investors (including bankers) o Customers o Suppliers What factors do investors find favorable and unfavorable? o Favorable  “One minute investor”  Speak investors language  Brief (30-40 pages)  Attractive overall appearance  Well-organized with a table of contents and numbered pages  Market oriented in meeting customers needs .

product-oriented v. promotion. whereby the franchisee conducts business according to the terms specified by the franchisor o Franchise Contract = The legal agreement o Franchise = the privileges conveyed in the contract o Franchisee = entrepreneur whose power is limited by agreement o Franchisor = The party that specifies the methods to be followed Meaning of term “franchising” . sales-oriented v. market-oriented o Consumer = all efforts begin and end with the consumer o Product = Product/production efficiencies o Sales = Sales over production efficiencies and customer preference What’s included in the market analysis section of the marketing plan? o Evaluation process that encompasses market segmentation. Secondary data? o Primary data = new market information that is gathered by the firm conducting the research o Secondary = market information previously compiled by others Franchising Terms o Franchising = a marketing system revolving around a two party agreement. marketing research.         Show evidence of customer acceptance  Recognize investor’s need for healthy return  Demonstrate a focus on a limited number of products/services  Have a proprietary market position o Unfavorable  Infatuation with product/service. and distribution Consumer-oriented v. market control. downplay market need/acceptance  Unrealistic financial projections  Unrealistic growth projections Marketing mix o The combination of product. our target share of the market Primary vs. pricing. where. and sales forecasting What is included in the marketing plan? o Market analysis o The competition o Marketing strategy  Product/service section  Distribution section  Pricing section  Promotion section What’s in the competitor analysis? o SWOT o Relative competitive strengths and weaknesses o Who are they.

Partnership. own all off company  Disadvantages: no one to lean on or take over. ownership shared with many  Advantages and disadvantages of each form .) o Sole  Advantages: total control.o See “Franchising”  Benefits of franchising o Higher probability of success o Training o Financial assistance o Operating benefits  Notes on organizational forms (sole proprietor. all profit is just regular income o Partnership  Ad = someone to help out and lean on  Dis = Power struggles. Corp. responsible for partners o Corp  A: much higher potential for growth. lots of people to lean on  D: much lower individual control. very high divorce rate.

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