Small Business Management

9/18/2020

Concept Questions

Concept Check Questions 3-1

1: There is a strong connection between social responsibility, ethics and strategic planning in small
businesses. The things that are important to the owner will be important in the business; the small
business is a reflection of the owner and what is important in his/her own life. Social responsibility and
ethics in a business are commitments to do the right thing. Strategic planning is the process of deciding
where you want your business to go and how it will get there. These three things form the foundation of
a small business and how it will operate.

Concept Check Questions 3-2

1: The four groups of laws that regulate business activity are consumer protection, trade protection,
environmental protection and employee protection. Ralph Nader began the consumer protection
movement in the 1960s which began in the automotive industry and protected the safety and rights of
consumers. Upton Sinclair released a book in 1905 about the meatpacking industry, triggering the Pure
Food and Drug Act, and government agencies like the FDA that we have today. The Sherman Antitrust
Act of 1890 prohibits monopolies. These laws ensure that companies provide quality products and
services at reasonable prices. The EPA was created to protect the environment from things such as air
and water pollution. There are many laws put in place to protect employees, such as age discrimination,
equal pay, disabilities act, etc.

2: Due to cultural differences, there could be communication barriers or limitations regarding contract
work. In the text, it uses the example of the Americans versus Japanese when interpreting the contract.
What the American customer thought was clear as day and couldn’t be misconstrued, the Japanese
customer did not understand and interpret it the same way. He expected Japanese customers to act like
American clients without taking into consideration the differences in adaptation levels between the two
groups.

3: A business can show it’s socially responsible in a lot of ways. The company that I work for sponsors a
town little league team, they've had groups of people from our different campuses volunteer for Habitat
for Humanity on the weekends to build a house in Westbrook, etc. During the beginning of Covid, they
bought over a thousand $50 gift cards (3 different times) to local restaurants on the shoreline to support
the local businesses and then gave each employee a total of $150 to different restaurants to use. It was
a win-win for both the employees and the restaurants. So many things can be done to show community
involvement and support and I think that it makes businesses stand apart when they are willing to do
those types of things. It doesn't even have to be a huge financial contribution; the volunteers for
building the house is just as meaningful.

Concept Check Questions 3-3

1: A code of ethics is a formal statement of what your business expects in the way of ethical behavior.
The purpose of this is to serve as a guide for employee conduct to help employees determine what
behaviors are acceptable and what is considered right. An example of a code of ethics for a small
business could be: 1. ) Treat all employees, customers, vendors, etc with fairness and respect 2.) Create
quality and safe products and services 3.) Comply with all areas of the law 4.) Keep accurate notes and
records 5.) Do not give away internal information, etc.

2: I think an example of this would be marketing for things that you know are not healthy or targeting
specific consumers despite it being morally wrong. For example – if there is someone who has had a
history of substance abuse and a liquor company is aware of their buying habits, they may overly market
to this consumer knowing that they will probably buy it. It’s ethically wrong to target someone with an
addiction but this business is just doing their job marketing to their target audience. It’s legal but it’s
immoral.

Concept Check Questions 3-4

1: Greet everyone with a “hello” and a smile, Be knowledgeable about our products, Be confident in our
quality, Never stop trying to do better, Make everyone feel like Megan’s Market is home.

2: Environmental analysis is the process in which a manager examines what is going on within any sector
that could affect the business, either within the business or outside it. The SWOT analysis is more crucial
to small business owners than larger corporations because small businesses are in a position to quickly
take advantage of changes in the environment due to their speed, flexibility and sensitivity to customer
preferences. It’s also important because small businesses have fewer resources to risk. Businesses can’t
afford mistakes but larger corporations have more room to accept the mistakes. A small business could
be more heavily impacted by changes in the environment than a large corporation.

3: An internal analysis assesses the strengths and weaknesses of the company. You can go to your
newest hire employee and ask them questions to see if they know why the business exists, the major
competitors, customers, strengths, etc. You can ask a long-term employee about their day and get a feel
for how they view the company based on their reaction. You can look at the business both after hours to
see if it’s clean, organized, etc. Then you can go there during hours unexpectedly to see how the
employees and business seem to be operating and appear from an outsider. There are many different
things you can do to evaluate the strengths and weaknesses of a business.

4. Competitive analysis is so important because you must do something better than everyone else. If
not, your small business isn’t needed. It also has to be sustainable where your business can not be easily
duplicated over time; you have to have something that maintains your competitive advantage.
Competitive analysis is also important because it removes bias and allows you to focus on competitor’s
weaknesses. In order to obtain competitive intelligence, you can read articles, listen to what people say
about your competitors, buy competitor’s products and dissect them to look at quality, etc. You can look
into information involving the competitor’s image, location, products, services, pricing, etc. All of this
intel will help give you a competitive advantage by finding out exactly what you are up against with
other similar or competing businesses.

5. Each functional area of your business will have its own set of specific goals. There are different
strategies to meet these goals. For instance, a marketing strategy could be hiring someone who
specializes in whatever will appeal to your target consumer audience. One strategy would help attain
your function-level goal which then helps attain your business-level goal and then finally your mission.
All departments should be able to coexist and work together to help attain goals; they should be in
support of other goals. For instance, if sales has a goal, then the production department should also be
prepared to be able to produce that capacity and assist them in meeting that goal.

6. Strategic plans are needed before the business is started and throughout the operation of the
business as needs and the environment changes. Strategic planning focuses on strategic growth and
what direction you see the business heading. Strategic planning has you looking at general issues in the
next 3-5 years and are broader outlines of direction. You can get input from as many sources as possible;
you should consult with colleagues, bankers, accountants, lawyers, etc. Existing employees provide great
insight as well.

Closing Case Questions

1. The core problem faced by Millennium was the industry shift in the rise of digital music. Their
business concept was outdated at this point with the addition of MP3 players and iTunes and other
digital access to music. As for alternative options, they could shift to the online area which they did or
they could close up the shop. They could also do something entirely different that doesn’t even involve
music. It mentioned how Clayton looked at it as a growing experience while also mentioning his
experience in making furniture, teaching, and acrobatic yoga. They could have ventured out on a
completely new path with one of those ideas or something that hadn’t even been considered.

2. The five basic forces of competition are the rivalry among existing competitors, the threat of new
entrants, bargaining power of buyers, threat of substitute products or services and bargaining power of
suppliers. This applies to this case because that is essentially what happened to Millennium. They were
extremely successful until there was a threat of substitute products. When it turned digital, they found it
hard to compete with their inventory of physical CD’s. The new entrants, like iTunes, were definitely a
threat to their business. They did not have a competitive edge above these companies and they couldn’t
offer what they did at those prices.

3. I would have closed the shop. I don’t think they will ever reach that level of success again within the
music industry. I would take Clayton’s “eclectic” background and I would try and come up with another
idea. Sometimes I think it is better to abandon the idea and admit defeat than try and change it into
something that you know will not be successful in the long run. You can’t force it and once you see that
the business has kind of run its course and now there are things that have replaced it with the
development of new technology, I would take my profit and reinvest it into a business venture that has a
brighter outlook.