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Applied Economics > 10 Principles in Creating a Business > Flashcards

10 Principles in Creating a Business Flashcards

1
Q

10 Principles in Creating a Business

A
  1. Scalability
  2. Big ideas
  3. Systems
  4. Sustainability
  5. Growth
  6. Vision
  7. Purpose
  8. Autonomy
  9. Profitability
  10. Standards
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2
Q

Businesses which has a potential to grow. It is the capability of a system, network or process to handle a growing amount of work or its potential to be enlarged in order to accommodate that growth.

A
  1. Scalability
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3
Q

Every business begins with an idea. Business ideas come from many sources. Hobbies, interests, and business experiences often give people ideas for new business.

The entrepreneurs vision is more important to the life of the business that anything else.

A
  1. Big ideas
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4
Q

Recognizing small and big parts contributes success and failures to the business. In this system everything must work together from employee to presidents from resources to equipment. In making plan/decision one should be align to the other.

A
  1. Systems
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5
Q

A business must be powerful able to harness all economic conditions, in all market settings, providing positive and meaningful quality results to its customers. Such differentiated result is the key to survive.

A
  1. Sustainability
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6
Q

All business needs internal g_____. When you are a beginner in a business it is like a school wherein your employees are students that need your guidance, with your intention and determination that the business will grow.

A
  1. Growth
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7
Q

What do you want your business to be in the future, your very purpose in creating a business, vision plays a vital role as it is your guide in planning.

A
  1. Vision
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8
Q

outlines all the things your company is doing in the present to reach your goal.

“We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience.”

A

Mission Statement

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9
Q

describes what your company is building toward in the future.

“To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.”

A

Vision Statement

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10
Q

A business is the results of a big dream in mind of the person who dream for it.

A
  1. Purpose
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11
Q

A business if not part of the owner’s life, but in fact, its own entity. A business is difficult to start, however, without the help of others. Even the smallest businesses need a few ful or part-time employees. Choosing the “team” becomes one of the most important initial business decisions.

A
  1. Autonomy
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12
Q

A business help economic entity, managing economic reality, creating an economic certainty for the communities in which it thrives.

A
  1. Profitability
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13
Q

A business creates standard against all businesses measured as either successful or not. In order a business will go beyond, aim high beyond the existing standard.

A
  1. Standards
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14
Q

Are internal positive characteristics like traits, skills, knowledge, abilities within the organization. These are things that are within your control.

What physical assets do you have, such as customers, equipment, technology, cash, an patents? And what competitive advantages do you have over you competitors?

A

Strength

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15
Q

Are negative factors that detract from your strengths. These are things that you might need to improve on to be competitive. Like unskilled workers or lack of managerial talents.

A

Weaknesses

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16
Q

Are external factors in your business environment that are likely to contribute to your success. Like reliable suppliers of raw materials and cheap power These are positive impacts of various external environment on the profitability on which the company has no direct control over it.

A

Opportunities

17
Q

Are external factors that you have no control over. You may want to consider putting in place contingency plans for dealing them if they occur. These are negative and undesirable impacts of external factors that affects the profitability of the business. Like absence of supporting industries that will supply the materials high cost of electricity

A

Threats

18
Q

Porter’s Five Forces

A
  1. Competitive Rivalry.
  2. Bargaining Power of Suppliers.
  3. Bargaining Power of Buyers.
  4. Threat of New Entrants.
  5. Threat of Substitute Products or Services.
19
Q

This force examines how intense the competition currently is in the market, which is determined by the number of existing competitors and what each is capable of doing. Rivalry competition is high when consumers can easily switch to a competitor offering for little cost. CIU

A
  1. Competitive Rivalry
20
Q

Rivalry Among Existing Competitors

A

• Number of competitors
• Diversity of competitors
• Industry growth
• Brand loyalty
• Switching costs
• Quality differences

21
Q

This force analyzes how much power a business’ suppliers have and how much control it has over the potential to raise its prices, which, in turn, would lower a business’s profitability. Also, it looks at the number of suppliers available. The fewer there are, the more power they have.

A
  1. Bargaining Power of Suppliers
22
Q
  1. Bargaining Power of Suppliers
A

• Number and size of suppliers.
• Uniqueness of each supplier’s product.
• Company’s ability to substitute.

23
Q

This force looks at the power of the consumer to affect pricing and quality. Consumers have power when there aren’t many of them, but lots of sellers, as when it is easy to switch from one business’s products or services to another.

A
  1. Bargaining Power of Buyers
24
Q
  1. Bargaining Power of Buyers
A

• Number of customers

Size of each customer order

• Differences between competitors

• Buyers ability to bstitute

• Buyers information availability

25
Q

This force examines how easy or difficult it is for the competition to join the marketplace in the industry being examined. The easier it is a competitor to join the marketplace, the greater the risk of a business’s market share being depleted.

A
  1. Threat of New Entrants
26
Q
  1. Threat of New Entrants
A

• Barriers to entry
• Brand loyalty
• Capital requirements
• Government policies
• Access to distribution channels
• Switching costs

27
Q

This force studies how easy it is for consumers to switch from a business’s product or service to that of a competitor. It looks at how many competitors there are, how their prices and quality compare to the business being examined.

A
  1. Threat of Substitute Products or Services
28
Q
  1. Threat of Substitute Products or Services
A

• Number of substitute products available
• Buyer propensity to substitute
• Relative price performance
• Perceived level of product differentiation
Switching costs

Applied Economics (6 decks)

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