Entrep Ch 3 Creating Business

Question 1

Who said “Problems are only opportunities in work clothes.”

Answer 1

Henry J. Kaiser, American industrialist

Question 2

A group of people or organizations that may be interested in buying given product or service, has the resources to purchase it, and is permitted by law and regulation to do so.

Answer 2

A Market

Question 2

This includes the offer, target market, and product and delivery capability—answering the questions of who, what, and
how.

Answer 2

Business definition

Question 3

A solid business definition has three elements, what are these?

Answer 3

1. The offer: What will you sell to your customers
2. Target market: Which segment of the market are you aiming to
   serve
3. Production and delivery capability: How will you provide your
   offer to your targeted customers?

Question 3

The fundamental ethical and moral philosophy and beliefs that form the foundation of the organization and provide broad guidance for all decision making.

Answer 3

Core Values

Question 4

The culture of an organization is largely shaped by?

Answer 4

It’s leadership

Question 4

Culture is composed by?

Answer 4

Composed of the core values in action.

Question 4

Your competition is defined by your target market and can be?

Answer 4

It can be
Direct: selling the same or similar products to the same market
Indirect: selling different products that compete for the same share of customer spending

Question 5

What are the 6 factors of competitive advantage?

Answer 5

1. Quality: Can you provide higher quality than competing businesses?
2. Price: Can you offer a lower price on a sustained basis than your
   competition, or does your higher price reflect quality and/or
   uniqueness?
3. Location: Can you find a more convenient location for customers?
4. Selection: Can you provide a wider range of choices than your
   competitors can?
5. Service: Can you provide better, more personalized customer service?
6. Speed/Turnaround: Can you deliver your product/service more quickly than the competition?

Question 5

According to _____ of New Venture Creation, a successful company
needs to do one of 5 things.

Answer 5

According to Jeffery Timmons

Question 6

The factors that contribute to the ease or difficulty of a new competitor joining an established market.

Answer 6

Barriers to entry

Question 6

To determine whether you have a competitive advantage that will enable you to outperform your closest and strongest competitors, ask these 3 questions:

Answer 6

1. Competitive Offers
2. Unique Selling Proposition (UPS)
3. Cost structure

Question 7

What is USP?

Answer 7

Unique Selling Proposition, the distinctive feature and benefit that set a company apart from its competition.

Question 8

The combination of the business definition with its competitive advantage.

Competitive Advantage must be sustainable

Answer 8

Competitive Strategy

Question 8

This is the plan for outperforming the competition

Answer 8

Strategy

Question 9

These are the ways in which you will carry out your strategy.

Answer 9

Tactics

Question 10

What is Gross Profit?

Answer 10

Total sales revenue
minus
Total cost
of goods sold.

Question 10

What is EOU

Answer 10

Economics of one unit of sale
The amount of gross profit that is earned on
each unit of the product or service a business sells

Question 11

This is the basic unit of the product or service sold by the business.

Answer 11

Unit of sale

Question 11

Define These Units of Sale
Manufacturing
Wholesale
Retail
Service

Answer 11

In the same order,
It’s one order with x amount of quantity (like 100 Leche Flan)
A bulk of an item that should be cheaper than the same amount in retail. (Like 12 Leche Flan for 120 pesos)
1 Item (1 Leche Flan for 15 pesos)
Defined by units of time (Like 1 Hour of making Leche Flan)

Question 11

What is COGS?

Answer 11

Cost of goods sold, The cost of producing
tangible item. (Materials and Labor)

Question 12

What is COSS

Answer 12

Cost of services sold, The cost of delivering
a service.

Question 12

Employees that actively produce or deliver a product or service

Answer 12

Direct labor

Question 13

A term for money when it is exchanged internationally

Answer 13

Currency

Question 13

The relative value of one currency to another.

Answer 13

Foreign exchange rate (FX)

Question 13

A method that analyzes the underlying value of a business’s assets as a basis for negotiating a price.

Answer 13

Asset valuation

Question 14

The 4 most common standards for Asset Valuation

Answer 14

1. Book Value
2. Adjusted Book Value
3. Liquidation Value
4. Replacement Value

Question 14

This takes into account any of the discrepancies identified in the calculation of book value and looks at the actual market value versus the stated book value. Intangible assets are often excluded in this method.

Answer 14

Adjusted Book Value

Question 14

Starting with the value of assets reported in the books and records of the firm as a reference point

Answer 14

Book Value

Question 15

This is a determination of the net cash that could be obtained through disposing of assets via a quick sale, with liabilities either paid off or negotiated away

Answer 15

Liquidation Value

Question 16

This is the determination of the cost of newly purchasing the assets, as would be required to start up the firm. This is also used more as a point of reference than as a pricing option.

Answer 16

Replacement Value

Question 17

This is a method that assesses the value of the firm based
on a stream of earnings that is multiplied either by an agreed-upon factor (the capitalization factor) or by the Price/Earnings ratio (for a publicly traded company).

Answer 17

Earnings valuation

Question 18

The 3 ways of looking at earnings valuation are?

Answer 18

1. Historical earnings
2. Future earnings under current ownership
3. Future earnings under new ownership

Question 18

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