Exam 2 Vocabulary Flashcards
a group of people bound by a shared history and a commitment to share a future together, while supporting the development and well-being of individual members.
Family
an organization in which either the individuals who established or acquired the firm or their descendants significantly influence the strategic decisions and life course of the firm.
Family Business
a venture operated by a founding entrepreneur.
Owner-Managed Business
a business which children of the founder become owners and managers.
Sibling Partnership
a business in third and subsequent generations, when children of the siblings take ownership and management positions.
Cousin Consortium
the practice of employing relatives
Nepotism
patterns of behaviors and beliefs that characterize a particular firm.
Organizational Culture
non-financial factors in a family firm that affect the commitment of family members to the business
Socioemotional Wealth
Couples team who own and manage businesses.
Co-preneurs
a gathering of family members, usually at a remote location, to discuss family business matters.
Family Retreat
an organized group of family members who gather periodical to discuss family-related business issues.
Family Council
a statement of principles intended to guide a family firm through times of crisis and change.
Family Business Constitution
the process by which a more experienced person guides and supports the professional progress of a new or less-experienced employee.
Mentoring
passing ownership of a family business to the next generation
Transfer of Ownership
a document that outlines the basic concept underlying a business and describes how.
Business Plan
an abbreviated business plan that presents only the most important issues and projections for the business.
Short Plan
a complete business plan that provides an in-depth analysis of the critical factors that will determine a firm’s success or failure, along with all the underlying assumptions
Comprehensive Plan
a section of the business plan that conveys a clear and concise overall picture of the proposed venture and creates interest in the venture
Executive Summary (Overview)
a section of the business plan that describes the user benefits of the product or service and the type of market that exists.
Marketing Plan
a section of the business plan that offers information on how a product will be produced or service provided, including descriptions of the new firm’s facilities, labor, raw materials, and processing requirements
Operations and Development Plan
a section of the business plan that describes a new firm’s organizational structure and the backgrounds of its key players
Management Team
A section of the business plan that identifies the potential risks that may be encountered by an investor
Critical Risks
A section of the business plan that indicates to an investor how much money is needed, and when and how the money will be used.
Offering
A section of the business plan that focuses on options for cashing out of the investment
Exit Strategy
a section of the business plan that projects the company’s financial position based on well-substantiated assumptions and explains how the figures have been determined.
Financial Plan
Projections of a company’s financial statements for up to five years, including balance sheets, income statements, and statements of cash flows, as well as cash budgets.
Pro Forma Statements
an analysis of how a firm plans to create profits and cash flows given its revenue sources, its cost structures, the required size of investment and sources of risk.
Business Model
a component of the business model that identifies the different types of revenue streams a firm expects to receive
Revenue Model
a component of the business model that provides a framework for estimating the nature and types of costs and expenses a firm may incur
Cost Structures
a component of the business model that provides estimates of the types and amounts of investment required to achieve positive profits and cash flows.
Maximum Investment
a component of the business model that identifies risks in the model and how the model can adjust to them
Business Model Risk
business activities that direct the creation, development, and delivery of a bundle of satisfaction from the creator to the targeted user.
Small Business Marketing
the fundamental benefits or solution sought by customers.
Core Product/Service
the basic physical product and/or service that delivers those benefits
Actual Product/Service
the basic product and/or service plus any extra or unsolicited benefits to the consumer that may prompt a purchase.
Augmented Product/Service
the process of locating and describing potential customers
Market Analysis
the combination of product/service, pricing, promotion, and distribution activities
Marketing Mix
a description of potential customers in a target market.
Customer Profile
the gathering, processing, interpreting, and reporting of market information
Marketing Research
market information that has been previously complied.
Secondary Data
new market information that is gathered by the firm conducting the research
Primary Data
a group of customers or potential customers who have purchasing power and unsatisfied needs
Market
the division of a market into several smaller groups with similar needs
Market Segmentation
the parameters used to distinguish one form of market behavior from another
Segmentation Variables
specific characteristics that distinguish market segments according to the benefits sought by customers.
Benefit Variables
specific characteristics that describe customer, their purchasing power, their consumption patterns, and other factors.
Demographic Variables
a strategy that defines the total market as the target market
Unsegmented Strategy (Mass Marketing)
a strategy that recognizes different preferences of individual market segments and develops a unique marketing mix of each.
Multi-Segment Strategy
a strategy that recognizes the existence of several distinct market segments but focuses on only the most profitable segment.
Single-Segment Strategy
a prediction of how much of a product or service will be purchased within a given market during a specified time period
Sales Forecast
a forecasting method that begins with a large scope variable and works down to the sales forecast/
Breakdown Process (Chain-Ratio Method)
a forecasting method in which all potential buyers in a target market’s sub-markets are identified and the estimated demand is added up.
Buildup Process
a forecasting method in which sales is the estimated variable
Direct Forecasting
a forecasting method in which variable related to sales are used to project future sales.
Indirect Forecasting
Managers and other key persons who give a company its general direction
Management Team
an interconnection system of relationships with other people.
Social Network
the advantage created by an individual’s connections in a social network
Social Capital
a powerful sense of obligation to repay in kind what another has done for or provided to us.
Reciprocation
a business owned by a one person, who bears unlimited liability for the enterprise.
Sole Proprietorship
Liability on the part of an owner that extends beyond the owner’s investment in the business.
Unlimited Liability
a legal entity formed by two or more co-owners to operate a business for profit
Partnership
a document that states explicitly the rights and duties of partners
Partnership Agreement
the liability of each partner resulting from any one partner’s ability to legally bind the other partners.
Joint and Several Liability
a business organization that exists as a legal entity and provides limited liability to its owners.
Corporation
a business organization that is recognized by the law as having a separate legal existence.
Legal Entity
an ordinary corporation taxed by the federal government as a separate legal entity
C Corporation
a document that established a corporation’s existence
Corporate Charter
a document specifying the number of shares owned by a stockholder
Stock Certificate
the right of stockholders to buy new shares of stock before they are offered to the public
Preemptive Right
a situation in which the courts conclude that incorporation has been used to perpetuate a fraud, skirt a law, or commit some wrongful act and thus remove liability protection from the corporate entity
Piercing the Corporate Veil
a partnership with at least one general partner and one or more limited partners
Limited Partnership
a partner in a limited partnership who has unlimited personal liability
General Partner
a partner in a limited partnership who is not active in its management and has limited personal liability
Limited Partner
a type of corporation that offers limited liability to its owners and passes taxable income or losses on to stockholders
S Corporation (Subchapter S Corporation)
a form of organization in which owners have limited liability but pay personal income taxes on business profits.
Limited Liability
a form of corporation that shields, owners from liability and is set up for individuals in certain professional practices.
Professional Corporation
a form of corporation for enterprises established to serve civic, educational, charitable, or religious purposes; not for generation of profits.
Nonprofit Corporation
verification of whether a nonprofit organization is staying true to its stated purpose
Organizational Test
an organizational relationship that links two or more independent business entities in a common endeavor
Strategic Alliance
the governing body of a corporation, elected by the stockholders
Board of Directors
a group that serves as an alternative to a board of directors, acting only in an advisory capacity.
Advisory Board
