Exam 2 Vocabulary

Question 1

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.

Answer 1

Family

Question 2

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.

Answer 2

Family Business

Question 3

a venture operated by a founding entrepreneur.

Answer 3

Owner-Managed Business

Question 4

a business which children of the founder become owners and managers.

Answer 4

Sibling Partnership

Question 5

a business in third and subsequent generations, when children of the siblings take ownership and management positions.

Answer 5

Cousin Consortium

Question 6

the practice of employing relatives

Answer 6

Nepotism

Question 7

patterns of behaviors and beliefs that characterize a particular firm.

Answer 7

Organizational Culture

Question 8

non-financial factors in a family firm that affect the commitment of family members to the business

Answer 8

Socioemotional Wealth

Question 9

Couples team who own and manage businesses.

Answer 9

Co-preneurs

Question 10

a gathering of family members, usually at a remote location, to discuss family business matters.

Answer 10

Family Retreat

Question 11

an organized group of family members who gather periodical to discuss family-related business issues.

Answer 11

Family Council

Question 12

a statement of principles intended to guide a family firm through times of crisis and change.

Answer 12

Family Business Constitution

Question 13

the process by which a more experienced person guides and supports the professional progress of a new or less-experienced employee.

Answer 13

Mentoring

Question 14

passing ownership of a family business to the next generation

Answer 14

Transfer of Ownership

Question 15

a document that outlines the basic concept underlying a business and describes how.

Answer 15

Business Plan

Question 16

an abbreviated business plan that presents only the most important issues and projections for the business.

Answer 16

Short Plan

Question 17

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

Answer 17

Comprehensive Plan

Question 18

a section of the business plan that conveys a clear and concise overall picture of the proposed venture and creates interest in the venture

Answer 18

Executive Summary (Overview)

Question 19

a section of the business plan that describes the user benefits of the product or service and the type of market that exists.

Answer 19

Marketing Plan

Question 20

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

Answer 20

Operations and Development Plan

Question 21

a section of the business plan that describes a new firm’s organizational structure and the backgrounds of its key players

Answer 21

Management Team

Question 22

A section of the business plan that identifies the potential risks that may be encountered by an investor

Answer 22

Critical Risks

Question 23

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.

Answer 23

Offering

Question 24

A section of the business plan that focuses on options for cashing out of the investment

Answer 24

Exit Strategy

Question 25

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.

Answer 25

Financial Plan

Question 26

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.

Answer 26

Pro Forma Statements

Question 27

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.

Answer 27

Business Model

Question 28

a component of the business model that identifies the different types of revenue streams a firm expects to receive

Answer 28

Revenue Model

Question 29

a component of the business model that provides a framework for estimating the nature and types of costs and expenses a firm may incur

Answer 29

Cost Structures

Question 30

a component of the business model that provides estimates of the types and amounts of investment required to achieve positive profits and cash flows.

Answer 30

Maximum Investment

Question 31

a component of the business model that identifies risks in the model and how the model can adjust to them

Answer 31

Business Model Risk

Question 32

business activities that direct the creation, development, and delivery of a bundle of satisfaction from the creator to the targeted user.

Answer 32

Small Business Marketing

Question 33

the fundamental benefits or solution sought by customers.

Answer 33

Core Product/Service

Question 34

the basic physical product and/or service that delivers those benefits

Answer 34

Actual Product/Service

Question 35

the basic product and/or service plus any extra or unsolicited benefits to the consumer that may prompt a purchase.

Answer 35

Augmented Product/Service

Question 36

the process of locating and describing potential customers

Answer 36

Market Analysis

Question 37

the combination of product/service, pricing, promotion, and distribution activities

Answer 37

Marketing Mix

Question 38

a description of potential customers in a target market.

Answer 38

Customer Profile

Question 39

the gathering, processing, interpreting, and reporting of market information

Answer 39

Marketing Research

Question 40

market information that has been previously complied.

Answer 40

Secondary Data

Question 41

new market information that is gathered by the firm conducting the research

Answer 41

Primary Data

Question 42

a group of customers or potential customers who have purchasing power and unsatisfied needs

Answer 42

Market

Question 43

the division of a market into several smaller groups with similar needs

Answer 43

Market Segmentation

Question 44

the parameters used to distinguish one form of market behavior from another

Answer 44

Segmentation Variables

Question 45

specific characteristics that distinguish market segments according to the benefits sought by customers.

Answer 45

Benefit Variables

Question 46

specific characteristics that describe customer, their purchasing power, their consumption patterns, and other factors.

Answer 46

Demographic Variables

Question 47

a strategy that defines the total market as the target market

Answer 47

Unsegmented Strategy (Mass Marketing)

Question 48

a strategy that recognizes different preferences of individual market segments and develops a unique marketing mix of each.

Answer 48

Multi-Segment Strategy

Question 49

a strategy that recognizes the existence of several distinct market segments but focuses on only the most profitable segment.

Answer 49

Single-Segment Strategy

Question 50

a prediction of how much of a product or service will be purchased within a given market during a specified time period

Answer 50

Sales Forecast

Question 51

a forecasting method that begins with a large scope variable and works down to the sales forecast/

Answer 51

Breakdown Process (Chain-Ratio Method)

Question 52

a forecasting method in which all potential buyers in a target market's sub-markets are identified and the estimated demand is added up.

Answer 52

Buildup Process

Question 53

a forecasting method in which sales is the estimated variable

Answer 53

Direct Forecasting

Question 54

a forecasting method in which variable related to sales are used to project future sales.

Answer 54

Indirect Forecasting

Question 55

Managers and other key persons who give a company its general direction

Answer 55

Management Team

Question 56

an interconnection system of relationships with other people.

Answer 56

Social Network

Question 57

the advantage created by an individual's connections in a social network

Answer 57

Social Capital

Question 58

a powerful sense of obligation to repay in kind what another has done for or provided to us.

Answer 58

Reciprocation

Question 59

a business owned by a one person, who bears unlimited liability for the enterprise.

Answer 59

Sole Proprietorship

Question 60

Liability on the part of an owner that extends beyond the owner's investment in the business.

Answer 60

Unlimited Liability

Question 61

a legal entity formed by two or more co-owners to operate a business for profit

Answer 61

Partnership

Question 62

a document that states explicitly the rights and duties of partners

Answer 62

Partnership Agreement

Question 63

the liability of each partner resulting from any one partner's ability to legally bind the other partners.

Answer 63

Joint and Several Liability

Question 64

a business organization that exists as a legal entity and provides limited liability to its owners.

Answer 64

Corporation

Question 65

a business organization that is recognized by the law as having a separate legal existence.

Answer 65

Legal Entity

Question 66

an ordinary corporation taxed by the federal government as a separate legal entity

Answer 66

C Corporation

Question 67

a document that established a corporation's existence

Answer 67

Corporate Charter

Question 68

a document specifying the number of shares owned by a stockholder

Answer 68

Stock Certificate

Question 69

the right of stockholders to buy new shares of stock before they are offered to the public

Answer 69

Preemptive Right

Question 70

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

Answer 70

Piercing the Corporate Veil

Question 71

a partnership with at least one general partner and one or more limited partners

Answer 71

Limited Partnership

Question 72

a partner in a limited partnership who has unlimited personal liability

Answer 72

General Partner

Question 73

a partner in a limited partnership who is not active in its management and has limited personal liability

Answer 73

Limited Partner

Question 74

a type of corporation that offers limited liability to its owners and passes taxable income or losses on to stockholders

Answer 74

S Corporation (Subchapter S Corporation)

Question 75

a form of organization in which owners have limited liability but pay personal income taxes on business profits.

Answer 75

Limited Liability

Question 76

a form of corporation that shields, owners from liability and is set up for individuals in certain professional practices.

Answer 76

Professional Corporation

Question 77

a form of corporation for enterprises established to serve civic, educational, charitable, or religious purposes; not for generation of profits.

Answer 77

Nonprofit Corporation

Question 78

verification of whether a nonprofit organization is staying true to its stated purpose

Answer 78

Organizational Test

Question 79

an organizational relationship that links two or more independent business entities in a common endeavor

Answer 79

Strategic Alliance

Question 80

the governing body of a corporation, elected by the stockholders

Answer 80

Board of Directors

Question 81

a group that serves as an alternative to a board of directors, acting only in an advisory capacity.

Answer 81

Advisory Board