Final Exam Flashcards
an enterprise subject to taxes on its reported profits; tax on corporate profits as well as any corporate distribution to owners
regular taxable corporation
firms where all profits flow to the owners free of any prior taxation
flow-through entities
a legal entity separate from its owners; a body of owners granted a charter to act as a separate entity distinct from its owners
corporation
4 main types of flow through entities
sole proprietorship, partnership, s corporation, and LLC
a firm owned by only one person and operated for his or her profit
sole proprietorship
business association of two or more people or firms who agree to cooperate with one another to achieve mutually compatible goals that would be difficult for each to accomplish alone
partnership (general or limited)
a firm with fewer than 50 employees operating as a sole proprietorship, a partnership, or a corporation owned by a few people
small business
seeks to exploit a limited opportunity or market to provide the entrepreneurs with independence and a slow-growth build-up of the business
niche business
a business corporation that aims to build an important new business and requires a significant initial investment to startup
high-growth business
a business based upon a radical innovation that seeks to commercialize it to build a special kind of high growth business
radical innovation
a corporation or a member association initiated to serve a social or charitable purpose
nonprofit organization
a new venture started by an existing corporation for the purpose of initiating and building an important new business unit or organization, solely owned subsidiary, or . spinoff as a new public company
corporate new venture (CNV)
a new venture that i snot owned or controlled by an established corporation
independent venture
a person or team that acts to form a new venture in response to an opportunity to deliver social benefits while satisfying environmental and economic values
social entrepreneur
the entrepreneurial process within the confines of an established corporation
intrapreneurship
the act of introducing products that compete with a firm’s already existing product line
cannibalization
an organization that is first established within an existing company and then sent off on its own
spin-off unit
an s corporation is taxed as
a flow through entity
a corporate new venture usually has _____ revenue growth
above average
the point of every non profit is to produce
social wealth
intrapreneurs have access to what
a team of entrepreneurial coworkers
the resources of an existing corporation
opportunities within the company
common fears that act as barriers for entry for corporate entrepreneurs
fewer promotion opportunities within the existing corporation; failure of the corporate new venture; loss of status
three things to establish conditions for corporate new ventures
increase the sources for innovation; establish a process for collecting and evaluation ideas; do not let traditional executives control the budget
the valuable intangible property owned by persons or companies
intellectual property
an intellectual asset protected by confidentiality, non disclosure and assignment of inventions agreements, as well as physical barriers such as safes and limited access
trade secret
a grant by the US government to an inventor giving exclusive rights to an invention or process for 20 years
patent
rights of exclusive use issued for the protection of new, useful, nonobvious, and adequately specified processes, machines, and manufacturing processes for a period of 20 years
utility patent
grants of exclusive right of use for new, original, ornamental, and non obvious designs for articles of manufacture for a period of 14 years
design patent
ex. apple rounded edges of rectangle screen of iPad
a grant of exclusive right of use for a term of 20 years for certain new varieties of plants that have been asexually reproduced
plant patent
a type of utility patent that involves the classification of a process
business method patent
Amazon one click order process
patent pending
provisional patent application (must file for the regular one within 12 months)
an distinctive word, name, symbol, slogan, shape, sound, or logo a firm uses to designate its product
trademark (indefinite length)
an exclusive right granted by the federal government to the owner to publish and sell literary, musical, and other artistic materials
copyright (life of the creator plus 70 years)
occurs when a firm (the licensor) grants the right to produce its product, use its production processes, or use its brand name or trademark to another firm (the licensee); licensor collects a royalty fee
licensing
a grant to another firm to make use of the rights of the licensor’s intellectual property
license
how can a trade secret be taken/used?
reverse engineering
a license is defined in a
contract
when one firm purchases another, the acquired company gives up its independence and the surviving firm assumes all assets and liabilities
acquisition
three steps for acquiring a company
- target identification and screening
- bidding strategy
- integration or transition to the acquirer
the increased effectiveness and achievement produced as a result of the combined action of two or more firms
synergy
3 valuation methods
book value, price-to-sales ratio, price-to-earnings ratio
the net worth (equity) of the firm, calculated by total assets minus intangible assets (patents, goodwill), and liabilities
book value
the combining of two companies (tend to involve much higher degree of cooperation and integration)
merger
an industry characterized by just a few seller firms
oligopoly
a merger between two firms that make and sell similar products in a similar market
horizontal merger
the merger of two firms at different places on the value chain
vertical merger
5 different types of mergers and acquisitions
overcapacity reduction geographic extension (rollup) product or market extension technology acquisition industry convergence
4 roles of the integration manager
- inject speed into the process
- create a new structure
- make social connections
- build success
common motivation for merger and acquisitions
to enter new markets
the integration of markets, nation states, and technologies enabling people and companies to offer and sell their products in any country in the world
globalization
a growth strategy focusing all efforts locally since that is the venture’s pathway to a competitive advantage
local or regional strategy
a growth strategy that calls for a presence in more than one nation as resources permit (separate product and marketing strategy)
multidomestic strategy
a growth strategy resting on a flow of product offerings created in any one of the countries of operation and transferred between countries
transnational strategy
a growth strategy that aims to create value by transferring products and capabilities from the home market to other nations using export or licensing arrangements
international strategy
a growth strategy that emphasizes worldwide creation of new products, sales, and marketing
global strategy
the four globalization strategies
multidomestic, transnational, international, and global
5 forms of entry into international markets
exporting, licensing, franchising, joint venture, and wholly owned subsidiary
3 components of cultural intelligence
cognitive, physical, and emotional
metanational company
a company that possesses 3 core capabilities
- being the first to identify and capture new knowledge emerging all over the world
- mobilizing this globally scattered knowledge to out-innovate competitors
- turning this innovation into value by producing, marketing, and delivering efficiently on a global scale
the difference between a merger and acquisition is the degree of
control
the amount of funds available to support a firm’s normal operations such as unexpected or out-of-the-ordinary, one-time-only expenses; current assets minus current liabilities
working capital
5 factors that lead to different perceptions of investors and entrepreneurs
- uncertainty of projected outcomes 2. asymmetrical information 3. assigning a value to intangible intellectual property 4. dynamics of the industry and the financial marketplace 5. entrepreneur’s wealth is concentrated in venture while investors have diversified portfolios
investors make capital investments in opportunities for
future cash returns
the right to purchase an asset at some future date and at a predetermined price
option
the right to invest in (or purchase) a real asset (such as the start up firm or shares) at a future date
real option
the present value of the future cash flow of a venture discounted at an appropriate rate
net present value NPV
the first funds used to launch a new firm
seed capital
four stages of growth
founding stage, seed stage, growth stage, harvest stage
the investment by a person in ownership through purchase of the stock of the firm (stockholders have a claim on assets and earnings and it represents ownership)
equity capital
money that a business has borrowed and must repay in a specified time with interest (no ownership)
debt capital
wealthy individuals, usually experience entrepreneurs, who invest in business startups in exchange for equity in the new venture
angels
professional managers of investment funds
venture capitalists
3 sources of equity capital
angels (individuals), VC firms, and corporations
launching a startup with modest funds from the entrepreneurial team, friends, and family
bootstrap financing
the joining together of a collection of individuals-the “crowd”- each of whom contributes a small amount to help fund a business
crowdfunding
a type of bond that the investor can convert to stock in the new venture or cash of equal value at an agreed upon price
convertible note
a type of financing that is invested in new and emerging ventures . by a professional investment company called a venture capital firm
venture capital
four investment stages
- seed or startup stage 2. development stage (series A) 3. growth stage (series B or C) 4. competitive or maturity stage (IPO)
the success of crowdfunding depends on
the entrepreneur’s social network and the quality of product
an initiative by a corporation to invest in either young firms outside the corporation or units formerly part of the corporation
corporate venture capital
the methodology by which an investor assigns monetary value to a new venture
valuation process
the rate at which future earnings or cash flows is discounted because of the time value of money
discount rate
uses the projected sales, profit, and cash flow in a target year (N) and the projected earning growth rate (g) for 5 years after year N to calculate the value of the firm
new venture valuation rule
the ration of the price of a stock to the company’s earnings
PE ratio
the valuation accorded an enterprise before investment by VCs and other investors
pre-money value (PREMV)
the valuation accorded an enterprise after investment by VCs and other investors
post-money value (POSMV)
cash in minus cash out on a monthly basis
burn rate
3 reasons to issue an IPO
raise new capital, liquidity, image or brand
gathering and verifying facts and data provided in a business plan before making a commitment to the terms of an investment deal
due diligence
a decision-making process among interdependent parties who do not share identical preferences
negotiation
a summary of the principal conditions for a proposed investment by a VC firm in a company
term sheet
a long term option to acquire additional common shares, usually at a nominal price
warrant
stock with preferences or claims on dividends and assets before common stock owners
preferred stock
10/20/30 rule of pitches
10 slides, 20 minutes, minimum of 30 pt font text
