glossary A-E

Question 1

acquisition

Answer 1

The outright purchase of one firm by another. (532

Question 2

agency theory

Answer 2

A management concept that argues that managers, because they are paid a salary, may not be as committed to the success of the businesses they manage as the owners, who capture the business’ profits. This theory
supports the notion of franchising, because franchisees are, in effect, the owners of the units they manage. (568)

Question 3

balance sheet

Answer 3

A snapshot of a company’s assets, liabilities,
and owners’ equity at a specific point in time. (309)

Question 4

barrier to entry

Answer 4

Conditions that create disincentives for a
new firm to enter an industry. (194)

Question 5

basis of differentiation

Answer 5

What causes consumers to pick one
company’s products over another’s. (158)

Question 6

bootstrapping

Answer 6

Using creativity, ingenuity, or any means posssible to obtain resources other than borrowing money or raising capital from traditional sources. (377)

Question 7

brainstorming

Answer 7

A technique used to quickly generate a large
number of ideas and solutions to problems; conducted to generate ideas that might represent product or business opportunities. (89)

Question 8

brand

Answer 8

The set of attributes—positive or negative—that people associate with a company. (416)

Question 9

brand equity

Answer 9

The set of assets and liabilities that is linked
to a brand and enables it to raise a firm’s valuation. (420)

Question 10

Brand managment

Answer 10

A program that protects the image and
value of an organization’s brand in consumers’ minds. (418)

Question 11

business angels

Answer 11

Individuals who invest their personal capital directly in new ventures. (381)

Question 12

business model

Answer 12

A company’s plan for how it competes, uses
its resources, structures its relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it generates. (53, 148

Question 13

business plan

Answer 13

A written document describing all the aspects
of a business venture, which is usually necessary to raise money and attract high quality business partners. (53, 222)

Question 14

corporation

Answer 14

A legal entity that, in the eyes of the law, is
separate from its owners. (281)

Question 15

code of conduct

Answer 15

A formal statement of an organization’s values on certain ethical and social issues. (265)

Question 16

concept statement

Answer 16

A preliminary description of a business
that includes descriptions of the product or service being offered, the intended target market, the benefits of the product or service, the product’s position in the market, and how
the product or service will be sold and distributed. (111)

Question 17

copyright

Answer 17

A form of intellectual property protection that
grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits of the work. (471)

Question 18

corporate entrepreneurship

Answer 18

Behavioral orientation exhibited by established firms with an entrepreneurial emphasis that is proactive, innovative, and risk taking. (33

Question 19

creative destruction.

Answer 19

The process by which new products
and technologies developed by entrepreneurs over time make current products and technologies obsolete; stimulus of economic activity. (49)

Question 20

current assets.

Answer 20

Cash plus items that are readily convertible
to cash, such as accounts receivable, inventories, and marketable securities. (311)

Question 21

current liabilities.

Answer 21

Obligations that are payable within a year, including accounts payable, accrued expenses, and the current portion of long-term debt. (311)

Question 22

debt financing.

Answer 22

Getting a loan; most common sources of debt
financing are commercial banks and the Small Business Administration’s (SBA’s) guaranteed loan program. (379)

Question 23

declining industry

Answer 23

An industry that is experiencing a reduction in demand. (203)

Question 24

economies of scale

Answer 24

A phenomenon that occurs when mass producing a product results in lower average costs. (194, 495)

Question 25

economies of scope.

Answer 25

The advantage a firm accrues through the scope (or range) of its operations rather than from the scale of its production. (497)

Question 26

entrepreneurial alertness.

Answer 26

The ability to notice things without engaging in deliberate search. (87)

Question 27

entrepreneurial firms.

Answer 27

Companies that bring new products and services to market by creating and seizing
opportunities. (45

Question 28

entrepreneurial intensity

Answer 28

The position of a firm on a conceptual continuum that ranges from highly conservative to highly entrepreneurial. (33)

Question 29

entrepreneurship

Answer 29

The process by which individuals pursue
opportunities without regard to resources they currently control. (32

Question 30

equity-based crowdfunding

Answer 30

This type of funding helps businesses raise money by tapping individuals who provide
funding in exchange for equity in the business. (390

Question 31

equity financing.

Answer 31

A means of raising money by exchanging partial ownership in a firm, usually in the form of stock, for funding. (378

Question 32

ethical dilemma

Answer 32

A situation that involves doing something
that is beneficial to oneself or the organization, but may be unethical. (265)

Question 33

key characteristic of successful entrepreneurs

Answer 33

Passion for the business, Product/cosyumer focus, Tenacity despite failure, execution intellignece

Question 34

execution intelligence

Answer 34

The ability to fashion a solid business idea into a viable business; it is a key characteristic of successful entrepreneurs. (40

Question 35

agency theory

Answer 35

A management concept that argues that managers, because they are paid a salary, may not be as committed to the success of the businesses they manage as the owners, who capture the business’ profits. This theory
supports the notion of franchising, because franchisees are, in effect, the owners of the units they manage. (568)