Week 7 - Planning (Ch. 5)

Question 1

Getting Funding

Types and Explain

Answer 1

1. Equity - investors give you money.
2. Debt - Banks, friends, loans, interest.
3. Awards from competitions

Question 2

Type of Ownership

and differences between them

Answer 2

1. Proprietorship (1) /Partnership (2+):
Everything is on you personally
2. Corporation:
Creates a business as a separate legal entity from the owners. Owners are protected
3. Subchapter S-Corporation or Limited Liability Company (LLC):
Separate legal entities from owners. Profits are not taxes as corporate, only tax once. Owners are protected

Can’t revise what kind of company you are for at least 5 years

Question 3

Key ideas behind ‘burn your business plan’

In other words, planning for business

Answer 3

1. Purpose Statement
Vision: What do we want to do?
Mission: Why do we do it?
2. Strategic Objective
Specific goals that unify commpany-wide efforts, stretch and challenge with a time frame
3. Tactical Plans
The how of strategy
4. Operational Plans
Day-to-day, single use plans, budgets (mostly used)

Question 4

Steps in rational decision making

Answer 4

1. Define the Problem
Must have the resources to solve it
2. Identify Decision Criteria
What standards are use for guiding
3. Weight the Criteria
a) Absolute Comparisons: criterion is compared on standards or rank
b) Relative Comparisons: each criterion is compared directly with each other.
4. Generate Alternative Couse of Action
Generate as many as possible
5. Evaluate each Alternative
6. Compute the Optimal Decision