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63 Cards in this Set
- Front
- Back
Cash Flow
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The money coming into and flowing from a business.
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Customer Value
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-The difference between the benefits a customer receives from the product or service, and the costs associated with obtaining that product or service.
-Small business owners must think about this every day. |
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Small Business Ethics
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More influenced by norms and community/peer pressure than they are by moral or religious principles, the anticipation of rewards, upholding the law, or the fear of punishment.
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Business Ethics
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Apply the virtues and discipline of ethics to business behavior.
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Growth Stage
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-Requires significant amounts of capital.
-Strategic focus is product differentiation with an increased focus on responding to customer needs and interests. -Intense competition will result. |
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Maturity Stage
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-Some competition from late entrants that will take market share away from existing companies.
-Marketing effort must continue to focus on product or service differentiation. -Surviving firms will be larger and more dominant. |
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Decline Stage
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-Typically triggered by a product or service innovation that renders the industry obsolete.
-Sales will suffer, and the business goes into decline. |
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Introduction Stage
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-Industry in its infancy.
-Strategy will focus on stressing the uniqueness of the product or the service to a small group of customers. |
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Industry Life Cycle (ILC)
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-Introduction Stage
-Growth Stage -Maturity Stage -Decline Stage |
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Maturity (OLC)
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-Significantly more concern shown for internal efficiency.
-More control mechanisms and processes installed. -Organization becomes very bureaucratic. |
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Youth and Midlife Stage
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-More sophisticated structures will be adopted.
-Authority will be decentralized to lower and middle-level managers. |
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Birth Stage
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-A very simple organizational structure with the owner doing everything.
-Few, if any subordinates. |
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Organizational Life Cycle (OLC)
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-Birth Stage
-Youth and Midlife Stage -Maturity Stage -Death |
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Ossification
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-Occurs when there is a lack of innovation.
-Will contribute to stalled or halted growth. -Common traits in large corporations. |
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Resource Maturity
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-The company has arrived.
-Has staff and financial resources. -Decentralized organizational structure. -All necessary systems are in place. -The owner and business have separated financially and operationally. |
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Two key questions during take-off stage.
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1. Can the owner delegate responsibility to others to improve managerial effectiveness?
2. Will there be enough cash to satisfy the demands of growth? |
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Take-off
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-Critical time in a company's life.
-Business is becoming increasingly complex. -Owner must decide how to grow rapidly and how to finance that growth. |
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Success-Disengagement Substage
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-Managers take over owner's operational duties, strategy focuses on maintaining the status quo.
-Cash is plentiful. -The company should be able to maintain itself indefinitely. -The first professional managers are hired. |
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Success-Growth Substage
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-Business owner pulls all the company resources together and risks them all in financing growth.
-Owner is active in all phases of the company's business. |
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Success
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-Business is now economically healthy.
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Survival
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-The business is now a viable operation.
-Focal point shifts to the relationship between revenues and expenses. |
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Existence
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-The beginning.
-Problems: -Obtaining customers and establishing a base. -Producing products or services. -Tracking and conserving cash flow. -Strategy is staying alive. -Organization is simple. -Owner does everything. |
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Stages of Growth
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1. Existence
2. Survival 3. Success 4. Take-off 5. Resource Maturity |
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Three reasons for failure
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-Managerial inadequacy
-Finance -Environmental |
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Business Success
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-Makes a profit.
-Makes an acceptable profit now and in the future. -Maximizes shareholder wealth. -Creates customers. -Delights customers. -The longer you survive, the higher the probability of your continued existence. |
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Three issues associated with small-business failure:
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-Type of failure
-Time horizon -Industry |
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Small Business (cont.)
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-Estimated that 40% of America's scientific and engineering talent is employed by small businesses.
-Produce 13 to 14 times as many patents per employee than larger firms. -The great generator of jobs. |
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Small Business
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-Determined by that business' industrial classification.
-The industry size may be determined by the number of employees or revenues. -Small businesses are 99.7%of the total number of businesses in the U.S. -Accounts for 50% of GDP. Number has held steady for past 30 years. |
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Robinson-Patman Act (1936) and Miller-Tydings Act (1937)
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Designed to protect small retailers from large chain retailers.
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Sherman Act (1890) and Clayton Act (1914)
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Passed with the initial intent of restricting the unfair trading practices of trusts.
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The Interstate Commerce Act (1887)
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Designed to regulate the rates charged by railroads to protect small farmers and businesses.
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Lean Inventory Management
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Refers to approaches that focus on minimizing inventory by eliminating all sources of waste.
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Digital Technology
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A broad spectrum of computer hardware, software, and information retrieval and manipulation systems.
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E-Environment
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A catch-all term that include e-business and e-commerce.
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The Three Threads
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-Customer Value
-Cash flow -Digital Technology and the e-environment. |
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Enterprise Resource Planning (ERP)
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Integrate multiple business functions from purchasing to sales, billing, accounting records, shipping, inventory control, and payroll.
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Customer Value
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The difference between perceived benefits and perceived cost.
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Five Types of Value
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-Functional
-Social -Emotional -Epistemic -Conditional |
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Functional Value
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Relates to the product's or service's ability to perform its utilitarian purpose.
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Social Value
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Involves a sense of relationship with other groups through the use of images or symbols.
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Emotional Value
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Derived from the ability to evoke an emotional or affective response.
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Epistemic Value
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Generated by a sense of novelty or simple fun.
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Conditional Value
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Derived from a particular context or socio-cultural setting.
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Three components of perceived cost.
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-Monetary
-Time -Psychic costs |
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Monetary Cost Component
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Should be broken down into its constituent elements: purchase cost, operating cost, service cost, and switching and opportunity costs.
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Time Cost Component
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Consists of the time required to evaluate, acquire, and purchase a product or service.
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Psychic Cost Component
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The element that can be associated with those factors that might induce stress in a customer.
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Market Segmentation
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Involves dividing the market into several portions that are different from each other.
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Geographic Segmentation
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Can be done by global or national region, population size or density, or even by climate.
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Demographic Segmentation
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Divides the market on factors such as gender, age, income, ethnicity, education, or occupation.
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Psychographic Segmentation
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Carried out on dimensions that reflect differences in personality, opinions, value, or lifestyle.
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Customer Lifetime Value
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A measure of the revenue generated by the customer, the cost generated for that particular customer, and the projected retention rate of that customer over their lifetime.
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Net Present Value
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Discounts the value of future cash flows. It recognizes the time value of money.
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Quality Function Deployment (QFD)
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An approach that takes the concept Voice of the Customer (VOC) seriously, and uses it to help design new products and services or to improve existing ones.
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Components of QFD:
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-Customer's Requirements
-Engineering Characteristics -Relationship Matrix |
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Customers' Requirements
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Where one identifies the elements desired by the customers - this section also contains the relative importance of these needs as identified by the customers.
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Engineering Characteristics
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-The means by which the organization seeks to meet customer needs.
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Relationship Matrix
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This illustrates the correlations amongst the customers' requirements and the engineering characteristics; the degree of the correlation may be represented by different symbols
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Innovation
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Involves new ways in which the product or service might be used.
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Creativity
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Generally required to produce innovative means of constructing customer value.
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Alexander Hiam's 9 factors
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-Failure to ask questions.
-Failure to record ideas. -Failure to revisit ideas. -Failure to express ideas. -Failure to think in new ways. -Failure to wish for more. -Failure to try to be creative. -Failure to keep trying. -Failure to tolerate creative behavior. |
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Customer Relationship Management (CRM)
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Refers to a service approach which hopes to build a long-term and sustainable relationship with customers that has value both for the customer and the company.
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Cloud Computing
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Also known as SaaS (software as a service), refers to the situation in which vendor software does not reside on the computer system of a small business.
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