Entrepreneurial Management (SG3)

Question 1

The entrepreneur creates a boundary within the environment, setting his or her firm apart from the rest of the environment.

Answer 1

BRIE model

Question 2

The sum of all the forces outside the firm or entrepreneur.

Answer 2

Environment

Question 3

As entrepreneurs face resource constraints, they often learn to get by with less, or substitute a more readily obtained resource, or ask to borrow, rent, or trade for the resource.

Answer 3

Bootstrapping

Question 4

A firm consists of those people inside the boundary—the owner, any employees, and any other owners or board members of the firm. As every company matures, it adds to its organizational culture a set of shared beliefs or basic assumptions that demonstrate how things get done. Organizational culture also includes common, accepted ways of dealing with problems and challenges within a company.

Answer 4

Internal Environment

Question 5

Consists of everything outside the firm’s boundary. When businesspeople talk about “the environment” and they are not talking about air, land, or water, this is the environment they are discussing.

Answer 5

External Environment

Question 6

A part of the external environment made up of those components that the firm deals with directly such as customers, suppliers, consultants, media, interest groups, and the like.

Answer 6

Task Environment

Question 7

A part of the external environment made up of sectors of major forces that shape the people and institutions of the task and internal environments, such as the economic sector or the demographic sector.

Answer 7

General Environment

Question 8

The acronym for PROFIT.

Answer 8

1. Property/Physical
2. Relational
3. Organizational
4. Financial
5. Intellectual
6. Technological

Question 9

FIVE SKILLS FOR MANAGING RELATIONS WITH THE ENVIRONMENT

Answer 9

1. Building Legitimacy
2. Developing a Social Network
3. Handling a Crisis
4. Achieving Sustainability
5. Making Ethical Decisions

Question 10

A firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors.

Answer 10

Legitimacy

Question 11

One of the top challenges facing new small businesses, but it can be especially difficult for entrepreneurs seen as “different”—women, minorities, home-based businesses, businesses started by young people, entrepreneurs introducing a new technology, or people new to the area or industry.

Answer 11

Gaining legitimacy

Question 12

Three general forms of legitimacy.

Answer 12

1. Based on your people
2. Based on your product
3. Based on your organization

Question 13

1. Buildings, land, equipment, raw materials
2. Customers, networks, distributors, social capital
3. Systems, structures, operational procedures
4. Money, lines of credit, crowdfunding, bartering
5. Employees, contractors, advisers, consultants, and the skills the business needs or has.
6. Patents, trademarks, ideas, copyrights, licenses, access to technology or expertise networks

Answer 13

1. Property/Physical
2. Relational
3. Organizational
4. Financial
5. Intellectual
6. Technological

Question 14

Remember that often the owner is the business in many people’s minds. So, he or she is the most important element of social capital to customers and supporters of a business, such as bankers, lawyers, and suppliers. Having people in the organization—an owner, employees, or even media spokespeople—whom customers know, and respect increases the firm’s legitimacy. Making sure the people of your business always work in the best, friendliest, and most professional way also helps build the business.

Answer 14

Based on your people

Question 15

The goal is to make sure the customer knows about the details of the product—its high quality and environmental friendliness, its competitive advantage, how to use it—and has the assurance that it will be backed up by the firm.

Answer 15

Based on your product

Question 16

The final key legitimacy factor is promoting knowledge about the organization itself. This might focus on talking about the history or visibility the firm already enjoys. It might come from published information that makes sure your firm looks like a substantial and professional business. Whatever gives customers confidence in the quality and survivability of the firm helps the selling process and in turn increases the all-important trust factor.

Answer 16

Based on your organization

Question 17

The entrepreneur’s relationships and contacts with others

Answer 17

Social network

Question 18

A way to work trust, reciprocity, and long-term relationships into your day-to-day business operations.

Answer 18

Social networking

Question 19

The idea and action of each person helping the other.

Answer 19

Mutuality

Question 20

Means small business owners interacting with others in order to build relationships useful to the business.

Answer 20

Networking

Question 21

A situation that poses a major problem for the business or its people, in which the survival of the business is at stake, and immediate action is necessary.

Answer 21

Crisis

Question 22

Six steps to follow can be readily adapted to small ones.

Answer 22

1. Admit you’re in trouble—quickly. It is better to say, “If there is a problem, I will find it and fix it,” than to delay an admission until fact-finding is done.
2. Get to the scene as soon as possible. Your job? Show caring and accountability.
3. Communicate facts you know (and those you don’t) to employees, customers, and suppliers.
4. Have one person serve as the firm’s spokesperson. It is best if it can be the owner, but an articulate employee, family member, or outside professional (e.g., lawyer) can stand in.
5. Separate crisis management from the everyday management of the firm. If you are doing both, try to take time to do each separately. Delegate as much as possible of the everyday management to employees or family while you concentrate on dealing with the crisis.
6. Deal with the crisis quickly. Take steps to solve the problem and make the process of dealing with the problem as open as possible.

Question 23

An approach to the operation of the firm, the line of business of the firm, or both, which identifies or creates and then exploits opportunities to make a profit in a manner that minimizes the depletion of natural resources, maximizes the use of recycled material, improves the environment, or any combination of these outcomes.

Answer 23

Sustainable entrepreneurship

Question 24

Positive outcomes along these lines are described as “greener,” so the approach is also sometimes called?

Answer 24

Green entrepreneurship

Question 25

Comprise a system of values people use to determine whether actions are right or wrong. We consider ____ in determining whether a decision we are about to make is good or bad.

Answer 25

Ethics

Question 26

Occurs when a person’s values are in conflict, making it unclear whether a decision we’re thinking about making is right or not. It also occurs when there are several different options for a decision we have to make, and the best choice isn’t clear.

Answer 26

Ethical dilemma

Question 27

A professor of entrepreneurship who came from a family logging business. He later turned his eye toward the challenge of making ethical decisions in business. He came up with a model widely used today, but it is focused more on big business than small ones.

Answer 27

LaRue Hosmer

Question 28

Making ethical decisions involves three steps

Answer 28

1. Define: Define the moral problem.
2. Generate: Generate alternatives that could meet the ethical, legal, and economic goals every business must balance.
3. Implement: Pick the best alternative you and your business can live with and implement it.

Question 29

Four proven philosophies to try when you are thinking through alternatives to help you determine how ethical the choices are.

Answer 29

1. Am I treating others the way I would want to be treated?
2. Is my solution the best thing for the most people over the long term?
3. What if everyone did what I want to do? What kind of world would it be?
4. What if my decision were advertised on a billboard?

Question 30

You’ve probably heard of this one before. It’s the Golden Rule, and almost every major religious tradition in the world has some version of it.

Answer 30

Am I treating others the way I would want to be treated?

Question 31

You may have heard of an idea called utilitarianism. Basically, it means that the action resulting in the greatest good for the greatest number of people is the right action to take.

Answer 31

Is my solution the best thing for the most people over the long term?

Question 32

Those questions in a nutshell are the idea of universalism, a code of right and wrong that everyone can see and follow.

Answer 32

What if everyone did what I want to do? What kind of world would it be?

Question 33

If you have tried ways to think this through and still can’t decide whether what you plan to do is ethical, try the billboard principle. As the name implies, this asks whether you’d be comfortable having your decision (with your name, of course) advertised on a billboard for everyone you know to see.

Answer 33

What if my decision were advertised on a billboard?