Final Exam Flashcards
(33 cards)
Pitfalls in Selecting New Ventures
Lack of Objective evaluation No insight into market Technical requirements Financial Understanding Uniqueness Legal Issues
5 Critical Factors in new venture development
Uniqueness Investment Growth of Sales Product availability Customer Availability
Profile Analysis
Identifies and investigates the financial, marketing, organizational and human resource variables that influence the business’s potential before the new idea is put into practice.
Feasibility Criteria Approach
Use of a criteria selection list entrepreneurs use to gain insights into viability of venture
Comprehensive Feasibility Approach
Incorporates external factors in addition to criteria questions
4 Step Process of Marketing Research
Define the purpose and objectives
Gather Secondary data (pre-existing)
Gather Primary Data
Analyze and Interpret Results
Control Vs. Contributions
Social medial marketing emphasizes audience contribution and relinquishes organizational control over large parts of the content
Two-Way communication
Creates ongoing conversation between firm and customer
4 Advantages of Internet Marketing
Increases presence and brand equity
Frequent new customers
Improved Customer Service
Efficient information Transfer
6 parts in developing a Marketing Plan
Current Marketing Research Current Sales Analysis Marketing Information Systems Sales Forecasting Evaluation Final considerations
Pricing Strategie Factors(Pricing strategies differ depending on the nature of the venture)
Degree of competitive pressure Availability of supply Seasonal changes in demand Cost of distribution Economic Conditions
Operating Budget
A statement of estimated income and expenses of a certain period of time
Growth Stage
Leadership transitions from an entrepreneurial one person focus to a managerial team oriention to cope the growth of the venture
Strategic Planning Categories
Category 1- No written plan
Category 2- Moderately sophisticated planning
Category 3- Sophisticated planning
Firms that engage in strategic planning….
Are more effective than those that don’t
The planning process, rather than merely the plans…
Is key to successful performance
Strategic planning
Long range plans for the success and growth of the venture
Moves from survival to growth
Strategic planning includes
Defining the Ventures Mission
Specifying Achievable Objectives
Developing Strategies
Setting Policy Guidelines
Where entrepreneurship and strategy meet?
Strategic planning
Evaluation Method: Price Earning Ration (Multiple of earnings)
Useful in valuing publicly held corporations
Valuation determined:
market price of the common stock/ earnings per share
Drawbacks of P/E Ratio
Tough to compare
Private company does not have one
Discounted Earnings Method
Dollars earned in the future that are worth less than dollars earned today (due to loss of purchasing power)
Timing is critical
Underlying issues when acquiring a Business
Goals of the buyer and seller
Emotional Bias
Reasons for the acquisition
Valuing a firm
Potential to pay for itself Difficulties that new owners will face Security or risk Effect on firms value if a turnaround is required Potential Buyers # Current managers intentions Taxes
