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business > midterm 2 > Flashcards

midterm 2 Flashcards

1
Q

sole proprietorship

A

you are the sole owner of your company, responsible for all profits and debts

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2
Q

advantages of sole proprietorship

A
  • freedom/no heavy regulation
  • decision making power
  • low start up costs
  • easy to register
  • tax advantages
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3
Q

disadvantages of sole proprietorships

A
  • unlimited liability
  • lack of continuity if owner is not available
  • tax disadvantages if your business is doing well
  • can be difficult to raise capital on your own.
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4
Q

partnerships

A

non-incorporated business owned by 2 or more people

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5
Q

advantages of partnerships

A
  • easy and inexpensive to form a partnership
  • start-up costs shared between partners, shared responsibilities, shared management
  • tax advantage if business is not doing well
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6
Q

disadvantages of partnerships

A
  • disagreements among partnerships

- unlimited liability

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7
Q

3 types of partnerships

A

general partnership, limited partnership, limited liability partnership

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8
Q

general partnership

A

all partners share liability

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9
Q

limited partnership

A

all invest in the business but not all are involved in operation

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10
Q

risks of having partners with equal shares

A
  • deters investors because they think you haven’t thought about it enough, and that looks bad on your future negotiations and decisions
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11
Q

corporation

A

incorporated business that is a separate legal entity for its share holders

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12
Q

advantages of corporations

A
  • limited liability
  • ownership is transferable/continuity of the business
  • easier to raise capital
  • taxes may be lower
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13
Q

disadvantages for corporations

A
  • heavy regulation

- conflicts among shareholders

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14
Q

who is part of a team

A

shareholders, board of directors, managers, employees, board of advisors, other professionals, lenders and investors

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15
Q

advantages of franchising

A
  • it is a proven product in the market
  • there is support from the franchisor
  • available financing
  • marketing networks
  • established system and trademark
  • available training
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16
Q

disadvantages of franchising

A
  • cost of franchise
  • restrictions on creativity
  • lack of commitment from the franchisor
  • potential for failure
  • potential of misunderstandings with the franchisor
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17
Q

key to a good franchise

A

service delivery system

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18
Q

Leadership

A

when someone inspires others to reach for a goal

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19
Q

management

A

overseeing the implementation of a certain strategy

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20
Q

Patents

A

having exclusive rights to an invention for a period of time, and in order to get the patent you must disclose the invention in exchange for the patent

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21
Q

copyright

A

claiming exclusive rights to a piece of work, you do not have to register for the copyright but you can lincense a copyright which allows others to use your work for a fee

22
Q

trademark

A

protect name, logos and other branding items from being stole, it is an automatic trademark that does not need to be applied for

23
Q

statutory trademark

A

register your trademark so that it is recognized by the government.

24
Q

trade secrets

A

in order to keep company secrets you have your employees sign an agreement not to disclose any information

25
Q

3 types of trade secrets documents

A

confidentiality agreement- insure certain info will be held in confidence
non-disclosure- employees sworn to secrecy about unpatented work
restrictive covenant- restricting leaving employees from using company trade secrets against them

26
Q

factors to consider when choosing a location for retail services

A
  • visibility
  • market saturation
  • customer traffic
  • level of competition
  • laws/taxes/costs
  • demographics of the region
27
Q

factors to consider when choosing a location for manufacturing

A

business incubators and accelerators empowerment zones

28
Q

ergonomics

A

creating a work environment that is conducive to employee creativity and productivity and suits customers needs

29
Q

Business incubators

A

rental space for business owners to come and innovate and turn ideas into business models, they also provide training

30
Q

Business accelerators

A

boot-camps for start-up companies providing them with mentorship, networking and training to accelerate the business growth

31
Q

membership changes in NVTs

A
  • the addition of new members leads to IPO
  • the exist of the founder leads to IPO
  • the exist of team members is negatively relatively related to IPOs
32
Q

Organizational culture of NVTs

A
  • certain moods are conducive to different outcomes
  • calm moods=novel ideas
  • pleasant moods= creative ideas
  • calm and uncalm moods= effective ideas
  • a sense of belonging= firm profits
  • firm commitment= firm effectiveness
33
Q

2 types of conflicts

A

cognitive conflicts- disagreements on how the business should be run has positive effects on profits
affective conflicts- disagreements based on personal issues and relationships conflicts has a negative effect on profits

34
Q

funding resources for new ventures

A

crowd funding, angel investing, venture capital investing

35
Q

venture capital investment

A

funding from investment banks, and financial institutions. Best kind of funding because you assistance, networks of potential clients,

36
Q

ads and dis of crowd funding

A

ads- proves to investors that there is a demand for your product in the public, none of your investors are shareholders so they wont ask for equity,
dis- it is not the best option for long term funding

37
Q

angel investing

A

ads- you raise capital quicker, you gain a business partner

dis- angel investor may not be very helpful in other non-financial areas and may not have good business advise

38
Q

venture capital investing

A

ads
- best value added investment, not only financial assistance but also assistance in other parts of the business
- VCs want to help you grow and succeed
dis
- they have a timeframe with which they want to see returns

39
Q

2 mechanism for selling your firm

A

M&A and IPO

40
Q

2 types of acquisition

A

auction and negotiation

41
Q

factors that influence decision of which mechanism to use

A

bargaining power, resource value, market thickness, risk propensity, search costs

42
Q

bargaining power

A

having an advantage over your another person that you can use to get a better outcome

43
Q

increase in bargaining power

A

likelihood of M&A over IPO

44
Q

Resource value

A

value judgment for what a resource is worth

45
Q

increase in resource value

A

likelihood of choosing IPO over M&A

46
Q

market thickness

A

the number of buyers and sellers in the market

47
Q

increase in market thickness

A

likelihood of IPO over M&A

48
Q

risk propensity

A

willingness to carry debt and the degree at which an owner retains ownership in the venture

49
Q

increase in risk propensity

A

likelihood of IPO over M&A

50
Q

search costs

A

costs that arise because of information asymmetries that exist between buyers and sellers

51
Q

increase in search costs

A

choosing IPO over M&A

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