Vocabulary-Lecture-Test 2

Question 1

The exercise of prudence, such as would be expected of a reasonable person, in the careful evaluation of a business opportunity.

Answer 1

Due Diligence

Question 2

Specialized brokers that bring together buyers and sellers.

Answer 2

Matchmakers (Business Brokers)

Question 3

A group of people bound by a shared history and commitment to share a future together, while supporting the development and well-being of individual members.

Answer 3

Family

Question 4

An organization in which either the individuals who established or acquired the firm or their descendants significantly influence the strategic decisions and life course of the firm.

Answer 4

Family Business

Question 5

Couples teams who own and manage businesses.

Answer 5

Co-preneurs

Question 6

Commitment based on being something that the family member “ought to” do.

Answer 6

Obligation-Based Commitment

Question 7

Commitment based on being something that the family member “wants to” do.

Answer 7

Emotional Attachment (Desire-Based Commitment)

Question 8

Commitment based on being something that the family member “has to” do.

Answer 8

Cost-Based Commitment

Question 9

Commitment based on being something that the family member “needs to” do.

Answer 9

Need-Based Commitment

Question 10

A document that outlines the basic concept underlying a business and describes how that concept will be realized.

Answer 10

Business Plan

Question 11

An abbreviated business plan that presents only the most important issues and projections for the business.

Answer 11

Mini-Plan (Short Plan, Abbreviated Plan)

Question 12

A complete business plan that provides an in-depth analysis of the critical factors that will determine a firm;s success of failure, along with all the underlying assumptions.

Answer 12

Comprehensive Plan

Question 13

A section of the business plan that conveys a clear and concise overall picture of the proposed venture and creates interest in the venture.

Answer 13

Executive Summary (Overview)

Question 14

A section of the business plan that describes the product and/or service to be provided and explains its merits.

Answer 14

Product/Service Plan

Question 15

A section of the business plan that describes how the firm will reach and service customers within a given market.

Answer 15

Marketing Plan

Question 16

A section of the business plan that offers information on how a product will be produced or a service provided, including descriptions of the firm’s facilities, labor, raw materials, and processing requirements.

Answer 16

Operations and Development Plan

Question 17

A section of the business plan that describes a new firm’s organizational structure and the backgrounds of its key employees.

Answer 17

Management Team Section

Question 18

A section of the business plan that identifies the potential risks that may be encountered by an investor.

Answer 18

Critical Risks Section

Question 19

A section of the business plan that indicates to an investor how much money is needed, and when and how the money will be used.

Answer 19

Offering

Question 20

A section of the business plan that projects the company’s financial position based on well-substantiated assumptions and explains how the figures have been determined.

Answer 20

Financial Plan

Question 21

Projections of a company’s financial statements for up to five years, including balance sheets, income statements, and statements of cash flows, as well as cash budgets.

Answer 21

Pro Forma Statements

Question 22

A disclosure document that describes a financial security for potential buyers (investors).

Answer 22

Prospectus (Offering Memorandum)

Question 23

Business activities that direct the creation, development, and delivery of a bundle of satisfaction from the creator to the targeted user.

Answer 23

Small Business Marketing

Question 24

The fundamental benefit or solution sought by customers.

Answer 24

Core Product/Service

Question 25

The basic physical product and/or service that delivers those benefits.

Answer 25

Actual Product/Service

Question 26

The basic product and/or service plus any extra or unsolicited benefits to the customer that may prompt a purchase.

Answer 26

Augmented Product/Service

Question 27

The process of locating and describing potential customers.

Answer 27

Market Analysis

Question 28

The combination of product/service, pricing, promotion, and distribution activities.

Answer 28

Marketing Mix

Question 29

A description of potential customers in a target market.

Answer 29

Customer Profile

Question 30

Patents, trademarks, and copyrights, which are used to differentiate products and images from those of competitors and prevent rivals from stealing competitive advantage. Also includes trade secrets. Intangible assets of the company.

Answer 30

Intellectual Property

Question 31

The gathering, processing, interpreting, and reporting of market information.

Answer 31

Marketing Research

Question 32

Market information that has been previously complied.

Answer 32

Secondary Data

Question 33

New market information that is gathered by the firm conducting the research.

Answer 33

Primary Data

Question 34

A group of customers or potential customers who have purchasing power and unsatisfied needs.

Answer 34

Market

Question 35

The division of a market into several smaller groups, each with similar needs.

Answer 35

Market Segmentation

Question 36

Specific characteristics that distinguish market segments according to the benefits sought by customers.

Answer 36

Benefit Variables

Question 37

Specific characteristics that describe customers, their purchasing power, their consumption patterns, and other factors.

Answer 37

Demographic Variables

Question 38

A strategy that defines the total market as the target market.

Answer 38

Unsegmented Strategy (Mass Marketing)

Question 39

A strategy that recognizes different preferences of individual market segments and develops a unique marketing mix for each.

Answer 39

Multisegment Strategy

Question 40

A strategy that recognizes the existence of several distinct market segments but focuses on only the most profitable segment.

Answer 40

Single-Segment Strategy

Question 41

A prediction of how much a product or service can be sold within a given market during a specified time period.

Answer 41

Sales Forecast

Question 42

A forecasting method that begins with a variable that has a very large scope and systematically works down the sales forecast.

Answer 42

Breakdown Process (Chain-Ratio Method)

Question 43

A forecasting method in which all potential buyers in a target market's submarkets are identified and the estimated demand is added up.

Answer 43

Buildup Process

Question 44

A forecasting method in which sales is the estimated variable.

Answer 44

Direct Forecasting

Question 45

A forecasting method in which variables related to sales are used to project future sales.

Answer 45

Indirect Forecastingq

Question 46

Managers and other key persons who give a company its general direction.

Answer 46

Management Team

Question 47

An interconnected system of relationships with other people.

Answer 47

Social Network

Question 48

The advantage created by an individual's connections in a social network.

Answer 48

Social Capital

Question 49

A powerful sense of obligation to repay in kind what another has done for or provided for us.

Answer 49

Reciprocation

Question 50

A business owned by one person, who bears unlimited liability for the enterprise.

Answer 50

Sole Proprietorship

Question 51

Liability on the part of an owner that extends beyond the owner's investment in the business.

Answer 51

Unlimited Liability

Question 52

A legal entity formed by two or more co-owners to operate a business for profit.

Answer 52

Partnership

Question 53

A document that states explicitly the rights and duties of partners.

Answer 53

Partnership Agreement

Question 54

The liability of each partner resulting from any one partner's ability to legally bind the other partners.

Answer 54

Joint and Several Liability

Question 55

`A document or clause conferring the authority to act as an agent on another's behalf in a particular context.

Answer 55

Agency Power

Question 56

A business organization that exists as a legal entity and provides limited liability to its owners.

Answer 56

Corporation

Question 57

A business organization that is recognized by the law as having a separate legal existence.

Answer 57

Legal Entity

Question 58

An ordinary corporation, taxed by the federal government as a separate legal existence.

Answer 58

C-Corporation

Question 59

A document that establishes a corporation's existence.

Answer 59

Corporate Charter

Question 60

A document specifying the number of shares owned by a stockholder.

Answer 60

Stock Certificates

Question 61

The right of stockholders to buy new shares of stock before they are offered to the public.

Answer 61

Preemptive Right

Question 62

A situation in which the courts conclude that incorporation has been used to perpetuate a fraud, skirt a law, or commit some wrongful act and remove liability protection from the corporate entity.

Answer 62

Piercing the Corporate Veil

Question 63

A partnership with at least one general partner and one or more limited partners.

Answer 63

Limited Partnership

Question 64

A partner in a limited partnership who has unlimited personal liability.

Answer 64

General Partner

Question 65

A partner in a limited partnership who is not active in its management and has limited personal liability.

Answer 65

Limited Partners

Question 66

A type of corporation that offers limited liability to its owners and passes taxable income or losses on to stockholders.

Answer 66

S Corporation (Subcharter S Corporation)

Question 67

A form of organization in which owners have limited liability but pay personal income taxes on business profits.

Answer 67

Limited Liability Company

Question 68

A form of corporation that shields owners from liability and is set up for individuals in certain professional practices.

Answer 68

Professional Corporation

Question 69

A form of corporation for enterprises established to serve civic, educational, charitable, or religious purposes; not for generation of profits.

Answer 69

Nonprofit Organization

Question 70

Verification of whether a nonprofit organization is staying true to its stated purpose.

Answer 70

Organizational Test

Question 71

An organizational relationship that links two or more independent business entities in a common endeavor.

Answer 71

Strategic Alliance

Question 72

The governing body of a corporation, elected by the stockholders.

Answer 72

Board of Directors

Question 73

A group that serves as an alternative to a board of directors, acting only in an advisory capacity.

Answer 73

Advisory Board

Question 74

A facility that provides shared space, services, and management assistance to new businesses.

Answer 74

Business Incubator

Question 75

An analysis of how a firm plans to create profits and cash flows given its revenue sources, its cost structures, the required size of investment, and sources at risk.

Answer 75

Business Model

Question 76

A business model based on selling to business customers electronically.

Answer 76

Business-to-Business (B2B) Model

Question 77

A business model based on selling to final consumers electronically.

Answer 77

Business-to-Consumer (B2C) Model

Question 78

Web-based business offering participants the ability to list products for consumer bidding.

Answer 78

Auction Sites

Question 79

A business model in which a website simply provides information about a business, its products, and other related matters.

Answer 79

Information-Based Model

Question 80

A business model in which a website provides information (content) that attracts visitors, usually with the hope of generating revenue through advertising or by directing those visitors to other websites.

Answer 80

Content-Based Model

Question 81

A business model in which a website provides a mechanism for buying or selling products or services.

Answer 81

Transaction-Based Model