MGMT Test 2

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MGMT Test 2
2010-10-25 09:53:07
MGMT Management

terms for test 2
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  1. What are the characteristics of entrepreneurs?
    • •Internal locus of control
    • •High energy level
    • •High need for achievement
    • •Tolerance for ambiguity
    • •Self-confidence
    • •Passion & action orientation
    • •Self-reliance & desire for independence
    • •Flexibility
  2. What three main things define a small business?
    • 500 or fewer employees
    • Independently owned and operated
    • Does not dominate its industry
  3. What percentage of US businesses are small businesses?
    99% are small businesses, 87% of those employ fewer than 20 people
  4. What percentage of employment do family businesses provide?
    Family businesses provide 60% of US employment and 78% of new jobs
  5. What is the most crucial factor for the survival of a family business?
    a proper succession plan
  6. What are the statistics on family businesses after the first generation?
    66% plan on keeping the business in the family, but 30% survive to the second generation, 12% to the third, only 3% beyond the third
  7. How many small businesses fail within the first 5 years?
    60-80% of new businesses fail in the first five years
  8. Why do small businesses typically fail? (8 reasons)
    • •Lack of experience in the industry
    • •Lack of expertise in finance, production, sales...
    • •Lack of strategy or planning
    • •Poor financial control
    • •Growing too fast, ahead of cash flow
    • •Insufficient commitment
    • •Ethical failure—fraud, embezzlement
    • •Not usually lack of initial capital
  9. business plan
    a document that summarizes the business strategy and structure
  10. Parts of a business plan
    • business goals
    • strategies used to achieve these goals
    • a plan of how the entrepreneur will implement these strategies
    • exit strategy
  11. Advantages of Franchising
    • –Reduced financial risk of new business success through experience provided by franchisor.
    • –Training, financial, and management support by franchisor.
  12. Disadvantages of Franchising
    • –Start-up fees to purchase franchise.
    • –Limitations of franchise (market area, product, customers).
    • –Imposed operational controls of franchisor.