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B200 Ch 4-5 Cheat Sheet (DRAFT) by

This is a draft cheat sheet. It is a work in progress and is not finished yet.

Chapter 4

Nascent Entrep­ren­eurs: people who are trying to start a business from scratch
Small Business: an indepe­ndently owned and managed business that does not dominate its market
New Venture: recently formed (less than 12 months) commercial org. that provides g+s
Entrep­ren­eur­ship: a business person
Entrep­reneur: a business person who accepts both the risks and opport­unities involved in creating and operating a new business venture
Intrap­ren­eurs: people who create something new within an existing large firm/org.

Chapter 4 LO4

Franch­ising Agreement: duties­/re­spo­nsi­bil­ities of franch­isee/er
Sole Propri­eto­rship
 
Individual ownership
 
Unlimited liability: creditors can go after personal assets
 
Tax: profits and losses part of owners taxable situation
General Partne­rship
 
2+ partners, unlimited liability
 
each partner must claim income­/loss on their personal income tax
Limited Partne­rship
 
1+ general, 1+ limited partners
 
General: unlimited, Limited: liability limited to their invest­ments
 
All partners claim tax according to their share in the company, same income status
Corpor­ation
 
Exists until terminated by act of shareh­olders
 
Ownership: Fictional person, shareh­olders equity
 
Liability: limited to corpor­ation, can be sued
 
Taxable entity, has own income status
Trust
 
Ownership: someone other than owners name on title
 
Liability: depends on status
 
Profit­s/l­osses passed onto whose name its in

Chapter 5 Key Terms

Protec­tio­nism: protecting domestic business at the expense of free market compet­ition
Local-­Content Laws: law/re­gul­ation governing business practices in given countries
Busine­ss-­Pra­ctice Law: law/re­gul­ation governing business practices in given countries
Cartel: any assoc. of producers whose purpose it is to control supply­/prices for product
Dumping: selling product for less abroad than in producing nation
General Agreement on Tariffs and Trade
 
int. trade agreement to encourage multil­ateral reduction or elimin­ation of trade barriers
World Trade Organi­zation: member nations negoti­ation through trading agreement and resolve disputes about polici­es/­pra­ctices
European Union: Agreement among western european nations to eliminate trade barriers affecting members
North American Free Trade Agreement
 
gradually eliminate tariff­s/b­arriers among US, CAD, MEX
 

Chapter 4: Fit

The Entrep­reneur - Opport­unity fit
 
Is the opport­unity something the ent. wants to take on?
 
Realistic self assessment (big five)
Opport­uni­ty-­Res­ources Fit
 
Resources needed to capitalize on the opport­unity can be acquired
Entrep­ren­eur­-Re­sources Fit
 
Does the ent. have the capacity to meet requir­ements

Chapter 4 LO2 LO3

Private Sector: the part of teh economy that is made up of companies and orgs that are not owned/­con­trolled by govt.
Entrep­reneurs must identify an opport­unity and access resources
Sales Forecast: an estimate of how much a product or service will be purchased by prospe­ctive customers over a specific period
 
an idea must: create value, compet­itive advantage, low exit costs, marketable and financ­ially viable
Franchise: an arrang­ement that gives franch­isees (buyers) the right to sell to product of franchiser
Business Plan: document in which entrep­reneur summarizes their business strategy for proposed venture + implem­ent­ation
Bootst­rap­ping: doing more with less
Collat­eral: assets that a borrower uses to secure a loan/c­redit and that are subject to seizure by lender if the loan isn't repaid according to the specified terms
Incuba­tors: facilities that support small businesses during their early growth phase by providing basic servic­es/­spa­ce/­advice

Chapter 5: Key Terms

Global­iza­tion: process by which the world economy is becoming a single interd­epe­ndent system
Import: product made or grown abroad
Export: product made/grown domest­ically but shipped and sold abroad
Per-Capita Income: the average income per person of a country
BRIC: four powerful emerging markets Brazil Russia India China
Absolute Advantage: ability to produce something more effici­ently than any other country
Compar­ative Advantage: ability to produce some products more effici­ently than others
National Compet­itive Advantage: Intern­ational compet­itive advantage stemming from a combin­ation of factors:
 
demand condit­ions; relate­d/s­upp­orting industry; firm strategy, struct­ures, rivalry
Intern­ational Compet­iti­veness: compet­itive marketing of domestic products against foreign products
Balance of Trade: the economic value of all the products that a country exports - value of imported products
Surplus: a country's import­s>e­xports (positive balance of trade)
Deficit: import­s<e­xports (negative balance of trade)
Balance of Payments: flow of all money into/out of country
Exchange Rate: rate at which currency of one nation can be exchanged for currency of another
Exporter: firm that distri­butes and sells products to one or more foreign countries
Importer: firm that buys products in foreign markets and then
Intern­ational Firm: conducts a signif­icant portion of its business in foreign countries
Multin­ational Firm: connected to many nations
Indepe­ndent Agent: firms choose foreign individual to manufa­ctu­re/­market products in another country
Royalties: fees to exporter for another country manufa­cturing their product
World Product Mandating: multin­ational product respon­sib­ility to branch
Foreign Direct Investment (FDI): buying­/es­tab­lishing tangible assets in another country
Foreign Investment Review Agency: est. 1973 to screen foreign invest. to CAN
Quota: restri­ction by one nation on total products of type that can be imported
Embargo: gov't order forbidding export­s/i­mports of a particular product
Tariff: tax levied on imported products
Revenue Tariff: imposed solely to raise money for government that imposes it
Subsidy: government payment to help domestic business compete with foreign firms
 

Chapter 4: LO4

Stockh­olders: investors who buy shares of ownership in stock
Board of Directors: group of indivi­duals elected by a firm's shareh­olders and charged with overse­eing, and taking legal respon­sib­ility for the firm's actions
Inside Directors: members of a corpor­ations BoD who are also full-time employees
Outside Directors: members of a corp. board of directors who are not also employees of the corp. on a day-to-day basis
CEO: highest ranking executive in a compan­y/org
Public Corpor­ation: business whose stock is widely held by a small group of indivi­duals, not usually available for sale
Private Corpor­ation: business whose stock is held by a small group of indivi­duals and not available for sale
Initial Public Offering (IPO): selling shares of stock in a company for the first time to the public
Private Equity Firms: companies that buy publicly traded companies and then make them private
Income Trust: structure allowing companies to avoid paying corp. inc. tax if they distribute all/most earnings to investors
Limited Liability: investor liability is limited to personal invest­ments in the corp.
 
courts cannot go after personal assets of investors in the event corp. goes bankrupt
Stock: a share of ownership in a corp.
Double Taxation: a corp. must pay income taxes on its profits, then shareh­olders pay personal income tax on dividends from corp.
Dividends: the amount of money, normally portion of profit, that is distri­buted to shareh­olders
Co-ope­rative: org. that is formed to benefit its owners in the form of reduced prices and/or distri­bution of surpluses at year end