Ch 3, 6 & 7
Popular in Introduction to Business
Popular in Business
This 5 page Study Guide was uploaded by Ashli Rutledge on Tuesday November 3, 2015. The Study Guide belongs to BUS100 at Central Michigan University taught by Professor Olsen in Fall 2015. Since its upload, it has received 31 views. For similar materials see Introduction to Business in Business at Central Michigan University.
Reviews for Ch 3, 6 & 7
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 11/03/15
STUDY GUIDE ANSWERS Chapter 3 The World Marketplace Business without Borders 10 Their strong economic GDP growth and population determine the size of this opportunity The companies can get the supplies cheaper easier and faster than the other companies in the competition The difference between a country s exports and imports The growing US trade deficit impacts the economy because we are buying more than we sell Why To settle the difference people and governments from other countries buy US investment assets Strong currency means it has risen in value compared to the other country s currency Weak currency means it has fallen in value compared to that country s currency Advantages ofstrong currency you can go to other countries and buy products for cheaper Advantages of weak currency the country benefits because they make more money from it and it boosts their economy Disadvantages ofstrong currency the country loses a little bit of value from the item Disadvantages of weak currency you spent more than you would in their country compared to your own Outsourcing is an attractive way for firms to tap into foreign market because they spend less to enter into the market rather than trying to build their own Risks quality control social responsibility and ethical standards Exporting Pros access to factor of production inflow of innovation reduced economic risk Cons product modifications export licenses and documentation financial risk Licensing and Franchising Pros marketing support business methods direct investment Cons company image franchise fees Direct Investment Pros new tech formation environmental issues Cons employment formation local firms Countertrading is international trading of products for products instead of for money Benefits gaining customers and products that wouldn t be available any other way Drawbacks increase economic downturns confusing nightmare Key elements of sociocultural barriers to trade expansion of economic integration absence of liquidity borrow from large banks NAFTA impacted the US by American jobs flowing to Mexico and the US economy has grown significantly It has not been a positive move for the US due to job loss and less manufacturing done in some states Overarching goal of the European Union is to bolster Europe s trade position and to increase it international political and economic power Chapter 6 Business Formation Choosing the form that Fits 1 10 Sale proprietorship business owned by a single individual General partnership each partner has the right to participate in the company s management and share profit A corporation is taxed separately from its owners LLC a hybrid form of business ownership some respects to a partnership with characteristic similar to cooperation s They are eager to get a business up and running quickly can find this a compelling advantage Some choose to convert to a corporation or LLC because they are expanding their company Limited partnerships and LLCs m from general partnerships because in general partnerships they have the right to participate fully in managing their partnership but assume unlimited personal liability for any of its debt Limited partnerships cannot actively participate in its management but have the protection of limited liability Limited partnership and LLC differ from each other based on personal liability In a limited partnership you are responsible for the liabilities but in a LLC you are not at risk for the obligations Can be owned by noncitizens or other business entities unlimited shareholders raise huge amount in financial capital easy for stockholders to withdraw from stocks amp stockholders had limited liability and are no liable for the debts of the company Steps in forming a CCorporation filing articles of incorporation paying filing fees and the adoption of corporate bylaws Corporations are owned by stockholders Board of directors job is to protect the stockholders and represent them CEOs preside over the meeting of the assembled group as well as firing employees A merger is when two companies combine with each other An acquisition is when one company takes control of the other Horizontal merger is a combination of firms in the same industry Horizontal acquisition is buying or taking over a firm in the same industry where on company is in a better position than the other Vertical merger is a combination of firms creating a quotbuyerseller relationship Vertical acquisition is buying or taking over a firm in the same industry that are in different production positions Current news horizontal acquisition Yahoo struggled with staying on the internet so it was bought by AOL Vertical acquisition Western Digital buying SanDisk for 19 million S corporation in comparison to a LLC Owners are typically not responsible for debts and liabilities Why do you think limited liability companies are currently more popular than S corporations I think LLCs are more popular than S corporations today because you have the responsibilities like a CEO or top officer of a corp Along with the simplicity and flexibility in management and operation There s less paperwork and fewer reporting requirements than corps People who start off their company as entrepreneurs want to start off with simple then maybe work their way up to corporation 11 Advantages and disadvantages of business format franchise arrangement for the franchisee Advantages less risk training and support brand recognition and easier access to funding Disadvantages costs lack of control negative halo effect growth challenges restrictions on sale poor execution Franchisor Advantages expand the business and bring in more money without investing its capital Disadvantages can be complex and challenging Difficult to keep all the franchisees satisfied and sometimes franchisees go public with their complaints ruining the rep of the company 12 Franchise Disclosure Document legal document presented to prospective buyers of franchises that the franchisor must provide fourteen calendar days before the franchise agreement is signed The importance is to know all the facts before signing on the dotted line It can go a long way ensuring that the franchisee makes the right decision Chapter 7 1 Benefits greater financial success independence flexibility challenges learning survival 3 Failure is the key role in an entrepreneur s success It is the chance to learn rather than a sign of being incapable It is a chance to bounce back and create something even better 4 To convince family and friends to support your new business launch you should keep the relationship professional Explain your idea how much money you need and the benefits from the idea If the business fails a professional agreement can preserve personal ties If it succeeds then documentation should be made of financing from family and friends Launching a new business you could either start from scratch of buy a firm I would personally start from scratch depending on how established the firm is If it is not well established I will start from the ground up making things my way 5 Funding options for small businesses loans banks and other lenders alternative funding alternative lenders private firms that charge high interest rates ange investors wealthy people who invest in promising start up companies to make money for themselves venture capital fund highpotential new companies in exchange for a share of ownership Most entrepreneurs find these processes easier and less timeconsuming Its easier to ask family for money rather than the banks with interest fees 6 Opportunities and threats that small businesses face 0 Most compelling opportunities are 10 Technology being able to advertise and contact customers easier through social networks Market Niches you have fewer competitors Personal customer service personal relations with individuals Lower overhead costs not a huge staff to put on payroll offer flexible schedules to employees rather than high healthcare benefits 0 Most intimidating threats are High risk of failure and too little money Sacrificing time and money into something that may never be ask big as you expected niche market a market defined for a certain group of people Their key is to direct a different marketing strategy and feature benefits that appeal to a certain segment Book says small segment of a market with fewer competitors than the market as a whole Market niches tend to be the quite attractive to small firms Examples 1 AnyBots business travelers who need to be everywhere at once It s a robot little camerascooter device 2 Bakon Vodka bacon flavored vodka 3 um busters if you have gum stuck to anything they can get it off Technology has affected niche marketing because you can develop a web site work in a virtual office provide points of contact with targeted customers and work efficiently with partners same question as number 4 Key contributions of small businesses to the US economy are the newjobs that it brings Opening a new company and running it requires a staff so that allows people to apply for a position It vitalizes inner cities Small business comprises more than 99 of inner city business establishments Lastly itfuels innovation New small business brings more choices for consumers and new ideas that may have not been brought up Possibly inspiring other entrepreneurs to start their company I personally think that bringing new jobs top of the chart because it helps the economy grow Then when the economy grows it has a positive affect on inner cities That inspires people of the inner city to start innovating Differences that account for entrepreneurship rates around the world is China High percentage of people start their businesses their because they have no other option The entrepreneurship rate is low in countries with higherincome high level of employment protection and strong unemployment insurance and lack of cultural supports I think entrepreneurship will continue to grow worldwide Especially with the technology today everyone is always innovating and thinking of new ways to make thing attractive faster and better for society Starting your own business also looks good on your rep so more people may do it more for the trend and popularity Chapter 8 1 Public Accountants vs Management Accountants Public work for individuals or firms separately providing services such as tax prep external auditing management consulting Management work within a company and provide analysis prepare reports and financial statements Key users of accounting info and what they need from it Managers info about sales in various regions and for products Stockholders financial performance Employees make their case for nice pay raises and hefty bonuses Creditors asses a firm s creditworthiness before granting a loan Suppliers if the company can pay for the orders it places Gov t agencies for meeting the reporting requirements of the IRS or SEC FASB Financial Accounting Standards Board is charge of establishing the generally accepted accounting principles used in the practice of financial accounting Goals that guide their formulation 1 2 3 They must contain info that helps users understand the firm s financial performance They must provide information that is objective accurate and verifiable They must provide financial statements based on the same core assumptions and procedures over time They must present accounting statements in a reasonably standardized way Accounting principles are likely to change in the near future because they are constantly modifying clarifying and expanding and business evolve and new issues arise
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'