Entrepreneurship and Small Business ASSIGNMENT -1 Submission Date by students: Before the end of Week- 7th Place of Submission: Students Grade Centre Weight: 05 Marks Learning Outcome: 1. Demonstrate a solid understanding of the potential of entrepreneur in today s competitive business world. (Lo 1.2) 2. Demonstrate ability to think independently and systematically on developing a viable business model (Lo 1.3 & 3.7). 3. Understand the place of small business in history and explore the strengths and weaknesses of small business. (Lo 1.1). Assignment Workload: This assignment is an individual assignment. Start-up Business Plan Imagine you started a new business as an entrepreneur in Saudi Arabia. Please, think and share information on the following items: 1. Owners, capital structure and company profile a. Your Business Name, Address, E Mail b. Form of ownership: What is the legal structure? Sole proprietor, Partnership, Corporation .. C. Investment capital 2. Company Business Description (300 400 words) A. Scope and type of business What business will you be in? What will you do? What market segment will you choose? Business idea: what is your big idea? Is it a product or a service? What makes your idea different? Mission Statement Company s short-term and long-term goals and objectives. Target market and demographics: Who will your customers be? Where do they live? What is your target market passionate about? B. Business Philosophy What is important to you in your business? Describe your Industry: Is it a growth industry? What long term or short-term changes do you foresee in the industry? How will your company take advantage of it? Describe your most important company strengths and core competencies: What factors will make the company succeed? What do you think your major competitive strengths will be? What background experience, skills, and strengths do you personally bring to this new venture? Risk Assessment: Evaluate the strengths and weaknesses of your business using SWOT. Scale of the business and its growth anticipation: what is the growth rate per year for five years? What do your 5-year financials look like? What is your path to profitability? Who is your competition and how do you beat them? Start-up costs: what costs do you expect to make the business run for the next five years? 3. Products and Services a. Describe in detail your products or services (Technical specifications). b. Size of business: how many employees? How many offices and retail facilities? c. What factors will give you competitive advantages or disadvantages? Examples, include level of quality or unique or proprietary features. Entrepreneurship and Effective Small Business Management, 11/E Cases Case # 1 Entrepreneur & Company Name Michael Volpatt, Kate Larkin, and Crista Leudtke Big Bottom Market 2 Peter Justen MyBizHomepage 3 4 5 6 Chapter Reference Related Topics Industry: Restaurant, specialty food, and wine Bootstrap marketing and social media marketing Managing cash flow 9 15 Industry: Web-based financial services for small business owners 1 Entrepreneurship Buying/Selling a business E-commerce Sources of financing Human resources management: staffing 7 13 16 and 17 21 Jacqui Rosshandler Industry: All-natural breath-freshener Jacquii LLC Managing cash flow 15 Sources of equity financing 16 Sources of debt financing 17 Lucy Cardenas and Bill Coker Industry: Restaurant Red Iguana Buying/Selling a business 7 Sources of debt financing 17 Management succession 18 Choosing a location 22 Rachel Shein and Steve Pilarski Industry: Wholesale bakery Baked in the Sun Angela Crawford and Martin Rodriguez Industry: Pharmacy Healthcare insurance and the Affordable Care Act Financial analysis 22 14 Bluffton Pharmacy 7 Angela Crawford and Martin Rodriguez Industry: Pharmacy Managing cash flow 15 Bluffton Pharmacy Part 2 8 9 10 Brian Linton Industry: Apparel United By Blue Ethics and social responsibility Strategic management Pricing 2 4 11 Aseem Badshah and Kevin Yu Industry: Social media services Socedo Entrepreneurship Sources of equity financing 1 16 Kelly Lester Industry: Lunchboxes EasyLunchboxes Bootstrap marketing and social media marketing E-commerce #149226 Cust: Pearson Au: Scarborough Pg. No. 2 Title: Entrepreneurship and Effective Small Business Management 11e 9 13 Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARLIsLE Publishing Services Eleventh Edition Entrepreneurship and Effective Small Business Management Norman M. Scarborough Presbyterian College Jeffrey R. Cornwall Belmont University Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City S o Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo # 149226 Cust: Pearson Education / NJ / B & E Au: Scarborough Pg. No. i Title: Entrepreneurship and Effective Small Business Management 11e Server: C/M/Y/K Short / Normal / Long DESIGN SERVICES OF S4carlisle Publishing Services Editor in Chief: Stephanie Wall Acquisitions Editor: Daniel Tylman Program Management Lead: Ashley Santora Program Manager: Claudia Fernandes Editorial Assistant: Linda Albelli Director of Marketing: Maggie Moylan Senior Marketing Manager: Erin Gardner Project Management Lead: Judy Leale Project Manager: Ann Pulido Art Director: Kenny Beck Text Designer: S4Carlisle Publishing Services Art Cover Director: Bruce Kenselaar Cover Designer: Suzanne Behnke VP, Director of Digital Strategy & Assessment: Paul Gentile Digital Editor: Brian Surette Digital Development Manager: Robin Lazrus Digital Project Manager: Alana Coles MyLab Product Manager: Joan Waxman Digital Production Project Manager: Lisa Rinaldi Full-Service Project Management: Christian Holdener/S4Carlisle Publishing Services Composition: S4Carlisle Publishing Services Printer: R.R. Donnelley/Willard Cover Printer: Lehigh-Phoenix Color/Hagerstown Text Font: 10/12, Times LT Std Photo credits front cover (from top to bottom): PhotoSG/Fotolia, monjiro/Fotolia, JJAVA/Fototlia, ducdao/Fotolia, Jacques PALUT/Fotolia, Gina Sanders/Fotolia. Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text with the exception of the chapter opening photo which appears throughout the text and is credited to Tyler Olson/Fotolia. Microsoft and Windows are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. Screen shots and icons reprinted with permission from the Microsoft Corporation. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation. Copyright 2015, 2012, 2009, 2006, 2003 by Pearson Education, Inc., One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290. Many of the designations by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Scarborough, Norman M. Entrepreneurship and effective small business management/Norman Scarborough, Jeff Cornwall. Eleventh Edition. pages cm Includes bibliographical references and index. ISBN-13: 978-0-13-350632-7 ISBN-10: 0-13-350632-0 1. Small business Management. 2. New business enterprises Management. 3. Small business United States Management. 4. New business enterprises United States Management. I. Cornwall, Jeffrey. II. Title. HD62.7.S27 2013 657 .9042 dc23 2013039406 10 9 8 7 6 5 4 3 2 1 ISBN-10: 0-13-350632-0 ISBN-13: 978-0-13-350632-7 # 149226 Cust: Pearson Education / NJ / B & E Au: Scarborough Pg. No. ii Title: Entrepreneurship and Effective Small Business Management 11e Server: C/M/Y/K Short / Normal / Long DESIGN SERVICES OF S4carlisle Publishing Services Brief Contents SECTION I The Rewards and Challenges of Entrepreneurship 1 Chapter Chapter Chapter Chapter 1 2 3 4 SECTION II Chapter Chapter Chapter Chapter Launching a Venture: Entry Strategies 5 6 7 8 SECTION III SECTION IV SECTION V Chapter Chapter Chapter Chapter SECTION VI Chapter 23 581 Location, Layout, and Physical Facilities 581 Supply Chain Management 627 Managing Inventory 667 Staffing and Leading a Growing Company 703 Management Succession and Risk Management Strategies in the Family Business 741 The Legal Environment: Business Law and Government Regulation 781 The picturebooth co. 817 831 Endnotes Index Creating a Solid Financial Plan 453 Managing Cash Flow 489 Sources of Equity Financing 523 Sources of Debt Financing 551 Legal Aspects of Small Business: Succession, Ethics, and Government Regulation 741 Chapter 22 Cases 305 453 Building an Operating Plan 18 19 20 21 Appendix 273 Building a Bootstrap Marketing Plan 273 Creative Use of Advertising and Promotion Pricing and Credit Strategies 343 Global Marketing Strategies 375 E-Commerce and Entrepreneurship 413 Building a Financial Plan 14 15 16 17 137 Choosing a Form of Ownership 137 Franchising and the Entrepreneur 165 Buying an Existing Business 201 New Business Planning Process: Feasibility Analysis, Business Modeling, and Crafting a Winning Business Plan 235 Building a Marketing Plan Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter Chapter Chapter Chapter Entrepreneurs: The Driving Force Behind Small Business 1 Ethics and Social Responsibility: Doing the Right Thing 37 Creativity and Innovation: Keys to Entrepreneurial Success 71 Strategic Management and the Entrepreneur 105 846 884 iii # 149226 Cust: Pearson Education / NJ / B & E Au: Scarborough Pg. No. iii Title: Entrepreneurship and Effective Small Business Management 11e Server: C/M/Y/K Short / Normal / Long DESIGN SERVICES OF S4carlisle Publishing Services This page intentionally left blank v Contents Preface xxiii Acknowledgments xxvi SECTION I Chapter 1 The Rewards and Challenges of Entrepreneurship 1 Entrepreneurs: The Driving Force Behind Small Business 1 The Role of the Entrepreneur 2 What Is an Entrepreneur? 5 ENTREPRENEURSHIP IN ACTION Frontier? 9 Space: The Next Entrepreneurial How to Spot Entrepreneurial Opportunities 10 Monitor Trends and Exploit Them Early On 10 Travel and Be Inspired 11 Take a Different Approach to an Existing Market Put a New Twist on an Old Idea 11 11 Look for Creative Ways to Use Existing Resources 12 Realize That Others Have the Same Problem You Do 12 Take Time to Play 12 Notice What Is Missing 12 The Benefits of Owning a Small Business 13 Opportunity to Gain Control over Your Own Destiny 13 Opportunity to Make a Difference 13 Opportunity to Reach Your Full Potential 14 Opportunity to Reap Impressive Profits 14 Opportunity to Contribute to Society and Be Recognized for Your Efforts 14 Opportunity to Do What You Enjoy Doing 15 The Potential Drawbacks of Entrepreneurship Uncertainty of Income 15 15 Risk of Losing Your Entire Invested Capital 15 Long Hours and Hard Work 16 Lower Quality of Life Until the Business Gets Established High Levels of Stress 16 16 Complete Responsibility 17 Discouragement 17 Why the Boom: The Fuel Feeding the Entrepreneurial Fire 17 Entrepreneurs as Heroes 17 Entrepreneurial Education 17 Shift to a Service Economy 17 Technology Advancements 17 Outsourcing 18 Independent Lifestyle 18 E-Commerce, the Internet, and Mobile Computing International Opportunities 18 19 IN THE ENTREPRENEURIAL SPOTLIGHT Collegiate Entrepreneurs # 149226 Cust: Pearson Education / NJ / B & E Au: Scarborough Pg. No. v Title: Entrepreneurship and Effective Small Business Management 11e Server: 19 C/M/Y/K Short / Normal / Long v DESIGN SERVICES OF S4carlisle Publishing Services vi Contents The Cultural Diversity of Entrepreneurship 20 Young Entrepreneurs 20 Women Entrepreneurs 21 Minority Enterprises 22 Immigrant Entrepreneurs 23 Part-Time Entrepreneurs 24 Home-Based Business Owners 24 Family Business Owners 24 Copreneurs 26 Corporate Castoffs 27 Corporate Dropouts 27 Retired Baby Boomers 28 The Contributions of Small Businesses 28 LESSONS FROM THE STREET-SMART ENTREPRENEUR Start-Up 30 Bulletproofing Your Putting Failure into Perspective 31 How to Avoid the Pitfalls 32 Know Your Business in Depth 32 Prepare a Business Plan 33 Manage Financial Resources 33 Understand Financial Statements 33 Learn to Manage People Effectively 34 Set Your Business Apart from the Competition 34 Maintain a Positive Attitude 34 Conclusion and a Look Ahead 34 Chapter Review Chapter 2 35 Discussion Questions 36 Ethics and Social Responsibility: Doing the Right Thing 37 An Ethical Perspective 39 Three Levels of Ethical Standards 40 Immoral, Amoral, and Moral Management 41 The Benefits of Moral Management 42 Establishing an Ethical Framework 43 Why Ethical Lapses Occur 44 An Unethical Employee 45 An Unethical Organizational Culture 45 Moral Blindness 45 Competitive Pressures 45 Opportunity Pressures 45 Globalization of Business 45 Establishing and Maintaining Ethical Standards 46 Establishing Ethical Standards 46 Maintaining Ethical Standards 46 ENTREPRENEURSHIP IN ACTION But Is It Safe? Social Entrepreneurship 49 49 IN THE ENTREPRENEURIAL SPOTLIGHT Making a Profit and Making a Difference 50 Social Responsibility 51 Business s Responsibility to the Environment 52 Business s Responsibility to Employees 53 Cultural Diversity in the Workplace 54 Drug Testing 57 # 149226 Cust: Pearson Education / NJ / B & E Au: Scarborough Pg. No. vi Title: Entrepreneurship and Effective Small Business Management 11e Server: C/M/Y/K Short / Normal / Long DESIGN SERVICES OF S4carlisle Publishing Services Contents vii HIV/AIDS 58 Sexual Harassment 59 LESSONS FROM THE STREET-SMART ENTREPRENEUR How to Avoid Sexual Harassment Charges 62 Privacy 64 ENTREPRENEURSHIP IN ACTION on Facebook 64 Think Before You Hit Post Business s Responsibility to Customers 65 Right to Safety 65 Right to Know 66 Right to Be Heard 66 Right to Education Right to Choice 66 67 Business s Responsibility to Investors 67 Business s Responsibility to the Community 67 Conclusion 68 Chapter Review Chapter 3 68 Discussion Questions 69 Creativity and Innovation: Keys to Entrepreneurial Success 71 Creativity, Innovation, and Entrepreneurship 72 Creativity Essential to Survival 76 Can Creativity Be Taught? 78 Creative Thinking 78 IN THE ENTREPRENEURIAL SPOTLIGHT The Ingredients of Creativity Barriers to Creativity 79 81 LESSONS FROM THE STREET-SMART ENTREPRENEUR Questions to Spur the Imagination 85 How to Enhance Creativity 86 Enhancing Organizational Creativity 86 Enhancing Individual Creativity 91 IN THE ENTREPRENEURIAL SPOTLIGHT How to Create a Culture of Creativity and Innovation 96 The Creative Process 97 Step 1. Preparation Step 2. Investigation 97 98 Step 3. Transformation 98 Step 4. Incubation 99 Step 5. Illumination 101 Step 6. Verification 101 Step 7. Implementation Conclusion 102 Chapter Review Chapter 4 102 103 Discussion Questions 103 Strategic Management and the Entrepreneur 105 Building a Competitive Advantage 108 The Strategic Management Process 110 Step 1. Develop a Clear Vision and Translate It into a Meaningful Mission Statement 111 LESSONS FROM THE STREET-SMART ENTREPRENEUR Thriving on Change 113 Step 2. Assess the Company s Strengths and Weaknesses 114 Step 3. Scan the Environment for Significant Opportunities and Threats Facing the Business 115 Step 4. Identify the Key Factors for Success in the Business 116 # 149226 Cust: Pearson Education / NJ / B & E Au: Scarborough Pg. No. vii Title: Entrepreneurship and Effective Small Business Management 11e Server: C/M/Y/K Short / Normal / Long DESIGN SERVICES OF S4carlisle Publishing Services viii Contents Step 5. Analyze the Competition 118 Step 6. Create Company Goals and Objectives 122 ENTREPRENEURSHIP IN ACTION Vizio: Disrupting Another Market 124 Step 7. Formulate Strategic Options and Select the Appropriate Strategies 125 IN THE ENTREPRENEURIAL SPOTLIGHT Strategies for Success 130 Step 8. Translate Strategic Plans into Action Plans 131 Step 9. Establish Accurate Controls 132 Conclusion 134 Chapter Review 135 Discussion Questions 136 SECTION II Launching a Venture: Entry Strategies 137 Chapter 5 Choosing a Form of Ownership The Sole Proprietorship 137 139 Advantages of a Sole Proprietorship 140 LESSONS FROM THE STREET-SMART ENTREPRENEUR Right! 141 Disadvantages of the Sole Proprietorship 142 ENTREPRENEURSHIP IN ACTION What s in a Name? The Partnership Get That Name 143 144 The Uniform Partnership Act 146 Advantages of the Partnership 146 LESSONS FROM THE STREET-SMART ENTREPRENEUR a Business Divorce 148 How to Avoid Disadvantages of the Partnership 149 Limited Partnerships 150 Limited Liability Partnerships 151 The Corporation 151 Requirements for Incorporation 151 Advantages of the Corporation 152 Disadvantages of the Corporation 154 Professional Corporations 155 The S Corporation 155 Advantages of an S Corporation 156 Disadvantages of an S Corporation 157 When Is an S Corporation a Wise Choice? 157 The Limited Liability Company Social Enterprises 160 157 IN THE ENTREPRENEURIAL SPOTLIGHT From the Life on the Street to Running a Business 160 Chapter 6 Nonprofit Organizations 161 Chapter Review 163 Discussion Questions 164 Franchising and the Entrepreneur What Is a Franchise? 167 Types of Franchising 168 The Benefits of Buying a Franchise A Business System 165 168 169 Management Training and Support 170 Brand-Name Appeal 171 Standardized Quality of Goods and Services 171 National Advertising Programs Financial Assistance 171 172 Proven Products and Business Formats # 149226 Cust: Pearson Education / NJ / B & E Au: Scarborough Pg. No. viii Title: Entrepreneurship and Effective Small Business Management 11e Server: 173 C/M/Y/K Short / Normal / Long DESIGN SERVICES OF S4carlisle Publishing Services Contents ix Centralized Buying Power 173 Site Selection and Territorial Protection 173 Increased Chance for Success 174 Drawbacks of Buying a Franchise 175 Franchise Fees and Ongoing Royalties 175 Strict Adherence to Standardized Operations 176 Restrictions on Purchasing 176 Limited Product Line Market Saturation 177 177 Limited Freedom 178 No Guarantee of Success 178 Franchising and the Law 178 EN
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