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MGTA01H3 (583)
Chapter 3

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Management (MGT)
Bill Mc Conkey

MGTA03 – READING NOTES – CHAPTER 3  Small business: an owner managed business with less than 100 employees  New venture/firm: a recently formed commercial organization that provides goods and/or services for sale  Entrepreneurship: the process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it  Entrepreneurs: people who recognize and seize opportunities o Small businesses are usually independently owned and influenced by unpredictable market forces. As a result, the provide an environment to use personal attributes o People who show entrepreneurial characteristics and make something new within an existing large firm are called “intraprenuers”  the key difference is that intrapreneurs typically don’t have to concern themselves with getingg the resources needed to bring hte new product to market since their employer provides the resources  starting a business involves dealing with a great deal of uncertainty, ambiguity, and unpredictability  private sector: the part of the economy that is made up of companies and organizations that are not owned or controlled by the govt  IDENTIFYING OPPORTUNITIES o Idea Generation  Abandoning traditional assumptions about how things work and how they ought to be, and seeing what others do not.  The next most frequent sources of venture ideas are a personal interest/hobby (16%) and a chance happening (11%) o Screening  The idea creates or adds value for the customer  A product of service that does this is one that solves a significant problem or meets a significant need in new or different ways  The idea provides a competitive advantage that can be sustained  Exists when potential customers see the product or service as better than that of competitors  It involves maintaining it in the face of competitors’’ actions or changes in the industry  The idea is marketable and financially viable  Estimating the market demand requires an initial understanding of who the customers are, what ther needs are, and how the product or service will satisfy their needs better than competitiors  Sales forecast: an estimate of how much of a product or service will be purchased by the propective customers for a specific period of time o In order to determine financial viability involves preparing financial forecasts (consists of start up costs, cash budgets, an income statement, and balance sheet o Developing the opportunity  New ventures use on or more of the three main entry strats: They introduce a totally new product or service, they introduce a product or service that will compete directly with existing competitive offerings but add a new twist, or they franchise  Franchise: an arrangement in which a buyer (franchisee) purchases the right to sell the product or service of the seller (franchiser)  Business plan: a document that describes the entrepreneur’s propsed business venture; explains why it is an opportunity; and outlines its marketing plan, its operational and financial details, and its managers’ skills and abilities  ACCESING RESOURCES o Fina
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