§  Willingness to take risk for the desired reward. There is a direct relationship between risk and reward

Organization seeking profit (R-C=P) by meeting needs (Maslow).  

A collection of stakeholders. Their interaction defines the business

·         (primary goal and reward)

o    R-C=P

o    The three things a business must do to reach P (Profit) and not L (loss)= demand for your product, business ability to attract demand, control your costs

·         ): physiological needs, safety and security, love and belonging, self-esteem, self actualization

·         Any group or individual who can affect or is affected by a corporation (business or organization). 

§  Land, capitol, labor, entrepreneurship

: focus on employees, marketers gather info and conduct research to determine what customers want

satisfying customers, coordinating employee’s actionsto achieve the firms goals

§  – guides the process and defines the direction and charts a course): Where do we need to go and how are we going to get there

– How a society allocates its resources to produce goods and services

Economic system in which individuals own and operate the majority of businesses that provide goods and services

pure capitalism in which all economic decisions are made without government intervention

Economic system in which the government owns and operates basic industries but individuals own most businesses.

first described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resources

:A system where the government, rather than the free market, determines what goods should be produced, how much should be produced and the price at which the goods will be offered for sale.

§  : Increasing/decreasing the supply of money. This impacts interest rates.  Central banks. The Fed.

§  process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability

o   characteristics of human population and population segments (Diversity, aging, two working parents, single parents)

Consumer tastes: environmentally conscious, technology, fashion

: transitioning toward free enterprise, communication and transportation revolution, and free trade agreements 

o    . (Production or output (GDP), employment (official unemployment rate), purchasing power), contraction or expansion.

o    examples: how we watch movies (Netflix), Walmart (barcode thing), container shipping (new way of shipping stuff).

o    Exploiting ideas. Transforming creativity or invention into results through implementation or commercialization.
1)Product/service innovcation
2) Process innovation (Nike's flyknit)

o    major change : assembly line, original walkman, ipod/itunes nexus

§  – new ways of doing things that disrupt or overturn the traditional business methods and practices (ie smartphone)

§  Nike’s Flyknit as an example of both, but greater excitement about the process part.

·         Copyright Criminals and the fair use doctrine: any copying of copyrighted material done for a limited and "transformative" purpose can be done without permission from the owner.

·         thickets of patents”, “patent trolls”, patent war in the smartphone industry and its impact on consumer cost and squandering of company resources.

ü  Create the best possible environment – and then get out of the way, Protecting and facilitating IP, Education, Tax policies, Immigration policies, Open and accessible information (“open innovation”), Financial competence/resources

o    self directed
-self confident and resilient
-action oriented
-highly energetic
-tolerant of uncertainty
-competitive
-passionate

educated, experienced, and motivated to make money

o   A thought, conception, or notion that exists in the mind as a product of mental activity.

o   A favorable set of circumstances that creates the need/desire for a new product, service or business idea.

Executive summary
-management team
-company description
-market analysis
-competitive analysis
-operations plan
-funding request
-financials
-risks
-appendices.

Bootstrapping, friends and family (Most prevalent), venture capitalists, angel investors, crowd funding

o    :  1) startup costs have been reduced through technological advances such as additive manufacturing and cloud computing
2) Get to market quick and get feedback to tweak the product
3) Based on quantitative market feedback you can focus on what matters.

o    : A person who pursues an innovative idea with the potential to solve a community or social problem (ex: Toms, give a pair for every pair baught)

ü  Types of franchises 

ü  1) product distribution franchise:  (ie coca cola)

ü  
2) business format franchise:Not only distributes the franchisor’s products, but also implements the franchisor’s format and procedure of conducting the business  (mcdonalds, subway)

ü  high initial fees, loss of flexibility

ü  ): small business is less complex, tend to be more resource constrained, less personnel specialization (wear many hats), but has much less regulatory burden

ü  Advantages: independence, costs, focus, flexibility, simplified recordkeeping. Disadvantages: undercapitalization, risk of failure, high stress, managerial inexperience or incompetence.

ü  Government agency that offers managerial and financial assistance to small businesses.

ü  Independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people. More than 99% of U.S. firms are called small businesses.

ü  largely responsible for creating jobs and innovation

Partnership

o    A form of business organization defined by the uniform partnership act as an association of two or more persons who carry on as co-owners of a business for profit

o    Smaller firms who operate under slightly different rules and have greater flexibility than do traditional C-corportions. It is taxed as though it were a partnership with restrictions on shareholders.

A corporation by just one or a few people who are closely involved in managing the business, not required to disclose financial info publicly.

o    Combination of two companies (usually corporations) to form a new company

o    purchase of one company by another, usually by buying its stock

·         When firms that make and sell similar products to the same customers merge. (ex: defense contractors merging together) (However horizontal mergers reduce the number of corporations competing within an industry).

ü  Investors looking to use their expertise to improve the company and “flip” or sell for a profit.  It’s about maximizing return on investment.

ü  Investors + debt (LBO)

ü  Focus on established companies

From a societal standpoint innovation is the engine of progress.  Creative destruction.

From a business standpoint it can create competitive advantage, and often is necessary just to stay relevant

1.     Explain the difference between an idea and opportunity.  The opportunity screen discussed in class is designed to get at three issues – what are those three issues?

Opportunity: A favorable set of circumstances that creates the need/desire for a new product, service or business idea.

Idea: A thought, conception, or notion that exists in the mind as a product of mental activity.

The opportunity screen: Is there a market, can I execute, does the math work

Bootstrapping: using your own money, credit cards, refinancing assets

Friends and Family: They lend you money

Venture capital: Organizations (typically) that agree to provide funding in exchange for a stake, or ownership, in the company.

 Angel investors: individual who provides capital to a startup company, usually affluent individual

Crowdfunding: The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.”

It resembles the innovation process because you take things and you transform them into your own

Profit is essential for growth, and for survival of the business

1.     In lecture two answers were provided for the question “What is business?” What were these answers?

Organization seeking profit (R-C=P) by meeting needs (Maslow).  

A collection of stakeholders. Their interaction defines the business