chapters 20/21

Description:	Mr. Hurdle's Chapters 20 and 21 Marketing/Merchandising Test
Category:	Marketing
Created by:	sissiloo on 2009-04-28

Question	Answer
Acquiring and Financing a Business	Buying Into An Existing Business, Buying an Existing Business, Establishing a New Business, and Sources of Capital
Buying Into An Existing Business	existing customer base, name recognition, a) partnership, b) buying into a business by buying stock, c) tremendously easier transition if business is already operating
Buying An Existing Business	a) Records are available (You won't have to guess), b) You can check the market to determine fair cost, c) Transition should be very smooth
Establishing a New Business	will lose money 1st year, will break even 2nd year if a good business, will make a profit the 3rd yr, a) You may set it up the way you want to, b) You must have enough capital for at least 2 yrs w/o profit, c) You must have a reserve fund
Sources of Capital	1) Personal Savings, 2) Bank Loans, 3) Partnerships, 4) Corporate Financing
Selecting a Business Location	1) Current Population Trends, 2) The Community Economy, 3) REtail Competition, 4) Community Services and Laws, 5) Is there a central shopping District, 6) Fringes of a central shopping district, 7) Secondary shopping districts, 8) Shopping Centers/Malls
The Community Economy	a) family income, b) breakdown of income brackets, c) unemployment rates, d) whether people own or rent homes, e) are the people professionals or not
Retail Competition	a) What kinds of stores? b) How many stores?
Community Services and Laws	a) Accounting Services, b) Banking Services, c) Advertising Services, d) Credit Information Services, e) Building Laws, f) Zoning Laws
Fringes of a Central Shopping District	a) Rent is lower, b) typically specialty stores
Secondary Shopping Districts	usually much cheapter, but you are limiting your number of customers
Renting	usually on a monthly basis with X amount of dollars a month. They can remove you at any time and raise the cost at any time. Very little protection against eviction or price being changed
Lease	usually one to ten years with the option to renew. Can't raise price or evict you. *All leases should be put in writing for your protection, read thoroughly, and signed by both parties
Forms of Leases	1) Flat Amount Lease, 2) Straight Percentage Lease, 3) Percentage Lease with a Guaranteed Minimum
Flat Amount Lease	Ex: $500/month for 3 years
Straight Percentage Lease	Amount varies with profit or volume. Ex: 5% of sales or 15% of profit, percent of volume
Percentage lease with a Guaranteed Minimum	Ex: $500/month or 5% of sales-whichever is higher
Income Statement	statement that indicates how well a business is doing over a period of time: Monthly, Quarterly, Yearly, Bi-Yearly
revenue	the money received from the sale of products and serves
The Role of Marketing in Financial Planning	Target Markets, Marketing Mix
Managing Marketing Costs	Long-Term Expenses, Short-Term Expenses
Financing Marketing Activities	Capital Expenses, Inventory Expenses, Operating Expenses
Capital expenses	long-term investments in land, buildings, and equipment
Inventory Expenses	usually financed by short-term loans from financial institutions or through credit extended by the seller
Inventory	the assortment and quantities of products the company maintains for sale to customers
Operating Expenses	costs of the day-to-day activities of marketing. Includes: salaries and wages, materials and supplies, advertising and special promotions, and customer services
Planning Tools	Forecasts, Budgets
Financial forecasts	numerical predictions of future performance related to revenue and expenses
Budgets	detailed projections of financial performance for a specific time period, usually a year or less
Operating Tools	Financial statements: Income statement, Balance sheet
Financial statements	detailed summaries of the specific financial performance for a business or a part of the business
Income statement	reports on the amount and source of revenue and the amount and type of expenses for a specific period of time to determine if the business earned a profit or loss on its operations
Balance sheet	describes the type and amount of assets, liabilities, and capital ina business on a specific date
Using Financial Tools	Developing Forecasts and Budgets, Gathering Information for Financial Statements
Analyzing Financial Information	Using Financial Information, Increasing Revenues, Controlling Costs
Effects of Marketing on Revenue	Sales of Products and Services, After-Sale Revenue, Credit and Interest,
Credit and Interest	Credit Cards, Unpaid Credit, Regulation
Equal Credit Opportunity Law	prevents companies from discriminating among the people to whom they offer credit
Truth-in-Lending Act	specifies the type of information businesses must provide to credit customers
Fair Credit Reporting Act	regulates the use of the credit information that businesses gather about individual customers
Fair Debt Collection Practices Act	controls methods companies use to collect money owed by customers
Expenses Associated with the Marketing Mix	Product Expenses, Distribution Expenses, Price Expenses, Promotion Expenses
Starting A Business	The American Dream, Entrepreneurship Opportunities in Marketing
entrepreneur	someone who takes the risk to start a new business
Entrepreneurship	the process of planning, creating, and managing a new business
The Importance of Entrepreneurship	Economic Role,Personal Benefits
Characteristics of Entrepreneurs	1) focused and goal oriented, 2) risk takers, 3) want to achieve, 4) independent, 5) have a high level of self-confidence, 6) creative
Preparing for Entrepreneurship	Academic Preparation, Using Technology, Business Skills
Academic Preparation	Communication Skills, Math Skills, Scientific skills
Business Opportunities in Marketing	Promotion, Selling, Distribution, Pricing, Finance, Marketing-Information Management, Product/Service Management
Identifying Business Ownership Opportunities	1) Identify a Target Market, 2) Study the Competition, 3) Develop a Unique Offering
The Ownership Decision	Proprietorship,Partnership, Corporation
Proprietorship	a business owned and managed by one person
Advantages of Proprietorships	1) owner of business is boss and can make all decisions, 2) receives all profits of business, 3) owner can make decisions without consulting others and so can act quickly when needed, 4) forming one is relatively easy
Disadvantages of Proprietorships	1) greater chance that business will fail due to lack of planning and managements skills, 2) one person may not have needed money and may not be able to borrow adequate funds, 3) requires owner to assume great deal of risk
Partnership	owned and operated by two or more people who share in the decision-making and profitability of the company
partnership agreement	a legal document that specifies the responsibilities and financial relationships of the partners
Advantages of Partnerships	1) more people available to manage the business, 2) usually more money available and banks more likely to loan money
Disadvantages of Partnerships	1) Disagreements can occur on important decisions so it may take time to discuss issues and agree on the best solution, 2) all partners responsible for any actions and decisions made by another partner. If money is owed, each partner is liable for debt
corporation	a business owned by people who purchase stock in the company
charter	a legal document allowing the corporation to operate as if it were a person. Business can borrow money, enter into contracts, and is liable for its decisions and actions
Advantages of Corporations	1) losses suffered by business in case of failure are limited to amount of investment, 2) life of it does not depend on any one owner
Disadvantages of Corporations	1) face more rules and regulations and watched more carefully by states in which they operate and must file regular reports, 2) no one individual has to take responsibility for business operations and decisions, 3) usually are taxed at a higher rate
The Business Plan	purpose of business, Descriptions of business' customers & important needs, Major business activities to be completed, Resources needed, Sources of financing & amt, type of competition, Financial req. & profit projections
business plan	a written document prepared to guide the development and operation of a new business
Using the Business Plan	Prospective Partners & Stockholders, Bankers and Investors, Employees of the Business, Other Business People