Transcript Document

MT209, Small Business
Management
Unit 9 Seminar
Unit 9 Seminar Game Plan
 Course Check-In
 Course Website Check-In
 Course Activities & Assignments Check-In
 Review Unit 7 & 8 Content
 Content Review
 Assignment Review
 Unit 9 Check-In
 Look Ahead to End of Course & Term
UNIT 7 Review- Setting a Price
 Price
 A specification of what a seller requires in exchange for
transferring ownership or use of a product or service.
 Prices set too low, loss in revenue
 Price set too high, loss in revenue
 Price and demand are related for many goods and services
 Credit
 An agreement between a buyer and a seller that provides for
delayed payment for a product or service.
16–3
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Exhibit 16.1 The Three Components of Total Cost in Determining Price
16–4
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Cost Determination for Pricing
 Total Cost
 The sum of cost of goods sold, selling expenses, and overhead
costs.
 Variable Costs
 Costs that vary with the quantity produced or sold.
 Fixed Costs
 Costs that remain constant as the quantity product or sold varies.
 Average Pricing
 An approach in which total cost for a given period is divided by
quantity sold in that period to set a price.
16–5
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How Customer Demand Affects Pricing
 The Elasticity of Demand
 The degree to which a change in price affects the
quantity demanded.
 Elastic Demand
 Demand that changes
significantly when there
is a change in the price
of the product.
 Inelastic Demand
 Demand that does not change
significantly when there is a
change in the price of the product.
16–6
Price
Inelastic
Elastic
Demand
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Learning, Inc. All rights reserved.
Pricing and Competitive Advantage
 Pricing and Competitive Advantage
 Customers will demand and pay more for a product or service that
they perceive as important to their needs.
 Prestige Pricing
 Setting a high price to convey an image of high quality or uniqueness
(competitive advantage).
 Customers associate price with quality.
 Markets with low levels of product knowledge are candidates for
prestige pricing.
16–7
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Learning, Inc. All rights reserved.
Applying a Pricing System
 Break-Even Analysis
 A comparison of alternative cost and revenue estimates in order to
determine the acceptability of each price.
 Steps in the analysis
 Examining revenue-cost relationships: the quantity at which the product will
generate enough revenue to start earning a profit.
Break-even
units sold
16–8
=
total fixed costs and expenses
selling price – unit variable costs and expenses
© 2010 South-Western, Cengage
Learning, Inc. All rights reserved.
Offering Credit
 Benefits of Credit to Borrowers
 Provides working capital
 Ability to satisfy immediate needs and pay later
 Better records of purchases on credit billing
 Better service and greater convenience when exchanging purchased
items
 Establishment of credit history
16–9
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Learning, Inc. All rights reserved.
Types of Credit
 Consumer Credit
 Financing granted by retailers to individuals who purchase for
personal or family use.
 Trade Credit
 Financing provided by a supplier of inventory to a given company
which sets up an account payable for the amount.
 Terms of sale may be 2/10, net 30—two percent discount on the invoiced
amount if paid in full within 10 days of the invoice date, otherwise the full
amount of the invoice is due in 30 days.
16–10
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Learning, Inc. All rights reserved.
Managing the Credit Process
 Evaluation of Credit Applicants
 Can the buyer pay as promised?
 Will the buyer pay?
 If so, when will the buyer pay?
 If not, can the buyer be forced to pay?
 The Traditional Five C’s of Credit
 Character
 Capital
 Capacity
 Conditions
 Collateral
16–11
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Learning, Inc. All rights reserved.
Small Businesses as Global
Enterprises
 Globalization
 The expansion of international business:
 Converging market preferences
 Falling trade barriers
 Integration of national economies.
 Born-Global Firms
 Small companies launched with cross-border business activities in
mind
 Size does not necessarily limit a firm’s international activity—small companies can
build upon their unique resources to become global competitors.
18–12
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Learning, Inc. All rights reserved.
Questions Before Going Global
 What are management’s objectives?
 Reasons, commitment, expected payoff
 How prepared is management to go global?
 Expertise, responsibility for and time allocated to international
operations, organizational structure
 Is there sufficient production capacity?
 Present capacity, effect of international operations on local
production
 Is there enough financial capacity?
 Capital available for marketing, expansion, payback
18–13
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Learning, Inc. All rights reserved.
Exhibit 18.2 Basic Forces Driving Global Enterprises
18–14
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Exhibit 18.4 Strategy Options for Global Enterprises
18–15
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Learning, Inc. All rights reserved.
UNIT 8 -Entrepreneurial Leadership
 What is Leadership?
 Involves pointing the way: creating and communicating the
entrepreneur’s vision of the firm.
 Varies in a business as it grows larger and more mature.
 Leadership Qualities of Founders
 A tolerance for ambiguity
 A capacity for adaptation
19–16
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Learning, Inc. All rights reserved.
Entrepreneurial Leadership (cont’d)
 What Makes an Effective Leader?
 One who is focused intently on attaining the firm’s business goals.
 One who creates a significant personal relationship with employees
based on loyalty and respect.
 One who directly influences employees’ understanding of how the
firm operates (e.g., its ethics).
 One who makes the firm attractive to new employees.
19–17
© 2010 South-Western, Cengage
Learning, Inc. All rights reserved.
Entrepreneurial Leadership (cont’d)
 Leadership Styles
 Visionary leaders mobilize people toward a vision.
 Coaching leaders develop people, establishing a relationship and trust.
 Affiliative leaders create emotional bonds.
 Democratic leaders build consensus through participation.
 Pacesetting leaders set high standards and expect excellence.
 Commanding leaders demand immediate compliance.
Which type are you??
19–18
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Learning, Inc. All rights reserved.
Entrepreneurial Leadership (cont’d)
 Leaders Shape the Culture of the Organization
 Empowerment
 Giving employees authority to make decisions and take actions on their own
 Work teams
 Groups of self-managed employees with the freedom to function without
close supervision
 Working environment
 Workers are affected by their surrounding
 Good Hiring
 Employees who fit the personality of the firm
19–19
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Learning, Inc. All rights reserved.
Exhibit 19.1 Organizational Stages of Small Business Growth
19–20
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Stages in Firm Growth and Management
Growth Stage
Entrepreneur’s Workload
Stage 1. One-Person Operation
Doing all of the work. Making
contact with customers.
Stage 2. Player-Coach
Continuing to do some of the
basic work, although learning to
hire and supervise.
Stage 3. Intermediate Supervision Rising above hands-on
management; working through
intermediate managers.
Stage 4. Formal Organization
19–21
Using plans and budgets;
following policies and
procedures.
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Learning, Inc. All rights reserved.
Managing Versus Doing
STAGE 1
STAGE 2
STAGE 3
STAGE 4
One-Person
Operation
Player-Coach
Intermediate
Supervision
Formal
Organization
Time spent managing
19–22
Time spent doing
© 2010 South-Western, Cengage
Learning, Inc. All rights reserved.
Creating an Organizational Structure
 The Unplanned Structure
 Structure evolves as the firm evolves.
 Growth creates the need for structural change.
 Chain of Command
 The official, vertical channel of communication in an organization
 A channel for two-way communication
 Span of Control
 The number of subordinates supervised by one manager
19–23
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Learning, Inc. All rights reserved.
Exhibit 19.2 Line-and-Staff Organization
19–24
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Recruiting Personnel
 The Need for Quality Employees
 Employee performance directly or indirectly affects the capability of
the firm to service customer needs.
 Employee performance affects profitability.
 Payroll costs affect firm’s bottom line.
 Quality of employees determines the long-term competitive
potential of the firm.
20–25
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Learning, Inc. All rights reserved.
Diversity in the Workforce
 Workforce Diversity
 Differences among employees in terms of such dimensions as gender,
age, and race.
 Diversity is increasing with higher proportions of women, older
workers, and racial minorities entering the workforce.
20–26
© 2010 South-Western, Cengage
Learning, Inc. All rights reserved.
Unit 9: Final Project Activity:
Financial Management
 Financial Management
 This portion of your mini-business plan should contain summary
information on what financial resources you will need to launch
your business, what types of expenses you will have over the first
three years of operation, and what your financial goals are for the
first three years of operation. Be sure to draw on your work from
the Unit 5 Activity for this segment of the Final Project.
 Please remember: As a guide to help you develop your mini-
business plan, please refer to the content of the Atayne, LLC
business plan on pages 675 to 695 of our textbook.
Unit 9 Information
Reading
Unit 9: Managi Discussion
ng Operations, Final Project:
Assets & Risks Business Plan
Review
Seminar
Preview Unit 10
Writing
Assignment
Discussion
Posts
Final Project:
Business Plan
Paper /PPT
presentation
Review- 20
questions
Please note that the Unit 9 Final Project (Business Plan & MS PowerPoint
Presentation) must be submitted no later than the end of Unit 9. No late
submissions of this important assignment will be accepted to allow time for
grading and submission of final grades for the term.
Unit 10 Information
Unit 10: Reflection Writing
Assignment:
Careers and
Reflection
Paper
Please note that the Unit 10 Writing Assignment must be submitted
no later than the end of Unit 10. No late submissions of this
important assignment will be accepted to allow time for grading
and submission of final grades for the term.
Last Live Seminar!
 This was our last live seminar in MT209
 Thank you for attending tonight’s seminar.
 It was great working with each of you this term!
 Best wishes to you for much success in your upcoming
classes at Kaplan University!!!