Aida Lim

Chapter 8 Assessing a New Venture’s Financial Strength and Viablity Financial Objective of a Firm Most entrepreneurial firms-whether they have been in business for several years or they are starts up- have four main financial objective: 1.       Profitability : Ability to earn a profit. A firm must become profitable to remain viable and provide a return to its owners. 2.       Liquidity : A company’s ability to meet its short-term financial obligations. And even if a company is profitable, but still we should keep a close watch on account receivable and inventories. The reason why company should watch the account receivable because the money owed to it by its customers. And the inventories is its merchandise, raw materials, and product waiting to be sold. 3.       Efficiency : How productively a firm utilizes its assets relative to its revenue and its profits. 4.       ...

Chapter 7 Preparing the Proper Ethical and Legal Foundation Estabilishing a Strong Ethical Culture for a Firm The ethics recources center concluded that the most important thing an organizationcan do to combat ethical misconduct is to establish a strong ethical culture. Steps that an entrepreneurial organization can take to build a strong ethical culture: 1.       Lead by Example : this is the most important thing that any entrepreneur, manager, or supervisor can do to build a strong ethical culture in their organization. For getting the strong ethical culture, the entrepreneur, manager, or supervisor can do: - Communicate ethics as a priority - Set a good example of ethical conduct - Keep commitments - Provides information about what is going on - Support following organizational standards Employees also have responsibilities. The most important things that employees can do to support a strong ethical culture in an organization are to: - ...

Chapter 6 Writing a Business Plan Business plan is a written narrative, typically 25 to 35 pages long that describes what a new business intends to accomplish and how it intends to accomplish it. The reasons for writing a business plan 2 primary reason to write a business plan 1.       Forces a firm’s founders to systematically think through each aspect of their new venture. 2.       Communicate the merits of a new venture to outsiders, such as investors and bankers. Writting a business plan forces a firm’s founders to intently study every aspect of their business, a process that’s hard to replicate in any other way. Who reads the business plan and what are they looking for? 1.       A Firm’s Employees à To articulates the vision and the future plan of a firm. A clearly written business plan also helps a firm’s rank and file employees operate in sync and move forward in a consistent and purpo...

Summary Chapter 5 Industry and Competitor Analysis Industry analysis is a business research that focuses on the potential of an industry. Industry analysis is important because it help the company to think about the position at the both of company level and the product or service level. Studying Industry Trends 1.       Environmental Trends. 2.       Business Trends. The 5 Forces Model à A framework entrepreneur use to understand an industry’s structure. The framework is comprised to the forces that determine industry profitability. Each of porter’s 5 forces affects the average rate of return for the firms in an industry by applying pressure on industry profitability. 1.       Threat of Substitutes à the product or services from other industries can’t easily serve as substitutes for the products or service being made and sold in the focal firm’s industry. 2.      ...