Term
| Why do new ventures seeks growth? |
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Definition
| Economies of scale, market leadership and high profitability (Scalable Business model) |
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Term
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Definition
| increased revenues cost less to deliver than current revenues |
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Term
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Definition
| New ventures that grow rapidly, 80% annual growth sales over at least 3 years |
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Term
| Major Challenges for growth |
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Definition
1. Rapid growth isn't for everyone
2. Managerial capacity
3. Day to day challenges |
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Term
| Why isn't rapid growth for everyone? |
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Definition
| rapid growth may cause founders to lose sight of initial business model, people who cannot devote enough time and if growth is not carefully directed |
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Term
| How does managerial capacity sometimes limit growth? |
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Definition
| Managerial capacity is stretched, challenge to manage expanded number of products/service, growth comes at a significant cost |
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Term
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Definition
| the skills and experience necessary to take advantages of opportunities for new products/services that could help the business expand |
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Term
| Founder Characteristics associated with high growth |
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Definition
| growth vision, passion, tenacity, self efficacy, new resource skill and challenging goals |
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Term
| Characteristic of high growth ventures |
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Definition
| Characteristics of founders, attributes of company, business practices and human resource practices |
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Term
| Attributes of the company |
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Definition
| value growth, form relationships with other companies and plan for growth |
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Term
| Forming relationships many affect the rate of growth by... |
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Definition
| reducing cost, ability to move to market faster and gain more knowledge |
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Term
| Human resource practices that promote growth |
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Definition
| hiring selectively, offering meaningful incentives (profit sharing, bonuses, stock options) |
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Term
| Business Practices that promote growth.. |
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Definition
| Superior products, create unique value for customers, and innovation |
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Term
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Definition
| strategies that involve efforts from within the company itself. |
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Term
| Internal Strategies for encouraging growth |
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Definition
| new product development, improving existing products/services, expand market, go global, adopt innovative business practices |
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Term
| External Strategies for encouraging growth |
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Definition
| mergers and acquisitions, licensing intellectual property, joint ventures and strategic alliances |
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Term
| Strategies for transferring ownership to family members |
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Definition
| share the power gradually, form a Limited partnership or set up a trust |
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Term
| transferring ownership to family members: Form limited partnership |
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Definition
| transfer majority of shares to family members but act as the general partner to retaining control of daily operations |
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Term
| transferring ownership to family members: Set up trusts |
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Definition
| trustees receive legal tittle (stock in company) and hold it for the beneficiaries for a specific time period after which beneficiaries receive tittle to stock and control |
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Term
| Strategies for sale or transfer of ownership to insiders |
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Definition
| Succession, leveraged buyout, employee stock ownership plans |
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Term
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Definition
| spells out in detail how how and when the owner will transfer ownership and control to the designated successor |
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Term
| Leveraged Buyout (When managers become owners) |
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Definition
| Managers borrow money to pay the owner an agreed upon price. New owners pledge their stock as collateral or lenders accept an equity position in the company to cover all/part of the funds |
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Term
| Employee Stock Ownership Plans (gradual transfer of ownership to employees) (ESOP) |
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Definition
| Ordinary ESOP, leveraged plan or transfer ownership plan |
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Term
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Definition
| Balance sheet methods, earnings methods and market method |
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Term
| Evaluating a company: Balance Sheet Method |
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Definition
| Net worth= Assets-liabilities |
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Term
| evaluation of company: Earnings Methods |
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Definition
| Excess earning methods, capitalized earning methods and discounted future earnings method |
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Term
| Evaluating a Company: Market Method |
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Definition
| Market value or price-earnings approach (Most used for public companies, comparing PE ratios) |
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Term
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Definition
| New equity capital, liquidity, prestige and recognition, personal wealth and market provides continuing valuation of worth |
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Term
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Definition
| legal fees, accounting fees, and printing of documents |
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Term
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Definition
| loss of capital, disclosure, sarbanes-Oxley Act and expenses |
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Term
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Definition
Chapter 7
Chapter 11
Chapter 13 |
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Term
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Definition
| most common types, company just ceases to exist |
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Term
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Definition
| companies engage in reorganization effort to save the company. Only available to companies that have significant resources and a chance to recover. (only 1% of companies are allowed to take this route) |
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Term
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Definition
| companies are allowed to pay their creditors in installments and are required to show how they will pay back (29% of companies) |
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Term
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Definition
| two independent companies, generally of similar size join to become a single company |
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Term
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Definition
| a company purchases another |
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Term
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Definition
| Employee stock ownership trust, gradual transfer of shares to employees. Shares are held in a trust for employees |
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Term
| Transfer of Ownership plan |
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Definition
| company makes cash contributions to ESOT, which then uses these fund to purchase existing shares from stockholders (Owner, family members etc) rather than opening it up to the market |
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