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SmallBusinessManagementProfessorHornadayLecture1Entrepreneurship-InnovativeEconomicLeadershipSmallBusiness-Self-employedManagementCompetitiveAdvantagesofSmallBusinessTheyOfferSuperiorQuality&Servicesuchas:1.Flexibility2.ShortDecisionTime3.ShortProductionRuns4.SmallInventoryHoldings5.PersonalContactwithCustomersCompetitiveAdvantagesofSmallBusinessAssupplierstolargefirms,smallbusinessescanofferlowpricesbecausetheyhavelowoverheadcosts.Smallretailfirmscannotcompetewithlargerretailchainstoresonprice,buttheyofferconsumerssuperiorservice.Porter’sGenericStrategiesCompetitiveAdvantageCompetitiveScopeBroadTargetNarrowTargetLowerCostDifferentiation1.CostLeadership2.Differentiation3A.CostFocus3B.DifferentiationFocusBigBusinessandSmallBusinessBigBusinessSalariedTopLevelManagersarenotOwners;PersonalAssetsnotatRiskFunctionalandSpecialStaffPriceMakers(Buy&Sell)OligopolyorMonopolySmallBusinessOwnerisManager;PersonalAssetsatRisk;OwnerIncomefromProfitsGeneralist;LittleStaffExpertisePriceTakers(Buy&Sell)CompetitiveMarkets-SupplyandDemandTheMarketingNicheSmallFirmsNeedaNicheCharacteristicsofViableNicheIdentifiableMarketSegmentSatisfytheSegmentataProfitDefendagainstALLCompetitorsImportanceofU.S.SmallFirmsContributeabout51%ofU.S.GDP13%ofAllWorkersSelf-Employed47%ofallSalesintheU.S.52%ofthePrivateWorkforceCreateabout76%ofNewJobsMajorSourceofInnovationFlexibilitytoMeetShortTermFluctuationsEconomicShockAbsorbersSmallFirmEmploymentinU.S.IndustryAllAgriculture,Forestry,FishingMiningConstructionManufacturingTransportationWholesaleTradeRetailsTradeFinance,Insurance,RealtorsService%inSmallFirms50%77%45%76%26%45%79%74%59%45%U.S.BusinessPopulationNewFirmsTakeOversQuitsNetTotal19907691468445,36319917261388215,67919927371388185,73519937801368015,85019948071378025,991000’sofFirmsSource:SBA,1994NumberofU.S.FirmsbySizeEmployeesperFirmNumberofFirms%ofAllFirmsRevenuesperFirm*Total,AllFirms5,051,025100%$1,802Lessthan204,528,89989.7%$38420-99439,8118.7%$3,599100-49968,3381.3%$17,450500+13,977.03%$327,940Source:IRS,1994TheAverageU.S.MillionaireA57-Year-OldMarriedManwith3ChildrenSelf-Employed:Farmer,ServiceFirmorConstructionMedianHouseholdIncomeof$131,000MeanHouseholdNetWorthof$3.7MillionOwnsaHomeValuedat$320,000FirstGenerationWealthyDrivesanOlderAutomobileAttendedPublicSchoolsSendsChildrentoPrivateSchoolsThreePhasesofOwnership1.StartupBecomeaGoingConcern2.GetonDesiredGrowthTrackLimited,Rapid,Controlled3.GetOutSell,PasstoFamily,Liquidate-100-80-60-40-20020406080100120TimeProfitsLine1SmallBusinessManagementGILDER'SDIVINGBOARDMODELGoingConcernLevelTimeRevenueSmallBusinessManagementOwnerStrengthsTechnicalCompetenceMarketingCompetenceFinancialCompetenceHumanRelationsCompetenceSmallBusinessManagementFailureFactorsManagementIncompetenceLackofExperiencePoorFinancialControlLackofCapitalLaxCustomerCreditOverinvestinginFixedAssetsFailuretoPlanInappropriateLocationLackofInventoryControlImproperAttitudesSmallBusinessManagementAvoidingPitfalls1.KnowBusinessinDepth2.PLAN!3.UnderstandFinancialStatements4.ManageFinancialResources5.SeekProfessionalAssistance6.KeepinTunewithYourselfCaseAnalysisFormatI.Identifythemainissueinthecaseinyourintroductorysentence.II.ExternalSituationofimportancetothisCompanyA.TargetMarketSegmentB.CompetitorsC.UniqueProblems/OpportunitiesIII.CompanyAnalysisA.ProductLinesB.IndustryPositionC.FinancialPositionD.OperationalCondition1.Technology2.Personnel3.Structure4.ProductionCapacityE.OwnerorTopManagementCapabilities/WeaknessesIV.BriefSWOTV.Goal/StrategyIdentificationandEvaluationA.Whatarethefirm'smainGoalsandStrategies?B.ArepresentGoalsandStrategiesappropriate?VI.RecommendationA.Continuepresentgoal/strategymix.Justifyyourrecommendation.or.....B.Presentandjustifynewgoalsand/orstrategiesyoufeelarerequired.