Product liability could be classified as a source of tort liability.
Valuing a company is an easy task that results in a precise figure.
Prestige pricing (setting a high price to convey an image of high quality or uniqueness)
is a pricing tactic that reflects competitive advantage.
You Make the CallSituation 3
Corinna Lathan is co-founder and CEO of AnthroTronix, which is currently located in
the business incubator at the University of Maryland. Founded in July 1999, the
company is a human factors engineering firm committed to optimizing interactions
between people and technology.
With co-founder Jack M. Vice, Lathan is developing a Muppet-like robot for use as a
therapeutic tool with children with speech, learning, and physical disabilities. The robot
has been tested at a Maryland hospital, where the medical director says the kids using
the device have shown measurable improvement. Here’s how the robot, named
JesterBot, works:
A child puts on leg- or armbands and a hat embedded with radio transceivers and
sensors. By waving a hand, say, or nodding her head, she sends out radio signals that
are interpreted by a central processing unit in the JesterBot. During exercises, the
JesterBot can gauge a child’s range of motion, while electronically reporting the results
of the session to a therapist via a data port hooked up to a PC.
To launch the product, the company needs additional funding, which it hopes to get
soon.
Source: Nicole Ridgway, “Robo-Therapy,” Forbes, Vol. 167, No. 11 (March 14, 2001),
p. 216.
Question 1 When the product is ready to launch, what kinds of promotion should the
company use? Why?
Question 2 What techniques might this firm use to set the promotional budget?
Question 3 In what way, if any, could Internet promotion help this business?
Trade shows are accurately profiled as “free advertising.”
Small business owners sometimes accept higher levels of debt because doing so permits
them to retain all of the stock and full ownership.
The major difference between the cash method and the accrual method of accounting is
the point at which the firm reports revenue and expenses.
The three primary types of personnel-oriented risks are dishonesty of current
employees, competition from current employees that take on ‘side jobs,” and the loss of
key executives.
Effective collaboration by members of a management team requires personal
compatibility and cooperation of team members.
The ability to enjoy one-on-one contact with customers has always been a competitive
advantage for large firms.
In earlier years, the leveraged buyout became synonymous with the bust-up leveraged
buyout.
Franchising organizations frequently extend financial assistance to franchise applicants
that seem to be suitable prospects with a high probability of success.
Trade missions can provide a useful means for a firm to explore the potential for
international business.
You Make the CallSituation 4
Stuart Mize had worked with his father in a successful building materials business. The
family had sold the company, and Mize had received a portion of the sales price. After
several months, he began thinking about starting or buying a company. One of his
hobbies was backpacking; he had hiked the highest peaks in 30 of the 50 states. In his
search for a new business, Mize heard of a company that made small trailers for
motorcycles. These trailers were fairly popular with retirees who were cyclists and with
individuals who liked to travel on motorcycles in order to go where a car could not go.
After several meetings, Mize and the current owner of the firm negotiated a selling
price and the deal was consummated. Immediately after the purchase, Mize moved the
business from its present location to his hometown, several hundred miles away.
Question 1 Why should Mize buy the company instead of starting his own firm?
Question 2 What are the pros and cons for Mize of buying this particular business?
Question 3 Do you think Mize made a mistake in moving the business to his
hometown?
High-tech ventures usually require more initial financing than service businesses.
In a practice known as pledging, a business sells its accounts receivable to a finance
company, and the finance company assumes any bad-debt risk.
Name and define three categories of assets.
Customer accessibility is vital in industries in which the cost of shipping the final
product is high relative to the product’s value.
Better Business Bureaus serve primarily as assistants to district attorneys, helping
expose corrupt business practices.
Kenny Kramm’s idea for FlavorX has been a success because other pharmacies
recognized its value and readily adopted Kramm’s unique system.