“Me, too” strategies are used by very few new ventures.
Computer software packages can help a small business manager with some aspects of
an accounting system but are generally not available to help prepare income statements
or balance sheets.
Ownership in a corporation is evidenced by stock certificates.
The primary purposes of the Equal Credit Opportunity Act are to inform consumers
about terms of a credit agreement and to require creditors to specify how finance
charges are computed.
Every group to which an individual belongs is a reference group for that consumer.
You Make the CallSituation 2
Tom Anderson started his records storage business in the New York metropolitan area in
1991. His differentiation strategy was to offer competitive prices while providing
state-of-the-art technology, easy access to his warehouse, and, of course, great service.
After opening the business, Anderson learned that most potential customers had already
signed long-term storage contracts with competitors. These contracts included a
removal fee for each box permanently removed from the storage company’s warehouse,
making it difficult for customers to consider switching.
Anderson believes that the survival of his company hinges on his view of what the
essence of his business is. In other words, is he operating a storage company or a real
estate business? He is convinced that he must answer this question before making any
decision regarding pricing strategy.
Question 1 What do you think Anderson means when he asks, “Is my business storage
or real estate?” Why do you think he feels a need to ask this question prior to
developing a pricing strategy?
Question 2 What pricing strategy would be effective in combating the existing
contractual relationships between potential customers and competitors?
Question 3 Assuming that business costs would allow Anderson to lower prices, what
problems do you see with this approach?
Question 4 Do you believe his business could benefit from offering credit to
customers? Why or why not?
Change may be the most important source of opportunities for entrepreneurial firms.
The turnover ratios for accounts receivable and inventories are used for one
purposeassessing the firm’s liquidity.
Marketers create needs that offer unique motivations to consumers.
The inventory turnover ratio indicates whether a company is holding excessive stocks
of inventory.
In conducting a comprehensive break-even analysis, a firm must examine both its
revenue-cost relationships and sales forecasts.
Strong industry forces tend to lead to low profits, whereas weak forces yield high
profits.
The general environment is positive in its impact on the small firm and its performance.