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AOF Entrepreneurship Unit 3, Lesson 8 NavBuigating siness Growth Copyright © 2009–2012 National Academy Foundation. All rights reserved.
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Entrepreneurs’ goals and values help them choose the best strategies for growth and maintenance of the business
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A partnership enables an entrepreneur to share the risk and responsibility of owning and managing the business Benefits of partnerships: Shared workload Combined skills Drawbacks of partnerships: Shared profits Loss of total control
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Licensing and franchising a business allows an entrepreneur to increase profits through royalties Benefits of licensing and franchising: Revenue without direct effort Increased brand recognition Growth with low financial risk Drawbacks of licensing and franchising: Risk to brand image by poor franchisee Reduction of potential markets
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Benefits of acquisitions and mergers: Can finance growth that wouldn’t otherwise be possible Gives entrepreneur the option of staying or leaving Drawbacks of acquisitions and mergers: Long, complex process to close Deal often comes apart during negotiations Two strategies for growing the company with an immediate infusion of assets are acquisitions and mergers
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Globalization is one way for a company to grow—by selling products and services to untapped markets Benefits of globalizing: 95% of the world’s population lives outside the United States—many markets are untapped. Selling to multiple markets diversifies a business’s “portfolio,” making it less susceptible to downturns in one market. Drawbacks of globalizing: Hard to gauge partner creditworthiness Exchange-rate fluctuations Language barriers
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Entrepreneurs manage business growth by choosing a strategy and selecting the options that help reach that goal Entrepreneurs have several options to help them promote and manage their business’s growth. A few of these are: Partnerships Licensing and franchising Mergers and acquisitions Globalization
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