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Class 10

Class 10. Exam 2 discussion Assignment 6 review and in-class debrief Risk Management Location Resources RMA, Association Directories, SPACE publication, etc. Risk Management Strategies. Risk Management Strategies. Risk avoidance Risk reduction Risk anticipation Risk transfer.

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Class 10

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  1. Class 10 • Exam 2 discussion • Assignment 6 review and in-class debrief • Risk Management • Location • Resources • RMA, Association Directories, SPACE publication, etc.

  2. Risk Management Strategies

  3. Risk Management Strategies • Risk avoidance • Risk reduction • Risk anticipation • Risk transfer

  4. High severity High probability High loss = High Risk Low severity Low probability Low loss = Low Risk Figure 20. The Risk Pyramid. AAA AAB ABA BAA AAC ABB ACA BAB BBA CAA AAD ABC ACB ADA BAC BBB BCA CAB CBA DAA ABD ACC ADB Event Severity of event Probability of event Loss from event _____ A-D A-D A-D

  5. Major Types of Insurance Start with a basic business owner’s policy (BOP); then, consider adding property and casualty insurance: • Property • Extra expense coverage • Business interruption • Machinery and equipment • Electronic data processing (EDP) • Surety • Marine • Crime

  6. Major Types of Insurance • Start with a basic business owner’s policy (BOP); then, consider adding life and disability insurance: • Life • Key-person • Disability

  7. Major Types of Insurance • Start with a basic business owner’s policy (BOP); then, consider adding health insurance and workers’ compensation: • Traditional indemnity plans • Managed care plans • HMOs • PPOs • Medical Savings Accounts (MSAs) • Self-insurance • Workers’ Compensation

  8. Major Types of Insurance • Start with a basic business owner’s policy (BOP); then, consider adding liability insurance: • Auto • Professional liability • Employment practices liability

  9. Controlling Insurance Costs • Aggressively pursue a loss-control program. • Increase your policies' deductibles. • Work with a qualified professional insurance broker or agent.

  10. Controlling Insurance Costs • Find an agent who understands your needs. • Find insurance companies that want small companies’ insurance business. • Conduct a periodic insurance audit.

  11. Controlling Health Insurance Costs • Increase employees’ insurance contributions or deductibles. • Switch to HMOs or PPOs. • Join an insurance pool. • Conduct a yearly utilization review.

  12. Controlling Insurance Costs • Make sure your company’s health plan fits the needs of your employees. • Create a wellness program for employees. • Conduct a safety audit. • Create a safety manual and use it. • Create a safety team.

  13. Location, Layout, and Physical Facilities

  14. Choosing a Location • The right region of the country • The right state in the region • The right city in the state • The right site in the city

  15. Choosing the Region:Sources of Information • Census data • World Wide Web • U.S. Census Bureauhttp://www.census.gov/ • Oregon State’s Government Information Sharing Projecthttp://govinfo.kerr.orst.edu/ • AmeriStathttp://www.ameristat.org

  16. Choosing the Region:Sources of Information • American Demographics • Demographics USA • Lifestyle Market Analyst • Markets of the U.S. for Business Planners • Rand McNally's Commercial Atlas and Marketing Guide

  17. Choosing the Region:Sources of Information • The Sourcebook of County Demographics • Sales and Marketing Management’s Survey of Buying Power • Editor and Publisher Market Guide • The American Marketplace: Demographics and Spending Patterns • Zip Code Atlas and Market Planner

  18. Geographic Information Systems(GIS) • Computerized programs combining map-drawing with database management capability. • Search through virtually any database and then plot the results on a map. • Visual display reveals otherwise hidden trends.

  19. Selecting the State Factors to consider: • Proximity to markets • Proximity to raw materials • Labor supply needs • Wage rates • Business climate

  20. Selecting the City • Population trends and density • Competition • Clustering • Index of Retail Saturation (IRS) • Costs • Local laws and regulations • Compatibility with community

  21. Selecting the City • Quality of life • Transportation networks • Police and fire protection • Cost of utilities and public services • Location’s reputation

  22. Retail and Service Location Considerations • Trade area size • Retail compatibility • Degree of competition • Transportation network • Physical, cultural, or emotional barriers • Political barriers

  23. Retail and Service Location Considerations continued • Customer traffic • Adequate parking • Reputation • Room for expansion • Visibility

  24. Retail and Service Location Options • Central Business Districts (CBDs) • Neighborhood locations • Shopping centers and malls • Neighborhood shopping centers • Community shopping centers • Regional shopping centers • Power centers

  25. Shopping Centers and Malls • Neighborhood Shopping Centers • 3 to 12 Stores; anchor is supermarket or drugstore • Community Shopping Centers • 12 to 50 stores; anchor is department or variety store • Regional Shopping Malls • 50 to 100 stores; anchor is one or more major department stores • Power Centers • Combines drawing power of a mall with convenience of neighborhood shopping center

  26. Retail and Service Location Options continued • Near competitors • Outlying areas • Home-based businesses

  27. Manufacturing Locations • Foreign trade zones

  28. How a Foreign Trade Zone (FTZ) Works U.S. Sales Small Company No FTZ Duty Paid Imported Parts and Materials Store Exports Assemble U.S. Sales Package Duty FTZ Paid Manufacture No Duty Paid Imported Parts and Materials Process Mix Exports

  29. Manufacturing Locations • Foreign trade zones • Empowerment zones • Business incubators

  30. Business Incubators • Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents. • More than 900 in operation across the U.S., and a new one opening, on average, every week. • They work!! Firms that “graduate” from incubators have a success rate of 87%. • Average incubator houses 17 businesses employing 55 people.

  31. Local Incubator • Nussbaum Center for Entrepreneurship • Largest incubator in NC • Houses 56 businesses • Small Business Resources: • GTCC Small Business Center • Small Business & Technology Development Ctr. • Piedmont Entrepreneurs Network • Link to the Nussbaum Center web site

  32. Layout:External Factors • Adequate size to accommodate business needs. • Create the proper image or “personality” for the business in the customer's eyes. • Entrances must invite customers to come in.

  33. Layout:External Factors continued • Create effective window displays and change them often; they can be powerful sales tools. • Must comply with Americans with Disabilities Act. • Pay attention to the business sign, the most direct method of reaching potential customers.

  34. A Business Sign • Tells potential customers who you are and what you're selling. • Must comply with local sign ordinances. • Should be visible, simple, and clear. • Should be changed periodically to avoid becoming part of the background. • Should be legible both day and night. • Must be maintained properly.

  35. Building Interiors • Ergonomics is an integral part of any design. • Proper layout and design pays off in higher productivity, efficiency, or sales. • Proper lighting is measured by what is ideal for the job being done. • Careful selection of colors can create the desired impressions among customers and employees. • Appealing to all of the customer's senses can boost sales.

  36. Three Layout Patterns • Grid • Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently. • Supermarkets and self-service discount stores.

  37. Three Layout Patterns • Free-Form • Free-flowing; informal; creates “friendly” environment; flexible. • Small specialty shops.

  38. Three Layout Patterns • Boutique • Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment. • Small department stores.

  39. Layout Guidelines • Know your customers buying habits and plan your layout accordingly. • Display merchandise as attractively as your budget will allow. • Display complementary items together. • Recognize the value of floor space; never waste valuable selling space with nonselling functions.

  40. Factors to Consider in Manufacturing Layouts • Type of product • Type of production process • Ergonomic considerations • Economic considerations • Space availability within the facility

  41. Manufacturing Layouts • Product layout • Process layout • Fixed position layout • Functional layout

  42. Next Week • Global Opportunities • Pricing considerations – retail and service • Discussion of Assignment 7

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