ESB exam

• Reasons for choosing a C-Corporation:

  • Best if the company plans to someday sell stock to the public; can issue shares to founders, employees, and investors
  • Unlimited owners (aka "shareholders") allowed
  • Shareholders are not personally responsible for business liabilities
  • Taxed twice-business pays at the corporate level, and shareholders pay on income received. A separate tax return is required for the business
• 1. Corporation:

  • Offers many of the same benefits as a C Corporation, but better for smaller businesses
  • 100 shareholders maximum allowed. All must be U.S. citizens or residents
  • Shareholders are not personally responsible for business liabilities
  • Taxed once-only the shareholders pay on profits received. A separate tax return is required for the business
• Sole Proprietorship:

  • Best if you need an easy set-up. You may still need a DBA or business licenses to operate legally, but no other paperwork is required
  • One owner maximum
  • The owner is personally responsible for business liabilities. No personal liability protection
  • Taxed once you pay on profits in your personal tax return. Separate tax return not needed
• Limited Liability Company (LLC):

  • Popular choice for business concerned about liability protection
  • Unlimited owners (aka "members") allowed. No shareholders. LLCs cannot go public
  • Members are not personally responsible for business liabilities
  • An LLC can choose how to be taxed by filing form 8832 with the IRS. An LLC can elect to be taxed as a Sole Proprietorship, Partnership, S Corp, or C Corp. An LLC is not recognized globally; you may be taxed as a corporation in other countries
• The Elements of the Design Thinking Process, in their correct order, are:

  • Empathize: Research Your Users' Needs
  • Define: State Your Users' Needs and Problems
  • Ideate: Challenge Assumptions and Create Ideas
  • Prototype: Create Solutions
  • Test: Try Your Solutions
• Empathize stage:

  • Acquire an empathetic understanding of the problem through user research
  • Empathy is crucial for a human-centered design process to gain real insight into users and their needs
• Define stage:

  • Analyze observations and synthesize them to define core problems
  • Problem statements are created in this stage
  • Creating personas can help keep efforts human-centered before proceeding to ideation
• Ideate stage:

  • Challenge assumptions and create ideas
  • Use the background knowledge acquired from previous stages to think outside the box and identify innovative solutions
  • Brainstorming is particularly useful in this stage
• Prototype stage:

  • Experimental phase to identify the best possible solution for each problem
  • Produce inexpensive, scaled-down versions of the product to investigate ideas
  • Could be as simple as paper prototyping
• Test stage:

  • Evaluators rigorously test the prototypes
  • Design thinking is iterative, so teams often use results to redefine problems and make further iterations, alterations, and refinements to find or rule out alternative solutions
• Types of intellectual property protection:

  • Trademark: protects brand names and logos used on goods and services
  • Copyright: protects original works such as art, writings, or music
  • Patent: protects an invention
  • Trade Secrets: confidential information that may be sold or licensed
• Example:

  • Apply for a patent to protect the invention of a new kind of vacuum cleaner
  • Register a trademark to protect the brand name of the vacuum cleaner
  • Register a copyright for the TV commercial used to market the product
• Price Skimming:

  • Involves setting high prices when a product is introduced and then gradually lowering the price as more competitors enter the market
  • Ideal for businesses entering emerging markets
  • Gives the opportunity to capitalize on early adopters and undercut future competitors as they join an already-developed market
• Market Penetration:

  • Opposite of price skimming
  • Take over a market by undercutting competitors and then raise prices once a reliable customer base is developed
  • Factors to consider include the business's ability to potentially take losses upfront and establish a strong footing in the market
  • Crucial to develop a loyal customer base, which may require other marketing and branding strategies
• Premium Pricing:

  • For high-quality products marketed to high-income individuals
  • Requires a "luxury" or "lifestyle" branding strategy to appeal to the right type of consumer
• Economy Pricing:

  • Targets customers looking to save as much money as possible on goods or services
  • Examples include big box stores like Walmart and Costco
  • Adoption of economy pricing model depends on overhead costs and the overall value of the product
• Bundle Pricing:

  • Companies pair several products together and sell them for less money than each would be individually
  • Good way to move inventory quickly
  • Successful strategy involves profits on low-value items outweighing losses on high-value items included in a bundle
• Opportunities identified in a SWOT analysis provide a ready-made list of new goals for the business to reach
• Threats identified in a SWOT analysis are typically external factors and can be difficult to mitigate
• For example, economic uncertainty is virtually impossible to fully mitigate
• Acting on weaknesses identified in a SWOT analysis is necessary for business growth
• Strengths are successful characteristics of the business
• Acting upon strengths involves doing more of what the business is already good at