Bizdom U 2009: Andrew Hwang

Entrepreneurship: Starting and Operating a Small Business (Ch.1)

Critical Thinking

1. Identify three nonfinancial benefits of entrepreneurship that might be important to you. Write a paragraph about each.

1. 1. Doing What You Want To Do

As an entrepreneur, you are able to create whatever kind of business you please, whether it is a restaurant or online mortgage firm. Additionally, it is primarily up to you as to how your business is operated and executed—you are your own boss, meaning that you can work according to your own schedule and create whatever working conditions you want.

1. 1. Personal Satisfaction

I believe that entrepreneurs find personal satisfaction in the work that they do because they choose to do it. Nobody necessarily gives them orders or forces them to practice their business in any other way but their own. If you love what you are doing, chances are, you are going to perform it at high levels and most importantly, you will have fun doing it.

c. Accomplishing Your Own Goals

Entrepreneurs have a chance to do something many corporate employees never get a chance to do—they get the opportunity of accomplishing their own goals, rather than the goals of their boss. This is the most significant benefit of entrepreneurship to me because I highly value being determined and goal-oriented.

1. Describe an idea for a business that you have. Explain how it could satisfy a consumer need.

My business idea is to establish a commercial real estate investment and management firm in the city of Detroit. As of now, there are many buildings whether retail, office, industrial, or multifamily housing that are unoccupied or abandoned. As a part of my plan, I would like to invite investors to the city and partner with them, which would give me minority ownership. As a part-owner, my goal would be to obtain the managing rights to the properties. I could then higher my own company to manage the building, which can include all janitorial services, maintenance, sales, renovation, development, etc. In the context of Detroit, this would satisfy consumer needs by creating retail, housing, and jobs for investors and city residents.

Key Concepts

2. Explain how profit works as a signal to the entrepreneur.

Entrepreneurs start a business in hopes of generating profit. The concept is simple—if you are profiting, you should stay in the business and figure out how to increase your profit margin. However, if you are steadily losing money, you should probably shut down your operations and develop a different idea. Often times, entrepreneurs make slight changes to their business and evaluate how their profits fluctuate. Depending on whether profits increase or decrease, the changes should be implemented.

4. Describe three things you have learned about capitalism

First and foremost, I learned that capitalism is based on a system of free enterprise, meaning that people are allowed to voluntarily trade goods or services with one another. This allows the market to grow and create wealth because people value things differently. Secondly, capitalism is a vital ingredient of this globalizing world. With free trade, companies constantly have to innovate and improve because of the increase in competition. As a result, consumers benefit from new products and services at lower prices. Lastly, capitalism gives opportunities for entrepreneurs to implement their own ideas and profit from them.

Entrepreneurship (Ch. 2)

Critical Thinking

(1)

Business Definition Question Responses

1. Real Estate investment and partnershipà My business model will dig deeper into the management aspect of partnership.  I want to build a network of investors that want to invest together (with me) knowing that my company will hold a minority share in their investment(s).  With that minority ownership, my company will also hold the management rights.  Therefore, my real money maker will not be in the part ownership, but contracting out all management services (janitorial, waste management, construction, remodeling, developing, etc.) to my subsidiary companies.   
   
   
2. I am looking for a group of real estate investors that are willing to partner with me in purchasing commercial property.  They will know before hand how the ownership will be distributed as well as the management policies for each investment.  This can include anywhere from one to how ever many people want to invest.  My target market is people who want part ownership in retail, office, multi-family, and industrial buildings.  The key is to network people together and make large purchases.  Their investment can vary according to the percentage they desire to own.
3. The key ingredient is a strong sales force, which includes me (at least in the beginning).  As a salesman, I would offer my commission back to the investor(s) and contribute towards the down payment in order to gain a small share of each of the commercial properties.  With this as my strategy, I feel that investors can confidently invest with me because they know I am partnering with them.

Competitive Advantage Question Responses

1. I will be a minority partner investor and not just a salesman trying to make a quick sale.  I can assure investors my undivided attention towards any transaction because I will be fully involved in the management of each property.

1. Primarily, I am looking for people with money who are willing to take risks with me.  Again, the key here is the ability to sell.  I am a firm believer in networking with people that I know and will meet throughout the program.  I have already started building relationships with investors in Oklahoma City who have stated interest in real estate in Detroit.

   My customers: A well-established and networked group of investors who are wanting to make large real estate transactions through the partnership of me (and possibly other investors).

2. The major difference in my business plan is that I am willing to share the risks of the investor(s).  Additionally, as a minority owner, I would be particularly responsible in the management and well-being of all property investments.

 (2)

There are undoubtedly potential clients in foreign countries, especially investors with a lot of money.  There are thousands of millionaires and billionaires in Asia, Europe, and in the Middle East.  I would first target East Asia, particularly South Korea, because I understand the culture well and can fluently speak the language.  I find one of the biggest problems to doing international business is the lack of understanding other cultures.  Lastly, as a Michigan Alum and former Korea University student, it is easy to find networks of other alums located in major cities such as Seoul and Busan. 

(3)

I understand that the competition in terms of commercial real estate is rough, especially with the whole boom this past decade.  However, an important factor to real estate has to do with “knowing the right people”—people that are willing to help me start out and establish relationships. 

Ultimately, the best way for me to compete with international competitors is to perform at “high levels” and maintain a professional client-focused company.  Word of mouth is the best kind of marketing, and it is only good if your service and product is superior to its competitors.  I want to provide that satisfactory experience to my investors so that my company can also take a hold on the international stage in commercial real estate investment and management. 

International Competitors: AIG, The Inland Real Estate Group, Jones Lang LaSalle, and Savills (just to name a few)
 

(4)

·         “The client/customer is always right”

·         “Diligence preservers over any deficiency”

·         “The ultimate mission is the rebuilding and revitalization of Detroit”

Key Concepts

1. price minus the cost of goods sold
2. Business 1: $2100/115= $18.26
   Business 2: 1500/75= $20.0
3. unit of sale- one unit of the product or service a business sells

   $1240/100=$12.4
   $210/100=$2.1
                   -______
                      $10.3

4. Monopolies can charge whatever price they want (assuming there is no government regulation) because they hold all of the market share for a particular product or service.  They are able to do this because they are the only ones who know or have the rights to use its service or product.
   Due to government intervention, monopolies struggle to survive in a free market system and will most likely gain competitors and perhaps even form oligopolies.
5. I think that extremely sophisticated hand-held computers (capable of wi-fi and satellite functions) will replace laptops, cellular phones, PDAs, Blackberrys, mp3 players, and door/car keys.  All of this technology is currently on the market but have not yet been fully integrated for consumer utilization.