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MGMT 140
Exam 2
| Question | Answer |
|---|---|
| Sole Proprietorship | A business owned, and usually managed, by one person |
| Partnership | two or more people legally agree to become co-owners of a business |
| Corporation | A legal entity with authority to act and have liability apart from it's owners |
| Benefits of Sole Proprietorship | Ease of starting and ending the business, being your own boss, pride of ownership, leaving a legacy, retention of company profit, no special taxes |
| Unlimited Liability | Any debts or damages incurred by the business are your debts, even if it means selling your home, car, or anything else. |
| General Partnership | All owners share in operating the business and in assuming liability for the business's debts |
| Limited Partnership | A partnership with one or more general partners and one or more limited partners |
| General Partner | An owner (partner)who has unlimited liability and is active in managing the firm |
| Limited Partner | An owner who invest money in the business, but enjoys limited liability. |
| Limited Liability | liability for the debts of the business is limited to the amount the limited partner puts into the company; personal assets are not at risk |
| Master Limited Partnership | A partnership that looks much like a corporation, but is taxed like a partnershp and thus avoids the corporate income tax. |
| Limited Liability Partnership | Limits partners risk of losing thier own personal assets to the outcomes of only their own acts and omissions and those of people under their supervision |
| Advantages of Partnerships | more financial resources, shared management and broader skills and knowledge, longer survivial, No special taxes |
| Disadvantages of Partnerships | unlimited liability, division of profits, disagreements among partners, difficult to termninate |
| Conventional Corporation | A state-chartered legal entity with authority to act and have liability separate from its owners (Stockholders) |
| Advantages of Corporations | limited liability, ability to raise more money for investment, size, perpetual life, ease of ownership change, ease of attracting talent employees, separation of ownership from management |
| Disadvantages of Corporations | Initial cost, extensive paperwork, Double taxation, two tax returns, Size, Difficulty of termination, Possible conflict with stockholders and board of directors |
| S Corporation | A unique government creation that looks like a coroporation, but is taxed like sole proprietorships and partnerships |
| Limited Liability Company | Similar to an S corporation, but without the elgibility requirements |
| Advantages of LLC's | limited liability, choice of taxation, flexible ownership rules, flexible distribution of profits and losses, operating flexibility |
| Disadvantages of LLC's | No stock, therefore ownership is nontransferable, limited life span, fewer incentives, taxes, paperwork |
| Merger | The result of two firms joining to form one company |
| Acquisition | One company's purchase of the property and obligations of another company |
| Vertical Merger | Joins two firms in different stages of related business |
| Horizontal merger | Joins two firms in the same industry and allows them to diversify or expand their products |
| Conglomerate Merger | Unites Firms in completely unrelated industries in order to diversify business operations and investments |
| Leveraged Buyout (LBO) | An attempt by employees, management or a group of investors to buy out the stockholders in a company |
| Franchise Agreement | An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise)to others (franchisees) in a given territory |
| Advantages of Franchising | Management and marketing assistance, personal ownership, Nationally recognized name, Financial advice and assistance, Lower failure rate |
| Disadvantages of Franchising | large start up cost, shared profit, Management regulation, Coattail effects, Restrictions on selling, Fraudulent franchisors |
| Cooperatives | Businisses owned and controlled by the people who use them- producers, consumers, or workers with similar needs who pool their resources or mutual gain. |
| Entrepreneurship | Accepting the risk of starting and running a business |
| 5 Reasons to start your business right away | 1. you don't have a mortgage or kids to take care of 2. you can survive on little funds and work long hours 3. No disruption in your career path. it hasn't started yet 4. Use of your alma mater for resources |
| Why take the risk? | opportunity, profit, independence, challenge |
| What does it take to be an Entrepreneur? | Self-directed, Self-nurturing, Action-oriented, Highly energetic, Tolerant of uncertainty |
| Entrepreneurial team | A group of experienced people from different areas of business who join to form a managerial team with the skills to develop, make and market a new product. |
| Micropreneurs | Entrepreneurs willing to accept the risk of starting and managing a business that remains small, lets them do the work they want to do, and offers a balanced lifestyle. |
| Intrapreneur | A creative person who works as an entrepreneur within a corporation |
| Enterprise Zones | Specific geographic areas to which governments attract private business investment by offering lower taxes and other government. |
| Incubators | Offer new businesses low-cost offices with basic services |
| Small business | Independently owned and operated, not dominant, in its field of operation and meets certain standards of size. |
| Advantages of SMALL over BIG business | 1. more personal customer service. 2. The ability to respond quickly to opportunities |
| Major business functions | planning, financing, knowing customers, managing employees, keeping records |
| Business Plan | A detailed written statement that describes the nature of the business, the target market, the advantages of the business will have over competition, and the resources and owners qualifications |
| Sources of capital | personal savings, relatives, former employers, banks & finance companies, government agencies, angel investors |
| Venture capitalists | Individuals or companies that invest in new businesses in exchange for partial ownership |
| Small Business Administration | A US gov agency that advises and assist small businesses by providing management training and financial advice |
| Small Business Investment Company | A program through which private investment companies licensed by the SBA lend money to small businesses |
| Market | Consumers with unsatisfied wants and needs who have both resources and willingness to buy |
| Management | The process used to accomplish organizational goals through planning, organizing, leading and controlling people and other organizational resources. |
| 4 Functions of management | Planning, Organizing, leading, controlling |
| Vision | More than a goal, it's a broad explanation of why the organization exists and where it's trying to go. |
| Mission Statement | Outlines the organization's fundamental purposes. |
| Goals | The broad, long-term accomplishments an organization wishes to attain. |
| Objectives | Specific, short-term statements detailing how to achieve the organization's goals |
| SWOT Analysis | Analyzes the organization's Strengths, Weaknesses, Opportunities and Threats |
| Strategic Planning | Done by top mgmt. and determines the major goals of the organization and the policies, procedures, strategies and resources it will need to achieve them. |
| Tactical Planning | The process of developing detailed, short-term statements about what is to be done, who is to do it and how |
| Operational Planning | The process of setting work standards and schedules necessary to implement the company's tactical objectives |
| Contingency Planning | The process of preparing alternative courses of action the firm can use if its primary plans don't work out. |
| Problem Solving | The process of solving the everyday problems that occur; less formal than decision making and needs quicker action |
| Organizational chart | A visual device that shows relationships among people and divides the organization's work; it shows who reports to whom. |
| Chief Executive Officer (CEO) | Introduces change into an organization |
| Chief Operating Officer (COO) | Implements CEO's changes. |
| Chief Financial Officer (CFO) | Obtains funds, plans budgets, collects funds, etc. |
| Chief Information Officer (CIO) | Gets the right information to the right people so decisions can be made |
| Technical Skills | The ability to perform tasks in a specific discipline or department |
| Human Relations Skills | Skills that involve communication and motivation; they enable managers to work through and with people |
| Conceptual Skills | Skills that involve the ability to picture the organization as a whole and the relationship among its various parts |
| Interns | Doing lots of work for little money, they are the future of the company and industry |
| Lawyers | Many do pro bono work, even for nonprofit companies |
| The little people | Mailroom, repair, and cleaning staff keep the office running day-to-day |
| Staffing | Recruiting, hiring, motivating and retaining the best people available to accomplish the company's objectives |
| Transparency | The presentation of the company's facts and figures in a way that is clear and apparent to all stakeholders |
| Autocratic Leadership | Making managerial decisions without consulting others |
| Participate or Democratic Leadership | Managers and employees work together to make decisions |
| Free-Rein Leadership | Managers set objectives and employees are free to do whatever is appropriate to accomplish those objectives |
| Economies of Scale | Companies can reduce their production costs by purchasing raw materials in bulk |
| Hierarchy | A system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down |
| Chain of Command | The line of authority that moves from the top of the hierarchy to the lowest level |
| Bureaucracy | An organization with many layers of managers who set rules and regulations and oversee all decisions |
| Centralized Authority | When decision-making is concentrated at the top level of management |
| Decentralized Authority | When decision-making is delegated to lower-level of managers and employees more familiar with local conditions than headquarters is. |
| Tall organization Structures | An organizational structure in which the organization chart would be tall because of the various levels of management |
| Flat Organization Structures | An organizational structure that has few layers of management and a broad span of control |
| Departmentalization | Divides organizations into separate units (workers are grouped by skills and expertise to specialize their skills |
| Advantages of Departmentalization | * Employees develop skills and progress within a department as they master skills * The company can achieve economies of scale. * Employees can coordinate work within the function and top management can easily direct activities |
| Disadvantages of Departmentalization | *Departments may not communicate well *Employees may identify with their department's goals rather than the organizations. *The company's response to external changes may be slow. *People may not be trained to take different managerial responsibilities |
| 4 ways to structure an organization | 1. Line organizations 2. Line and staff organizations 3. matrix-style organization. 4. Cross-functional self-managed teams |
| Line Organization | Has direct two-way lines of responsibility, authority and communication running from the top to the bottom. Everyone reports to one supervisor |
| Line Personnel | Workers responsible for directly achieving organizational goals, and include production, distribution and marketing employees |
| Staff Personnel | Employees who advise and assist line personnel in meeting their goals, and include marketing research, legal advising, IT and human resource employees |
| Matrix Organizations | Specialist from different parts of the organization work together temporarily on specific projects, but still remain part of a line-and-staff structure. |
| Advantages of the Matrix Style | *Managers have flexibility in assigning people to projects.*Interorganizational cooperation and teamwork is encouraged. *creative solutions to product development problems are produced. *Efficient use of organizational resources |
| Disadvantages of the Matrix Style | *Costly and complex *Employees may be confused about where their loyalty belongs *good interpersonal skills and cooperative employees are a must *It's temporary solution to a possible long-term Problem. *Teams are not permanent |
| Cross-Functional Self-Managed Teams | Groups of employees from different departments who work together on a long-term basis |
| Networking | Using communications technology to link organizations and allow them to work together. |
| Real-Time | The present moment or actual time in which something takes place. |
| Transparency | When a company is so open to other companies that electric information is shared as if the companies were one |
| Virtual Corporation | A temporary networked organization made up of replaceable firms that join and leave as needed |
| Restructuring | Redesigned and organization so it can more effectively and efficiently serve its customers |
| Inverted Organization | An organization that has contact people at the top and the CEO at the bottom of the organizational chart |
| Organizational or Corporate Culture | The widely shared values within an organization that foster unity and cooperation to achieve common goals |
Created by:
cammccarty
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