BUSI 1301 Exam 2

Benchmarking

Compares an organization's practices, processes and products against the world's best.

Disney-ABC is an example of

Conglomerate Merger

Quality

Consistently producing what the customer wants while reducing errors before and after delivery.

Market

Consumers with unsatisfied wants and needs who have both resources and willingness to buy.

Don't cheat your

employees. Let's Talk.

Amazon acquired Whole Foods is an

example of acquisition

No organization can be effective without

formal and informal organization.

Small Business Development Centers (SBDC) are

funded jointly by the federal government and individual states.

The average cost of ____ decreases as production levels ____.

good decreases production levels rise

OPERATIONS MANAGEMENT in the SERVICE SECTOR is all about creating a

good experience for those who use the service.

External Customers

Dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own use.

Flexible Manufacturing

Designing machines to do multiple tasks so they can produce a variety of products.

Formal Organization

Details lines of responsibility, authority and position.

Departmentalization

Divides organizations into separate units by skills and expertise to their specialize skills.

MANAGING KNOWLEDGE

Do you want to know more about your customers? What about competition? What information would make the company more effective in the marketplace? What do I still not know? Whom should I be asking?

Strategic Planning

Done by top management and determines the major goals of the organization and the policies, procedures, strategies and resources it will need to achieve them

Saying "thank you" has led to

happier employees and greater profits for companies.

Conglomerate Merger

he joining of firms in completely unrelated industries

The formal system can be slow and bureaucratic, but it

helps guide the lines of authority.

Consumers today want

high-quality products with fast, friendly service and all at low cost.

WEBER'S PRINCIPLES

Employees understand what is expected of them.

Staff Personnel

Employees who advise and assist line personnel in meeting their goals, and include marketing research, legal advising, IT and human resource employees.

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. We need to talk.

The International Organization for Standardization (ISO)

is a worldwide federation of national standards bodies.

Benchmarking is essential to

keep an organization relevant in a rapidly changing and global business environment

Talk to and work for successful

local entrepreneurs.

Bureaucrat

middle managers whose job is to implement orders of top management

Profits are taxed only as the

personal income of the shareholder.

Manufacturing in the U.S. is so

productive and efficient fewer workers are needed.

Informal organization can be an asset that

promotes harmony and comradery among the workers.

In recent years, the service sector has grown much more

rapidly than the manufacturing sector.

Informal organization may also be powerful in

resisting management directives.

franchisor

sells the rights to use the business name and sell a product or service

franchisees

sells the rights to use the business name and sell a product or service in a given territory.

franchise

sells the rights to use the business name and sell a product or service to others

S corporations have

shareholders, directors and employees, plus the benefit of limited liability

Major advantages are limited liability and possible

tax benefits.

Limited Liability

that 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.

To strengthen its manufacturing base,

the US will have to continue to innovate.

The U.S. economy is no longer manufacturing based It is dominated by

the service industry.

Entrepreneurs are important because

their businesses employ LOTS of people.

Bureaucracy

there are many layers of management who set rules and regulations that everyone in the organization is expected to follow

Line personnel may have authority

to make policy decisions

The informal system is too ________ and __________ on its own.

unstructured and emotional

Knowledge Management

Finding the right information, keeping the information in a readily accessible place and making the information known to everyone in the firm.

Cross-functional teams work best when the

voice of the customer is heard- internal and or external customer.

Enabling

Giving workers the education and tools they need to make decisions.

Cross-Functional Self-Managed Teams

Groups of employees from different departments who work together on a long-term basis. Works well for developing new product lines or services.

Have an Escape Hatch

Have a Plan B. Generally if you have a plan B you will fail and take it.

The strategy that will protect partners is to put the partnership agreement in

writing

STRUCTURING an ORGANIZATION

•Create a division of labor •Set up teams or departments •Allocate resources •Assign tasks •Establish procedures •Adjust to new realities

Examples of Informal Group Norms

•Do your job but don't produce more than the rest of your group. •Don't tell off-color jokes or use profanity. •Everyone is to be clean and organized at the workstation. •Respect and help your fellow group members. •Drinking is done off the job - NEVER at work.

HOME-BASED/ Small BUSINESS ISN'T EASY

•Getting new customers is difficult. It is a Marketing Job! •Managing your time requires self-discipline. •Work and family tasks are sometimes not separated. •Government ordinances may restrict your business. •Homeowner's insurance may not cover business-related claims.

MANAGING EMPLOYEES

•Hiring, training and motivating employees is critical. •Employees of small companies are often more satisfied with their jobs - they feel challenged and respected. •Entrepreneurs best serve themselves and the business if they recruit and groom employees for management positions.

DISADVANTAGES of CORPORATIONS

•Initial cost •Extensive paperwork •Double taxation •Two tax returns •Size •Difficulty of termination •Possible conflict with stockholders and board of directors

ADVANTAGES of CORPORATIONS

•Limited liability •Ability to raise more money for investment •Size •Perpetual life •Ease of ownership change •Ease of attracting talented employees •Separation of ownership from management

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.

ADVANTAGES of PARTNERSHIPS

•More financial resources •Shared management and pooled/complementary skills and knowledge •Longer survival •No special taxes

THE CHANGING ORGANIZATION

•Often change in organizations is due to evolving business environments: -More global competition -Declining economy/growing economy -Could be change in industry as well -Faster technological change Pressure to protect the environment

WHY TAKE the RISK?

•Opportunity: - To Share the American Dream - Problems = Opportunities •Profit •Independence •Challenge

EMPOWERMENT

•Progressive leaders give employees the authority and responsibility to make decisions on their own without consulting a manager. Be careful here. •Customer needs are handled quickly. •Manager's role becomes less of a boss and more of a coach.

Small Business Statistic

•There are 28 million small businesses in the U.S. •Of all nonfarm businesses in the U.S., almost 97% are considered small. •Small businesses account for over 50% of the GDP. •Small businesses have generated 65% of new jobs since 1995. •About 80% of U.S. workers' first jobs were in small business.

DISADVANTAGES of PARTNERSHIPS

•Unlimited liability •Division of profits •Disagreements among partners •Difficult to terminate

Today's Managers

•Younger and more progressive. -Growing numbers of women and minorities. -Fewer from elite universities. •Emphasis is on teams and team building and less on discipline and order giving. •Managers need to be skilled communicators and team players.

Exxon-Mobil; JP Morgan-Chase; Sprint-T-Mobile is an example of

Horizontal Merger

Small Business

Independently owned and operated, not dominant in its field of operation and meets certain standards of size.

Internal Customers

Individuals and units within the firm that receive services from other individuals or units

The _______ has transformed the purchasing function

Internet

Learn from Others

Investigate your local colleges for classes on small business and entrepreneurship;

Limited Liability Partnership

Limits partners' risk of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision.

Autocratic Leadership

Making managerial decisions without consulting others. Today's successful leaders are less autocratic and emphasize team work.

WORK SMARTER

Manage output instead of hours. Productivity is the key!

Participative 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.

Service Corps of Retired Executives

More than 13,000 volunteers from industry, trade associations, and education who counsel small business at no cost.

Vision

More than a goal, it's a broad explanation of why the organization exists and where it's trying to go.

Incubators

Offer new businesses low-cost offices with basic services. Many times these are government funded.

Acquisition

One company's purchase of the property and obligations of another company.

Get Some Experience

Perhaps an internship in the field or work with a successful firm in the field.

Restructuring

Redesigning an organization so it can more effectively and efficiently serve its customers.

Take Over a Successful Firm

Serve as an apprentice and eventually take over once the owner steps down.

Limited Liability Company (LLC)

Similar to an S corporation, but without the eligibility requirements.

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.

Matrix Organization

Specialists from different parts of the organization work together temporarily on specific projects, but still remain part of a line-and-staff structure.

Enterprise Zones

Specific geographic areas to which governments attract private business investment by offering lower taxes and other government support.

Objectives

Specific, short-term statements detailing how to achieve the organization's goals. (Tactical)

Mass Customization

Tailoring products to meet the needs of a large number of individual customers

Technical Skills

The ability to perform tasks in a specific discipline or department.

Goals

The broad, long-term accomplishments an organization wishes to attain. (Strategic)

ISO 9000

The common name given to quality management and assurance standards.

Production

The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production).

Purchasing

The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services.

Vertical Merger

The joining of two firms in different stages of related businesses.

Horizontal Merger

The joining of two firms in the same industry.

chain of command

The line of authority that moves from the top of the hierarchy to the lowest level.

Span of Control

The optimal number of subordinates a manager supervises or should supervise.

Transparency

The presentation of the company's facts and figures in a way that is clear and apparent to all stakeholders.

Tactical Planning

The process of developing detailed, short-term statements about what is to be done, who is to do it and how.

Contingency Planning

The process of preparing alternative courses of action the firm can use if its primary plans don't work out.

Set up teams or departments

The process of setting up individual functional units of the business to do specialized tasks

Operational Planning

The process of setting work standards and schedules necessary to implement the company's tactical objectives.

Management

The process used to accomplish organizational goals through planning, organizing, leading and controlling people and other organizational resources.

Merger

The result of two firms joining to form one company.

Critical Path

The sequence of tasks that takes the longest time to complete.

Informal Organization

The system of relationships that develop spontaneously as employees meet and form relationships.

Computer-Aided Design (CAD)

The use of computers in the design of products.

Organizational or Corporate Culture

The widely shared values within an organization that foster unity and cooperation to achieve common goals. It is "what we do in an organization"

Many companies use sites like ________ and ___________ to proactively and reactively communicate with their customers.

Twitter and Facebook

Partnership

Two or more people legally agree to become co-owners of a business.

Networking

Using communications technology to link organizations and allow them to work together on common objectives.

Lean Manufacturing

Using less of everything than in mass production.

Pixar-Disney; Time Warner-Turner Broadcasting is an example of

Vertical Merger

What is entrepreneurship?

What does it mean to the economy?

Centralized Authority

When decision-making is concentrated at the top level of management.

Decentralized Authority

When decision-making is delegated to lower-level managers and employees more familiar with local conditions than headquarters is.

Line Personnel

Workers responsible for directly achieving organizational goals, and include production, distribution and marketing employees.

Telecommuting

Working from home via computer

Immigration Act passed in 1990 created a category of

"investor visas" that encourage entrepreneurs to come to the U.S.

HOME-BASED BUSINESS/Small Business GROWTH

- Computer technology has leveled the playing field. - Corporate downsizing has led many to venture on their own. -Social attitudes have changed. -New tax laws have loosened restrictions on deducting expenses for home offices.

line organization disadvantages

- Inflexible -Long Line of - Communication Difficult to Handle Complex Decisions

DISADVANTAGES of the MATRIX STYLE

- It's costly and complex. - Employees may be confused where their loyalty belongs. - Good interpersonal skills and cooperative employees are a must. - It could be a temporary solution to a possible long-term problem. - Teams are not permanent.

ADVANTAGES of SMALL OVER BIG BUSINESS Situations for Success

- Personal attention - Products not easily made by mass production - Sales are not large enough for a large firm -Unattractive neighborhood -Franchising -Paying attention to new competitors -The business is in a growth industry

FAYOL'S PRINCIPLES (came to the US in 1949; principles created in 1919.) examples

- Unity of Command - Hierarchy of Authority - Division of Labor - Subordination of Individual Interest to the General Interest - Authority - Degree of Centralization - Clear Communication Channels - Order - Equity - Esprit de Corps

line organization advantages

-Clear Authority & Responsibility -Easy to Understand -One Supervisor Per Employee

Leaders must

-Communicate a vision and rally others around that vision. Explaining why the company exists and where it wants to go. -Establish corporate values. -Promote corporate ethics. -Embrace change. -Stress accountability and responsibility.

How can U.S. businesses maintain a competitive edge?

-Focusing on customers -Maintaining close relationships with suppliers -Practicing continuous improvement -Focusing on quality -Saving on costs through site selection -Relying on the Internet to unite companies -Adopting new production techniques i.e. innovation

Operations management includes

-Inventory management -Quality control -Production scheduling -Follow-up services

Fayol's principles, Weber emphasized

-Job descriptions -Written rules, decision guidelines and detailed records -Consistent procedures, regulations and policies -Staffing and promotion based on qualifications (meritocracy)

How can we get to out goal from here?

-Strategic planning -Tactical planning -Operational planning -Contingency planning

Compared to others, lean companies:

-Take half the human effort. -Have half the defects in finished products. -Require one-third the engineering effort. -Use half the floor space. -Carry 90% less inventory.

DISADVANTAGES of DEPARTMENTALIZATION

1)Departments may not communicate well. 2)Employees may identify with their department's goals rather than the organizations (localized optimization. 3)The company's response to external changes may be slow. 4)People may not be trained to take different managerial responsibilities, instead they become specialists. 5)Department members may engage in groupthink and may need outside input.

Major Benefits of Sole Proprietorship

1)Ease of starting and ending the business 2)Being your own boss 3)Pride of ownership 4)Leaving a legacy 5)Retention of company profit 6)No special taxes

ADVANTAGES of DEPARTMENTALIZATION

1)Employees develop skills and progress within a department as they master skills. 2)The company can achieve economies of scale. As a firm produces more, the average cost of goods or services goes down. 3)Employees can coordinate work within the function and top management can easily direct activities.

Disadvantages of Sole Proprietorship

1)Unlimited Liability -- Any debts or damages incurred by the business are your debts, even if it means selling your home, car or anything else. 2)Limited financial resources 3)Management difficulties 4)Overwhelming time commitment 5)Few fringe benefits 6)Limited growth 7)Limited life span

•More manufacturers are learning to _______ and exist in the ____________ too

customize and service sector

RATIONAL DECISION-MAKING MODEL

1. Define the situation. 2. Describe and collect needed information. 3. Develop alternatives. 4. Decide which alternative is best. 5. Do what is indicated. 6. Determine whether the decision was a good one and follow up. This builds institutional knowledge.

DEVELOPMENTS MAKING U.S. COMPANIES MORE COMPETITIVE

1.Computer-aided design and manufacturing (CAD) 2.Flexible manufacturing 3.Lean manufacturing 4.Mass customization

DISADVANTAGES of FRANCHISING

1.Large start-up costs 2.Shared profit 3.Management regulation 4.Coattail effects 5.Restrictions on selling 6.Fraudulent franchisors

Advantages of LLCs

1.Limited liability 2.Choice of taxation 3.Flexible ownership rules 4.Flexible distribution of profits and losses 5.Operating flexibility

ADVANTAGES of FRANCHISING

1.Management and marketing assistance 2.Personal ownership 3.Nationally recognized name 4.Financial advice and assistance 5.Lower failure rate

DISADVANTAGES of LLCs

1.Ownership can be in two ways: (1) by percentage; or (2) by membership units, which can be sold 2.Limited life span 3.Fewer incentives 4.Taxes 5.Paperwork

___% of jobs are in the service sector.

85

Small Business Administration (SBA)

A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans.

Gantt Chart

A bar graph that shows what projects are being worked on and how much has been completed.

Sole Proprietorship

A business owned, and usually managed, by one person

ISO 14000

A collection of the best practices for managing an organization's impact on the environment.

Intrapreneur

A creative person who works as an entrepreneur within a corporation.

Business Plan

A detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners' qualifications.

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.

Corporation

A legal entity with authority to act and have liability apart from its owners.

Program Evaluation and Review Technique (PERT)

A method for analyzing the tasks involved in completing a given project and estimating the time needed.

Master Limited Partnership

A partnership that looks much like a corporation, but is taxed like a partnership and thus avoids the corporate income tax.

Limited Partnership

A partnership with one or more general partners and one or more limited partners.

Small Business Investment Company (SBIC)

A program through which private investment companies licensed by the SBA lend money to small businesses.

Six Sigma Quality

A quality measure that allows only 3.4 defects per million opportunities.

Operations Management

A specialized area in management that converts or transforms resources into goods and services.

Conventional (C) Corporation

A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).

Virtual Corporation

A temporary networked organization made up of replaceable firms that join and leave as needed

S Corporation

A unique government creation that looks like a corporation, but is taxed like sole proprietorships and partnerships.

Entrepreneurship

Accepting the risk of starting and running a business.

General Partnership

All owners share in operating the business and in assuming liability for the business's debts.

Production Management

All the activities managers do to help firms create goods

Franchise Agreement

An arrangement whereby someone with a good idea for a business

Leveraged Buyout (LBO)

An attempt by employees, management or a group of investors to buy out the stockholders in a company.

Affiliate Marketing

An online marketing strategy in which a business rewards individuals or other businesses for each visitor or customer the affiliate sends to its website.

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.

General Partner

An owner (partner) who has unlimited liability and is active in managing the firm.

Limited Partner

An owner who invests money in the business, but enjoys limited liability.

Unlimited Liability

Any debts or damages incurred by the business are your debts, even if it means selling your home, car or anything else

Cooperatives

Businesses owned and controlled by the people who use them- producers, consumers, or workers with similar needs who pool their resources for mutual gain. .

Economies of Scale

Companies can reduce their production costs by purchasing raw materials in bulk.

True Value Hardware, The University Coop, Grain Elevator Cooperatives are examples of

are examples of cooperatives

Steve Jobs, Steve Wozniak and Mike Markkula are an example of

an entrepreneurial team

Create a division of labor

dividing the required work among a group of employees.