Topics to Study for Exam 2
Functional Team Structure
All team members belong to the same functional department
Leveraged Buyout
Attempt to buyout stockholders of a company by borrowing necessary funds
ISO 14001
Best practices for managing an organization's impact on the environment
Decentralization Advantages
Better adaptation to customer wants, more empowerment of workers, faster decision making
Corporation
Business entity that is legally separate from its owners
Sole Proprietorship
Business owned and operated by one person
Partnership
Business owned and operated by two or more people
Merger
Combining two firms in the same industry to diversify or expand their products
Limited Liability Company (LLC)
Company that offers limited liability and flexible ownership rules
Franchisor
Company that sells the rights to use the business name to sell a product or service
Benchmarking
Comparing an organization's practices, processes, and products against the best
Centralization
Concentrating decision-making authority in upper management
Quality
Consistently producing what the customer wants and reducing errors
C-Corporation
Corporation that is subject to double taxation
S-Corporation
Corporation that is taxed as personal income
Production
Creation of finished goods and services using factors of production
Line Structure
Direct vertical structure where employees report directly to their superior
Decentralization
Dispersing decision-making responsibility and authority to lower levels of the organization
Articles of Organization
Document required to form an LLC
Sole Proprietorship Advantages
Easy to start and end, avoids double taxation, individual accountability
Matrix Organizational Structure
Employees report to both a project manager and a functional manager
Self-Managed Team Structure
Employees with the skills and ability to manage themselves
Matrix Organization Advantages
Extra managers, more flexibility, cross functionality, knowledge sharing, efficiency
Centralization Advantages
Greater top-management control, more efficiency, simpler distribution system
Vertical Merger
Joining two firms operating in different stages of related businesses
Franchising Disadvantages
Large start-up costs, shared profit, management regulation
Decentralization Disadvantages
Less efficiency, complex distribution system, less top-management control
Centralization Disadvantages
Less responsiveness to customers, less empowerment, interorganizational conflict
Sole Proprietorship Growth Limitation
Limited financial and managerial resources, limited growth
C-Corporation Advantages
Limited liability, raise money by selling stock, potentially perpetual life
S-Corporation Advantages
Limited liability, raise money by selling stock, potentially perpetual life, avoids double taxation
S-Corporation Disadvantages
Limited to 100 shareholders, shareholders must be U.S. citizens or residents
S-Corporation Growth Limitation
Limited to 100 shareholders, shareholders must be U.S. citizens or residents, limited growth
Chain of Command
Line of authority that moves from the top of a hierarchy to the lowest level
Line-Staff Structure
Line structure with specialists and extra managers for guidance and support
Franchising Benefits
Management and marketing assistance, personal ownership, nationally recognized name
Supply Chain Management
Managing the movement of resources and information through the supply chain
Cross-Functional Team Structure
Members come from different functional departments
Virtual Team Structure
Members who are geographically dispersed but communicate electronically
Partnership Advantages
More shared financial and managerial resources, avoids double taxation
LLC Advantages
Not limited to 100 owners, no citizenship restrictions, fewer meeting/reporting requirements
Conglomerate Acquisition
One company buying another from a completely unrelated industry
Vertical Acquisition
One firm purchasing the assets and operations of another firm at a different stage of the same or related industry
Acquisition
One firm purchasing the assets and operations of another firm in the same industry
General Partnership
Partnership where all partners have unlimited liability
Limited Partnership
Partnership where there is at least one general partner and one limited partner
Franchisee
Person who buys a franchise
Process Manufacturing
Physically or chemically changing materials in the production process
Lean Manufacturing
Production using less resources and increasing efficiency
LLC Disadvantages
Provides limited liability, can opt to be taxed as a corporation, no stock
LLC Growth Limitation
Provides limited liability, can opt to be taxed as a corporation, no stock, limited growth
Assembly Process
Putting together components in the production process
ISO 9001
Quality management and assurance standards
Six Sigma Quality
Quality measure that allows only 3.4 defects per million opportunities
Restructuring
Redesigning an organization to more effectively and efficiently serve its customers
S-Corp vs LLC
S-Corp sells stock, avoids double taxation, limited to 100 shareholders; LLC does not sell stock, can avoid double taxation, not limited to 100 shareholders
Facility Location
Selecting a geographic location for a company's operations
Operations Management
Specialized area that converts resources into goods and services
C-Corporation Disadvantages
Subject to double taxation, can be costly to form and terminate
C-Corporation Growth Limitation
Subject to double taxation, potentially costly to form and terminate, limited growth
Mass Customization
Tailoring products to meet the needs of individual customers
Delegate
To entrust decision-making authority to a less senior employee
Empower
To give frontline workers the responsibility, authority, freedom, training, and equipment they need
Matrix Organization Disadvantages
Unclearly defined roles, conflict between project and functional managers, slower decision making
Conglomerate Merger
Uniting firms in completely unrelated industries to diversify business operations
Personal Liability
Unlimited liability for sole proprietorship, shared liability for general partnership, limited liability for limited partnership, C-corporation, S-corporation, and LLC
Partnership Disadvantages
Unlimited personal liability for general partners, difficulty terminating partnerships
Partnership Growth Limitation
Unlimited personal liability for general partners, limited financial and managerial resources, limited growth
Sole Proprietorship Disadvantages
Unlimited personal liability, limited financial and managerial resources
Form Utility
Value added to materials in the creation of goods and services
Organizational Culture
Widely shared values within an organization that provide unity and cooperation