Intro to Business Exam #2 Review: Chs 5, 6, 10, 11

Angels

Private individuals who invest their own money in potentially hot new companies before they go public.

Franchise

The right to use a specific business's name and sell its products or services in a given territory.

Recruitment

The set of activities used to obtain a sufficient number of the right people at the right time.

Intrapreneurs

Creative people who work as entrepreneurs within corporations.

Home-Based Work

-44 percent of Americans work from home at least once per week or more -Allows employees to choose their own hours, interrupt work for child care or other tasks, and take time out for personal reasons -Employers benefit because it can limit absences, increase productivity, and save money -Companies also offer ''hot-desking,'' or sharing a desk with other employees who work at different times

Small Business: Managing Employees

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

Management by Objectives (MBO)

-Involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees -Managers formulate goals in cooperation with everyone in the organization -Need to monitor results and reward achievement

Theory Y

-People like work; it's part of life -Workers seek goals to which they are committed -Commitment to goals depends on perceived rewards -Most people will seek responsibility -People can use creativity to solve problems -Intellectual capacity is only partially realized -People are motivated by a variety of rewards

Theory X

-Workers dislike work and seek to avoid it -Workers must be forced, controlled, directed, or threatened with punishment to get them to perform -Workers prefer to be directed and avoid responsibility -Primary motivators are fear and punishment

Advantages 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 profits. 6. No special taxes.

Disadvantages of Corporations

1. Initial cost. 2. Extensive paperwork. 3. Double taxation. 4. Two tax returns. 5. Size. 6. Difficulty of termination. 7. Possible conflict with stockholders and board of directors.

Disadvantages of Sole Proprietorship

1. Limited financial resources. 2. Management difficulties. 3. Overwhelming time commitment. 4. Few fringe benefits. 5. Limited growth. 6. Limited life span.

Advantages of Corporations

1. Limited liability. 2. Ability to raise more money for investment. 3. Size. 4. Perpetual life. 5. Ease of ownership change. 6. Ease of attracting talented employees. 7. Separation of ownership from management.

Entrepreneur

A person who organizes, manages, and takes on the risks of a business.

Cooperative

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

Sole Proprietorship

A business owned and usually managed, by one person.

Small Business

A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts.

Business Plan

A detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s).

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.

Crowdfunding

A large group of individuals provide donations in support of a company or product.

Compensation

A main tool companies use to attract qualified employees, and one of their largest operating costs.

Job Enrichment

A motivational strategy that emphasizes motivating the worker through the job itself.

General Partnership

A partnership in which 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.

C corporation

A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders); enables many people to share in ownership.

Job Analysis

A study of what is done by employees who hold various job titles.

Job Description

A summary of the objectives of a job, the type of work to be done, the responsibilities and duties, the working conditions, and the relationship of the job to other functions.

S corportation

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

Job Specification

A written summary of the minimum qualifications required of workers to do a particular job.

Small Business Success and Failure

About half do not last five years. Some reasons for failure are: -Managerial incompetence -Inadequate financial planning -Choosing the wrong type of business

Training and Development

All attempts to improve productivity by increasing an employee's ability to perform; training focuses on short-term skills, whereas development focuses on long-term abilities.

Leveraged Buyout (LBO)

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

Performance Appraisal

An evaluation that measures employee performance against established standards in order to make decisions about promotions, compensation, training, or termination.

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 does not have any management responsibility or liability for losses beyond the investment.

Fringe Benefits

Benefits such as sick-leave pay, vacation pay, pension plans, and health plans that represent additional compensation to employees beyond base wages.

Small versus Big Business

Businesses are small in relation to other businesses in their industries; there are over 30 million small businesses in the United States.

Incubators

Centers that offer new businesses low-cost offices with basic business services.

Legal Aspects of HR Management

Civil Rights Act of 1964, 1972 Equal Employment Opportunity Act (EEOA), Office of Federal Contract Compliance Programs (OFCCP), Civil Rights Act of 1991, Americans With Disabilities Act of 1990 (ADA), Age Discrimination in Employment Act (ADEA)

Flextime

Gives employees some freedom to choose which hours to work.

Venture Capitalists

Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.

Learning about Small Business Operations

Learn from others -Take classes on small business and entrepreneurship -Talk to and work for successful local entrepreneurs Get some experience -Gain three years experience in the field -Start a part-time small business Take over a successful firm -Serve as an apprentice and eventually take over once the owner steps down

Open Communication

Motivating through Open Communication -Create a culture that rewards listening -Train managers to listen -Use effective questioning techniques -Remove barriers to open communication -Avoid vague and ambiguous communication -Make it easy to communicate -Ask employees what is important to them Applying Open Communications in Self-Managed Teams -Respect workers -Provide interesting work -Develop workers' skills -Allow autonomy -Decentralized authority -Reward good work

Acquisition

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

Moving Employees

Promoting and Reassigning, Terminating, Retiring, Losing Valued Employees

Limited Liability Company (LLC)

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

Unlimited Liability

The responsibility of business owners for all debts of the business.

Small Business: Going Global

Small Business Exporting Accounts for 98 percent of all exporting firms. Technological advances have helped growth. Hurdles include: -Difficulty in finding financing -Not knowing how to get started -Not understanding cultural differences -Too much bureaucratic paperwork Advantages of global trade for small businesses: -Overseas buyers enjoy dealing with individuals -They can usually begin shipping much faster -They provide a wide variety of suppliers -They can give more personal service and attention

Forms of Business Ownership

Sole proprietorship, partnership, corporation

Extrinsic Reward

Something given to you by someone else as recognition of good work.

Enterprise Zones

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

Merger

The result of two firms forming one company.

Goal-setting Theory

The idea that setting ambitious but attainable goals can motivate workers and improve performance if the goals are: -Accepted -Accompanied by feedback -Facilitated by organizational conditions

Vertical Merger

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

Conglomerate Merger

The joining of two firms in completely unrelated industries.

Horizontal Merger

The joining of two firms in the same industry.

Intrinsic Reward

The personal satisfaction you feel when you perform well and complete goals.

Selection

The process of gathering information and deciding who should be hired, under legal guidelines, for the best interests of the individual and the organization.

HR Challenge

Uncertainty in global politics, technology, multigenerational workforce, shortages of trained workers in growth areas and construction trades, growing percentage of undereducated and unprepared new workers, baby boomer brain drain, increasing number of single-parent and two-income families, change in attitude towards work, increased demand for temporary or part-time work, expanding global markets with low-wage workers, increased benefit demands and low costs, concern over child and elder care, health and mental well-being, workplace violence, changing health care regulations, a decreased sense of employee loyalty, automated HRM systems

Contingent Workers

Workers who do not have the expectation of regular, full-time employment.

Theory Z

includes long-term employment, collective decision making, individual responsibility for the outcomes of decisions, slow evaluation and promotion, moderately specialized career paths, and holistic concern for employees (including family); views the organization as a family that fosters cooperation and organizational values.