MIE 201 Exam 2: Chapters 4, 5, 8 Makanui NCSU

ISO 9000

designed to ensure the customer's quality standards are met

flexible manufacturing

designing machines to do multiple tasks so that they can produce a variety of products

uniformity of output in service businesses

each service is performed differently

Microentrepreneur

entrepreneurs who start a business with 5 or fewer people

financial resources needed to run a small business

equity financing (when a new business owner borrows against the value of assets) venture capitalists debt financing line of credit trade credit bartering

nonprofit corporations

focus on providing a service rather than earning a profit but are not owned by a government entity

social entrepreneur

individuals who use entrepreneurship to address social problems

what's the transformation process?

inputs are converted into outputs

measurement of productivity in service businesses

intangibility makes measurement more difficult

articles of partnership

legal documents that set forth the basic agreement between partners -list the money or assets that each partner contributed -states each partner's individual management role/duty - defines the steps a partner must take to sell his or her partnership interest or what will happen if one of the patterns dies

Planning Facilities

location, layout, technology

computer-assisted manufacturing

manufacturing that employs specialized computer systems to actually guide and control the transformation processes

outsourcing

obtain (goods or a service) from an outside or foreign supplier, especially in place of an internal source.

intermittent organizations

organizations that deal with products of a lesser magnitude than do project organizations; their products are not necessarily unique but possess a significant number of differences generally have a low level of output

transformation

procedures, equipment, facilities, technology

dividends

profits of a corporation that are distributed in the form of cash payments to stockholders

ISO 19600

provides guidelines for compliance management that address risks, legal requirements, and stakeholder needs

Many sole proprietors will focus on ______

services (like child care, salons, etc) rather than on the manufacture of goods

uniformity of inputs in service businesses

services are more customized to each consumer

labor required in service businesses

services are more labor-intensive

Designing the Operations Processes

standardization, modular design, customization

scheduling

the assignment of required tasks to departments or even specific machines, workers, or teams

modular design

the creation of an item in self-contained units, or modules, that can be combined or interchanged to create different products allows products to be repaired quickly, thus reducing the cost of labor

computer-assisted design

the design of components, products, and processes on computers instead of on paper

outputs

the goods, services, and ideas that result from conversion of inputs

Standarization

the making of identical interchangeable components or products speeds up production and quality control reduces production costs

inventory control

the process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it

quality control

the processes an organization uses to maintain its established quality standards

inputs

the resources, labor, money, materials, and energy

critical path

the sequence of activities that determine the minimum amount of time in which a process can be completed

routing

the sequence of operations through which the product must pass occurs after materials have been purchased and their use determined

customer-driven marketing

understanding customer needs even better than customers themselves do and creating products and services that meet both existing and latent needs, now and in the future

mergers

- 2 companies join together to form a single entity - companies can merge by either pooling their resources or through a purchase of the assets of one company by the other ex: Disney-Pixar ex: SiriusXM

factors contributing to an increase in small business

- E-commerce - technology - social media - growing diversity in entrepreneurship - corporate downsizing and outsourcing

franchise

- a business established or operated under an authorization to sell or distribute a company's goods or services in a particular area

domestic corporation

- a company that is incorporated in one state that does business only in the state where it is chartered

small business

- a company that is independently owned and operated, is not dominant in its field, and employs fewer than 500 people (although this # varies by industry)

foreign corporation

- a corporation that is incorporated in one state but that does business in several other states where it is registered - frequently happens in the state of Delaware where incorporation laws are more lenient

alien corporation

- a corporation that operates in the United States but is incorporated in another country

limited liability

- a form of business ownership in which the owners are liable only up to the amount of their individual investments

a corporation is like what?

- a horcrux - they can be in so many types of business that even if you take out one component they will still survive and thrive in all their other components of business

strategic alliance

- a long-term partnership between companies to jointly develop, produce, or sell products - can help expand market share, access technology, diversity offerings, share best practices ex: Cisco and Salesforce announce global strategic alliance

business start up definition

- a newly formed business - usually start small, but some might grow to become much bigger

conglomerate merger

- a parent company buys companies in unrelated industries often to diversify its assets to protect against downturns in specific industries

entrepreneurship characteristics

- a process - persistence - passion - value creation - creative

joint ventures

- a special type of strategic alliance in which two or more firms jointly create a new business entity that is legally separate and distinct from its parents - attain specific goals, share strengths, spread costs, minimize risks ex: Toyota and Mazda forming their own new car company

what is a system?

- a system is an interconnected set of elements that is coherently organized in a way that achieves something (some function or purpose)

white knight

- a third company invited to acquire a company that is in danger of being swallowed up in a hostile takeover - usually agree to leave the current management team in place and let the company continue to operate in an independent fashion.

MLP (master limited partnership)

- allowed to raise money by selling units of ownership to the general public in the same way that corporations sell shares of stock to the public - gives MLPs the fundraising capabilities of corporations without the double-taxation disadvantage - mainly oil and gas companies

buying an existing business definition

- already have a proven product, current customers, active suppliers, a known location, and trained employees

what do you need to start a small business?

- an entrepreneur - an idea - a drive to succeed

business system

- an interconnected and coordinated set of elements and processes that converts inputs into desired outputs

shareholders commitments in a corporation

- annual meetings where they discuss the years results and plans for the next year - those who cannot attend send a proxy in their place to vote for them - shareholder activism is when they pressure management on matters ranging a wide variety relating to the overall company performance

entrepreneur

- anyone who starts a new business

education

- board members are expected to understand everything from government regulation t financial management to executive compensation strategies in addition to the inner working of the corporation itself

sole proprietorships

- businesses owned by one individual - the most common form of business organization in the United States - easiest and least expensive form of business to start - ex: tutoring/bookkeeping/landscaping etc...

corporations

- businesses that are owned by many investors who buy shares of stock - a legal entity with the power to own property and conduct business - can receive, own, and transfer property; make contracts; sue; and be sued - faces limited liability because it is its own legal entity

CEO

- chief executive officer

CFO

- chief financial officer

CIO

- chief information officer

COO

- chief operating officer

CTO

- chief technology officer

board issues

- composition - education - liability - independent board chairs - recruiting challenges

disadvantages of corporations

- cost and complexity - reporting requirements - possible loss of control - managerial demands - double taxation - short term orientation - stock market

business plan

- document that summarizes a proposed business venture, goals, and plans, for achieving those goals - summary, mission and objectives, company overview, management, target market, marketing strategy, design and development plans, operations plan, start-up schedule, major risk factors, financial projections and requirements, exit strategy

intrapreneurship

- entrepreneurial activity that takes place within the context of a large corporation - freedom to define and initiate new projects, much as they were independent entrepreneurs

disadvantages of mergers and acquisitions

- executives have to agree on how the merger will be financed - managers need to decide who will be in charge after they join forces - marketing departments need to figure out how to blend product lines, branding strategies, and advertising and sales efforts - companies must often deal with layoffs

business marketing strategy

- explain how you can profitably meet the needs of your target market; identify the goods or services you will provide including their unique and compelling attributes; explain pricing, distribution, and promotion strategies

business mission and objectives

- explain the purpose of your business and what you hope to accomplish

double taxation

- feature of taxation that allows stockholders' dividends to be taxed both as corporate profit and as personal income

private corporations

- few shareholders - stock not publicly traded - stock is held only by a few individuals or companies and is not publicly traded - owners retain complete control over their operations and ownership by withholding their stock from public sale - finance their operating costs and growth from either company earnings or bank loans

limited liability corporation

- flexible business entities combine the tax advantages of a partnership with the personal liability protection of a corporation - not restricted in the number of shareholders they can have and members participation in management is not restricted as it is in limited partnerships

LLP (limited liability partnership)

- form of business was created to help protect individual partners in certain professions from major mistakes (such as errors that trigger malpractice lawsuits) by other partners in the firm - each partner has unlimited liability only for his or her own actions and at least some degree of limited liability for the partnership as a whole

types of partnerships

- general partnerships - limited partnerships - MLP - LLP

business company overview

- give full background information on the origins and structure of your venture

JIT (just-in-time) inventory management

- goods and materials are delivered throughout the production process right before they are needed rather than being stockpiled in inventories

sources of small business assistance

- government agencies Small Business Administration Minority Business Development Agency SCORE - nonprofit organizations - business partners - mentors SCORE Social networks - advisory boards - media (print and online) - business incubators and accelerators

blueprint for an effective business plan

- guide operations - attract lenders and investors - provide a reality check

managing systems for peak performance

- help everyone see the big picture - understand how individual systems really work and how they interact - understand problems before you try to fix them - understand the potential impact of solutions before you implement them - don't just move problems around; solve them - understand how feedback works in the system - use mistakes as opportunities to learn and improve

business major risk factors

- identify all potentially negative factors and discuss them honestly

champion intrapreneurs think about these things on top of the regular entrepreneurship things

- in a company - bureaucracy - budget - culture - politics

business financial projections and requirements

- include a detailed budget of start-up and operating costs, as well as projections for income, expenses, and cash flow for the first three years of business - identify the company's financing needs and potential sources

advantages of mergers and acquisitions

- increase their buying power as a result of their larger size - increase revenue by cross-selling products to each other's customers - increase market share by combining product lines - gain access to new expertise, systems, and teams of employees

evaluating a franchise

- initial franchise - periodic royalties - trademarks and names - advertising and promotion - business location - exclusive territory - right of first refusal - equipment and supplies - agreement termination - franchise agreement

IPO

- initial public offering - a corporation's first offering of shares to the public

venture capitalists

- investment specialists who raise pools of capital from large private and institutional sources to fund ventures that have high growth potential and a need for large amounts of capital - extremely selective

horizontal merger

- involves two similar companies at the same level - companies can merge to expand their product offerings or their geographic market coverage - 2 same companies

2 types of small businesses

- lifestyle - high-growth

advantages of corporations

- limited liability - ability to raise capital - increased liquidity - unlimited life span - ease of transfer of ownership

qualities of successful entrepreneurs

- love what they do, passion to succeed - highly disciplined - self-confident and optimistic - like to control their own destiny - relate well with others - curious and eager - learn from mistakes and see failures as opportunities - balance risk and reward

S corporation

- made only for federal income tax purposes and otherwise is no different from any other corporation - owners receive the tax advantages of a partnership while they raise money through the sale of stock - income and tax deduction flow directly to the owners

why small businesses fail?

- management incompetence - over reliance on a single customer - lack of strategic planning - inadequate financing - lack of relevant experience - poor cash management - inability to make transition: corp to entrepreneur - too much overhead - ineffective marketing - poor location - uncontrolled growth - poor inventory control

public corporations

- many shareholders - stock is publicly traded - stock available for sale to the general public

unlimited liability

- means that the owner is personally and fully responsible for all losses and debts of the business - major drawback to a sole proprietorship or a partnership - from a legal standpoint the owner and business are one and the same

business combinations

- mergers - acquisitions - leveraged buyouts - hostile takeovers - consolidation

why people start their own companies

- more control over their futures - tired of working for someone else - passion for new products - pursue business goals that are important to them on a personal level - inability to find attractive employment anywhere else

cons of franchising

- must follow format - little decision making - few options for changes

vertical merger

- occurs when a company purchases a complementary company at a different stage or level in an industry - 2 diff. companies ex) Burger King purchasing an Idaho potato farm for its fries

acquisition

- one company simply buys a controlling interest in the voting stock of another company ex: Amazon buys Whole Foods ex: Micheal Kors buys Jimmy Choo

banks and micro-lenders

- one of the most important sources of financing for a small business - banks won't lend money to a start-up that hasn't established a successful track record - micro-lenders offer up loans up to $35,000 or so (they promote entrepreneurship through micro loans and support services)

the Toyota production system

- one of the most influential proaction strategies in modern business history - based on 2 fundamental principles of the JIT inventory management and jidoka (automation with a human touch)

leveraged buyout

- one or more individuals purchase a company's publicly traded stock by using borrowed funds - usually with the intent of using some of the acquired assets to pay back the loans used to acquire the company ex: Blackstone Group buys Hilton Hotels

limited partnerships

- one or more persons act as general partners who run the business while the remaining partners are passive investors (not involved in managing the business) - called this because their liability (amount of money they can lose) is limited to the amount of the capital they invested at the beginning of their partnership - passive investors and have limited liability

board chair

- oversees the board of directors who are supposed to oversee the corporate officers who make up the top management team while the CEO oversees the management team

shareholders

- owners of a corporation who are issued shares of stock in return for their investments

subsidiary corporations

- partially or wholly owned by another corporation known as a parent company which supervises the operations of the subsidary

general partnerships

- partners are considered equal by law and all are liable for the business's debts - partners share ownership and both have unlimited liability ex) lawyers, accountants, etc.

techniques to prevent hostile takeovers

- poison pill - shark repellent - white knight

angel investors

- private individuals who put their own money into start-ups with the goal of eventually selling their interest for a large profit - willing to invest smaller amounts than VC's and to stay involved with the company for a longer period of time

the franchising alternative

- product franchise - manufacturing franchise - business-format franchise

benefit coropration

- profit seeking corporation whose charter also requires it to pursue a stated social or environmental goal

business target market

- provide data that will persuade an investor that you understand your target market - be sure to identify the strengths and weaknesses of your competitors

business operations plan

- provide information on the facilities, equipment, and labor needed

economic roles of small business

- provide new jobs - introduce new products - service large corporations - half the US payroll - risk takers - specialized goods and services

types of corporations

- public corporations - private corporations

board of directors

- represent the shareholders and are responsible for declaring dividends, guiding corporate affairs, reviewing long-term strategic plans, selecting corporate officer, and overseeing financial performance

stock certificate

- represents shares of stock owned by shareholders of a company - may be sold or given to upon the death of the owner to someone else

lifestyle small businesses

- run by individuals - limited products and/or services - limited resources - limited marketplace - aren't designed to grow into large corporations - built around personal and financial needs of an individual or a family ex: mom and pop surf shop

high-growth small businesses

- run by teams - multiple products and/or services - investment capital - large marketplace - expand rapidly by obtaining a sizable supply of investment capital ex: Tesla growing into a large corporation

private financing options for small businesses

- seed money - banks and micro-lenders - venture capitalists - IPO - angel investors - personal credit cards - small business administration

ownership of corporations

- shareholders - stock certificates

business accelerator

- similar to an incubator - focus more on providing advice and financing (in some cases) and less on providing office space and other infrastructure

advantages of a partnership

- simplicity - single layer of taxation - more resources than a sole proprietorship - cost sharing between partners - broader skills and experience - longevity

sole proprietorship advantages

- simplicity - single layer of taxation - taxed at individual rates - privacy - flexibility and control - personal satisfaction - fewer limitations on personal income -complete ownership of the profits

3 types of business ownership

- sole propreitorship - partnership - corporation

holding company

- special type of a parent company that owns other companies for investment reasons and usually exercises little operating control over those subsidaries

small business ownership types

- start up - buy an existing business - franchise

special types of corporations

- subchapter S corporation - limited liability corporation - subsidiary corporation - alien v. foreign corporation - benefit or B corporation - domestic corporation

business management

- summarize the background and qualifications of any key management personnel in your company

business summary

- summarizes your business concept - clearly articulates your business model and strategy for success

hostile takeover types

- tender offer - proxy fight

where does the center of power lie within a corporation

- the CEO or chief executive officer - with the help of the other C-level officers

hostile takeovers

- the buyer tries to convince enough shareholders to go against management and vote to sell - acquisition of another company against the wishes of management ex: AOL and Time Warner

Seed money

- the first infusion of capital used to get a business started

exclusive territory

- the geographical area in which an exclusive seller is allowed to operate as the sole vendor of certain brands of merchandise

the entrepreneurial spirit

- the positive, forward-thinking desire to create profitable, sustainable business enterprises - vital to the health of the economy and to everyone's standard of living

proxy fight

- the raider launches a public relations battle for shareholders votes hoping to enlist enough votes to oust the board and management

tender offer

- the raider offers to buy a certain number of shares of stock in the corporation at a specific price (generally more than the current stock price so shareholders are more motivated to sell) - the raider hopes to get enough shares to take control of the corporation and to replace the existing board of directors and management

corporate governance

- the way in which a corporation is structured and the effect that structure has on the corporation's behavior - shareholders elect the board of directors who hire corporate officers who hire employees

corporations change from private to public ownership and vice versa when??

- their financial needs and strategic interests change

entrepreneurs do not what???

- they DO NOT start with a business plan

the curse of being a big company?

- things are accomplished very SLOW because there are so many hoops to jump through

poison pill

- this plan triggered by a takeover attempt makes the company less valuable in some way to the potential raider - the idea is to discourage the takeover from actually happening

shark repellent

- this tactic is more direct; it is simply a requirement that stockholders representing a large majority of shares approve of any takeover attempt (only viable if the management team has the support of the shareholder majority)

consolidation

- two companies create a new third entity that then purchases the two original companies

sole proprietorship disadvantages

- unlimited liability - finite life span - resource limitations - limited managerial experience - demands on owner - no employee benefits for the owner -lack of qualified employees (can't match wage demands)

disadvantages of a partnership

- unlimited liability for general partners - interpersonal problems managing partner & unproductive partners - limited partners have no voice in the management of the business - distribution of profits

pros of franchising

- viable business - name recognition - network of support

Planning Capacity

-Unit of measurement - could be worker, machine, department, branch, or entire plant -Can be stated in terms of inputs or outputs -when it's too low, it results in unmet demand, while planning it too high results in higher cost

inside directors

Board members who are generally part of the company's senior management team; appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance.

what does marketing research help figure out?

Determine product and features customers want Gauge demand Set price

disadvantages of a small business

High stress level High failure rate Undercapitalization Managerial inexperience or incompetence Inability to cope with growth

advantages of small business

Independence Costs Flexibility Focus - finely defined market niche Reputation

Industries that attract small businesses

Retailing and wholesaling, services, manufacturing, and high technology

nature and consumption of output in service businesses

Services require more customer contact and happen at the point of consumption

project organization

a company using a fixed-position layout because it is typically involved in large, complex projects such as construction or exploration

computer-integrated manufacturing

a complete system that designs products, manages machines and materials, and controls the operations function boosts productivity and quality and reduce costs

Six Sigma

a comprehensive approach that encompasses a philosophy of striving toward perfection, a rigorous methodology for measuring and improving quality, and specific tools such as SPC to track progress it's a highly disciplined, systematic approach to reducing the deviation from desired goals in virtually any business process, whether it's eliminating defects in the creation of a product or improving a company's cash flow

ISO 140000

a comprehensive set of environmental standards that encourages a cleaner and safer world promotes a more uniform approach to environmental management and to help companies attain and measure improvements in their environmental performance

product layout

a layout requiring that production be broken down into relatively simple tasks assigned to workers, who are usually positioned along an assembly line

fixed-position layout

a layout that brings all resources required to create the product to a central location

process layout

a layout that organizes the transformation process into departments that group related processes

corporate charter

a legal document that the state issues to a company based on information the company provides in the articles of incorporation

Economic Order Quantity (EOQ) Model

a model that identifies the optimum number of items to order to minimize the costs of managing (ordering, storing, and using) them

Total Quality Management (TQM)

a philosophy that uniform commitment to quality in all areas of an organization will promote a culture that meets customers' perceptions of quality requires constant improvements in all areas of the company as well as employee empowerment

Material Requirements Planning (MRP)

a planning system that schedules the precise quantity of materials needed to make the product also utilizes a master production schedule, a bill of materials, and an inventory status file

Statistical Process Control (SPC)

a system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system

statistical process control

a system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system

inventory

all raw materials, components, completed or partially completed products, and pieces of equipment a firm uses

purchasing

also known as procurement, is the buying of all the materials needed by the organization

definition of a partnership

an association of two or more persons to carry on, as co-owners, a business for profit; profits will be divided as specified in the agreement

sharing economy

an economic model involving the sharing of underutilized resources, aka "gig economy" like Uber

cooperative

an organization composed of individuals that have banded together to reap the benefits of belonging to a larger organization

outside directors

board members who are not employees of the firm, but who are frequently senior executives from other firms or full-time professionals

continuous manufacturing organizations

companies that use continuously running assembly lines, creating products with many similar characteristics

supply chain management

connecting and integrating all parties or members of the distribution system in order to satisfy customers

Quasi-public corporation

corporations owned and operated by the federal, state, or local government ex) NASA, and USPS