BCOR 199: ch 4, 5, 6, 7, & 8

What advantages do small businesses have over large ones in international trade?

- Overseas buyers often enjoy dealing with individuals rather than corporations - Can begin shipping faster - Provides a wide variety of suppliers - Can provide personal service and undivided attention to customers

What are the potential sources of capital for an entrepreneur?

- Personal savings -Family and business associates -Banks and finance institutions -Angels, crowdfunding, and venture capitalists - Government agencies

What is the Self-Employment Assistance (SEA) Program?

Allows participants to collect unemployment checks while they build their businesses

What does enabling mean?

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

What is the best way to learn small-business management?

Becoming an apprentice or working for a successful entrepreneur Have 3 years of experience in a comparable business first

What did business growth lead to?

Economies of scale

What is operations management planning?

Helps solve many of the problems in the service and manufacturing sectors (facility location & layout, materials requirement planning, purchasing, inventory control, & quality control)

What is just-in-time inventory control?

JIT systems keep a minimum of inventory on the premises and deliver parts, supplies, and other needs just in time to go on the assembly line

What are the functions of a small business?

Planning, financing, marketing, human resource development, and accounting

What is contingency planning?

Preparing alternative courses of action that may be used if the primary plans don't work out

What are angel investors?

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

What is the Small Business Investment Company Program?

Private investment companies licensed by the SBA to lend money to small businesses

What is staffing?

Recruiting, hiring, motivating and retaining the best people available to accomplish the company's objectives

What is restructuring?

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

What is the trend today regarding span of control?

Reduce the number of middle managers + hire more talented and better educated lower-level employees

What are matrix-style organizations?

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

What are enterprise zones?

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

What are objectives?

Specific, short-term statements detailing how to achieve the organization's goals

What is purchasing?

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

What is management?

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

What is a merger?

The result of two firms joining to form one company

What is operations management?

The service industry is all about creating a good experience for those who use the service

What is a conglomerate merger?

Unites firms in completely unrelated industries in order to diversify business operations and investments

What is a partnership?

When two or more people legally agree to become co-owners of a business

Why are small businesses important?

- 67% of the nation's new jobs are in small businesses - More personal customer service - Able to respond quickly to opportunities

What are the advantages and disadvantages of decentralized authority?

+ Better adaption + More empowerment + Faster decision making + Higher morale - Less efficiency - Complex distribution system - Less top-management control - Weakened corporate image

What are the advantages and disadvantages of departmentalization?

+ Employees can develop skills in depth + Company can achieve economies of scale + Employees can coordinate work within the function, and top management can easily direct and control various departments' activities - Bad communication - Employees may identify with their department's goals rather than their organization - Slow response to external changes - People may not be trained to take different managerial responsibilities - "Groupthink"

What are the advantages and disadvantages of centralized authority?

+ Greater top management control + More efficiency + Simpler distribution system + Stronger brand/ corporate image - Less responsiveness to customers - Less empowerment - Interorganizational conflict - Lower morale away from headquarters

Why is running a small business part time or during off hours helpful?

- Can bring in rewards of working for yourself while still enjoying a regular paycheck at another job - Can save money because you are less likely to make "rookie mistakes"

What are Fayol's principals of organization?

- Unity of command - Hierarchy of authority - Division of labor - Subordination of individual interests to the general interest - Authority - Degree of centralization - Clear communication channels - ORDER - EQUITY - Pride & loyalty

What is a market?

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

When designing responsive organizations, firms have to make decisions about what organizational issues?

1. Centralization vs decentralization 2. Span of control 3. Tall vs flat organizational structures 4. Departmentalization

What are the advantages of a sole proprietorship?

1. Easy to start and end the business 2. Being your own boss 3. Pride of ownership 4. Leave a legacy 5. Retention of company profits 6. No special taxes

Why do small businesses have difficulty getting started in global markets?

1. Financing is difficult to find 2. Would-be exporters don't know how to get started and do not understand cultural differences 3. Bureaucratic paperwork can threaten to bury a small business

What are 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 stakeholders and board of directors

What are the disadvantages of a franchise?

1. Large start-up costs 2. Shared profits 3. Management regulation 4. Coattail effects: "overexposure" 5. Restrictions on selling

What are advantages of corporations?

1. Limited liability 2. Ability to raise 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

What are advantages of limited liability companies?

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

What are the 4 ways to structure an organization?

1. Line Organizations 2. Line-and-Staff Organizations 3. Matrix-Style Organizations 4. Cross-Functional Self-Managed Teams

What would professionals tell you about starting a small business?

1. Location is critical 2. Caution about undercapitalization 3. Problems of finding and retaining good workers 4. Keep good records and hire a good accountant and lawyer

What are the advantages of a franchise?

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

What are advantages of partnerships?

1. More financial resources 2. Shared management and knowledge 3. Longer survival 4. No special taxes

.What are the disadvantages of limited liability companies?

1. No stock 2. Fewer incentives 3. Taxes 4. Paperwork

What are the three steps of building an organization?

1. Organizing 2. Division of labor 3. Job specialization

What are the five steps of the control process?

1. Set clear performance standards 2. Monitor performance 3. Compare results against plans and standards 4. Communicate results to employees 5. Take corrective action when needed and provide positive feedback

What are the disadvantages of partnerships?

1. Unlimited liability 2. Division of profits 3. Disagreements between partners 4. Difficult to terminate the business

What are the disadvantages of sole proprietorships?

1. Unlimited liability 2. Limited financial resources 3. Management difficulties 4. Overwhelming time commitment 5. Few fringe benefits 6. Limited growth 7. Limited life span

Who was Max Weber?

A German sociologist and economist that promoted the pyramid-shaped organizational structure that became popular in large firms. Weber put great trust in managers and felt the firm would do well if employees simply did what they were told

What is the Small Business Administration (SBA)?

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

What is a vision?

A broad explanation of why the organization exists and where it's trying to go Gives an organization a sense of purpose and a set of values

What is a sole proprietorship?

A business owned and usually managed by one person

What is the difference between a continuous and intermittent production process?

A continuous process is one in which long production runs turn out finished goods over time (like a chef or chemical plant) A intermittent process is used when responding to specific customer orders (most used today with computers)

What is a 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).

What is a limited liability partnership?

A form of partnership that allows professionals to enjoy the tax benefits of a partnership while limiting their personal liability for the malpractice of other partners

What is an 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

What is a corporation?

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

What is a master limited partnership?

A partnership that acts like a corporation but is taxed like a partnership

What is a limited partnership?

A partnership with at least one general partner and at least one limited partner. The general partner has unlimited liability while the limited partner invests money into the business but has no liability

What are community development financial institutions (CDFIs)?

A source for businesses in lower-income communities

What are conventional corporations?

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

What is a hiearchy?

A system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers and others who are responsible to that person

What are S corporations?

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

What is an organization chart?

A visual device that shows relationships among people and divides the organization's work; it shows who reports to whom

What is entrepreneurship?

Accepting the risk of starting and running a business

What is a franchise agreement?

An arrangement where someone with a good idea for a business (franchisor) sells the right to use the business name and sell a product or service (the franchise) to others (the franchisees) in a given territory

What is a leveraged buyout?

An attempt by employees, management, or a group of private investors to buy out the stockholders in a company, primarily by borrowing the necessary funds

What is a SWOT analysis?

Analysis of strengths, weaknesses, opportunities, and threats

What is the "planning" management function?

Anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives

What are policies?

Broad guidelines for action

In addition to the articles of incorporation, what must a corporation create?

Bylaws that describe how the firm is to be operated from both legal and managerial points of view

What do all organizations demand?

Capital, good ideas, planning, information management, budgets, accounting, marketing, good employee relations, and good overall managerial know-how

What are incubators?

Centers that offer new businesses in the critical stage of early development low-cost offices with basic services such as accounting, legal advice, and secretarial help

What is a CEO, COO, CFO, CIO, and CKO?

Chief executive officer Chief operating officer Chief financial officer Chief information officer Chief knowledge officer

What is decision making?

Choosing among two or more alternatives

What is benchmarking?

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

What has led to the growth of home-based businesses?

Computer technology, corporate downsizing, social attitudes, and newer tax laws

What makes franchising successful in global markets?

Convenience and a predictable level of service and quality

What is the "leading" management function?

Creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve goals and objectives in a timely manner

What are intrapreneurs?

Creative people who work as entrepreneurs within corporations

What structure of organization works best when the voice of the customer is brought in, especially in product development tasks?

Cross-functional teams

What are external customers?

Dealers: buy products to sell to others Ultimate customers: "end users" who buy products for their own personal use

What type of structure do large organizations normally use?

Flat

What is the "organizing" management function?

Designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives`

What is 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

What is tactical planning?

Developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done

What are micropreneurs?

Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle

What are general partnerships?

Equal responsibility and liability between all partners

What is the "controlling" management function?

Establishes clear standards to determine whether an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not

What is the most common source of funding after personal savings?

Family and friends

What is knowledge management?

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

What is the formal organization vs the informal organization?

Formal: Details lines of responsibility, authority, and position Informal: Develops spontaneously as employees meet and form cliques, relationships, and lines of authority separate from the formal organization

What type of business is often owned by minorities?

Franchises

What does middle management consist of?

General managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling

What are the challenges of home-based businesses?

Getting new customers, managing time, keeping work and family tasks separate, abiding by city ordinances, and managing risk

What are cross-functional self-managed teams?

Groups of employees from different departments who work together on a long-term basis They are empowered and collaborative and work best when leadership is shared

What are the disadvantages of small businesses?

Half of new businesses don't last five years

What is an inverted organization?

Has contact people (like nurses) at the top and the chief executive officer at the bottom

What are line organizations?

Has direct two-lines of responsibility, authority, and communication running from the top to the bottom of the organization, with everyone reporting to only one supervisor

What is a flat organizational structure?

Has fewer layers of management. Can respond readily to customer demands because lower-level employees have authority and responsibility for making decisions and managers can be spared some day-to-day tasks

What is a small business according to the SBA?

Independently owned and operated, not dominant in its field of operation, and meets certain standards of size in terms of employees or annual receipts

What is participative (democratic) leadership

Involves managers and employees working together to make decisions; increases job satisfaction. Most frequently used in large organizations (Google & Apple) and most smaller firms

What do the articles of incorporation contain?

Its name, names of the creators, purpose, duration, number of shares, minimum capital, address of corporation's office, person responsible for corporation's legal service, first directors, any other public information

What is a horizontal merger?

Joins two firms in the same industry and allows them to diversify or expand their products

What is a vertical merger?

Joins two firms operating in different stages of related businesses

What are line and staff organizations?

Line personnel are responsible for directly achieving organizational goals, and include production workers, distribution people, and marketing personnel. Staff personnel advise and assist line personnel in meeting their goals, and include those in marketing research, legal advising, information technology, and human resource management

What is autocratic leadership?

Making managerial decisions without consulting others. Very effective in emergencies. Most frequently used with new, unskilled workers and is very successful in sports

What is free-rein leadership?

Managers set objectives and employees are free to do whatever is appropriate to accomplish those objectives. Most frequently used with doctors, professors, engineers, or other professionals

What is the difference between managers and leaders?

Managers strive to produce order and stability, whereas leaders embrace and manage change Good leaders motivate workers and create a good work environment while a manager carries out the leader's vision

What are venture capitalists?

May finance your project for a price- they may ask for a hefty stake in your company (as much as 60%)

What is centralized authority?

Occurs when decision making is concentrated at the top level of management

What is decentralized authority?

Occurs when decision making is delegated to lower-level managers and employees more familiar with local conditions than headquarters management could be

What is an aquisition?

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

Why are people willing to take the entrepreneurial risk?

Opportunity, profit, independence, and challenge

What is a mission statement?

Outlines the organization's fundamental purposes Should address the organization's self-concept, philosophy, long-term survival needs, customer needs, social responsibility, & nature of its product/ service

What is a cooperative (co-op)?

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

What does the control process do?

Provide feedback that lets managers and workers adjust to deviations from plans and to changes in the environment that have affected performance

What were Weber's principles of oganization?

Resembled Fayol's but emphasized: - Job descriptions - Written rules, decision guidelines, and detailed records - Consistent procedures, regulations, and policies - Staffing and promotion based on qualifications

What skills does it take to be an entrepreneur?

Self-directed, self-nurturing, action-oriented, highly energetic, and tolerant of uncertainty

What is a limited liability company? (LLC)

Similar to an S corporation but without the special eligibility requirements

What are the three skills that top management must perform?

Technical skills (the ability to perform tasks in a specific discipline or department) Human relations skills Conceptual skills

What are goals?

The broad, long-term accomplishments an organization wishes to attain

What is production?

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

What is a chain of command?

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

What is a span of control?

The optimal number of subordinates a manager supervises or should supervise

What is crowdfunding?

The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

What is real time?

The present moment or the actual time in which something takes place

What does top management consist of?

The president and other key company executives who develop strategic plans

What is departmentalization?

The process of setting up individual departments to do specialized tasks

What is operational planning?

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

Why do employees of small companies find their jobs more satisfying than in larger businesses?

Their jobs are more challenging, their ideas are more accepted, and their bosses are more respectful

Why is hiring a lawyer so important?

They can help with leases, contracts, partnership agreements, and protection against liabilities

Why is hiring a good accountant extremely important?

They can help you with tax planning, financial forecasting, choosing sources of finance, and writing requests for funds They can also help avoid poor accounting practices that can lead to costly mistakes

What does supervisory management consist of?

Those directly responsible for supervising workers and evaluating their daily performance

What are core competencies?

Those functions that the organization can do as well as or better than any other organization in the world

What is networking?

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

What is a temporary network that is made up of replaceable firms that join and leave as needed?

Virtual corporation

What is organizational (corporate) culture?

Widely shared values within an organization that foster unity and cooperation to achieve common goals

What is telecommuting?

Working from home via computer

What are digital natives?

Younger people who have grown up with the internet and cell phones

What is flexible manufacturing?

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

What are strategies?

determine the best way to use resources

What are the three types of partnerships?

general, limited, limited liability

One of the most important elements of small-business success is knowing _____?

the market

What is lean manufacturing?

the production of goods using less of everything compared to mass production (less effort, less manufacturing space, less investment in tools, etc.)