Business midterm

Maslow's hierarchy of needs:

(BOTTOM TO TOP): physical needs, safety needs, social needs, esteem needs, self-actualization

Market share formula

(Total sales of business ---------------- Total sales of industry) x 100

Ethical code (code of conduct):

A document detailing a company's rules and guidelines on staff behavior that must be followed by all employees

Management by objectives:

A method of coordinating and motivating all staff in an organization by dividing its overall aim into specific targets for each department manager and employee

Informal leadership

A person who has no formal authority but has the respect of colleagues and some power over them.

Understanding of added value and creating value

Added value: the difference netween the cost of purchasing bought-in materials and the price the finished goods are sold for. Creating value: Increasing the difference between the cost purchasing bought-in materials and the price the finished goods are sold for.

The Hierarchy of objectives

Aim, mission, corporate objectives, divisional objectives, departmental objectives, and individual targets.

Job enlargement:

Attempting to increase the scope of a job by broadening or deepening the tasks undertaken.

Factors of production (5)

Capital goods definition- the physical goods used by industry to aid in the production of other goods and services, such as machines and commercial vehicles.

Factors of production (3)

Capital: this is not just the finance needed to set up a business and pay for its continuing operations, but also all of the man-made resources used in production. These include capital goods, such as computers, machines, factories, offices, and vehicles.

Mayo's work-

Changes in working conditions and financial rewards have little or no effect on productivity When management consult with workers and take an interest in their work, then motivation is improved.

Type of financial payments and their benefits part 2:

Commission: a payment to a sales person for each sale made. It encourages greater effort and faster working. Bonus: a payment made in addition to the contracted wage or salary. It encourages greater effort and faster working. Performance-related pay (PRP): a bonus scheme to reward staff for above-average work performance. Encourages staff to meet agreed targets.

Characteristics of successful entrepreneurs (2)

Commitment and self-motivation: willingness to work hard, keen ambition to succeed, energy, and focus.

Advantages of a family owned business

Commitment, stability, decreased costs

Factors that determine the corporate objectives of a business:

Corporate culture, The size and legal form of the business, Public-sector or private-sector businesses, The number of years the business has been operating, Divisional, departmental, and individual objectives

Important leadership positions:

Directors, Manager, Supervisors, Workers' representatives

Objectives of social enterprise

Economic: make a profit to reinvest back into the business and provide some return to owners. Social: provide jobs or support for local, often disadvantaged, communities. Environmental: to protect the environment and to manage the business in an environmentally sustainable way.

Unfair dismissal

Ending a worker's employment contract for a reason that the law regards as being unfair.

Factors of production (4)

Enterprise: this is the driving force, provided by risk-taking individuals, that combines the other factors of production into a unit capable of producing goods and services. It provides a managing, decision-making and coordinating role.

Decisional roles:

Entrepreneur, Disturbance handler, Resource allocator, Negotiater

Scientific management:

Establishing an idea or a hypothesis, studying and recording performance at work, altering working methods and rerecording performance - are still used in modern industry.

Different theorists:

F.W Taylor, Elton Mayo, Abraham Maslow, Frederick Herzberg, David McClelland

Type of financial payments and their benefits part 1

Hourly or time- based wage rate: offers security to workers, but it is not directly linked to the level of outputor effort. Piece rate: a payment to a worker for each unit produced. It encourages greater effort and faster working. Salary: annual income that is usually paid on a monthly basis. Gives security of income.

Characteristics of successful entrepreneurs (1)

Innovation: must be able to carve a new niche, attract customers, and present their business as being different.

Three main management roles identified by Mintzberg

Interpersonal, informational, and decisional

Factors of production (2)

Labor- manual and skilled labor make up the workforce of a business.

Disadvantages of a family owned business

Lack of family interest, conflict, nepotism

Reasons why new businesses fail:

Lack of record-keeping, lack of cash and working capital, poor management skills, and changes in the business environment.

Factors of production (1)

Land- the general term includes not only land itself but all of the renewable and non-renewable resources of nature, such as coal, crude oil, and timber.

Characteristics of successful entrepreneurs: (4)

Leadership skills: lead by example and personality that encourages people to follow them and be motivated by them.

Significance of small businesses in the economy

Many jobs are created Often run by dynamic entrepreneurs with new ideas for consumer goods and services. Small firms can create competition for larger businesses. Small firms often supply specialist goods and services to important industries in a country. All great businesses were small at one time. Small firms may enjoy lower average costs than larger ones and this benefit could be passed on to the consumer too.

Labor turnover:

Measures the rate at which employees are leaving an organization. It is measured by Number of employees leaving in 1 year ----------------------- Average number of people employed x 100

Characteristics of successful entrepreneurs (3)

Multiskilled: keen to learn technical skills, being good with people and handling money, and keeping accounting records.

Different measures of size of businesses

Number of employees, Revenue, Capital employed, Market Capitalization, Market Share

Job enrichment:

Often involves a reduction of direct supervision as workers take more responsibility for their own work and are allowed some degree of decision-making authority.

Advantages of a partnership

Partners may specialize in different areas of business management. Shared decision-making Additional capital injected by each partner Business loss is shared between the partners Greater privacy and fewer legal formalities than corporate organizations

Stakeholders:

People or groups of people who can be affected by - and therefore have an interest in - any action by an organization.

Common corporate objectives

Profit maximization, Profit Satisficing, Growth, Increasing market share, Survival, Corporate social responsibility, Maximizing short-term sales revenue, Maximizing shareholder value

Type of financial payments and their benefits:

Profit sharing: a bonus for staff based on the profits of the business - usually paid as a proportion of basic salary. Staff will feel more committed to the success of the business and will strive to achieve higher performances and cost savings. Fringe benefits: benefits given, separate from pay, by an employer to some or all employees. Give status to higher - level employees and to to recruit and retain the best staff.

Role of lenders:

Provide finance to the business in different forms

Characteristics of successful entrepreneurs: (6)

Risk-taking: willing to take risks to see results.

SMART criteria

S: Specific M: Measurable A: Achieveable R:Realistic and relevant T: Time-specific

Characteristics of successful entrepreneurs: (5)

Self confidence and ability to bounce back: have belief in themselves and business that they would bounce back.

Functions of management

Setting objectives and planning, Organizing resources to meet the objectives, Directing and motivating staff, Coordinating activities, Controlling and measuring performance against targets

Emotional intelligence

The ability of managers to understand their own emotions, and those of the people they work with, to achieve better business performance.

Economic man:

The view was that man was driven or motivated by money alone and the only factor that could stimulate further effort was the chance of earning extra money.

Corporate social responsibility

This concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities and the environment

Responsibilities from customers:

To be honest - to pay for goods bought or services received when requested Not to steal Not to make false claims about poor service, underperforming goods or failed items

Customer's rights

To receive goods and services that meet local laws regarding health and safety, design, performance, and so on To be offered replacements, repairs, compensation in the event of failure of the product or service - to at least the minimum levels laid down by law.

Responsibilities from suppliers:

To supply goods and services ordered by the business in the time and condition as laid down by the purchase contract or supplier's service agreements

Joint venture:

Two or more businesses agree to work closely together on a particular project and create a separate business division to do so.

Disadvantages of a partnership:

Unlimited liability for all partners (with some exceptions ) Profits are shared As with sole traders, no continuity and the partnership will have to be reformed in the event of the death of one of the partners All partners bound by the decisions of any any one of them Not possible to raise capital from selling shares A sole trader taking on partners will lose independence of decision-making

Democratic:

Workers help make decisions

mayo's work part 2

Working in teams and developing a team spirit can improve productivity. When some control over their own working lives is given to workers, such as deciding when to take breaks, there is a positive motivational effect. Groups can establish their own targets or norms and these can be greatly influenced by the informal leaders of the group.

Informational roles:

acting as a source, receiver, and transmitter of information

Leadership styles

autocratic, democratic, paternalistic, laissez-faire

Theory Y:

believed workers did enjoy work and that they found it as natural as rest or play.

Fringe benefits:

benefits given, separate from pay, by an employer to some or all employees.

Private sector:

comprises businesses owned and controlled by individuals or groups of individuals.

Public sector:

comprises organizations accountable to and controlled by central or local government (the state).

Interpersonal roles:

dealing with and motivating staff at all levels of the organization

Different types of economies (Mixed economy)

economic resources are owned and controlled by both private and public sectors.

Different types of economies (free-market economy)

economic resources are owned largely by the private sector with very little state intervention.

Different types of economies (command economy)

economic resources are owned, planned, and controlled by the state

impact on a country's economy from enterprises

employment creation: new businesses = new job opportunities. economic growth: increase in output goods will increase domestic. firms' survival & growth: become important, employment. Innovation & technological change: makes business sector competitive

Internal growth:

expansion of a business by means of opening new branches, shops, or factories (also known as organic growth).

Primary sector

firms engaged in farming, fishing, oil extraction, and all other industries that extract natural resources so that they can be used and processed by other firms.

Secondary Sector

firms that manufacture and process products from natural resources, including computers, brewing, baking, clothes-making, and construction.

Tertiary sector

firms that provide services to customers and other businesses, such as retailing, transport, insurance, baking, hotels, tourism, and telecommunications.

challenges faced by entrepreneurs

identifying successful business opportunities: sourcing capital (finance), determining a location, competition, building a customer base.

Autocratic:

leader takes all decisions

Paternalistic:

managers do what they think is best for workers (father-like)

Decisional roles:

taking decisions and allocating resources to meet the organization's objectives.

Understand opportunity cost

the benefit of the next most desired option which is given up.

Limited companies:

the only liability - or potential loss - a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder.

Capital employed

the total value of all long-term finance invested in the business.

What is the Memorandum of Association:

this states the name of the company, the address of the head office through which it can be contacted, the maximum share capital for which the company seeks authorization and the declared aims of the business.

Theory X

view workers as lazy, disliking work, and unprepared to accept responsibility, needed to be controlled and made to work.

Quality circles:

voluntary groups of workers who meet regularly to discuss work - related problems and issues.

Laissez-faire:

workers make all the decisions