Chapters 5-8

Organizing

A management function that includes designing the structure or the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives.

Staffing

A management function that includes hiring, motivating, and retaining the best people available to accomplish the company's objectives.

Controlling

A management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not.

General Partnership

A partnership in which all owners share in operating the business and in assuming liability for the business' debts.

Limited liability partnership (LLP)

A partnership that limits partners' risk of losing their personal assets to only their acts and omissions and to the acts and omissions of people under their supervision.

Limited Partnership

A partnership with one or more general partners and one or more limited partners.

SWOT Analysis

A planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats.

What should be covered in the Marketing Plan section of a business plan?

A review of industry size, trends, and the target market. Include the strengths and weaknesses of your product, and what makes it more desirable than what's already available. Make sure the costs of marketing agree with those projected in the financial statement.

Values

A set of fundamental beliefs that guide a business in the decisions it makes.

Micro-Enterprises

A small business defined as having one to four employees.

Ethical Consumerism

A strategy where companies provide products that appeal to people's best selves.

Participative (democratic) Leadership

A style that consists of managers and employees working together to make decisions. Eg. Google, Apple.

Autocratic Leadership

A style that involves making managerial decisions without consulting others. Eg. Military, Sports coach.

Free-Rein Leadership

A style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives. Eg. Doctors, professors.

Organization Chart

A visual device that shows relationships among people and divides the organization's work; it shows who is accountable for the completion of specific work and who reports to whom.

Incubator sponsors include:

Academic institutions, economic development organizations, government entities, and for-profit organizations. Incubators help entrepreneurs prepare plans and proposals, and assist in finding financing and cheaper insurance. Most incubators are not investors, and mainly act in the form of services and indirect support.

Entrepreneurship

Accepting the challenge of starting and running a business.

What tasks are involved in Organizing?

Allocating resources, assigning tasks, and establishing procedures for accomplishing goals; Preparing a structure (organization chart) showing lines of authority and responsibility; Recruiting, selecting, training, and developing employees; Placing employees where they will be most effective.

How do entrepreneurial ventures differ from small businesses?

Amount of wealth creation, Speed of wealth creation, Risk, and Innovation. Entrepreneurs usually make more profit quicker, but they also assume a higher risk that requires a large amount of innovation.

Franchise Agreement

An arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell its good and services in a given territory.

Vision

An encompassing explanation of why the organization exists and where it is trying to head.

What should be covered in the Management Team section of a business plan?

An organization chart, job descriptions, and detailed resumes of current and proposed executives. Managers should have expertise in all disciplines needed to start and run a business, or outside consultants should be mentioned in place of experienced managers.

Co-Operatives

An organization owned and controlled by people-producers, consumers, or workers - with similar needs who pool their resources for mutual gain.

Mission Statement

An outline of the fundamental purposes of an organization.

General Partner

An owner (partner) who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.

External Customers

Dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use.

What are the six Ds of decision making?

Define the situation; Describe and collect needed information; Develop alternatives; Decide which alternative is best; Do what is indicated; Determine whether the decision was good and follow up.

What should be covered in the Company Background section of a business plan?

Description of company operations to date, potential legal considerations, and areas of risk and opportunity.

What are some advantages of Sole Proprietorships?

Ease of starting and ending the business, Being your own boss, Pride of ownership, Retention of company profit, No special taxes, and Less regulation.

What should be covered in the Financial Plan section of a business plan?

Five-year projections for income, expenses and funding sources. Assumptions should be reasonable and based on industry trends, and added up totals should be consistent throughout the plan.

What tasks are involved in Controlling?

Measuring results against corporate objectives; Monitoring performance relative to standards; Rewarding outstanding performance; Taking corrective action when necessary.

What are some advantages of Partnerships?

More financial resources, shared mgmt and pooled/complementary skills and knowledge, Longer survival, Shared risk, No special taxes, and Less regulation.

What should be included in a partnership agreement?

Name of the business, purpose and nature of the business, terms of the partnership, defined duties, division of responsibilities, provision for sharing profits or losses, requirements for taking in new partners, or leaving, and provisions for how to dissolve the partnership.

What are some pros and cons of Home-Based franchises?

No commute, lower overhead, and more time for personal activities. The biggest con is isolation, and the inability to share their knowledge.

Why do family businesses often fail?

No qualified successor, or they are sold off due to a lack of planning.

Transformational Leadership

Occurs when leaders can influence others to follow them in working to achieve a desired outcome or goal. This works best in situations where dramatic organizational change is required.

Transactional Leadership

Occurs when the leader is given the power to assign tasks and their successful completion leads to rewards and reinforcement.

Why are people willing to take the entrepreneurial challenge?

Opportunity, New Idea, Process, or Product, Profit, Challenge, Independence, and Family Pattern.

What are some advantages in international trade that small businesses have over large ones?

Overseas buyers enjoy dealing with individuals rather than large corporate bureaucracies, small companies often ship faster, can support a variety of suppliers, and provide customers with more personal service and attention.

What causes small-businesses to succeed?

Owner paying attention to new competitors, product isn't easily mass-produced, and the customer requiring personal attention, such as a beauty parlour.

How does a manager set ethical standards?

People lean their standards and values from observing other people's actions, rather than their words.

Whistleblowers

People who report illegal or unethical behavior

Market

People with unsatisfied wants and needs who have both the resources and the willingness to buy.

What are the five functions of a small business for success?

Planning your business, Financing your business, Knowing your customers (marketing), Managing your employees (human resources), and Keeping records (accounting).

What are the four functions of management?

Planning, Organizing, Leading, Controlling.

Angel Investors

Private individuals, often successful business people, who invest their own money into a potentially rewarding private company.

Crowdfunding

Raising funds through the collection of small contributions from the general public using the Internet and Social media.

What should an organization's mission statement address?

The organization's self-concept; their philosophy and goals; long-term survival; customer needs; social responsibility; the nature of the organization's product or service.

How is survival defined in small business?

The percentage of new firms that continue to operate when they reach a given age.

Transparency

The presentation of a company's facts and figures in way that is clear, accessible, and apparent to all stakeholders.

Corporate Governance

The process and policies that determine how an organization interacts with its stakeholders, both internal and external.

Strategic planning

The process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals.

Tactical Planning

The process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done. Usually done at lower levels.

Contingency Planning

The process of preparing alternative course of action that may be used if the primary plans do not achieve the organization's objectives.

Operational Planning

The process of setting work standards and schedules necessary to implement the company's tactical objectives. Operational planning focuses on specific responsibilities of supervisors, department managers, and individual employees.

Problem Solving

The process of solving the everyday problems that occur. Problem solving is less formal than decision making and usually calls for quicker action.

Management

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

Unlimited Liability

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

How are corporations "doubled taxed"?

They are taxed on income prior to distributing net income as dividends to shareholders. Then the shareholders pay tax on the dividends they receive.

What is the role of the board of directors in the corporate hierarchy?

They hire/fire the top officers and set the pay for those officers, who in turn select other managers and employees.

What is the role of shareholders in the corporate hierarchy?

They influence how a business is managed by electing a board of directors.

What are the three leadership styles?

Autocratic, Participative, and Free-rein.

What are some types of corporations?

Benefit corporation (certified to meet social and environmental standards), Crown corporation, non-profit corporation, domestic corporation (only operates domestically).

Partnership Agreement

Legal document that specifies the rights and responsibilities of each partner.

What are some benefits of Corporations?

Limited liability, Ability to raise more money for investment, Size, Perpetual life, Ease of ownership change, Ease of attracting talented employees, and Separation of ownership from management.

What are some benefits of E-Commerce in franchising?

Low start-up cost, easy to enter multinational market, convenient.

Why should a business be ethically managed?

Maintain good reputation, keep customers, avoid lawsuits, reduce turnover, avoid government intervention, to please customers, employees, and society.

What are some advantages of franchising?

Management and marketing assistance, Personal ownership, Nationally recognized name, Financial advice and assistance, Lower failure rate.

Supervisory Management

Managers who are directly responsible for supervising workers and evaluating their daily performance.

What is the six step process to improve business ethics?

1. Top mgmt must adopt and support corporate code of conduct. 2. Employees must understand that expectations for ethical behavior being at the top and that senior mgmt expects all employees to act accordingly. 3. Managers and others must be trained to consider the ethical implications of all business decisions. 4. An ethics office must be set up with phone lines to maintain anonymity. 5. Outsiders such as suppliers, subcontractors, distributors, and customers must be told about the ethics program to avoid outside pressure. 6. The ethics code must be enforced.

What are some facts about small businesses?

97.9% of businesses in Canada are small, and half of those are micro-enterprises, and employ 70.5% of the total labour force. They created approx. 1M jobs between 2005-15, and contribute an avg. Of 30% to GDP of their province.

Small business

A business that is independently owned and operated, is not dominant in its field and meets certain standards of size in terms of employees or annual revenues. (Less than 100 employees)

Sole Proprietorship

A business that is owned, and usually managed, by one person.

Corporate Social Responsibility

A business' concern for the welfare of society.

Franchisor

A company that develops a product concept and sells others the rights to make and sell the product.

PMI

A creative thinking strategy that lists all the pluses, minuses, and interesting points for a solution in separate columns.

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). Aka. A tool that is used to transition the entrepreneur from having an idea to actually developing a strategic and operation framework for the business.

Resources

A general term that incorporates human resources, natural resources, and financial resources.

Entrepreneurial Team

A group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product.

Articles of Incorporation

A legal authorization from the federal or provincial/territorial government for a company to use the corporate format.

Corporation

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

Partnership

A legal form of business with two or more parties.

Planning

A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives.

Intrapreneurs

Creative people who work as entrepreneurs within corporations. They often use a company's existing resources - human, financial, and physical - to launch new products and generate profits.

When starting a small business, how can you get experience?

By becoming an apprentice or working for a successful entrepreneur.

How do corporations attract talented employees?

By offering better benefits such as a pension plan, health benefits, and stock options.

How do corporations raise money?

By selling shares in the stock market.

What are some factors to consider before buying a franchise?

Careful consideration of the benefits and drawbacks of franchising should be considered and weighed against your personal values and goals.

Business Incubators

Centres that provide space, services, advice, and support to assist new and growing businesses to become established and successful.

How do ethics differ from legality?

Certain actions may be legal, but not ethical.

Decision Making

Choosing among two or more alternatives.

What are some duties of leaders?

Communicate a vision and rally others around that vision; Establish corporate values; Promote corporate ethics; Embrace transformational change; Stress accountability and responsibility.

How are compliance-based ethics codes different from integrity-based ethics codes?

Compliance-based ethics codes focuses on following rules and regulations through enforcement, while integrity-based ethics codes define the organizations guiding values and support an environment of ethically sound behavior.

What are some reasons for the growth of home-based businesses?

Computer technology, Corporate downsizing, Change in social attitudes.

Public Corporation

Corporation that has the right to issue shares to the public, so its shares may be listed on a stock exchange.

Private Corporation

Corporation that is usually controlled by a small number of shareholders and its shares are NOT listed on a stock exchange.

Leading

Creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization's goals and objectives.

When looking to start a small business, how can you buy an existing business?

Enter into a training period with an entrepreneur and work hard to learn all about the business - suppliers, inventory, bookkeeping, customers, promotion, etc. At the end of the period, make the owner the offer to retire or work part-time as you take over the business.

What are the five steps of the control function of management?

Establish clear standards; Monitor and record performance; Compare results against standards; Communicate results; If needed, take corrective action.

Integrity-based ethics codes

Ethical standards that define the organization's guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees.

Compliance-based ethics codes

Ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers.

What are the nine sections of a business plan?

Executive summary, Company background, Management team, Financial plan, Capital required, Marketing plan, location analysis, Manufacturing plan, and Appendix.

What are some reasons for the emergence of female entrepreneurs?

Financial need, Lack of promotion opportunities, Women returning to the workforce, Family and personal responsibility, Public awareness of women in business, Part-time occupations, and Higher rate of success for women.

Why is it difficult for small businesses to get started in global markets?

Financing is difficult to find, it's hard to get started with exporting and there may be little to no understanding of the cultural differences between markets, and the bureaucratic paperwork can threaten to bury a small business.

What are some steps to follow in order to create a successful online business?

Find a need & fill it, Write copy that sells, Design and build an easy-to-use website, Use search engines to drive traffic to your site, Establish an expert reputation for yourself, Follow up with your customers and subscribers with email, Increase your income through back-end sales and upselling.

Knowledge Management

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

Brainstorming

Generating as many solutions to a problem as possible in a short period of time with no censoring of ideas.

What are some challenges of home-based businesses?

Getting new customers, Time management, Separation of personal and work life, Abiding by city ordinances, and managing risk.

What tasks are involved in Leading?

Guiding & motivating employees to work effectively to accomplish organizational goals and objectives; Giving assignments; Explaining routines; Clarifying policies, Providing feedback on performance.

Top management

Highest level of management consisting of the president and other key company executives, who develop strategic plans.

What are the largest areas of Co-Operative activity?

Housing, Agriculture, and credit unions.

How do you know if your business idea is a good opportunity?

If it fills customers' needs, you have the skills and resources to start a business, you can sell your item at price that will still allow for profit, you can provide your product in a timely matter, and you can keep the business going.

Why would unlimited liability be a drawback of sole proprietorships?

If the businesses fails are assumes debt, it is the responsibility of the owner to resolve that debt and could involve losing their personal wealth.

Internal Customers

Individuals and units within the firm that receive services from other individuals or units.

Venture capitalists

Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses. (Usually through raise money with investment banks, insurance companies, and other financial institutions).

What are some disadvantages of Corporations?

Initial cost, Extensive paperwork, Double taxation, Two tax returns, Size, Difficulty of termination, Possible conflict with shareholders and their board of directors.

What are some services for entrepreneurs provided by the federal government?

Innovation, Science, and Economic Development Canada (ISED) provides research and business intelligence information. The National Business Incubator Association provides education and mentorship.

Crisis Planning

Involves reacting to sudden changes in the environment. Eg. Plans to respond to terrorist attacks.

What are the three questions to ask when faced with an ethical dilemma?

Is it legal? Is it balanced? How will it make me feel?

What are some disadvantages of franchising?

Large start-up costs, Shared profit, Management regulation, Coattail effects, Restrictions on selling, and Fraudulent franchisors.

What are some difference between leaders and managers?

Leadership is creating a vision for others to follow, establishing corporate values and ethic, and motivating workers and creates an environment for workers to motivate themselves. Management is the carrying out of the leadership's vision.

What are some ways to get into your first business venture?

Learn from others, Get experience, Buy an existing business, Buy a franchise, Inherit/take over a family business.

Small and Medium-sized Enterprises (SMEs)

Refers to all businesses with fewer than 500 employees.

What laws are in place to protect whistleblowers?

SOX (Sarbanes-Oxley Act of 2002) and the FFA (Federal Accountability Act)

What is a key factor in ensuring the success of the ethics code?

Selecting an ethics officer.

What are some entrepreneurial attributes?

Self-directed, Self-nurturing, Action-Oriented, Highly energetic, Tolerant of Uncertainty, Ability to learn quickly, and Courage.

What tasks are involved in Planning?

Setting organizational goals; Developing strategies to reach those goals; Determining resources needed, and Setting precise standards.

Micropreneurs

Small-business owners with fewer than five employees who are 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 the three major forms of business?

Sole Proprietorship, Partnerships, and Corporations.

What business model can a franchise be formed as?

Sole proprietorship, partnership, or a corporation.

Objectives

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

Ethics

Standards of moral behavior; behavior that is accepted by society as right versus wrong.

What are the four forms of planning?

Strategic, tactical, operational, and contingency.

When starting a small business, how can you learn from others?

Taking classes, and speak to people who have started businesses and take their advice.

Human Relations Skills

The ability to communicate and motivate, enabling managers to work through and with people.

Technical Skills

The ability to perform tasks in a specific discipline or department.

Conceptual Skills

The ability to picture the organization as a whole and the relationships among its various parts.

What are the advantages of entrepreneurial teams?

The ability to work together with a team of like-minded, skilled people.

Goals

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

Middle Management

The level of management that includes general managers, division managers, and branch and plant managers, who are responsible for tactical planning and controlling.

How do Co-Op principles differ from other businesses?

They serve A different purpose to meet the needs of their members rather than to maximize profit, A different control structure where each member gets one vote, A different allocation of profit where profits are shared among members based on how much they use the organization rather based on how many shares they hold.

What are the primary goals of business incubators?

To produce successful firms that will leave the program financially viable and freestanding. Also, job creation, retaining businesses in a community, building or accelerating growth in a local industry, and diversifying local economies are other goals.

What are some common problems of being a sole proprietor?

Trouble getting loans, keeping up with their business, and issues with theft.

What causes small-businesses to fail?

Under or overpricing goods or services, starting with too little or too much capital, not allowing for setbacks and unexpected expenses, not understanding business cycles.

What are some disadvantages of Partnerships?

Unlimited liability, Division of profits, Disagreements among partners, Difficulty of termination, Possibly pay higher taxes.

What are some disadvantages of Sole Proprietorships?

Unlimited liability, Limited financial resources, Management difficulties, overwhelming time commitment, Few fringe benefits, Limited growth, Limited lifespan, and Possibly paying hiring taxes.

When buying a business, how do you determine a fair price?

Value is based on: What the business owns, What it earns, and What makes it unique.

What two fundamental questions does Planning answer?

What is the gap between where an organization currently is and where it wants to be? And How can we get there?

What are three questions to ask before forming a global franchise?

Will your intellectual property be protected? Can you give proper support to global partners? Are you able to adapt to regulations in other countries?