Intro to Business Chapter 5-9
Sole Proprietorship
A Business that is owned, and usually managed by one person.
Cooperative
A business owned and controlled by the people who use it producers, consumers, or workers with similar needs who pool their resources for mutual gain.
Small business
A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size set by SBA in terms of employees or annual receipts.
Franchisor
A company that develops a product concept and sells others the rights to make and sell the products.
Business plan
A detailed written statement that describes the nature of the business the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s).
Entrepreneurial team
A group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make and market a new product.
Corporation
A legal entity with authority to act and have liability apart from its owners.
Partnership
A legal form of business with two or more owners.
Planning
A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives.
Organizing
A management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything works together to achieve the organizations 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 whixh all owners share in operating the business and in assuming liability for the business's debts.
Limited liability partnership (LLP)
A partnership that limits partners risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.
Master limited partnership (MLP)
A partnership that looks much like a corporation in that it acts like a corporation and is traded on a stock exchange but is taxed like a partnership and thus avoids the corporate income tax.
Limitied partnership
A partnership with one or more general partners and one or more limited partners.
Franchisee
A person who buys a franchise.
SWOT Analysis
A planning tool used to analyze an organizations strengths, weaknesses, opportunities, and threats.
SBIC - Small business invesment company
A program through which private investment companies licensed by the SBA lend money to small businesses.
Six Sigma Quality
A quality measure that allows only 3.4 defects per million opportunities.
Operation management
A specialized area in management that converts or transforms resources including human resources into goods and services.
Conventional corporation
A state-chartered legal entity with authority to act and have liability separate from its owners.
Hierarchy
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 who are responsible for that person.
Virtual corporation
A temporary networked organization made up of replaceable firms that join and leave as needed.
S Corporation
A unique government creation that looks like a corportation but is taxed like a sole proprietorships and partnerships.
Entrepreneurship
Accepting the risk of starting and running a business.
Affiliate marketing
An Internet-based marketing strategy in which a business rewards individuals or other businesses for each visitor or customer the affiliate sends to its website.
Franchise agreement
An arrangement whereby somone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.
Leveraged Buyout (LBO)
An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.
Vision
An encompassing explanation of why the organization exists and where its trying to head.
Matrix organization
An organization in which specialists from different parts of the org are brought together to work on specific projects but remain part of line and staff structure.
Decentralized authority
An organization structure in which decision making authority is delegated to lower level managers more familiar with local conditions than headquarters.
Centralized authority
An organization structure in whih decision making authority is maintained at the top level of management.
Inverted organization
An organization that has contact people at the top and CEO at the bottom of the org chart.
Line organization
An organization that has direct two way lines of responsibility, authority, and communication running from the top to the bottom of the organization with people reporting to one supervisor.
Bureaucracy
An organization with many layers of managers who set rules and regulations and oversee all decisions.
Tall organization structure
An organizational structure in which the pyramidal organizational chart is tall because of various levels of management.
Flat organization structure
An organizational structure that has few layers of management and a broad span of control.
Mission statement
An outline of the fundamental purposes of an organization.
General partner
An owner (partner) who has unlimited liability and is active in managing the firm.
Limited partner
An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.
Gantt chart
Bar graph showing production managers what projects are being worked on and what stage they are in at any given time.
Decision making
Choosing among two or more alternatives.
Brainstorming
Coming up with as many solutions to a problem as possible in a short period of time with no censoring of ideas.
Benchmarking
Comparing an organizations practices, processes and products against the world's best.
CAD
Computer aided design of products.
CIM
Computer aided integrated manufacturing.
CAM
Computer aided manufacturing of products.
Quality
Consistently producing what the customer wants while reducing errors before and after delivery to the customer.
Leading
Creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organizations goals and objectives.
Production
Creation of finished goods and services using factors of production.
Intrapreneurs
Creative people who work as entrepreneurs within corporations.
External customers
Dealers who buy products to sell to otherw, and ultimate customers or end users who buy products for their own personal use.
Flexible manufacturing
Designing machines to do multiple tasks so they can produce a variety of products.
Sole Proprietorship Advantages:
Ease of start/end Be your own boss Pride of ownership Leave Legacy Retain profit No special taxes
Staff personnel
Employees who advise and assist line personnel in meeting their goals.
Line personnel
Employees who are part of the chain of command that is reponsible for achieving organizational goals.
Micropreneurs
Enterepreneurs willing to accept the risk of starting and managing the tpe of business that remains small, lets them do the kind of work they want to do and offers them a balanced lifestyle.
ERP
Entrprise Resource planning
Knowledge management
Finding the right information, keeping the information in a readily accessible place and making the information known to everyone in the firm.
Types of Partnerships
General and Limited
Enabling
Giving workers the education and tools they need to make decisions.
Cross functional self managed teams
Groups of employees from different department who work together on a long term basis.
Top Management
Highest level of management, consisting of the president and other key compay executives who develop strategic plans.
Critical path
In a PERT network, the sequence of tasks, that takes the longest time to complete.
Internal customers
Individuals and units within the firm that receive services from other individuals.
Venture capitalists
Individuals or companies that invest in new businesses in exchange for partial ownersip of those businesses.
Corporations Disadvantages:
Initial Cost Paperwork Two tax returns Termination difficult Stockholder and Board Conflict Double taxation
JIT
Just in time inventory control is a production process that stores a minimum of inventory and orders just in time to go on the assembly line.
Limited liability company
LLC is a company similar to an S Corporation but without the special eligibility requirements.
Participative (democratic) leadership
Leadership style that consists of managers and employees working together to make decisions.
Autocratic leadership
Leadership style that involves making managerial decisions without consulting others.
Free-rein leadership
Leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives.
Supvisory management
Managers who are directly responsible for supervising workier s and evaluating their daily performance.
MRP
Material requirement planning which is computer based operations management system that uses sales forecases to make sure that needed parts and materials are available at the right time and place.
Partnerships Advantages:
More financial resources Shared managment Longer survival No special taxes
Corporation Advantages:
More money for investment. Limited liability Separation of ownership/mgmt. Ease of ownership change Perpetual life Size
Acquisition
One company's purchase of the property and obiligations of another company.
Process manufacturing
Part of the production process that physically or chemically changes the materials.
Assembly process
Part of the production processthat puts together components.
Market
People with unsatisfied wants andneeds who have both the resources and willingness to buy.
PMI
Pluses, Implications and Minuses
Corporations:
Private-not traded on any stock exchange. Public-Shares are traded on 1 or more stock exchanges. Non-profit-performs public service, has a special tax considerations to encourage formation.
Lean manufacturing
Production of goods using less of everthing compared to mass production.
Continuous process
Production process in which long production runs turn out finished goods over time.
Intermittent process
Production process in which the production run is shor and the machines are changed frequently to make different products.
PERT
Program evaluation and review technique.
Restructuring
Redesigning an organization so that it can more effectively and efficiently serve its customers.
Types of corporations:
Regular C S Corporation Limited Liability Companies
SCORE
Service Corps of Retired Executives which is a SBA office with volunteers from the industry, trade associations, and education who counsel small business at no cost (except for expenses).
Human Relations skills
Skills that involve communication and motivation, they enable managers to work through and with people.
Technical skills
Skills that involve the ability to perform tasks in a specific discipline or department.
conceptual skills
Skills that involve the ability to picture the organization as a whole and the relationshipp among its various parts.
SBA
Small business administration that is a government agency that advises and assists small businesses by providing management training and financial advice and loans.
Enterprise zones
Specific geographic areas to which governmentws try to attract private gusiness investment by offering lower taxes and other government support.
Objectives
Specific short-term statements detailing how to achieve the organizations goals.
Formal organization
Structure that details lines of responsibility, authority and position.
Informal Organization
System that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization.
Mass customization
Tailoring products to meet the needs of the customer.
Production management
Term used to describe all the activities managers do to help their firms create goods.
Goals
The broad, long-term accomplishments an organization wihes to attain.
Business plan Importance
The business plan is probably the most important document a small business owner will ever create. There are 9 sections which include: Cover Letter, Executive Summary, Company Background, Management Team, Financial Plan, Capital Required, Marketing Plan, Location Analysis, Manufacturing Plan and Appendix which includes all of the supporting documents and marketing research.
ISO 14000
The collection of the best practices for managing an organizations impact on the environment.
ISO 9000
The common name given to quality management and assurance standards.
Departmentalization
The dividing of organizational functions into separate units.
Purchasing
The function in a firm that searches for high-quality material resources, best suppliers and negotiates the best price for goods and services.
Conglomerate Merger
The joining of firms in completely unrelated industries.
Vertical Merger
The joining of two companies involved in different stages of related businesses.
Horizontal Merger
The joining of two firms in the same industry.
Middle management
The level of management that includes a general manager, and branch and plant managers who are responsible for tactical planning and controlling.
Chain of command
The line of authority that moves from the top of a hierarchy to the lowests levels.
Span of control
The optimal number of subordinates a manager can and should supervise.
Facility layout
The physical arrangement of resources including people in the production process.
Real Time
The present moment and time in which something takes place.
Transparency
The presentation of a company's facts and figures in a wayt that is clear and apparent to all stakeholders.
Strategic planning
The process of determing 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.
Contingency planning
The process of preparing alternative courses of action that may be used if the primary plans don't achieve the organizations objectives.
Facility location
The process of selecting a geograhic location for the company's operation.
Operational planning
The process of setting work, standards and schedules necessary to implement the company's tactical objectives.
Problem solving
The process of solving the everyday problems that occur. It is less formal decision making and usually calls for quicker action.
SPC - Statistical Process Control
The process of testing statistical samples of product components at each stage of the production process.
SQC - Statistical Quality Control
The process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product.
Management
The process used to accomplish organization goals through planning, organizing, leading, and controlling people and other organization resources.
Limited liability
The responsibility of a business's owners for losses only up to the amount they invest limited partners and shareholders have a limited liability.
Unlimited Liability
The responsibility of business owners for all of the debts of the business.
Merger
The result of two firms forming one company.
Franchise
The right to use a specific business's name and sell its products or services in a given territory.
Economies of scale
The situation in which companies can reduce their production costs if they can purchase raw materials in bulk, the average cost of goods goes down as production levels increase.
Form Utility
The value producers add to materials in the creation of finished goods.
Core competencies
Those functions that the organization can do as well as or better than any other org in the world.
Fayel's Principles of Organization
Unity of Command, Hierarchy of authority, Division of labor, Subordination of individual interests to the general interest, Authority, Degree of centralization
Sole Proprietorship Disadvantages:
Unlimited Liability Limited financial resources Difficulty in management Time commitment Few fringe benefits Limited growth Limited life span
Partnerships Disavantages:
Unlimited liability Division of profits Disagreements among partners Difficult to terminate
Networking
Using communications technology and other means to link organizations and allow them to work together on a common objective.
Org Chart
Visual device that shows relationships among people and divides the organizational work and whom reports to whom.
Organizational culture
Widely shared values within an organization that provide unity and cooperation to achieve common goals.
Telecommuting
Working from home via computer and modem.
Digital natives
Young people who have grown up using the internet and social networking.
