Topics to Study for Exam 2

Functional Team Structure

All team members belong to the same functional department

Leveraged Buyout

Attempt to buyout stockholders of a company by borrowing necessary funds

ISO 14001

Best practices for managing an organization's impact on the environment

Decentralization Advantages

Better adaptation to customer wants, more empowerment of workers, faster decision making

Corporation

Business entity that is legally separate from its owners

Sole Proprietorship

Business owned and operated by one person

Partnership

Business owned and operated by two or more people

Merger

Combining two firms in the same industry to diversify or expand their products

Limited Liability Company (LLC)

Company that offers limited liability and flexible ownership rules

Franchisor

Company that sells the rights to use the business name to sell a product or service

Benchmarking

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

Centralization

Concentrating decision-making authority in upper management

Quality

Consistently producing what the customer wants and reducing errors

C-Corporation

Corporation that is subject to double taxation

S-Corporation

Corporation that is taxed as personal income

Production

Creation of finished goods and services using factors of production

Line Structure

Direct vertical structure where employees report directly to their superior

Decentralization

Dispersing decision-making responsibility and authority to lower levels of the organization

Articles of Organization

Document required to form an LLC

Sole Proprietorship Advantages

Easy to start and end, avoids double taxation, individual accountability

Matrix Organizational Structure

Employees report to both a project manager and a functional manager

Self-Managed Team Structure

Employees with the skills and ability to manage themselves

Matrix Organization Advantages

Extra managers, more flexibility, cross functionality, knowledge sharing, efficiency

Centralization Advantages

Greater top-management control, more efficiency, simpler distribution system

Vertical Merger

Joining two firms operating in different stages of related businesses

Franchising Disadvantages

Large start-up costs, shared profit, management regulation

Decentralization Disadvantages

Less efficiency, complex distribution system, less top-management control

Centralization Disadvantages

Less responsiveness to customers, less empowerment, interorganizational conflict

Sole Proprietorship Growth Limitation

Limited financial and managerial resources, limited growth

C-Corporation Advantages

Limited liability, raise money by selling stock, potentially perpetual life

S-Corporation Advantages

Limited liability, raise money by selling stock, potentially perpetual life, avoids double taxation

S-Corporation Disadvantages

Limited to 100 shareholders, shareholders must be U.S. citizens or residents

S-Corporation Growth Limitation

Limited to 100 shareholders, shareholders must be U.S. citizens or residents, limited growth

Chain of Command

Line of authority that moves from the top of a hierarchy to the lowest level

Line-Staff Structure

Line structure with specialists and extra managers for guidance and support

Franchising Benefits

Management and marketing assistance, personal ownership, nationally recognized name

Supply Chain Management

Managing the movement of resources and information through the supply chain

Cross-Functional Team Structure

Members come from different functional departments

Virtual Team Structure

Members who are geographically dispersed but communicate electronically

Partnership Advantages

More shared financial and managerial resources, avoids double taxation

LLC Advantages

Not limited to 100 owners, no citizenship restrictions, fewer meeting/reporting requirements

Conglomerate Acquisition

One company buying another from a completely unrelated industry

Vertical Acquisition

One firm purchasing the assets and operations of another firm at a different stage of the same or related industry

Acquisition

One firm purchasing the assets and operations of another firm in the same industry

General Partnership

Partnership where all partners have unlimited liability

Limited Partnership

Partnership where there is at least one general partner and one limited partner

Franchisee

Person who buys a franchise

Process Manufacturing

Physically or chemically changing materials in the production process

Lean Manufacturing

Production using less resources and increasing efficiency

LLC Disadvantages

Provides limited liability, can opt to be taxed as a corporation, no stock

LLC Growth Limitation

Provides limited liability, can opt to be taxed as a corporation, no stock, limited growth

Assembly Process

Putting together components in the production process

ISO 9001

Quality management and assurance standards

Six Sigma Quality

Quality measure that allows only 3.4 defects per million opportunities

Restructuring

Redesigning an organization to more effectively and efficiently serve its customers

S-Corp vs LLC

S-Corp sells stock, avoids double taxation, limited to 100 shareholders; LLC does not sell stock, can avoid double taxation, not limited to 100 shareholders

Facility Location

Selecting a geographic location for a company's operations

Operations Management

Specialized area that converts resources into goods and services

C-Corporation Disadvantages

Subject to double taxation, can be costly to form and terminate

C-Corporation Growth Limitation

Subject to double taxation, potentially costly to form and terminate, limited growth

Mass Customization

Tailoring products to meet the needs of individual customers

Delegate

To entrust decision-making authority to a less senior employee

Empower

To give frontline workers the responsibility, authority, freedom, training, and equipment they need

Matrix Organization Disadvantages

Unclearly defined roles, conflict between project and functional managers, slower decision making

Conglomerate Merger

Uniting firms in completely unrelated industries to diversify business operations

Personal Liability

Unlimited liability for sole proprietorship, shared liability for general partnership, limited liability for limited partnership, C-corporation, S-corporation, and LLC

Partnership Disadvantages

Unlimited personal liability for general partners, difficulty terminating partnerships

Partnership Growth Limitation

Unlimited personal liability for general partners, limited financial and managerial resources, limited growth

Sole Proprietorship Disadvantages

Unlimited personal liability, limited financial and managerial resources

Form Utility

Value added to materials in the creation of goods and services

Organizational Culture

Widely shared values within an organization that provide unity and cooperation