Buisnesz exam cram

What is a franchisor?

The headquarters/supplier who owns the brand and sells the method of operation to franchisees.

What is a franchisee?

The person or business that buys the rights to operate a franchise.

Difference between franchisor and franchisee?

A franchisor is the seller/headquarters, while a franchisee is the buyer/operator.

What is double taxation?

Corporate earnings and shareholder dividends are both taxed.

Corporation

A business entity with limited liability, where owners are not personally responsible, potentially subject to double taxation.

S Corporation

A type of corporation that avoids double taxation while maintaining limited liability.

Which business type has the least government regulation?

Sole proprietorship.

Sole Proprietorship

A business owned by one person, characterized by unlimited liability and difficulty raising capital.

General Partnership

Co-owners of a business that share unlimited liability.

Limited Partnership

A partnership where liability is limited to the investment.

Difference between general and limited partnership?

In a general partnership, all partners manage and have unlimited liability, while in a limited partnership, some partners only invest and their liability is limited to their contribution.

Example: Tom invests 40,000 but doesn’t manage. His liability is capped at 40,000. What type of partnership?

Limited partnership.

What is unlimited liability?

Owners are personally responsible for debts and damages.

What is limited liability?

Owners’ responsibility is limited to their investment in the business.

What is a cooperative?

An organization owned collectively by its members to gain economic power (e.g., farmers, small businesses).

What is a merger?

When two companies combine to form one new company.

What is an acquisition?

When one company purchases another company.

Difference between merger and acquisition?

A merger involves two companies joining to form a new entity, while an acquisition is when one company buys another.

Vertical Merger

A merger involving companies at different stages of production.

Example: McKesson + HBOC (wholesaler + software) is an example of what?

Vertical merger.

What is a joint venture?

A temporary business arrangement for a single project, dissolved after its completion.

What is an entrepreneur?

A person who takes the risk of starting and managing a business.

What is an intrapreneur?

Someone innovating within an established corporation, not starting their own business.

Micropreneur

An entrepreneur who prefers to stay small.

Multipreneur

An entrepreneur who starts multiple companies.

Difference: entrepreneur vs intrapreneur?

An entrepreneur is independent and starts their own business, while an intrapreneur innovates inside an existing company.

What is a business plan?

A formal written statement describing a business idea, its market, competition, management, and financial projections.

Example: Emily wants to open a B&B and get a bank loan. What does she need?

A business plan.

Debt Financing

Money borrowed that must be repaid with interest.

Equity Financing

Selling ownership in the form of stock.

Difference between debt and equity financing?

Debt financing is borrowed money that must be repaid with interest, while equity financing involves selling ownership (stock) and typically requires no repayment.

Venture Capital

Investment from firms in businesses with high growth potential, often requiring ownership or management roles.

What are angel investors?

Wealthy individuals who fund startups in exchange for equity.

Difference between angel investors and venture capital?

Angel investors are wealthy individuals, whereas venture capital comes from firms making more formal investments.

Franchisor

The owner or headquarters that grants the rights to operate a business under its name.

Franchisee

A person or entity that buys the rights to operate a business using the franchisor's system and brand.

Sole Proprietorship

A business owned and run by one individual who is personally liable for all business debts; least regulated, hard to raise capital.

General Partnership

A partnership where all partners co-own assets and have unlimited liability.

Limited Partnership

A partnership where the liability of some partners is limited to the amount of their investment.

Corporation Limited Liability

Owners (shareholders) are not personally responsible for the corporation's debts or liabilities.

Corporation Double Taxation

Corporate earnings are taxed, and then dividends paid to shareholders are taxed again as personal income.

S Corporation

A type of corporation that avoids double taxation by passing income, losses, deductions, and credits directly to their shareholders.

Cooperative

A collectively owned and operated organization, often by farmers or businesses, for mutual benefit.

Merger

When two companies combine to form a single new company.

Acquisition

When one company buys another company.

Vertical Merger

A merger between two companies operating at different stages of the same production process.

Joint Venture

A temporary business undertaking by two or more parties for a single project.

Entrepreneur

An individual who takes on the risk of starting and operating a new business.

Intrapreneur

An employee within a large corporation who is given significant autonomy and financial support to create new products, services, or ventures.

Micropreneur

An entrepreneur who starts a small business that he or she intends to keep small, typically focused on work-life balance.

Multipreneur

An individual who starts and manages multiple companies or ventures.

Business Plan

A detailed document describing a new business, its market, management, and financial projections; required for banks/investors.

Debt Financing

Borrowing money that must be repaid with interest.

Equity Financing

Selling ownership in the company (e.g., through stock issuance) to raise capital.

Venture Capital

Investments made by firms in high-growth companies, often taking an ownership and management role.

Angel Investors

Wealthy individuals who provide capital for start-up companies in exchange for ownership equity.

Outsourcing

Hiring another company to perform tasks that could be done in-house.

SBA (Small Business Administration)

A U.S. government agency that provides support to entrepreneurs and small businesses.

Planning (Management Function)

Setting organizational goals and developing strategies to achieve them.

Organizing (Management Function)

Arranging tasks, people, and other resources to accomplish the work.

Leading (Management Function)

Guiding and motivating employees to achieve organizational goals.

Controlling (Management Function)

Setting standards, measuring actual performance against those standards, and taking corrective action if necessary.

Top Management

Managers responsible for the overall long-term goals and strategic direction of the organization.

Middle Management

Managers responsible for developing detailed plans and procedures to implement the strategic plans and supervising lower-level managers.

Supervisory Management

The lowest level of management, directly overseeing daily operations and employees.

Strategic Planning

Long-range planning that sets broad goals and defines the overall path for the organization.

Operational Planning

Short-term planning that sets specific objectives for individual departments and supervisors.

Contingency Planning

Developing backup plans for unexpected events or emergencies.

Technical Skills (Management)

Specialized knowledge and expertise required to perform specific tasks (e.g., programming).

Conceptual Skills (Management)

The ability to think abstractly, analyze complex situations, and see the 'big picture'.

Participative Leadership

A leadership style that involves employees in decision-making, including consensual, democratic, and consultative approaches.

Empowerment

Giving employees the authority and responsibility to make decisions.

What is the term for the owner or headquarters of a franchise?

Franchisor

What is the term for the buyer of the rights to operate a franchise?

Franchisee

A business structure characterized by one owner, unlimited liability, and difficulty in raising capital.

Sole Proprietorship

What type of partnership involves co-owning assets and exposes partners to unlimited liability?

General Partnership

In which type of partnership is a partner's liability limited strictly to their investment?

Limited Partnership

What is the primary advantage of a corporation concerning the financial responsibility of its owners?

Limited liability (owners are not personally responsible for debts)

What is a major financial drawback of traditional corporations where both company earnings and shareholder dividends are taxed?

Double taxation (on earnings and dividends)

Which corporation structure is designed to avoid the issue of double taxation?

S corporation

An organization that is collectively owned by its members, often seen among farmers or other businesses.

Cooperative

What occurs when two separate companies combine to form a single, new entity?

Merger

What is the process called when one company purchases another company?

Acquisition

What type of merger involves companies that operate at different stages of the same production process?

Vertical merger

A temporary partnership formed for the purpose of carrying out a single, specific project.

Joint venture

Who is an individual who undertakes risks to start and manage a new business venture?

Entrepreneur

An innovator who develops new products, services, or processes within an existing large corporation.

Intrapreneur

An entrepreneur whose primary goal is to keep their business small and manageable, rather than seeking rapid growth.

Micropreneur

An individual who starts and operates multiple different companies concurrently.

Multipreneur

What is the essential document required by banks and investors that outlines a business's market, management, and financial plans?

Business Plan

What type of financing involves borrowing money that must be repaid with interest?

Debt financing

What type of financing involves selling ownership in the company, typically through stocks?

Equity financing

What do you call firms that invest in high-growth potential companies, often taking an ownership and active management role?

Venture capital

Who are wealthy private individuals who provide capital for startup companies in exchange for ownership equity or convertible debt?

Angel investors

What is the business practice of contracting out a business function or process to an external provider?

Outsourcing

Which U.S. government agency provides support to entrepreneurs and small businesses?

SBA (Small Business Administration)

Which management function involves setting organizational goals and charting the strategies to achieve them?

Planning

Which management function involves structuring resources and activities to accomplish objectives, including job design and departmentalization?

Organizing

Which management function involves guiding, motivating, and inspiring employees to achieve organizational goals?

Leading

Which management function involves establishing performance standards, measuring actual performance, and taking corrective action?

Controlling