Business Dynamics Midterm

1: Business Overview 4: Ethics 5: Business Ownership 6: Entrepreneurship 7: Management 11: Human Resources 9: Manufacturing 3: Global Business

Business (1)

Activity seeking to provide goods/services and profit

Revenue (1)

Amount business takes in from sales

Profit/Loss (1)

Revenue minus expenses

Stakeholders (1)

People who gain/lose by business activities

Nonprofit (1)

Organization with social/educational goals

5 Factors of Production (1)

Land, labor, capital, entrepreneurship, knowledge

Business Environment (1)

Economic/legal, technological, competitive, social, global business

Intellectual Capital (1)

Employee knowledge/skill

Ethics (4)

Society’s standards of moral behavior

Compliance-based Ethics Code (4)

Emphasize preventing unlawful behavior through control/penalties

Integrity-based Ethics Code (4)

Define organization’s guiding values, creates ethical environment with shared accountability

Sarbanes-Oxley Act (4)

Public companies must allow employee concerns about accounting to be submitted anonymously, must provide back pay to employees punished for helping authorities

Dodd-Frank Act (4)

Whistleblower bounty program

Corporate Responsibility (4)

Acting responsibly within society

Corporate Policy (4)

Firms take on social/political issues

Social Audit (4)

Evaluation of organization’s progress towards socially responsible programs

Sole Proprietorship (5)

Business owned by 1 person

Sole Proprietorship Advantages (5)

Ease of starting/ending, own boss, keep all profits, profits taxed as personal income of owner

Sole Proprietorship Disadvantages (5)

Unlimited liability, limited financial resources

Partnership (5)

2+ owners

General Partnership (5)

All owners operate business, share liability for its debt

Limited Partnership (5)

1+ general partner (unlimited liability, management responsibility), 1+ limited partner (no liability, no management responsibility)

Partnership Advantages (5)

More financial resources, profits taxed as personal income

Partnership Disadvantages (5)

Share profits, difficulty of termination

Corporation (5)

Legal entity with authority to act/have liability apart from owners

Corporation Advantages (5)

Limited liability, ability to raise money, separation of ownership from management

Corporation Disadvantages (5)

High initial costs, extensive paperwork, double taxation, difficulty of termination

S-Corp (5)

Profits taxed only as personal income of shareholders

S-Corp Requirements (5)

Max of 100 shareholders (US-based), 1 class of stock, max 25% of income from passive sources

LLC (5)

Similar to S-Corp without eligibility requirements, limited liability, choice of taxation, operating flexibility

Vertical Merger (5)

2 firms involved in different stages of same business join

Horizontal Merger (5)

2 firms in same industry join

Conglomerate Merger (5)

2 firms in different industries join

Cooperative/Co-op (5)

Owned/controlled by people who use it

Entrepreneurship (6)

Accepting risk of starting/running business

Entrepreneural Team (6)

Diverse group of experienced people who form managerial team to pursue idea

Intrapreneurs (6)

Creative entrepreneurs in company

Micropreneurs (6)

Want to start small business

Incubators (6)

Offer early-stage businesses low-cost administrative help

Small Business (6)

Independently owned/operated, not dominant in field

Business Plan (6)

Detailed, written statement describing nature of business

Business Plan Outline (6)

Cover letter, executive summary, company background, management team, financial plan, capital required, marketing plan

Venture Capitalists (6)

Provide cash in exchange for large ownership stake

Management (7)

Process used to achieve organization’s goals through planning, organizing, leading, controlling, people/resources

4 Functions of Management (7)

Planning, organizing, leading, controlling

Vision (7)

Why organization exists, what it wants to do

Mission Statement (7)

Organization’s purpose: philosophy, own/customer needs, social responsibility

Goals (7)

Broad, long-term accomplishments

Objectives (7)

Short-term statements on how to achieve goals

Strategic Planning (7)

Major goals of organization, ways to achieve them

Tactical Planning (7)

Short-term statements on what to do, who to do it

Management Structure (7)

Top management, middle management, supervisory management, nonsupervisory

Staffing (7)

Recruiting, hiring, motivating, retaining

Knowledge Management (7)

Collecting/storing/sharing information

Human Resources Management (11)

Process of determining human resources needs

Recruitment (11)

Activities for obtaining right number of qualified people at right time

Selection (11)

Deciding who should be hired

Contingent Worker (11)

Part-time/temporary worker

Training (11)

Orientation, on-the-job training, apprentice programs, management development

Performance Appraisal (11)

Measures employee performance against standards

Hay Method (11)

Job grades with strict pay ranges

Fringe Benefits (11)

Addition compensation beyond base wages

Flextime Plan (11)

Employees chose which hours to work

Job-sharing Plans (11)

2+ part-time employees share full-time job

Production (9)

Creation of good/services using factors of production

Operations Management (9)

Transforms resources into goods/services

Form Utility (9)

Value producers add to materials in creation of finished goods/services

Assembly Process (9)

Puts components together to make product

Continuous Process (9)

Long production runs turn out finished goods over time

Intermittent Process (9)

Short production runs, machine adjusted frequently to make different products

Mass Production (9)

Large number of limited variety products at low cost

Computer-aided Manufacturing (9)

Computers used in production process

Flexible Manufacturing (9)

Designing machines to do multiple tasks to produce variety of products

Lean Manufacturing (9)

Production of goods using less of everything

Mass Customization (9)

Tailoring products to meet needs of many individual customers

Nanomanufacturing (9)

Manipulating materials on atomic scale

Interfirm Operations (9)

Outsourcing to other companies

Materials Requirement Planning (9)

Uses sales forecasts to ensure correct inventory

Enterprise Resource Planning (9)

Combines computerized functions of all divisions into single integrated database

Just-in-time Inventory Control (9)

Keeps minimum inventory on-premise

ISO 9001 (9)

Quality management/assurance standards

ISO 14001 (9)

Best practices for managing environmental impact

Free Trade (3)

Movement of goods/services among nations without political/economic barriers

Absolute Advantage (3)

Can produce more efficiently than all other countries

Comparative Advantage (3)

Produce product more efficiently than another country

Balance of Trade (3)

Total value of nations exports compared to imports over period

Balance of Payments (3)

Difference between money entering/leaving country

Licensing (3)

Gives right to manufacture product/use trademark to foreign company for a fee

Exporting (3)

Sell goods/services to foreign market

Franchising (3)

Sells right to use business name, sell product/service in given territory in specific manner

Contract Manufacturing (3)

Foreign company produces private-label goods to which domestic company attaches its own brand name

Joint Venture (3)

Partnership where 2+ companies join to undertake project (share assets)

Strategic Alliance (3)

Long-term partnership between 2+ companies established to help each company build competitive market advantages (assets not shared)

Foreign Direct Investment (3)

Buying permanent property/businesses in foreign countries

Floating Exchange Rate (3)

Currencies float in value according to supply/demand

Protective Tariff (3)

Raise price of imported products so domestic goods are more competitively priced

Revenue Tariff (3)

Raise money for government

Import Quota (3)

Limits number of products in certain categories nation can import

World Trade Organization (3)

Mediates trade disputes among nations

Common Market/Trading Bloc (3)

Regional group of countries with common external tariff, no internal tariff, coordinated laws