Business Management Final Study Guide

IPOs by smaller firms less prevalent

Since the 2008 financial crisis and the passage of the Dodd-Frank Act

A company's culture

reflects the character and style of the founder over the lifetime of the business

Cost analysis

identifies a level below which a price should not be set under normal circumstances

The balance sheet

assets, liabilities, and owners' equity at a specific point in time

State and local governments

increasingly involved in financing new businesses

Depreciation expense

cost of a firm's building and equipment allocated over its useful life

Organizational structure

should remain open to change in order for business growth

Consumer needs

cannot be completely satisfied by customer relationship management

Selling on credit

cannot often be avoided because it is standard practice

Collateral

generally not required for open charge accounts

Materials costs and sales commissions

variable costs

Management development

preparation for career advancement through education, experience, networking, and assessment

Outsourcing

buying services from a third party to manage firm functions

Going public

creates a liquid currency to fund future acquisitions

Attitude

may act as an obstacle or driver in bringing a customer to a product

Product strategy

adding an unrelated product can be more difficult to manageP

Products

must be analyzed financially in the business analysis stage of new product development

Balance sheet equation

Assets = Liabilities + Owner's Equity

Tests

must meet validity and reliability criteria

Chain of command

official vertical communication channel in an organization

Product life cycle

sales and profits from introduction until exit

Employee benefits

health insurance and paid vacation time

Family members

secondary source of early financing

Double taxation

both company and shareholders are taxed on dividends

Loan considerations

interest rate, maturity date, repayment schedule, and covenant

Profit curve

lowest in introduction stage

Family and Medical Leave Act

up to 12 weeks unpaid leave for qualifying conditions

Payroll

one of the largest business expenses

Break-even analysis

cost-revenue relationships and sales forecasts

Workers' compensation

requires benefits for workplace injuries without fault

Prestige pricing

high price to convey quality or uniqueness

Net working capital

Net working capital

Indemnification clause

one party assumes another party's legal liabilities

OSHA

enforces safety and health standards

Need recognition

identifying or creating a consumer need

Successful growth

requires careful management of multiple factors

Price

what a seller requires for ownership or use of a product or service

Five Cs of credit

character, capacity, capital, collateral, conditions

Balloon payment

large payment due about halfway through a loan term

Customer loyalty

superior customer service in small firms

Leadership in small firms

more personal than in large corporations

Marketing defect

failure to warn or provide safe use instructions

Just-in-time inventory system

requires close coordination with suppliers

ISO 9000

international quality management standards

Line organization

used by most very small firms