Exam #2 (Chapters 4-6)- Introduction to Business

Flashcards covering key vocabulary, definitions, and concepts related to business organizations (sole proprietorships, partnerships, corporations, LLCs, co-ops, mergers) and foundational management principles (functions, goal setting, leadership, skills, decision-making).

Sole Proprietorship

A business owned and operated by one individual; the most common form of business organization in the US, where profits are taxed as the owner s personal income.

Unlimited liability

A disadvantage of sole proprietorships and partnerships where the owner is personally responsible for all business debts and obligations.

Partnership

An association of two or more persons who carry on as co-owners of a business for profit, defined by the Uniform Partnership Act.

Uniform Partnership Act

The statutory framework that defines and governs partnerships.

General partnership

A form of partnership where all partners are actively involved in management and have unlimited liability.

Limited partnership

A form of partnership requiring at least one general partner with unlimited liability and one or more limited partners whose liability is restricted to their investment and who typically do not participate in day-to-day management.

Articles of partnership

Legal documents outlining the roles, responsibilities, profit sharing, and admission/removal of partners in a partnership.

Corporation

A legal entity created by the state, where assets and liabilities are separate from the owners (stockholders).

Domestic corporation

A corporation that conducts business in the state in which it is chartered.

Foreign corporation

A corporation that conducts business outside the state in which it is chartered.

Alien corporation

A corporation that conducts business outside the nation in which it is incorporated.

Private corporation

A corporation whose stock is closely held by insiders, not traded publicly, and typically not required to disclose financial information publicly.

Public corporation

A corporation whose stock is available for public trading, potentially listed on stock exchanges, and subject to public reporting requirements.

Quasi-public corporation

A corporation owned or operated by government bodies (federal, state, or local).

Non-profit corporation

A corporation focused on services rather than profit, often quasi-public in nature.

Common stock

A type of stock where owners have voting rights, but dividends are not guaranteed.

Preferred stock

A type of stock that typically has no voting rights but has priority for dividends.

Dividends

Distributions of profits paid to stockholders at the discretion of the corporation.

Double taxation

A disadvantage of C corporations where profits are taxed at the corporate level and then again as dividends paid to shareholders are taxed at the individual level.

S Corporation

A form of corporation taxed as a pass-through entity (like a partnership) but retaining corporate status, limited to 100 shareholders who must be U.S. residents or citizens.

Limited Liability Company (LLC)

A form of business ownership providing limited liability with flexible tax treatment, taxed as a partnership by default but can elect corporate taxation.

Cooperatives (Co-ops)

Organizations composed of individuals or small businesses that band together to reap the benefits of a larger entity, often for economies of scale or shared services.

Mergers

The combination of two companies, often corporations, to form a new entity.

Horizontal merger

A type of merger where companies in the same industry combine.

Vertical merger

A type of merger where a company acquires a business in a different stage of the same supply chain.

Conglomerate merger

A type of merger where unrelated businesses combine.

Acquisitions

One company purchases another, typically by buying a majority of its stock.

Tender offer

An offer to purchase some or all of a target company's stock at a premium to market price, often triggering a hostile takeover.

Corporate raider

An entity seeking to acquire control of a company, sometimes met with resistance from management.

Poison pill

An anti-takeover measure that allows existing shareholders to buy more shares at a discount to deter an unwanted bidder.

Shark repellent

An anti-takeover measure that requires a large majority of stakeholders (e.g., 80%) to approve any takeover.

White knight

An anti-takeover measure where a target company seeks a more friendly company to acquire it instead of a hostile bidder.

Leveraged Buyout (LBO)

An acquisition funded largely through borrowed funds, typically secured by the assets of the target company.

Corporate Charter

A state-issued legal document establishing a corporation.

Board of Directors

A group elected by stockholders to oversee management, legally liable for mismanagement, and typically a mix of insiders and outsiders.

Initial Public Offering (IPO)

The first sale of stock to the public.

Entrepreneurship

The willingness to accept the risk of starting and running a business.

Self-Directed

An attribute of a successful entrepreneur, meaning capable of guiding one's own efforts.

Self-Nurturing

An attribute of a successful entrepreneur, meaning maintaining enthusiasm and motivation.

Action-Oriented

An attribute of a successful entrepreneur, meaning proactively taking steps and avoiding procrastination.

High Energy

An attribute of a successful entrepreneur, meaning sustaining the demanding work required for business endeavors.

Tolerance for Uncertainty

An attribute of a successful entrepreneur, meaning accepting that not all answers will be known and challenges will arise in new areas.

Management

A process used to accomplish an organization's goals through planning, organizing, leading, and controlling resources.

Planning

The management function of anticipating trends and determining the best strategies and tactics to achieve an organization's goals.

Organizing

The management function of designing the structure of the organization and creating conditions and systems where everyone and everything works together to achieve goals.

Leading

The management function of creating a shared vision for the organization and guiding, training, coaching, and motivating others effectively towards those goals.

Controlling

The management function of establishing clear standards, monitoring progress, rewarding good performance, and taking corrective action to ensure the organization progresses toward its goals.

SMART Acronym

A framework for setting effective goals and objectives that are Specific, Measurable, Achievable, Realistic, and Time-bound.

Vision Statement

A statement that lays out why a company exists and what it will be in the future, needing to be shared with the entire organization.

Mission Statement

A concise outline of the fundamental purpose of an organization, detailing who the customers are, what products/services are offered, and how the company operates.

Goal

A broad, long-term accomplishment that an organization wishes to attain.

Objective

Specific, short-term statements detailing how to achieve a particular goal.

SWOT Analysis

An internal and external environmental analysis to identify factors impacting the organization, standing for Strengths, Weaknesses, Opportunities, and Threats.

Strengths

Internal potential advantages that an organization can capitalize upon during a SWOT analysis.

Weaknesses

Internal areas that an organization should improve upon during a SWOT analysis.

Opportunities

External factors that an organization can take advantage of during a SWOT analysis.

Threats

External factors that an organization needs to avoid or minimize their impact during a SWOT analysis.

Strategic Plan

A plan developed by top management focusing on the major, long-term goals of the organization, policies, and strategies for attaining them and using resources.

Tactical Plan

A plan developed by middle management outlining detailed, short-term statements for each operational group on what needs to be done by whom and how.

Operational Plan

A plan set by supervisory management focusing on work standards and schedules necessary to implement tactical objectives daily.

Contingency Plan

An alternative course of action prepared to be used if the primary plan fails to achieve objectives, allowing for specifics to be filled in later.

Decision-Making Process

A six-step process involving defining the situation, collecting information, developing alternatives, deciding the best alternative, implementing the decision, and monitoring it.

Problem Solving

A less formal and quicker process than decision-making, used for everyday problems employing techniques like brainstorming and PMI.

Brainstorming

A problem-solving technique for generating as many solutions as possible without initial censoring, often by talking to multiple people.

PMI (Plus, Minus, Implications)

A problem-solving technique involving listing all positive, negative, and potential unintended consequences of a solution to consider all angles.

Top Management

The highest level of management (e.g., President, CEO), responsible for setting the overall vision, major goals, and policies for the organization.

Middle Management

The management level (e.g., General Managers, Division Managers) responsible for tactical planning and controlling activities, overseeing specific operational groups.

Supervisory Management (First-Line Management)

The management level that directly supervises workers, responsible for operational plans and evaluating day-to-day employee performance.

Technical Skills

The ability to perform tasks in a specific discipline or department (e.g., accounting, marketing), most crucial for supervisory managers.

Human Relations Skills

Communication, motivation, and interpersonal abilities crucial for interacting effectively with employees, customers, and external stakeholders, essential at all management levels.

Conceptual Skills

The ability to think abstractly, analyze complex situations, and formulate long-range plans, strategies, and visions, most crucial for top managers.

Autocratic Leadership

A leadership style where managers make decisions without consulting others, useful in situations requiring quick decisions or strict control.

Participative (Democratic) Leadership

A leadership style where managers and employees work together to make decisions, fostering collaboration and buy-in.

Free-Rein (Laissez-Faire) Leadership

A leadership style where managers set objectives, and employees are relatively free to determine how to accomplish them, best for highly skilled and self-motivated teams.

Employee Empowerment

Giving frontline workers the responsibility, authority, freedom, training, and equipment to respond quickly and effectively to customer requests.

Data

Raw, unanalyzed facts.

Information

Processed, massaged data that has been made actionable.

Control (in business)

A process of monitoring and measuring progress against established SMART goals and objectives to ensure wise spending and profitability.

Micromanagement

A style of management characterized by excessive oversight, frequent checking on employees' work, and reluctance to delegate.

External Customers

Individuals who buy products, as well as dealers and middlemen who help sell products.

Internal Customers

Individuals and units within the company that receive services from other departments (e.g., operations receiving information from finance).