BMGT 110 Jeff Miller

Businesses' profit to risk assumption relationship

profit is the money earned with salaries and other expenses deducted. Risk is chance entrepreneurs take of losing time/money.

Stakeholders

customers, employees, stockholders, suppliers, dealers, bankers, media, people in community, environmentalists, government leaders. Businesses must respond to needs of them and still make profit.

Advantages/Disadvantages of Entrepreneurship

Advantages: freedom to make own decisions, more opportunity and wealth

Disadvantages: more risk and lose benefits from other employers

Five Factors of Production

land, labor, capital, entrepreneurship, and knowledge.

Efficiency

producing items from least amount of resources

Productivity

amount of output generated with given imput

How businesses beat competiton

high-quality products, exceed customer expectations, more training and authority of employees (empowerment)

2 Major Competitors

China and India

Economics

study of how society produces goods and services and distributes them amoung competing groups

Microeconomics

study that looks at behavior of people and organizations in a market

Macroeconomics

study that looks at nations economy as a whole

Resource Development

study of how to increase resources and create conditions to make better use of resources

Capitalism

factors of production and distribution are privately owned, operated for profit

Monopolistic Competition

large number of sellers produce similar goods that buyers perceive as different

Oligopoly

few sellers dominate market

Monopoly

one seller controls total supply of product/service, sets price

Communism

all economic decisions made by government, control factors of production

Free-Market Economies

market determines what goods/services produced, who gets them, and how economy will grow

Command Economies

government decides what goods/services are produced, who gets them, and how economy will grow

Mixed Economies

some resources made by market, some made by individuals

GDP

total value of good/services produced in a country in a given year

Inflation

rise in prices over time

Disinflation

price increases slowly (inflation rate declining)

Deflation

prices declining

Stagflation

economy is slowing but prices going up

Consumer Price Index (CPI)

monthly statistics that measures inflation and deflation

Producer Price Index (PPI)

index that measures prices at wholesale level

Recession

two or more consecutive quarters of decline in GDP

Depression

severe recession with deflation

Fiscal Policy

govt's efforts to keep economy stable by increasing/decreasing taxes or govt spending

Keynesian Economic Theory

theory that a govt policy of increasing spending and cutting taxes could stimulate economy in recession

Monetary Policy

management of money supply and interest rates by Federal Reserve

Basic Rights Under Capitalism

right to private property, right to own business and keep profits after taxes, freedom of competition, freedom of choice

Sole Proprietorship

business owned and managed by one person

Partnership

business with two or more owners

Corportation

authority to act and have ability apart from owners

Unlimited Liability

business owners are responsible for all debts of business (may have to sell personal possessions to pay business debts)

General Partnership

partnership where owners share operating cost and the liability of business's debts

Limited Partnership

partnership with one of more general partners and one of more limited partners

Limited Liability

stockholders and limited partners are responsible for losses up to amount they invested (private property not at risk)

Master Limited Partnership

acts like corporation, traded on stock exchange, taxed like partnership, avoids corporate tax

Limited Liability Partnership

limits partners' risks of losing personal assets to only their own acts

Merger

result of two firms forming one company

Acquisition

one company purchases another

Vertical Merger

joining two companies involved in different stages of related businesses. (Ex. automobile company joining with a parts supplier OR Soda Company and Artificial Sweetener Company)

Horizontal Merger

joining two firms in same industry (Ex. Pepsi and Coke OR Soda Company and Mineral Water Company)

Conglomerate Merger

joining firms of unrelated industries (Ex. Athletic Shoes and Soda Firm OR Soda Company and Snack Food Company)

Leverage Buyout

attempt by employees, management, or group of investors to purchase an organization primarily through borrowing

Franchise Agreement

someone with a good business sells rights to use business name and sell a product/service to others

Franchisor

company that develops a product concept and sells others the right to make and sell the products

Franchise

right to use business's name and sell its products or services in a given territory

Franchisee

person who buys a franchise

Cooperative

business owned and controlled by people who use it - producers, consumers, or workers with similar needs who pool resources for mutual gain

S Corporation

corporation with limited liability and simpler taxes, company must have fewer than 100 stockholders, cannot derive more than 25% of income from passive sources

Micropreneur

entrepreneurs willing to risk starting a small business, lets them do work they want to do, and offers a balanced lifestyle

Affiliate Marketing

internet-based marketing strategy, business rewards businesses for each customer they send to the website

Intrapreneurs

creative people who work as entrepreneurs within corporations

Enterprise Zones

specific areas governments try to attract business investment by offering lower taxes and other support

Incubators

centers that offer new businesses low-cost offices with basic business services

Venture Capitalists

companies that invest in new businesses in exchange in partial ownership of those businesses

Service Corps of Retired Executives

SBA volunteers from industry, trade associates, education who counsel small businesses at no cost

Four Functions of Managment

planning, organizing, leading, and controlling

Objectives

short-term statements detailing how to achieve the organization's goals

SWOT analysis

strengths, weaknesses, opportunities, and threats

Tactical Planning

detailed, short-term statements about what is to be done, who is to do it, and how it is to be done

Strategical Planning

broad, long-term planning that outlines goals of organization

Operational Planning

setting work standards and schedules necessary to implement company's tactical objective

Contingency Planning

process of preparing alternative courses if primary plans don't achieve objectives

Organization Chart

visual that shows relationship among people and divides organization's work, shows who reports to who

Technical Skills

ability to perform tasks in specific part of department

Conceptual Skills

involve the ability to picture the organization as a whole and relationship of various parts

Transparency

company's facts and figures clear to all stakeholders

Autocratic Leadership

making managerial decisions without consulting others

Participative Leadership

consists of managers and employees working together to make decisions

Free-Rein Leadership

managers setting objectives and employees being relatively free to do whatever it takes to accomplish objectives

Steps of Decision Making

define a situation, describe collected information, develop alternatives, develop agreement, decide which alternative is best, do what is indicated, determine whether decision is a good on

Manager vs. Leader

Managers plan, organize, control functions. Leaders have a vision and inspire others, establish values, emphasize ethics.

Economies Of Scale

companies reduce production costs if they can purchase raw materials in bulk

Bureaucracy

organization with many layers of managers who set rules and regulations and oversee all decisons

Centralized Authority

decision making authority is maintained at top level of managment

Decentralized Authority

decision making authority is delegated to lower level managers more familiar with local conditions than headquarters

Span of Control

optimal number of subordinates a manager supervises

Tall Organization Structure

pyramidal organization chart would be tall because of various levels of management

Flat Organization Structure

few layers of management and a broad span of control

Line Organization

direct two-way lines of responsibility, all people reporting to one supervisor, provides each worker with only one supervisor

Line-And-Staff Organizations

expert advice of staff assistants help in areas such as safety, quality control, computer technology, human resource managament, and investing

Line Personnel

employees part of a chain of command responsible for achieving organizational goals

Staff Personnel

employees who advise and assist line personnel in meeting their goals

Matrix Organization

specialists from different parts of the organization are brought together to work on specific projects for a short-term, still remain part of line and staff structure

Cross Functional Self-Managed Teams

groups of employees from different departments who work together on a long-term basis

Virtual Corportation

temporary networked organization made up of replaceable firms that join and leave as needed

Core Competencies

functions that organizations can do better than any organization in the world

Digital Natives

young people who have grown up using Internet

Restructuring

redesigning an organization so that it can be more effective to serve customer

Inverted Organization

organization that has contract people at the top and chief executive at the bottom of org. chart

Organizational Culture

widely shared values within organization that provide unity and cooperation to achieve common goals

Formal Organization

lines of responsibility, authority, and position; structure shown on org. charts

Informal Organization

system that develops spontaneously as employees meet and form cliques, relationships, and line of authority outside the formal organization

Four Choices in Structuring Orgainzations

centralize or decentralize, breadth of span of control, tall versus flat organization structures and type of departmentalization

Operations Managament

converts resources into goods and services