2nd Exam
Sole proprietorship — A business owned, and usually managed, by one person
Partnership — A legal form of business with two or more owners
Corporation — A legal entity with authority to act and have liability separate from its owners
Unlimited liability — The responsibility of business owners for all debts of the business
General partnership — A partnership in which all owners share in operating the business and in assuming liability for the business’s debts
Limited partnership — A partnership with one or more general partners and one or more limited partners
General partner — An owner (partner) who has unlimited liability and is active in managing the firm
Limited partner — An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment
Limited liability — The responsibility of a business’s owners for losses only up to the amount they invest; limited partners and shareholders have limited liability
Master limited partnership (MLP) — A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax
Limited liability partnership (LLP) — A partnership that limits partners’ risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision
Conventional (C) Corporation--A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders)
If an S corporation loses its S status-- it may not operate under it again for at least 5 years.
Limited Liability Companies (LLCs)-- similar to an S corporation but without the special eligibility requirements.
Merger — The result of two firms forming one company
Acquisition — One company’s purchase of the property and obligations of another company
Vertical merger — The joining of two companies in different stages of related businesses Horizontal merger — The joining of two firms in the same industry
Conglomerate merger — The joining of firms in completely unrelated industries
Leveraged buyout (LBO) — An attempt by employees, management, or a group of private investors to buy out the stockholders in a company
Franchise agreement — An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise) to others (franchisees) in a given territory
Cooperative (Co-Op)-- A business owned and controlled by the people who use it— producers, consumers, or workers with similar needs who pool their resources for mutual gain
Entrepreneurship—Accepting the risk of starting and running a business
Four Major Reasons- Opportunity Profit Independence Challenge
Entrepreneurial Teams—A group of experienced people from different areas of business who join to form a managerial team with the skills to develop, make, and market a new product.
Intrapreneurs—Creative people who work as entrepreneurs within corporations
Micropreneurs—Entrepreneurs willing to accept the risk of starting and managing a business that remains small, lets them do the work they want to do, and offers them a balanced lifestyle
Enterprise zones — Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support.
Incubators—Centers that offer new businesses low-cost offices with basic business services.
Small business — A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts
Business plan — A detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner
Venture capitalists—Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses
Small Business Administration (SBA)—A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans
Small Business Investment Company (SBIC)—A program through which private investment companies licensed by the SBA lend money to small businesses
Market—People with unsatisfied wants and needs who have both resources and willingness to buy
Service Corps of Retired Executives (SCORE)—More than 10,000 volunteers from industry, trade associations, and education who counsel small business at no cost.
Management The process used to accomplish organizational goals through: Planning, Organizing, Leading, Controlling
Vision — More than a goal; an encompassing explanation of why the organization exists and where it’s trying to go.
Goals — The broad, long-term accomplishments an organization wishes to attain
Objectives — Specific, short-term statements detailing how to achieve the organization’s goals.
Mission statement — An outline of the fundamental purposes of an organization
SWOT analysis — A planning tool used to analyze an organization’s strengths, weaknesses, opportunities, and threats
Strategic planning — Determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals.
Tactical planning — Developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done.
rational planning — Setting work standards and schedules necessary to implement the company’s tactical objectives.
Contingency planning — Preparing alternative courses of action that may be used if the primary plans don’t achieve the organization’s objectives.
Decision making — Choosing among two or more alternatives.
Problem solving — The process of solving the everyday problems that occur; less formal than decision making and usually calls for quicker action.
Brainstorming — Coming up with as many solutions as possible in a short period of time with no censoring of ideas.
PMI — Listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third column
top management — Highest level, consisting of the president and other key company executives who develop strategic plans.
Middle management — Includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling
Supervisory management — Those directly responsible for supervising workers and evaluating their daily performance.
Technical skills — The ability to perform tasks in a specific discipline or department.
• Human relations skills — Communication and motivation; they enable managers to work through and with people.
• Conceptual skills — The ability to picture the organization as a whole and the relationship among its various parts.
Staffing — Hiring, motivating, and retaining the best people available to accomplish the company’s objectives.
Transparency — The presentation of the company’s facts and figures in a way that is clear and apparent to all stakeholders.
Empowerment — Progressive leaders give employees the authority to make decisions on their own without consulting a manager.
Enabling — Giving workers the education and tools they need to make decisions.
Knowledge management — Finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm.
External customers — Dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own use
Internal customers — Individuals and units within the firm that receive services from other individuals or units.
Engagement — Employees’ level of motivation, passion, and commitment
Employee experience —The level of satisfaction at every step along an employee’s path at a company
intrinsic rewards--The personal satisfaction you feel when you perform well and complete goals.
Extrinsic rewards Something given to you by someone else as recognition of good work.
Scientific management—Studying workers to find the most efficient ways of doing things and then teaching people those techniques
Time-motion studies—Studies of which tasks must be performed to complete a job and the time needed to do each task.
principle of motion economy. --Theory that every job can be broken down into a series of elementary motions
Hawthorne effect—The tendency for people to act differently when they know they are being studied.
Maslow’s Hierarchy of Needs -- Theory of motivation based on unmet human needs from basic physiological needs to safety, social, and esteem needs to self-actualization needs
Motivators—Job factors that cause employees to be productive and that give them satisfaction.
Hygiene factors—Job factors that can cause dissatisfaction if missing but that do not necessarily motivate employees if increased.
Theory X-- Workers dislike work and seek to avoid it. Workers must be forced, controlled, directed, or threatened with punishment to get them to perform. Workers prefer to be directed and avoid responsibility. Primary motivators are fear and punishment.
Theory Y--People like work; it’s a part of life. Workers seek goals to which they are committed. Commitment to goals depends on perceived rewards. Most people will seek responsibility. People can use creativity to solve problems. Intellectual capacity is only partially realized. People are motivated by a variety of rewards.
Type J --are committed to the organization and group.
Type A --are focused on the individual.
Theory Z is the hybrid approach of Types A and J.
Goal-Setting Theory-- The idea that setting ambitious but attainable goals can motivate --workers and improve performance if the goals are
Management by Objectives (MBO) --Involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees
Expectancy Theory--The amount of effort employees exert on a specific task depends on their expectations of the outcome.
Equity Theory The idea that employees try to maintain equity between inputs and outputs compared to others in similar positions.
Job enrichment—A motivational strategy that emphasizes motivating the worker through the job itself.
Job enlargement—A job enrichment strategy that involves combining a series of tasks into one challenging and interesting assignment.
Job rotation—A job enrichment strategy that involves moving employees from one job to another.