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  • Business owned & operated by one individual

    Sole Proprietorships

    What s the most common form of business organizations in the United States?

    Sole Proprietorships

    An association of two or more persons who carry on as co-owners of a business for a profit.


    Partnerships are typically larger than _____ ______ but smaller than _______.

    Sole Proprietorships, corporations

    Involves a complete sharing in both the management & the liability of the business.

    General Partnership

    A business organization that has at least one general partner, who assumes unlimited liability & at least one limited partner, whose liability is limited to his or her investment in the business.

    Limited Partnership

    Legal documents that set forth the basic agreement between partners.

    Articles of Partnership

    The money or assists that each partner has contributed.

    Partnership Capital

    A legal entity, created by the state, whose assets & liabilities are separate from its owners.


    Shares of a corporation that may be bought or sold.


    Profits of a corporation that are distributed in the form of cash payments to stockholders.


    A legal document that the state issues to a company based on information the company provides in the articles of incorporation.

    Corporate Charter

    If the corporation does business in the state in which it was chartered.

    Domestic Corporation

    If the corporation does business in other states.

    Foreign Corporations

    If a corporation does business outside the nation in which it is incorporated.

    Alien Corporation

    A corporation owned by just one or a few people who are closely involved in managing the business.

    Private Corporation

    A corporation whose stock anyone may buy, sell, or trade.

    Public Corporation

    Selling a corporations stock on public markets for the first time.

    Initial Public Offering

    Corporations Owned & operated by the federal, state, or local government.

    Quasi-Public Corporations

    A group of individuals elected by the stockholders to oversee the general operation of the corporation, who set the corporations long-range objectives.

    Board of Directors

    A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.

    Preferred Stock

    Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.

    Common Stock

    Common stockholders have the first right to purchase new shares of stock from the corporation.

    Preemptive Right

    A partnership established for a specific project or for a limited time.

    Joint Venture

    Corporation taxed as though it were a partnership with restrictions on stakeholders.

    S Corporation

    Form of ownership that provides limited liability & taxation like a partnership but places fewer restrictions on members.

    Limited Liability Company (LLC)

    An organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger organization.


    The combination of 2 companies (usually corporations) to form a new company.


    The purchase of one company by another, usually buying its stock.


    When firms that make & sell similar products to the same customers merge.

    Horizontal Merger

    When companies operating at different but related levels of an industry merge.

    Vertical Merger

    Results when 2 firms in unrelated industries merge.

    Conglomerate Merger

    A purchase in which a group of investors borrows money from banks & other institutions to acquire a company, using the assets of the purchased company to guarantee repayment of the loan.

    Leveraged Buyout (LBO)

    What are the 3 forms of business ownership?

    Sole Proprietorship

    Nearly 3 quarters of all businesses are:

    Sole Proprietorships

    Have most of the rights of people


    A corporation is created (incorporated) under the laws of the

    State in which it incorporates

    What are the qualifications for an S-Corporation?

    Only 1 class of stock
    Less than 100 shareholders
    Shareholders must be U.S. citizens or residents

    A company or individual who wants to acquire or take over another company and first offers to buy some or all of its stock at a premium in a tender offer.

    Corporate Raider

    The firm allows stockholders to buy more shares of a stock at lower prices than the current market value to head off a hostile takeover.

    Poison Pill

    Management requires a large majority of stockholders to approve a takeover.

    Shark Repellant

    A more acceptable firm that is willing to acquire a threatened company.

    White Knight

    Any independently owned and operated business, not dominant in its competitive area.

    Small Business

    How many people does a small business employ?

    Less than 500

    What percentage of U.S. firms are classified as small businesses?


    Small firms have generated what percent of net new jobs over the past 15 years?


    What percentage of business employee fewer than 19 people?


    What percent of all innovations do small businesses represent?


    What are 4 industries that are especially attractive to entrepreneurs?

    Retailing and wholesaling
    High technology

    The service sector is what percent of all U.S. jobs?


    Attracts individuals whose skills are not required by large firms.


    Who does the Malcolm Baldridge National Quality Award, reward?

    Innovative Small Manufacturing Firms

    Businesses that depend heavily on advanced scientific and engineering knowledge.

    High Technology

    What percentage of high-tech jobs are with small businesses?


    What are 5 advantages of owning a small business?


    What are 5 disadvantages of owning a small business?

    High Stress Level
    High Failure Rate
    Managerial Inexperience
    Inability to cope with growth

    What are the 4 steps to starting a business?

    Start with a concept
    Create a business plan
    Devise a strategy to guide planning & development
    Make decisions

    A precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals. Acts as a guide and reference document.

    Business Plan

    What 3 things does a business plan contain?

    Explanation of the business
    Analysis of competition
    Income/Expense estimates

    What are the financing options when starting a business?

    Equity Financing

    Selling or borrowing against the value of an asset such as an (automobile, insurance policy, savings account) to obtain funds to operate a business.

    Equity Financing

    Persons/organizations that agree to provide funding for a new business in exchange for an ownership interest or stock. Usually requires a sharing of ownership/control.

    Venture Capitalists

    Borrowing financial resources typically from a bank or lending institution- often collateral is needed.

    Debt Financing

    An agreement by which a financial institution promises to lend a business a predetermined sum on demand.

    Line of Credit

    A license to sell another's products or to use another's name in business, or both.


    The company that sells a franchise?


    The purchaser of a franchise?


    What are the 6 advantages of franchises?

    Training & Support
    Brand Name Appeal
    National Advertising
    Financial Assistance
    Proven Products
    Greater Chance for Success

    What are the 6 disadvantages of franchises?

    Fees & Profit Sharing
    Standardized Operations
    Restrictions on Purchasing
    Limited Product line
    Possible Market Saturation
    Less Freedom in Decisions

    Is there currently an increase of decrease in service exports?


    Individuals in large firms who take responsibility for the development of innovations within the organization.


    What 2 things do large firms do where they emulate smaller ones to improve bottom line?

    Downsizing & Intraprenuers

    An independent agency of the federal government that offers managerial & financial assistance to small businesses.

    Small Business Administration

    The lack of funds to operate a business normally


    A financial interest in the property or fixtures of the business, to garuntee payment of the debt.


    Suppliers allow the business to take possession of the needed goods & services & for them at a later date or installments.

    Trade Credit

    A process designed to achieve an organization's objectives by using its resources effectively & efficiently in a changing environment.


    What 7 things do managers do?

    Make decisions
    Achieve Objectives

    Process of determining the organization's missions, goals, and objectives and deciding how to accomplish them.


    Organization's statement of purpose and basic philosophy.


    The results that a firm wishes to achieve- almost always have multiple goals.


    Results desired by an organization.


    What are the 3 components of a goal?

    An attribute sought
    A target to be achieved
    A time frame

    Strategic Plans are the duty of who?

    Executive-Level Managers

    Establish the long-range objectives & overall strategy to fulfill firm's mission.

    Strategic Plans

    What are the time frames of strategic plans, looking forward?

    2-10 years

    Short-range plans, has a time frame of 1 year or less.

    Tactical Plans

    What type of plan discusses environmental changes?

    Tactical Plans

    Help to achieve tactical plans. Actionable, Specific.

    Operational Plans

    What is the time frame for operational plans?

    1 day, 1 week, 1 month. Very short term.

    Focus on potential disasters.

    Crisis Management Contingency Planning

    _____________ is very important during a crisis.


    Structuring of resources & activities to accomplish objectives efficiently & effectively.


    Hiring people to carry out the work of the organization.


    The elimination of significant numbers of employees.


    Motivating and leading employees to achieve organizational objectives.


    Process of evaluating and correcting activities to keep organization on course.


    What are the 5 activities of controlling?

    Measuring performance
    Comparing performance against standards
    Identifying deviations from standards
    Investigating causes of deviations
    Taking corrective action

    Who's responsibility is it to implement general guidelines established by top management?

    Middle Management

    Who is responsible for tactical planning?

    Middle Management

    Who supervises workers & oversees daily operations?

    First Line Management

    Focus on obtaining money necessary for the successful operations and using these funds to further organizational goals.

    Financial Management

    Develop & administer activities to transform resources into goods, services and ideas for the marketplace.

    Production & Operations Management

    Handle staffing function and deal with employees in a formalized manner.

    Human Resources Management

    Responsible for planning, pricing and promoting products and making them available to customers.

    Marketing Management

    Responsible for implementing, maintaining and controlling technology applications in business (such as computer networks).

    Informational Technology Management

    Manage an entire business or major segment of the business. Coordinate activities of specialized managers.

    Administrative Managers

    Decision makers, "tell" employees what to do.

    Autocratic Leaders

    Leader who involves employees in decisions.

    Democratic Leader

    Employees work with minimal interference when working under these leaders.

    Free-Rein Leaders

    __________ _________ is a skill for nearly all managers.

    Computer Expertise

    The specialized knowledge and training required to perform jobs related to a manager's area.

    Technical Expertise

    Are the ability to think in abstract terms and to see how parts come together to form the whole.

    Conceptual Skills

    The ability to identify relevant issues and recognize their importance, understand the relationships between them and perceive the underlying causes of a situation.

    Analytical Skills

    This skill is most important to top-level managers.


    The ability to deal with people inside and outside the organization.

    Human Relation Skills

    What are the 5 aspects of formal expression?

    Mission statement
    Code of ethics

    What are the 3 aspects on informal expression?

    Dress code
    Work habits
    Extracurricular activities

    Is the arrangement or relationship of positions within an organization.

    Organizational Culture

    Visual displays of the organizational structure, lines of authority, staff relationships, permanent committee arrangements and lines of communication.

    Organizational Charts

    Managers divide the labor into small, specific tasks and assign employees individual tasks to accomplish.


    Grouping of jobs into working units (departments, units, groups, divisions).


    Giving employees tasks and empowering them to make commitments, use resources and take action to carry out tasks.

    Delegation of Authority

    Authority is concentrated at the top level. Very little delegation to lower levels.

    Centralized Organizations

    Decision making authority is delegated as far down the chain of command as possible.

    Decentralized Organizations

    A _______ span of management exists when a manager directly supervises a very large number of employees.

    Wide centralized

    A _______ span of management exists when a manager directly supervises only a few subordinates.

    Narrow decenterized

    What are the 4 forms of organizational structure?

    Line Structure
    Line-and-staff structure
    Multidivisional structure
    Matrix structure

    Organizes departments into larger groups called divisions.

    Multidivisional Structure

    A small group whose members have complementary skills; have a common purpose, goals and approach; hold themselves mutually accountable.


    A permanent, formal group performing a specific task.


    A temporary group responsible for a particular change activity.

    Task Force

    Similar to task forces in that they have total control of a specific project.

    Project Teams

    Formed to devise, design and implement a new product.

    Product Development Teams

    Brought together from throughout the organization to solve specific problems.

    Quality Assurance Teams

    Responsible for an entire work process that delivers a product to a customer.

    Self-Directed Work Teams

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