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sole proprietorship

answer

-a business that is owned (and usually operated) by one person -The simplest form of business ownership and the easiest to start The most popular form of business ownership

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ADVANTAGES of Sole Proprietorships

answer

-Ease of start-up and closure -Pride of ownership -Retention of all profits -No special taxes -Flexibility of being your own boss

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DISADVANTAGES of Sole Proprietorships

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- Unlimited liability • A legal concept that holds a business owner personally responsible for all the debts of the business - Lack of continuity - Lack of money - Limited management skills - Difficulty in hiring employees

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Partnerships

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- A voluntary association of two or more persons to act as co- owners of a business for profit -No legal limit on the maximum number of partners; most have only two - Large accounting, law, and advertising partnerships have multiple partners - Partnerships are usually a pooling of special talents or the result of a sole proprietor taking on a partner Dennis, Trevor, VMKS @ Pasadena

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Types of Partners

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General Partner Limited Partner

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General Partner

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- a person who assumes full or shared responsibility for operating a business - a business co-owned by two or more general partners who are liable for everything the business does

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Limited Partner

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- A person who contributes capital to a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership - a business co-owned by one or more general partners who manage the business and limited partners who invest money in it - Master limited BLANK: a business partnership that is owned and managed like a corporation but taxed like a partnership

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Articles of partnership

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- An agreement listing and explaining the terms of the partnership; written is preferable to oral Agreement should state - Who will make final decisions - What each partner's duties will be - How much each partner will invest - How much profit or loss each partner receives or is responsible for - How the partnership can be dissolved

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ADVANTAGES of Partnerships

answer

• Ease of start-up • Availability of capital and credit • Personal interest • Combined business skills and knowledge • Retention of profits • No special taxes

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DISADVANTAGES of Partnerships

answer

• Unlimited liability • Management disagreements • Lack of continuity • Frozen investment • Lack of continuity

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Corporations

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An artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts. -exists only on paper!

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Corporate ownership: Stock

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- The shares of ownership of a corporation

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Cooperate ownership: Stockholder

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- A person who owns a corporation's stock

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Corporate ownership: Closed corporation

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- A corporation whose stock is owned by relatively few people and is not sold to the general public

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Corporate ownership: Open corporation

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- A corporation whose stock is bought and sold on security exchanges and can be purchased by any individual

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Incorporation

answer

• The process of forming a corporation - Most experts recommend consulting a lawyer

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Forming a corporation: Where to incorporate

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- business can incorporate any state they choose!

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Domestic Corporation

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- A corporation in the state in which it is incorporated

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Foreign corporation

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- A corporation in any state in which it does business except the one in which it is incorporated

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Alien corporation

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- A corporation chartered by a foreign government and conducting business in the U.S

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The Corporate Charter: Articles of incorporation

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- a contract between the corporation and the state in which the state recognizes the formation of the artificial person that is the corporation and includes: -firm's name and address -incorporators' names and addresses -purpose of the corporation -maximum amount of stock and types of stock to be issued -rights and privileges of stockholders length of time the corporation is to exist

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Stockholders' rights: Common stock

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- Stock owned by individuals or firms who may vote on corporate matters but whose claims on profit and assets are subordinate to the claims of others

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Stockholders' rights: Preferred stock

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- Stock owned by individuals or firms who usually do not have voting rights but whose claims on dividends are paid before those of common stock owners

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Stockholders' rights: Dividend

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- A distribution of earnings to the stockholders of a corporation

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Stockholders' rights: Proxy

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A legal form listing issues to be decided at a stockholders' meeting and enabling stockholders to transfer their voting rights to some other individual or individuals

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Organizational meeting

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• The last step in forming a corporation the incorporators and original stockholders meet to adopt corporate by-laws and elect their first board of directors

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Corporate Structure

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-Stockholders ELECT board of director -board of director APPOINTS executive -executive HIRES employees

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Advantages of Corporations

answer

• Limited liability • Ease of raising capital • Ease of transfer of ownership • Perpetual life • Specialized management

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Disadvantages of Corporations

answer

- Difficulty and expense of formation - Government regulation and increased paperwork - Conflict within the corporation - Double taxation - Lack of secrecy

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S-corporation

answer

A corporation that is taxed as if it were a partnership (income taxed as personal income of stockholders)

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S-corporation Advantages

answer

- Avoids double taxation of a corporation - Retains the corporation's legal benefit of limited liability

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S-corporation Criteria

answer

- No more than 100 stockholders allowed - Stockholders must be individuals, estates, or certain trusts

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Limited-liability company (LLC)

answer

Form of business ownership that combines the benefits of a corporation and partnership but avoids some of the restrictions and disadvantages

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Limited-liability company (LLC) Advantages

answer

- Avoids double taxation of a corporation - Retains the corporation's legal benefit of limited liability - Provides more management flexibility

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Difference between LLC and S-corporation

answer

- LLCs not restricted to 100 stockholders - LLCs have fewer restrictions on who can be a stockholder

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Not-for-profit corporations

answer

Corporations organized to provide social, educational, religious, or other services, rather than to earn a profit

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Joint ventures

answer

Agreements between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time Example: Walmart and India's Bharti Enterprises

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Syndicates

answer

Temporary associations of individuals or firms organized to perform a specific task that requires a large amount of capital Most commonly used to underwrite large insurance policies, loans, and investments

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Merger:

answer

the purchase of one corporation by another; essentially the same as an acquisition EX: American Airline & US Airways

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Horizontal mergers

answer

- Mergers between firms that make and sell similar products • Subject to approval by federal agencies to protect competition

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Vertical mergers

answer

- Mergers between firms that operate at different but related levels of production and marketing of a product • Usually one firm is a supplier or customer of the other

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Conglomerate mergers

answer

• Mergers between firms in completely different industries

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corporation.

answer

In the United States, the form of business ownership that generates the largest amount of sales revenues is the. .. . . . . . . . sole proprietorship. partnership. corporation. limited-liability company. S-corporation.

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Unlimited liability

answer

Which of the following is not an advantage of a sole proprietorship? Flexibility No special taxes Pride of ownership Retention of all profits Unlimited liability

question

limited partnership.

answer

A business co-owned by one or more general partners who manage the business and limited partners who invest money into it is called a. . . . not-for-profit partnership. limited partnership. general partnership. limited-liability company. S-partnership

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foreign

answer

A corporation that received its corporate charter in California and is doing business in Oregon is called a(n) ____________ corporation in Oregon. alien domestic visiting international foreign

question

horizontal merger

answer

A ____________ is a merger between firms that make and sell similar products or services in similar industries. horizontal merger vertical merger conglomerate merger hostile takeover tender offer

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Small Business

answer

-one that is independently owned and operated FOR PROFIT and IS NOT dominant in its field

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Primary reasons for the failure of a business (2)

answer

Mismanagement Lack of Business know-how

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Why do some Industries attract Small Business? (2)

answer

Require low initial investment Some special skills/knowledge

question

What are the 3 Categories of business?

answer

Distribution Service Production

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Retail, whole-sale, transportation Concerned with the movement of goods from producers to consumers 33% of all small business

answer

Distribution Industry What kinds of industries can be found here? What is it concerned with? What % of the small business does this industry account for?

question

Hairdresser, medical/dental care - NON-FINANCIAL CARE 48% of all small business

answer

Service Industry What kinds of industries can be found here? What % of the small business does this industry account for?

question

Construction, mining manufactures 19% of all small business

answer

Production Industry What kinds of industries can be found here? What % of the small business does this industry account for?

question

entrepreneurial spirit

answer

Characteristic of Entrepreneurs -the desire to create a new business -desire for independence! -motivation!

question

Capital, Management, and Planning Over expansion

answer

Why do some entrepreneurs and small businesses fail?

question

Providing Technical Innovation Providing Employment Providing Competition Filling Needs of Society and other Business

answer

What are the importances of Small Business in our society? (4)

question

Personal relationships with customers and employees Ability to adapt to change Simplified recordkeeping Independence

answer

What are the PROS of small business?

question

Risk of failure Limited potential Limited ability to raise capital

answer

What are the CONS of small business?

question

Business Plan + What are the 3 basic purposes?

answer

- a carefully constructed guide for starting a business -communication, management, planning

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**Small Business Administration**

answer

A governmental agency that assists, counsels, and protects the interests of small business in the U.S.

question

Service Corps of Retired Executives (SCORE) Small Business Institutes (SBI's)

answer

What are the 2 SBA management assistances?

question

Service Corps of Retired Executives (SCORE)

answer

group of BUSINESS PEOPLE who volunteer their services to small business through the SBA

question

Small Business Institutes (SBI's)

answer

groups of SENIOR/GRADUATE STUDENTS in business administration who provide management counseling to small business

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Franchise Franchising Franchisor Franchisee

answer

What are the 4 terms within Franchising?

question

Franchise

answer

A license to operate an individually owned business as though it were part of a chain of outlets or stores

question

Franchising

answer

The actual granting of a franchise

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Franchisor

answer

An individual or organization granting a franchise

question

Franchisee

answer

A person or organization purchasing a franchise

question

A manufacturer authorizes retailers to sell a certain brand-name item e.g. Honda, Toyota car manufacturers producer licenses distributors to sell a product to retailers e.g. Coca Cola, Pepsi franchisor supplies brand names, techniques, or services instead of a complete product e.g Subway.

answer

What are the 3 types of franchising?

question

Dual-branded franchising

answer

two franchisors offer their products together, is a new trend

question

Too rapid expansion, inadequate capital or management skills

answer

What can cause a franchise to fail? (3)

question

• Fast and well controlled distribution of its products • No need to construct and operate its own outlets • More working capital • available for expanded production and advertising • • Franchising agreements maintain product and quality standards • Motivated work force of franchisees

answer

PROS of Franchising to the franchisor?

question

Opportunity to start a proven business with limited capital Guaranteed customers Franchisor available for advice and guidance Materials for local promotional campaigns and participation in national campaigns Cost savings when purchasing in cooperation

answer

PROS of Franchising To the franchisee?

question

Failure of the franchisee to operate franchise properly Disputes with and lawsuits by franchisees over the terms of the franchise

answer

Disadvantages of Franchising to the franchisor?

question

Franchisor retains a large amount of control over the franchisee's activities Franchisor opening competing franchises within the franchisee's market

answer

Disadvantages of Franchising to the franchisee?

question

The Internet

answer

what is the favored strategy for growth for small businesses?

question

demographic and economic changes

answer

what kind of changes must small businesses adapt to in the world market place?

question

D. Dry cleaning shop

answer

1. Which one of the following would most likely be classified as a service industry? A. Grocery store B. Jewelry store C. Pet shop D. Dry cleaning shop E. Clothing store

question

E

answer

Roger Jones, a graduate business student, has decided to open his own consulting firm. Since he is an intelligent and hard-working student with previous management experience, Roger feels he is well prepared to succeed since more new businesses fail due to. . . . . . A. a lack of adequate financing. low consumer demand for their products. B. hostile competition. C. a lack of owner commitment. D. mismanagement and lack of business know- how.

question

C. university-based group providing individual counseling and practical training to owners of small businesses

answer

A Small Business Institute may be defined as group of retired businesspeople who voluntarily offer their services to small businesses through the SBA. A. group of active managers who voluntarily counsel small-business owners. B. group of senior and graduate students in business administration who provide management counseling to small businesses. C. university-based group providing individual counseling and practical training to owners of small businesses. D. technical publication dealing with hundreds of topics of interest to present and prospective managers of small firms.

question

C. franchise.

answer

A license to operate an individually owned business as if it were part of a chain of outlets or stores is called a A. joint venture. B. syndicate. C. franchise. D. SCORE. E. small-business development center

question

B. the semiconductor industry.

answer

Jim Moniz is contemplating obtaining a franchise. He would like to purchase a franchise in an industry that has had extensive success with franchising in the past. All of the following are possible choices for Jim except A. a fast-food industry. B. the semiconductor industry. C. filling stations. D. car dealerships. E. the soft-drink industry.

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Management

answer

COORDINATING an organizations people and resources to achieve the goals of the organization.

question

material human financial informational

answer

What are the 4 main resources of an organization??

question

Planning Organizing the enterprise Leading and motivating Controlling Ongoing Activities

answer

What are the 4 basic management functions?

question

Planning

answer

Establishing organizational goals and deciding how to accomplish them

question

Mission

answer

A statement of the basic purpose that makes an organization different from others

question

Strategic planning

answer

The process of establishing an organization's major goals and objectives and allocating the resources to achieve them

question

Goal

answer

An end result that an organization is expected to achieve over a one- to ten-year period

question

Objective

answer

A specific statement detailing what an organization intends to accomplish over a shorter period of time

question

SWOT analysis (for organizational analysis)

answer

The identification and evaluation of a firm's - Strengths - Weaknesses - Opportunities - Threats

question

Core competencies

answer

Approaches and processes that a company performs well and may give it an advantage over its competitors

question

Strategic Tactical Operational Contingency

answer

***What are the 4 types of plans?***

question

Strategic Plan

answer

BROADEST plan, a guide for major policy setting and decision making

question

Tactical Plan

answer

A SMALLER SCALE plan to implement a strategy

question

Operational plan

answer

A plan to implement a tactical plan

question

**Contingency plan**

answer

A plan of alternative courses of action if the organization's other plans are disrupted or become ineffective

question

Organizing

answer

The GROUPING OF RESOUCES AND ACTIVITIES to accomplish some end result in an efficient and effective manner

question

Leading

answer

INFLUENCING PEOPLE to work toward a common goal

question

Motivating

answer

Providing reasons for people to work in the best interests of an organization

question

Directing

answer

The combined processes of leading and motivating

question

Controlling

answer

EVALUATING AND REGULATING ongoing activities to ensure that goals are achieve

question

Top Manager Middle Manager First Line Manager

answer

What are the 3 levels of management?

question

Middle Manager

answer

implements the strategy and major policies developed by top management

question

Top Manager

answer

GUIDES AND CONTROLS the overall fortunes of an organization

question

First-Line Manager

answer

COORDINATES AND SUPERVISES the activities of operating employees

question

? Financial managers ? Operations managers ? Marketing managers ? Human resources managers ? Administrative managers (general managers)

answer

What are the 5 Areas of Management Specialization?

question

Financial -Responsible for an organization's financial resources Operations -Manage the systems that convert resources into goods and services Marketing -Responsible for facilitating the exchange of products between an organization and its customers or clients Human resources -Manage an organization's human resources programs Administrative managers (general managers) -Not associated with any specific functional area; provide overall administrative guidance and leadership

answer

What is the job of each of the 5 areas of management?

question

-Conceptual skills Ability to think in abstract terms -Analytic skills Ability to identify problems, generate alternative solutions, and select the best solution - Interpersonal skills Ability to deal effectively with other people -Technical skills Needed to accomplish a specialized acti

answer

What are the 5 key skills of successful managers?

question

Managers MAINTAIN a work environment, Leaders INFLUENCE others to work towards the same objectives/goals

answer

What is the difference between Leaders and Managers?

question

Audit your company cultures. Stay informed—informed people don't fear change. Beware of "aspirational" accounting. (Enron) Empower your people—turn them loose. Prevent erosion of human assets. Be generous with what you know

answer

What are the rules for leaders?

question

Leadership

answer

The ability to INFLUENCE others

question

Autocratic Participative Entrepreneurial

answer

What are the 3 types of leadership?

question

Satisficing

answer

Choosing an alternative that is not the best possible solution, but one that adequately solves the problem

question

Opportunity

answer

- A "positive" problem

question

? Identifying the problem or opportunity ? Generating alternatives ? Selecting an alternative ? Implementing and evaluating the solution

answer

***What are the 4 steps to decision making?***

question

The coordination of efforts directed at - Improving customer satisfaction - Increasing employee participation - Strengthening supplier partnerships - Facilitating an organizational atmosphere of continuous quality improvement

answer

****What is Total Quality Management (TQM)****

question

D. Human

answer

People in an organization are what type of resource? A. Material B. Informational C. Inventory D. Human E. Financial

question

B. establish goals.

answer

In executing their functions, managers must first A. organize activities. B. establish goals. C. motivate employees. D. evaluate activities. E. select employees.

question

C. decisional

answer

Roles such as entrepreneur, disturbance handler, and resource allocator are types of _______ roles. A. interpersonal B. informational C. decisional D. leadership E. ownership

question

A. laissez-faire.

answer

One type of leadership style is A. laissez-faire. B. CEO. C. entrepreneur. D. negotiator. E. bureaucratic

question

C. unpredictability on Wall Street.

answer

All of the following are reasons for a greater focus on quality by U.S. firms except A. competition from foreign firms. B. customers that are more demanding. C. unpredictability on Wall Street. D. poorer financial performance. E. reduced market share.

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