Question 1

small business

Accepted Answer

is independent (that is, not part of a larger business) and has relatively little influence in its market.Most U.S. businesses employ fewer than 20 people, and most U.S. workers are employed by small firms. The contribution of small business can be measured through its impact on job creation, innovation, and its importance to big business

Question 2

Job Creation

Accepted Answer

Small businesses are an important source of new jobs; in recent years, small businesses have accounted for 40 percent of all new jobs in the high-technology sectors of the economy alone.

Question 3

Innovation

Accepted Answer

Small business supplies 55 percent of all innovations that reach the U.S. marketplace. Most products made by big businesses are sold to consumers by small ones.

Question 4

Popular Areas of Small-Business Enterprise

Accepted Answer

services 50%, retailing 13%, construction 15%, wholesaling 6%, finance and insurance 7%, manufacturing 4%, transportation 3%, other 7%

Question 5

Entrepreneurs

Accepted Answer

are people who assume the risk of business ownership. known for their Resourcefulness, A concern for customer relations, A desire for autonomy, The ability to handle ambiguity, A desire for risk-taking, A need for personal freedom, The opportunity for creative expression

Question 6

Entrepreneurship

Accepted Answer

is the process of seeking business opportunities under conditions of risk

Question 7

Crafting a Business Plan

Accepted Answer

A business plan summarizes business strategy for the new venture and shows how it will be implemented (setting goals and objectives, sales forecasting, financial planning

Question 8

Starting the Small Business

Accepted Answer

Small-business people begin by understanding the true nature of their businesses (buying an existing business, franchising, starting from scratch

Question 9

Financing the Small Business

Accepted Answer

Many sources for business financing are available. Personal resources account for more than two-thirds of all money invested; smaller portions of funding come from banks, independent investors, and government loans. (Venture Capital companies,SBA Financial Programs, Other SBA Programs like Small Business Development Center (SBDC))

Question 10

Trends in Small-Business Start-Ups

Accepted Answer

Several factors account for the thousands of new business start-ups in the United States each year. (electric commerce, Crossovers from Big Business, Opportunities for Minorities and Women, Global Opportunities, Better Survival Rates for Businesses

Question 11

Reasons for Failure

Accepted Answer

Four general factors contribute to small-business failure: 1. Managerial incompetence or inexperience  2. Neglect  3. Weak control systems  4. Insufficient capital

Question 12

Reasons for Success

Accepted Answer

Four general factors contribute to small-business success: 1. Hard work, drive, and dedication  2. Market demand for the products or services being produced  3. Managerial competence  4. Luck

Question 13

Noncorporate Business Ownerships

Accepted Answer

Sole proprietorships, partnerships, and cooperatives

Question 14

Sole Proprietorships

Accepted Answer

A sole proprietorship is owned and usually operated by one person; about 73 percent of all U.S. businesses are sole proprietorships.  Advantages of Sole Proprietorships: Freedom, ease in forming, low start-up costs, and tax benefits are the advantages of this form of ownership.   Disadvantages of Sole Proprietorships: Unlimited liability, lack of continuity, and a possible lack of resources from the single individual are the major drawbacks of this form of organization

Question 15

Partnerships

Accepted Answer

A general partnership, the most common type, is a sole proprietorship multiplied by the number of partner-owners. Partners may invest unequal sums of money. In most cases, partners share the profits equally or in proportion to their investment in the partnership.  Advantages of Partnerships: The ability to grow with the addition of new talent and money, few legal requirements, and tax advantages are benefits of this form of ownership.   Disadvantages of Partnerships: Unlimited liability in that each partner may be liable for the debts incurred in the name of the partnership, lack of continuity, difficulty of transferring ownership, and little or no guidance for conflict resolution are the major drawbacks of this form of ownership.

Question 16

Cooperatives

Accepted Answer

Cooperatives combine the freedom of sole proprietorships with the financial power of corporations. These groups of sole proprietorships or partnerships agree to work together for their common benefit.

Question 17

Corporations

Accepted Answer

Both large and small corporations account for 20 percent of all businesses, but generate about 90 percent of all sales revenues in the United States

Question 18

The Corporate Entity

Accepted Answer

Characteristics of corporations include legal status as separate entities, property rights and obligations, and indefinite life spans. Corporations may sue and be sued; buy, hold, and sell property; make and sell products to consumers; commit crimes, and be tried and punished for them.   Advantages of Incorporation. These include limited liability, continuity, and the ability to raise money.   Disadvantages of Incorporation. Difficulty in ease of transferring ownership, control, and cost are drawbacks of incorporation. In addition, double taxation plagues a corporation, because a regular corporation must pay income taxes on profits and stockholders must pay taxes on income returned by their investments.

Question 19

Types of Corporations

Accepted Answer

Stock is held by only a few people and is not available for sale to the public in a closely held (or PRIVATE) corporation. When shares are publicly issued, the firm becomes a publicly held (or PUBLIC) corporation. The S CORPORATION is a hybrid of a private corporation and partnership. In a LIMITED LIABILITY CORPORATION, owners are taxed like partners, with each paying personal taxes only. PROFESSIONAL CORPORATIONS are most likely comprised of doctors, lawyers, accountants, or other professionals. A MULTINATIONAL (or transnational) CORPORATIONS spans national boundaries

Question 20

Managing a Corporation

Accepted Answer

Once the corporate entity comes into existence, it must be managed by people who understand the principles of corporate governance.   Corporate Governance. Defined by the firm\'s bylaws, corporate governance involves stockholders, the board of directors, and corporate officers.

Question 21

Stockholders

Accepted Answer

Stockholders are the owners of a corporation. Corporations sell shares, called stock, to investors who then become stockholders, or shareholders. Profits are distributed among stockholders in the form of dividends, and corporate managers serve at stockholders\' discretion.

Question 22

Board of directors

Accepted Answer

The board of directors is the governing body of the corporation.

Question 23

Officers

Accepted Answer

Appointed by the board of directors, officers oversee the day-to-day operations of the corporation. The chief executive officer, or CEO, oversees overall operations

Question 24

Joint Ventures and Strategic Alliances

Accepted Answer

In a strategic alliance, two or more organizations collaborate on a project for mutual gain  when partners share ownership of what is essentially a new enterprise, it is called a joint venture.

Question 25

Employee Stock Ownership Plans

Accepted Answer

ESOPs allow employees to own a significant share of the corporation through trusts established on their behalf.

Question 26

Institutional Ownership

Accepted Answer

Institutional investors include mutual funds and pensions that buy enormous blocks of stock.

Question 27

Mergers, Acquisitions, Divestitures, and Spin-Offs

Accepted Answer

A merger occurs when two firms combine to create a new company; in an acquisition, one firm buys another outright. A divestiture occurs when a firm sells off unrelated and/or underperforming businesses. When a firm sells part of itself to raise capital, the strategy is known as a spin-off

Question 28

The Management Process

Accepted Answer

All corporations depend on effective management; the principles of management apply to all kinds of organizations.   Management is the process of planning, organizing, leading, and controlling an organiÂ¬zation\'s financial, physical, human, and information resources to achieve its goals.

Question 29

Planning

Accepted Answer

Determining what the organization needs to do and how best to get it done requires planning. Planning begins with determining the firm\'s goals, followed by development of a comprehensive strategy for achieving those goals, and designing tactical and operational plans for implementing the strategy

Question 30

Organizing

Accepted Answer

Organizing involves the arranging of a firm\'s resources into a coherent structure. Organization charts help everyone understand roles and reporting relationships, key parts of the organizing function.

Question 31

Leading

Accepted Answer

When leading, a manager works to guide and motivate employees to meet the firm\'s objectives.

Question 32

Controlling

Accepted Answer

Controlling is the process of monitoring a firm\'s performance to make sure that it is meeting its goals.

Question 33

Types of Managers

Accepted Answer

Although all managers plan, organize, lead, and control, not all managers have the same degree of responsibility for these activities. Thus, it is helpful to classify managers according to levels and areas of responsibility.   Levels of Management The three basic levels of management are top, middle, and first-line managers.

Question 34

Top Managers

Accepted Answer

This level is responsible for the firm\'s overall performance and effectiveness. Top managers set general policies and formulate strategies, approve all significant decisions, and represent the company in dealing with stockholders, the board of directors, other businesses, and government. Common titles for top managers include President, Vice President, Treasurer, Chief Executive Officer (CEO), and Chief Financial Officer (CFO).

Question 35

Middle Managers

Accepted Answer

This level is responsible for implementing the strategies, policies, and decisions made by top managers. Titles such as Plant Manager, Operations Manager, and Division Manager designate middle-management slots.

Question 36

First-Line Managers

Accepted Answer

Duties of managers at this level depend on the job, though first-line managers spend most of their time supervising the employees who report to them. Those who hold such titles as Supervisor, Office Manager, Project Manager, and Group Leader are first-line managers.

Question 37

Human Resource Managers

Accepted Answer

These managers hire and train employees, evaluate performance, and determine compensation.

Question 38

Operations Managers

Accepted Answer

These managers are responsible for the production system in which a firm produces goods and/or services, inventory and inventory control, and quality control

Question 39

Marketing Managers

Accepted Answer

These managers are responsible for the development, pricing, promotion, and distribution of goods and services

Question 40

Information Managers

Accepted Answer

These managers design and implement systems to gather, organize, and distribute information.

Question 41

Financial Managers

Accepted Answer

These managers are responsible for the firm\'s accounting functions and financial resources.

Question 42

Other Managers

Accepted Answer

Some firms employ various types of specialized managers, such as public relations managers.

Question 43

Technical Skills

Accepted Answer

Technical skills are the skills needed to perform specialized tasks. These skills are developed through a combination of education and experience. Technical skills are especially important for first-line managers who spend most of their time with the day-to-day operations of the production system.

Question 44

Human Relations Skills

Accepted Answer

Absolutely necessary for managerial success, human relations skills are skills in understanding and getting along with people. These skills are important at all management levels.

Question 45

Conceptual Skills

Accepted Answer

Especially prevalent among top managers, conceptual skills involve the ability to diagnose and analyze different situations and to see beyond the present situation.

Question 46

Decision-Making Skills

Accepted Answer

Decision-making skills include the ability to define problems and to select the best course of action. These skills involve gathering facts, identifying solutions, evaluating alternatives, and implementing the chosen alternative.

Question 47

Time Management Skills

Accepted Answer

Time management skills involve the productive use of managers\' time. Leading causes of wasted time are paperwork, telephone calls, meetings, and e-mail.

Question 48

Management Skills for the Twenty-First Century

Accepted Answer

Competing globally and managing technology are two major challenges facing managers today.  Global Management Skills. Businesses now demand managers who can understand cultural differences and the motives and practices of foreign competitors.  Management and Technology Skills. New forms of technology increase the manager\'s need to process, organize, and interpret a plethora of information

Question 49

Strategic management

Accepted Answer

is the process of helping an organization maintain an effective alignment with its environment.

Question 50

Goals

Accepted Answer

are objectives that a business hopes and plans to achieve

Question 51

Strategy

Accepted Answer

is a broad set of organizational plans for implementing the decisions made for achieving organizational goals.

Question 52

Setting Business Goals

Accepted Answer

Goals are performance targetsâthe means by which organizations and their managers measure success or failure at every level.  1. Purpose of goal setting: An organization functions systematically because it sets goals and plans accordingly. The four main purposes of organizational goal setting include: (a) providing direction and guidance for managers at all levels; (b) helping firms allocate resources; (c) helping to define corporate culture; and (d) helping managers assess performance.  2. Kinds of Goals. Every firm has a purpose and a mission. A mission statement is a statement of how the firm will achieve its purpose in the environment in which it operates. In addition, every firm needs long-term goals, which look at five years or more into the future; intermediate goals, which focus on a period of one to five years; and short-term goals, which are set for one year.

Question 53

Types of Strategy

Accepted Answer

A company usually considers three types of strategy:  1. Corporate Strategy. The purpose of corporate strategy is to determine the firm\'s overall attitude toward growth and the way it will manage its businesses or product lines.  2. Business (or Competitive) Strategy. Business (or competitive) strategy focuses on improving the company\'s competitive position.  3. Functional Strategy. With functional strategy, managers in specific areas decide how best to achieve corporate goals by being as productive as possible.

Question 54

Formulating Strategy

Accepted Answer

Strategy tends to be wider in scope than planning; strategy describes what an organization intends to do. Strategy formulation involves three basic steps.   1. Step 1: Setting Strategic Goals. Strategic goals are long-term goals derived from the firm\'s mission statement.   2. Step 2: Analyzing the Organization and Its Environment: SWOT Analysis. After strategic goals have been established, managers usually attempt to assess both their organization and its environment. A common framework for this assessment is called a SWOT analysis. This process involves assessing organizational strengths and weaknesses (the S and W) and environmental opportunities and threats (the O and T). Environmental analysis involves scanning the external environment for threats and opportunities. Threats include changing consumer tastes, hostile takeovers, and some competitor actions. Organizational analysis involves scanning the internal environment for strengths and weaknesses. Strengths include surplus cash, a dedicated workforce, technical expertise, etc.   3. Step 3: Matching the Organization and Its Environment. This step in strategy formulation involves matching a firm\'s strengths and weaknesses to its opportunities and threats. This step is credited as the foundation for successful planning.

Question 55

Hierarchy of Plans

Accepted Answer

Plans can be viewed on three levels: strategic, tactical, and operational. Managerial responsibilities are defined at each level. The levels constitute a hierarchy because implementing plans is practical only when there is a logical flow from one level to the next. Usually set by the board of directors and top management, strategic plans focus on steps needed to meet strategic goals. Usually involving upper and middle managers, tactical plans are concerned with implementing certain aspects of the strategic plans; tactical plans are short-range plans. Middle and lower-level managers develop Operational plans, geared toward short-term goals.

Question 56

Contingency Planning

Accepted Answer

Contingency planning is planning for change; it identifies ways in which a company will respond to change.

Question 57

Crisis Management

Accepted Answer

Crisis management involves an organization\'s methods for dealing with emergencies.

Question 58

Corporate culture

Accepted Answer

âthe shared experiences, stories, beliefs, and norms that characterize an organizationâgreatly influences management philosophy, style, and behavior and must be understood by management in order to be effectively communicated to others in the organization.

Question 59

Communicating the Culture

Accepted Answer

This involves having an understanding of the culture, transmitting the culture to others in the organization, and maintaining the culture.

Question 60

Managing Change

Accepted Answer

This involves analyzing the company\'s environment, formulating a vision of a new company, and setting up appraisal and compensation systems for employees who enforce the new values.

Question 61

Organizational structure

Accepted Answer

is the specification of the jobs to be done within an organization and the ways in which those jobs relate to one another

Question 62

Organization Charts

Accepted Answer

Organizational charts are prepared to clarify structure and to show employees where they fit into a firm\'s operations. The chain of command represents the hierarchy of who reports to whom in the organization.

Question 63

Determinants of Organizational Structure

Accepted Answer

Numerous factors influence the planning and creating of an efficient organizational structure. Managers not only consider the organization\'s purpose, mission, and strategy, but also the organization\'s size, technology, and environmental changes.

Question 64

The Building Blocks of Organizational Structure

Accepted Answer

The first step in developing the structure of any business involves three activities: specialization, departmentalization, and establishing the decision-making hierarchy.

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