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business 160 chapters 5 + 6 +8

the process of creating and managing a business to achieve desired objective.
small business
any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people
small business administration
(SBA) an independent agency of the federal government that offers managerial financial assistance to small business.
define services
the service sector includes businesses that do not actually produce tangible goods. the service sector accounts for 80% of u.s. jobs. (ie banks, barbershops, agencies, repairs shops etc.)
what does the term High Technology refer to
high technology is a broad term used to describe businesses that depend heavily on advanced scientific and engineering knowledge.
Advantages of Small Business ownership
1. Independence – being your own boss. choose who, when, and where they work
2. Costs – Less $ to start up and maintain.
3. Flexibility – ability to adapt to changing market demands.decisions can be made quickly. Like sole-prop.
4. Focus – ability to focus on precisely defined market niche. (IE a specific group of customers…Fatheads sunglasses)
5. Reputation – bc of narrow niche can develope enviable reputation for quality goods and services.
disadvantages of small businesses
1. High Stress Level – physical and psychological stress. bc of limited ability and profitability, and changing market demands. 2. High Failure Rate – no guarantee of success. 50% of S.B. fail within the first 5 years. (often bc of poor bus concept)
3. Undercapitalization – lack of funds to operate a business normally. few bus make $ from start. need to maintain cashflow.
4. Managerial inexperience and incompetence – poor management is the cause of many bus failures. may be a good creative thinker but not manager, HR, finance, etc.
5. Inability to cope w/growth – owner doesn’t want to relinquish control, despite needing to defer to somebody w/more specific training. poor management affects company’s reputation.
business plan
a precise statement of the rationale for a business and step-by-step explanation of how it will achieve its goal.
equity financing
owner uses personal assets – IE computer, desk, car, for the company.
venture capitalist
persons or organizations that agree to provide some funds for a new business in exchange for an ownership interest or stock.
New businesses sometimes borrow more than half of their financial resources (to get started).
what is the S.B.A.
Small Business Administration – offers financial assistance to qualifying businesses.
a license to sell another’s product or to use another’s name in businesses, or both, is a franchase.
franchiser vs.franchisee
franchiser – the company that sells a franchse. (make money. lose % of company. potentially corrrupts your comp’s name).
franchisee- the purchaser of a franchise (dont have to start from scratch. immediate name recognition and assets).
Advantages of Franchises
management training and support.
brand name appeal. standardized quality of G & S.
national advertising programs. financial assistance.
Proven products and bus formats. centralized buying power. greater chance for success.
Disadvantages of Franchises
Franchise fees and profit sharing with franchiser.
strict adherence to standardized operations.
restrictions of purchasing. limited product line. possible market saturation. less freedom in business decisions.
the lack of funds to operate a business normally.
firms size breakdown
0-19 employees = 89.3%
20-99 employees = 8.9%
100-499 empoyees = 1.5%
500+ employees = 0.3%
Demographic Trends
Baby boomers = 25% of population. immigrants = 12% of population. … therefore you can focus a business on a certain type of demographic.
technology and economic trends
tech-advancements open new marks in small business. IE – Internet.
procusess of reducing management layers, corporate staff, and work tasks in order to make the firm more flexible, resourceful, and innovative. (one example – make each department within a company responsible for its own profits, loses, and resources.
managing for quality and comptetiveness
define management
a process designed to achieve an organization’s objectives by using its resources effectively (meaning having intended result) and efficiently (meaning accomplishing the objective with the minimal resources) in a changing environment.
those individuals in organizations who make decisions about the use of resources and who are concerned with planning, organizing, staffing, directing, and controlling the organization’s activities to reach its objectives.
4 parts to obtaining and retaining employees
recuit, train, compensate, and provide benefits. (ie health insurance, shares of stock)…these foster employee’s loyalty.
name the 5 parts of managers
1. planning. 2. organizing. 3. staffing. 4. directing. 5. controlling.
First function of management. “the process of determining the organization’s objectives and deciding how to accomplish them”. (ask questions like who are we? who are our customers? what is our operating philosophy? what are our competetive advantages)
the statement of an organization’s fundamental purpose and basic philosophy.
what is a Goals –
Gaols are the results that firm wishes to achieve. goals happen before strategies.
what are the 3 types of plans
objective-strategic, tactical, and operational.
Objectives are the end results desired by an organization, derived from the organization’s mission.
Strategic Plans
Those plans that establish the long-range (2-10+years) objectives and overall strategy or course of action by which a firm fulfills its mission.
tactical plans
short-range (1 year or less) plans designed to implement the activities and objectives specified in the strategic plan.
operational plan
very short-term (1 day, week, or month) plans that specify what actions individuals, work groups or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic.
Crisis management or contingency planning
an element in planning that deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer virus, or airplane crash.
the structuring of resources and activities to accomplish objectives in an efficient and effective manner. (creates synergy, establishes lines of authority, improve communication, helps avoid duplication of resources, can improve competitiveness, and speed up decision making).
the hiring of people to carry out the work of the organization.
the elimination of a significant number of employees from an organization. (reduces costs help company’s become more profitable).
motivating and leading employees to achieve organizational objective. motivation via incentive. telling people what to do. and when to do it by.
The process of evaluating and correcting activities to keep the organization on course. closely linked to planning.
5 parts of planning
1. measuring performance. 2. comparing present performance w/standards or objectives. 3. identifying deviations from the standards. 4. investigating the causes of deviation. 5. taking corrective action when necessary.
types of managment
top managers, middle managers, first-line managers.
top managers
the president and other top executives of a business, such as the CEO, CFO, COO (chief operations officer), who have overall responsibilty for the organization
those members of an organizations responsible for the tactical planning that implements the general guidelines established by the top managment. (generally have years of of varied experience, and receive highest pay).
first-line managers
those who supervise both workers and the daily operations of an organization
financial manager
those who focus on obtaining needed funds for the successful operation of an organization and using those funds to further organizational goals.
look at figure 6.3
it breaks down roles by manager type
look at Table 6.2
Five rules of successful diversity recruiting.
Production and operations managers
those who develop and administer the activities involved in transforming resources into goods services, and ideas ready for the marketplace.
Human resource manager
those who handle the staffing function and deal with employees in a formalized manner.
marketing managers
those who are responsible for planning, pricing, and promoting products and making them available to customers.
IT (information technology manager
those who are responsible for implementing, maintaining, and controlling technology applicatoins in business, such as computer networks.
Administrative managers
those who manage an entire business or a major segment of a business’ they are not specialists but coordinate the activities of specialized managers.
the ability to influence employees to work toward an organizational goal
7 tips to successful leadership
1. build effective and responsible interpersonal relationships.
2. communicate effectively, in person, print, and email etc.
3. build the team & enable employees to collaborate effectively
4. understand the financial aspects of the business.
5. know how to create an environment where people experience positive morale and recognition.
6. lead by example.
7. help people grow and develop.
Technical Expertise
The specialized knowledge and training needed to perform jobs that are related to particular areas of management. (to be a manager you must be able to be a worker in that area).
Conceptual skills.
The ability to think in abstract terms and to see how parts fit together to form the whole.
analytical skills
the ability to identify relevant issues, recognize their importance, understand the relationships between them, and perceive the underlying causes of situation.
human relations skills
the ability to deal with people, both inside and outside the organization
Ways manager is obtained (3)
1. promoted to managerial position from within.
2. hiring managers from other organizations.
3. hiring straight out of university.
pros and cons w/hiring a manager
(from within) increases motivation/something to work
– less training necessary bc theyre familiar w/the system
cons – less innovation. (continue in previous ways)
– difficult to find qualified candidates.
(from outside)
new perspective/ think innovatively,
cons- possibly hurt moral,
6 steps for decision making
1. recognize and define the decision situation.(decline profit)
2. develop options (come up w/standard and creative plans). 3. analyze options (considering what is impractical & practical based on various resources).
4. select the best option. (often subjective but have2 choose1) 5. implement the decision (can be simple or complex)
6. monitor the consequences-did it accomplish desired result? if yes, good. if no, perhaps you misdefined & need to restart.
A calendar, containing both specific and vague items, that covers short-term goals and long-term objectives. (specific and vague. short and long-term)
The building of relationships and sharing of information w/colleagues who can help mangagers achieve the items on their agendas. (essential to company and includes variety of people in various positions).
Chapter 8
operations management
the development and administration of activities involved in transforming resources into goods and services.
the activies and processes used in making tangible products’ also called production.
the activities and processes used in making tangible products; also called manufacturing.
the activities and processes used in making both tangible and inangible products.
the resources-such as labor, money, materials, and energy- that are converted into output.
the goods, services, and ideas that result from the conversion of input.
the making of identical interchangeable components or products.
modular design
the reation of an item in self-constrained units, or modules, that can be combined or interchanged to create different products.
making products to meet a particular customer’s needs or wants.
the maximum load that an organizational unit can carry or operate.
fun fact
hershey’s has the production capacity to make more than 80 million chocolate kisses per day.
fix-position layout
a layout that brings all resources required to create the product to a central location.
project organization
a company using a fixed-position layout because it is typically involved in large, complex projects such as construction or exploration.
process layout
a layout that organizes the transformation process into department that group related processes.
intermittent organization
organizations that deal with products of a lesser magnitude than do project organizations; their products are not necessarily unique but possess a significant number of differences.
product layout
a layout requiring that production be broken down into relatively simple tasks assiged to workers, who are usually positioned along an assembly line.
continuous manufacturing organizations
companies that use continuously runing assembly lines, creating products with many similar characteristics.
computer-assisted design
CAD-the design of components, products, and processes on computers instead of paper.
CAM- manufacturing that employs specialized computer systems to actually guide and control the transformation processes.
flexible manufacturing
the direction of machinery by computers to adapt to different versions of similar operations.
a complete system that designs products, manages machines and materials, and controls the operations function.
supply chain managment
connecting and integrating all parties or members of the distribution system in order to satisfy customers.
the buying of all the materials needed by the organization; also called preocurement.
the raw materials, components, completed or partially completed products, and pieces of equipment a firm uses.
inventory control
the process of determining how many supplies and goods are needed and keepingtack of quanitites on hand. where each item is, and who is responsible for it.
economic order quantity model
(EOQ) model that identifies the optimum number of items to order to minimize the costs of managing (ordering, storing, and using) them.
just in time inventory management
(JIT) management – a technique using smaller quantities of materials that arrive :ust in time: for use in the transformation process and therefore require less storage space and other inventory management expense.
material-requirements planning
(MRP) – a planning system that schedules the precise quantity of materials needed to make product.
the sequence of operations through which the product must pass
the assignment of required tasks to departments or even specific machines, workers, or teams.
quality control
the processes an organization uses to maintain its established quality standards
total quality management
a philosophy that uniform commitment to quality in all areas of an organization will promote a culture that meets customers’ perceptions of quality.
statistical process control
a system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system.
ISO 9000
a series of quality assurance standards designed by the international organizations for standardization (ISO) to ensure consistent product quality under many conditions.
ISO 14000
a comprehensive set of environmental standards that encourages companies to conduct businesses in a cleaner, safer, and less wasteful way. ISO 14000 provides a uniform set of standards globally.

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