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what is a business
individual or organization that: satisfy needs, provides goods and/or services, and makes profit.
It also provides employment, contributes to standard of living/quality of life, provides invest opportunities, manipulates, narrows definition of quality of life, exploits, pollutes, and influences politics
define goods and services
goods: tangible (e.g., car, iPad)
services: intangible (e.g., consulting)
define revenues, expenses, profit, and loss
revenues: money flowing in
expenses: money flowing out
profit: revenues > expenses
loss: expenses > revenues
profits/losses are dynamic
what are the three types of businesses?
manufacturing (Toyota), service (Goldman Sachs), and intermediaries (Costco)
nonprofit organizations
primary object: make this work a better place. they still need to make money and they are run like businesses
businesses use which resources?
land, labor, capital, entrepreneurship, and knowledge
what are stakeholders and name them
they are affected by or are part of the business world. customers, owners, employees, suppliers, investors, politicians, media, environment
what’s government’s role in business?
taxes, regulations, laws, establish currency (tradeable), fiscal and monetary policy.
standard of living vs quality of life
what do you get for your money vs what is the general well-being of society?
define effectiveness, efficiency, and productivity
effectiveness: achieving goal
efficiency: achieving goal with minimum sources
productivity: quantitative measure relating output to input. technology has led leaps in productivity
define e-commerce and what are the two kinds?
conducting commercial transaction over the internet.
B2C: business to consumer (e.g., Amazon)
B2B: business to business (e.g., supply-chaining)
study of population characteristics
TRUE OR FALSE: businesses provide goods, jobs, and services to others.
TRUE OR FALSE: Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable
TRUE OR FALSE:The only way a firm can increase its profits is to increase its sales revenue.
TRUE OR FALSE: Tools, machinery, and buildings are examples of capital resources.
TRUE OR FALSE: The “pay-as-you-go” Social Security system will ensure that the young people of today will have Social Security benefits in the future when they retire.
TRUE OR FALSE: China and India have become major U.S. competitors.
TRUE OR FALSE: Over many years the nature of U.S. business has changed very little from century to century.
__________ is the amount a business earns after deducting what it spends for salaries and other expenses.
Which of the following is the best example of a business whose goal is to earn a profit?:
A community college
The Salvation Army
Boy Scouts of America
Best Buy, Inc.
Best Buy
The resources that contribute to the creation of wealth are known as _______.
factors of production
Taxes and government regulations are part of the ________________ environment of business.
economic and legal
Efficiency means:
producing the desired result.
producing goods and services using the least amount of resources.
the amount of output you generate given the amount of input.
the buying and selling of goods using the most amount of resources.
producing goods and services using the least amount of resources.
The statistical study of human population to learn its size, density, and characteristics is called:
Businesses that produce and sell tangible products such as steel and machines are part of the:
manufacturing industry.
knowledge-based industry.
service industry.
production sector.
manufacturing industry
TRUE OR FALSE: The study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as sociology.
TRUE OR FALSE: Studies about the effects of population growth on the economy are part of macroeconomics.
TRUE OR FALSE: In capitalist countries, the government decides what to produce and how the goods and services will be produced.
TRUE OR FALSE: In perfect competition, each firm produces a product that is clearly differentiated from the products of other firms in the same market.
TRUE OR FALSE: Socialists believe that the primary economic function of the government is to promote rapid economic growth.
TRUE OR FALSE: In command economies, the government plays a major role in deciding which goods are produced and who will get them.
TRUE OR FALSE: The total value of a country’s output of final goods and services in a given year is known as the gross domestic product (GDP).
TRUE OR FALSE: Deflation means prices are declining.
TRUE OR FALSE: Fiscal policy refers to the federal government’s efforts to keep the economy stable by controlling the amount of money in circulation.
____________ looks at the behavior of individual people and organizations in specific markets.
Finite economics
_________ is the name of a free-market economic system in which most of the factors of production and distribution – such as land, factories, railroads, and stores – are owned by individuals.
A(n) _____________ curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.
When the market price of a good is below the equilibrium price, and all other determinants are unchanged:
the quantity demanded will exceed the quantity supplied.
the supply curve will be to the right of the demand curve.
a surplus will exist in the market.
the government will regulate the price of the good to ensure equilibrium is attained.
the quantity demanded will exceed the quantity supplied.
Today, the economic systems of most nations could most accurately be classified as:
Pure capitalism.
Pure socialism.
Command economies.
Mixed economies.
mixed economies
Which of the following statements about business cycles in the U.S. is most accurate?
Business cycles occur precisely every 5 years.
Long term business cycles have only two phases—boom and bust.
Seasonal business cycles occur within a year.
Business cycles are based on theories.
Seasonal business cycles occur within a year.
When the government runs a continual budget deficit, it increases the:
National debt.
Balance of payments deficit.
Federal capital account.
Money supply.
national debt
what are the major branches of economics and define each
economics: how does a society use and allocate resources to produce and distribute products and services
macroeconomics: focus on economy/nation as a whole (e.g., unemployment)
microeconomics: focus on individuals and organizations (e.g, supply and demand)
define model building
simplified frameworks to understand complex reality (base on assumptions)
define econometrics
use statistics to analyze and interpret empirical data
who is Thomas Malthus?
he stated that overpopulation will create starvation
who is Adam Smith?
he wrote “Wealth of Nations” in 1776. He found Capitalism and promoted free pursuit of self-interest will create and distribute wealth (“Invisible Hand”)
who is Karl Marx?
wrote “Das Kapital” in 1867, which was the foundation of communism
who is John Maynard Keynes?
wrote “The General Theory of Employment, Interest, and Money” in 1936. He stated that the government should stimulate the economy during economic crises
who is Milton Friedman?
wrote “A Monetary History of the U.S.” in 1963. He stated that the government should stabilize prices but that’s it
what are the Capitalism’s 4 Basic Rights?
1) the right to own private property
2) the right to own a business and keep and the business’s profits
3) the right to freedom of competition
4) the right to freedom of choice
free markets
-the “market” decides how resources are used and allocated
-prices are used to send signals between businesses and consumers
define sypply
the quantities of products businesses are willing to sell at different prices
define demand
the quantities of products consumers are willing to buy at different prices
market price
also known as equilibrium point, where supply and demand curves intersect
what are the four degrees of competition
1) perfect (pure competition)
2) monopolistic competition
3) oligopoly
4) monopoly
what are the pros and cons of free markets?
pros: wealth creation, innovation, and upward mobility
cons: inequality, irresponsible/unethical behavior
what is communism?
-government controls factors of production and makes most/all economic decisions.
-decisions based on plans fall short
-often associated with non-democratic and corrupt political regimes
what’s socialism?
-crucial industry sectors are under governmental control
-entrepreneurship still exists
-high taxes redistributes wealth
-more socially responsible culture
what are the pros and cons of socialism and communism?
pros: social equality, many free services
cons: shortages of products, no incentives, brain drain
what are the two major economic system and define?
1) free-market economies: market forces determine what’s produced and how it is distributed
2) command economies: the government determined what is produced and how it’s distributed
define GDP
total value of final goods and services produced in a country in a given year
define unemployment
the percentage of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.
what are the 4 types of unemployment?
1) frictional
2) structural
3) cyclical
4) seasonal
define inflation, deflation, and stagflation
inflation: the general rise in the prices of goods and services over time
deflation: prices decline if money supply (demand) shrinks
stagflation: economy is slow but prices are going up
define CPI
measures inflation/deflation monthly which is measured by the government
define business cycles and what are the four phases of long-term business cycles:
period rises and falls that occur in economies over time
1) economic boom
2) recession: two or more consecutive quarters of decline in the GDP
3)depression: a severe recession
4) recovery: economy stabilizes and starts to grow again
what are the two key aspects of fiscal policy?
1) taxation
2) government spending
define national deficit, debt, and surplus
deficit: (tax) revenues don’t cover expenditures
debt: accumulation of deficits over time
surplus: revenues exceed expenditures
define monetary policy
the management of the money supply and interest rates by the Federal Reserve Bank (the Fed)
what are the key activities of the Federal Reserve?
setting reserve requirements, setting interest rates, and open-market operations (buying and selling of government bonds
TRUE OR FALSE: Importing is the selling of products to another country
TRUE OR FALSE: with respect to free trade, many U.S. citizens prefer “fair trade, not free trade”
TRUE OR FALSE: a favorable balance of trade occurs when the value of a country’s imports exceeds the value of the exports
TRUE OR FALSE: the U.S. currently enjoys a favorable balance of trade with the rest of the world
TRUE OR FALSE: through licensing, domestic firms give foreign manufactures/producers the right to produce their product and use their trademark in exchange for royalities
TRUE OR FALSE: the disadvantage of creating a foreign subsidiary is the loss of control technology and expertise used in the production pf the product
TRUE OR FALSE: governments directly participate in global markets through sovereign wealth funds
TRUE OR FALSE: the complete ban on the sale of Cuban cigars in the U.S. is an example of import quota
the concept of free trade means: buyers and sellers contract with each other and offer some goods at no cost.
goods and services can be traded freely across borders without political and/or economic barriers.
there is no exchange of currency for these products.
there is no exchange of currency, but the trading partners determine the value of the product and perform a bartering process to exchange goods.
goods and services can be traded freely across borders without political and/or economic barriers.
The __________ is the difference between money flowing into a country from exports, and money leaving the country for imports, plus money flows coming from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
balance of payments
balance of trade surplus
balance of cash flows
balance of trade
balance of payments
When foreign firms build production facilities in the United States, they are engaging in:
foreign direct investment.
foreign direct investment
Which of the following terms describes the set of values, beliefs, rules, language, and institutions held by a specific group of people?
Institutional society
Social myopia
A major force that often impeded global trade occurs when government regulations limit the import of goods and services. We call this:
anti-trade concessions.
de-facto trading.
trade protectionism
trade protectionism
When studying abroad last year, Blake found that his U.S. dollars did not stretch as far as he had hoped. Each time he exchanged U.S. dollars for euros, he gave up more U.S. dollars in exchange for less euros. The exchange rate indicates:
the dollar has gained strength against the euro.
the euro is weak against the U.S. dollar.
the euro has gained strength against the dollar.
the demand for dollars is stronger than the demand for euros.
the euro has gained strength against the dollar.
In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called:
revenue tariffs.
protective tariffs.
import quotas.
import quotas
define importing and exporting
importing: buying products from another country
exporting: selling products to other countries
define free trade
the movement of products (goods and services) with little or no friction imposed by geography and political borders
define global trade
(ideally) makes use of relative efficiency of producing goods and services in different parts of the world
what are the non-economic benefits of global trade?
increased literacy, increased life expectancy, and reduced risk of military conflict
how to measure global trade? (and define)
balance of trade: the total value of a nation’s exports compared to its imports measured over time
trade surplus: when the value of a country’s exports is more than that of its imports
trade deficit: when the value of a country’s exports is less than that of its imports
what is the balance of payments?
the difference between money coming into a country (from exports) and money leaving the country (from imports) plus other money flows. the goal is to have more money flowing into a country than out – favorable balance. an unfavorable balance is the opposite
define dumping
unfair trade practice that means selling products in a foreign country at lower prices than those charged in the producing country.
define licensing
when a firm (licensor) provides the right to manufacture its product or use its trademark to a foreign company (licensee) for a fee (royalty). benefits: gaining revenues it wouldn’t have otherwise generated and spending little or no money to produce or market their products
define franchsing
a contractual agreement whereby someone with a good idea for a business sells others the rights to use the name and sell a product/service in a given area. franchisers need to be careful to adapt their product int the countries they serve
define contract manufacturing
a foreign co produces private-label goods to which a domestic co then attaches its own brand name or trademark. a form of outsourcing.
define joint venture
a partnership in which two or more companies join to undertake a major project.
define strategic alliance
a long-term partnership between two or more companies established to help each co build competitive market advantages
define foreign direct investment and foreign subsidiary
foreign direct investment (FDI): the buying of permanent property and businesses in foreign nations
foreign subsidiary: a co owned in foreign country by another co called the parent co. (most common form of FDI.
define multinational corps
a co that manufactures and markets products in many different countries and has multinational stock ownership and management
define sovereign wealth funds (SWFs)
investment funds controlled by governments holding large stakes in foreign companies
what forces affect global trade?
-economic and financial
-legal and regulatory
-physical and environmental
define exchange rate
the value of one’s nation’s currency relative to the currencies of other countries
define devaluation and countertrading
devaluation: lowers the value of a nation’s currency relative to others
countertrading: complex form of bartering in which several countries each trade goods or services for other goods and services
define trade protectionism
use of government regulations to limit the import of goods and services.
define tariffs. name and define the two types
tariffs: taxes on imports
– protective: raise the retail price of imports so domestic goods are competitively priced
-revenue: raise money for governments
define import quota
limits the number of products in certain categories a nation can import
define embargo
a complete ban on the import or export of a certain product or the stopping of all trade with a particular country
define world trade organization
headquartered in Geneva, the WTO is an independent entity of 153 member nations whose purpose is to oversee cross-border trade issues and global business practices
define general agreement on tariffs and trade
a global forum for reducing trade restrictions on goods, services, ideas, and cultural problems
define common market
a regional group of countries with a common external tariff, no internal tariffs and coordinated laws to facilitate exchange among members
define North American Free Trade Agreement (NAFTA)
ratified in 1994, created a free-trade area among the U.S., Canada, and Mexico
define outsourcing
purchasing goods and services from sources outside a fir, rather than providing them within the co
what are ethics?
the standards of moral behavior. behaviors that are accepted by society as right vs. wrong
define compliance-based ethics codes
emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers
define integrity-based ethics code
define the organization’s guiding values, create an environment that supports ethically sound behavior and stress a shared accountability among employees
define whistleblowers
people who report illegal or unethical behavior
define caveat emptor and caveat venditor
caveat emptor: “let the buyer beware”
caveat venditor: “let the seller beware”
define corporate social responsibility
the concern businesses have for the welfare of society
who are the opponents and the proponents?
opponents: the only responsibility of businesses is to make money (for their owners and shareholders)
proponents: businesses operate in a social and physical environment and have the responsibility to be good citizens and stewards
define corporate philanthropy and corporate social initiatives
corporate philanthropy: includes charitable donations
corportate social initiatives: includes enhanced forms of corporate philanthropy
define corporate responsibility and corporate policy
corporate responsibility: includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment
corporate policy: the position a firm takes on social and political issues
what is the Consumer Bill of Rights
written by John F Kennedy in 1962:
-the right to safety
-the right to be informed
-the right to choose
-the right to be heard
define insider trader
insiders using private co info to further their own fortunes or those of their family and friends
define social audit
a systematic evaluation of an organization’s progress toward implementing programs that are socially responsible and responsive
what are the four types of sicla audit watchdogs
-socially conscious investors
-union officials
define proprietorship
a business owned, and usually managed by one person
define partnership
two or more people legally agree to become co-owners of a business
define corporation
a legal entity with authority to act and have liability apart from its owners
major benefits of sole proprietorship
-ease of starting and ending the business
-being your own boss
-pride of ownership
-leaving a legacy
-retention of co profit
-no special taxes
define unlimited liability
any debts of damage incurred by the business are your debts, even if it means selling your home, car, or anything else
define general partnership
all owners share in operating the business and in assuming liability for the business’s debts
define limited partnership
a partnership with one or more general partners and one or more limited partners
define master limited partnership
a partnership that looks much like a corp but is taxed like a partnership and thus avoids corp income tax
define limited liability partnership
limits partners’ risk of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision
define general partner
an owner (partner who has unlimited liability and is active in managing the firm
define limited partner
an owner who invests money in the business but enjoys limited liability
define limited liability
the liability for the debts of the business is limited to the amount the limited partner puts into the co; personal assets are not at risk
what are the advantages of partnerships
-more financial resources
-shared management and pooled skills and knowledge
-longer survival
-no special taxes
what are the disadvantages of partnerships
-unlimited liability
-division of profits
-difficult to terminate
-disagreements among partners
define conventional (C) corp
a state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders)
name the advantages of corps
-limited liability
-ability to raise more money for investment
-perpetual life
-ease of ownership
-ease of attracting talented employees
-separation of ownership from management
name the disadvantages of corps
-initial costs
-extensive paperwork
-double taxation
-two tax returns
-difficulty of termination
-possible conflict with stockholders and board of directors
define s corporation
a unique government creation that looks like a corp but is taxed like sole proprietorships
define limited liability co (LLCs)
similar to S corps but without the eligibility requirements
what are the advantages of LLCs
-limited liability
-choice of taxation
-flexible ownership rules
-flexible distribution of profit and losses
-operating flexibility
what are the disadvantages of LLCs
-no stock, therefore the ownership is nontransferable
-limited life span
-fewer incentives
define merger and acquisition
merger: the result of two firms joining to form one co
acquisition: one co’s purchase of the property and obligations of another co
name and define types of mergers
vertical: joins two firms in diff stages of related business
horizontal: joins two firms in the same industry and allows them to diversify or expand their products
conglomerate: unites firms in completed unrelated industries in order to diversify business operations and investments
define leveraged buyout
an attempt by employees, management,or a group of investors to buy out the stockholders in a co
define 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 terrority
what are the advantages of franchising
-management and marketing assistance
-personal ownership
-nationally recognized name
-financial advice and assistance
-lower failure rate
what are the disadvantages of franchising
-large start-up costs
-shared profit
-management regulation
-coattail effects
-restrictions on selling
-fraudulent franchisors
TRUE OR FALSE: The Enron scandal illustrates the difference between unethical behavior and illegal behavior.
TRUE OR FALSE: An accurate statement regarding this chapter is: “Business law establishes ethical behavior.”
TRUE OR FALSE: Moral behavior refers to behavior that is accepted by society as right versus wrong.
TRUE OR FALSE: A common form of cheating in schools today is plagiarizing material from the Internet.
TRUE OR FALSE: When faced with slow sales and low profits, even managers with strong ethical values may feel pressured to compromise those values.
TRUE OR FALSE: People who report illegal or unethical behavior are called whistleblowers.
TRUE OR FALSE: Corporate social responsibility refers to the concern businesses have for the welfare of society.
TRUE OR FALSE: Some experts feel that corporate social responsibility means solely making money for stockholders.
Which of the following questions can help us avoid a decision that would injure our self-esteem?
Is it legal?
Is it balanced?
How will it make me feel about myself?
“how will it make me feel about myself?”
Which of the following is a reason why a business should be managed ethically?
It is the right thing to do.
Strict global regulations require it.
It is the law in the U.S.
Employees demand it.
How can I avoid taking the blame?
it is the right thing to do
A(n) _______ -based ethics code emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers.
corporate responsibility
After developing a code of ethics, it should be communicated to:
everyone with whom the business has dealings.
the Attorney General in jurisdictions where the business has operations.
all levels of management.
everyone with whom the business has dealings
Corporate social responsibility describes the firm’s:
exclusive responsibility to its stockholders.
ability to plan for the unexpected.
commitment to a management training program.
concern for the welfare of society.
concern for the welfare of society
Insider trading involves:
an Internet activity that establishes a barter exchange system between businesses.
investors using private company information to further their own fortunes.
the exchange of assets between companies in the same industry.
a payment or reward for socially conscious behavior.
investors using private co info to further their own fortunes
The purpose of a(n) ________ is to evaluate an organization’s progress towards implementing programs that are socially responsible and responsive.
accountability review
social audit
federal disclosure statement
annual report
social audit
TRUE OR FALSE: The corporation is the most common form of business ownership.
TRUE OR FALSE: The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations.
TRUE OR FALSE: Once a business is established, it’s almost impossible to change from one form of business ownership to another.
TRUE OR FALSE: A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.
TRUE OR FALSE:A general partner takes an active role in the management of the business.
TRUE OR FALSE: A major objective of limited liability partnerships (LLPs) is to limit each partner’s personal liability to the consequences of their own acts and those of people under their supervision.
TRUE OR FALSE: One method to avoid conflicts between partners is to solicit the services of a lawyer to create a well-written partnership agreement.
TRUE OR FALSE: Double taxation means that a corporation pays twice the amount of taxes as a sole proprietorship or partnership.
To many businesspeople, one of the major attractions of a sole proprietorship is:
The ability to obtain additional financial resources.
The protection of limited liability.
An unlimited lifespan.
The chance to be their own boss.
the chance to be their own boss
A partner (owner) who invests money in a business, does not take an active role in managing the operation, and is only subject to losing the funds he/she invested.
Implied partner.
Limited partner.
Partial partner.
Corporate partner.
limited partner
A(n) ___________________ is a state-chartered legal entity with authority to act and to have liability separate from its owners.
limited partnership
conventional corporation
unlimited partnership
nonprofit organization
conventional corp
Earnings of C (conventional) corporations can be:
Taxed twice if they are distributed as dividends to stockholders.
Taxed at twice the going rate of a partnership or sole proprietorship.
Taxed by the federal government, but they are exempt from state taxes if the corporation owns any facilities within that state.
Taxed the same as a partnership.
taxed twice if they are distributed as dividends to stockholders
When two firms who do not participate in the same industries, for example a software company and a fast food restaurant company decide to merge, the result is called a ____________ merger.
In a leveraged buyout, the managers of a firm, its employees, or other investors:
Move the company elsewhere and start over.
Obtain the assets of the company through bankruptcy proceedings.
Borrow funds to buy out the firm’s stockholders.
Negotiate a merger with another firm to create a conglomerate.
borrow funds to buy out the firm’s stockholders
Franchised businesses are successful (both domestically and internationally) because:
They require very little start-up revenue.
People prefer the owners and employees of franchised businesses.
Laws require franchisors to provide the same level of service to franchisees.
Customers like the predictability of the product and/or service.
customers like the predictability of the product and/or service
define entrepreneurship
accepting the risk of starting and running a business
what are the two main types of new ventures?
lifestyle and growth
when and what will an exit look like?
-IPO (Initial Public Offering)
-handed down to a family member
why take the risk?
define entrepreneurial team
a group of experienced of people from different areas of business who join to form a managerial team with the skills to develop, make, and market a new product
define intrapreneurs
a create person who works as an entrepreneur within a corp
define enterprise zones
specific geographic areas to which governments attract private business investment by offering lower taxes and other government support
define incubators
offer new businesses low-cost offices with basic services
define business plan
a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners qualifications
what are the four questions a business plan should answer?
-who are you
-what do you do?
-who do you do it to?
-why should they care to pay attention to you and buy from you
define small business
independently owned and operated, not dominant in its field of operation and meets certain standards or size
what are the advantages of small over big businesses
-more personal customer service
-the ability to respond quickly to opporunities
what’s the small business administration (SBA)
a U.S. government agency that advises and assists small businesses by providing management training and financial advice
define the market
consumers with unsatisfied wants and needs who have both resources and willingness to buy
what is management?
the process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources
define vision
more than a goal, it’s a broad explanation of why the organization exists and where its trying to go
define mission statement
outlines the organization’s fundamental purposes
define goals and objectives
goals: the broad, long-term accomplishments an organization wishes to attain
objectives: specific, short-term statements detailing how to achieve the organization’s goals
define SWOT analysis
analyzes the organization’s strengths, weaknesses, opportunities, and threats
what are the planning functions
strategic planning -> tactical planning -> operational planning -> contingency planning
define organizational chart
a visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom
name and define management levels
top: highest level, includes president, who develop strategic plans
middle: include general managers who are responsible for tactical planning and controlling
supervisory: those directly responsible for supervising workers and evaluating daily performance
name and define top management: C-Level Positions
-chief executive officer (CEO): introduces change into an organization
-chief operating officer (COO): implements CEO’s changes
chief financial officer (CFO): obtains funds, plans budgets, collects funds, etc.
-chief information officer (CIO): gets the right information to the right people so decisions can be made
name and define managerial skills
-technical skills: ability to perform tasks in a specific discipline
-human relations skills: skills that involve communication and motivation; they enable managers to work through and with people
conceptual skills: skills that involve the ability to picture the organization as a whole and the relationship among its various parts
what are the qualities of a leader
-communicate a vision and rally others around that vision
-establish corporate values
-promote corporate values
-embrace change
-stress accountability and responsibility
name and define leadership styles
-autocratic leadership: making managerial decisions without consulting others
-participative or democratic leadership: managers and employees work together to make decisions
-free-rein leadership: managers set objectives and employees and free to do whatever is appropriate to accomplish those objectives
define external and internal customers
external: dealers, who buy products to sell to others, and ultimate customer (or end users), who buy products for their own use
internal: individuals and units within the firm that receive services from other individuals or units
how do you structure an organization?
-create a division of labor
-set up teams or departments
-allocate resources
-assign tasks
-establish procedures
-adjust to new realities
often change in organizations is due to evolving business environments:
-more global competition
-declining economy
-faster technological change
-faster technological change
-pressure to protect the environment
define hierarchy and chain of command
hierarchy: a system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down
chain of command: the line of authority that moves from the top of the hierarchy to the lowest level
define bureaucracy
an organization with many layers of managers who set rules and regulations and oversee all decision
define centralized and decentralized authority
centralized: when decision-making is concentrated at the top level of management
decentralized: when decision-making is delegated to lower-level managers and employees more familiar with local conditions than headquarters
define span of control
the optimal number of subordinates a manager supervises or should supervise
define tall and flat orgs.
tall: an org structure in which the org chart would be tall because of the various levels of management
flat: an organizational structure that has few layers of management and a broad span of control
define departmentalization
divides organizations into separate units
what are the four ways to structure an org?
1. line
2. line-and-staff org
3. matrix-style
4. cross-functional self-managed
define line organization
has direct two-way lines of responsibility, authority, and communication running from the top to the bottom. everyone reports to one supervisor
define line personnel
workers responsible for directly achieving organizational goals, and include production, distribution, and marketing employees
define staff personnel
employees who advise and assist line personnel in meeting their goals, and include marketing research, legal advising, IT, and human resource employee
define matrix or
specialists from diff parts of the org work together temporarily on specific projects, but still remain part of a line-and-staff structure
define benchmarking
compares an org’s practices, processes, and products against the world’s best
define core competences
the functions an organization can do as well as or better than any other org in the world
define organizational culture
the widely shared values within an organization that foster unity and cooperation to achieve common goals
define formal and informal org
formal: details lines responsibility, authority, and position
informal:the system of relationships that develop spontaneously as employees meet and form relationships
TRUE OR FALSE: Many business started by entrepreneurs have grown into major corporations employing thousands of workers.
TRUE OR FALSE: Entrepreneurial teams combine the creative marketing and production ideas of a group of experienced people.
TRUE OR FALSE: An intrapreneur is the creative person who starts and manages a nonprofit organization.
TRUE OR FALSE: To be classified as a small business, a firm must have no more than 100 employees.
TRUE OR FALSE: Getting a business plan into the hands of the right people is nearly as important as getting the right information in the plan.
TRUE OR FALSE: When writing a business plan, prospective entrepreneurs should remember to omit details regarding their experience and education since investors are only interested in the proposed business.
A __________ is a written document that details the business idea, the target market and the business’s competitive advantage, financial resources available for the business, and the qualification of the management.
feasibility product
marketing plan
business plan
statement of intent
business plan
A ________ refers to people with unsatisfied wants and needs who are willing and able to buy a product or service.
consumer cooperative
consumer collective
buyer’s cooperative
The executive summary section of the business plan contains:
computerized information that readers can access interactively.
information that will capture the attention of bankers and other investors who receive many business plans every day.
qualifications, experience, and education of the entrepreneur and prospective employees.
a financial summary prepared by the business’ accountant.
information that will capture the attention of bankers and other
After retiring as a telecommunications executive, Chad joined SCORE. As a SCORE counselor Chad will:
provide venture capital funds for aspiring small businesspeople.
visit high schools to advise students who are thinking about starting their own business.
help in the research and development of new products for entrepreneurs to market.
provide consulting services to small businesses for free.
provide consulting services to small businesses for free.
TRUE OR FALSE: Management is the art of getting things done through organizational resources.
TRUE OR FALSE: Financing is one of the four key functions of management.
TRUE OR FALSE: Planning involves setting the organizational vision, goals and objectives.
TRUE OR FALSE: Conceptual skills refer to the ability of a manager to perform the tasks associated with a specific discipline or department.
TRUE OR FALSE: Researchers have determined that all effective leaders have similar traits.
One of the four primary functions of management is:
A __________ analysis is used to help companies evaluate their internal strengths and weaknesses, and develop an awareness of external threats and opportunities.
A(n) __________ is used by an organization to show who is accountable for the completion of specific work and who reports to whom.
balance sheet
Venn diagram
stakeholder outline
organization chart
org chart
Which of the following persons is most likely to be involved in strategic planning?
Chief executive officer
Electrical shop supervisor
Budget analyst
Advertising manager
Well-known retired basketball coach, Bob Knight, was known for his emotional antics at Indiana University and Texas Tech. If you talk with Bob, he believes in total dedication from his team and total compliance to his style of coaching. It’s “his way or the highway.” Bob typifies the _____________ style of leader.
TRUE OR FALSE: An organization chart shows who is accountable for the completion of specific work and who reports to whom.
TRUE OR FALSE: Weber believed that large organizations required everyone to follow the established rules and guidelines precisely.
TRUE OR FALSE: Bureaucratic organizations are not very responsive to customers.
TRUE OR FALSE: An advantage of decentralized authority is that those individuals closest to the customers and more familiar with local conditions make decisions.
TRUE OR FALSE: Departmentalization is the dividing of organizational functions into separate units.
In a(n) _____________ organization, decision-making authority is concentrated at the top level of management.
Which of the following factors help determine a manager’s span of control?
The number of global competitors
The level of standardization of the work to be done
Method of accounting for production
Form of business ownership
The level of standardization of the work to be done
Employees who perform functions that advise and assist line personnel are known as:
middle managers.
empowered workers.
secondary employees.
staff personnel.
staff personnel
Chang is a project manager at Paradox Industries. He is able to borrow specialists from the organization on a regular basis to assist in major projects. After the project ends, the specialists return to their functional units to await new assignments. Paradox Industries utilizes a:
line organization model.
bi-functional organization model.
lateral transfer organization model.
matrix organization model.
matrix organizational model
TRUE OR FALSE: Introducing change into an organization is an easy task for a manager.
define intrinsic rewards
personal satisfaction felt for a job well done
define extrinsic
something has been given as recognition of good work
define scientific management
studying workers to determine the most efficient ways of doing things and then teaching those techniques
what are the key elements to increase productivity
-methods of work
-rules of work
define time-emotion studies
studies which tasts must be performed to complete a job and the time needed to do each task
define principle of motion economy
every job can be broken down into a series of elementary motions
define hawthorne effect
people act differently when they know they are being studied
define Maslow’s theory of motivation
based off 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
what are Herberg’s motivating factors?
-what factors controlled by managers are most effective in increasing worker motivation?
-how do workers rank job-related factors in order of importance related to motivation
define motivators
job factors that cause employees to be productive and that give them satisfaction
define hygiene factors
job factors that can cause dissatisfaction if mission but that do not necessarily motivate employees if increased
define Theory X and Theory Y
-Douglas McGregor proposed managers had two different sets of assumptions concerning workers
theory X: workers dislike work and seek to avoid it
theory Y: people like work; it’s part of life
define goal-setting theory
setting ambitious but attainable goals can motivate workers and improve performance if the goals are accepted, accompanied by feedback, and facilitated
define management by objectives (MBO)
involves cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees
define expectancy theory
the amount of effort employees exert on a specific task depends on their expectations of the outcome
define equity theory
employees try to maintain equity between inputs and outputs compared to others in similar positions
define job enrichment
a motivational strategy that emphasizes motivating the worker through the job itself
define job enlargment
strategy that involves combining a series of tasks into one challenging and interesting assignmen
define job rotation
a job enrichment strategy that involves moving employees from one job to another
define human resource management
the process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating and scheduling employees to achieve organizational goals
define affirmative action and reverse discrimination
affirmative action: policy designed to “right past wrongs” by increasing opportunities
reverse discrimination: discrimination against whites or males in hiring or promoting
Civil Rights Act of 1991
amended title VII and gave victims of discrimination the right to a jury trial and possible damage
what is the Office of Federal Contract Compliance Programs (OFCCP)
ensures that employers doing business with the federal government comply with the nondiscrimination and affirmative action laws
define job analysis, job description, and job specifications
job analysis: a study of what employees who holds various job titles do
job description: specifies the objectives of the job, the type of work, the responsibilities and duties, working conditions and relationship to other jobs
job specifications: a summary of minimal education and skills needed to do a particular job
define recruitment
set of activities for obtaining the right number of qualified people at the right time
define selection
the process of gathering information and deciding who should be hired, under legal guidelines, to fit needs of the org and individuals
define contingent workers
include part-time and temp workers, seasonal workers, independent contractors, interns, and co-op students
define training and development
all attempts to improve productivity by increasing an employee’s ability to peform
define management development
process of training and educating employees to become good managers and tracking the progress of their skills over time
define networking
establishing and maintaining contacts with key managers in and out of the org and using those contacts to develop relationships
define mentors
managers who supervise, coach and guide selected lower-level employees by acting as corp sponsors
define performance appraisal
an evaluation that measures employee performance against established standards in order to make decisions about promotions, compensation, training, or terminiation
what are the 6 steps of performance appraisal
1. establishing performance standards that are understandable, measurable and reasonable
2. clearly communicating those standards
3. evaluating performance against the standards
4. discussing the results with employees
5. taking corrective action
6. using the results to make decisions
define fringe benefits
sick leave, vacation pay, pension and health plans that provide additional compensation to employees beyond base wages
define cafeteria-style and soft benefits
allow employees to choose the benefits they want
define flextime plan
gives employees some freedom to choose which hours to work as long as they work the required number
define compressed work week
employees work the full number of work hours, but in fewer than the standard number of days
define job sharing
lets two or more part-time employees share on a full-time job
define core time
most flextime require core time: when all employees are expected to be at their job stations

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