Business

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Small Business

Back 1

a firm that is independently owned and operated and is not dominant in the field.

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small Business size

Back 2

ranges from 500,000$ to 25 million in sales and from 100 to 1,500 employees

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major industries dominated by small businesses

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construction, agricultural services, wholesale trade, services, retail trade

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small business falure

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1 in 3 close permanetly within 2 years
50% after 4 years
60% within 6 years
and 82% with 10 years

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reasons why small businesses fail

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- management shortcomings
- inadequet financing
-goverment regulation

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Trade credit

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Main source of small business financing, and it means purchasing goods or equipment from a supplier who finances the purchas by delaying the payment for those goods

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Increasing the likelihood of small business success

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- creating a business plan
-small business administration: goverment agency concerned with helping small business firms

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The Franchising Alternative

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A contractual Business agreement between a manufacturer or another suppler and a dealer to produce and market the suppliers good or service.
the franchising agreement exist between the franshisee and the franchisor

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Pros of a Franchising Agreemtent

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prior performance record
recognizable company name
prove business model
tested management program

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cons of a franchising agreement

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franchising fees
future payments
linked to reputation and management
franchise agreement restrictions

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Sole proprietership

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one owner, PROS: unlimites personal liability for business debt.
pros: owner retains all profits.
easy to form and dissolve. owner has flexibility
CONS: unlimited financial liability, financing limitations, management defeciencies, lack of continuity

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partnership

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two or more owners. PROSE: easy to form, can benefit from complementary mangement skills, expanded financial capacity
CONS: unlimited financial liability, interpersonal conflicts, lack of continuity, difficult to dissolve

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corporation

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unlimited number of share holders, up to 100 shareholders for S corporations. PROSE: limited financial liability, specialised management skills, expanded financial capacity, economies of large scale operations,
CONS: difficult and costly to form and dissolve, tax disadvantages, legal restrictions

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Legal Structures to meet changing needs

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financial situation, management skills and limitations, management styles and capabilities, exposure to liability

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Types of Corporations

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domestic corporation
foregin corporation
alien corporation
employee owned corporation
not for profit corporations

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stockholders

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acquire stocks in exchange for ownership:
- preffered stock
common stock

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board of directors

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elected by stockholders to oversee corporation

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corporate officers and management

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make major corporate decisions and handle ongiong operations

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merger

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combination of two or more firms to form one company
vertical
horisontal
conglomerate

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acquisition

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procedure in which one firm purchases the property and assumes the obligations of another

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joint ventures

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partnership between companies for a specific purpose

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public ownership

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a unit or agency of goverment owns and operates an orginization. Parking structures, water systems, turnpike authority.

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customer owned businesses

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collective ownership of a production, storage, transportation, or marketing organization is a cooperative

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entreprenuer

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is a person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business

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Entreprenuers differe from other because...

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trong desire to make business grow
overiding responsibility to use the resources of the orginization to accomplish their goals
QILLING TO TAK RISKS

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why people become entreprenuers

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- be their own boss
- desire to succeed financially
desire for an imporved quality of life
-desire for job security

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globilization

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Globalization refers to the increasing unification of the world's economic order through reduction of such barriers to international trade as tariffs, export fees, and import quotas.
the rapid globilization of business has created many oportunities for enrepenuers

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vision

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entreprenuers begin with an overall idea for how to make their business idea a success

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high energy level

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a willingess to work hard

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need to achieve

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they work hard because they want to excel

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self confidence

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fearlessness in teh face of difficult odds

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tolerance for failure

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they do not get discouraged easily

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creativity

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entreprenuers devise innovative ways to overcome difficult problems and situations

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olerance for ambiguity

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they take in stride uncerainties

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intrenal locus of control

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they believe they control their own fate

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YOU NEED A BUSINESS PLAN

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the idea they chose must have interest in the marketplace

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debt financing

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credit cards, family and friends, bank loans (SBA BACKED)

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equity financing

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venture capitalists
angel investors

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Business Incubators

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a key way government supports new ventures
clean energy incubator (CEI)

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Enterprise zones

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encourage entrepreneurship in specific geographic areas

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government legislation

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the immagration act of 1990

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Intrapreneurship

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promoting innovation within orginizational structures
an idea to prmote creativity
companies promote in a variety of ways
-skunkworks
-pacing programs

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Intrapreneurship 2

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acting like an entrepreneur but in a large orginization, they take on something new without being asked to

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Capabilities and benefits of E bisuness

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global reach, personalization, interactivity, right time and integrated marker, cost saving

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right time and intergrated market

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online retailersprovide products when and where customers want them and promptions can be directed to individual customers

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B2B

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electronic business transactions between businesses using the internet

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ctronic Data interchange (EDI)

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omputer to computer xchange of invoices, purchase orders, price quotations and other sales information

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B2C

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business to consumer

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encryption

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data is encoded for security purposes

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Secure Sockets Layer

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ny companies use it to encrypt information and verufy senders and recievers

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electronic wallet

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contains credit car and identification information

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phishing

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growing form of internet fraud

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channel conflict

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sales can compete with business partners such as retailers and distributors causing disputes called channel conflict

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s four main functions

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siness, entertainment, information, and communication

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ways to creat a good website

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planning and preperation
content and conections
costs and maintenance

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click through rate

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percentage of people presentd with a web banner ad who click on it

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conversion rate

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percentage of visitors to website who make a purchase

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Management

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Management is the process of achieving orginizational objectives through people and other resources

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Top Management

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- devleop long range strategic plans for the orginization
- inspire executives and employees to achieve their vision for the companys future

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middle Management

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- focus on specific operations, products, or customer groups within an orginization
- responsible for developing detailed plands and procedures to implement the firms strategic plans

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Supervisory Management

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Implement the plans developed by middle management
- responsible for non manager employees
- motivate workers to accomplish daily, weekly, and monthly goals..

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Skills needed for management success

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technical skills, human skills, coceptual skills

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Technical skills

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managers ability to understand and use the techniques knowledge and tools and equipment of a specific discipline or department

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human skills

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interpersonal skills that enable a manger to work effectively with and through poepl

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conceptual skills

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ability to see the orginization as a unified whole and to understand how each part of the overall orginization interacts with other parts

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Managerial Functions

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planning, directing, organizing, and controling

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planning

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process of determining courses of action for achieving orginizational objectives

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organizing

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blending human and material resources through a formal structure of authority

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directing

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guiding and motivating employees to accomplish orginizational objectives

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controlling

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evaluating an orginizations performance to determine whether it is accomplishing its objectives
1) establishing performance standards
2) monitor acttual performance
3)compare actual performance with established standards
4) take corrective action if required

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Vision is the perception of marketplace neds and the methods an orginization can use to satisfy them

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must be focused yet adaptable to changes in the business enviroment

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need good ethical standards

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tied to long term success

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Orginizations should have a comprehensive planning framework
- plans outline the steps the company will take to meet the outlined goals and objectives

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from mission statement to objectives and goals
narrow functional plans

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strategic

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nizational objectives, fundamental strategies, long term plans

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tactical

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quartely and semiannual plans, departmenta policies and procedures

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operational

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daily and weekply plans, rules, amd procedures for eahc department

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contigency

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ongoing plans for actions and communications in an emergency

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programmed decision

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simple problems

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nonprogrammed decision

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complex problems

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leadership

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he ability to direct or inspire people to attain orginizational goals
involves the use of influence or power

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3 traits are common among leaders

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emapthy, salf awareness, objectivity in deaing with others

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autocratic leadership

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make decisions alone without consulting employees

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democratic leadership

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s employees in decision, delegate assighments and ask employees for suggestions

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free reighn leadership

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leave most desicions to employees

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corporate culture

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orginizations system of principles, beliefs, and values

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influences of corporate cultue

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managerial philosophies, communication networks, and workplace enviromen all influence corporate cultue

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orginization

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structured groupong of people working together to achieve common goals

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three key elements in an orginization

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human interaction
goal direceted activities
structure

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product departmentalization

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organised based on the goods and services a company offers

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geographical departmentalization

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organised by geo region

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ustomer departmentalization

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organised by business functions such as fiance marketing human resources and prodution

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process departmentalization

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nised by wokr process necessary to complete production of goods and services

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delegation

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the act of assighning work activities to subordinates

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centralization

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decision making is retained at the top of the managerial hierachy

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decentrilization

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decision making is located at the ower levels many firms believe it enhances their flexibility and responsiveness to customer needs

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line orginization

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oldest and simplest form; direct flow and authority from ceo to subordinates
chain of command indicates who directs which activities and who report to whom

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line and staff orginization

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ombines line departments and staff departments
line departments participate directly in decision that affect the core operations of the orginization
staff departmets lend specialized technical support

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matrix orinizations

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project management structure that links employees from different part of the organization to work together on specific projects
employees report to a line manager and a project manager

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human resource management

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function of attracting, developing, and retaining enough qualified employees to prefrom the activities necessary to accomplish orginizational objectives

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performance appraisal

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eluation of an employees job performance

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360 degree performance review

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thers feedback from a review pannel that includes co workers, supervisors, team members, and sometimes customers

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profit sharing

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bonus based on company profit

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gain sharing

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bonus based on productivity gains, cost savings or quality improvements

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lump sum bonus

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one time cash pasyment or option to buy shares of company based on performance

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pay for knoweledge

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salary increase based on learning new job task

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compressed work week

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allows employees to workt he regular number of weekly hours in fewer than the typical five days

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voluntary tunover

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employee levaes by choice

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involuntary tunover

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employee is terminated

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downsizing

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process of reducing the number of employees wthin a firm by eliminating jobs

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outsourcing

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ontracting with another business to preform tastks or functions previously handled by internal staff members

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slows hiearchy of needs

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people have five level of needs that they seek to satisfy
physiological needs
safety needs
social belongingneess
esteem needs
self actualization needs

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Herzbergs two factor theory

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hygiiene factors
motivator factors

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expectancy theory

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he process people use to evaluate the likelihood their effort will yield thedesired outcome and how much they want thatt outcome

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equity theory

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individuals perception of fair and equitable treatment

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management by objective

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ystematic and organized approach that allows managers to focus on attainable goals and achieve the best results

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job enalrgement

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make job bigger more work

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job enrichment

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change in job duties to increase employees authorirty om planning their work deciding how it should be done and learning new skillss

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theory x

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employees dislike work and try to avoid it so manager has to use punishment

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heory y

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ypical person sems like work

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theory z

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worker involvement is key to increased productivity for the company and improved quality work life for employees

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labor union

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group of worker who have been banded together to achieve common goals in the areas of wages, hours, and working conditions

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collective bargaining

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process of negotiation between management and union representatives for the purpose of arriving at a mutually accpetable wages and working conditions

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mediation

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process of settling labor management disputes through recoomondations of a third party

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arbitration

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adds a third party who renders a legally binding dcision

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Multinational cORPORATION

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an orginization with significant foreign operations and marketing activities outside its home country

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offshoring

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relocation of business processes to a lower cost overseas loctation is offshoring

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countertrade

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ernation transactions that do not invlove currency payments but use bartering

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franchising

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contractual agreement were a local entity gains rihs to sell the franchisors product in the foreign market

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quotas

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limit the amount od product that can be imported over a specified time

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dumping

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the act of selling a product abroad at a very low price

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embargo

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imposes a total ban on importing a specified product a all

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Foreign Corrupt practices ACT

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forbids US companies from bribing foreign official, candidates, or goverment represenattives.

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currency rates are influenced by

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doestic economic and political conditions
central bank intervention
balance of payments position
specualtion over future currence valus

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balance of trade

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difference between a nations imports and exports

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balance of payment

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overall flow of money into or out of a country

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GDP

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Gross domestic product (GDP) refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.[1][2]

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Sorbanes Oxley Act

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OVERSIGHT

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Monetoary Policy

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what the gov can do to make you spend money

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eral reserve system

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formulates and implements monitary polociy

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supply curve

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shows the relationship btween different prices and the quantities t

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BUSINESS CYCLE

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prosperity
recession
depression
recovery