Chap 1-5 business any activity that seeks to provide goods go ods and services to others while operating at a profit
goods tangible products such as computers, food, clothing, cars, and appliances
services intangible products such as education, health care, insurance, recreation, and travel
entrepreneur a person who risks time and money mone y to start and manage a business
revenue the total amount of money a business takes in during a given period by selling goods and services
profit the amount of money a business earns above and beyond be yond what it spends fro salaries and other expenses
loss when a business' expenses are more than its revenues
risk the chance an entrepreneur takes of losing time and money on a business that may not prove profitable
standard of living the amount of goods and services people can buy with the money they have
quality of life the general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide
stakeholders all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address
outsourcing contracting with other companies to do some or all of the functions of a firm, like its production or accounting tasks
nonprofit organization an organization whose goals do not include making a personal profit for its owners or organizers
factors of production the resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge
business environment the surrounding factors that either help or hinder the development of businesses
technology everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more effective, efficient, and productive
productivity the amount of output you generate given the amount of input
e-commerce the buying and selling of goods over the internet
database an electronic storage file for information
identity theft the obtaining of individuals' personal information such as ocial ecurity and credit card numbers, for illegal purposes
empowerment giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests
demography the statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income
economics the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals
microeconomics the part of economics study that looks at the behavior of people and organizations in particular markets
macroeconomics the part of economics study that looks at the operation of a nation's economy as a whole
resource development the study of how to increase resources and to create the conditions that will make better u se of those resources
capitalism an economic system in which all or most of the factors of production and distribution are privately owned and operated fro profit
supply the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
demand the quantity of products that people are willing to buy at different prices at a specific time
market price the price determined by supply and demand
perfect competition the degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
oligopoly a degree of competition in which just a few sellers dominate the market
monopoly a degree of competition in which only one seller controls the total supply of a product or service, and sets the price
socialism an economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people
brain drain the loss of the best and brightest people to other countries
communism an economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production
free-market economies economic systems in which the market largely decides what go ods and services will be produced, who will get them, and how the economy will grow
command economies economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow
mixed economies economic systems in which some allocation of resources is made by the market and some by the government
gross domestic product the total value of final goods and services produced in a country in a given year
unemployment rate the number of civilians at least !" years# old who are unemployed and tried to find a job within the prior four weeks
inflation a general rise in the prices of goods and services over time
deflation a situation in which prices are declining
stagflation a situation when the economy is slowing but prices are going up anyhow
consumer price index monthly statistics that measure the pace of inflation or deflation
business cycles the periodic rises and falls that occur in econ omies over time
recession two or more consecutive quarters of decline in the gross domestic product
depression a severe recession, usually accompanied by deflation
fiscal policy the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending
importing buying products from another country
exporting selling products to another country
free trade the movement of goods and services among nations without political or economic barriers
absolute advantage the advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other coun tries
balance of trade the total value of a nation's exports compared to its imports measured over a particular period
trade surplus a favorable balance of trade$ occurs when the value of a country's exports exceeds that of its imports
trade deficit an unfavorable balance of trade$ occurs when the value of a country's imports exceeds that of its exports
licensing a global strategy in which a firm %the licensor& allows a foreign company %the licensee& to produce its product in exchange for a fee %a royalty&
exchange rate the value of one nation's currency relative to the currencies of other countries
tariff a tax imposed on imports
import quota a limit on the number of products in certain categories that a nation can import
embargo a complete ban on the import or export of the certain product, or the stopping of all trade with a particular country
orth (merican )ree *rade (greement %()*(& agreement that created a free-trade area among the +nited tates, anada, and exico
ethics standards of moral behavior that is, behavior accep ted by society as right verses wrong
whistleblowers insiders who report illegal or unethical behavior
corporate social responsibility %.& ( business's concern for the welfare of society
/uota0 1mbargo0 2umping 3imits the number of units of a particular product that can be imported into a country %quota&4 5rohibits trade in a particular product %embargo&4 6hen a business 0country sells products less than what it cost to produce them4
orth (merica )ree *rade (greement %()*(& (greement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade among anada, the +nited tates, and exico4
3icensing 0 )ranchising ( trade agreement in which one company--the licensor--allows another company--the licensee-to use its company name, products, patents, brands, trademark, raw materials, and0or production processes in exchange for a fee or royalty4 , - ( form of licensing in which a company-the franchiser- agrees to provide a franchise the name, logo, methods of operation, advertising, products, and other elements associated w0 the franchiser's business, in return for a financial commitment and the agreement to conduct business in accordance with the franchiser's standard of operations4
trategic (lliance ( partnership formed to create competitive advantage on a worldwide basis4
2atabase ( collection of data organized in a manner that allows access, retrieval, and use of that data4
7ntranet (n internal network similar to the 7nternet that is accessible only b y authorized personnel$ used to access4
1-business arrying out the goals of business through utilization of the internet4
8usiness to 8usiness %898& 0 ustomer to ustomer%9& 5rovides goods and services to other businesses %898&4 7ndividuals buying and selling goods to one another online %9&4
ustomer .elationship anagement %.& *he overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction4
ole 5artnerships 0 5artnerships 0 orporation 8usinesses owned and operated by one individual %sole partnerships&4 (n association of 9 or more persons to carry on a business for profit %partnerships&4 ( legal entity, created by the state, whose assets and liabilities are separate from its owner %corporation&4
eneral 0 3imited 5artnership 7nvolves a complete sharing in the management of a business %general partnership&4 ;as one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to his or her investment to business %limited partnerships&4
tock
2ividends 5rofits distributed in the form of cash payments4
5rivate 0 5ublic orporation
7nitial 5ublic
8oard of 2irectors 1lected by stockholders to oversee the general operation of the corporation, sets long-range objectives of the corporation4
3imited 3iability ompany %33&
erger 0 (cquisition *he combination of two companies %usually corporations& to form a new business %merger&4 *he purchase of one company by another, usually by buying its stock %acquisition&4
1ntrepreneurship *he process of creating and managing a business to achieve desired objectives4
mall 8usiness 7ndependently owned and operated and is not dominant in its competitive area doesn't employ more than =>> people4
mall 8usiness (dministration %8(& 7ndependent agency of federal government that offers managerial and financial assistance to small businesses4
+nder-capitalization 3ack of funds to operate a business normally4
8usiness 5lan ( precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals4
7ntrapreneurs 7ndividuals in large firms who take responsibility for the development of innovations within the organization4
Chap – 6 sole proprietorship business owned, and usually operated by a single individual4
sole proprietorship advantages ease of formation, greater control and flexibility, no specific corporate records to keep or file, potential financial0tax benefit of combined business and personal finances
sole proprietorship disadvantages unlimited liability, potential difficulty in borrowing money
partnership type of business entity in which two or more entities %partners& share the ownership and the profits and losses of the business4
partnership advantages more owners contribute capitol, greater ability to increase sales, market the b usiness, and generate income, shared financial responsibility, partners likely willing to work very hard, utilize complementary skills, ?two heads are better than one?
partnership disadvantages need the ?right? partner, must share control and profits, difference in opinion on company's decision
partnership agreement formalizes the relationship between business partners4
parts of a partnership agreement capital contributions, responsibilities of each partner, decision- making process, shares of profits or losses, departure of partners, addition of partners4
general partnership default arrangement for a partnership, simplest form4
3imited 5artnership two distinctions of partners4 *o encourage investors who do not want to loose more than they invested4
3imited 5artners are as involved as investors and are personally liable only up to the amount of their investment in the business and must not actively participate in an y decisions of the business4
eneral 5artners full owners of the business, are responsible for all day-to-day business decisions, and remain liable for all debts and obligations of the bu siness4
orporation a specific form of business organization that is legally formed under state laws4 onsidered a separate entity from its owners, therefore has legal rights like an individual %can own property, assume liability, pay taxes, enter into contracts, and can sue and be sued&
corporate structure shareholders, board of directors, corporate officers, chief executive officers, chief financial officer0 corporate security0 chief operating officer4
orporation a regular corporation that has elected to be taxed under special section of the 7nternational .evenue ode called subchapter 4 *hey do not pay corporate income taxes4 *hey pay taxes through individual tax returns, only owe income tax based on their proportionate share of business profits they receive4
3imited 3iability ompany distinct type of business that combines corporate advantages o f limited liability with the tax advantages inherent in partnerships4
ot- for- profit corporations (n incorporated business that does not seek a net profit4 .eceive limited liability when the become incorporated and are established as a separate legal entity4 an not be organized for any person's private gain4 tax exempt with =>!%&%@& status4
ooperative a business that is owned and governed by members who use its products and services, not by outside investors4 otivated to provide services to people with co mmon interests and0or needs and are not motivated by profits4 erger two companies come together to form one company4 )riendly and mutually agreed on
(cquisition
ynergy affect achieved when two companies combine, the result is better than each company could achieve individually4
;orizontal erger two companies that share the same product lines and markets in direct competition with each other combine4
Aertical erger two companies that have a company0 customer relationship combine4 %ex4 ice cream shop merges with cone factory&
merger disadvantages nearly two thirds don't achieve greater market va lue, revenues and profits suffer because day-today activities are neglected while the companies are combined, corporate cultures may clash, communications may break down, new division of responsibilities can be vague, power struggle, employees may leave4
Chap -7 management the process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources planning a management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives
organizing a management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives
leading creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization's goals and objectives
controlling a management function that involves establishing clear standards to determine whether or not an organization is progressing towards its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not
vision an encompassing explanation of why the organization exists and where it is trying to head
mission statement an outline of the fundamental purposes of an organization %self-concept, philosophy, long-term survival needs, customer needs, social responsibility, nature of the product0service&
goals the broad, long-term accomplishments an organization wishes to attain
objectives specific, short-term statements detailing how to achieve the organization's goals
6<* analysis a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats
strategic planning the process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve these goals
tactical planning the process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done
operational planning the process of setting work standards and schedules necessar y to implement the company's tactical objectives
contingency planning the process of preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives
decision making choosing among two or more alternatives
problem solving the process of solving the everyday problems that occur4 5roblem solving is less formal than decision making and usually calls for quicker action
brainstorming coming up with as many solutions to a problem as possible in a short period of time with no censoring of ideas
57 pluses, minuses, and implications
organization chart a visual device that shows relationships among people and divides the organization#s work$ it shows who reports to whom
top management highest level of management, consisting of the president and other key company executives who develop strategic plans
middle management the level of management that includes general managers, division managers, and branch managers who are responsible for tactical planning and controlling
supervisory management managers who are directly responsible for supervising workers and evaluating their daily performance
technical skills skills that involve the ability to perform tasks in a specific discipline or dep artment
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 wh ole and the relationship among its various parts
staffing a management function that includes hiring, motivating, a nd retaining the best people available to accomplish the company's objectives
transparency the presentation of a company's facts and figures in a way that is clear and apparent to all stakeholders
autocratic leadership leadership style that involves making managerial decisions without consulting others
participative %democratic& leadership leadership style that consists of managers and employees working together to make decisions
free-reign leadership leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives
enabling giving workers the education and tools they need to make decisions
knowledge management finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm
external customers dealers, who buy products to sell to others, and ultimate customers %or end users&, who buy products for their own personal use
internal customers individuals and units within the firm that receive services from other individuals or u nits
Chap – 8 economics of scale the situation in which companies can reduce their production costs if they can purchase raw materials in bulk$ the average cost of goods goes down as production levels increase
)ayol's 5rinciples of
ax 6eber's
hierarchy a system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person
chain of command the line of authority that moves from the top of a hierarchy to the lowest level
bureaucracy an organization with many layers of managers who set rules and regulations and oversee all decisions
centralized authority an organization structure in which decision-making authority is maintained at the top level of management
decentralized authority
an organization structure in which decision-making authority is delegated to lower-level managers more familiar with the local conditions than headquarters management could be
span of control the optimal number of subordinates a manager supervises or should supervise
tall organization structure an organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management
flat organization structures an organization structure that has few layers of management and a broad span of control
departmentalization the dividing of organizational functions into separate units
line organization an organization that has direct two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with all people reporting to only one supervisor
line personnel employees who are part of the chain of command that is responsible for achieving organizational goals
staff personnel employees who advise and assist line personnel in mee ting their goals
matrix organization an organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line-and-staff structure
cross-functional self-managed teams groups of employees from different departments who work together on a long-term basis
networking using communications technology and other means to link organizations and allow them to work together on common objectives
real time the present moment or the actual time in which something takes place
virtual corporation a temporary networked organization made u of replaceable firms that join and leave as needed
benchmarking comparing and organization's practices, processes, and products against the world's best
core competencies those functions that the organization can do as well as or better than any other organization in the world
digital natives young people who have grown up using the internet and social networking
restructuring redesigning an organization so that it can more effectively and efficiently serve its customers
inverted organization an organization that has contacted people at the top and the chief executive officer at the bottom of the organization chart
corporate culture widely shared values within an organization that provide unity and cooperation to achieve common goals
formal organization the structure that details lines of responsibility, authority, and position$ that is, the structure shown on organization charts
informal organization the system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization
Chap – 9 production the creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge
production management the term used to describe all the activities managers do to help their firms create goods
operations management a specialized area in management that converts or transforms resources %including human resources& into goods and services
form utility the value producers add to materials in the creation of finished goods and services
process manufacturing
the part of the production process that physically or chemically changes materials
assembly process the part of the production process that puts together components
continuous process a production process in which long production runs turn out finished goods over time
intermittent process a production process in which the production run is short and the machines are changed frequently to make different products
computer-aided design %(2& the use of computers in the design of products
computer-aided manufacturing %(& the use of computers in the manufacturing of products
computer-integrated manufacturing %7& the uniting of computer-aided design with computer aided manufacturing
flexible manufacturing designing machines to do multiple tasks so they can produce a variety of products
lean manufacturing the production of goods using less of everything compared to mass production
mass customization tailoring products to meet the needs of individual customers
facility location the process of selecting a geographic location for a company's operations
telecommuting working from home via computer
facility layout the physical arrangement of resources %including people& in the production process&
assembly-line layout workers do only a few tasks at a time
modular layout teams of workers combine to produce more complex units of the final product
fixed-position layout allows workers to congregate around the product to be completed
process layout similar equipment and functions are grouped together
materials requirement planning %.5& computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place
enterprise resource planning %1.5& a newer version of materials requirement planning that combines the computerized functions of all the divisions and subsidiaries of the firm, such as finance, h uman resources, and order fulfillment, into a single integrated software program that uses a single database
purchasing the function in a firm that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for goods and services
just-in-time %F7*& inventory control a production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line
quality consistently producing what the customer wants while reducing errors before and after delivery to the customer
ix igma quality a quality measure that allows only @4B defects per million opportunities
statistical quality control %/& the process some managers use to continually monitor all phases of the production process to assure that quality is being built in the product from the beginning
statistical process control %5& the process of testing statistical samples of product components at each stage of the production process and plotting those results on a graph4 (ny variances from quality standards are recognized and can be corrected if beyond the set standard
program evaluation and review technique %51.*& a method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project
critical path in a 51.* network, the sequence of tasks that takes the longest time to complete
antt chart bar graph showing production managers what projects are being worked on and what stage they are in at any given time
Chap -10 intrinsic reward the personal satisfaction you feel when you perform well and complete goals extrinsic reward something given to you by someone else as recognition for good work$ extrinsic rewards include pay increases, praise, and promotions
scientific management studying workers to find the most efficient ways of doing things and then teaching people those techniques
*aylor's approach to scientific management time, methods, and rules of work
time-motion studies studies, begun by )rederick *aylor, of which tasks must be performed to complete a job and the time needed to do each task
principle of motion economy theory developed by )rank and 3illian ilbert that every job can be broken down into a series of elementary motions
;awthorne effect the tendency for people to behave differently when they know they are being studied
aslow's 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
motivators in ;erzberg's theory of motivating factors, job factors that cause employees to be productive and that give them satisfaction
hygiene factors in ;erzberg's theory of motivating factors, job factors that can cause dissatisfaction if missing but that do not necessarily motivate employees if increased
theory G management
average person dislikes work, workers must be bossed around, motivated by fear and money
theory D management average person likes work, workers seek additional responsibility, workers like to be uniquely rewarded, people are creative
theory H long term employment, collective decision making, individual responsibility for outcomes of decision, slow evaluation0promotion, specialized career paths, holistic concern for families
goal-setting theory the idea that setting ambitious but attainable goals can motivate workers and improve performance if the goals are accepted, accompanied by feedback, and facilitated by organizational conditions
management by objectives %8<& a system of goal setting and implementation$ involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees
expectancy theory Aictor Aroom's theory that the amount of effort employees exert on a specific task depends on their expectations of the outcome
reinforcement theory theory that positive and negative reinforces motivate a person to behave in certain ways
equity theory the idea that employees try to maintain equity between inputs and outputs compared to others in similar positions
job enrichment a motivational strategy that emphasizes motivating the workers through the job itself
job enlargement a job enrichment strategy that involves combining a series of tasks into one challenging and interesting assignment
job rotation a job enrichment strategy that involves moving employees from one job to another
