Business computer test prep Flashcards
Entrepreneurship
the process of starting, organizing, managing, and assuming the responsibility for a business. The foundation of the free market economy. Create diverse product market.
Basic Organization Structure
function, product, market, customer, location. Division of labor, structure for making decisions. Goal: Maintain efficiency in business.
Management Problems.
Span of Management - too many immediate subordinates to be effective. Job assignments unclear.
Management Structure
Functional, territorial, product and matrix
Functional Management Structure
Divides the parts of the business by what they do. Production, Acctg, marketing, etc.
Territorial structure
operations are spread out over a variety of areas each operating independently
Product structure
break along product lines(auto manufacturer)
Matrix structure
functional and product structures - both financial and production oversee a project
Management style-Exploitative/Authorative
managerial decisions are imposed on subordinates and management has greater responsibility; little communication overall on the hierarchy; Employees very dependent on jobs and exploited by management. Ex: bad factories. Ineffective
Management style-Exploitative/benevoloent
managerial assumption that management acts in the best interest of the workers; little communication overall on the hierarchy; Management patronizing and fail to take into account employees feelings. Ineffective
Consultative style
small degree of trust in employees by management; all employees feel some responsibility for the overall success of the company, there is some degree of teamwork and freedom to act on minor issues among employees. But management handles larger issues and does not trust lower level employees with important manners.
Participative-group style
most effective. Managers have trust in subordinates b/c every employee is well trained and competent. Motivation by reward not punishment.
Sole proprietorship
owned and operated by one person. Suffer from limited sources of capital, high risk. Do not have to pay income taxes on profits, only personal income.
Corporations
distance and viable entity. Ownership of a corporation is held by individuals who own shares of corporation’s stock. Individual shareholders are not responsible for the actions of the corporation-just lose initial investment. Employees cannot be prosecuted for the acts of the corporation at large. Attract solid managers, manipulate/influences govt policy to suit their ends.
Corporate governance
Stockholders elect the members of a board of directors who oversee the operations of the corporation. Real power held by management group not stockholders who cooperate with a few major stockholders to ensure they remain in power.
Proxies
permission given by stockholders to someone else to manage the stockholder’s interest in the corporation.
Advantages of Corporations
ownership of corporations is easily transferable and it rarely has any effect on the daily operations of the business.
Disadvantages of corporations
double taxation-company taxed as legal entity and shareholders must pay income taxes on dividends.
Partnerships
business owned and operated by two or more principals for the purpose of making a profit. Jointly provide capital and labor in exchange for shared profit or loss. No govt permission is required for a partnership, business affairs do not have to be shared beyond partners., as a business form is not required to pay income taxes. Disadvantages: unstable, hard to dissolve if one partner is found to be incompetent.
Cooperative
small group of individuals or smaller groups that join together to achieve some common goals. Ex: credit unions, retail consumer groups, residential organizations, and marketing associations.
Board of directors
selects upper level management including the CEO and supervises strategy and financial objectives.
Business planning
assess the business’ current status, anticipate trends in the market and consider the financial implications of proposed plans. Planning is impossible without good records from the acctg department.
Steps to Business planning
- Becoming aware of an opportunity or problem. 2. Define a clear and verifiable objective. 3. Develop the premises of their future plans - forecasting changes in market, assessing population growth and changes in price level. 4. Consider the various means of getting the job done, weigh alternatives. 5. Selecting a course of action. 6.Develop the supporting plans for the great plan to be completed.
Business Objectives
goals or end points to where the business is aiming.
Business strategies
Overall plans that take into consideration such external factors as trends in the marketplace or actions of the competitors. Course of action.
Business procedures
must be clear and specify exactly how future actions should be performed.
Business rules and programs
things that employees are either required to do or are forbidden from doing.
Fiscal policy
created and implemented by the federal government in the hopes of increasing the gross national product, raising employment and stabilizing price and money.
Expansionary fiscal policy
combats a recession by either lowering taxes or increasing government spending
Contractionary fiscal policy
aims to fight inflation and involves raising taxes and decreasing spending.
Monetary policy
actions of a bank or currency regulation organization that affects the size of the money supply and therefore interest rates. Designed to restrain inflation, improve the employment rate and stabilize the economy.
3 ways the Fed carries out monetary policy
Open market operations, discount rate, reserve requirements. To halt a recession - expands the money supply, decrease inflation - limit spending by contracting the money supply.
Open Market operations
government purchasing and selling of government securities (bonds) to affect the size of the money supply (to increase, buys securities)
