Business Management and Strategy

Question 1

strategic management

Answer 1

ongoing process of innovation, advantage, value creation, and reassessment.

Question 2

sole proprietorship

Answer 2

Most basic business structure. Owner is a single person who is the final authority for all decisions in the business. Any profits earned by the business belong to the owner, and owner has unlimited personal liability for all business decisions and activities.

Question 3

partnership

Answer 3

Business owned by two or more people who share final authority for all business decisions and are jointly liable for the actions of the business. Partners are liable not only for their own individual actions but for the actions taken by their other partners as well. Profits are split according to ownership shares established at the beginning of the partnership.

Question 4

general partnership (GP)

Answer 4

partners share responsibility for managing the business based on the partnership agreement

Question 5

limited partnership (LP) or limited liability partnership (LLP)

Answer 5

Most partners are involved only as investors and have little input into daily operations of the business. These forms are commonly used for service business.

Question 6

joint venture (JV)

Answer 6

similar to a GP but formed to manage a specific project or for a limited time frame

Question 7

corporations

Answer 7

Defined by four characteristics:
1. liability is limited to assets owned by the corp.
2. life of the corp can extend beyond the life of its original owner/founder
3. central management structure
4. ownership may be transferred by selling stock.
Corporations sell stock to raise funds necessary to operate the business. Corporations are legal entities and may incur debts, sign contracts, and be sued in the same way as individuals.

Question 8

stockholders or shareholders

Answer 8

Owners of stock. Free to sell the stock they own to other investors at any time. Can be individuals or other entities. Not involved in the daily operation of the business. May elect a board of directors to represent their interest with senior management. Liability is limited to assets owned by the corp, so stockholder liability is limited to the amount of stock owned by the individual investor.

Question 9

limited liability company (LLC)

Answer 9

Cross between a general partnership and a corporation. Provides its owners with the liability protection of a corp with fewer operating restrictions. Exists for a finite period of time defined when organized, and can be extended by a vote of the owner/members when expires. May only have 2 of the 4 characteristics of a corp.

Question 10

production

Answer 10

refers to the process by which businesses create the product or service offered to customers.

Question 11

operations

Answer 11

encompasses all activities necessary to produce the goods or services of the business - think SIPOC

Question 12

capacity - operations

Answer 12

includes determing how much of a product or service is able to be produced with the available inputs, as well as what changes in inputs are required by fluctuating customer demands

Question 13

inputs

Answer 13

available materials, labor, and equipment

Question 14

production layout - operations

Answer 14

way in which the goods or service will be produced (process or assembly line)

Question 15

scheduling - operations

Answer 15

making sure that the products or services are available at times of peak customer demand

Question 16

quality management - operations

Answer 16

QA ensures that the product or service meets acceptable standards

Question 17

inventory management - operations

Answer 17

balance the cost of maintaining a large inventory with the need to satisfy customers by filling orders promptly

Question 18

just-in-time (JIT) inventory management

Answer 18

purchasing smaller amounts of supplies more frequently to reduce inventories and ensure a steady supply of products for distribution

Question 19

sales

Answer 19

includes near-term activites involved in transferring the product or service from the business to the customer

Question 20

marketing

Answer 20

Incorporates longer-term functions necessary to promote and distribute products in the marketplace, provide support for sales staff, conduct research on product design, and determine appropriate pricing. Begins by identifying the target market.

Also responsible for determining what new products will be produced based on market research.

Question 21

4 P’s of Marketing

Answer 21

1. Product - what is the product or service, how will it look, packaging
2. Price
3. Placement - distribution - where will the customer find the product?
4. Promotion - advertising, PR, selling, incentives

Question 22

research and development (R&D)

Answer 22

Charged with designing new product offerings and testing them to make sure they do what they’re designed to do before they’re offered to the public. Includes redesigning old products to meet changing demands and developing products to create demand where none existed.

Question 23

finance

Answer 23

Responsible for obtaining credit to meet the organization’s needs, granting credit to customers, investing and managing cash for maximum ROI, and establishing banking relationships for the org. Also does budgeting and planning

Question 24

accounting

Answer 24

responsible for activities that record financial transactions within an org

Question 25

cost accounting

Answer 25

transactions related to product sales and the costs related to creating the product.

Question 26

Securities Exchange Act of 1934

Answer 26

Gave statutory authority for establishing reporting standards for publicly held companies to the Securities and Exchange Commission (SEC). Acknowledges the FASB and therefore the GAAP. In 2008, began allowing the IASB and IFRS rules globally.

Question 27

American Institute of Certified Public Accountants (AICPA)

Answer 27

In 1939, established a committee to develop accoutning standards and reports for the private sector. Developed the generally accepted accounting principles (GAAP), then gave authority for regulating these standards to the Financial Accounting Standards Board (FASB).

Question 28

International Accounting Standards Board (IASB)

Answer 28

global board that developed the International Financial Reporting Standards (IFRS)

Question 29

organization lifecycle

Answer 29

1. startup
2. growth
3. maturity
4. decline

Question 30

startup

Answer 30

Org leaders struggle to obtain funding so the organization can survive. Because employees hired during this phase must wear many different hats, there is little time for training, so they are usually fully qualified for their positions, and base pay is often below the market rate. Outsourcing can be cost-effective for specialized functions that do not require full time employees. Few layers of management allow employees to work closely with founders and leaders.

Question 31

growth

Answer 31

Founder is not able to manage organization alone so additional management personnel are brought into the company. Can lead to morale issues when employees who once had access to organization leaders lose the daily contact common in the startup phase. Funds are available to provide competitive compensation and benefits to attract and retain qualified employees. Growth presents challenges when it exceeds the ability of the infrastructure to handle it, sometimes necessitating the outsourcing of some functions to meet needs.

Question 32

maturity

Answer 32

Organization has enough resources to provide planning and standardize policies and procedures. Possible to become bureaucratic and unwieldy. Relative stability means it is possible to hire less experienced personnel and provide training.

Question 33

decline

Answer 33

Characterized by inefficiency and bureaucracy. Leaders may implement workforce reductions, close facilities, take cost-cutting measures.

Question 34

pre-planning

Answer 34

Sets the stage for success, reduces errors in planning process, ensures commitment form leaders. Decide on process, participants, time frame. Use planning tools: statistical models, SWOT analysis, PEST analysis, Porter’s 5 forces

Question 35

strategy

Answer 35

Uses the strengths of the business to its competitive advantage in the marketplace

Question 36

goal

Answer 36

Describes the direction the business will take and what it will achieve. Goals are set at the corporate and business unit level of the org.

Question 37

objective

Answer 37

Specific description of the practical steps that will be taken to achieve the business goals. Objectives are set at the functional level of the org.

Question 38

long range forecasting

Answer 38

3-5 years

Question 39

mid range forecasting

Answer 39

1-3 years

Question 40

short range forecasting

Answer 40

6-12 months

Question 41

5 Stages of the Strategic Planning Process

Answer 41

1. Pre-Planning - decide on process, participants, time frame, use statistical models to plan. Get commitment from leaders.
2. Environmental Scanning - statistical models, SWOT, PEST, Porter’s 5 forces. Answer the question - Where are we now?
3. Formulate strategy - Where do we want to be? Develop vision, mission, values, goals
4. Implement strategy - How do we get there? Develop goals, budget, plans, execute.
5. Evaluate strategy and make adjustments.

Question 42

vision statement

Answer 42

Should inspire the org and inform the customers and shareholders, describing what will carry the org into the future and what it will accomplish. Concise communication of what the company does, for whom, and what long range success looks like.

Question 43

mission statement

Answer 43

More specific than vision statement. Describes company, what it does, where it’s going, and how it’s different from others. Directed at employees and tells where the company is headed mid to long term.

Question 44

core competencies

Answer 44

Parts of the operation an organization does best or that sets them apart from the competition. Focusing on hese competencies makes it possible to expand their revenue streams.

Question 45

corporate values statement

Answer 45

Communicates the standards for how the organization will conduct business. Values chosen should be true regardless of changes in product lines or business processes. Would the values hold true even if the org began doing business in a completely different way? Beliefs are usually reflected in culture.

Question 46

SMART goals model

Answer 46

Specific
Measurable
Action-oriented 
Realistic
Time-based

Question 47

business plan

Answer 47

Includes the company strategy, vision, mission, values, and goals for getting where the company wants to be. Identifies performance targets, recommends new products or services to use existing talent, and defines net income expectations.

Question 48

tactical goal

Answer 48

describes what will be accomplished to achieve a strategic goal

Question 49

action plan

Answer 49

breaks down tactical goals into steps to be taken by individuals, teams, or operating groups to accomplish tactical goals

Question 50

Human Capital Management Plan (HCMP) or Strategic HR Plan

Answer 50

Strategic planning for HR.  Answers the questions:
1.  Where are we now?
2.  Where do we want to be?
3.  How will we get there?
4.  How will we know when we arrive?
Must align with business goals

Question 51

format of HCMP

Answer 51

1. HR statement of strategic direction
2. desired results or goals
3. objectives
4. action plans
5. communication plan
6. measurement/metrics

Question 52

HR Budget

Answer 52

HR Budget may consist of: salaries, payroll taxes, benefits, equipment and supplies, repairs and maintenance, training and development for HR, travel, professional services, outsources services (HRIS, payroll). May also include expenses allocated from budgets in other areas such as: liability insurance, software, hardware. May also include items allocated to other units, including: training, awards, raises, temps, recruiting.

Question 53

human capital projecting

Answer 53

A budgetary activity in which HR attempts to measure the value of people getting the work done on behalf of the organization. Take into account the HCMP, creating depth by identifying the current competencies of the existing internal workforce. Analyzes current KSAs and compares to the KSAs we need to be where we want to be, then develop a plan to address deficiencies. Addresses cost and ROI.

Question 54

5 Basic Management Functions

Answer 54

1. Planning
2. Organizing
3. Coordinating
4. Directing
5. Controlling

Question 55

centralized organization

Answer 55

one where decision-making authority is concentrated at higher levels in the organization

Question 56

decentralized organization

Answer 56

decision-making authority is delegated to lower-levels in the organization

Question 57

line functions

Answer 57

need to make decisions about operating needs, such as operations or sales

Question 58

staff functions

Answer 58

don’t make operating decisions but do advise line managers, such as finance or HR

Question 59

span of control

Answer 59

Number of employees that one manager can directly supervise. Will depend on the nature and complexity of the task.

Question 60

directing

Answer 60

Managers must establish relationships with employees they supervise to encourage and support them in accomplishing their goals. Management style contributes to the development of these relationships.

Question 61

controlling

Answer 61

Used by managers to ensure that the strategies, tactics, and plans developed during the planning process are implemented. In addition to evaluating individual goals and action plans, management must have a big picture view of overall progress.

Question 62

strategic relationship

Answer 62

Advances the contribution of the HR function toward achieving organizational goals. These are relationships built with stakeholders.

Question 63

corporate responsibility (CR)

Answer 63

a business behavior focused on building strategic relationships.

Question 64

sustainability

Answer 64

Behavior that doesn’t deplete the resources used to achieve an outcome. Resources include time, labor, and finances, all of which have a significant impact on long-term health of the org.

Question 65

reengineering

Answer 65

Involves looking at the entire organization to simplify or eliminate unnecessary processes with the goal of increasing customer satisfaction through improvements in efficiency.

Question 66

corporate restructuring

Answer 66

Looks at individual units in the organization to reduce or eliminate redundancy or bureaucratic processes in order to reduce costs and increase production. May mean reducing the workforce or reassigning employees to new jobs.

Question 67

workforce expansion

Answer 67

When a large number of employees enter an organization within a short period of time, it can be difficult for them to assimilate into the existing culture and climate. The resulting clashes of operating styles can create mistrust and reduce productivity.

Question 68

workforce reduction or reduction in force (RIF) or downsizing or rightsizing

Answer 68

Used to decrease expenses by reducing the size of the workforce. Can be used to lower expenses for short-term improvements in net profits in order to meet previously stated earnings targets for stock market analysts.

Question 69

merger

Answer 69

two or more organizations are combined into a single entity with the goal of leveraging the assets of both into a more successful company

Question 70

acquisition

Answer 70

One company purchases or trades stock to gain a controlling interest in another. Can be hostile, where the board of directors of the company being acquired object to the takeover.

Question 71

divestiture

Answer 71

A company asset such as a product line, a division, or another part of the org is sold or somehow disposed of. May occur as the result of a strategic decision to focus on core competencies or because the asset has greater value as a stand-alone operation than s part of the original org. Can mean eliminating jobs or transferring employees to a new operating entity. Reduces the workforce in the divesting organization, and, if appropriate, performing due diligence to determine whether to transfer employees to the new entity.

Question 72

offshoring

Answer 72

Moving production or service processes to other countries to realize cost savings.

Question 73

outsourcing

Answer 73

Contracts internal business services to outside organizations that specialize in specific processes (payroll, IT, custodial services). Can result in a workforce reduction or transfer of employees to other jobs. When employees are acquired by an outsource provider, they’re terminated from the org and hired by the new company.

Question 74

enterprise risk management (ERM)

Answer 74

Practice of forecasting possible risks to the organization and taking steps to mitigate their impact on operations. First step is to identify risks.

Question 75

HR audit

Answer 75

identifies areas that may be out of compliance with legal requirements and are in need of updating because of strategic changes within the org, and it defines elements that are working well.

Question 76

The Legislative Process

Answer 76

1. Member of Congress agrees to sponsor a bill and presents it to the full body of the House or Senate.
2. Bill assigned to a committee for study.
3. Committee determines the likelihood the bill will be able to pass a vote in the full body. If the determination is made that the bill isn’t likely to pass, no action is taken and the bill dies in committee.
4. Bills deemed likely to pass are studied in subcommittee. Hearings are conducted to obtain input from government representatives, SMEs, and citizens.
5. Subcommittee may make changes - known as marking up the bill.
6. Subcommittee then votes on whether to return the bill back to the full committee. Bills not reported back die in subcommittee.
7. Bills returned to full committee may be subjected to further study.
8. Full committee may vote to accept bill and order the bill reported to the full body.
9. Written report of findings and recommendations of the committee are prepared, including dissenting views.
10. Placed on legislative calendar and schedule for a vote by full body.
11. Debate by full body, including adding amendments.
12. When debate is completed, vote is conducted.
13. If the full body passes the bill, it must go to the other body and begin the process again.
14. Second body may vote it down, table it, or change it. Bills rejected or tabled at this stage are considered dead and won’t become laws.
15. If the bill passes the second body, are reconciled in a conference committee. If the conference committee can’t agree on the form of the bill, it will die and not become a law.
16. If the committee recommends a conference report incorporating the changes, both houses of Congress must vote to approve the conference report before the bill is forwarded to the president for signature.
17. When the president receives the bill, he has 3 choices: he may sign it into law, veto it, or fail to sign.
18. If the bill is vetoed, Congress may override the veto by a two-thirds vote of a quorum in each house, in which case the bill will become law in spite of the veto.
19. If the president fails to sign, one of two things will happen. When Congress is in session, a bill that remains unsigned for 10 days will become law without the president’s signature. If Congress adjourns before the 10 day period is up, the bill won’t become law. This is known as a pocket veto.

Question 77

administrative laws

Answer 77

agency rules and regulations, agency orders, and executive orders

Question 78

Process for Developing Administrative Law

Answer 78

1. Develop rules or regulations and publish them in the Federal Register to give the public an opportunity to coment on heir proposals.
2. Once the comment period has been completed, the agency publishes final rules that take effect no less than 30 days after the date of public notice.

Question 79

administrative law courts

Answer 79

Courts associated with federal agencies (such as the EEOC or NLRB) that have the power to order compliance with federal laws. Rulings have the effect of law and are published and the Federal Register.

Question 80

administrative law judge (ALJ)

Answer 80

judge associated with administrative law court

Question 81

executive order (EO)

Answer 81

Issued by the president of the United States and become law after they have been published in the Federal Register for 30 days. Executive orders relating to employment issues are enforced by the Office of Federal Contract Compliance Programs (OFCCP).

Question 82

lobbying

Answer 82

An activity in which anyone can participate when the want to influence new laws and regulations.

Question 83

planning

Answer 83

Lays the groundwork for how managers will work toward accomplishing the organization’s goals. Mnagers decide what needs to get done, when it needs to get done, who ill do it, and how it will get done.

Question 84

organizing

Answer 84

Speaks to the ways in which the manager obtains and arranges the resources that he or she needs to implement the plans (output of the planning function). Resources could include people, facilities, materials, etc. Managers must also designate reporting relationships during this function. Linkages between peoples, places, and things must be established.

Question 85

coordinating

Answer 85

Manager brings together all the resources that he or she has organized to accomplish the stated plan. Manager must also ensure the pieces fit.

Question 86

BASIC feedback

Answer 86

Behavioral
As soon as possible
Specific
Interactive
Consistent

Question 87

balanced scorecard

Answer 87

Approach to strategic management that balances financial measures of success with non-financial measures of success. Basically, businesses can grow in other ways than financially. Includes 4 perspectives:

1. Learning and Growth
2. Business Processes
3. Customers
4. Financial

Question 88

effectiveness

Answer 88

the degree to which carefully established and strategically aligned goals are met (doing the right things)

Question 89

efficiency

Answer 89

ratio of outputs to inputs (doing things right)

Question 90

Sarbanes-Oxley Act

Answer 90

Requires violations of securities laws or breaches of fiduciary responsibility to be reported to either the chief legal officer or CEO by in-house attorneys or outside counsel. If resolution doesn’t occur, attorneys must report the concerns to the audit committee of the BOD.

Question 91

Section 806 of SOX

Answer 91

provides protection for employees who initiate reports of company actions in violation of SEC regulations or federal securities laws. Enforcement is delegated to OSHA.

Question 92

inside director

Answer 92

a person with operational responsibilities who is employed by the org who is also on the BOD. May be CEO or CFO

Question 93

outside director

Answer 93

someone who isn’t employed by the corp and doesn’t have operational duties.

Question 94

prima facie violation of an unfavorable employment action

Answer 94

1. employee was engaged in a protected activity (whistleblowing)
2. employer knew or suspected that the employee was engaged in the protected activity
3. employee suffered an unfavorable employment action
4. sufficient circumstances existed to infer that a contributing factor to the action was the employee’s participation in the protected activity.

Question 95

Pocket Veto

Answer 95

President fails to sign legislation. If Congress adjourns before the 10 day period is up, the bill won’t become law.