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Management > Chapter 8 Packet Notes > Flashcards

Chapter 8 Packet Notes Flashcards

1
Q
  • Management team
  • Characteristics of a strong management team
  • Team building and structure
A

Building a Management Team

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2
Q

Managers and other key persons who give a company its general direction.

A

Management Team

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3
Q
  • Capable of securing the resources needed to make the business a success.
  • Reassures investors about their investment and the continuity of business.
  • Diversity of talent makes the team stronger than an individual entrepreneur.
A

Characteristics of a Strong Management Team

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4
Q
  • The required combination of education and experience depends on the type of business and the nature of its operations.
  • The key: Achieving a balance of skills and compentencies in functional areas.
  • Designing an internal management structure that defines relationships and responsibilities.
    • Outside professional support can supplement the skills of a management team.
    • An active board of directors can provide counsel and guidance.
A

Team Building and Structure

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5
Q
  • Achieving balance
  • Expanding social networks
  • Team building and structure
  • Specifying structure
A

Building a Management Team (More)

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6
Q

A business owned by one person, who bears unlimited liability for the enterprise.

A

Sole Proprietorship

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7
Q
  • Recieves all of the firm’s profits
  • Holds title to all the firm’s assets
  • Can easily sell or transfer ownership of the company name and assets.
  • Requires no registration or filing fee.
  • Has absolute freedom from interference by other stakeholders.
A

Advantages of Sole Proprietorship

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8
Q
  • Bears all business risk
  • Is subject to all claims of creditors
  • Has unlimited personal liability for business.
  • Recieves no tax free benefits as an employee.
  • Death/incapacity of owner terminates personal capital
  • Is taxed on business income as personal income.
A

Disadvantages of Sole Proprietorship

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9
Q

A legal entity formed by two or more co-owners to carry on a business for profit.

A

Partnership

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10
Q
  • Required: Of legal age to contract
  • Desired: Honest, healthy, capable, and compatible.
A

Partner Qualifications

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11
Q
  • What is our business concept?
  • How are we going to structure ownership?
  • Why do we need each other?
  • How do our lifestyles differ?
A

Questions about Partnership Formation

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12
Q
  • Choose your partner carefully
  • Be open, but cautious, about partnerships with friends.
  • Test-drive the relationship, if possible.
  • Create a combined vision for the business.
  • Prepare for the worst.
A

Partnership Insights

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13
Q
  • Sharing workload
  • Sharing emotional burden
  • Procuring executive talent not otherwise affordable.
  • Sharing financial burden
  • Companionship
A

Advantages of Partnerships

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14
Q
  • Interpersonal conflicts
  • Dissatisfaction with partner
  • Absence of one clear leader
  • Dilution of equity
  • Frustration of not being able to call one’s own shots.
A

Disadvantages of Partnership

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15
Q
  • Partnership agreement
  • Joint and Several Liability
  • Termination of Partnership
A

Rights and Duties of Partners

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16
Q

A document that states explicitly the rights and duties of partners.

A

Partnership Agreement

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17
Q

The liability of each partner resulting from any one partner’s ability to legally bind the other partners.

A

Joint and Several Liability

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18
Q

Provisions for rapidly responding to death or departure of a partner.

A

Termination of a Partnership

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19
Q

A business organization that exists as a legal entity and provides limited liability for its owners.

A

Corporation

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20
Q

A business organization recognized by the law as having a separate legal existence (“artificial being”); can be sued, hold property, and incur debt.

A

Legal Entity

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21
Q

An ordinary, or regular, corporation chartered by the state and taxed by the federal government as a separate legal entity.

  • No new business can start as this
A

C Corporation

22
Q
  • Name of company
  • Formal statement of formation
  • Type of business
  • Location
  • Duration
  • Classes and preferences of stock
  • Number and per value of authorized shares
  • Voting privileges for each class of stock
  • Names of incorporators and directors
  • Capital stockholders
  • Statement of limited liability for stockholders
  • Statement of directors’ powers
A

Articles of Incorporation

23
Q
  • Stock certificate
  • Pre-emptive right
  • Legal Status
A

Rights and Legal Status of Stockholders

24
Q

A document specifying the number of shares of stock owned by a shareholder.

A

Stock Certificate

25
Q

The right of current stockholders to buy new shares of stock before they are offered to the public.

A

Preemptive Right

26
Q
  • Ownership provides control over the firm.
  • Ownership limits liability to investment in the firm.
  • Ownership can be transferred without affecting the firm’s operations.
A

Legal Status

27
Q
  • Initial Organizational Requirements and costs
  • Liability of owners
  • Continuity of the business
  • Transferability of ownership
  • Management control
  • Attractiveness for raising capital
  • Income taxes
A

Factors Affecting the Choice of a Firm’s Structure

28
Q

Rise as the formality of the organization increases. In a view of the relatively modest costs, however, this consideration is of minimal importance in the long run.

A

Initial Organizational Requirements and Costs

29
Q
  • Self-employed persons are taxed on their busines incomes at tax rates set for individuals.
A

Federal Income Taxes- Sole Proprietorship

30
Q

The partnership does not pay taxes; allocated shares of income from partnership are taxed as personal income for each of the partners.

A

Federal Income Tax- Partnership

31
Q

As a separate legal entity, it reports its income and pays any taxes related to its profits; dividends paid to shareholders are taxed as personal income.

A

Federal Income Tax- Corporation

32
Q
  • Piercing the Corporate Veil
  • Agency Principal
A

LIability of Owners

33
Q

A situation in which the courts conclude that incorporation has been used to perpetuate a fraud, skirt a law, or commit some wrongful act, and thus remove liability protections from the corporate entity.

A

Piercing the Corporate Veil

34
Q
  • An employer is liabile for the actions of an employee while on company business.
  • Organizing as a corporation or limited liability company shields the personal assets of owners in agency cases.
A

Agency Principal

35
Q
  • The limited partnership
  • The limited liability company
  • The professional corporation
  • The nonprofit corporation
A

Specialized Forms of Organization

36
Q
  • General partner
  • Limited partners
  • Income (taxable) or losses
A

The Limited Partnership

37
Q

Active in the business, personally liabile for the debts of the business.

A

General Partner

38
Q

Not active in the business, liability limited to investment in business.

A

Limited Partner

39
Q

Apportioned to each partner in a limited partnership.

A

Income (Taxable) or Losses

40
Q

Stockholders have limited liability but pay personal income taxes on the business profits.

  • Easier to set up
  • More flexible
  • Tax advantages
A

The Limited Liability Company

41
Q

Protects licensed professionals from liability of partners but not their personal liability.

A

The Professional Corporation

42
Q

Serves civic, educational, charitable, or religious purposes but not for generation of profits.

A

The Nonprofit Corporation

43
Q

An organizational relationship that links two or more independent business entities in a common endeavor.

A

Strategic Alliances

44
Q
  • Reduced cycle types through shared resources
  • Increased performance through synergistic combinations of financial resources and creativity.
A

Benefits of a Strategic Alliance

45
Q

Difficulty in establishing and maintaining alliances.

A

Risk of Strategic Alliances

46
Q
  • Establish a healthy network of contacts
  • Identify and contact indiividuals within a firm who are likely to return your call.
  • Outline the partner’s potential financial benefits from the alliance.
  • Learn to speak and understand the “language” of your partner.
  • Continue to monitor the progess of the alliance.
A

Steps in Building a Strategic Alliance

47
Q

The governing body of a corporation, elected by the stockholders.

  • Inside directors work for the firm.
  • Outside directors do not work for the firm.
A

Board of Directors

48
Q
  • Elect the firm’s officers (top management)
  • Approve top management’s strategic plans and policies.
  • Review top management’s performance.
  • Declare dividends
A

Duties of Directors

49
Q

Bring knowledge and experience.

  • Review policy decisions
  • Provide general direction
  • Monitor the firm’s ethical behavior
  • Mediate and resolve disputes among top management
A

Contributions of Board of Directors

50
Q

The alternative to a board of directors:

  • Provides advice but does not have the fiduciary (money) responsibility for the direction of the firm.
  • May be less threatening and more cooperative than a board of directors.
A

Advisory Council

Management (33 decks)

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