core concepts chapter 6,7,8 Flashcards
what is a sole proprietorship?
one person owning and operating a business, without forming a corporation
in a sole proprietorship, the business and owner are a single entity
what are the 6 advantages to a sole proprietorship?
easy and inexpensive to form
profits are retained by the owner
direct control of the business
freedom from government regulation
taxed once
ease of dissolution
what are the 7 disadvantages of a sole proprietorship?
unlimited liability
difficulty raising capital
limited managerial expertise
trouble finding qualified employees
personal time commitment unstable business life (limited lifespan)
losses are the owners responsibility
limited growth few fringe benefits
what are the 3 forms of partnerships?
general partnership
limited liability partnership
limited partnership
explain a limited partnership?
a partnership with one or more general partners and one or more limited partners
what is a limited liability partnership?
Limits all partner’s risks of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision
all other partners are not liable for another partners mistakes
what are the 6 advantages of a partnership?
more financial resources
shared management and pooled, complementary skills and knowledge
longer survival
shared risk
special taxes
flexibility
what are the 5 disadvantages of a partnership?
unlimited liability
division of profits
disagreements among partners
difficulty of termination
possibility of higher taxes
what are the 5 types of corporations?
private
public
non-profit
professional corporations
crown corporations
what are the 7 advantages to a corporations?
limited liability
more money for investment
size: may be larger due to increased resources
perpetual life
ease of ownership change
ease of attracting talented employees
separation of ownership from management
what are the 6 disadvantages of corporations?
high initial costs
extensive paperwork
double taxation
two tax returns
termination is difficult
stock holder and board conflict
what are the four reasons why mergers do not work?
companies overpay to acquire another firm
acquiring company overestimates cost saving and synergies
after merger, managers disagree about integrating operations
after merger, cost cutting obsession hurts business, costing the top employees and customers
what are the 5 responsibilities of a franchisor?
assign territory
may provide financial aid/advice
offers merchandise or supplies at a competitive price
provides training and support
business expansion
what are the 4 responsibilities of a franchisee?
pay upfront costs
make monthly or annual payments to the franchisor (royalty fee)
runs business by franchisors rules and procedures
buys materials from franchisor or approved supplier
what are the 5 advantages to franchises?
management and marketing assistance
personal ownership
nationally recognized name
financial advice and assistance
low failure rate
what are the 6 disadvantages to franchises?
large start up cost
shared profit
management regulations
coattail effect
restrictions on selling
fraudulent franchisors
what are the 4 ways to avoid disaster in a franchise?
research officers and their business experience
get all summary of any bankruptcy and litigation
estimate ALL costs to set up a franchise
review franchise contract and three most recent financial statments
what is the difference between the intent of small business and the intent of entrepreneurship?
small business is fine remaining small and does try to innovate and grow to become a larger company or corporation
entrepreneurship may start small but the intention is to grow to a large scale company corporation and revolutionize the market
what are the 4 ways entrepreneurial ventures differ from small business?
amount of wealth creation
speed of wealth creation
risk
innovation
what is entrepreneurship?
taking a risk to either create a new business or to greatly change the scope and direction of an existing one
entrepreneurs are typically innovators who start companies to pursue their ideas for a new product or service
what is a small business owner?
people with technical expertise who started a business or bought an existing small business and made a conscious decision to stay small
what are the 6 reasons people take the entrepreneurial challenge?
opportunity presents itself (to fill a customers needs, or they have a skill or resources)
new idea, product or product
profit
challenge
family pattern
independence
what is an example of small business vs entrepreneurship?
the owner of a local independent bookstore is a small business owner. Jeff Bezos, founder of Amazon, also sells books. but Bezos is an entrepreneur because he revolutionized the bookselling world
what are the four types on entrepreneurs?
classic entrepreneurs
micropreneurs
multipreneurs
intrtapreneurs
what is a classic entrepreneur?
a risk taker who starts their own companies based on innovative ideas and bringing new products to market
what is a micropreneur?
micropreneurs are someone who starts small and plans to stay small they normally have 1-4 employees
what is a multipreneur?
multipreneurs are someone who starts a series of companies. they thrive on the challenge of building a business and watching it grow (start with one entrepreneurial venture and it presents an opportunity for another one)
what is an intrepreneur?
they are entrepreneurs that don’t own their own companies but apply their creativity, vision and risk-taking within a large corporation. enjoy the freedom to grow ideas and develop products but with less risk due to being part of a big corporation
what is defined as a small business?
a independently owned and operated business that meets certain standards of size interms of employees or annual revenue
what are the 5 reasons small business is important?
contribute to growth in specific economic areas
create jobs
spark innovation
provide opportunities for many people to achieve financial success and independence, including women and minorities
compliment the economic activity of large organizations by providing them with services
what are the 7 advantages of a small business?
independence
personal satisfaction from work
best route to success
rapidly changing technology
major corporate restructuring and downsizing
outsourcing
small business are resilient
what are the 5 disadvantages of small business?
financial risk
stress
time commitment
undesirable duties
limitations
what are some (6) resources for small businesses that the government offers?
business and industry services
business development bank of Canada
innovation, science and economic development canada
canadian chamber of commerce
business accelerator (access to mentorship and investors)
business incubators (space, services, advice, support and financial assistance)
what are the 3 causes for small business success?
pay attention to competition
business in a growth industry
product is not easily replicated
what are the 12 things that can lead to small business failure?
plunging in without first testing testing the waters on a small scale
underpricing or overpricing goods or services
underestimating how much time it will to take to build a market
staring with too little capital
starting with too much capital and being careless in its use
going in to business with little or no experience and without first learning something about the industry or market
borrowing money without planning how and when to pay it back
not allowing for setback and unexpected setbacks
buying to much on credit
extending credit to freely
expanding credit too rapidly
failing to complete accurate records so that the owners drift into trouble without realizing it
what are the 4 ways to get into your first business venture?
start your own company
buy an existing franchise unit
inherit or take over a family business
get some experience and ideas
what are the 5 functions of managing a small business?
planning the business
financing the business
knowing the customers (marketing)
managing the employees
maintaining records (accounting)
what are the details (4) of a written business plan?
nature of the business
target market
advantages the business will have over competition and the resources
qualifications of the owners
what are the 10 key elements of a business plan?
cover letter
executive summary
company background
management team
financial plan
capital required
marketing plan
location analysis
manufacturing plan
appendix
what are the 3 positives of a small business going global?
access to world market
absorb (sell) excess inventory
extend product life
what are the 4 negatives of small business going global?
financing difficult
not knowing how to get started
lack of cultural understanding
paperwork
what is management?
the process of guiding the development and allocation of resources to attain organizational goals
what are the three basic categories of managerial skills?
technical
human relations
conceptual skills
what are the three levels of management?
top managers
middle managers
first-line managers
what is an acronym for the 4 functions management areas?
P.L.O.C
what are the 4 functional areas of management?
planning
organizing
leading
controlling
explain the planning functional area of management?
anticipating potential problems or opportunities and planning how to deal with them
explain the organizing functional area of management?
coordinating and allocating the resources needed to implement plans
(allocating budget to different areas)
explain the leading functional area of management?
creating a vision for the organization and motivating others to achieve that objective
explain the controlling functional area of management?
establishing clear standards, reviewing results and making any necessary corrective actions
what are the three things that are in a company vision?
goals
objectives
plans
what is a SWOT analysis?
how strengths can be capitalized on
how weakness can be improved
how opportunities can be exploited
how strengths can be mitigated
what are the 4 planning strategies?
strategic planning
tactical planning
operational planning
contingency planning
what is tactical planning?
the identification of specific, short-range objectives by lower managers
what is contingency planning?
backup plans in case primary plans fail
what is operational planning?
the process of setting work standards and schedules necessary to implement the company’s objectives
what does strategic planning involve?
creating long-range (1-5 years) broad goals and determining how the organization will accomplish those goals
what are the two categories of decision making?
programed decision making
nonprogrammed decision making
what is programmed decision making?
decisions that are made in response to routine situations that occur frequently
ex: scheduling
what is non-programmed decision making?
decisions that are infrequent, unforeseen or very unusual problems and opportunities
what are the 5 steps in the decision making process?
recognize the problem or opportunity
gather information to identify alternative actions
select one or more alternatives after evaluating S and W
put chosen alternative into action
gather information to obtain feedback on the effectiveness of the chosen plan
what are the 5 ways kinds of power?
legitimate power
reward power
coercive power
expert power
referent power
what is legitimate power?
power that comes from an individuals position in an organization
what is reward power?
the power that coms from an individuals control over rewards
what is coercive power?
power that comes from an individuals ability to threaten and produce negative outcomes
what is expert power?
power that comes from an individuals extensive knowledge in one or more areas
what is referent power?
the power that comes with their influence and respect of their opinion
what are the three leadership styles?
autocratic
participative/ democratic
free rein
what is autocratic leadership?
they are directive leaders and wants their subordinates to follow their directions, they like to make all of the decisions
what is participative/ democratic leadership?
they share decision making with with group members and encourage discussion of issues and alternatives
what are the three types of participative leadership?
democratic leaders
consensual leaders
consultive leader
what is free-rein leadership?
managers who use this style turns over all authority and control to subordinates and let the employees figure out the best way to figure things out
what makes a leader effective?
leaders that recognize employee growth and select a leadership style that matches the maturity and competency levels of those completing the tasks
what are the 5 responsibilities of a franchisor?
assign territory
may provide financial aid/advice
offers merchandise or supplies at a competitive price
provides training and support
business expansion
what are the 4 responsibilities of a franchisee?
pay upfront costs
make monthly or annual payments to the franchisor (royalty fee)
runs business by franchisors rules and procedures
buys materials from franchisor or approved supplier
what is controlling in management?
the process of assessing the organizations progress towards accomplishing its goals
