Business Study Plan PDF

Business Study Plan Forms of Business Ownership CHAPTER 6 Learning Objectives 1. Compare the advantages and disadvantages of sole proprietorships. 2. Describe the advantages and disadvantages of partnerships. Include the...

Business Study Plan Forms of Business Ownership CHAPTER 6 Learning Objectives 1. Compare the advantages and disadvantages of sole proprietorships. 2. Describe the advantages and disadvantages of partnerships. Include the differences between general and limited partners. 3. Discuss the advantages and disadvantages of corporations. 4. Outline the advantages and disadvantages of franchising. Include the challenges of global franchising. 5. Describe the role of co-operatives in Canada. Sole Proprietorship One person owning and operating a business, without forming a corporation. Business and the owner are a single entity. Almost ¼ of all registered businesses in Canada fall under this form of ownership. Sole Proprietorship, Pt. 2 Advantages: Ease of starting and ending Be your own boss Pride of ownership Retain profit No special taxes Business Study Plan 1  Less regulation Disadvantages: Unlimited liability Limited financial resources Management difficulties Overwhelming time commitment Few fringe benefits Limited growth Limited lifespan Possibly pay higher taxes Liability Liability is often just another word for debt, but it also has a wider and important meaning. For a business, it includes the responsibility to pay all normal debts. Unlimited Liability When you work for others, it is their problem if the business is not profitable. When you own your own business, you and the business are considered one. You have unlimited liability; that is, any debts or damages incurred by the business are your debts, and you must pay them. When you have a sole proprietorship, you have unlimited liability. Partnership There are several main types of partnerships: General Partnership Limited Partnership General Partner Limited Partner Business Study Plan 2  Partnership, Pt. 2 General Partnership (only general partners) All owners share in operating the business and in assuming liability for the business’s debts. Limited Partnership One or more general partners and one or more limited partners. Partnership, Pt. 3 General Partner An owner (partner) who has unlimited liability and is active in managing the firm. Limited Partner An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment. QUESTIONS TO ASK WHEN CHOOSING A BUSINESS PARTNER Partnership, Pt. 4 Advantages: More financial resources Shared management and pooled, complementary skills and knowledge Longer survival Shared risk No special taxes Disadvantages: Unlimited liability Division of profits Disagreements among partners Business Study Plan 3  Difficulty of termination Possibility of higher taxes Corporations Although the word corporation makes people think of big businesses such as the Bank of Montreal or Irving Oil, it is not necessary to be big to incorporate (i.e., start a corporation). Obviously, many corporations are big; however, incorporating may also be beneficial for small businesses. Corporations, Pt. 2 Advantages: 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 Disadvantages: High initial costs Extensive paperwork Double taxation Two tax returns Size: may become too inflexible to new ideas Termination difficult Business Study Plan 4  Stockholder and board conflict Types Of Corporations Private: not traded on any stock exchange, limited to 50 or fewer stockholders. Public: shares are traded on one or more stock exchanges. Non-Profit: performs public service, has special tax considerations to encourage formation. Example: Chapman’s Ice Cream is a private corporation, started in 1973 by Penny and David Chapman. Other Types of Corporations Professional Corporations: owners provide professional services (e.g., accountants and architects). Crown Corporation: can only be registered by the provincial or federal government. Non-profit: does not seek personal profit for its owners - universities, hospitals, charities, etc. How Owners Affect Management Owners/shareholders elect board of directors Board of directors hire officers Officers select managers and set corporate objectives Managers supervise employees Employees Canada's Largest Corporations Business Study Plan 5  Private Corporations Based on Revenue 1. Wal-Mart Canada - $35.00 billion (Retail) 2. Costco Wholesale Canada - $26.14 billion (Retail) 3. Desjardins Group - $19.74 billion (Utilities) 4. McKesson Canada - $19.33 billion (Financial) 5. Honda Canada - $17.48 billion (Wholesale) Corporate Governance Process and policies that determine how an organization interacts with its stakeholders, both internal and external. Corporate governance is necessary because of the evolution of public ownership. Corporate Governance, Pt. 2 As a result of corporate scandals, board members are under increasing scrutiny to ensure that they are effectively fulfilling their roles and responsibilities to their stakeholders. Be aware that those who serve on boards (both for-profit and non-profit) may be held personally liable for the misconduct of the organization. Business Regulations Companies that wish to operate in Canada must follow federal and provincial business laws and regulations. Among other things, this applies to registration and to reporting and information. Articles of Incorporation Business Study Plan 6  Legal authorization from the federal or provincial/territorial government for a company to use the corporate format. Corporate Expansion: Mergers and Acquisitions Merger = two firms forming one company. Acquisition is one company’s purchase of the property and obligations of another company. Corporate Expansion: Mergers and Acquisitions (2) A vertical merger is the joining of two firms involved in different stages of related businesses. A horizontal merger joins two firms in the same industry and allows them to diversify or expand their products. A conglomerate merger unites firms in completely unrelated industries. Why Mergers Do Not Work Companies overpay to acquire another firm. Acquiring company overestimates cost savings and synergies. After merger, managers disagree about integrating operations. After merger, cost-cutting obsession hurts business, costing top employees and customers. Leveraged Buyout Business Study Plan 7  A leveraged buyout (LBO) is an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing. The funds borrowed are used to buy out the stockholders in the company. Franchises A franchise agreement is an arrangement whereby someone with a good idea for a business (the franchisor) sells the rights to use the business name and to sell a good or service (the franchise) to others (the franchisee) in a given territory. Franchises, Pt. 2 Advantages: Management and marketing assistance Personal ownership Nationally recognized name Financial advice and assistance Lower failure rate Disadvantages: Large start-up costs Shared profit Management regulation Coattail effects Restrictions on selling Fraudulent franchisors Franchise System Franchise Agreement Business Study Plan 8  Franchisor Franchisee Franchisor Assigns territory May provide financial aid/advice Offers merchandise/supplies at competitive prices Provides training/support Business expansion using other people's money (OPM) Franchisee Pays upfront costs Makes monthly payment to franchisor Runs business by franchisor’s rules/procedures Buys materials from franchisor/approved supplier How To Avoid A Franchise Disaster 1. Research officers & their business experience. 2. Get a summary of any bankruptcy & litigation. 3. Estimate all costs to set up the franchise. 4. Review the franchise contract and three most recent financial statements. Franchising and E-Commerce Technology enables faster customer service. Provides access to international markets. Co-Operatives (by owners, for owners) - no middle man Business Study Plan 9  Owned by members. No income taxes. Profits shared among members, democracy based decision making Co-workers, farmers, fishermen, consumers, etc., band together to form “co- ops.” Agricultural Co-Operatives Owned by farmer members. Combined resources to sell their product. Co-Operatives in Canada Types of Co-ops Consumer co-operative: Provides goods and services for personal use. Examples: food, credit unions, housing. Producer co-operative: Processes and markets members’ goods and services. Examples: agriculture, pooling of equipment. Multi-stakeholder (solidarity) co-operative: Different categories of members share a common interest. Examples: health services, home-care services. Worker co-operative: Provides employment for members through an enterprise. Examples: forestry, retail, paramedic services. Employees are owners, have stake in business. Co-Operatives in Canada, Pt. 2 Worker-shareholder co-operative: Holds partial ownership of the business in which members are involved. Examples: processing, high technology, manufacturing. Federation: A co-operative of co-operatives. Examples: credit union central, retail co-op federation, housing co-op federation. Business Study Plan 10  Mutual: An organization created by and for its members to offer mutual aid or mutual protection. Example: insurance. Chapter Summary 1. The advantages of sole proprietorships include ease of starting and ending the business, being your own boss, pride of ownership, retention of profits, no special taxes, and less regulation than for corporations. 2. General partners are owners (partners) who have unlimited liability and are active in managing the company. Limited partners are owners (partners) who have limited liability and are not active in the company. 3. Advantages of corporations include more money for investment, limited liability, size, and perpetual life, as well as ease of ownership change. Chapter Summary, Pt. 2 4. Franchises offer benefits such as a nationally recognized name and reputation, a proven management system, promotional assistance, and pride of ownership. 1. Co-operatives are organizations owned by members/customers. Some people form co-operatives to give members more economic power than they would have as individuals. This version includes all the detailed text from the PowerPoint notes without summarizing or omitting content. Chapter 7 Entrepreneurship and Starting a Small Business Focuses on entrepreneurship and the steps to start a small business. Learning Objectives 1. Explain why people are willing to become entrepreneurs, and describe the attributes of successful entrepreneurs. Business Study Plan 11  2. Discuss the importance of small business to the Canadian economy. 3. Summarize the ways to learn how small businesses operate. 4. Analyze what it takes to start and run a small business. 5. Outline the advantages and disadvantages that small businesses have in entering global markets. Entrepreneurship 2.9 million people in Canada are self-employed. Increasingly, young people are considering starting a small business when they graduate. Schools are responding to this trend by offering more courses on the subject of entrepreneurship. Entrepreneurship, Pt. 2 Entrepreneurship is accepting the challenge of starting and running a business. The word entrepreneur originates from the French word entreprendre, which means “to undertake.” In a business context, it means to start a business. Entrepreneurship, Pt. 3 While many people use the terms entrepreneurship and small business interchangeably, there are significant differences. Entrepreneurial ventures differ from small businesses in four ways: 1. Amount of wealth creation 2. Speed of wealth creation 3. Risk Business Study Plan 12  4. Innovation Entrepreneurship Differs from Small Business Entrepreneurship is not always small, and small business is not always entrepreneurial. While most businesses start small, it’s the intent to stay small that separates small business from entrepreneurship. Canadian Entrepreneurs Wallace and Harrison McCain Billes brothers (Canadian Tire) Ablan Leon (Leon’s Furniture) Jean Coutu and Louis Michaud J.W. Sobey Christine Magee (Sleep Country Canada) Why People Take the Entrepreneurial Challenge New Idea, Process, or Product. Some entrepreneurs are driven by a firm belief, perhaps even an obsession, that they can produce a better product, or a current product at a lower cost, than anybody else. Profit. Challenge. Many people thrive on overcoming challenges. Business Study Plan 13  Why People Take the Entrepreneurial Challenge (2) Family Pattern. Some people grow up in families who have started their own businesses. Independence. Many entrepreneurs simply do not enjoy working for someone else. What Does it Take to be an Entrepreneur? Entrepreneurial attributes to look for in yourself include the following: Self-directed. -Disciplined You should be a self-starter, with a lot of confidence in yourself. Self-Nurturing. You must believe in your idea even when no one else does, and be able to replenish your own enthusiasm. What Does it Take to be an Entrepreneur?, Pt. 2 Attributes: Action-Oriented. Highly Energetic. Tolerant of Uncertainty. Able to Learn Quickly. Making errors is inevitable. What is important is what you learn from them. Turning Your Passions into Opportunities Business Study Plan 14  While many entrepreneurs’ business ideas are inspired by their passions, many see business opportunities in their problems. To look at problems or passions and see opportunities in them, ask yourself these questions: What do I want, but can never find? What product or service would improve my life? What really irritates me and what product or service would help? Women Entrepreneurs According to Statistics Canada’s Labour Force Survey report, there were 950,000 self-employed women in Canada, accounting for approximately 36 percent of all self-employed persons. - Now 1.05M and 38% A greater concentration of women run small and medium-sized enterprises (SMEs). (16% of all SMEs are women) A Comparison of Canadian Women and Men Entrepreneurs Reasons for the Emergence of Female Entrepreneurs Financial Need. Lack of Promotion Opportunities. Women Returning to the Workforce. Family and Personal Responsibility. Public Awareness of Women in Business. Part-Time Occupations. Higher Rate of Success for Women. Entrepreneurial Teams Business Study Plan 15  A group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product. Entrepreneurship Within Firms Intrapreneurs Creative people who work as entrepreneurs within corporations. The idea is to use a company’s existing resources—human, financial, and physical—to launch new products and generate new profits. Micropreneurs and Home-Based Business The smallest of small businesses are called micro-enterprises, most often defined as having fewer than five employees. Many micropreneurs are owners of home-based businesses. Micropreneurs and Home-Based Business, Pt. 2 Many home-based businesses are owned by people who are trying to combine career and family. Home-based Businesses Reasons for the growth of home-based businesses: Computer Technology. Corporate Downsizing. Change in Social Attitudes. Online Businesses There is a multitude of small businesses selling everything online from staplers to refrigerator magnets to wedding dresses. Business Study Plan 16  These small businesses compete with other small businesses as well as large web-based and bricks-and-mortar businesses. Why People Start Their Own Businesses Opportunity. New Idea, Process, or Product. Profit. Challenge. Independence. Family Pattern. Home-based Business Challenges Getting New Customers. Managing Time. Keeping Work and Family Tasks Separate. Abiding by City Ordinances. Managing Risk. Potential Home-based Businesses 1. Home Renovation Services. 2. Pet Products and Services. 3. Catering Services. 4. Cleaning Services. 5. Fall Prevention Products - Sales and Service. 6. Wedding Planner Services. 7. Ecommerce. Business Study Plan 17  8. In-Home Beauty Services. 9. Sewing and Alteration Services. 10. Business/Life Coach Services. Incubators Entrepreneurs and new start-ups can also find assistance from incubators. Incubators provide hands-on management assistance, education, information, technical and vital business support services, networking resources, financial advice, as well as advice on where to go to seek financial assistance. Provide inexpensive office space Government Support for Indigenous Businesses Indigenous economy contributes $31 billion to Canada’s GDP. It is estimated to reach $90 billion by 2025. There are over 50,000 Indigenous businesses in Canada of which 99 percent are SMEs. Budget 2021 proposed a $42 million investment over three years to expand the Aboriginal Entrepreneurship Program. Getting Started in Small Business Definition: business establishment. Has at least one paid employee. Annual sales revenue of $30,000, or is incorporated. Has filed a federal corporate income tax return at least once in the previous three years. Business Study Plan 18  Importance of Small Business Nearly all small businesses are Canadian-owned and managed. This is in contrast to large businesses, of which many are foreign-owned and managed. Small business thus plays a major role in helping to maintain the Canadian identity and Canadian economic independence. Small Business Success and Failure The following are some of the causes of small-business failure: Plunging in without first testing the waters on a small scale. Underpricing or overpricing goods or services. Underestimating how much time it will take to build a market. Starting with too little capital. Small Business Success and Failure, Pt. 2 Starting with too much capital and being careless in its use. Going into business with little or no experience and without first learning something about the industry or market. Borrowing money without planning just how and when to pay it back. Small Business Success and Failure, Pt. 3 Not allowing for setbacks and unexpected expenses. Buying too much on credit. Extending credit too freely. Expanding credit too rapidly. Business Study Plan 19  Failing to keep complete, accurate records, so that the owners drift into trouble without realizing it. Ways to get into Your First Business Venture 1. Start your own company. 2. Buy an existing business. 3. Buy a franchise unit. 4. Inherit/take over a family business. Ways to get into Your First Business Venture, Pt. 2 Get Some Experience. Many small-business owners got the idea for their businesses from their prior jobs. Managing a Small Business The functions of business in a small-business setting: Planning your business. Financing your business. Knowing your customers (marketing). Managing your employees (human resource development). Keeping records (accounting). Planning a Business Plan A detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, Business Study Plan 20  and the resources and qualifications of the owner(s). A business plan forces potential owners of small businesses to be quite specific about the goods or services they intend to offer. Writing a Business Plan Sample of Outline of Business Plan Cover Letter. Executive Summary. Company Background. Management Team. Financial Plan. Capital Required. Marketing Plan. Location Analysis. Manufacturing Plan. Appendix. Financing Your Business Getting Money to Fund a Small Business: Supplier credit. Personal savings. Personal credit cards. Retained earnings. Business credit cards. Personal lines of credit. Business Study Plan 21  Leasing. Personal loans. Loans from friends and relatives. Government lending agencies. Angel investment. Getting Money to Fund a Small Business Angel Investors: Private individuals who invest their own money in potentially hot new companies before they go public. Angel investors usually target their support (generally $20,000 to $500,000) to pre-start-up and early-stage companies. Getting Money to Fund a Small Business, Pt. 2 Crowdfunding: Crowdfunding is the raising of funds through the collection of small contributions from the general public (known as the “crowd”) using the Internet and social media. Examples of crowdfunding platforms where individuals can ask for or donate money include Kickstarter and Indiegogo. Knowing Your Customers Market: People with unsatisfied wants and needs who have both the resources and the willingness to buy. One of the greatest advantages that small businesses have over larger ones is the ability to know their customers better and to adapt quickly to their ever- changing needs. Business Study Plan 22  Managing Employees Hiring, training, and motivating employees are critical. It is not easy to find good, qualified help when you offer less money and fewer benefits. The gig economy (also called the on-demand economy or the contingent workforce) is work based on people having temporary jobs or doing separate pieces of work, each paid separately, rather than working in a permanent job for an employer. Going Global: Small Business & International Prospects Positives: 1. World Market. 2. Absorb Excess Inventory. 3. Soften U.S. Downturns. 4. Extend Product Life. Negatives: 1. Financing Difficult. 2. How to Get Started? 3. Lack of Cultural Understanding. 4. Paperwork. International Small Business Advantages: Deal With Individuals. Faster Shipping. Business Study Plan 23  Variety of Suppliers. Professional Service. Information: Canadian Trade Commissioner Service. Chapter Summary 1. Why people are willing to become entrepreneurs: New idea, independence, etc. Attributes of successful entrepreneurs: self-directed, action-oriented, etc. 2. Importance of small business and the Canadian economy: 2.6 million workers in the Canadian economy were self-employed. Chapter Summary, cont’d. 1. Summarize ways to learn about how small businesses operate. 2. Analyze what it takes to start and run a small business. 3. Outline the advantages and disadvantages that small businesses have in entering global markets. Here is a rewritten version of your Chapter 7 notes: CHAPTER 7 - ENTREPRENEURSHIP, SMALL BUSINESS I. INTERRELATIONSHIP OF SMALL BUSINESS, NEW VENTURE CREATION, AND ENTREPRENEURSHIP Business Study Plan 24  Small Business – Defined as an owner-managed business with fewer than 100 employees. Nascent entrepreneurs are individuals trying to start a business from scratch. The New Venture/Firm – A venture that has become operational within the last 12 months, adopting organizational forms such as proprietorship, partnership, corporation, or co-operative, and selling goods or services. Entrepreneurship – The process of identifying opportunities in the marketplace and accessing resources to capitalize on them. 1. Entrepreneurship goals – Some aim for independence and financial security, while others seek growth and expansion to transform ventures into large businesses. 2. Entrepreneurial characteristics – Successful entrepreneurs exhibit resourcefulness, a focus on customer relations, and a desire to be their own bosses. They manage uncertainty and risk well. Intrapreneurs – People who exhibit entrepreneurial traits within an existing firm or organization. II. THE ROLE OF SMALL AND NEW BUSINESSES IN THE CANADIAN ECONOMY Small Businesses – Approximately 98% of Canadian businesses have fewer than 100 employees. Private-sector companies are not government-owned. New Ventures – A business is considered new when it hires its first employee. New ventures are the primary source of new jobs and new products/services. III. THE ENTREPRENEURIAL PROCESS This process involves identifying a business opportunity, accessing resources, and considering social, economic, political, and technological factors impacting success. Business Study Plan 25  A. Identifying Opportunities – Generating and evaluating ideas for new or improved products, processes, or services. 1. Idea generation – Often arises from work or personal experience. Ignoring traditional assumptions and envisioning improvements can be successful. 2. Screening – Quick elimination of dead-end ideas saves time for pursuing viable opportunities. 3. Developing the opportunity – A clear business vision is key, and incorporating new information can improve results. B. Accessing Resources – Entrepreneurs often “bootstrap,” meaning they achieve more with fewer resources. 1. Financial resources – Choosing between debt and equity financing involves trade-offs. Equity financing, or money from investors, is often preferred during the risky start-up phase. 2. Other resources – Includes the Business Development Bank of Canada, incubators, and the internet. C. Building the Right Team – Deciding whether to form a venture team depends on the venture's size and personal competencies. D. Assessing the “Fit” – Matching the entrepreneur with the opportunity, resources, and people needed is an ongoing task. 1. Entrepreneur-opportunity fit – Entrepreneurs must assess their skills and interests to match the opportunity. 2. Opportunity-resources fit – Planning for future resource needs as the opportunity evolves. Business Study Plan 26  3. Entrepreneur-resources fit – Ensuring the entrepreneur has the capacity and networks for the venture. IV. STARTING UP A SMALL BUSINESS Three main options: starting from scratch, buying an existing business, or buying a franchise. A. Buying an existing business – Offers a higher success rate than starting from scratch, with established customer bases and supplier relationships. However, potential limitations include unclear financial health, poor reputation, and determining a fair purchase price. B. Buying a franchise – Popular for starting businesses. Franchise agreements provide rights to sell a product/service under established guidelines. Financial responsibilities include upfront fees, royalty payments, and advertising costs. V. SUCCESS AND FAILURE IN A SMALL BUSINESS A. Reasons for Success – Hard work, market demand, managerial competence, and luck are key factors. B. Reasons for Failure – Managerial incompetence, neglect, weak control systems, and insufficient capital are common causes. QUICK QUESTIONS 1. What are local examples of businesses in small business industry groups like services, retailing, manufacturing, and transportation? 2. Why is entrepreneurship an important part of our economic system? 3. What characteristics are shared by all entrepreneurs? 4. What is the purpose of a business plan? 5. What are the advantages and disadvantages of franchising for the franchisee? 6. Where can a person find money to start a new venture? Business Study Plan 27  7. Why do venture capital companies invest in new businesses? 8. What do people with big business experience bring to a new venture? CHAPTER 8 - MANAGEMENT AND LEADERSHIP Learning Objectives 1. Describe the changes occurring today in the management function. 2. Describe the four functions of management. 3. Relate the planning process and decision-making to the accomplishment of company goals. 4. Describe the organizing function of management. 5. Explain the differences between leaders and managers and describe the various leadership styles. 6. Summarize the five steps of the control function of management. Managers’ Roles are Evolving Managers must practice getting things done through organizational resources. Resources include: Human resources (e.g., employees) Natural resources (e.g., raw materials) Financial resources (e.g., money) Managers: A Definition of PDOC Management is the Business Study Plan 28  process used to accomplish organizational goals through: Planning Directing (leading) Organizing Controlling people and other organizational resources. Functions of Management (PDOC) Planning Directing Organizing Controlling Planning Strategies Business Study Plan 29  Strategic planning: The process of determining the major goals of the organization, and the policies and strategies for obtaining and using resources to achieve those 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 necessary 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 do not achieve the organization’s objectives. Business Study Plan 30  Managers: A Definition of PDOC, Pt. 2 Planning A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals, objectives, plans, strategies, and tactics (GOPST). Managers: A Definition of PDOC, Pt. 3 Directing (Leading) Creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively toward achieving organizational goals and objectives. Manager: A Definition of PDOC, Pt. 4 Organizing Designing the structure of the organization and creating systems in which everything works together to achieve goals. Manager: A Definition of PDOC, Pt. 5 Controlling Establishing clear standards to determine progress toward goals, rewarding achievements, and taking corrective actions if necessary. Planning: Create Vision, Pt. 3 Goals: Broad, long-term accomplishments expressed in measurable terms. Objectives: Specific, short-term actions to achieve goals. Plans: Ordered sequences of strategies, always with a time element. Planning: SWOT Analysis A SWOT analysis evaluates: Strengths – Internal factors that can be capitalized on. Business Study Plan 31  Weaknesses – Internal factors that need improvement. Opportunities – External factors that can be exploited. Threats – External factors to be mitigated. Decision Making Involves choosing among two or more alternatives: 1. Define the situation. 2. Collect needed information. 3. Develop alternatives. 4. Decide the best alternative. 5. Implement the decision. 6. Follow up to evaluate success. Problem Solving A less formal, quicker process than decision making. Often involves brainstorming and techniques like PMI (Pluses, Minuses, Interesting). Business Study Plan 32 Business Study Plan 33  Required Management Skills Technical Skills – Knowledge and ability in a specific field. Human Relations Skills – Ability to work well with others. Conceptual Skills – Ability to see the big picture and strategize. Business Study Plan 34 Business Study Plan 35  Stakeholders (anyone that has something to gain or lose- Shareholders) Stakeholders include customers, employees, suppliers, dealers, environmental groups, and surrounding communities. Leading Leadership is increasingly seen as separate from management. Not all managers are good leaders, and vice versa. Leaders are motivated by intrinsic factors like needs, desires, and willpower, rather than extrinsic factors like rewards and recognition. Successful Leadership Requires vision, communication, values, ethics, and the ability to embrace change. Leadership Styles Autocratic – Close supervision, effective in emergencies, without consulting others. Participative (Democratic) – Involves employee participation, increasing job satisfaction. Free-rein – Often effective when managing professionals like doctors or engineers. (Give them a task and a deadline, do not care about the process, simply if they get the job done) Knowledge Management Involves finding, storing, and making information accessible to everyone in the organization. Business Study Plan 36  Controlling The control function consists of five steps: 1. Establish clear performance standards. 2. Monitor + record actual performance. 3. Compare results against plans and standards. 4. Communicate results and deviations to employees. 5. Take corrective action when necessary. Chapter Summary 1. The management function involves responding to change. 2. The four functions of management: planning, directing, organizing, and controlling. 3. Different types of planning and the importance of decision-making. Business Study Plan 37  4. The organizing function of management and the skills needed by managers. 5. Differences between leaders and managers, and the various leadership styles. 6. The five steps of the control function of management. CHAPTER 8 - MANAGING THE BUSINESS ENTERPRISE WHO ARE MANAGERS? All businesses rely on effective management, and managers perform similar functions across different types of companies. THE MANAGEMENT PROCESS Management is the process of planning, organizing, leading, and controlling an organization’s resources (financial, physical, human, and informational) to achieve its goals. TYPES OF MANAGERS All managers perform the four management functions, but they emphasize them differently. Levels of Management Top Managers: Responsible for overall performance and long-range plans of the company. Middle Managers: Implement strategies, policies, and decisions of top management. First-line Managers: Supervise the work of operational employees. Areas of Management (HOIFM) The number and importance of each type of manager depend on the industry. Business Study Plan 38  Human Resource Managers: Handle hiring, training, evaluating, and compensating employees. Operations Managers: Oversee production, inventory, and quality control. Information Managers: Design and implement systems for gathering, processing, and distributing information. Marketing Managers: Develop, price, promote, and distribute goods and services. Financial Managers: Plan and oversee financial resources. Other Managers: Specialized roles, such as Research and Development, meet specific business needs. MANAGEMENT ROLES AND SKILLS Regardless of the level or area within an organization, managers must play certain roles and possess certain skills to succeed. Management Roles Managers' jobs are often described through functions like planning, organizing, leading, and controlling, but they also play specific roles in organizations. Mintzberg’s research identified 10 roles in three general categories. Management Skills Effective managers need several key skills, including technical, human relations, conceptual, decision-making, and time management skills. Different levels in an organization require different combinations of these skills. STRATEGIC MANAGEMENT Strategic management involves aligning an organization effectively with its external environment, starting with setting the business's goals. Business Study Plan 39  Levels of Strategy 1. Corporate-level Strategies: Identify the businesses a company will operate in. 2. Business-level (Competitive) Strategies: Establish profitable and sustainable positions within industries, including: Cost Leadership: Being the low-cost leader. Differentiation: Offering uniqueness valued by buyers. Focus: Serving a market niche better than competitors. 3. Functional Strategies: Set actions for each department to achieve the overall business goals. CONTINGENCY PLANNING AND CRISIS MANAGEMENT Contingency Planning: Identifies potential future changes in the market and how the company will respond if these changes occur. Crisis Management: Involves planning responses to emergencies, such as oil spills, that require immediate action. MANAGEMENT AND THE CORPORATE CULTURE When recruiting managers, organizations must ensure they fit into the company’s corporate culture, which is made up of shared experiences, stories, beliefs, and norms. A strong, clear culture provides advantages, and maintaining it is crucial for the organization’s success. Business Study Plan 40