Management Test 2 Review PDF

CHAPTER 6 **Sole proprietorship**: unincorporated business owned by an individual for profit. − Majority of businesses in the United States\ − Easy to start\ − Few legal requirements\ − Proprietor has total ownership and control\ − Owner has unlimited liability\ − Financing can be harder to obtain...

CHAPTER 6 **Sole proprietorship**: unincorporated business owned by an individual for profit. − Majority of businesses in the United States\ − Easy to start\ − Few legal requirements\ − Proprietor has total ownership and control\ − Owner has unlimited liability\ − Financing can be harder to obtain **Partnership**: unincorporated business owned by two or more people\ − Easy to start\ − Use a formal partnership agreement\ ♣ Specifies how partners share responsibility and resources\ ♣ Specifies how partners contribute expertise\ − Unlimited liability\ − Often dissolve within five years **Corporation**: artificial entity created by the state and existing apart from its owners\ − Separate legal entity liable for its actions\ − Limits owners' liability\ − Must pay taxes on its income\ − Provides continuity\ − Expensive and complex paperwork\ − Can raise funds through the sale of stock to investors **Franchising**: firm (franchise) collects upfront and ongoing fees in exchange\ for letting other firms (franchisees) offer products and services under its\ brand name and using its processes\ − Franchise provides management help\ − Provides established name and national advertising\ − Disadvantages include a lack of control; franchisors who dictate the\ prices; requirement of purchasing expensive equipment; and new\ product offerings\ − Start-up costs may be high and are typically followed with monthly\ payments **Immigrants** were **almost twice** as likely as native-born Americans to start new businesses. **Entrepreneurship**: the process of initiating a business venture, organizing the necessary resources, assuming the associated risks, and enjoying the rewards\ **Entrepreneur:** someone who engages in entrepreneurship **Most important traits of entrepreneurs**\ − Autonomy (self-govern)\ − Entrepreneurial sacrifice\ − High energy **Five Types of Small-Business Owners** **-Idealists**: Rewarded by chance to work on something new and creative. \- **Hard Workers**: Thrive on the challenge of building a larger, more profitable business. **-Optimizers**: Get personal satisfaction from being business owners. **- Jugglers:** High-energy people who enjoy handling every detail of their own business. **-Sustainers**: Enjoy chance to balance work and personal life. **Business plan:** document specifying business details prepared by an entrepreneur prior to opening a new business CHAPTER 7 **Contingency planning**: define company responses to be taken in the case of emergencies, setbacks, or unexpected conditions ** Scenario building**: forecasting technique that looks at current trends and discontinuities and visualizes future possibilities **Stretch goals**: reasonable yet highly ambitious and compelling goals, characterized by both extreme difficulty and extreme novelty, that energize people and inspire excellence **Crisis planning:** preparing organization, managers, and employees to cope with catastrophic events that could destroy the firm **Strategic goals**: official goals; broad statements describing where the organization wants to be in the future **Strategic plans:** define the action steps by which the company intends to attain strategic goals. − Blueprint that defines organizational activities and resource allocations − Tend to be long term **Tactical goals:** the results that major divisions and departments within the organization intend to achieve − Apply to middle management **Tactical plans:** define what major departments and organizational subunits will do to implement the organization's strategic plan − Tend to be short term **Operational goals**: results expected from departments, work groups, and individuals − Precise and measurable **Operational plans**: developed at the lower levels of the organization to specify action plans toward achieving operational goals and to support tactical plans − Goals stated in quantitative terms − Schedules are an important component **Key performance indicators (KPIs):** tool used to assess what is important to an organization and how well the organization is progressing toward achieving its strategic goal **Management by objectives (MBO**): system whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance **Management by means (MBM**): new systemic approach that focuses attention on the methods and processes used to achieve goals CHAPTER 8 **Elements of Competitive Advantage** **− Synergy:** occurs when organizational parts interact to produce a joint effect that is greater than the sum of its parts acting alone Deliver value -Target customers\ Exploit core competencies\ **− Core competence**: something the organization does especially well in comparison to its competitors\ Build synergy **Corporate-level strategy**: pertains to the organization as a whole and the combination of business units and product lines that makes up the corporate entity (**what business are we in?)** **Business-level strategy**: pertains to each business unit or product line **Functional-level strategy**: pertains to the major functional departments within the business unit ( **how do we support the business level competitive strategy**) **Strategy:** plan of action that describes resource allocation and activities for dealing with the environment, achieving a competitive advantage, and attaining the organization's goals. **Strategic management**: set of decisions and actions used to formulate and execute strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals. **Market share** **(high growth, high market share) Stars:** Rapid growth and expansion. **(slow growth, high market share**) **Cash Cows**: Milk to finance bright prospects and stars. (**high growth, low market share**) **Bright Prospects:** New ventures. Risky---a few become stars, others are divested. **(Low growth, low market share) Dogs:** No investment. Keep if some profit. Consider divestment **Diversification**: strategy of moving into new lines of business **Related diversification**: expansion into new business related to existing business activities **Unrelated diversification**: expansion into new lines of business that are not related **Vertical integration**: expansion into businesses that supply to the business or are distributors **Cost leadership strategy**: aggressively seek efficient facilities, cost reductions, and cost controls **Differentiation strategy**: distinguish products and services **Focus strategy**: concentration on a specific region or buyer **Strategy formulation**: includes the planning and decision making that lead to the establishment of the firm's goals and the development of a specific strategic plan **Globalization strategy**: use of standardized product design and advertising strategies throughout the world CHAPTER 9 **Programmed decisions**: involve situations that have occurred often enough to enable decision rules to be developed and applied in the future **Nonprogrammed decisions**: made in response to situations that are unique, are poorly defined and largely unstructured, and have important consequences for the organization **-Certainty**: situation in which all information the decision maker needs is fully available **- Risk**: decision has clear-cut goals and good information is available, but future outcomes associated with each alternative are subject to chance of loss or failure - **Uncertainty**: goals are known, but information about alternatives and future events is incomplete **-Ambiguity**: goals to be achieved or problems to be solved are unclear, alternatives are difficult to define, and information about outcomes is unavailable **Decision making**: the process of identifying problems and opportunities and then resolving them **Brainstorming:** uses a face-to-face interactive group to spontaneously suggest as many ideas as possible for solving a problem − **Electronic brainstorming**: brings people together in an interactive group over a computer network **Coalition**: informal alliance among managers who support specific goal **Administrative model**: use of a rational decision-making process within the limits of human and environmental factors **Descriptive:** how managers actually make decisions in complex situations ** Bounded rationality**: people have limits or boundaries on how rational they can be **Satisficing**: choosing the first solution that satisfies minimal decision criteria **Decision styles:** distinctions among people with respect to how they evaluate problems, generate alternatives, and make choices. − **Directive style**: prefer simple, clear-cut solutions to problems **− Analytical style**: base decisions on all available rational data − **Conceptual style**: use a broad amount of information to solve problems creatively − **Behavioral style**: exhibit a deep concern regarding effect of decision on others **Decision Making: Administrative Model** Assumptions − Goals are often vague and conflicting − Managers often unaware of problems or opportunities − Rational procedures are not always used; simplistic view of problems − Managers' searches for alternatives are limited − Most managers settle for satisficing **Anchoring bias:** occurs when we allow initial impressions, statistics, and estimates to act as anchors to our subsequent thoughts and judgements **Confirmation bias**: occurs when a manager puts too much value on evidence that is consistent with a favored belief or viewpoint and discounts evidence that contradicts it **Evidence-based decision making**: a commitment to make more informed and intelligent decisions based on the best available facts and evidence SUPPLY CHAIN **Supply chain**: The sequence of organizations---their facilities, functions, and activities---that are involved in producing and delivering a product or service. Also referred to as value chains. **Logistics:** The part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information **Supply chain management**: The strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management **Procurement**: The purchasing department is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service **Strategic partnering:** Two or more business organizations that have complementary products or services join so that each may realize a strategic benefit