Entrepreneurship and Starting a Small Business

Chapter 6 – Entrepreneurship and Starting a Small Business 1. Entrepreneurship: Accepting the risk of starting and running a business. 2. Entrepreneurial Team: A group of experience 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. 3. Micropreneurs: Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle. 4. Affiliate Marketing: An internet-based marketing strategy in which a business rewards individuals or other businesses (affiliates) for each visitor or customer the affiliate sends to its Web site. 5. Intrapreneurs: Creative people who work as entrepreneurs within corporations. 6. Enterprise Zones: Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support. 7. Incubators: Centers that offer new businesses low-cost offices with basic business services. 8. Small Business: A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts. 9. 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, and the resources and qualifications of the owner(s). a. Sections: Executive Summary, Company Background, Management Team, Financial Plan, Capital Required, Marketing Plan, and Location Analysis. 10. Venture Capitalists: Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses. 11. Small Business Administration (SBA): A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans. 12. Small Business Investment Company (SBIC) Program: A program through which private investment companies licensed by the SBA lend money to small businesses. 13. Market: People with unsatisfied wants and needs who have both the resources and the willingness to buy. 14. Service Corps of Retired Executives (SCORE): An SBA office with volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for businesses). Chapter 7 - Management and Leadership 1. Management: The process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources. 2. Planning: A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives. 1 3. Organizing: A management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything works together to achieve the organization’s goals and objectives. 4. Leading: Creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization’s goals and objectives. 5. Controlling: A management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not. 6. Vision: An encompassing explanation of why the organization exists and where it’s trying to head. 7. Mission Statement: An outline of the fundamental purposes of an organization. 8. Goals: The broad, long-term accomplishments an organization wishes to attain. 9. Objectives: Specific, short-term statements detailing how to achieve the organization’s goals. 10. SWOT Analysis: A planning tool used to analyze an organization’s strengths, weaknesses, opportunities, and threats. 11. 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. 12. Tactical Planning: The process of developing short-term statements about what is to be done, who is to do it, and how it is to be done. 13. Operational Planning: The process of setting work standards and schedules necessary to implement the company’s tactical objectives. 14. Contingency Planning: The process of preparing alternative courses of action that may be used if the primary plans don’t achieve the organization’s objectives. 15. Decision Making: Choosing among two or more alternatives. 16. Problem Solving: The process of solving the everyday problems that occur. Problem solving is less formal than decision making and usually calls for quicker action. 17. Brainstorming: Coming up with as many solutions to a problem as possible in a short period of time with no censoring of ideas. 18. PMI: Listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third column. 19. Organization Chart: A visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom. 20. Top Management: Highest level of management, consisting of the president and other key company executives who develop strategic plans. 21. Middle Management: The level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling. 22. Supervisory Management: Managers who are directly responsible for supervising workers and evaluating their daily performance. 23. Technical Skills: Skills that involve the ability to perform tasks in a specific discipline or department. 24. Human Relations Skills: Skills that involve communication and motivation; they enable managers to work through and with people. 2 25. Conceptual Skills: Skills that involve the ability to picture the organization as a whole and the relationship among its various parts. 26. Staffing: A management function that includes hiring, motivating, and retaining the best people available to accomplish the company’s objectives. 27. Transparency: The presentation of a company’s facts and figures in a way that is clear and apparent to all stakeholders. 28. Autocratic Leadership: Leadership style that involves making managerial decisions without consulting others. 29. Participative (Democratic) Leadership: Leadership style that consists of managers and employees working together to make decisions. 30. Free-Rein Leadership: Leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives. 31. Enabling: Giving workers the education and tools they need to make decisions. 32. Knowledge Management: Finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm. 33. External Customers: Dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use. 34. Internal Customers: Individuals and units within the firm that receive services from other individuals or units. Chapter 8 - Adapting Organizations to Today’s Markets 1. Economies of Scale: The situation in which companies can reduce their production costs if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase. a. Henri Fayol’s Administration industrielle et générale (1919) i. Unity of Command ii. Hierarchy of Authority iii. Division of Labor iv. Subordination of Individual Interests to the General Interest v. Authority vi. Degree of Centralization vii. Clear Communication Channels viii. Order ix. Equity x. Esprit de corps (loyalty) b. Max Weber’s The Theory of Social and Economic Organization i. Like Fayol ^^ but also, ii. Job descriptions iii. Written rules, decision guidelines, and detailed records iv. Consistent procedures, regulations, and policies v. Staffing and promotion based on qualifications 3 2. Hierarchy: A system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person. 3. Chain of Command: This line of authority that moves from the top of a hierarchy to the lowest level. 4. Bureaucracy: An organization with many layers of managers who set rules and regulations and oversee all decisions. 5. Centralized Authority: An organization structure in which decision-making authority is maintained at the top level of management. 6. Decentralized Authority: An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be. 7. Span of Control: The optimal number of subordinates a manger supervises or should supervise. 8. Tall Organization Structure: An organization structure in which the pyramidal organization chart would be quite tall because of the various levels of management. 9. Flat Organization Structure: An organization structure that has few layers of management and a broad span of control. 10. Departmentalization: The dividing of organizational functions into separate units. 11. Line Organization: An organization that has direct two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with all people reporting to only one supervisor. 12. Line Personnel: Employees who are part of the chain of command that is responsible for achieving organizational goals. 13. Staff Personnel: Employees who advise and assist line personnel in meeting their goals. 14. Matrix Organization: An organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a lineand-staff structure. 15. Cross-Functional Self-Managed Teams: Groups of employees from different departments who work together on a long-term basis. 16. Networking: Using communications technology and other means to link organizations and allow them to work together on common objectives. 17. Real Time: The present moment or the actual time in which something takes place. 18. Virtual Corporation: A temporary networked organization made up of replaceable firms that join and leave as needed. 19. Benchmarking: Comparing an organization’s practices, processes, and products against the world’s best. 20. Core Competencies: Those functions that the organization can do as well as or better than any other organization in the world. 21. Digital Natives: Young people who have grown up using the internet and social networking. 22. Restructuring: Redesigning an organization so that it can more effectively and efficiently serve its customers. 4 23. Inverted Organization: An organization that has contact people at the top and the chief executive officer at the bottom of the organization chart. 24. Organizational (or Corporate) Culture: Widely shared values within an organization that provide unity and cooperation to achieve common goals. 25. Formal Organization: The structure that details lines of responsibility, authority, and position; that is, the structure show on the organization charts. 26. Informal Organization: The system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization. Chapter 9 - Production and Operations Management of Goods and Services 1. Production: The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge. 2. Production Management: The term used to describe all the activities mangers do to help their firms create goods. 3. Operations Management: A specialized area in management that converts or transforms resources (including human resources) into goods and services. 4. Form Utility: The value producers add to materials in the creation of finished goods and services. 5. Process Manufacturing: That part of the production process that physically or chemically changes materials. 6. Assembly Process: That part of the production process that puts together components. 7. Continuous Process: A production process in which long production runs turn out finished goods over time. 8. Intermittent Process: A production process in which the production run is short and the machines are changed frequently to make different products. 9. Computer-Aided Design (CAD): The use of computers in the design of products. 10. Computer-Aided Manufacturing (CAM): The use of computers in the manufacturing of products. 11. Computer-Integrated Manufacturing (CIM): The uniting of CAD with CAM. 12. Flexible Manufacturing: Designing machines to do multiple tasks so that they can produce a variety of products. 13. Lean Manufacturing: The production of goods using less of everything compared to mass production. 14. Mass Customization: Tailoring products to meet the needs of individual customers. 15. Facility Location: The process of selecting a geographic location for a company’s operations. 16. Telecommuting: Working from home via computer and modem. 17. Facility Layout: The physical arrangement of resources (including people) in the production process. 18. Materials-Requirement Planning (MRP): A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right place and time. 19. Enterprise-Resource Planning (ERP): A newer version of MRP that combines the computerized functions of all the divisions and subsidiaries of the firm—such as finance, 5 HR, and order fulfillment—into a single integrated software program that uses a single database. 20. Purchasing: The function in a firm that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for goods and services. 21. Just-in-Time (JIT) Inventory Control: A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line. 22. Quality: Consistently producing what the customer wants while reducing errors before and after delivery to the customer. 23. Six Sigma Quality: A quality measure that allows only 3.4 defects per million opportunities. 24. Statistical Quality Control (SQC): The process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning. 25. Statistical Process Control (SPC): The process of testing statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards. 26. Baldrige Awards: A standard set for overall company quality that is associated with a company’s leadership, strategic planning, customer and market focus, information and analysis, HR focus, process management, and business results. 27. ISO 9000: The common name given to quality management and assurance standards. 28. ISO 14000: A collection of the best practices for managing an organization’s impact on the environment. 29. Program Evaluation and Review Technique (PERT): A method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project. 30. Critical Path: In a PERT network, the sequence of tasks that takes the longest time to complete. 31. Gantt Chart: Bar graph showing production managers what projects are being worked on and what stage they are in at any given time. Chapter 10 - Motivating Employees 1. Intrinsic Reward: The personal satisfaction you feel when you perform well and complete goals. 2. Extrinsic Reward: Something given to you by someone else as recognition for good work; examples include pay increases, praise, and promotions. 3. Scientific Management: Studying workers to find the most efficient ways of doing things and then teaching people those techniques. 4. Time-Motion Studies: Studies, begun by Frederick Taylor, of which tasks must be performed to complete a job and the time needed to do each task. 5. Principle of Motion Economy: Theory developed by Frank and Lillian Gilbreth that every job can be broken down into a series of elementary motions. 6 6. Hawthorne Effect: The tendency for people to behave differently when they know they are being studied. 7. Maslow’s Hierarchy of Needs: Theory of motivation based on unmet human needs. a. Physiological Needs > Safety Needs > Social Needs > Esteem Needs > SelfActualization Needs 8. Herzberg’s Motivating Factors a. Motivators: In his theory, job factors that cause employees to be productive and that give them satisfaction. b. Hygiene Factors: In his theory, job factors that can cause dissatisfaction if missing but that do not necessarily motivate employees if increased. 9. McGregor’s Theories of Management a. Theory X: The average person dislikes work and will avoid it if possible… b. Theory Y: Most people like work; it is as natural as play or rest… most people naturally work towards goals to which they are committed… 10. Ouchi’s Hybrid Theory of Management a. Theory Z: Long-term employment, collective decision making, slow evaluation and promotion… 11. Goal-Setting Theory: The idea that setting ambitious but attainable goals can motivate workers and improve performance if the goals are accepted, accompanied by feedback, and facilitated by organizational conditions. 12. Management by Objectives (MBO): A system of goal setting and implementation; it involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees. 13. Expectancy Theory: Victor Vroom’s theory that the amount of effort employees exert on a specific task depends on their expectations of the outcome. 14. Reinforcement Theory: Theory that positive and negative reinforcers motivate a person to behave in certain ways. 15. Equity Theory: The idea that employees try to maintain equity between inputs and outputs compared to others in similar positions. 16. Job Enrichment: A motivational strategy that emphasizes motivating the worker through the job itself. 17. Job Enlargement: A job enrichment strategy that involves combining a series of tasks into one challenging and interesting assignment. 18. Job Rotation: A job enrichment strategy that involves moving employees from one job to another. Chapter 11 - Human Resource Management-Finding and Keeping the Best Employees 1. Human Resource Management (HRM): The process of determining HR needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to achieve organizational goals. 2. Affirmative Action: Employment activities designed to “right past wrongs” by increasing opportunities for minorities and women. 3. Reverse Discrimination: Discrimination against whites or males in hiring or promoting. 7 4. Job Analysis: A study of what employees do who hold various job titles. 5. Job Description: A summary of the objectives of a job, the type of work to be done, the responsibilities and duties, the working conditions, and the relationship of the job to other functions. 6. Job Specifications: A written summary of the minimum qualifications required of workers to do a particular job. 7. Recruitment: The set of activities used to obtain a sufficient number of the right employees at the right time. 8. Selection: The process of gathering information and deciding who should be hired, under legal guidelines, to serve the best interests of the individual and the organization. 9. Contingent Workers: Employees that include part-time workers, temporary workers, seasonal workers, independent contractors, interns, and co-op students. 10. Training and Development: All attempts to improve productivity by increasing an employee’s ability to perform. Training focuses on short-term skills, development on long-term abilities. 11. Orientation: The activity that introduces new employees to the organization; to fellow employees; to their immediate supervisors; and to the policies, practices and objectives of the firm. 12. On-the-Job Training: Training at the workplace that lets the employee learn by doing or by watching others for a while and then imitating them. 13. Apprentice Programs: Training programs during which a learner works alongside an experienced employee to master the skills and procedures of a craft. 14. Off-the-Job Training: Internal or external training programs away from the workplace that develop any or a variety of skills or foster personal development. 15. Online Training: Training programs in which employees complete classes via the internet. 16. Vestibule Training: Training done in schools where employees are taught on equipment similar to that used on the job. 17. Job Simulation: The use of equipment that duplicates job conditions and tasks so trainees can learn skills before attempting them on the job. 18. Management Development: The process of training and educating employees to become good managers, and then monitoring the progress of their managerial skills over time. 19. Networking: The process of establishing and maintaining contacts with key managers in and outside the organization and using those contacts to weave strong relationships that serve as informal development systems. 20. Mentor: An experienced employee who supervises, coaches, and guides lower-level employees by introducing them to the right people and generally being their organizational sponsor. 21. Performance Appraisal: An evaluation that measures employee performance against established standards to make decisions about promotions, compensation, training, or termination. 22. Fringe Benefits: Benefits such as sick-leave pay, vacation pay, pension plans ,and health plans that represent additional compensation beyond base wages. 23. Cafeteria-Style Fringe Benefits: Fringe benefits plan that allows employees to choose the benefits they want up to a certain dollar amount. 8 24. Flextime Plan: Work schedule that gives employees some freedom to choose when to work, as long as they work the required number of hours. 25. Core Time: In a flextime plan, the period when all employees are expected to be at their job stations. 26. Compressed Workweek: Work schedule that allows an employee to work a full number of hours per week in fewer days. Job Sharing: An arrangement whereby two part-time employees share one full-time job. 9