Management Ch. 3

Question 1

Small Business Administration

SBA

Answer 1

government agency charged with assisting

small businesses

Question 2

Small Business

Answer 2

independently owned business that has

relatively little influence in its market

Question 3

Entrepreneur

Answer 3

businessperson who accepts both the risks
and the opportunities involved in creating
and operating a new business venture

Question 4

Entrepreneurship

Answer 4

the process of seeking business

opportunities under conditions of risk

Question 5

Established Market

Answer 5

one in which many firms compete

according to relatively well-defined criteria

Question 6

Niche

Answer 6

a segment of a market that is not currently

being exploited

Question 7

First-Mover Advantage

Answer 7

any advantage that comes to a firm
because it exploits an opportunity before
any other firm does

Question 8

Business Plan

Answer 8

document in which the entrepreneur
summarizes his or her business strategy
for the proposed new venture and how that
strategy will be implemented

Question 9

Franchise

Answer 9

arrangement in which a buyer (franchisee)
purchases the right to sell the good or
service of the seller (franchiser)

Question 10

Venture Capital Company

Answer 10

group of small investors who invest money

in companies with rapid growth potential

Question 11

Small Business Investment Company (SBIC)

Answer 11

government-regulated investment
company that borrows money from the
SBA to invest in or lend to a small business

Question 12

Small Business Development Center (SBDC)

Answer 12

SBA program designed to consolidate
information from various disciplines and
make it available to small businesses

Question 13

Sole Proprietorship

Answer 13

business owned and usually operated by
one person who is responsible for all of its
debts

Question 14

Unlimited Liability

Answer 14

legal principle holding owners responsible

for paying off all debts of a business

Question 15

General Partnership

Answer 15

business with two or more owners who
share in both the operation of the firm and
the financial responsibility for its debts

Question 16

Limited Partnership

Answer 16

type of partnership consisting of limited
partners and a general (or managing)
partner

Question 17

Limited Partner

Answer 17

partner who does not share in a firm’s
management and is liable for its debts only
to the limits of said partner’s investment

Question 18

General (or Active) Partner

Answer 18

partner who actively manages a firm and

who has unlimited liability for its debts

Question 19

Master Limited Partnership

Answer 19

form of ownership that sells shares to
investors who receive profits and that pays
taxes on income from profits

Question 20

Cooperatives

Answer 20

form of ownership in which a group of sole
proprietorships or partnerships agree to
work together for common benefits

Question 21

Corporation

Answer 21

business that is legally considered an
entity separate from its owners and is
liable for its own debts; owners’ liability
extends to the limits of their investments

Question 22

Limited Liability

Answer 22

legal principle holding investors liable for a
firm’s debts only to the limits of their
personal investments in it

Question 23

Tender Offer

Answer 23

offer to buy shares made by a prospective
buyer directly to a target corporation’s
shareholders, who then make individual
decisions about whether to sell

Question 24

Double Taxation

Answer 24

situation in which taxes may be payable
both by a corporation on its profits and by
shareholders on dividend incomes

Question 25

Closely Held (or Private) Corporation

Answer 25

corporation whose stock is held by only a few people and is not available for sale to the general public

Question 26

Publicly Held (or Public) Corporation

Answer 26

corporation whose stock is widely held and | available for sale to the general public

Question 27

S Corporation

Answer 27

hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes

Question 28

Limited Liability Corporation | LLC

Answer 28

hybrid of a publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability

Question 29

Professional Corporation

Answer 29

form of ownership allowing professionals to take advantage of corporate benefits while granting them limited business liability and unlimited professional liability

Question 30

Multinational (or Transnational) Corporation

Answer 30

form of corporation spanning national | boundaries

Question 31

Corporate Governance

Answer 31

roles of shareholders, directors, and other managers in corporate decision making and accountability

Question 32

Stockholder (or Shareholder)

Answer 32

owner of shares of stock in a corporation

Question 33

Board of Directors

Answer 33

governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets

Question 34

Officers

Answer 34

top management team of a corporation

Question 35

Chief Executive Officer (CEO)

Answer 35

the top manager of an organization

Question 36

Strategic Alliance

Answer 36

strategy in which two or more organizations collaborate on a project for mutual gain

Question 37

Joint Venture

Answer 37

strategic alliance in which the collaboration involves joint ownership of the new venture

Question 38

Employee Stock Ownership Plan | ESOP

Answer 38

arrangement in which a corporation holds its own stock in trust for its employees, who gradually receive ownership of the stock and control its voting rights

Question 39

Institutional Investor

Answer 39

large investor, such as a mutual fund or a pension fund, that purchases large blocks of corporate stock

Question 40

Merger

Answer 40

the union of two corporations to form a | new corporation

Question 41

Acquisition

Answer 41

the purchase of one company by another

Question 42

Divestiture

Answer 42

strategy whereby a firm sells one or more | of its business units

Question 43

Spin-off

Answer 43

strategy of setting up one or more corporate units as new, independent corporations