Midterm #3 Flashcards
1
Q
what is sole proprietorship? (form of business)
what are the benefits and the risks?
A
easy, quick, affordable, adaptable,
full control with minimal administration
risks: personal exposure, credibility
2
Q
how do you form a sole proprietorship/make it legal?
A
choose name, filed an assumed business name with the secretary of state, obtain licenses, obtain an employer identification number
3
Q
what is a partnership?
A
UNLIMITED LIABILITY, LIMITED LIFE AND LIMITED CAPITAL
partners maintain control and benefit (owners=partners)
voluntary association, unlimited liability
prepare a partnership agreement, mutual agency
limited life (debt, death, etc); limited capital access
4
Q
how are partnerships regulated and taxed?
A
relatively unregulated, SINGLE taxation
5
Q
how are corporations regulated/taxed?
A
government regulation, DOUBLE taxation
6
Q
what is a domestic corporation?
A
operate in the state in which it is incorporated
7
Q
what is a foreign corporation?
A
operate in states other than state of incorporation
8
Q
what is an alien corporation?
A
organized in one country and operate in another
9
Q
which state has the most fortune 500 companies hqs?
A
delaware (best/least taxes on companies)
10
Q
what is common stock?
A
voting rights (proxy), residual claims to assets, shares that allow holder to get dividends
11
Q
what is preferred stock?
A
no vote, first claim to income (dividend), first claim on assets after debt is paid, higher claim to assets than common stock
12
Q
what is a B corporation?
A
certified by nonprofit B lab, meet standards of social and environmental performance; more than 4k B corps
13
Q
what is the corporation required to do by law?
A
to create wealth for its stockholders
14
Q
what is fiduciary responsibility?
A
relationship between the US (economy) and the corporation (business), responsibility to promote and create wealth
15
Q
what is the 3 P approach, in relation to B corps?
A
people, planet, profit — connects to the triple bottom line where B corps focus on all 3 P’s instead of just profit
16
Q
what is an LLC?
A
limited liability company; benefits: single taxation, flexibility, limited liability
17
Q
what is a merger?
A
when 2 companies combine into 1
18
Q
what is an acquisition?
A
when one firm buys another
19
Q
what are horizontal, vertical and conglomerate acquisitions?
A
horizontal: same industry
vertical: distribution channel, suppliers/distributors
conglomerate: separate industry/unrelated businesses
20
Q
what is an entrepreneur?
A
someone who creates a new business to make money by taking advantage of opportunities and using resources to capitalize on them – someone who doesnt have the backing of an established company
21
Q
how many businesses, in the US, are started each year by businesses?
A
more than 6 million
22
Q
what are some characteristics of an entrepreneur?
A
take initiative, appreciate risk, confident, self-reliance, perseverance
23
Q
what is innovation?
A
tool used by entrepreneurs, process used to create new ideas
24
Q
what are some weaknesses of entrepreneurs?
A
often lack natural or exemplary leadership skills
25
how are entrepreneurs commonly presented?
heroes or villians
26
what are some reasons businesses fail?
declining market, lack of succession plan, dysfunctional management, operational inefficiencies, operational mediocrity, lack of cash cushion, poor accounting, out-of-control growth, owners who cant get out of their own way, business just doesnt work
27
what is purposeful innovation?
meaningful contribution through: new or different value, combining resources in a more productive way
28
what is intrapreneurship?
having/applying an entrepreneurial mindset within an established organization, stimulates innovation in a large company --- foster creativity and new ideas for the company to keep growing
29
what is crowdsourcing?
practice of getting necessary services, ideas, or content by soliciting contributions from a large group of people, especially an online community -- not employees
30
what is an entrepreneurship process?
entrepreneurial mindset, idea, opportunity analysis, feasibility analysis, business plan, funding
31
what is opportunity analysis?
two areas of focus: determine how attractive an industry is overall as a new business, identify possible niches a new entrant can occupy profitably
32
what is feasibility analysis?
"should we proceed with this business idea?"
33
what is product or service feasibility analysis?
determines degree to which product/service idea appeals to potential customers; identifies resources necessary to produce it
34
what is financial feasibility analysis?
straightforward haha
35
what are the 3 proforma statements?
balance sheet, cash flow statement, profit and loss statement
36
what are the 2 functions of the business plan?
1. guiding company by charting its future course and defining its strategy
2. attracting lenders and investors who will provide capital
37
what is equity capital?
personal investment of owners in the firm, called "risk capital" because investors assume risk of losing money if business fails
38
what are the sources of equity financing?
personal savings, friends and family, angel investors, partners, corporations, public stock sale
39
what are angel investors?
private investors in emerging start-ups in exchange for equity stakes
40
what is management?
accomplishing organizational goals through planning, organizing, leading, and controlling people and resources
41
what is leadership?
influencing and inspiring others to work to achieve a common goal, setting a good example, giving them power and freedom to accomplish it
42
what do leaders create?
a vision
43
what do managers create?
goals
44
what do effective managers and leaders do?
hire the right employees, build a culture, communicate the shared vision, motivate workers to perform
45
what does POLC stand for?
Planning, Organizing, Leading, and Controlling
46
what is a mission statement?
outline of fundamental purposes of the organization (philosophy, long-term survival needs, customer needs, social responsibility)
47
what are planning goals?
broad and long term accomplishments that an organization wishes to attain
48
what are planning objectives?
specific, short term statements detailing how to achieve the orgs goals
49
what 2 fundamental questions does planning answer?
what is the situation now? (swot analysis)
how can we get to our goal from here? (strategic, tactical, operation, and contingency planning)
50
what is SWOT analysis?
internal STRENGTHS
internal WEAKNESSES
external OPPORTUNITIES
external THREATS
51
what is strategic planning?
broad, long range goals by top managers;
major goals, and finding strategies to accomplish
52
what is tactical planning?
identification of specific short range objectives by lower level managers; developed and detailed
53
what is operational planning?
the setting of work standards and schedules to implement tactical objectives
54
what is contingency planning?
backup plans in case of failure
55
what is the rational decision making model?
1. define the situation
2. describe and collect needed information
3. develop alternatives
4. decide which alternative is best
5. do what is indicated
6. determine whether decision was a good one and follow up
56
what is problem solving?
solving everyday problems, less formal than decision making, quicker action
57
what are the levels of management?
top management --- middle management --- supervisory management --- non supervisory
58
what is the COO?
chief operating officer (donna)
59
what is the CFO?
chief financial officer
60
what is CIO?
chief information officer
61
what are the 3 skills all employees need in organizing?
human relations (communication), conceptual (broad vision), technical (tactile skills)
62
why is staffing and hiring the right people so important?
expensive investments in people, in high employment hard to find the right people, many will demand fair wages/treatment
63
what is an autocratic leadership style?
make decisions without consulting others
64
what is a participative/democratic leadership style?
managers and employees work together to make decisions
65
what is the free-rein leadership style?
managers set objectives and employees are relatively free to do whatever it takes to accomplish objectives
66
what is leading (in broad definition)?
empowering workers, authority to make decisions, more coach less boss, enabling
67
what is controlling (in broad scope)?
control function, measures performance relative to planned objectives, rewards people for work well don, takes corrective action
68
what countries does the US consumer mainly buy from?
canada, mexico, china, europe
69
what is globalization?
integration and free movement of people, goods, services, and capital across national borders; influences supply and demand
70
why is there globalization? why is it beneficial for the economy and businesses?
increase revenue, access different markets, reduce costs, access different materials
71
what are the major drivers of globalization?
1. declining trade and investment barriers
2. technological change
72
what are the 3 major technological advances of globalization?
communication, information processing, transportation
73
what does WTO stand for?
World trade organization
74
What does the WTO do?
"police force" for world trading system
75
what does the international monetary fund do?
maintains order in the international monetary system
76
what does the world bank do?
promotes economic development
77
what does the united nations do?
attempts to maintain international peace and security
78
what is the need for the cruck?
to bypass import taxes on trucks from foreign countries (subaru brat)
79
what is importing?
buying products from another country
80
what is exporting?
selling products to another country
81
what is the inspiration for US exporting?
boosts the economy, improves employment numbers
82
why does international trade exist?
no nation is entirely self-sufficient, to meet citizens' needs, mutually beneficial exchange
83
what is the mutually beneficial exchange? (in terms of international trade)
countries with abundant natural resources need access to foreign markets or tech from other countries
84
what is free trade? (in terms of international trade)
movement of goods and services among nations without political or economic barriers
85
what are the comparative advantages of free trade?
a country should sell the products it produces most efficiently and buy from other countries the products it cannot produce as efficiently
86
what is the absolute advantage to free trade?
a country has a monopoly on producing a specific product or produce is most efficiently
87
what are the debate/arguments against globalization?
jobs and income, labor policies and ecological environment, national sovereignty and culture, the world's poor
88
what is outsourcing?
firm contracts with other firms to do some or all of its functions; could outsource payroll, accounting, manufacturing; offshore outsourcing!
89
what is the balance of trade? (in terms of global trade)
TOTAL EXPORTS = TOTAL IMPORTS
total value of a nations exports compared to imports over a particular period
90
what is the trade surplus? (in terms of global trade)
VALUE OF EXPORTS>IMPORTS
when the value of country's exports is more than that of its imports --- FAVORABLE
91
what is the trade deficit? (in terms global trade)
when the value of country's exports is less than that of its imports
92
what are the forces affecting trade in global markets?
sociocultural, economic and financial forces, legal and regulatory, physical and environmental
93
what are sociocultural forces?
set of values, beliefs, rules, and institutions held by a specific group of people
94
what are examples of sociocultural forces?
social structures, religion, manners, customs, values, language, personal communication
95
what are exchange rates?
value of one nations currency relative to currencies of other countries
96
what is the high value of the dollar?
dollar is trading for more foreign currency; foreign goods are less expensive!
97
what is the low value of the dollar?
dollar is trading for more foreign currency; foreign goods are more expensive!
98
what are legal and regulatory forces? (affecting global trade)
no global/international system of laws, laws may be inconsistent, US firms must follow US laws while conducting global business
99
what are the environmental forces?
developing countries have transportation and storage systems that make international distribution difficult or impossible
100
what is licensing?
when a firm (licensor) provides the right to manufacture its product of use its trademark to a foreign company (licensee) for a fee (royalty)
101
what is franchising?
a contractual agreement whereby someone with a good idea for a business sells others the rights to use the name and sell a product/service in a given area
102
what is contract manufacturing?
a foreign company produces private-label goods to which a domestic company then attaches its own brand name or trademark --- outsourcing
103
what are joint ventures?
partnership in which two or more firms join to undertake a major project
104
what are strategic alliances?
partnership between two or more firms established to help each firm build competitive advantage; dont typically share costs, risks, management, or profits
105
what is foreign direct investment (FDI)?
buying of permanent property and business in foreign nations
106
what is a foreign subsidiary?
firm owned in a foreign country by another firm (parent)
107
what are the advantages and disadvantages of foreign subsidiaries?
advantage: parent maintains control over tech/expertise
disadvantage: must commit funds and tech within foreign boundaries
108
what are the 7 instruments of trade policy?
tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative policies, antidumping policies
109
what are tariffs?
tax levied on imports, raising the cost of imported products relative to domestic products
110
why do governments impose tariffs?
increase government revenue, provide protection to domestic producers against foreign competitors by increasing the cost of imported foreign goods, force consumers to pay more for certain imports, tariffs are pro-producer and anti-consumer and tariffs reduce the overall efficiency of the world economy
111
what are subsidies?
government payment to a domestic producer, help domestic producers -- compete against low-cost foreign imports gain export markets, consumers typically absorb costs of subsidies
112
what are import quotas?
direct restriction on the quantity of goods imported into a country
113
what is dumping?
selling goods in a foreign market far below cost of production or selling goods below their "fair" market value; method to unload excess production
114
why are there anti-dumping policies?
predatory behavior: profits from home markets to subsidize prices in a foreign market, drives indigenous competitors out of that market, later raising prices
115
what are some common ethical issues with global business?
employment practices, human rights, environmental regulations, corruption
116
what is corruption? (in simple terms)
dishonest behavior by those in positions of power, such as business managers or government officials.
117
what are the 3 levels of ethical standards?
1. the law
2. organizational policies and procedures
3. the moral stance employees take when faced with decisions not governed by formal rules
118
what is the definition of ethics?
the standards of moral behavior, behaviors accepted by society as right vs wrong
119
what is the front page test?
a test/mindset that if any of the internal business movements were displayed on the front page of a newspaper, they shouldn't affect or should positively affect that business's reputation
120
where do ethics originate?
organizational ethics begin at the top, managers and leaders set the example and instill core values of the company
121
what are the basic rights of consumers?
the right to: safety, to be informed, to choose, to be heard
122
how does a manager shape the organization and the world that employees inhabit?
employment agreement, structure of the job (task), interpersonal interaction
123
why do some managers behave unethically?
personal ethics code, do not realize they are behaving unethically, organizations culture, unrealistic performance goals, unethical leadership
124
what is the fraud triangle?
perceived opportunity, rationalization, perceived pressure
125
what are examples of the fraud triangle?
enron, tyco, worldcom
126
what are the causes of the enron scandal?
conflict of interest, lack of attention, lack of truthfulness, enrons culture
127
what is the sarbanes-oxley act of 2002?
establishes new or enhanced standards for all US public company boards, management, and public accounting firms --- AKA sarbox
128
what is the dodd-frank wall street reform and consumer protection act of 2010?
comprehensive regulation of financial markets, the consolidation of regulatory agencies, consumer protection reforms, tightened regulation of credit rating agencies
129
why was the dodd-frank wall street reform and consumer protection act of 2012 passed?
in response to the financial crisis of 2008, most significant changes to financial regulation in the US since the great depression
130
what is business ethics?
the accepted principles of right or wrong governing the conduct of business people; often codified into laws but behaving ethically goes beyond staying within the law
131
what are some ethical issues?
self-dealing, information manipulation, anticompetitive behavior (intentionally harming competitors), opportunistic exploitation, substandard working conditions, environmental degradation, corruption
132
what is the friedman doctrine?
as long as the company stays within the law and the rules of the game without deception or fraud -- anything is free game to increase profit
133
what is the freeman/stakeholder theory?
companies should bear responsibilities to all of the individuals their activities affect and upon whom their existence depends
134
what role does marketing and promotion play into ethics?
creating awareness, creating an image, reaching the target market, value and purpose, connecting with your market and building loyalty ---- all can impact generations with possible misinformation to garner profit
135
what is corporate social responsibility?
companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment
136
what is a private enterprise?
market turns self-interest into social good
137
what is required to have a private enterprise? how is it ensured?
private property, freedom of choice, right to keep profits, fair competition --- all ensured by the government
138
what are some problems with business?
power of business vs consumer; actions of business vs consumer; public reaction; governments reaction
139
what is government intervention? what is the purpose?
ensure fair competition, private property, freedom of choice, right to keep profits
promote economic health, social responsibility, correct market failures, ethical lapses
140
how is government intervention enacted?
rule of law, industry regulation
141
what is common law?
judges establish when deciding disputes - precendents
142
what is statutory law?
enacted by a federal or state legislature
143
what is administrative law?
regulations passed by state and federal administrative agencies
144
what is the role of the judiciary branch?
settles disputes through application of law, trial courts (dispute is first heard) and appellate courts (dispute heard again if lower court errors)
145
what is criminal law? what is the punishment?
dispute between government and individual; fines and/or imprisonment
146
what is civil law? what is the punishment?
dispute between two individuals; fines
147
what is torts?
civil wrong inflicted on other people or their property; include all wrongs that are not a breach of contract
148
what are some examples of torts?
assault, slander, libel, product liability, fraud
149
what is fraud?
someone 'hurts' another by deception or manipulation, something said or done in a dishonest way to trick people
150
what is alternative dispute resolution?
arbitration and mediation
151
what is arbitration?
binding, non-binding
152
what is meditation?
non-binding... always
153
what are the types of property?
real, personal (and intellectual)
154
what is real property?
real estate and everything permanently attached to it
155
what is personal property?
everything else (tangible and intangible)
156
what is intellectual property?
generate by a persons creative activities (ex musical works, artwork, computer software)
157
what types of intellectual property are there?
patent, trademark, copyright
158
what is a patent?
inventors get exclusive right to inventions (20 years)
159
what is a trademark?
symbols used by firms to identify; distinctive word, symbol, design, name, logo, slogan -- noted by the R circle symbol
160
what is a copyright?
authors have exclusive rights to documents; literary, dramatic, musical, and artistic works, denoted by C circle symbol
161
what is a patent troll?
a company or person that acquires a lot of patents without the desire to actually develop the products
162
what is a genericized trademark?
primary meaning of the genericized trademark becomes the product or service itself -- kleenex, aspirin
162
what is a patent vs a trade secret?
patent is limited in time, requires compliance, and takes effect immediately; trade secrets: others can reverse engineer, anyone may use it once discovered, may be otherwise patented
163
what is a breach of contract?
a violation of a valid contract where the injured party goes to court to enforce contract and sometimes collect damages
164
what is agency?
acts on behalf of another (in others interest)
165
what are the 3 elements of a contract?
legal purpose, consideration, voluntary agreement
166
what is contractual capacity?
to be a legal the parties must have a legal ability to enter into the contract - they must have contractual capacity
167
who are some people who lack contractual capacity?
minors, mentally unstable/incapable/insane, intoxicated, under duress or coercion
168
what is bankrupcty?
give an honest debtor a "fresh start" in life by relieving the debtor of most debts
169
what did the 2005 personal bankruptcy laws change?
require people with income at certain levels to pay some or all of their financial obligations
170
what is the uniform commercial code?
first published in 1952, seeks to "harmonize" the law of commercial transactions in all 50 states
171
what are express warranties?
specifically defined by the seller
172
what are implied warranties?
legally imposed on seller/disclaimed
173
what are the governments other roles?
manage money, take money out of markets, put money into markets, regulate industries
174
what is the FDA?
the food and drug administration
175
what is the FTC?
federal trade commission
176
what is "business model thinking"?
large goals, product development and startup ventures, language for communicating
177
what are the 9 components of business models?
1. value propositions
2. customer segments
3. channels (of distribution)
4. customer relationships
5. revenue model
6. key resources
7. key partnerships
8. key activities
9. cost structure
178
what are value propositions?
solving a need or product, development: question assumptions, iterate through learning; making business valuable, "selling" the business
179
what is customer segments?
business exists for customers, not vice versa
180
what are channels?
distribution, supply chain, product life cycle; sales channels
181
what are customer relationships? how are they maintained?
get, grow, and keep customers; get: CRM, customer acquisition costs; grow: grow from existing customers; keep: maintain current customers, satisfy
182
what are key resources in the business model?
finance, physical, intellectual.... assets
183
what are the key partnerships in a business model?
partners and suppliers, interdependent
184
what are the key activities in the business model?
most important attributes, value chain
185
what is the cost structure of the business model?
most expensive key activities
