Business Test #2
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What is a Merger?
When 2 companies come together to form a new company.
ex: Sprint / Nextel
What is an Acquisition?
One company buys out another.
Leveraged Buy Out
An attempt by stakeholders to purchase a company through borrowing.
When 2 companies in a supply chain come together.
ex: A restaurant buys a bakery.
When 2 competitors merge.
ex: If McDonald's merged with Burger King.
Corporation that has divisions that make different products.
- +little paperwork
- +owner has full control
- +owner gets all profits
- +owner is only taxed once
- -unlimited liability
- -limited financial resources
- -owner must be 'jack of all trades'
- -limited life span
- -time committed
- +easy to start
- +more $ resources
- +benefits to specialization
- -unlimited liability
- -division of profits
- -disagreement among partners
- -limited life span
Type of Partnerships are ____, ____, ____ .
- Limited Partnership
- Limited Liability Partnerships
- Matter Limited Partnership
2 classes of partners -
- General Partner
- Limited Partner
Limited Liability Partnerships
No general partners.
Matter Limited Partnership
Ownershares can be traded in the stock market.
- +limited liability
- +easy to transfer ownership
- +much easier to finance
- +easy to attract talent stock incentives (stock options)
- +unlimited life
- -double taxation
- -more paperwork, costs
- -corporate government issues (Board of Directors)
**Corporation is a separate legal entity.
- +tax advantages
- +transferrable ownership, like a corporation
- -owndership limited to 100 shareholders
- -stock aid income restrictions
Limited Liability Company (LLC)
- +limited liability; like a partnership
- +ownership rules more flexible than Chapter S
- +flexible distribution of profits/losses
- +operation: more flexible than a corporation
- -ownership is difficult to transfer
- -limited life span (mostly structured - 30 years)
- -fewer incentives for members (owners)
- -owners must pay FICA taxes (social security)
- Not a business; more like a contractual agreement.
- Turn-key operation (ready to go, no construction)
- +Mgmt and marketing assisiting
- +personal ownership
- +Nationally recognized name (ex: McDonald's, IHOP)
- +more sources of capital
- +lower failure rate
- -large startup/ongoing costs
- -Mgmt regulation
- -coattail effects from other franchises
- -franchise solely responsible for most legal claims
(ex: New York co-op apartments.)
- -A business owned and controlled by the people who use it.
- -# of people or businesses come together for a common cause.
Human Resource Management consists of what two things?
- Training (for current position)
- Development (planning for the future)
Civil Rights Act 1964 (title VII)
Outlawed discrimination based on race, sex, religion, or national origin.
2 kinds of Sexual Harrassment
- Quid Pro Quo (for this, for that) - sexual activity required for getting or keeping job related benefit.
- Hostile Work Environment - someone'e behavior, what they say/do, creates hostile work environment.
Age Discrimination Act 1967
Outlawed discrimination against those over 40.
Pregnancy Discrimination Act 1979
- Required that pregnant women be treated like any other employee.
- Updated and expanded by Family and Medical Leave Act 1993 (FMLA)
Americans with Disabilities Act (ADA) 1990, updated 2008
- -Prohibits discrimination of those with disabilities.
- -Obligates organizations to extend reasonable accomodation.
(Can the job be performed without reasonable accomodation?)
Civil Rights Act 1991
- Update of CR 1964 (EEOC - Equal Opp Empl Commission)
- Places burden
What is: Job Analysis ?
Breaking a job down into it's basic components.
What is: Job Description ?
Lists the duties and responsibilities, it's working conditions, tools, materials, and info used to perform it.
What is: Job Specification ?
Lists the skills, abilities, experience, and other qualifications needed to perform a job effectively.
Recruitment vs. Selection
Recruitment: attract people to a company.
Selection: Gather info and decide who will be hired.
What is a: Performance Appraisal ?
- Measures employees performance
What are: 4 functions of management ?
- Planning - set goals/standards
- Organizing - prepare a structure, place employees adequately
- Controlling - measure results, monitor performance
- Leading - guide, motivate
Describe: Mission Statement
- Outlines the organizations fundamental purposes.
- Addresses organization's:
- Self concept
- It's philosophy
- Long term needs
- Customer needs
- Social responsibility
- Nature or product of service
analyzes the organization's: ___, ___, ___, ___
4 types of Planning are:
- Strategic Planning
- Tactical Planning
- Operational Planning
- Contingency Planning
Strategic Planning consists of:
Setting of broad, long-range goals by top Managers. (Attacks entire company.)
Tactical Planning consists of:
The identification of specific, short-range objectives by lower level Managers.
Operational Planning consists of:
Setting work standards and schedules.
Contingency Planning consists of:
Backup plans in case primary plans fail.
Define: Decision Making
- Choose among 2 or more alternatives.
- It is the heart of mgmt.
Decision Making Model
- Define the situation.
- Collect info.
- Develop alternatives.
- Agreement (w/ those involved.)
- Decides what's best.
- Begin implementation.
- Follow up.
What are the 3 levels of Management?
- Top Management (ex: CEO)
- Middle Management (ex: Directors)
- Supervisory Management (ex: Line Mgmt, Supervision)
What are the 3 Leadership Styles?
- Autocratic - controlling; doesn't trust employees.
- Participative - employees & Mgrs work together.
- Free Rein - empowerment; allow employees to make decisions.
What did Henry Fayol develop?
"Principles of Organization"
What does Henry Fayol's, "Principal of Organization," consist of?
- Unity of Command (employees report to one boss)
- Hierarchy of Authority (employees know who they report to)
- Division of Labor (divide jobs by specialization)
- Subordination of Individual Interests (workers view themselves as a team)
- Authority (Mgrs give orders, enforce obedience)
- Degree of Centralization (Amt of decision making power rested in Top Mgmt should vary by circumstance)
- Clear communication
- Order (materials & ppl s/b placed & maintained)
- Equity (treat employees with respect)
- Espirit de Corps (spirit of pride & loyalty created among ppl)
Max Weber - Organizational Theory
- Job description
- Written rules, guidelines, detailed records
- Consistent procedures, regulations, policies
- Staffing & promotion based on qualifications
What is the: Span of Control ?
The optimal # of subordinates that a manager supervises.
Tall Organizational Structure
- Narrow span control
- Low flexibility
Flat Organizational Structure
- Wide span of control
- High flexibility
5 types of Departmentalization
- Functional (focuses on what ppl do)
- Geographic (divisions in diff locations)
- Customer (depts based on customer needs)
- Product (divisions focused on products)
- Process (based on what a company does)
What are the 3 types of Organizational Models?
- Line Organizations (an organization that has 2-way lines of responsibility, authority, and communication from top to bottom. - Fayol's theory)
- Line and Staff Organization (an expansion of the line organization where line employees responsible for organizational goals are assessed and advised by staff employees w/ special skills/knowledge.)
- Matrix Organization (where teams are formed & team members report to 2 or more Mgrs.)
What are the 3 Organizational Designs for the 21st century?
- Team Organization (relies almost exclusively on project type teams - these teams tend to be cross-fictional and self-managed w/ little or no underlying functional hierarchy.)
- Virtual Organization (has little or no formal structure - this type of organization has few fulltime employees and outsources the work.)
- Learning Organization (focuses on employee training and development while continuing to transform itself to changing needs and demands.)
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