April 29, 2009

Management

Forms of business ownership

 Sole proprietorship
 Partnership
 Corporation

Sole proprietorship

A business owned by a single owner

 Characteristics
 Single owner
 Bears all responsibility
 Represent 70% of all firms in U.S (Pretty small)

Advantage and disadvantages of Partnership

Advantages Disadvantages

Ease of starting and ending the business Unlimited liability

Being your own boss limited financial
Pride of ownership Overwhelming time commitment

Retention of profit Few fringe benefits

No special taxes Limited growth
Limited life
span

Difficult to raise money (get loans)

No benefits (Health insurance, retirement plan)

Advantage and disadvantages of sole proprietorship

Advantages Disadvantages

More financial resources unlimited liability

Shared management Davison of profits
 Longer survival Disagreements among partners
Difficult to terminate
Limited liability and partnership – Not on the exam

May 6, 2009

Lecture 2 – Management

General Partnership

GP

GP GP

GP

GP- General Partner – He does what is spouse to do (dentist)

Limited partnership

Passive investor Passive investor

GP

Passive investor

The passive investor put the money

The general partner runs the business

 Corporation

State chartered entity that pays taxes and is distinct from is owners

Examples:

 General motors

 IBM

 Wal mart

Delver – most companies’ headquarters are there – It is better for them because of legal issues.

Advantages Disadvantages

More money for investors (Stocks, bonds) Initial cost

Limited liability Paper work

Size Two tax returns

Perpetual life Termination difficult

Ease of ownership change Double taxation

Separation of ownership from, management

Same industry + same industry

Vertical mergers

Different phases of

Same industry

Conglomerate

Unrelated companies
Leverage buyout- buys back all the stock; they need a lot of money

Franchising

Benefits Problems

Existing performance record Expensive fees

Brand name products Judged by peers
Tested management program Poor managerial control
Training Personality differences
Better changes to success

Leadership Styles – (Important not from the book)

 Autocratic
o Dictator
o Military
 Participative
o Listen to all choices then decide
o Politics
 “Laissez-Faire”
o Laid back, lazy – Others will do the job Ronald Regan

Leader has to delegate people – Need to have good people

Delegating must include:
1. Authority to carry out the task
2. Accountability for result

On the test - 20-70-10

In the end of the year the boss valuate his workers

20% – The best employee

70% – Good employee
10% – The bad employee

If on the second year the employees stay on the 10%, they get fired.
 Jack Welch’s spectrum of Boss-types

Strong/weak
Effective/ineffective
The “destroyer” – A “bad” tough boss
 Bully, power-drunk
 Takes credit for success
 Points fingers at failures
 Moody, mean manipulative
 Ineffective – “good companies remove or they self destruct

The Bad,”” is everybody happy? “Boss

 Enjoyable to work for – nice person
 Spineless, no “edge”
 Three basic sins:
1. Treats everyone the same
2. No consequences for misses
3. Change direction frequently to keep all happy
 Ineffective