1

Final Revision
Chapter 1
1. Types of ownership:
a) Sole proprietorship:
- It is a business that is owned by one person and it is not legally separated from the
owner.
- This means the companys debts are the responsibility of the owner pays personal
income tax, rather than corporate taxes, it is simply to operate and is under less
government regulation than other businesses, but also more risk involved.
b) Partnership:
- A business owned by two or more people, each of them shares profits and losses.
Owners pay personal income tax rather than paying corporate tax
- There are 2 types of partnership:
i. General partnership: It is simpler and less expensive to establish, but it carries
more risk for all partners because they are all financially liable and are not
protected by limited liability.
ii. Limited partnership: there is at least one partner who controls business
operations and is personally liable and the other partners are limited partners
and dont have much control over management decisions.
c) Corporation:
- Its a legal entity separate from its owners because owners have limited liability so
they are not personally liable for the companys debts
- It must do the following:
i. Keep financial records that detail every transaction the business makes
ii. Report income generated by the business in separate corporate tax returns
d) Limited liability company:
- It blends the characteristics of both corporations and sole proprietorships
- Owners have limited personal liability for the debts and action of company.
- It is a separate legal entity but it avoid double taxation, owners pay only personal
income taxes, its simpler than corporations to maintain because they are subject to
fewer government regulations and reporting requirements
2

2. Factors of production:
Are the resources used to create goods and services, the five factors of production,
it includes:
1) Labor: Human Resource that contributes to a businesss production, business
need people to produce goods and provide services.
2) Natural resources: The raw materials provided by nature that are used to produce
goods and services.
3) Capital: There are two types of capital
i. The real capital: refers to the physical facilities used to produce goods and services.
Ex: buildings, lands
ii. The financial capital: money used to facilitate a business enterprise and it can be
acquired via business loans, investors, other forms, personal savings
4) Entrepreneurial talent : people assume the risk of creating, organizing, and
operating a business, and what set them from labor is not only their willing to
bear risk but also their ability to effectively manage an enterprise
5) Technology: Refers to items and services that make business more efficient and
productive such as computers, smart phones, software.

3. Compare between local and regional business.
Comparison Local businesses Regional businesses
Definition Services a limited surrounding area
Depend only on local consumers to
generate business
Serves wider area but both of them
dont serve national or international
markets
challenges 1- Poor financial planning
2- Unfavorable economic condition
3- Undercapitalization: occurs when a business owner cannot gain access
to adequate funding
4- Take taxes and insurance costs into consideration


4. How does the social environment affect businesses?
Social environment: is an interconnected system of different demographic factors
such as gender , age, religion,
Businesses must consider the shifts and changes in the social environment when making
decisions.
There are three specific issues surrounding social environment that affects business:
1- Aging population
3

People who are aged between 47 and 65 years, they give opportunities for many
businesses such as healthcare and pharmaceuticals also they are presenting a big
challenge because they need more financial resources
2- Increasing diversity
In business there is no one size fits all method to managing employees and appealing to
customers because every person is different
The business will benefit from this diversified workers but at the same time the challenge
is to ensure that all employees are treated fairly by management and coworkers
3- Green movement
The demand for more green products presents new opportunities for entrepreneurs to
meet those needs ,meet the demand of products that will not affect our environment
negatively such as creating wind energy

5. What is the impact of Technological Changes?
Technology, when used and implemented effectively, can help streamline businesses,
increase productivity, and cut costs. Twitter and Facebook promote better
communication.
-Technology makes it possible for employees to telecommute, or work from home or
another location away from office. It also allows companies to communicate easily
regardless of the distance. The reduction in travel and other services has an impact on the
environment, consuming less energy and resources.

E-Commerce: primarily consists of two different kinds of businesses: business-to-consumer
(B2C) and business-to-business (B2B).
B2C interactions take place between a business and a consumer. B2B interactions take
place between a business and another business.
-B2B e-commerce often involves large transactions for a few customers, customized
products and pricing, and managers from both businesses make sure that the transaction
is beneficial to both parties.
-Examples of B2C: buying books from amazon.com, or songs and movies from iTunes.
Online Security: Personal information such as Social Security numbers, credit card
numbers, addresses, and passwords are all accessible online. This information can be
accessible by hackers. Businesses have the responsibility to protect the online security of
all their customers.
4

Identity theft is the illegal gain and use of personal information. As the number of online
transactions increases, identity theft increases.
Privacy: E-mails, internal documents, and chat transcripts all contain private information
that is not intended for public viewing. With all the universal access, it is difficult to
ensure that information remains private.
6. Define and talk about impact of competition:
1-Competition
Arises when two or more businesses contend with one another to attract customers and
gain an advantage.
-Competition in Todays Marketplace:
A) Customer Satisfaction and Beyond: Competition forces companies to improve their
product offerings, lower their prices, promote their brands, and focus on customer
satisfaction. Because profit is the ultimate goal, its the job of a successful business to
convince customers that its product is either better or less expensive than that of its
competitors.
B) Social Networking: describes a set of services focused on building and supporting social
relationships among people. Sites like Facebook and Twitter are examples of social-
networking sites.
-Companies use social networking to connect to their customers. Through these sites, they
can promote their products, offer discounts, and build relationships with people
interested in their company.
-Individuals can use social-networking sites to spread the word about very good or very
bad services or products.
C) Employee Empowerment: Employers seek workers who have interpersonal,
communication, and decision-making skills.
-Decision-making responsibilities are being decentralized to employees. This means
greater employee satisfaction and more career advancement opportunities.


Chapter 5
Small business:
It is independently owned and operated business which is not dominant in its field of
operation, limited by fewer number of employees up to 500 employees.
5

Q. what is the importance of small businesses?
Or: what are small business contributions?
Or: why are small businesses important to economy, bigger companies and consumers?

1- Importance for the economy:

a. filling the unemployment gap: as it creates new opportunities for new jobs, for example
Small businesses comprise 99.7% of all US private employees.

b. contributes for the GDP: it creates around one-half of the US GDP which makes US small
businesses the third largest economy in the world.

c. small businesses also help in increasing a country Exports. Ex: an average of $ 375 billion
represented as the US exports in goods and services every year.

2- Importance for bigger companies:
Small businesses operate in a cooperative relationship with bigger businesses, as small
businesses provide large ones by supply parts, raw materials, small and specialized parts.

For example: In the automotive industry, small businesses are important because they make
and supply parts that are required in large manufacturing processes and It is estimated that
small-business suppliers now provide two-thirds of the value added in the production of
cars through their increase in research and development.

3- Importance for consumers:

Small businesses provide consumers with many of the specialized products and services we
use every day. Service businesses such as hair salons, l, and dry cleaners, as well as local
restaurants, auto repair, and other mom and pop stores provide the services and products
larger businesses cant or dont want to provide.



1. Discuss the reasons for starting a small businesses.
1) Opportunity knocks: Means utilizing the opportunity of innovating a new something
(product or: service) that is not provided before.
or: An idea for a new company starts when someone innovate a product or a
service that is not being offered yet.
6

2) Financial Independence: Many people begin a small business because they want
financial independence however it takes three or five years for new small businesses
to become profitable.
3) Control: Many people want to take more control of business decisions than their
current position allows. Others know that they wouldnt be satisfied working for
someone else.
4) Flexibility: Many people view working in a small business as more rewarding than
working for a larger company.
- Small businesses owners believe their companies are more flexible than larger firms
- Going through fewer channels in decision making process
- Reacting more quickly to take the advantage of immediate opportunities.
- Flexibility in adjusting work to particular situations.
5) Unemployment: Some people are pushed into starting their own business
because they have no other employment opportunities.

2. Compare between different types of entrepreneurs.
1) Lifestyle entrepreneurs: Look for more than profit potential when they begin their
businesses, For instance, looking for freedom from corporate bureaucracy.
2) Micro entrepreneurs: They start their own businesses but are satisfied with keeping
their businesses small in an effort to achieve a balanced lifestyle. ex: Painters and
waffle makers.
3) Home-based entrepreneurs: Entrepreneurs who run their businesses from their
homes, they are Often parents who prefer being able to stay at home with their
children, they can take the advantage of deducting from their taxes a part of their
rent or mortgage payment, depreciation, insurance, utilities and home repair and
improvements.
4) Growth entrepreneurs: Strive to create fast growing businesses and look forward to
expansion.
5) Internet entrepreneurs: They create business that operate solely online, Young
people may have an advantage in this entrepreneurial genre because of their spare
time, good understanding of their peers and because it requires little investment.
6) Intrapreneurs: Employees who work in an entrepreneurial way within an
organizational environment.
7) Social entrepreneurs and social intrapreneurs:
a. Social intrapreneurs: They build and develop ventures within a company that are
designed to identify and solve large-scale social problems.
b. Social entrepreneurs: Set out to create innovative solutions in the social sector; they
are entrepreneurs with a social mission.

3. Differentiate between franchising and buying an existing business. (Full answer)
1) Franchise: It is a method of doing business whereby the business (the franchisor)
sells the companys products or services under the companys names to independent
third party operators (franchisees).
- Advantages:
7

a) A proven system of operation: The franchisee benefit from the collective experience
of the franchise company as the franchisor has already determined the best ways
through trial and error.
b) Strength in numbers: You are not alone when you buy a franchise because you
belong to a group, also business loans got easily approved when running a franchise
as lending institutions often view that there is less risk associated with a franchise.
c) Training is part of the deal: A franchisor offers initial training to ensure you have a
successful opening and might offer ongoing training of new products or services
being incorporated into the franchise line.
d) Marketing Support: As a franchisee, you are given marketing materials generated at
the corporate level and have the benefits of any national advertising programs that
are created.
e) Market Research: Franchisors usually do considerable market research and can
conclude whether there is a demand for the product or service in the area before
selling the franchisee a franchise
- Disadvantages:
a) Lack of control: Because that the franchisor usually controls the look of the store
and the product or service.
b) Startup cost: Costs might incur as real estate purchase or rental, equipment
purchase or rental and extra signage.
c) Work Load: With any new business owner, new franchises shouldnt expect easy
hours, franchisees should spend a lot more time on the business development and
management end of the business.
d) Sharing common problems: If franchisor or one franchisee is having a problem, all
franchisees will feel its pain.
e) Competition: Franchisee could experience serious competition not only from other
companies but also from other franchisees.

2) Buying Existing Business: It's a popular way to begin a business without starting
from scratch, but the decision must be well thought-out.
- Advantages
a) Ease of start-up: It is often simpler to buy an existing business than to start one from
scratch.
b) Existing customer base: An existing business may have a satisfied customer base
already in place.
c) Financing opportunities: If the business has had a positive track record, it might be
easier to obtain financing to purchase the existing business.
- Disadvantages
a) High purchase price: Goodwill and intangible assets represented by a businesss
name, customer service, employee morale, and other factors that might be lost with
a change in ownership are very difficult to determine their true value.
b) Inheriting the previous owners mistakes: you might inherit dissatisfied customers,
bad debt, and unhappy distributors or purchasing agents.
8

c) Unknowns in transition: No guarantee that existing employees, management,
customers, suppliers, or distributors will continue to work with the business once
new ownership takes over.

4. Why do so many small businesses fail? (v.v.imp)
1) Accumulating too much debt: If the business doesnt generate returns, there is a
temptation to take on more loan debt to keep business running which accumulates
and may result in personal bankruptcy at the end.
2) Poor planning : many businesses failed because they didnt plan for rapid growth, a
business plan includes the companys mission statement, history, marketing plan,
financial plan, operational plan, risk analysis and the qualifications of the owners and
management team and any resources that might have to contribute to the business
3) Inadequate management: Poor financial and business management also leads to
bankruptcy; financial statements and budgets should be created and adhered to
honestly and accurately each month.
4) Unanticipated personal sacrifices: Business owners are forced to make personal
sacrifices (financial and otherwise) to succeed.
traits of successful entrepreneurs.
5. What are the traits (features or characteristics) of successful
entrepreneurs?
Innovation
Taking risks
Motivation to succeed
Flexibility & self-direction
Working well with others & possessing leadership skills
System thinkers

6.
Chapter 9
1. HRM process: The functions of HRM:
1) Planning for staffing needs
- Keep track of HR needs at small businesses can be fairly simple.
- Companies that add employees and continue to grow require more specific planning.
- Poor staff planning can be costly.
i. Being overstaffed burdens a company with the unnecessary expenses of
maintaining salaries, benefits and training.
ii. Understaffed can lead to a loss of sales and competitiveness
2) Recruiting and hiring
- Recruitment is the process of finding, screening and selecting people for a specific
job.
9

i. Internal recruiting filling job vacancies with existing employees from within a
business.
ii. External recruiting looks outside a business to fill job vacancies by using
(internet, newspaper& magazines).

- Hiring process: is a multistep process consists of
Determine Initial pool of candidates
Conduct Initial & follow-up for interviews
Test Specific job skills
Conduct Background & reference checks
Make Final selection
Hire & Monitor Through probationary or trial period
3) Training and motivating
- Training is important, because it contributes to many employee characteristics.
a. Increased job satisfaction, motivation, and morale among employees.
b. Greater efficiency in work, resulting in financial gain.
c. More effective use of new technologies and methods.
d. Lower employee turn over
e. The development of new strategies and products.
f. Fewer interpersonal conflicts and better communication.

4) Evaluating (performance appraisals)
- Is an evaluation of an employee's performance that gives feedback about how well
an employee is doing, as well as where changes and improvements are needed.
- Performance appraisal process includes:
a. Determining standards that employee should aim for in their works.
b. Evaluating an employee's performance in comparison with these standers.
c. Providing feedback to reduce and eliminate poor performance and improve or
enhance positive performance.

5) Compensating: There are many ways to pay workers for their time and effort.
- Compensation is the payment for work performed through:
a. salaries (annual pay for a specific job )
b. Wages ( payment for hourly work )
c. Incentive-based payment
d. commissions
e. Bonuses

6) Terminating and repositioning:
10

- Termination refers to the act of permanently laying off workers due to poor
performance or a discontinued need for their services.
- Companies often offer a set of benefits for terminated employees including the
continuation of health care coverage, severance pay and outplacement services
- Terminating employees due to poor performance or illegal activities is a complex
process.

2. T/F All managers need training
True, Because of their roles in the organization, managers require different training
than their frontline workers. Managerial training focuses on leadership, teamwork,
communications and relationship building skills, also top managers may need such type
of development.

3. T/F All recruited people should be hired
False, because of the hiring process: is a multistep process that not all recruited people
acceptable this steps
Determine Initial pool of candidates
Conduct Initial & follow-up for interviews
Test Specific job skills
Conduct Background & reference checks
Make Final selection
Hire & Monitor Through probationary or trial period
4. Compare between internal and external recruiting resources
a) Internal recruiting: means filling job vacancies with existing employees from the within a
business, is the first choice of many companies.
b) External recruiting: looks outside a business to fill job vacancies. Like:
1. Word of mouse referrals
2. Trade shows
3. Employment agencies
4. Headhunters
5. Newspapers
6. Industry specific magazines
7. Hiring from competition
8. Virtual job markets
9. Internet job / networking sites
10. College carrier fairs (job fair)


11

5. What kind of training do new employees receive?
Orientation program: Orientation can be simple as an overview of an organization and the
distribution of basic information, such as a company procedures and expectations.
6. What other training is required of new and present employees?
Training begins when the orientation ends. Training should teach employees skills or
ways to improve existing skills.

On-the-job training: with this training employees learn skills by performing them. Ex:
there are many training and certification programs to become a pharmacy technician.

Apprentice training programs: trains individuals through classrooms or formal
instruction and on-the-job training. Ex: there is a growing need for underwater welders
to repair the infrastructures of bridges. The training to be an underwater welder
requires completing a surface welder program and a commercial diving program.

Programmed teaching approach: in which the employee is asked to perform a step-by-
step instructions or respond to questions.

What is the Impact of technology on training?
Simulation training (vestibule training):
Provides realistic job-task training I a manner that is challenging but doesn't create the
threat of failure.

Online training (distance learning):
Allows employees to take college classes on the internet at their convenience, enabling
them to obtain specific job-related education or pursue a degree.




12

Chapter 11
1. Compare between production and operation management
1) Production: is the process of getting a good or a service to the customer, it is a
series of related activities, with a value being added at each stage
- The importance of production:
a) Companies strive to make a profit by providing goods and services to consumers.
b) To increase their profits and decrease production costs, companies must find the
most efficient production process possible.
c) To remain competitive, companies must be cost effective, efficient, innovative and
flexible.
2) Operations management: It consists of managing the activities and processes to
produce and distribute goods and services.
- These activities and processes generally include how the facility should be organized,
what supplies to purchase, what materials and inventory to keep on hand, how the
product is produced, and how quality is measured and controlled.
- All of which are all important in ensuring that a good or service is created and
delivered successfully to the customer.

2. Compare between facility layout and facility location
Determining Facility Location
What factors must businesses consider when determining where to locate their
facilities?
- Some businesses must choose their locations based on their proximity to market,
they need to be close to their potential customer base.
- Transportation costs are one of the major expenses that many manufacturing
companies must consider. Locating a facility with easy access to natural resources or
suppliers helps a business keep transportation costs low.
- Transportation systems become more complex and costly when a companys supply
chain is global, so global companies that learn how to reduce transportation costs
and manage transportation processes more efficiently are more likely to have a
competitive edge over other large scale companies that have less efficient and more
costly transportation operations.
Why is it important to consider utility supply when determining location?
- The utility supply refers to the availability of public infrastructure services, such as
electricity, natural gas, water, and communications.
- Locating manufacturing operations in an area where easy access to these utilities
and resources is inexpensive greatly reduce costs.



Why is hazardous-waste disposal important?
13

- Many businesses create large amounts of hazardous waste that must be dealt with
correctly, such as everyday material like paint and cleaning fluids.
- Businesses that generate large amounts of hazardous waste should locate in an area
that has reliable hazardous waste removal or treatment facilities nearby.
- Responsible organizations must be aware of the disposal options that are available in
their areas.
What else impacts location selection?
a. Labor availability: Labor is necessary factor of production for a company to operate
successfully.
- Seeking skilled workers is only part of the decision making process.
- Health care, education, costs of living, and general business environment are some
of the other factors that can determine a companys ideal location.
b. Living conditions: manufacturing location can alter living conditions either positively
or negatively.
- A business brings opportunities to citizens of a community by creating jobs and
higher standards of living.
- Some social entrepreneurs might take it upon themselves to locate their businesses
in an impoverished area to revitalize the local economy.
- Conversely, a business could have a negative effects on the surrounding area.
- Some corporations have been accused of lowering a communitys living conditions
by exploiting workers or increasing local traffic.
c. Laws and regulations
Does the government have a say in location?
- To try to maintain a balance between business and community interests,
government has created many laws and regulations to protect individuals and the
environment.

3. Compare between mass production and mass customization
1) Mass production: The method of producing large quantities of goods at a low cost.
- This method relies on machines and automated assembly lines to produce goods
that are identical and adhere to certain standards of quality.
- Mass produced goods are usually manufactured along an assembly line (or a
production line), in which partially complete products are moved from one worker to
the next on a conveyor belt.
- The cost to run an assembly line is kept low because machines do the majority of the
work, laborers dont need to be especially skilled to perform their repetitive tasks.
- This method also cuts down on productive time, allowing a large quantity of goods to
be produced very quickly.

- Thus, the risk of human error is virtually eliminated.
- A major disadvantage that mass production is inflexible.
- It is difficult to change or alter the process if an unexpected problem occurs.
14

- A solution to the rigid system of mass production is a method of production called
flexible manufacturing or a flexible manufacturing system (FMS).
- In this system, several machines are linked together by one central computer. All the
Machines in the system can process different parts types simultaneously.
- Unlike mass production system, on FMS can adapt to changes in schedules and
product specifications. There are four components to an FMS: processing machines,
a material- handling system, central computer, and human labor.

2) Mass customization: it is the production of goods or services tailored to meet
customers' individual needs cost- effectively
Can mass customization be used in service industries?
The technologies of mass customization have also enabled many service-based organization
to meet the individual needs of their customers
4.Discuss make or buy decision
What is a maker or buy decision?
- One of the first decisions that operations managers make is what needs to be
manufactured and what needs to be purchased from outside suppliers.
- This is commonly called, make-or- buy decision.


Good Luck
3a elBarka ;)