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Ch. 16 Building a New Venture Team

by: Alora Lornklang

Ch. 16 Building a New Venture Team MGMT 3850

Marketplace > University of North Texas > Entrepreneurship > MGMT 3850 > Ch 16 Building a New Venture Team
Alora Lornklang
GPA 3.5

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About this Document

These notes will cover the learning objectives and vocabulary from Chapter 16
Foundations of Entrepreneurship
Brandi Everett
Class Notes
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This 4 page Class Notes was uploaded by Alora Lornklang on Sunday May 1, 2016. The Class Notes belongs to MGMT 3850 at University of North Texas taught by Brandi Everett in Spring 2016. Since its upload, it has received 21 views. For similar materials see Foundations of Entrepreneurship in Entrepreneurship at University of North Texas.


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Date Created: 05/01/16
MGMT 3850 Foundations of Entrepreneurship Ch. 16 Building a New Venture Team and Planning for the Next Generation 1. Explain the challenges involved in the entrepreneur’s role as leader and what it  takes to be a successful leader.  a. Leadership is the process of influencing and inspiring other to work to  achieve a common goal and then giving them the power and the freedom  to achieve it.  b. Management and leadership are not the same, yet both are essential to a  small company’s success. Leadership without management is unbridled;  management without leadership is uninspired. Leadership gets a small  business going; management keeps it going.  2. Describe the importance of hiring the right employees and how to avoid making  hiring mistakes a. The decision to hire a new employee is an important one for every  business, but its impact is magnified many times in a small company.  Every new hire a business owner makes determines the heights to which  the company can climb—or the depths to which it will plunge.  b. To avoid making hiring mistakes, entrepreneurs should develop  meaningful job descriptions and job specifications, plan and conduct an  effective interview, and check references before hiring any employee.  3. Explain how to create a company culture that encourages employee retention  a. Company culture is the distinctive, unwritten code of conduct that governs the behavior, attitudes, relationships, and style of an organization. Culture  arises from an entrepreneur’s consistent and relentless pursuit of a set of  core values that everyone in the company can believe in. Small  companies’ flexible structures can be a major competitive weapon.  b. Job design techniques for enhancing employee motivation include job  enlargement, job rotation, job enrichment, flextime, job sharing, and  flexplace.  c. Money is an important motivator for many workers but not the only one.  The key to using rewards such as recognition and praise to motivate  involves tailoring them to the needs and characteristics of the workers.  4. Describe the steps in developing a management succession plan for a growing  business that allows a smooth transition of leadership to the next generation.  a. As their companies grow, entrepreneurs must begin to plan for passing the leadership baton to the next generation well in advance. A sucession plan  is a crucial element in successfully transferring a company to the next  generation. Preparing a succession plan involves 5 steps:  i. Select the successor  ii. Create a survival kit for the successor iii. Groom the successor iv. Promote an environment of trust and respect v. Cope with the financial realities of estate taxes 5. Explain the exit strategies available to entrepreneurs a. Family business owners wanting to step down from their companies can  sell to outsiders or to insiders include. Common tools for selling to  insiders include LBOs and ESOPs.  Vocabulary  Leadership  o The process of influencing and inspiring others to work to achieve a  common goal and then giving them the power and the freedom to achieve  it  Servant leadership  o A leadership style in which a leader takes on the role of servant first and  leader second  Job analysis  o The process by which a firm determines the duties and nature of the jobs  to be filled and the skills and experience required of the people who are to  fill them   Job description  o A written statement of the duties, responsibilities, reporting relationships,  working conditions, and methods, and techniques as well as materials and  equipment used in a job.   Job specification  o A written statement of the qualifications and characteristics needed for a  job stated in terms such as education, skills, and experience.   Situational interview o An interview in which an interviewer gives candidates a typical job­ related situation to see how they respond to it  Puzzle interview  o An interview that includes offbeat questions to determine how job  candidates think and reason and to judge their capacity for creativity  Culture  o The distinctive, unwritten, informal code of conduct that governs an  organization’s behavior, attitudes, relationships, and style  Job simplification  o The type of job design that breaks work down into its simplest form and  standardizes each task   Job enlargement (horizontal job loading) o The type of job design that adds more tasks to a job to broaden its scope  Job rotation  o The type of job design involves cross training employees so that they can  move from one job in the company to others, giving them a greater  number and variety of tasks to perform   Job enrichment (vertical job loading) o The type of job design that involves building motivators into a job by  increasing the planning, decision­making, organizing, and controlling  functions that workers perform   Flextime o An arrangement under which employees work a normal number of hours  but have flexibility about when they start and stop work   Job sharing o A work arrangement in which two or more people share a single full­time  job  Flexplace o A work arrangement in which employees work at a place other than the  traditional office, such as a satellite branch closer to their homes or at  home  Telecommuting  o An arrangement in which employees working remotely use modern  communications equipment to connect electronically to their workplaces.   Pay­for­performance compensation systems o Compensation systems in which employees’ pay depends on how well  they perform their jobs  Profit­sharing plan o A reward system in which employees receive a portion of the company’s  profits   Open­book management  o A system in which entrepreneurs share openly their companies’ financial  results with employees  Stock options o A plan under which employees can purchase shares of a company’s stock  at a fixed price  Cafeteria benefit plan o A plan under which employers provide certain basic benefits and then  allocate a specific dollar amount for employees to select the benefits that  best suit their needs  Buy­sell agreement  o A contract among co­owners of a business stating that each agrees to buy  out the others in case of the death or disability of one  Trust  o A contract between a grantor and a trustee in which the grantor gives the  trustee assets that the trustee holds for the trust’s beneficiaries   Revocable trust o A trust that a grantor can change or revoke during his or her lifetime  Irrevocable trust o A trust in which a grantor cannot require the trustee to return the assets  held in trust  Estate freeze  o A strategy that minimizes estate taxes by creating two classes of stock for  a business: preferred voting stock for the parents and nonvoting common  stock for the children   Family limited partnership (FLP) o A strategy that allows business­owning parents to transfer their company  to their children while still retaining control over it for themselves.   Leveraged buyout (LBO) o A situation in which managers and/or employees borrow money from a  financial institution to purchase a business and then use the money form  the company’s operations to pay off the debt  Employee stock ownership plan (ESOP) o An arrangement in which employees and/or managers contribute a portion  of their salaries and wages over time toward purchasing shares of a  company’s stock from the founder until they own the company outright


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