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ICS 200 Week for Notes

by: Tatum Notetaker

ICS 200 Week for Notes ICS 200

Marketplace > DePaul University > Business > ICS 200 > ICS 200 Week for Notes
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These notes go over chapters 6 and 7!
Introduction to Business
Paul Kessenich
Class Notes
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This 19 page Class Notes was uploaded by Tatum Notetaker on Sunday October 9, 2016. The Class Notes belongs to ICS 200 at DePaul University taught by Paul Kessenich in Summer 2016. Since its upload, it has received 4 views. For similar materials see Introduction to Business in Business at DePaul University.

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Date Created: 10/09/16
Notes 10/4 CHAPTER 6  What is entrepreneurship? o Entrepreneurship: accepting the risk of starting and running a business o Why take the risk?  Opportunity  Profit  Independence  Challenge o What does it take to be an entrepreneur?  Self-directed  Self-nurturing  Action-oriented  Highly energetic  Tolerant of uncertainty o An idea is a good opportunity if  It fills customers’ needs  You have the skills and resources to start a business  You can sell the product or service at a reasonable price and still profit  You can get your product or service to customers before the window of opportunity closes  You can keep the business going o Entrepreneurial teams  Entrepreneurial team: a group of experienced people from different areas of business who join to form a managerial team with the skills to develop, make and market a new product  Micropreneurs o Micropreneurs: entrepreneurs willing to accept the risk of starting and managing a business that remains small, lets them do the work they want to do, and offers a balanced lifestyle o About half of US micropreneurs are home-based business owners – writers, consultants, video producers, architects, bookkeepers, etc. o Nearly 60% of home-based micropreneurs are men  Home-based business growth o Computer technology has leveled the playing field o Corporate downsizing has led many to venture on their own o Social attitudes have changed o New tax laws have loosened restrictions on deducting expenses for home offices  Home-based business isn’t easy o Getting new customers is difficult o Managing your time requires self-discipline o Work and family tasks are sometimes not separated o Government ordinances may restrict your business o Advantages:  Ability to start your business immediately  Minimal start-up capital needed 2  No rent or excessive set-up charges  Comfortable working conditions  Reduced wardrobe expenses  No commuting  Tax benefits  Elimination of office politics  Low risk for trial and error o Downsides  Difficult to establish work habits  Limited support system  Isolation  Work space may be limited  Clients may be uncomfortable coming to your home  Zoning restrictions  Success is based on 100% on your efforts  Online business o Online sales reached $262 billion in 2013, about 8% of all retail sales o All retail sales were up 2.5% in 2013, but online retail sales grew 13% o Boosting your business’s online presence  Establish an identity  Be easy to find  Steal good ideas and make them your own  Look out for opportunities 3  Remember other forms of marketing  Be friendly  Affiliate marketing o Affiliate marketing: an online marketing strategy in which a business rewards individuals or other business for each visitor or customer the affiliate sends to its website  Intrapreneurs o Intrepreneur: a creative person who works as an entrepreneur within a corporation o Intrapreneurs use a company’s existing resources to launch new products for the company o Art Fry of 3M developed Post-Its when he was trying to mark pages of his hymnal without damage  Government and entrepreneurship o Immigration Act passed in 1990 created a category of “investor visas” that encourage entrepreneurs to come to the US o Enterprise zones: specific geographic areas to which governments attract private business investment by offering lower taxes and other gov’t support o Incubators: offer new businesses low-cost offices with basic services  Small businesses o Small business: independently owned and operated, not dominant in its field of operation and meets certain standards of size o Businesses are “small” in relation to other businesses in their industries o Statistics 4  There are 28 million small businesses in the US  Of all nonfarm businesses in the US, almost 97% are considered small  Small businesses account for over 50% of the GDP  Small businesses have generated 65% of new jobs since 1995  About 80% of US workers’ first jobs were in a small business o Advantages  More personal customer service  The ability to respond quickly to opportunities o Business failures are lower than the reports because  Owner closing a business to start another is reported as a failure  Changing forms of ownership is reported as a failure  Retirement is reported as a failure o Learning about small business  Learn from others – investigate your local colleges for classes on small business and entrepreneurship, talk to and work for successful local entrepreneurs  Get some experience – gain 3-years’ experience in the field; then start a part-time small business  Take over a successful firm – serve as an apprentice and eventually take over once the owner steps down 5  Major Business Functions o Planning o Financing o Knowing customers o Managing employees o Keeping records  Business plans o Business plan: a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners’ qualifications o A business plan forces potential owners to be specific about what they will offer o A business plan is mandatory for talking with bankers or investors o Writing a business plan  A good plan takes a long time to prepare  A good executive summary catches interest and tempts potential investors to read on  Getting the plan into the right hands is almost as important as getting the right info in it  Sources of capital o Personal savings o Relatives o Former employers o Banks & finance companies o Gov’t agencies 6 o Angel investors o Venture capitalists: individuals or companies that invest in new businesses in exchange for partial ownership  Community development financial institutions o CDFIs are playing a big role in the economic recovery o First formed in the early 80’s, by 2009 over $1 billion flowed into CDFIs from investment companies o Only 1% of loans were not paid back in the last 30 years  States test new crowd investing rules o Sites like Kickstarter and Indiegogo have connected loan seekers to potential lenders o When the JOBS Act was passed in 2012, the goal was to make crowdfunding more accessible o It’s still too early to know how this will affect companies and investors  The small business administration o Small business administration (SBA): a US gov’t agency that advises and assists small businesses by providing management training and financial advice o SBA started a microloan program in 1991 that provides very small loans to small business owners o Program judges the worthiness based on the borrowers’ integrity and soundness of their business ideas  The small business investment company o Small business investment company (SBIC): a program through which private investment 7 companies licensed by the SBA lend money to small businesses o A SBIC must have a minimum of $5 million in capital and can borrow up to $2 from the SBA for each $1 of capital it has o SBICs are able to identify a business’s trouble spots early, giving entrepreneurs advice, and in some cases rescheduling loan payments  Small business development center o Small business development centers (SBDC): funded jointly by the fed gov’t and individual states o SBDCs are able to evaluate the feasibility of your idea, develop your business plan and complete your funding application for no charge  Knowing the market o Market: consumers with unsatisfied wants and needs who have both resources and willingness to buy o Set out to fill the market’s needs by offering top quality and great service at a fair price o One of the great advantages of small businesses is the ability to know the market and quickly adapt to market needs  Managing employees o Hiring, training, and motivating employees is critical o Employees of small companies are often more satisfied with their jobs, they feel challenged and respected o Entrepreneurs best serve themselves and the business if they recruit and groom employees for management positions 8  Accounting assistance o Computers simplify the process by helping with inventory control, customer records, and payroll o A good accountant can help in  Deciding whether to buy or lease equipment  Deciding whether to own or rent a building  Tax planning  Financial forecasting  Choosing sources of financing  Writing requests for funds  Legal help o Owners need outside consulting advice early in the process o Small and medium-sized firms cannot afford to hire experts as employees o A competent lawyer can help with  Leases  Contracts  Partnership agreements  Protection against liabilities  Marketing research o Marketing decisions need to be made long before introducing a product or opening a store o A marketing research study can help you  Determine where to locate  Whom to select as your target market 9  What is an effective strategy for reaching the market  Other forms of help o A commercial loan officer can help  Design an acceptable business plan  Give financial advice  Lend money o An insurance agent can help you  Know the risks associated with the business  How to cover risks with insurance  How to prevent risks with safety devices o Service corps of retired execs  More than 13,000 volunteers from industry, trade associations, and education who counsel small businesses at no cost  Small business prospects abroad o Small and medium-sized businesses accounted for 99% of recent export growth o Advantages of global trade for small businesses  Overseas buyers enjoy dealing with individuals  Small companies can usually begin shipping much faster  They provide a wide variety of suppliers  They can give more personal service and attention CHAPTER 7 10  What is management? o Management: the process used to accomplish organizational goals through planning, organizing, leading and controlling people and other organizational resources o Today’s managers  Younger and more progressive – growing numbers of women, fewer from elite universities  Emphasis is on teams and team building  Managers need to be skilled communicators and team players o Four foundations of management  Planning – setting organizational goals, developing strategies to reach those goals, determining resources needed, setting precise standards  Leading – guiding and motivating employees to work effectively to accomplish organizational goals and objectives, giving assignments, explaining routines, clarifying policies, providing feedback on performance  Organizing – allocating resources, assigning tasks, and establishing procedures for accomplishing goals, preparing a structure (organization chart) showing lines of authority and responsibility, recruiting, selecting, training, and developing employees, placing employees where they’ll be most effective 11  Controlling – measuring results against corporate objectives, monitoring performance relative to standards, rewarding outstanding performance, taking corrective action when necessary  Sharing the vision o Vision: more than a goal, it’s a broad explanation of why the organization exists and where it’s trying to go  Defining the mission o Mission statement: outlines the organization’s fundamental purposes, includes:  The organization’s self-concept  Its philosophy  Long-term survival needs  Customer needs  Social responsibility  Nature of the product or service  Setting goals and objectives o Goals: the broad, long-term accomplishments an organization wishes to attain o Objectives: specific, short-terms statements detailing how to achieve the organization’s goals  Planning Answers to fundamental questions o What is the situation now?  SWOT Analysis: analyzes the organization’s Strengths, Weaknesses, Opportunities, and Threats o How can we get to our goal from here? 12  Strategic planning  Tactical planning  Operational planning  Contingency planning o SWOT Matrix  Potential internal strengths – core competencies in key areas, an acknowledged market leader, well-conceived functional area strategies, proven management, cost advantages, better advertising campaigns  Potential internal weaknesses – no clear strategic direction, obsolete facilities, subpar profitability, lack of managerial depth and talent, weak market image, too narrow a product line  Potential external opportunities – ability to serve additional customer groups, expand product lines, ability to transfer skills/technology to new products, falling trade barriers in attractive foreign markets, complacency among rival firms, ability to grow due to increases in market demand  Potential external threats – entry of lower cost foreign competitors rising sales of substitute products, slower market growth, costly regulatory requirements, vulnerability to recession and business cycles, changing buyer needs and tastes  Planning functions o Strategic planning (long range) – the setting of broad, long-range goals by top managers 13 o Tactical planning (short range) – the identification of specific, short-range objectives by lower-level managers o Operational planning (low level, staff roles) – the setting of work standards and schedules o Contingency planning (back-up plans) – backup plans in case primary plans fail  Strategic and Tactical planning o Strategic planning: done by top management and determines the major goals of the organization and the policies, procedures, strategies, and resources it will need to achieve them o Tactical planning: the process of developing detailed, short-term statements about what it is to be done, who is to do it, and how  Operational and Contingency planning o Operational planning: the process of setting work standards and schedules necessary to implement the company’s tactical objectives o Contingency planning: the process of preparing alternative courses of action the firm can use if its primary plans don’t work out  Decision making o Decision making: choosing among two or more alternatives o Rational decision-making model  Define the situation  Describe and collect needed information  Develop alternatives  Decide which alternative is best 14  Do what is indicated  Determine whether the decision was a good one and follow up  Problem solving o Problem solving: the process of solving the everyday problems that occur; less formal than decision making and needs quicker action o Problem solving techniques include brainstorming and PMI  PMI: listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third  Levels of management o Top management – president, vice president  The highest level, consists of the president and other key company executives who develop strategic plans  Chief Executive Officer (CEO): introduces change into an organization  Chief Operating Officer (COO): implements CEO’s changes  Chief Financial Officer (CFO): obtains funds, plans budgets, collects funds, etc.  Chief Information Officer (CIO): gets the right information to the right people so decisions can be made o Middle management – plant managers, division heads, branch managers 15  Includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling o Supervisory (first line) management – supervisors, foreman, department heads, section leaders  Those directly responsible for supervising workers and evaluating daily performance o Nonsupervisory – employees  Managerial skills o Technical skills: the ability to perform tasks in a specific discipline or department o Human relations skills: skills that involve communication and motivation; they enable managers to work through and with people o Conceptual skills: skills that involve the ability to picture the organization as a whole and the relationship among its various parts  Back to school for top managers o Business leaders need to study international political, legal, and regulatory systems o Each local market requires their own set of global standards o Some companies, like coca-cola, nestle, and IBM have done a noteworthy job of assessing and understanding global challenges  Staffing o Staffing: recruiting, hiring, motivating, and retaining the best people available to accomplish the company’s objectives o Recruiting good employees is critical 16 o Many people are not willing to work at companies unless they are treated well with fair pay  Leadership o Leaders must:  Communicate a vision and rally others around that vision  Establish corporate values  Promote corporate ethics  Embrace change  Stress accountability and responsibility o Leadership styles  Autocratic leadership: making managerial decisions without consulting others  Participative or democratic leadership: managers and employees work together to make decisions  Free-rein leadership: managers set objectives and employees are free to do whatever is appropriate to accomplish those objectives  Accountability through transparency o Transparency: the presentation of the company’s facts and figures in a way that is clear and apparent to all stakeholders  Empowerment o Progressive leaders give employees the authority to make decisions on their own without consulting a manager o Customer needs are handled quickly 17 o Manager’s role becomes less of a boss and more of a coach o Enabling: giving workers the education and tools they need to make decisions  Managing knowledge o Knowledge management: finding the right information, keeping the information in a readily accessible place and making the information known to everyone in the firm o Tries to keep people from reinventing the wheel  Using social media during the worst of times o Many companies use sites like twitter and Facebook to proactively and reactively communicate with their customers o When GM was going through a massive recall, CEO Mary Barra, insisted on using social media o Complaints were quickly read, responded to, and resolved  Five steps of controlling o Establish clear standards o Monitor and record performance o Compare results against standards o Communicate results o If needed, take corrective action  Measuring success o Traditional forms of measuring success are financial, shouldn’t necessarily be that way o Pleasing employees, stakeholders, and customers is important 18 o External customers: dealers who buy products to sell to others, and ultimate customers (or end users), who buy products for their own use o Internal customers: individuals and units within the firm that receive services from other individuals or units 19


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