BUSSPP 0200 1st Edition Lecture 3 Outline of Last Lecture I Brainstorming What s happening II Analysis of stock III Profit IV Conclusion about Starbucks stock V Take aways VI Organizations and Firms Outline of Current Lecture I Organizations Firms II Environments III Concepts of Management IV Goals Stakeholders Current Lecture I Organizations Firms A Basic Characteristics 1 Boundaries 2 Goals 3 Deliberately Structured sets of activities 4 Social Inventions B Additional Characteristics of Firms besides those of organizations 1 Legal existence and Identity a US Legal definition is at the state level b Many different types of legal existence 9 i In all states Corporations sole proprietorships and partnerships sole proprietorship owned by one person These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute One in the same entity Person dies firm is gone Firm is sued owner has unlimited liability Partnerships very complex depending on state law Similar to a sole proprietorship but with multiple owners Unlimited liability of all owners Corporations Legally separate entity from it s owners Can outlive any one of its owners Unless criminal activity is involved owners have limited liability suit against firm is not a suit against the owners ii LLC limited liability company Benefits of sole proprietorship easy to set up administer Legal protection against owners May outlive owners c Not concerned with maximizing wealth but you need enough to stay operating i Think of student organizations raising money they don t seek to maximize profit just stay running and cover costs d Some Firms i public private IPO initial price offering process of making stock publicly available If it is public it s definitely not a sole proprietorship Corporations do not have to be public ii For profit not for profit not for profit firms make profit but recycle it back into operation exempt from many taxes eligible for reduced taxes 2 Rights and responsibilities 3 Some concern with the creation of wealth a wealth the accumulation of profit over time profit instantaneous change II Environments A Everything that is not within the boundaries of the firm is its environment B Properties 1 Unique a Every firm has a different environment at the most basic level 2 Environments are constantly in flux a Trends i Long term Speed at which technology advances Deregulation some flux in short term De centralization of government control Russia China India added 2 3 of the world to the market Globalization ii Short term some may transform into long term tremendous migration to e commerce Within this mobile commerce b Conceptual Drivers Simple Dynamics Small Change Large Change Complicated Dynamics Complex environment Intermediately Complex Environment Intermediately complex environment VERY COMPLEX ENVIRONMENT i Change assuming these are independent magnitude rate predictability systematic random ii Drivers few to huge Dynamics what drives the drivers Politics lobbying Social Trends Economics c Why is all of this important i If things change on a relatively constant basis the future is increasingly difficult to predict Implications existing firms will fail New opportunities can be pursued by existing firms and also new businesses II Concepts of Management A Authority 1 Who has what right to make what decision 2 Who has what right to commit resources of the firm a Resources money people time space ideas technology B Responsibility 1 What kind of obligations are you required to accomplish a Types of obligations i self own work only responsibilities typical employee ii others responsibility for both yourself and other supervisor iii tactical business problems repetitive common over time heuristics standard rules processes of dealing with and evaluating the solutions to problems responsible for self others and tactical decisions manager iv Strategic business problems non recurring once a year once every 5 years decade no well established system highly risky significant commitment of resource significant risk can really benefit harm the company responsible for self others tactical and strategic decisions general manager MCE Goals how those in positions of tactical and strategic decision making affect a company and its success II Goals Stakeholders A Concept 1 In micro one goal 2 in business in practice multiple goals B Why 1 Stakeholders any party with a vested interest in the firm somehow the firm s fate and the stakeholder s fate are intertwined a Types all have different interests Employees Owners Debt holders suppliers Customers Neighborhoods localities Governments
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