KEY TERMS
Acquisition- a corporate restructuring in which Franchise- a licensing arrangement whereby a
one firm buys another
Active listening- attentive listening that occurs
when the listener focuses his or her complete
attention on the speaker
Active voice- sentence construction in which
the subject performs the action expressed by the
verb (eg. My sister wrote the paper) Active voice
works better for the vast majority of business
communication
Angel investors- individuals who invest in start-
up companies with high growth potential in
exchange for a share of ownership
Articles of incorporation- the document filed
with a state government to establish the
existence of a new corporation
Bias- a preconception about members of a
particular group. Common forms of bias include
gender bias, age bias, and race, ethnicity, or
nationality bias.
Board of directors- the individuals who are
elected by stockholders of a corporation to
represent their interests
Business format franchise- a broad franchise
agreement in which the franchisee pays for the
right to use the name, trademark, and business
and production methods of the franchisor
Business plan- a formal document that
describes a business concept, outlines core
business objectives, and details strategies and
timelines for achieving those objectives
C Corporation- the most common type of
business corporation, where ownership offers
limited liability to all of its owners, also called
stockholders
Communication barriers- obstacles to
effective communication, typically defined in
terms of physical, language, body language,
cultural, perceptual, and organizational barriers
Communication channels- the various ways in
which a message can be sent, ranging from one-
on-one in-person meetings to Internet message
boards
Communication- transmission of information
between a sender and a recipient
Conglomerate merger- a combination of two
firms that are in unrelated industries
Corporate bylaws- the basic rules governing
how a corporation is organized and how it
conducts its business
Corporation- form of business ownership in
which the business is considered a legal entity
that is separate and distinct from its owners
Distributorship- a type of franchising
arrangement in which the franchisor makes a
product and licenses the franchisee to sell it
Divestiture- the transfer of total or partial
ownership of some of a firm’s assets to investors
or to another company
Dynamic delivery- vibrant, compelling
presentation delivery style that grabs and holds
the attention of the audience
Entrepreneurs- people who risk their time,
money, and other resources to start and manage
a business
External locus of control- a deep seated sense
that forces other than the individual are
responsible for what happens in his or her life
franchisor allows franchisees to use its name,
trademark, products, business methods and
other property in exchange for monetary
payments and other considerations
Franchise agreement- the contractual
arrangement between a franchisor and
franchisee that spells out the duties and
responsibilities of both parties
Franchise disclosure document (FDD)- a
detailed description of all aspects of a franchisor
must provide to the franchisee at least 14
calendar days before the franchise agreement is
signed
Franchisee- the party in a franchise relationship
that pays for the right to use resources supplied
by the franchisor
Franchisor- the business entity in a franchise
relationship that allows others to operate their
business using resources it supplies in exchange
for money and other considerations.
General partnership- partnership in which all
partners can take an active role in managing the
business and have unlimited liability for any
claims against the firm
Horizontal merger- a combination of two firms
that are in the same industry
Institutional investor- an organization that
pools contributors from investors, clients, or
depositors and uses these funds to buy stocks
and other securities
Intercultural communication- communication
among people with differing cultural
backgrounds
Internal locus of control- a deep seated sense
that the individual is personally responsible for
what happens in their life
Limited liability company (LLC)- a form of
business ownership that offers both limited
liability to its owners and flexible tax treatment
Limited liability partnership (LLP)- a form of
partnership in which all partners have the right to
participate in management and have limited
liability for company debts
Limited liability- when owners are not
personally liable for claims against their firm.
Limited liability owners may lose their
investment in the company, but their personal
assets are protected
Limited partnership- a partnership that
includes at least one general partner who
actively manages the company and accepts
unlimited liability and one limited partner who
gives up the right to actively manage the
company in exchange for limited liability
Market niche- a small segment of a market with
fewer competitors than the market as a whole.
Market niches tend to be quite attractive to small
firms
Merger- a corporate restructuring that occurs
when two formerly independent business entities
combine to form a new organization
Noise- any interference that causes the
message you send to be different from the
message your audience understands
Nonprofit corporation- a corporation that does
not seek to earn a profit and differs in several
fundamental respects from general corporations
Nonverbal communication- communication -Things to consider about audience- education, profession,
that does not use words. Common forms of and expectations
nonverbal communication include gestures, -Use common words in most situations (use versus utilize),
posture, facial expressions, tone of voice, and use active voice (we made a mistake versus a mistake was
eye contact made), use personal pronouns whenever appropriate (I, you),
Partnership- a voluntary agreement under Use contractions as often as you would when speaking (I’ll,
which two or more people act as co-owners of a don’t, here’s)
business for profit TIPS FOR EMAIL
 Consider both your primary and secondary readers
Passive voice-sentence construction in which
 Keep it short
the subject does not do the action expressed by
 Don’t forget to proofread
the verb; rather the subject is acted upon (eg the  Use standard writing
paper was written by my sister) Passive voice  Avoid attachments
tends to be less effective for business  Don’t assume privacy
communication  Respond promptly to emails
S Corporation- A form of corporation that  Assume the best
avoids double taxation by having its income  Create a compelling subject line
taxed as if it were a partnership  Think before you write, and think again before
SCORE (the Service Corps for Retired you send!
Executive)- an organization – affiliated with the PRESENTATION
Small Business Administration0 that provides Opening
free, comprehensive business counseling for An interesting or startling statistic, audience involvement,
small business owners from qualified volunteers. compelling story or anecdote, relevant simile or metaphor,
Small Business Administration (SBA)- an engaging question
agency of the federal government designed to
maintain and strengthen the nation’s economy
by aiding, counseling, assisting, and protecting  PRACTICE!
 Know your material, but never memorize
the interests of small businesses.
 Look at your audience at least 50% of the time
Small Business Development Centers
 Vary your voice, expression, and body language
(SBDCs)- local offices- affiliated with small  Use selective notes
business administration- that provide  Stick to your allotted time
comprehensive management assistance to  Slow down and listen to yourself
current and prospective small business owners.  Don’t apologize (unless you really did something
Sole proprietorship- a form of business wrong!)
ownership with a single owner who usually  Remember to use natural gestures
actively manages the company  PRACTICE!
Statutory close (or closed) Corporation- A Mergers – two companies agree to a combination of equals
corporation with a limited number of owners that Acquisitions – when one firm buys another
operates under simpler, less formal rules than a Corporations look for:
C corporation Growth opportunities, operational efficiencies, competitive
Stockholder- an owner of a corporation advantages
Venture capital firms- companies that invest SOLE PROPRIETORSHIP
in start-up business with high growth potential in Advantages:
exchange for a share of ownership Ease of formation, retention of control, pride of ownership,
Vertical merger- a combination of firms at retention of profits, and possible tax advantages
Disadvantages:
different stages in the production of a good or
Limited financial resources, unlimited liability, limited ability
service
to track and maintain talented employees, lack of permanence
PARTNERSHIP
Advantages:
Pooled financial resources, shared responsibilities, ease of
formation, tax advantages
Disadvantages:
Unlimited liability, disagreements, difficulty in withdrawing
from agreement, lack of continuity
Key Concepts CORPORATIONS
-Effective Communication happens when you transmit Advantages:
relevant meaning to your audience Limited liability, permanence, easy to transfer ownership,
-As globalization gains speed, intercultural communication ability to raise capital, specialized management
will become increasingly pivotal to long-term business Disadvantages:
success. Expense/complexity of formation and operation, double
-Reinforce the meaning of your message. Through eye taxation, paperwork and regulations, conflicts of interest
contact, tone of voice, facial expressions, gesture and posture LIMITED LIABILITY COMPANY
RESUME- Advantages:
-create scannable resume. Ensure that the computer can easily Limited liability, tax pass-through, flexible ownership,
read every word, use keywords that recruiters are likely to simplified management and operation
search Disadvantages:
-Formatting: Less is more! Include only your name on the top Franchise taxes, foreign status in other states, state law
line with mailing info below, use only plain text, and all caps differences, limited to select industries
instead of bold. Use plain, popular font. Include plenty of FRANCHISING
white space. Left justify Advantages:
- Less risk, training and support, brand recognition, access to
funding
Disadvantages:
Cost, lack of control, negative halo effect, growth challenges,
restriction on sale, poor execution
• Franchisors must provide a Franchise Disclosure
Document (FDD)
• The Federal Trace Commission (FTC) require:
✔ The FDD Must be written in plain
English
✔ The franchisor must be give 14 days to
review the FDD
✔ The Franchisee should have a lawyer
review the document
MERGERS
Horizontal- combine firms in same industry to increase size,
increase market power, gain efficiency (AT& T and SBC)
Vertical-combine companies with buyer-seller relationship to
provide tighter integration and increase control (Time warner
and turner broadcasting)
Conglomerate- combination of unrelated companies to
increase diversity (GE acquiring RCA)
Launching a new business- greater financial success,
independence, flexibility, challenge, survival
-not every small business person starts as an entrepreneur,
70% of small business owners say that they don’t want to
grow any larger.
Funding options- personal resources, loans, angel investors,
venture capital
SMALL BUSINESSES
Opportunities: market niches, personal customer service,
lower overhead cost, technology
Threats: higher risk of failure, lack of knowledge and
experience, too little money, bigger regulatory burden, higher
health insurance costs