BUILDING YOUR BUSINESS SKILLS

A Tasty Idea
Goal
To encourage you to identify options for financing a new business.
Background Information
Suppose that you and three friends from college want to open a new
restaurant. Collectively, you have almost 20 years of experience in the
restaurant industry, and with lots of new houses in the area, you think there’s
an opportunity to make a lot of money if you can offer interesting food at good
prices. You’ve even identified a great location, but you realize that it’s going to
take a great deal of money to get this business off the ground. As recent
college graduates, you don’t have a lot of money, so you’re looking for the
best source of funding. Realistically, you realize that you’re going to need at
least $100 000 to sustain operations until your business starts to return a 
profit.
Method
Step 1: Individually or in a group of two or three students brainstorm a list of
options for financing. You’ll want to do a little online research to find out more
about some of the loan programs identified in the text.
Step 2: For each of the funding options, develop a list of pros and cons. Be sure
to consider all the implications of each form of financing, considering interest
rates, repayment options, and eligibility requirements.

Follow-up Questions
1. Before getting financing, what will be expected of you and your business
partners?

Every business requires a concept or a brand before it is put into play. The
restaurant will need a concept that will decide the type of restaurant and
cuisine it will be serving. The location and crowd are the main factors
influencing the brand.
The next step is to create a business plan that will define the restaurant's
mission and vision. It will describe the opportunities, management structure,
marketing and advertising strategies, and operational programs like layout,
space, equipment, staffing needs, suppliers, etc. It will also include the menu
based on the concept of the restaurant. The business plan will also cover the
finance proposal that specifies the financial sources and budgets.
2. Which source of financing would be best for you and your partners? Why?
With a partnership business, secured business loan is fast and convenient
way to get the funds quickly. As it is secured with a collateral, it is easier to
 get approved with low interest rates. They usually have long repayment
schedule which makes it easier to pay off.
3. What form of business ownership would be most appropriate for your new
restaurant and why?
Partnership business would be most appropriate for the new restaurant. All
the four candidates would be general partners as they have a total of 20 years
of experience in the industry and can equally manage the firm. Funding is
easier for this type of ownership and can also invite partners to invest
money. It is easier to organize and includes many tax benefits.

 What differences might you expect to find in the corporate cultures of a 100-year-
old manufacturing firm based in Winnipeg and a 5-year-old e-commerce firm
based in Ottawa?
A manufacturing company would be more focused on its production, marketing,
meeting quotas and targets. It would be having a high-pressure environment with
the workplace driven by meeting deadlines, expecting results, and working long
hours. However, stability has helped the 100-year-old firm to survive and succeed.
A strong corporate culture may also be another reason for the company's success
by communicating the culture to the new employees and leading them by example.
A relatively newly formed e-commerce business may involve a clan culture where
colleagues share knowledge and new ideas, and leaders look for feedback from
their teammates. It may emphasize interpersonal relationships to make employees
feel valuable and respected. But this kind of corporate culture may lack strong
leadership.
Questions:
1. Do you think that the female employee’s claim that she is being discriminated
against is accurate? To make your decision, use the data presented at the
meeting and clearly indicate (quantitatively) how it does, or does not, support the
employee’s claim of pay discrimination.
As stated by Marilyn Trent, the average salary of females hired last year was
lesser than the average salary of males by $2000. Therefore, based on this
analysis, I believe the female employee's claim on pay discrimination is
accurate.
2. Are there data that are missing that would be useful in this case? Explain.
More data on newly hired males and females for the past year would be
helpful. Data like the employee’s qualification, previous experiences, and
entitled benefits could help identify alternatives and define a decision.
Moreover, detailed information on their responsibilities, like being assigned for
night shifts or required to travel a lot, would bring a more effective decision.
3. To what extent do the discussions of the executive team follow the six steps of
the rational decision-making process that are presented in this chapter? If you
decide there are differences, explain why those differences exist.
As the first step of the rational decision-making process, the executive team
tried to recognize the need for a decision before the situation escalates and
affects the company’s reputation and the morale of the employees. But due to
the lack of relevant data, they were not able conclude if a decision is required
or not. Therefore a subcommittee would first analyze the data before defining
a decision.
Analyze mission statements from three companies. How effective do you think
the mission statements are? Explain your reasoning. Do you think the mission
statements clearly reflect the identity of the company? Explain.
 LinkedIn

Mission: To connect the world’s professionals to make them more productive and successful.

Today social media has played a vital role in bringing people together from all walks of life to
connect and interact personally. LinkedIn has taken up this opportunity to associate with different
people in the professional community around the globe. As their mission states, they have
successfully designed a platform to link their clients worldwide, allowing them to connect to
suitable job opportunities, advance their careers, share ideas, and obtain guidance from
experienced mentors. This online service has been explicitly designed to match individuals based
on their preferences and has brought job seekers, trainers, and recruiters together.

 PayPal

Mission: To democratize financial services to ensure that everyone, regardless of background or

economic standing, has access to affordable, convenient and secure products and services to take
control of their financial lives.

In this age of hassle-free online purchase, electronic payment systems like PayPal have
successfully come a long way to provide a platform for convenient and secure financial services
for its customers around the globe, irrespective of their client’s economic background. From
paying utility bills to purchasing goods and services, PayPal has helped to provide affordable
services with just a click. The traditional method of payments, such as cheques, requires
comparatively long processing times and processing fees. PayPal has provided seamless and
reliable payment services by encrypting bank and credit card information and fraud prevention. It
has the advantage of being faster, easier to collect, and inexpensive, especially for small
businesses.
  Nestlé

Mission: Unlocking the power of food to enhance quality of life for everyone, today and for
generations to come.

Nestlé is the world’s largest food and beverage manufacturing company, marketing its products
worldwide. As their mission statement indicates, Nestlé prioritizes its consumer’s health and
well-being. They have developed nutritious and healthy food for young and old alike and
therefore have been particular to ensure the quality of all food products meets the required health
standards. Baby food, breakfast cereals, coffee, tea, dairy products, and pet food are some areas
where they have gained immense success.

In your own words, explain the dilemma that exists when managers are trying to decide
whether to use a geographic or product basis for departmentalization. Do the same for
the centralization/decentralization dilemma.

Geographic or Product Departmentalization

Geographic departmentalization refers to organizing the firm based on geographic regions, while product
departmentalization refers to organizing based on the sold products. Generally, companies tend to change
their structure from product to geographic departmentalization to meet the regional area's particular
demands, resulting in the successful expansion of business. Though this structure can lower the cost of
production, administrative and other expenses will be higher and can also result in duplicating activities.

Companies can focus on specific products and standardize manufacturing processes with product
departmentalization. As a result, they are more flexible when a new product is introduced and avoid
duplicating activities, resulting in better quality products. Though the production costs and utilization of
resources are optimized in this type of departmentalization, the local decision-making process may be
slowed, and the outcomes may not be favorable for the specific regions.

Centralization or Decentralization

A centralized organization is where the top management makes decisions for a company. At the same
time, in decentralization, the decision-making authority is delegated to the middle and first-line
management. With decentralization, the decision-making process is quicker, and the top leaders can focus
on more important decisions regarding the organization as a whole. In addition, the relaxed chain of
command makes it easier to respond quickly to regional demands and allows employees to share new
ideas.

There is a transparent chain of command and communication in a centralized structure. This way, it
becomes easier to focus on its goals and plans. A centralized organization has set standard procedures and
methods to guide the company, resulting in low administrative costs and no overlapping of activities. All
relevant decisions are made at the top of the hierarchy and communicated to others, thus preventing
conflicts or differences in opinions. But this bureaucratic leadership limits communication and creativity
as employees cannot present their ideas or contribute to the decision-making process.

Why would a company decide to split into two (or more) companies?
A company may split into two or more companies to efficiently allocate the capital to the different
companies based on their needs. It can also define other strategic plans to improve profits. Another main
objective to split a company would be to increase its shareholder value. This way, each business can be
valued separately at a premium valuation.

Consider the following statement: We should not pay too much attention to what an
organization’s structure looks like. It is far more important to have a good corporate
strategy and leaders who can motivate employees who work well together than it is to
worry about the mechanical structure of an organization. Do you agree or disagree?
Explain your reasoning.

I cannot entirely agree as I believe in a sound organizational structure, an excellent corporate strategy,
and motivating leaders to be equally crucial for a company. An organizational structure gives the
employees clarity and guidance, especially on managerial authority and the company’s workflow. It also
improves the efficiency and stability of the firm by focusing on the delegated tasks and responsibilities. A
good structure, a robust strategic plan, and managers with strong leadership qualities to motivate and
challenge employees can help build a successful business.

1. Explain the significance of organizational size as it relates to organizational

structure. Describe the changes likely to occur as an organization grows.

One of the main elements that define organizational structure is the size of the business. Large
companies have more job specializations, standardized processes, regulations, and complex
decision-making responsibilities, unlike small companies where the organization is a typical flat
structure. Therefore, large businesses will require to design their organizational structure into
various departments based on their specializations and functions to work efficiently.
A small business commonly starts with a functional organizational structure. But with the
company's growth, many factors affect the structure design like technology, innovation, new
market trends, and demands. For example, when an organization extends its market to other
countries, it has to introduce an international division to manage global markets. In addition, the
decision-making hierarchy also changes when the organization grows. Therefore, the structure
needs to be more decentralized where more decision-making authority is delegated to the middle
and first-line management.
Why do some managers have difficulties in delegating authority? Why do you think this
problem might be more pronounced in small businesses?
One of the main reasons managers have difficulties delegating authority could be the lack of trust
they have in their team members' skills and their commitment to quality. Some managers may
believe that they could utilize the time to do the task effectively and efficiently rather than
delegate. Other reasons include lack of delegation skills and the fear of losing their position of
control.
This problem is more pronounced in small businesses because managers believe that others
cannot do the task more effectively like them and fear that their subordinates would make
mistakes, consume a lot of time and may negatively impact the business and it’s reputation with
a low quality output. Another reason is that the managers are unwilling or not patient enough to
take the time to explain the task and the process to their team members, that is required to get the
desired results.

1. In your own words, explain how a functional structure differs from a divisional
structure.

In a functional organizational structure, employees are organized into units or departments based
on their specific skills and knowledge and report to assigned department managers. Each
department handles one function of the business process like marketing, production, information
technology, etc. It defines a clear hierarchy for the employees to know whom to report. This
structure is efficient in a stable environment where the design is simple and easy to understand.
Responsibilities and tasks are fixed, and employees feel confident. But a functional
organizational structure may find it hard to implement changes and flexibility and can lead to a
lack of communication between departments.

The organization is divided into divisions that operate autonomously in a divisional structure.
Each division has its top executives that manage hiring, budgeting, and advertising. This
structure encourages accountability and transparency as their management teams lead and guide
them. Another feature of a divisional structure is that it can accommodate expansion and increase
market share by adding geographic divisions. But a divisional organization tends to encourage
office rivalry among the divisions and shift the focus on the organization’s goal and strategic
plans.

2. The argument has been made that the divisional structure does a better job than
the functional structure of training managers for top-level positions. Do you agree
or disagree with this argument? Explain your reasoning.

Since each division works as an autonomous unit in a divisional organization, the middle
management has the opportunity to oversee the business operations in each unit along with
authority to make decisions and approvals. Thus, it gives managers a training opportunity for
career advancements to top-level positions. In addition, as there are different departments in a
division, employees can work in those departments giving them a chance to develop their skills
and expertise, thus providing them long-term benefits
In the chapter, the term quality is defined as “fitness for use.” Explain how that applies
in each of the examples given in the case.

Samsung Note 7 Phone - The quality of Samsung’s Note 7 phone was very poor and not fit
for use because the defective batteries caused the phone to short-out and catch fire. Due to
this dangerous outcome, all the phones were recalled from the market.

Medical Marijuana – Customers who was prescribed medical marijuana complained about
weight loss, skin blisters, muscle aches and persistent coughing. This was unfit for
consumption due to the presence of toxic pesticides.

Canada Revenue Agency – The agency was under scrutiny as it provided poor customer
service like not attending their calls and answering their queries.

Wooden Railroad Ties – Replacement of the defected ties caused great financial loss for
Norfolk Southern Corp. and could have led to safety issues for passengers due to derailment.
Disruption of services and changes in train schedules may occur when ties needed to
replaced.

The Automobile Industry – Millions of cars were recalled and deemed unfit for use due to
the flawed and failed quality inspections by Nissan, Subaru and Mitsubishi carried out over
the years. Cars manufactured by Takata Corp. were also recalled due to outfitted airbags that
exploded and killed or injured drivers and passengers. GM cars had defective switch that
disabled steering controls and caused accidents.

The Airline Industry – Poor quality and customer services like reduced in-flight services,
baggage fees, lost baggage, overbooked flights and cancelled flights led to poor customer
reviews in commercial airlines.

Most of the quality problems described in the case occurred in tangible

physical products. Are quality problems different when intangible services are involved,
or are they the same? When answering this question, address the issues of intangibility,
customization, and unstorability as key characteristics of services. Give examples to
support your conclusions about the similarities and differences in quality problems for
tangible physical products and intangible services.

For any product or service provided, quality is an essential aspect. The quality of tangible
products is measured through standardized methods and procedures by quality assurance and
quality control departments. For instance, when a pharmaceutical drug is produced, the
quality department conducts qualitative and quantitative analysis on the finished product and
the process to ensure it has followed all the standard procedures, protocols, and regulations to
ensure its quality and safety before it is marketed to the consumers.

The output of a service is measured by the customer’s evaluation and satisfaction. Due to the
intangible nature of services, the customer’s satisfaction is perceived in the form of pleasure
or a feeling of safety. Unlike products that can be mass-produced, services cannot be
produced and stored for high-demand periods. During the service operations process, the
customer is present and can affect the process when they ask for a more customized service
version. Additional or customized services may be provided to retain clientele. For example,
when booking a holiday package with a travel agency, an itinerary is provided, which
includes airport transfers, hotel bookings, rental cars, access to local or regional attractions
and activities, etc. Generally, clients prefer holiday packages for instant cost-saving and
convenience. Tour operators should continuously assess hotels, rental companies, and tourist
guides to ensure high-quality service and the client’s needs are met. Customer ratings and
their reviews define the success of travel agencies.

1. Develop a service-flow analysis for some service that you use frequently, such
as buying lunch at a cafeteria, having your hair cut, or riding a bus. Identify areas
of potential quality or productivity failures in the process.

A service-flow analysis of eating at a restaurant that I had recently experienced is

described as follows:

When guests arrive at a restaurant, the front desk checks for a reservation to confirm a
table for them; if no reservations are made, they have to wait until available tables are
confirmed. Unfortunately, quite a few reserved tables were not occupied, and a few
customers were already waiting for open tables. This situation could have been avoided if
the restaurant had called their clients who made the reservation to reschedule to
accommodate the guests on their waiting list.

Once the guests are escorted to the available tables, the waiter brings in the menu and
introduces the chef’s specials for the day. After the order is taken, the ordered beverages
are served first. Then the waiter serves starters, main course, and desserts altogether. The
wait time for the food was long, and it could have been avoided if each course had been
served individually to avoid unnecessary wait times.

The waiter ensures the guests have finished ordering and proceeds to the cashier to
prepare the bill. After the guests pay the bill and leaves, the table is cleaned and prepped
for the following reservation.

In this process, the customer is not satisfied with the service as they had to wait for
available tables or the food was served late. On the house, items like a free dessert or a
drink can be served to please the customer. To improve customer ratings and reviews,
complimentary service can be provided for their next visit, like a discount coupon or a
gift voucher.
 2. Describe three high-contact service operations and three low-contact service
operations. Do the concepts of intangibility and unstorability have different
implications for low- and high-contact service operations?

High-contact service operations refer to services that involve direct interactions between the
customer and the provider. Three high-contact service examples:
1. Hospitality services are categorized as high-contact services. When booking and staying
in a hotel, the management ensures that the rooms are cleaned, restocked, and ready
before the client arrives. The employees must complete the formalities at the front desk
efficiently without causing any delays. The services and recreational activities promised
during the stay must be provided. Throughout all these processes, customers are in
contact with the hotel's employees.
2. Financial services like opening a bank account or applying for a loan like a mortgage or
auto loans are classified as high-contact services. A bank relationship manager is
assigned to every client to use financial services and liaisons between the client and the
institution. They analyze the client's capital and investment needs and provide proposals
about the bank's products and services that benefit the customer.
3. Another example of high-touch service is the flight services provided throughout the air
travel, from boarding to getting off the plane. The flight captain and cabin crew ensure
that the passengers have a comfortable trip. It is also the crew's responsibility and priority
to make sure all the safety protocols are followed during the flight to ensure the safety of
everyone onboard the plane.

Low-contact service operations refer to services that involve little to no physical contact between
customer and the service provider.
a) Online shopping is a prevalent example of low-contact service operation. It requires less
interaction with the company and involves buying products online and paying for them
without any assistance.
b) Tutorials for new mobile or pc applications can be considered low-touch services.
Nowadays, a coach or tutor is not required to help teach how to use new apps as they are
provided as online manuals or tutorials with step-by-step instructions.
c) Another example can be seen in Alberta Health Services, where any immediate but non-
emergency health concerns can be consulted with a registered nurse through phone calls.
A diagnosis can be made after stating any occurring symptoms and health conditions like
fever, cold, cough, body pain, etc. The prescriptions would be sent to a nearby pharmacy
and collected by the patient.
3) Why do you think the various quality problems described in the case
occurred? Analyze several possible reasons. Is there a different reason in
each situation, or is there an underlying similarity across all of the situations?

The quality of most of the tangible products mentioned in the case is due to poor quality
management. For the production of any products, it is essential to inspect and analyze the raw
materials and supplies before it is taken into production. Quality should be maintained
throughout the process, from purchasing the raw materials until the product is packed and
delivered. For instance, in the case of Samsung Note 7 phones, the defective batteries could have
been avoided by conducting proper quality tests before it was sent for production. Another
example is medical marijuana, where the active pharmaceutical ingredient (API) is marijuana.
By conducting validated quality analysis on the raw material, undesired substances would have
been found before it was taken into production.

Quality management of services is different when compared to manufactured goods. The success
of a service provider is mainly built on customer satisfaction and retention. Consumers expect
services to be efficient and reliable. If there is a disruption or an interruption during the service's
operations process and the employee does not show the proper customer courtesy, it causes an
inconvenience for clients. Employees must be given appropriate training to handle customers and
frequent quality checks on the process, and the services must be done to improve the service's
standard. For example, United Airlines could have avoided the overbooked incident by providing
the passenger with a few rational options like an upgraded ticket.

4) Consider the following statement: “The emphasis on quality is misplaced.

What consumers really want is reliable and inexpensive products. The
emphasis on quality simply raises the price of products and frustrates
consumers because they have to pay so much for products and services.” Do
you agree or disagree with the statement? Explain your reasoning.

I disagree with the statement because when quality improves, then productivity improves. When
the processes involved in the manufacture of a product passes all the quality checks, there is
minimal error with no reworks, thereby avoiding unnecessary production costs and timely
delivery of the high-quality finished goods to meet customer’s demands for quality and standard
prices.
1. Why do the four levels of user groups in an organization need different kinds of
information from the IS?

Information collected and stored in businesses has its role to play in

managing the business operations effectively. Top level managers
require strategic information to analyze and find alternatives to problems
that affect the organization as a whole. The lower level managers and
employees require information that is needed for regular and daily
processes in their respective departments. Also, information is
compartmentalized to have controlled access and to prevent leakage of
vital business information.

2. In what ways are local area networks (LANs) different from, or similar to, wide
area networks (WANs)?
Wide Area Network (WAN) is a telecommunication network that connects devices and covers a
large area. E.g. internet. Local Area Network (LAN) is a telecommunication network that
connects devices locally. E.g. Wi-Fi.

As mentioned above, one of the key differences is the distance covered by each type of
network. LANs are locally connected networks and has been in use long before WANs; this type
of network is geographically connected. LANs has a high speed of 1000mbps while WANs has a
lower speed like 150mbps. Since LANs is a restricted local network which is commonly found in
offices, schools, hospitals, etc, they are more secure unlike WANs that is connected publicly to
many devices, which increases security risks. LANs are easier to maintain and less expensive
than WANs which is more complex and high maintenance.

Both LANs and WANs requires a connection to networked endpoint like device-to-device or
device-to-server and use internet protocol (IP). They can be both wired or wireless.