The Main Idea

1. Chapter 17 The Main Idea Entrepreneurs need to understand the advantages and disadvantages of various types of businesses so that they can choose the one that best suits their needs. Managing Operations and Staffing

2. Explain the significance of operational plans. Describe the purpose of operating policies, rules, and regulations. Section Objectives

3. For your operation to run smoothly, there has to be consistency in the way things are done and how people are treated. This is achieved by implementing policies and rules. The Main Idea

4. The goal of first-line management is to put operational plans into action. As your business grows, you may have to delegate some responsibilities to your employees. Implementing Operational Plans

5. Having a policy on how to deal with a recurring situation helps simplify day-to-day management. Operating Policies, Rules, and Regulations policy a statement of goals, purposes, and principles that serves as a guideline for daily business operations and supports the company’s goals and objectives

6. In contrast to a policy, a rule leaves no room for interpretation. Operating Policies, Rules, and Regulations rule a standard set forth to guide behavior and actions; a rule tells employees exactly what they should and should not do

7. Most policy statements cover these issues: Operating Policies, Rules, and Regulations • hours of operation • credit • return and rework • delivery • customer service • employee and customer safety

8. A business that offers credit may encourage sales, but offering credit also ties up money. Credit Policies credit an arrangement for deferred payment for goods and services; credit allows a business or individual to obtain products in exchange for a promise to pay later

9. There are four major credit plans: Credit Policies • bank credit cards • charge accounts • instalment plans • financing

10. Businesses that extend consumer credit use the three Cs of credit to determine whether to extend credit to customers. Three Cs of Credit C Character C Capacity C Capital 10

11. Credit bureaus give higher credit ratings to people who have good character. Credit Policies character a person’s reputation for honest dealings, such as that of a borrower of money

12. Applicants for credit must document their capacity by stating income and expenses when filling out credit application forms. Credit Policies capacity a borrower’s ability to repay a debt as judged by lenders

13. A lender is more likely to extend credit to individuals or businesses with substantial capital than to those with modest means. Credit Policies capital the overall assets of an individual or a business

14. When you choose to have a return policy or a reworkpolicy, your business is guaranteeing the quality of the goods or services you sell or provide. Return and Rework Policies return policy a policy that establishes the conditions under which items that have been ordered, shipped, or delivered may be returned rework policy a policy that establishes conditions under which items will be reworked; that is, doing something again because it was not done right the first time

15. Whether or not to deliver is another part of your place strategy. Delivery Policies

16. Common customer service policies include: Customer Service Policies • complaint handling • product servicing • customer courtesy • shopping climate • restroom access • response time • warranties

17. Businesses can take two basic precautions to reduce liability and ensure the safety of their customers and employees: Customer Service Policies Train employees in safety and emergency procedures. Reinforce training with signs posted throughout the workplace.