Management 1 Final

Primary functions of securities markets (financial marketplaces for stocks and bonds)

1. Assist businesses in finding long-term funding to finance capital needs 2. Provide investors a place to buy and sell securities like stocks and bonds

Key steps of financial planning

1. forecast firm's short and long term financial needs 2. develop budgets to meet those needs 3. establish financial controls to see if company is achieving its goals

Pricing objectives

Achieve target return on investment or profit Build traffic Achieve greater market share Create image Further short-run and long-run social objectives

Marketing

Activity, set of institutions, processes for creating, communicating, exchanging offerings with value for clients and society

Promotion includes

Advertising Personal selling Public relations Public relations Publicity Word of mouth Sales promotions

Types of marketing intermediaries

Agents and brokers Wholesaler Retailer

Benefits of marketing research

Analyze customer needs and satisfaction Current markets and opportunities Effectiveness of marketing strategies Marketing process and tactics used Reasons for goal achievement/ failure

Fundamental accounting equation

Assets = liabilities + owner's equity

Packaging

Attracts customer attention Offers protection: handling and storage Offer protection from theft - UFC, RFID Explain benefit, express warning Meets government and seller requirements

Dow Jones Industrial Average

Average cost of 30 selected industrial stocks Gives indication of stock market direction over time

Business-to-business advertising

B2B sales channel

Advantages of issuing bonds

Bondholders can't vote on corporate matters Bond interest is tax deductible Bonds are temporary source of funding and eventually repaid Bonds can be repaid before maturity date if contain call provision

Disadvantages of Issuing Bonds

Bonds increase debt, can negatively affect market's perception of the firm Paying interest on bonds is legal obligation The face value of the bond must be repaid on the maturity date

CFP

Certified Financial Planner

CFA

Chartered Financial Analyst

Comptroller

Chief Accounting Officer

CFO

Chief Fianncial Officer

Publicity: advantages

Consumers value third-party remarks Low cost vs. advertising for similar exposure Digital expands opportunities and demands Expand coverage

Product differentiation

Creation of real or perceived product differences use branding, pricing, advertising, packaging to create different images

3 Parts of Marketing Concept

Customer orientation, service orientation, profit orientation

Flexible manufacturing

Designing machines to do multiple tasks to produce a variety of products

Risks of AI

Drastic changes to lives, AI created with bad intention, AI created with good intention goes bad, unintentional bias

Largest web 2.0 businesses

Facebook, youtube, twitter

Statement of cash flows

Financial statement that reports cash receipts and disbursements related to : operations, investments, financing

Cloud computing

Form of virtualization; company data and applications are stored at offsite data centers accessed over internet

Federal Deposit Insurance Corporation

Independent agency of US government, insures deposits up to 250,000

Product Life Cycle Stages

Introduction, growth, maturity, decline

Operations management includes:

Inventory management Quality control Production scheduling Follow-up services

Five criteria in selecting investment options

Investment risk Yield Duration Liquidity Tax consequences

Considerations for moving facility location

Labor costs Availability of resources Time to market, access to transportation and proximity to suppliers and customers Employee quality of life Crime rates, living costs Need to train or retrain local workforce

M2

M1 plus money taking a bit more time to obtain (savings accounts, mutual funds)

M3

M2 plus big deposits, institutional money market funds

Artificial intelligence

Machines programmed to think and act like humans: General, Narrow, Machine learning

Brand categories

Manufacturers' brands Dealer (private-label) brands Generic goods Knockoff brands

Program Evaluation and Review Technique (PERT)

Method for analyzing tasks involved in completing a project, estimate time to complete, and identify minimum time needed to complete project

Communication goals - 6M's

Mission, market, message, media, money, measurement

Importance of short-term funds

Monthly expenses Emergencies Cash flow problems Expansion of inventory Temporary promotional programs

Skimming price strategy

New product priced high to make most profit when little competition exists

Importance of long-term funds

New-product development Replacement of capital equipment Mergers or acquisitions Expansion into new markets (domestic or global) New facilities

Publicity: Disadvantages

No control over when media uses story Can be good or bad Unpredictable results Hard to respond to fast traveling news Story run once, unlikely to be run again

Marketing intermediaries

Organizations assisting in moving goods and services from producers to businesses and businesses to consumers

Standards for useful form of money are:

Portability Divisibility Stability Durability Uniqueness

Cash flow forecast

Predict cash inflow and outflow in future periods; months or quarters

Convenience goods and services

Products consumer wants to purchase frequently and with minimum of effort added convenience Consumers pay premium

Key provisions of Sarbanes-Oxley Act

Prohibits accounting firms from providing certain non-auditing work to companies they audit Strengthens protection for whistleblowers Requires CEO and CFOs to certify accuracy of financial reports, impart strict penalties for violation of security reporting

Income statement formula

Revenue - Cost of goods sold- gross profit - operating expenses = net income before taxes Net income before taxes - taxes = net income or loss

Forms of Short-Term loans

Secured Unsecured Line of credit

Budget

Set management expectations, allocate use of resources throughout firm Depend on balance sheet, income statement, cash flow statement, short-term/ long-term financial forecast

Everyday low pricing

Setting prices lower than competitors daily, without special sales

Pros of selling stock to raise funds

Stock purchase price doesn't have to be repaid Dividends do not have to be paid Stocks don't increase debt

Cons of selling stock to raise funds

Stockholders can vote for board of directors + affect management decisions Dividends come from after taxes funds Dividends not tax deductible

Break even point

Total fixed costs/ (price of one unit -variable costs of one unit)

Report: financial statements and internally distributed financial reports

Users: Managers of the firm

Report: Financial statements found in annual reports (income statement, balance sheet, statement of cash flows)

Users: People interested in organization's income and financial position (owners, creditors, suppliers)

Report: required reports

Users: government regulatory agencies

Report: Tax return

Users: government taxing authorities

3 Basic Varieties of social media

Viral marketing, influencers, blogger/podcast

Message

What are the specific elements

Market

Who are we communicating to

Time value of money

a dollar today is worth more than a dollar tomorrow

Common liability accounts

accounts payable, notes payable, bonds payable

Cost of acquiring new customer vs. cost of retaining

acquiring new customer = 5x cost of retaining one

Traditional promotion mix

advertising, personal selling, public relations, sales promotion making up the product

Business-to-business market

all individuals and organizations that want goods and services to use in producing and selling goods to to others

Consumer market

all people that want goods and services for personal consumption or use

Falling dollar value

amount of goods and services you can buy with a dollar decreases

Rising dollar value

amount of goods and services you can buy with a dollar increases

Money supply

amount of money federal reserve bank makes available for people to buy goods and services

marketing research

analyzing markets to find opportunities and challenges, information to make good decisions

Fixed assets

assets relatively permanent, land, buildings, equipment

Secured loan

backed by collateral

Gantt Chart

bar graph showing production managers te projects being worked on and the stage they're at

Common stock

basic form of ownership in a firm; voting rights and rights to share in firm profits through dividends

Brand equity and loyalty are boosted by

brand awareness

Manufacturers' brands

brand names of manufacturers distributing products nationally

Trademark

brand with exclusive legal protection for brand name and design

Agents and brokers

bring buyers and sellers together: assist in negotiating an exchange but don't take title to goods

Open market operations

buy and sell US government bonds by Fed with goal of regulating the money supply

Diversification

buy different investment alternatives to spread investing risk

Trade credit

buy goods and services now, pay later

Disadvantage of algorithms

can be faulty + reflect human biases

Line of credit

certain amount of unsecured short-term funds a bank will lend, provided the funds are readily available

Product mix

combination of product lines offered by manufacturer (eg. PepsiCo)

Pricing product factors

competitor prices production cost distribution promotion product mix product lifestyle

MRP (Material Requirements Planning)

computer based operations management system, uses sales forecasts to make sure that needed parts and materials are available right time and place

Computer-integrated manufacturing

computer-aided design + computer-aided manufacturing

Bond

corporate certificate indicating that a person lent money to firm

Operating expenses

costs involved in operating a business; rent, utilities, salaries

variable costs

costs that change according to level of production

Institutional advertising

create attractive image for organization over product

Product advertising

create interest among consumer, commercial, and industrial buyers

Categories of assets

current assets, fixed assets, intangible assets

Accounts payable

current liabilities, involving money owed to others for merchandise or services on credit not yet paid for

Key ratios include: (liquidity ratios)

current ratio acid-test ratio

brand loyalty

degree which customers are committed to further purchases

Barter

direct trading goods or services for others

geographic segmentation

divide market by cities, counties, states, regions

benefit segmentation

divide market by determining which benefits of the product to talk about

volume/ usage segmentation

divide market usage

psychographic segmentation

divide market using group values, attitudes, interests

market segmentation

divide total market into groups

demographic segmentation

dividing market by age, income, education level

Unsecured

doesn't require collateral

earned or owned: viral marketing

earned - posts, shares, likes

Key ratios (proftability) include:

earnings per share, return on sales, return on equity

Liquidity

ease with which asset can be converted to cash

Assets

economic resources (things of value) owned by a firm; items tangible or intangible

Social commerce

electronic commerce; social media, online media that supports social interaction, user contributions to assist in online buying and selling of products and services

NASDAQ

electronic system communicating over the counter trades to brokers

Social listening

engage consumer, develop insight Incorporate themes into marketing messages Identify super fans and influencers

Cash budget

estimate cash inflow and outflow during a specific period, month, or quarter

Total product offer

everything consumers tangibly and intangibly evaluate when deciding whether to buy something

Maturity date

exact date issuer of a bond must pay principal to bondholder

total fixed costs

expenses that remain the same no matter how many products are made or sold

Principal

face value of the bond

Securities and Exchange Commission (SEC)

federal agency responsible for regulating various exchanges

Balance sheet

financial statement reporting firm's financial condition at specific time, is composed of three major accounts: assets, liabilities, owners' equity

Customer Orientation

finding what customers want and provide it

Financial control

firm periodically compares actual revenues, costs, and expenses with budget

profit orientation

focus on goods and services that will earn most profit

Debt financing

funds raised through borrowing, must be repaid

Jack Robbers

furnish racks or shelves of merchandise for display and sell them on consignment

Preferred stock

gives owners preference in payment of dividends and earlier asset claims than common stockholders

Primary markets

handle sale of new securities, includes initial public offering (IPO)

Secondary market

handle trading of securities between investors, proceeds of sale going to seller

Capital budget

highlight firm's spending plans for major asset purchases requiring large sums of money

Profitability ratios

how effectively firm's managers use resources to earn profits

Activity ratios

how effectively management turns over inventory

Gross profit

how much firm earned by buying or making and selling merch

money

how much will be spent

Brand awareness

how quickly/ easily a brand name comes to mind when mentioning a specific category

measurement

how will impact be measured

Brand

identifies goods and services of seller or group

knockoff brands

illegal copies of national brand name goods

Benefits of AI

increased efficiency, solving problems for humanity, liberate humans to what they do best, expanded access

Discount rate

interest rate that Fed charges for loans to member banks

Net Neutrality

internet service providers should provide same level of access to all websites regardless of content ISP could charge sites for faster access without net neutrality ISP: could charge people to visit certain websites

Just-in-time inventory control

inventory kept to a minimum on supplies and are delivered just in time to go to assembly line

Key ratios (activity) include:

inventory turnover ratio

Bears (perceptions of market)

investors expecting stock prices to decline

Bulls (perceptions of the market)

investors who believe stock prices are going to rise

Current assets

items that can/ will be converted to cash within a year

customer relationship management

learn as much as you can about customers and do what you can to satisfy or exceed expectations

Intangible assets

long-term assets (patents, trademarks, copyrights) have no physical form, but have value

Bonds payable

long-term liabilities, represent money lent to firm that must be paid back

service orientation

make sure everyone in organization is committed to customer satisfaction

Qualifying

make sure people have a need for the product, authority to buy, willingness to listen to a sales message

Public relations

management function: evaluates public attitude, changes in procedures in response to public's requests, execute program of action and information

supply chain management

managing raw materials, goods in progress, related info through all orgs in supply chain, manage return of goods, recycle materials

Product development

marketers need to think like consumers in assessing value

target marketing

marketing directed towards groups the organization best serves

Leverage ratios

measure degree to which firm relies on borrowed funds in its operations

Cost of Goods Sold

measures cost of merch sold or cost of raw materials and supplies used for purchasing items for resale

Revenue

monetary value firm got from goods, services and other payments

M1

money easily accessed (coins, paper money, traveler's checks)

Equity financing

money raised within firm, from operations or sale of ownership in the firm

Enterprise resource planning

newer version of MRP combining computerized functions of all divisions and subsidiaries of the firm, finance, HR, order fulfillment to single integrated software program using single database

Generic goods

nonbranded product at a sizeable discount

Stock exchange

organization whose members can buy and sell securities for companies and investors

Data analytics

organizing, collect, store large sets of data to find patterns useful for business now and in making future decisions

Mission

overall goal & decision-making process

Social media is either

owned - paid for banner ads, video earned - shared via likes, posts, search rankings

earned or owned: Blogger/podcast

owned - pay for production/ promotion

earned or owned: Influencers

owned - pay for promotion

Viral marketing

pay customers to say positive things on internet/ set up selling schemes where consumers get commissions for directing friends to websites

Interest

payment issuer makes to bondholders for use of borrowed money

Reserve requirement

percentage of commercial banks' checking and savings account that must be kept in the bank

Prospect

person with means and authority to buy product, willingness to listen to sales message

Logistics

planning physical flow of materials, final goods, related info from points origin to points of consumption to meet customer requirements and profit

Capital gains

positive difference between purchase price of stock and sale price

High-low pricing

prices higher than EDLP, but have many special sales with lower prices than competitors

Psychological pricing

pricing goods and services at price points making the product appear less than it is

hybrid clouds

private cloud for essential tasks, use public cloud as needed

Factoring (short term financing)

process of selling accounts receivable for cash

Break-even analysis

process used to determine profitability at various levels of sales

Penetration strategy

product priced low to attract customers and discourage competition

Product line

products closely related/ within similar markets

Shopping goods and services

products consumer buys only after comparing value and price with other sellers

Unsought goods and services

products consumers don't think of buying, need to solve a problem

Dealer (private-label) brands

products that don't carry manufacturer's name but carry distributor's or retailer's name instead

Letter of credit

promise by bank to pay seller given amount if certain conditions are met

Buying stock on margin

purchasing stocks by borrowing some of purchase cost from brokerage firm

Intensive distribution

put products into as many retail outlets as possible: vending

Accounting

record, classify, interpret financial events and transactions to provide others with information needed to make good choices

Bookkeeper

recording business transactions

Prospecting

research potential buyers and choose most likely to buy

public clouds

run on remote computers

Wholesaler

sells to other organizations

Retailer

sells to ultimate consumers

Supply chain

sequence of activities to move goods from raw materials to ultimate consumers

Web 2.0

set of tools: allow people to build social and business connections, share info, collaborate on projects online

Stocks

shares of ownership in a company

Notes payable

short or long-term liabilities that business promises to pay by certain date

Income statement

shows firm's profit after costs, summarizes resources coming into the firm and resources lost, and resulting net income or loss

Ledger

specialized accounting book/ computer program; info from accounting journals is put into specific categories and posted so managers can find all info about an account in one place

Trial balance

summary of all financial data in account ledgers; ensuring figures are correct and balanced

Depreciation

systematic write-off of cost of tangible asset over estimated useful life

Data mining

technique for looking for hidden patterns and unknown relationships in data

Operating budget

ties firms other budgets and summarizes proposed financial activities

Retail advertising

to consumers by various retail stores

Trade advertising

to wholesalers and retailers by manufacturers

Inflation is sometimes called

too much money chasing too few goods

Over the counter market

trading stocks not listed on national exchanges

Specialty goods and services

unique characteristics and brand identity

Computer-aided design

use of computers in design of products

Computer-aided manufacturing

use of computers in manufacturing products

Selective distribution

use only preferred group of retailers in area

brand equity

value of brand name and associated symbols

Liabilities

what business owes to others (debts)

Break-even point

where revenues equal cost

Media

which vehicles will be used in campaign

Private clouds

wholly behind firewall

Double-entry bookkeeping

write every business transaction in two places; so they can check one list of transactions against another for accuracy