Exam 2 (chapters 7-12)
Insider Trading
Practice of buying or selling of securities using important information about the company before it's made public
Downsizing
Practice of eliminating jobs to cut costs
Odd-Even Pricing
Practice of pricing products a few cents (or dollars) under an even number
Prestige-Pricing
Practice of setting a price artificially high to foster the impression that it is a product of high quality
Discrimination
Practice of treating a person unfairly on the basis of a characteristic unrelated to ability
Convertible Preferred Stock
Preferred stock that gives its owner the option of exchanging it for common stock
Cumilitive Preffered Stock
Preferred stock that requires a corporation to pay all current and missed preferred dividends before it can pay common dividends
Arbitration
Process of resolving a labor-contract dispute by having a third party study the situation and arrive at a binding agreement
Initial Public Offering (IPO)
Process of taking a privately held company public by selling stock to the public for the first time
Labeling
Information on the package of a product that identifies the product and provides details of the package contents
Secondary Data
Information used in marketing decisions that has already been collected for other purposes
Private Branding
Product made by a manufacturer and sold to a retailer who in turn resells it under its own name
Generic Branding
Product with no branding information attached to it except a description of its contents
Incentive Programs
Program designed to financially reward employees for good performance
Debt Financing
Process of raising capital for a company through the sale of bonds
Equity Financing
Process of raising capital for a company through the sale of stock
Budget
A document that itemizes the sources of income and expenditures for a future period (often a year)
Open Market Operations
The sale and purchase of U.S. government bonds by the Fed in the open market
"Sarbanes-Oxley Act (SOX)
A federal law enacted to encourage ethical corporate behavior and discourage fraud and other wrongdoing
Statement of Owner's Equity
A financial statement that details changes in owner's equity for a *specified period of time*
Money Market Mutual Funds
Accounts that pay interest to investors who pool funds to make short-term loans to businesses and the government
International Financial Reporting Standards (IFRS)
A set of worldwide accounting rules and guidelines used by companies to prepare financial statements that can be compared with those of other countries
Ethical
Ability and willingness to distinguish right from wrong and when you're practicing one or the other
Certified Public Accountants (CPAs)
Accountant who has met state-certified requirements for serving the general public rather than a single firm
Private Accountants
Accountant who works for a private organization or government agency
Audits
Accountant's examination of and report on a company's financial statements
Accrual Accounting
Accounting system that records transactions when they occur, regardless of when cash is paid or received
Accounting Equation
Accounting tool showing the resources of a business (assets) and the claims on those resources (liabilities and owner's equity)
Orientation
Activities involved in introducing new employees to the organization and their jobs
Physical Distribution
Activities needed to get a product from where it was manufactured to the customer
Operating Activities
Activity that creates cash inflows or outflows through day-to-day operations
Financing Activities
Activity that creates cash inflows or outflows through the obtaining or repaying of borrowed or invested funds
Investing Activities
Activity that creates cash inflows or outflows through the selling or buying of long-term assets
Human Resource Management (HRM)
All actions that an organization takes to attract, develop, and retain quality employees
Distribution
All activities involved in getting the right quantity of a product to the right customer at the right time and at a reasonable cost
Flextime
Alternative work arrangement that allows employees to designate starting and quitting times
Stockholders' Equity
Amount invested in a corporation by its shareholders
Revenues
Amount of money earned by selling products to customers
Profit Margin
Amount that a company earns on each unit sold
Owner's Equity
Amount which is invested in a business by its owners and which owners can claim from its assets
Vertical Percentage Analysis
Analysis of an income statement treating the relationship of each item as a percentage of a base (usually sales)
Bonuses
Annual income given to employees (in addition to salary) based on company-wide performance
Money
Anything commonly accepted as a medium of exchange, measure of value, and store of value
Business Ethics
Application of ethical behavior in a business context
Corporate Social Responsibility
Approach that an organization takes in balancing its responsibilities toward different stakeholders when making legal, economic, ethical, and social decisions
Mediation
Approach used to resolve a labor-contract dispute by following the recommendation of an impartial third party
Current Assets
Asset that a business intends to convert into cash within a year
Long-Term Assets
Asset that a business intends to hold for more than a year before converting it to cash
Classified Balance Sheet
Balance sheet that totals assets and liabilities in separate categories
Marketing Concept
Basic philosophy of satisfying customer needs while meeting organizational goals
NASDAQ
Best-known over-the-counter, electronic exchange system
New York Stock Exchange (NYSE)
Best-known stock market where stocks of the largest, most prestigious corporations are traded
Financial accounting
Branch of accounting that furnishes information to individuals and groups both inside and outside the organization to help them assess the firm's financial performance
Management accounting
Branch of accounting that provides information and analysis to decision makers inside the organization to help them operate the business
Manufacturer Branding
Branding strategy in which a manufacturer sells one or more products under its own brand names
Capital Budget
Budget that shows anticipated expenditures for major equipment
Storage Warehouse
Building used for the temporary storage of goods
Consumer Market
Buyers who want a product for personal use
Industrial Market
Buyers who want a product for use in making other products
Demand Deposits
Checking accounts that pay given sums to "payees" when they demand them
Security
Collateral pledged to secure repayment of a loan
Marketing Mix
Combination of product, price, place, and promotion (often called the four Ps) used to market products
Lines of Credit
Commitment by a bank that allows a company to borrow up to a specified amount of money as the need arises
Public Relations
Communication activities undertaken by companies to garner favorable publicity for themselves and their products
Fiscal year
Company's *designated business year*
Benefits
Compensation other than salaries, hourly wages, or financial incentives
Salary
Compensation paid for fulfilling the responsibilities of a position regardless of the number of hours required to do it
Commission
Compensation paid to employees based on the dollar amount of sales that they make
Wages
Compensation paid to employees based on the number of hours worked
Piecework
Compensation paid to workers according to the quantity of a product that they produce or sell
Trade Deficit
Condition whereby a country buys more products than it sells, resulting in an unfavorable trade balance
Absolute Advantage
Condition whereby a country is the only source of a product or is able to make more of a product using the same or fewer resources than other countries
Trade Surplus
Condition whereby a country sells more products than it buys, resulting in a favorable trade balance
Comparative Advantage
Condition whereby one nation is able to produce a product at a lower opportunity cost compared to another nation
Brand Loyalty
Consumer preference for a particular brand that develops over time based on satisfaction with a company's products
Packaging
Container that holds a product and can influence a consumer's decision to buy or pass it up
Interest
Cost charged to use someone else's money
Cost of Goods Sold
Cost of the products that a business sells to customers
Expenses
Costs incurred by selling products to customers
Depreciation Expense
Costs of a long-term or fixed asset spread over its useful life
Operating Expenses
Costs of selling products to customers, not including cost of goods sold
Fixed Costs
Costs that don't change when the amount of goods sold changes
Variable Costs
Costs that vary, in total, as the quantity of goods sold changes but stay constant on a per-unit basis
Trade Credit
Credit given to a company by its suppliers
Supply Chain
Flow that begins with the purchase of raw materials and ends in the sale of a finished product to an end user
Liabilities
Debt owed by a business to an outside individual or organization
Bonds
Debt securities that require annual interest payments to bondholders
Ethical Decision
Decision in which there is a right (ethical) choice and a wrong (unethical or illegal) choice
Consumer Behavior
Decision process that individuals go through when purchasing or using products
Job Specification
Detailed list of the qualifications needed to perform a job, including required skills, knowledge, and abilities
Balance of Payments
Difference between the total flow of money coming into a country and the total flow of money going out
Balance of Trade
Difference between the value of a nation's imports and its exports during a specified period
Application
Document completed by a job applicant that provides factual information on the person's education and work background
Fiduciary Relationship
Duty of managment to safeguard a company's assets and handle its funds in a trustworthy manner
Dividends
Earnings distributed to stockholders
On-the-Job Training
Employee training (often informal) that occurs while the employee is on the job
Value Chain
Entire range of activities involved in delivering value to customers
Contribution Margin per Unit
Excess of revenue per unit over variable cost per unit
External Marketing Environment
Factors external to the firm that present threats and opportunities and that require shifts in marketing plans
Equal Employment Opportunity Commission (EEOC)
Federal agency in charge of enforcing federal laws on employment discrimination
Savings Banks
Financial institution originally set up to provide mortgages and encourage saving, which now offers services similar to those of commercial banks
Brokerage Firms
Financial institution that buys and sells stocks, bonds, and other investments for clients
Commercial Banks
Financial institution that generates profits by lending funds and providing customers with services, such as check processing
Mutual Fund
Financial institution that invests in securities, using money pooled from investors (who become part owners of the fund)
Credit Union
Financial institution that provides services to only its members (who are associated with a particular organization)
Investment Banking Firm
Financial institution that specializes in issuing securities
Interest Coverage Ratio
Financial ratio showing a company's ability to pay interest on its debts from its operating income
Management effectiveness ratios
Financial ratio showing how effectively a firm is being run and measuring its overall performance
Profit Margin Ratios
Financial ratio showing how much of each sales dollar is left after certain costs are covered
Current Ratio
Financial ratio showing the relationship between a company's current assets and current liabilities
Debt-to-Equity Ratio
Financial ratio showing the relationship between debt (funds acquired from creditors) and equity (funds invested by owners)
Financial Condition Ratios
Financial ratio that helps to assess a firm's financial strength
Inventory Turnover Ratio
Financial ratio that shows how efficiently a company turns over its inventory
Financial Statements
Financial reports—including the income statement, the balance sheet, and the statement of cash flows—that summarize a company's past performance and evaluate its financial health
Statement of Cash Flows
Financial statement reporting on cash inflows and outflows resulting from operating, investing, and financing activities
Comparative income statement
Financial statement showing income for more than one year
Income Statement
Financial statement summarizing a business's revenues, expenses, and net income
Permission Marketing
Form of marketing in which companies ask customers or potential customers for permission to contact them or send them marketing materials
Publicity
Form of promotion that focuses on getting a company or product mentioned in a newspaper, on TV, or in some other news media
Off-the-Job Training
Formal employee training that occurs in a location away from the office
Interview
Formal meeting during which the employer learns more about an applicant and the applicant learns more about the prospective employer
Performance Appraisals
Formal process in which a manager evaluates an employee's work performance
Product Life Cycle
Four stages that a product goes through over its life: *introduction, growth, maturity, and decline*
Money Market Funds
Fund invested in safe, highly liquid securities
Pension Funds
Fund set up to collect contributions from participating companies for the purpose of providing its members with retirement income
Inventory
Goods that a business has made or bought and expects to sell in the process of normal operations
Securities and Exchange Commission (SEC)
Government agency that enforces securities laws
Federal Depository Insurance Corporation (FDIC)
Government agency that regulates banks and insures deposits in its member banks up to $250,000
Focus Group
Group of individuals brought together for the purpose of asking them questions about a product or marketing strategy
Market Segments
Group of potential customers with common characteristics that influence their buying decisions
Job Analysis
Identification of the tasks, responsibilities, and skills of a job, as well as the knowledge and abilities needed to perform it
Stock-Option Plans
Incentive program that allows eligible employees to buy a specific number of shares of company stock at a set price on a specified date
Profit-Sharing Plan
Incentive program that uses a predetermined formula to *distribute a share of company profits to eligible employees*
Whistle-Blower
Individual who exposes illegal or unethical behavior in an organization
Venture Capitalists
Individual who pools funds from private and institutional sources and invests them in businesses with strong growth potential
Retailers
Intermediaries who buy goods from producers and sell them to consumers
Wholesalers
Intermediaries who buy goods from suppliers and sell them to businesses that will either resell or use them
Motivation
Internally generated drive to achieve a goal or follow a particular course of action
Job Enlargement
Job redesign strategy in which management enhances a job by adding tasks at similar skill levels
Job Enrichment
Job redesign strategy in which management enriches a job by adding tasks that *increase both responsibility and opportunity for growth*
Job Rotation
Job redesign strategy that allows employees to rotate from one job to another on a systematic basis
Employment-at-Will
Legal doctrine that allows an employer to fire an employee at will
Current Liabilities
Liability that a business intends to pay off within a year
Long-Term Liabilities
Liability that a business need not pay off within the following year
Unsecured Loan
Loan given by a bank that doesn't require the borrower to put up collateral
Long-Term Loan
Loan issued with a maturity date of five years or more
Short-Term Loan
Loan issued with a maturity date of less than one year
Intermediate Loan
Loan issued with a maturity date of one to five years
Distribution Center
Location where products are received from multiple suppliers, stored temporarily, and then shipped to their final destinations
Job Redesign
Management strategy used to increase job satisfaction by *making jobs more interesting and challenging*
Lockout
Management tactic of closing the workplace to union workers
Secondary Market
Market in which investors buy previously issued securities from other investors
Over-the-Counter (OTC) Market
Market in which securities are traded over computer networks and phones rather than on the trading floor of an exchange
NASDAQ Composite Index
Market index of all stocks listed on the NASDAQ Stock Exchange
Standard & Poor's Composite Index (S&P 500)
Market index of the stocks of five hundred large U.S. companies
Dow Jones Industrial Average (DJIA)
Market index that reflects the total value of a "market basket" of thirty large U.S. companies
Primary Market
Market that deals in the sale of newly issued securities
Advertising Agency
Marketing consulting firm that develops and executes promotional campaigns for clients
Marketing
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
Interruption Marketing
Marketing that interrupts people to get their attention (with the hope they will listen to the ad), such as TV advertising
Market Indexes
Measure for tracking stock prices
M-2
Measure of the money supply that includes everything in M-1 plus near-cash
M-1
Measure of the money supply that includes only the most liquid forms of money, such as cash and checking-account funds
Breakeven Analysis
Method of determining the level of sales at which the company will break even (have no profit or loss)
Boycotting
Method used by union members to voice displeasure with certain organizations by refusing to buy the company's products and encouraging others to follow suit
Ethical Dilemma
Morally problematic situation
Stakeholder
Parties who are interested in the activities of a business because they're affected by them
Primary Data
Newly collected marketing information that addresses specific questions about the target market
Finance Companies
Nondeposit financial institution that makes loans from funds acquired by selling securities or borrowing from commercial banks
Insurance Companies
Nondeposit institution that collects premiums from policyholders for protection against losses and invests these funds
Strikebreakers
Nonunion workers who are willing to cross picket lines to replace strikers
Breakeven Point in Units
Number of sales units at which net income is zero
Stakeholders
Parties who are interested in the activities of a business because they're affected by them
Personal selling
One-on-one communication with customers or potential customers
Gross Profit or Gross Margin
Positive difference between revenues and cost of goods sold
Labor Union
Organized group of workers that bargains with employers to improve its members' pay, job security, and working conditions
Job Description
Outline of the duties and responsibilities of a position
Advertising
Paid, nonpersonal communication designed to create an awareness of a product or company
Bear Market
Period of declining or sluggish stock prices
Bull Market
Period of large stock-price increases
Maturity
Period of time for which a bank loan is issued
Turnover
Permanent separation of an employee from a company
Individual Retirement Account (IRA)
Personal retirement account set up by an individual to save money tax free until retirement
Marketing Strategy
Plan for selecting a target market and creating, pricing, promoting, and distributing products that satisfy customers
Financial Plan
Planning document that shows the amount of funds a company needs and details a strategy for getting those funds
Net Income
Positive difference between gross profit and total expenses
Skimming Pricing
Pricing strategy in which a seller generates early profits by starting off charging the highest price that customers will pay
Penetration Pricing
Pricing strategy in which the seller charges a low price on a new product to discourage competition and gain market share
Demand-Based Pricing
Pricing strategy that bases the price of a product on how much people are willing to pay for it
Cost-Based Pricing
Pricing strategy that bases the selling price of a product on its cost plus a reasonable profit
Target Costing
Pricing strategy that determines how much to invest in a product by figuring out how much customers will pay and subtracting an amount for profit
Collective Bargaining
Process by which management and union-represented workers settle differences
Psychographic Segmentation
Process of classifying consumers on the basis of individual lifestyles as reflected in people's interests, activities, attitudes, and values
Marketing Research
Process of collecting and analyzing data that's relevant to a specific marketing situation
Strategic Human Resource Planning
Process of developing a plan for satisfying an organization's human resource needs
Geographic Segmentation
Process of dividing a market according to such variables as climate, region, and population density
Behavioral Segmentation
Process of dividing consumers by behavioral variables, such as attitude toward the product, user status, or usage rate
Demographic Segmentation
Process of dividing the market into groups based on such variables as age and income
Selection
Process of gathering information on candidates, evaluating their qualifications, and choosing the right one
Recruiting
Process of identifying suitable candidates and encouraging them to apply for openings in the organization
Supply Chain Management (SCM)
Process of integrating all the activities in the supply chain
Cash-Flow Management
Process of monitoring cash inflows and outflows to ensure that the company has the right amount of funds on hand
Materials Handling
Process of physically moving or carrying goods during production, warehousing, and distribution
Discount Rate
Rate of interest the Fed charges member banks when they borrow reserve funds
Prime Rate
Rate that banks charge their best customers
Account Payable
Record of cash owed to sellers from whom a business has purchased products on credit
Account Receivable
Record of cash that will be received from a customer to whom a business has sold products on credit
Capital Structure
Relationship between a company's debt (funds acquired from creditors) and its equity (funds invested by owners)
Balance Sheet
Report on a company's assets, liabilities, and owner's equity at a *specific point in time*
Assets
Resource from which a business expects to gain some future benefit
Sales Promotion
Sales approach in which a company provides an incentive for potential customers to buy something
Amortization
Schedule by which you'll reduce the balance of your debt
Sustainability
The principle of providing products today that don't compromise the ability of future generations to meet their needs
Ethical Lapse
Situation in which an individual makes a decision that's unmistakably unethical or illegal
Conflicts of Interest
Situation in which an individual must choose between the promotion of personal interests and the interests of others
Collateral
Specific business or personal assets that a bank accepts as security for a loan
Target Market
Specific group of customers who should be interested in your product, have access to it, and have the means to buy it
Liquidity
Speed with which an asset can be converted into cash
Code of Conduct
Statement that defines the principles and guidelines that employees must follow in the course of all job-related activities
American Stock Exchange (AMEX)
Stock market where shares of smaller companies are traded
Preferred Stock
Stock that pays owners a fixed dividend annually
Common Stock
Stock whose owners bear the ultimate rewards and risks of ownership
Customer-Relationship Management
Strategy for retaining customers by gathering information about them, understanding them, and treating them well
Accounting
System for measuring and summarizing business activities, interpreting financial information, and communicating the results to management and other decision makers
Just-in-Time Production
System for reducing inventories and costs by requiring suppliers to deliver materials just in time to go into the production process
Ratio Analysis
Technique for financial analysis that shows the relationship between two numbers
Contingent Workers
Temporary or part-time worker hired to supplement a company's permanent workforce
Money Multiplier
The amount by which an initial bank deposit will expand the money supply
Federal Funds Rate
The interest rate that a Federal Reserve member bank pays when it borrows from other member banks to meet reserve requirements
Social Media Marketing
The practice of including social media as part of a company's marketing program
Mass Marketing
The practice of sending out messages to a vast audience of anonymous people
Equity Theory
Theory of motivation that focuses on our perceptions of how fairly we're treated relative to others
Hierarchy-of-Needs Theory
Theory of motivation that holds that people are motivated by a hierarchical series of unmet needs
Expectancy Theory
Theory of motivation that proposes that employees will work hard to earn rewards they value and consider obtainable
Two-Factor Theory
Theory that holds that motivation involves both motivation factors (which contribute to job satisfaction) and hygiene factors (which help to prevent job dissatisfaction)
Customer Value Triad
Three factors that customers consider in determining the value of a product: *quality, service, and price*
Federal Reserve System
U.S. central banking system, which has three goals: price stability, sustainable economic growth, and full employment
Generally Accepted Accounting Principles (GAAP)
Uniform set of rules for financial reporting issued by an independent agency called the Financial Accounting Standards Board (FASB)
Strike
Union tactic by which workers walk away from their jobs and refuse to return until a labor-management dispute has been resolved
Picketing
Union tactic of parading with signs outside a factory or other facility to publicize a strike
Grievances
Union worker complaints on contract-related matters
Brand Equity
Value of a brand generated by a favorable consumer experience with a product
Promotion Mix
Various ways to communicate with customers, including advertising, personal selling, sales promotion, and publicity
Angels
Wealthy individual willing to invest in start-up ventures
Intermediary
Wholesaler or retailer who helps move products from their original source to the end user
Brand
Word, letter, sound, or symbol that differentiates a product from similar products on the market
Trademark
Word, symbol, or other mark used to identify and legally protect a product from being copied
Job Sharing
Work arrangement in which *two people share one full-time position*
Telecommuting
Work arrangement in which the employee *regularly works from home*
Prospectus
Written offer to sell securities that provides useful information to prospective buyers