management final

What is the balance sheet?

Financial conditions on a date. Assets= liabilities+ owners equity

How can a firm have long-run financial success?

Firms must satisfy customers needs. Business is an art supported by science and a business is no better than its employees, must give customers value, customers needs are always changing, so the business needs to adapt as well

What is the discount rate and how does it impact a capital budget decision?

Firms required rate of return on its equity capital. It decides if the investment will help the company make a larger profit, ot cost more than its worth

What are the 4 utilities of marketing?

Form, place, time, possession

How does a firm earn the right to make a profit?

Giving value to its customers

What types of forecasts are the best?

Graphical forecasts are good, but you have to adjust for population, inflation, and seasonal patterns. Moving averages can help with this.

What composes thorough product knowledge in professional selling?

How its made, source of inputs, potential uses, technical specifications, how shipping is handled

What is the Internal Rate of Return Method in capital budgeting?

IRR is a variation on the NVP method, is the discount rate that makes the PV of a investments benefits = its cost

What functions should a firm's accounting system perform?

Identify goals, develop measures for goals, determine target for measures, set tolerance limit on targets, develop an information system, select and administer analytical tools, and identify and implement corrective action

What is diminishing marginal utility?

The satisfaction obtained from consuming each additional unit of a good or service will diminish as more of it is consumed

What are the 6 steps in the decision-making process?

Identify the problem, determine alternative courses of action, analyze alternatives, select best alternatives, implement decision, follow up

What is the participatory style of management?

Involve employees in planning work objectives, setting high standards and quantity

Corporation

Legal entity that is separate and distinct from its shareholders who own it, from who manages it, and by its employees, its created by state law and organized for profit or non-profit

Where does profit maximization occur?

MC=MR, rational stage, between max yield (max AP) and max output(max TP)

What are the three golden rules of management?

Matters of process and style change over time, but always hold onto principles, treat customers they way they want to be treated, be the kind of manager for whom you would like to work

Where does the economic efficiency point (max profit) occur?

Max of average product

Why is the budgeting process valuable?

Measure performance, keep managers focused on financial implications of operations, and help spot deviations from expectations

What is elasticity?

Measures the percentage change in sales (quantity demanded) for a 1 percent change in price or income

What are the benefits of decentralized management?

Senior management makes strategic decisions, lower management can develop decision making skills

How does a manager deal with negative employee performance?

Should be in private, not in public

What are the 3 main types of legal business structures?

sole proprietorship, partnership corperation

What should be included in the firm's purpose and objective?

States what the company plans to do, and what its competitive advantage is. This keeps the company on track of what its goals are.

How does a successful firm create a competitive advantage?

Strategic positioning and/or lowest cost, most successful do both (Superior quality, superior efficiency, superior customer relations, superior innovation)

What does it mean to call on the right people in sales?

Talk to the person with the authority to make a decision

What is contribution?

A firms most profitable level of output in measurable units

What are the 5 factors of forecasting?

Accuracy desired, time permitted to develop forecast, complexity of situation, time period projected, and amount of resources available

What types of data go into calculating an initial investment in capital budgeting?

Acquisition costs, depreciation, borrowed funds, additional costs, salvage value

What are the benefits and disadvantages of leasing?

Advantages- upgrades at lessors expense, equipment remain on cutting edge of efficiency and tech, lease payments are often less than loan payments, lower down payment that with a loan, reduces capital investment to acquire item, good for a start up Disadvantages- don't own it

What data are necessary to perform a capital budget analysis and decision?*

After tax incremental cash flows, see net effect, take capital needed for the investment, its benefits, and timing into account.

sole proprietorship

An individual who owns, manages, and assumes all risk and derives all the profits from a business, easiest to make, owner has all control and profits

What makes a successful salesperson?

Believing passionately in the product and are able to communicate that value to customers.

What is the goal of marketing?

Bridges the gap between conflicting needs of producers and consumers

What are the 6 revenue items that a manager must monitor?

Changing customer needs, market areas expand, value definition changes, competition, keep customers aware of products, credit policy change

How do you identify a target market?

Combining product preferences of demographics, a type of customer who will want your product should emerge

What does it mean to develop a long-term relationship with your customer?

Cooperate with everyone, trust and mutual benefit are key. File on people you dealt with to know how to best deal with each client.

What is an explicit cost?

Cost directly traceable to an end product

What does organizational structure impact?

Critical for transforming business plan into a profitable, operating agribusiness

What 3 groups of people should the firm be first with?

Customers, employees, and investors

What things are expected of a manager as far as employee performance?

Define tasks and develop jobs based on company values and needs, job descriptions and performance measures, make sure their needs are filled.

What is the 1st step in creating a successful business plan?

Defining your firms purpose

What are the 3 types of budgets?

Operating- summarizes the expected sales, production, and related costs Cash flow- summarizes amount and timing of cash expected to flow in and out during the budgetary period Capital expenditure- shows how money budgeted for capital expenditures is to be allocated among competing projects

How effective are the payback method and average rate of return method in capital budgeting?

Payback- most popular but dose not work well. (investment/ annual return), all projects that return investment in a set number of years are deemed acceptable. Works well on paper, but not in real life with uneven in/out flows. Average rate of return- (annual return/ investment), projects with greater than a set % are acceptable, this one also has similar problems to payback method as its just the reverse.

What 5 human needs does work fulfill?

Physiological, safety, belonging, esteem, self- fulfilment

What are the 4 functions of management?

Planning, organizing, controlling, directing

What are the 11 elements of personal selling?

Product knowledge, listen to the customer, call on the right people, call with a purpose, professional attitude and attire, make an appointment, get to know everyone, network, develop a long-term relationship with customers, be well rounded, close the sale

What are the 4 Ps of marketing?

Product, place, price, promotion

What must occur in the production process to obtain long-run profit maximization?

Production process must be technically efficient (max output per input), production process must be economically efficient (optimal output for max profits)

What is a business plan designed to do?

Put firm in best possible position relative to future business conditions and customer demands. Give the customers, and employees a purpose for the buissnes they apreciate and add value

What are the 4 cost items that a manager must monitor?

Revenues, cost, communication, leadership

How are risk and uncertainty dealt with and are they common in agribusiness?

Risk you have enough info to assets, uncertainty you don't have knowledge to asses the situation. Can develop alternative most optimistic, most likely, and worst case scenarios. Calculate break-even cash flows for each.

What results when the 3 golden rules of management are implemented?

Satisfied customers who will continue to buy, products that fill customers needs and give value, happy and productive employees who give excellent service

When do capital budget investment opportunities occur?

To maintain/ replace depreciable capital items, adopt cost-reducing investments to produce a given volume of output, adopt income-increasing investments (durable business assets or financial assets), a combination of preceding.

Partnership

Voluntary association of 2 or more people, both have control and share profits, losses and risk. General both are fully involved, limited partners are only liable for their investment, and registered limited liability makes them not liable for their partners.

Is the weighted average cost of capital an appropriate discount rate for capital budgeting?

Weighted average cost of borrowed capital, cost of ownership capital and weighted average total cost of capital are how to determine cost of capital

What questions should a business plan answer?

What is our business? • Who are our customers? • What is value to our customers? • What will our business be? • What should our business be?

What is utility maximization?

When given a choice, consumers will always select the item that gives them the highest level of satisfaction

When should a firm shut down (use contribution concepts)?

When the variable costs are higher than the fixed costs it should shut down in the short run, long run should shut down of not covering all costs

Why does ability to motivate make a manager great?

Workers in a good environment will take initiative, seek responsibility, and set high self standards. This is good for the manager and the company.

Should financial analysis look at historical performance of the firm and at others in the industry?

Yes, but helpful to look at common size financial statements so different size structure between comparisons is accounted for

Which is a more ideal organizational structure - simple and concise or complex and expansive?

You want a simple structure, with critical tasks having prominence and function without restriction, minimum number of supporting staff, and small working units