Final Exam

monopolistic competition

a market structure in which many companies sell products that are similar but not identical & it is perceived as different

what is the reserve requirement and how it affects banks

a percentage of commercial banks checking & savings account that must be paid physically kept in the bank (cash) it affects banks because it determines the amount of money they can loan out

executor of the will

a person who assembles and values your estate, files income and other taxes and distributes assets

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats

401(k) plan

a savings plan that allows you to deposit pretax dollars and whose earnings compound tax free until withdrawal, when the money is taxed at ordinary income tax rates

ethical dilemma

a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or even illegal (both choices are bad & result in negative consequences)

Integrated Marketing Communications

a technique that combines all the promotional tools into one comprehensive, unified promotional strategy

promotion

all the techniques sellers use to inform people about and motivate them to buy their products or services

What kind of policies encourage entrepreneurship

allowing private ownership of a business and by minimizing interference with the free exchange of goods and services (ex: reducing taxes & regulations)

wholesaler intermediary

an intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer markets

centralized authority

an organization structure in which decision-making authority is maintained at the top level of management

mutual fund

an organization that buys stocks and bonds and then sells shares in those securities to the public

Advantages of Publicity

any information about an individual, product, or organization that's distributed to the public through the media & that's not paid for or controlled by the seller

business stakeholder

are all the people who stand to gain or lose by the policies or activities of a business and whose concerns the business needs to address

Advantages small businesses have over large businesses

can attend customers and provide service, & adapt new opportunities

What kind of capital a partnership can obtain

can get capital from each individual partner

What is included as a liability on a personal balance sheet?

credit cards, student loans, anything where and individual owes money

difference between current liabilities and long term liabilities

current liabilities are things that one can pay within a year or less, long-term would be longer than a year

What are the key pros and cons of debt vs equity financing?

debt must be paid, equity is money you don't have to pay back

Differentiate job description vs job specification

description: a summary of the objectives of the job, the type of work to be done specifications: a summary of the minimum qualifications required of workers to do a particular job

Macroeconomics

economics from a global perspective

Microeconomics

economics from an individual or organizational perspective

What kind of research you do before buying a franchise

evaluate the franchise and what it does, the franchise owner (support they offer), own situation, come up with the money that is necessary, look at the market (do poorly or not in today's market)

total product offer

everything that consumers evaluate when deciding whether to buy something; also called a value package

What is in a business plan

executive summary, company background, management team, financial plan, capital required, marketing plan, location analysis, manufacturing plan, appendix

Most common sources of capital for entrepreneurs

friends & family

What does value mean to consumers?

good quality at a fair price (benefits exceed the costs) benefits-costs=value

How is span of control and tall/flat organizations related?

how many people report directly to each manager, tall: narrow span of control flat: wide span of control (promotes empowerment)

What does an effective mission and vision do for a company

if they are able to communicate the vision, the employees are going to have a sense of value/purpose & invested emotionally

Advantages of international trade (comparative advantage)

imports and exports allow more countries to access a wider range of goods and production techniques

3 different types of distribution strategies

intensive: sold everywhere (ex: doritos) selective: one kind of store exclusive: bought only at one place (ex: mercedes dealership)

Differentiate internal recruiting vs external recruiting

internal: current employees who can be transferred/promoted/ who can recommend others to hire external: expensive and it includes public/private employment agencies, college placement

The product life cycle phases

introduction, growth, maturity, decline

FDIC purpose

it insures bank accounts up to a certain amount and if the bank fails covers $250,000

What you need to learn when starting a small business

learn from other people from the same industry you want to go into

key strategies for reaching global markets

licensing: take your product & take it to a foreign country and sell it and take a percentage fee from that exporting: producing goods in your country and shipping the goods to another country contract manufacturing: paying a country to produce your goods foreign direct investment: going into a country and building the manufacturing facilities and distribution channels yourselves (investing into that country)

Quotas

limitations on the amount of specific products that may be imported from certain countries during a given time period

Liability of a Corporation

limited liability (personal assets are protected)

Line vs staff personnel

line: formal authority and are responsible for achieving organizational goals staff: advising authority, advise and assist line personnel in meeting their goals (supports line)

What is a 360 degree performance review?

looking at their performance & how they interact with their peers

Based on Herzberg's theory, what factors drive motivation?

looks at demotivators such as hygiene factors

Target Market

marketing directed towards those groups and organization decides it can serve profitability

Activity ratios

measure how effectively management is turning over inventory

leverage ratios

measure the degree to which managers use debt or equity to finance ongoing operations

Liquidity Ratios

measures a company's ability to turn assets into cash to pay its short-term debts (acid-test ratio, current ratio)

equity financing

money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital)

Know who owns the means of production under capitalism

owned by private individuals

What are the various ways to departmentalize an organization

product, function, customer group, geographic location, and process

Advantages of free trade agreements

promotes international trade by removing taxes & tariffs within nations (ex: NAFTA)

Profitability ratios

ratios measure how effectively a firms managers are using its various resources to achieve profits

recruiting vs selection

recruiting: create large candidate pool selection: decide who to hire

Ethics-based approach

reduce employee turnover, avoid government intervention, avoid lawsuits, keep existing customers, maintain a good reputation, and to please customers and society

Financial Ratios

relationships determined from a firm's financial information and used for comparison purposes

Risks associated with Just-In-Time Inventory

rely on suppliers on what you need everyday, so if a supplier goes down you too

Characteristics of an Entrepreneur

self-directed, self-nurturing, action-oriented, highly energetic, tolerant of uncertainty

What has the US economy evolved into

service economy but going into a information and technology economy

marketing manager

sets prices, figuring out how to sell it (all four elements)

What is on an income statement?

shows a firms profit after costs expenses & taxes it summarizes all the resources that have left the firm, expenses & the resulting net income/loss

trade surplus

situation in which a country exports more than it imports

trade deficit

situation in which a country imports more than it exports

bondholder

someone who owns bonds and receives the interest payments (IOU from the corporation)

what is an investment banker's role in issuing an IPO?

specialists who assist in the issue and sale of new securities and can also underwrite new issue of stocks or bonds

What U.S. manufacturers have done to achieve increased output

starting having better relations with their suppliers, applying to continuous improvement ideas (customer needs), information technology to manage their operations better

Economic & Legal Environment (of business)

taxes & government regulations

Scientific Management

the application of scientific principles to increase efficiency in the workplace (people are machines)

open market operations

the buying and selling of government bonds by the Fed with the goal of regulation the money supply selling bonds decreases the money supply buying bonds increases the money supply

perfect competition

the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product (ex: garage sales)

horizontal merger

the joining of two firms in the same industry (ex: walmart & target)

trade credit

the practice of buying goods and services now and paying for them later

Strategic Planning

the process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals (high level managers)

tactical planning

the process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done (middle level managers)

operational planning

the process of setting work standards and schedules necessary to implement the company's tactical objectives (front line managers)

lean manufacturing

the production of goods using less of everything compared to mass production

supply chain

the sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers

Ethics

the standards of moral behavior; behavior accepted by society as right vs wrong

Blue Chip Stock

the stock of a large, well-established and financially sound company that has operated for many years (ex: coca cola, johnson & johnson, and IBM)

viral marketing

the term used now to describe everything from paying customers to say positive things on the internet to setting up multilevel selling schemes whereby consumers get commissions for directing friends to specific websites

What is the goal of scientific management?

to use systematic study to find the "one best way" of doing each task

liability of sole proprietorship

unlimited liability

Based on Maslow's hierarchy of needs, what drives a person's motivation?

unmet human needs from basic psychological needs to safety, social, esteem, and self-actualization

What utilities do marketing intermediaries provide?

value that exceeds the cost (time, place, possession, information and service)

Why do we now talk about operations management (instead of production management)

we have become more of a service economy thus we do not produce as much

What are the three elements (or orientations) that make up the marketing concept?

what customers want, what they're able to make, sell a product that will earn a profit

What is the key process in controlling

where you compare your actual performance vs planned activities (making a budget)

What is the major benefit of open communication in a company setting?

workers are going to be more motivated (by having more information)

What is a cafeteria style benefit plan?

you can choose what benefits an employee wants such as health insurance with dental and vision benefits, retirement benefits (there's a deduction on their check)

How to create an ethics code

1. top management must adopt unconditionally support an explicit corporate code of conduct 2. employees must understand that expectations for ethical behavior begin at the top 3. managers and other must be trained to consider the ethical implications of all business decisions 4. an ethics office must be set up with which employees can communicate anonymously 5. outsiders such as suppliers, subcontractors, distributers, and customers must be told about the ethics program 6. the ethics code must be enforced (most important)

What is a power of attorney?

A Power of Attorney is a legal document delegating authority from one person to another. (gives someone the power to sell your house)

Oligopoly

A market structure in which a few large firms dominate a market (ex: oil gas, tobacco, airlines)

Roth IRA

An IRA where you don't get up-front deductions on your taxes as you would with a traditional IRA, but the earnings grow tax-free and are also tax-free when they are withdrawn

Retailer Intermediary

An intermediary who sells to consumers

Matrix Organization

An organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line-and-staff structure (teams, ex: google)

decentralized authority

An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be.

Accounting Equation

Assets = Liabilities + Owner's Equity

B2B vs B2C

B2B: large amounts being bought B2C: smaller things to buy

Monopoly

Complete control of a product or business by one person or group and can control the price (ex: water, natural gas, electric power)

Most critical skills needed by top level managers

Conceptual & Human Relations Skills

specialty goods and services

Consumer products with unique characteristics and brand identity. Because these products are perceived as having no reasonable substitute, the consumer puts forth a special effort to purchase them.

What factors of production do wealthy nations have that poor nations do not

Entrepreneurship (risks) and knowledge (new technology)

Point where the supply and demand curves meet is called

Equilibrium point

Who controls the money supply?

Federal Reserve System (FED)

What is in a capital budget

Highlights a firm's spending plans for major asset purchases that often require large sums of money

Names of the quality awards

ISO 9001, ISO 14001, Malcolm Baldrige, Statistical process control

IPO

Initial public offering, a corporation's first offer to sell shares to the public

skimming

Pricing new products high to recover costs and make high profits while competition is low

Marketing Mix

Product, Price, Place, Promotion

Accounting Journal

Raw financial transaction data are collected by the accounting department and stored in a journal. Modern accounting requires the use of a double-entry system to ensure accurate data. (records every transaction)

What federal agency regulates stock markets

Security and Exchange Commission (SEC)

preferred stock

Stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold (no voting rights)

Tariffs

Taxes on imported goods (sellers pay a tax)

promotion mix

The combination of promotional tools an organization uses. (ex: advertising, publicity, public relations, sales promotion)

vertical merger

The joining of two companies involved in different stages of related businesses

intermodal shipping

The use of multiple modes of transportation to complete a single long-distance movement of freight. (Ex: could start on a train and then to a ship and to a truck)

Difference between theory x and y managers?

Theory X:workers must be forced, controlled or threatened with punishment, average person dislikes work & will avoid it if possible Theory Y: most people like worker; creates empowerment, promotes creativeness and flexibility

Secured vs. Unsecured Debt

Unsecured debt does not have specific collateral for the payment of debt so if you fail to make payments the creditor cannot take any property without suing and going through a judge. Secured debt has collateral and the lender can offer better rates than unsecured debt.

Corporate Social Responsibility

a business's concern for society's welfare