Foundations of Business Final Exam

SWOT analysis

A SWOT analysis assesses the company's strengths and weaknesses and its fit with the external environment.

CPI (consumer price index)

A basket of goods that are taken at current prices and compared with historical prices to determine inflation.

Partnership

A business in which two or more persons combine their assets and skills to form a corporation like system. People can rise to partner status and take part it the control of the company.

Cooperative

A business made up of mulitple groups with common goals or purpose in mind, often made up of smaller businesses.

Corporation

A business that is owned by many investors. Treated as a single entity and its shareholders have limited liability to the company, and any liabilities are held to the corporation not the investors or operators of the corporation.

Grievances

A charge by employees that management is not abiding by the terms of the negotiated agreeement

foreign subsidiary

A common form of FDI is the foreign subsidiary, an independent company owned by a foreign firm.

Union Shop

A company in which new employees must join a union within a stated time period.

Limited Liability Company

A company similar to an S corporation but without the special eligibility requirements. Also known as an LLC. Common among smaller business as well as a few larger businesses.

multinational corporation (MNC).

A company that operates in many countries

Lockout

A company tool to fight union demands by refusing to allow employees to enter its facilities to work

comparative advantage

A comparative advantage exists when a country can produce a product at a lower opportunity cost than other nations.

Equal Employment Opportunity Commission (EEOC)

A federal agency that administers and enforces civil rights laws against workplace discrimination.

Oligopoly

A few sellers dominate the market; could control prices, but when one changes prices, others follow; watched closely for illegal collusion.

Income Statement

A financial statement showing the revenue and expenses for a fiscal period. It is the "Bottom Line."

Salary

A fixed annual amount of gross pay. Money paid for employee services

boycott

A group's refusal to have commercial dealings with some organization in protest against its policies. Certain groups of people protest to a company and refuse to buy its goods and advertise to many others to do the same.

joint venture

A joint venture is a type of strategic alliance in which a separate entity funded by the participating companies is formed.

injunction

A judicial order forcing a person or group to refrain from doing something.

Quota

A limit placed on the quantities of a product that can be imported

absolute advantage

A nation has an absolute advantage if it's the only source of a particular product or can make more of a product with the same amount of or fewer resources than other countries.

Customer

A person or business to whom merchandise or services are sold. The owners and employees depend on this group for business.

Entrepeneur

A person who organizes, manages, and takes on the risks of a business, usually from scratch. The entrepreneur is usually a sole proprietor, a partner, or the one who owns the majority of shares in an incorporated venture. The entrepreneur supplies risk capital as a risk taker, and monitors and controls the business activities.

Stakeholder

A person with a significant interest in the outcome of a business or project.

Benchmarking

A process for improving overall company efficiency and effectiveness by comparing performance to competitors

Recession

A slowdown in a nation's economy

Small business

A small business is independently owned and operated, exerts little influence in its industry, and has fewer than five hundred employees.

Ledger

A specialized accounting book or program where all information is in one place

Vision Statement

A summary of what a business owner wants a business to become.

Labor Strikes

A work stoppage intended to force an employer to respond to demands.

Union

A worker association that bargains with employers over wages, benefits, and working conditions

Financial Accounting

Accounting information and analyses prepared for people outside the organization. Publicly traded companies must have a public financial statement released.

Journal

An accounting record in which transactions are initially recorded in chronological order. Often by day

Commission

An amount paid to an employee based on a percentage of the employee's sales

Capital

An economic system based on private ownership of capital, money that is required for investment, items worth money, money itself, etc.

Growth

An economy provides people with goods and services, and economists measure its performance by studying the gross domestic product (GDP)—the market value of all goods and services produced by the economy in a given year. If the GDP goes up, the economy is growing; if it goes down, the economy is contracting.

Mediator

An impartial observer who helps resolve differences between union and management

International Monetary Fund

An international organization that promotes international trade and monetary cooperation.

Balance Sheet

Assets = Liabilities + Equity

High employment

Because most people earn their money by working, a goal of all economies is making jobs available to everyone who wants one. The U.S. government reports an unemployment rate—the percentage of the labor force that's unemployed and actively seeking work. The unemployment rate goes up during recessionary periods and down when the economy is expanding.

Transparency

Being open and even about yourself and your actions, as well as being open to others opinions.

CPA

Certified Public Accountant - Used for public accounting, very difficult to pass the exam

Flextime

Choose a work schedule while still meeting required hours and still make meetings

Specialization

Cluster related tasks in an organizational structure

Financial Ratio Analysis

Computing ratios that compare values of key accounts listed on a firm's financial statements.

Title 7 of the Civil Rights Act of 1964

Created the Equal Employment Opportunity Commission, (EEOC)

Current Ratio

Current Assets/Current Liabilities

Family-Friendly Programs

Dependent Care Paid Parental Leave Paid time off: total PTO allocation or vacation, sick days, personal days Employee Assistance Programs

Task-facilitating roles

Direction giving, Information seeking, Information giving, Elaborating, Urging, Monitoring, Process analyzing, Reality testing, Enforcing.

Trading blocs

Examples include the North American Free Trade Association (NAFTA) (United States, Canada, and Mexico) and the European Union (EU), a group of twenty-seven countries that have eliminated trade barriers among themselves.

Bonus Plans

Extra pay for accomplishing/surpassing specific objectives

3 finger test

Feasibility: Aptitude for owning and operating your own business. 1. Technical experience or expertise 2. Management Experience 3. Financial Capacity

FASB

Financial Accounting Standards Board; develops GAAP for public companies.

Financial Statements

Financial reports that summarize the financial condition and operations of a business

Americans with Disabilities Act (ADA)

Formed in 1990 and states business with 15+ employees cannot discriminate against disabled.

Debt Financing

Funds raised through various forms of borrowing that must be repaid.

GAAP

Generally Accepted Accounting Principles, adhered to by most Businesses to ensure smooth function

Job Rotation

Giving people experiences in other departments to help expand abilities and possibly groom them for promotion

National Labor Relations Board

Government agency that enforces procedures whereby employees may vote to have a union and for collective bargaining.

fiscal policy

Government policy that attempts to manage the economy by controlling taxing and spending.

3 Shared goals of all economies

Growth, High employment, and Price stability

Gantt Chart

Illustrates the start and finish dates of the terminal elements and summary elements of a project. Terminal elements and summary elements comprise the work breakdown structure of the project.

manager-led team

In the manager-led team the manager is the team leader and is in charge of setting team goals, assigning tasks, and monitoring the team's performance. The individual team members have relatively little autonomy.

IBT

Income Before Taxes

job Enrichment

Increasing the degree of responsibility a worker has over a job

economic indicators

Indicators that, like average length of unemployment, report the status of the economy a few months in the past are lagging economic indicators. Those, like new claims for unemployment insurance, that predict the status of the economy three to twelve months in the future are leading economic indicators.

Work slowdowns / Pickets

Industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties.

PTO - Paid Time Off

Insurance: Health, Life, Disability Retirement Accounts - 401k. A policy in some employee handbooks that provides a bank of hours in which the employer pools sick days, vacation days, and personal days that allows employees to use as the need or desire arises.

World Trade Organization

International organization that regulates international trade, and promotes free trade

Foreign direct investment

Investment made by a foreign company in the economy of another country.

Monopolistic Competition

Large number of sellers produce similar, but differentiated products that buyers perceive as different; sellers have some price control.

Transactional Leadership

Leadership behavior where a reward is provided for positive behavior.

Benefits

Legally required: social security, workers' compensation, unemployment insurance

Cross-Functional Teams

Many companies use cross-functional teams—teams that, as the name suggests, cut across an organization's functional areas (operations, marketing, finance, and so on). A crossfunctional team is designed to take advantage of the special expertise of members drawn from different functional areas of the company.

Perfect Competition

Many sellers; undifferentiated products and none can dictate price

Pricing Markups

Marking up the product from cost of production before sale.

MRP

Material Requirements Planning.

Debt Ratios

Measure the degree to which a firm relies on borrowed funds to operate. If it is over 100% they borrow more than they have invested.

Short-Term Funds

Monthly Expenses, Unanticipated emergencies, Cash flow problems, Expansion of current inventory, Temporary promotional programs

Long-Term Funds

New-product development, Replacement of

Profitability Ratios

One of the four classifications of ratios designed to measure the profitability of the firm. Gross Margin = Gross Profit/Revenue

Monopoly

One seller controls total supply of product/service (Natural = regulated utilities; also legal with patents)

Manager

One who handles business affairs of a corporation following directives set by higher executives or the board of directors

Stock Option

Opportunity to purchase stock Shares of company stock given to employees The right to buy company shares at a discount, time limit on exercise of stock option applicable

Strikebreakers

People hired by management to replace striking employees; called "scabs" by striking union members

collective bargaining

Process by which a union representing a group of workers negotiates with management for a contract

mass production

Process of making large quantities of a product quickly and cheaply

Pert Chart

Production schedule specifying the sequence and critical path for performing the steps in a project.

The Big 4 Accounting Firms

PwC Price Waterhouse Coopers E&Y Ernst and Young KPMG Deloitte - Touche Tohmatsu Limited

Liquidity Ratios

Ratios used to determine a business's ability to pay its short term debts and liabilities

The Accounting Cycle

Recurring set of accounting activities carried out during each fiscal period, often a 6 step process.

Esteem

Second from the highest on Maslow's hierarchy. The need for recognition

Self-Managing Teams

Self-managing teams (also known as self-directed teams) have considerable autonomy. They are usually small and often absorb activities that were once performed by traditional supervisors. A manager or team leader may determine overall goals, but the members of the self-managing team control the activities needed to achieve those goals.

liscensing

Selling the right to use some intangible property for a fee or royalty.

Outsourcing

Setting up businesses abroad to produce parts and products for domestic use or sale

SBA

Small Business Association, reduces the risks of starting a small business. Guarantees some bank loans, provides free business consulting, and provides training.

Relationship-Building Roles

Supporting, Harmonizing, Tension relieving, Elaborating, Confronting, Urging, Energizing, Monitoring, Developing, Process analyzing, Consensus building, Reality testing, Empathizing, Enforcing, Summarizing maintaining or improving group cohesiveness. This type of role includes activities that improve team "chemistry," from empathizing to confronting.

Virtual Teams

Technology now makes it possible for teams to function not only across organizational boundaries like functional areas but also across time and space. Technologies such as videoconferencing allow people to interact simultaneously and in real time, offering a number of advantages in conducting the business of a virtual team. 13 Members can participate from any location or at any time of day, and teams can "meet" for as long as it takes to achieve a goal or solve a problem—a few days, weeks, or months.

Equal Employment Opportunity Commission, EEOC

The U.S. Equal Employment Opportunity Commission is a federal agency that administers and enforces civil rights laws against workplace discrimination.

Mediation

The act or process of using an intermediary to effect an agreement or reconciliation.

Markup

The amount added to the cost of merchandise to establish the selling price. Cost/selling price

balance of payments

The balance of payments is the difference, over a period of time, between the total flow coming into a country and the total flow going out. The biggest factor in a country's balance of payments is the money that comes in and goes out as a result of exports and imports.

Liquidity

The ease with which an asset can be converted into the economy's medium of exchange

Managerial Accounting

The field of accounting that focuses on providing information for internal decision makers.

Maslow's Hierarchy of Needs

The five levels of needs that humans seek to satisfy, from most to least important.

Material Requirements Planning (MRP)

The logic for determining the number of parts, components, and materials needed to produce a product, often before you actually need them to allow for future predictions and more efficient manufacturing.

Double-Entry Bookkeeping

The practice of writing every business transaction in two places.

Certification

The process by which the union is recognized by the NLRB as the bargaining agent for a group of employees

Decertification

The process by which workers take away a union's right to represent them

Benchmarking

The process of comparing an organization's practices and technologies with those of other companies.

Customer's rights

The right to safe products, The right to be informed about a product, The right to choose what to buy, The right to be heard.

Leverage

The use of borrowed money to supplement existing funds for purposes of investment

Cash Flow Statements

They indicate the movement of cash receipts and payments as a result of transactions over time

Behavioral interview

Type of interview that focuses on how applicants previously handled real situations.

Agency Shop

Union security arrangement that requires the payment of union dues but not union membership

Foreign Corrupt Practices Act (FCPA)

United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.

balance of trade

We determine a country's balance of trade by subtracting the value of its imports from the value of its exports. If a country sells more products than it buys, it has a favorable balance, called a trade surplus. If it buys more than it sells, it has an unfavorable balance, or a trade deficit.

Strength

Well balanced company with correctly applied strengths and uses an effective business strategy and model

Price stability

When the average prices of products either don't change or change very little, price stability occurs. When overall prices go up, we have inflation; when they go down, we have deflation. The consumer price index (CPI) measures inflation by determining the change in prices of a hypothetical basket of goods bought by a typical household.

360 degree feedback

When you are evaluated by people below your position, at your position, and above you, so that you have a full picture of the feedback

sole proprietorship

a business owned and managed by a single individual

Open Shop

a company whose workers are hired without regard to their membership in a labor union. Union membership is voluntary

Piecework

a compensation system in which employees are paid a set rate for each item they produce

Franchise

a contract that gives a single firm the right to sell its goods within an exclusive market. Useful for large corporations who want help tackling local markets more efficiently.

Labor Contract

a formal agreement between a union and an employer about the terms of work for union members

democratic leadership

a leadership style in which members participate in the decision-making process

Minimum Wage

a minimum price that an employer can pay a worker for an hour of labor

SWOT analysis

a planning tool used to analyze an organization's Strengths, Weaknesses, Opportunities, and Threats

trial balance

a proof of the equality of debits and credits in a general ledger

strategic planning

a set of procedures for making decisions about the organization's long-term goals and strategies, 3-5 years

Ethical Dilemma

a situation in which more than one side of an issue can be supported with valid arguments. a morally problematic situation in which you must choose competing and often conflicting options which do not satisfy all stakeholders.

Hourly Wage

a specific amount of money paid for each hour of work

make to order

a system that produces low volumes of customized product at higher prices

cross functional team

a team composed of employees from different functional areas of the organization

opportunity

a time that is right for doing something. Finding an open market and locating/creating a product for that market

Living Wage

a wage that is high enough to maintain a normal standard of living

weakness

a weak point; slight fault within a company. Poor management, mismatched strengths, ETC.

motivation factors

a work condition related to satisfaction of the need for psychological growth

Business Plan

a written description of a new business venture that describes all aspects of the business. It is a true look into if it will work and how it will work. Improves chances of success due to larger knowledge of how do operate and increases ease of investing and implementation.

balance sheets

accounting statements that provide a snapshot of a company's financial position at a particular time

free market system

also known as capitalism, business is conducted with only limited government involvement. Competition determines what goods and services are produced, how they are produced, and for whom.

job sharing

an arrangement whereby two or more part-time employees share one full-time job

shop steward

an elected union official who permanently represents union members to management when workers have issues

Threat

any danger to which a system may be exposed from external source

equity financing

arranging funding by selling ownership shares in the company, publicly or privately

Blocking Roles

behavior that inhibits either team performance or that of individual members. Every member of the team should know how to recognize blocking behavior. If teams don't confront dysfunctional members, they can destroy morale, hamper consensus building, create conflict, and hinder progress.

matrix organization

combines workers into temporary work teams to complete specific projects.

planned system

communism and socialism, the government exerts control over the production and distribution of all or some goods and services.

Sexual harassment

consists of unwanted sexual attention that creates an adverse work environment

Whistle-blower

employee who reports orgz. misconduct to public such as health and safety measures.

macro environment

essentially the big picture world outside over which the business exerts very little if any control.

mission statement

expresses the purpose of the organization

hygiene factors

factors that eliminate job dissatisfaction but don't motivate

Recruiting

forming a pool of qualified applicants from which management can select employees.

critical path

in a PERT network, the sequence of tasks that takes the longest time to complete

Job Enlargement

increasing the number of different tasks that a worker performs within one particular job, makes the job more interesting

autocratic leadership

leadership style that involves making managerial decisions without consulting others

transformational leadership

leadership that, enabled by a leader's vision and inspiration, exerts significant influence. Influences employees to focus on organizational goals and a plan over personal goals.

self transcendence

meaning, purpose, and communion beyond the self

Ethical decision

one in which there's a right (ethical) choice and a wrong (unethical or downright illegal) choice.

contract manufacturing

private label manufacturing by a foreign company

Telecommuting

process of working at home or from another site through electronic systems

behavioral questions

questions about how a candidates usually behaves in a typical job-related situation.

Revenue

represents the funds an enterprise receives in exchange for its goods or services.

Arbitration

settling a dispute by agreeing to accept the decision of an impartial outsider, in the case of unions vs management, it is often of a mayor or governor.

Conflict of Interest

situations in which you'll have to choose between taking action that promotes your personal interest and action that favors the interest of others.

conceptual skill

the ability to think analytically to diagnose and solve complex problems

Business ethics

the application of ethical behavior in a business context. Ethical (trustworthy) companies are better able to attract and keep customers, talented employees, and capital.

Corporate Social Responsibility

the approach that an organization takes in balancing its responsibilities toward different stakeholders (owners, employees, customers, and the communities in which they conduct business) when making legal, economic, ethical, and social decisions.

mass customization

the creation of products tailored for individual consumers on a mass basis, usually a couple different variants all of the same base mass produced

profit-sharing

the distribution of a percentage of a firm's profit among its employees

product division structure

the organization of divisions by product

Owners

the people or institutions that maintain legal control of an organization, primary role is to invest money in the business.

dumping

the practice of selling exported goods below the price that producers would normally charge in their home markets (and often below the costs of producing the goods).

equilibrium price

the price at which buyers are willing to buy the same amount that sellers are willing to sell.

bargaining zone

the range of settlements within which it is better for both parties to agree than not to agree. An area in which the union and the employer are willing to concede when bargaining

monetary policy

the setting of the money supply by policymakers in the central bank

Economics

the study of the production, distribution, and consumption of goods and services.

Production Control

the task of predicting, planning and scheduling work, taking into account manpower, materials availability and other capacity restrictions, and cost so as to achieve proper quality and quantity at the time it is needed and then following up the schedule to see that the plan is carried out.

Groupthink

the tendency to conform to group pressure in making decisions, while failing to think critically or to consider outside influences.

Chain of Command

the vertical line of authority that clarifies who reports to whom throughout the organization

Legal rights of consumers

to use safe products, to be informed about products, to choose what to buy, and to be heard. Sellers must comply with these requirements.

Ponzi Scheme

using cash from newer investors to pay off older ones in a cycle that builds to a breaking point and will eventually collapse.

Profit

what's left (hopefully) after all the bills are paid.

Worker/Employee

work for the company and help it reach its goals.

compressed workweek

work schedule that allows an employee to work a full number of hours per week but in fewer days