MGMT 478 Ch. 4

Operating Profit Margin

Earnings before interest and taxes EBIT/Sales Profitability without concern for taxes and interest

Net Profit Margin

Net Income/Sales After-tax profits per dollar of sales

Return on total Assets (ROA)

Net Income/Total Assets After-tax profits per dollar of assets; this ratio is also called return on investment (ROI)

Return on Stockholders' Equity (ROE)

Net Income/Total Stockholder's Equity After-tax profits per dollar of stockholders' investment in the firm

Earnings Per Share (EPS)

Net income/Number of shares of common stock outstanding Earnings available to the owners of common stock

Times-Interest-Earned Ratio

Profits before interest and taxes/Total interest charges the extent to which earnings can decline without the firm becoming unable to meet its annual interest costs

Management Information System

Receives raw material from both external and internal evaluation of an organization - Improves the performance of an enterprise by improving the quality of managerial decisions - Collects, codes, stores, synthesizes, and presents information in such a manner that it answers important operating and strategic questions

Gross Profit Margin

Sales minus cost of goods sold/Sales the total margin available to cover operating expenses and yield a profit

Fixed Assets turnover

Sales/Fixed assets Sales productivity and plant and equipment utilization

Inventory Turnover

Sales/Inventory of finished goods Whether a firm holds excessive stocks of inventories and whether a firm is slowly selling its inventories compared to the industry average

Total Assets turnover

Sales/Total assets Whether a firm is generating a sufficient volume of business for the size of its asset investment

Target Market Analysis

The examination and evaluation of consumer needs and wants

what is the most widely used method for determining a organizations strengths and weaknesses in the investment, financing and dividend areas.

financial ratio analysis

what ties all business functions together and provides the basis for all managerial decisions

information (since it provides the basis for all managerial decisions. Information ties all business functions together and can be the source of a​ firm's competitive advantage)

the resource-based view emphasizes the importance of ______.

internal resources (The industrial organization view emphasizes the importance of external resources)

Advocates of the RBV approach to competitive advantage contend that​ ______.

internal resources are more important to achieving and sustaining competitive advantage (resource-based view)

Which of the following is NOT one of the 5 basic activities of​ marketing?

inventorying products ((1) marketing research and target market​ analysis; (2) product​ planning; (3) pricing​ products; (4) promoting​ products; and​ (5) placing or distributing products)

Organizational culture

is "a pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel."

in conducting a marketing audit, which of the following would NOT be a question to ask?

is the organization's structure appropriate

Which of the following correctly describes ZipCar's ability to leverage its internal resources, such as its extraordinary technologies?

it understands the resource-based view of competitive advantage

Which of the following has been identified as the biggest threat related to​ cyberthreats?

Too many people having access to information unrelated to their particular job

Debt-to-Total Assets Ratio

Total debt/Total assets The percentage of total funds provided by creditors

Debt-to-Equity Ratio

Total debt/Total stockholders' equity The percentage of total funds provided by creditors versus by owners

Quick Ratio

Current assets minus inventory/Current liabilities The extent to which a firm can meet its short-term obligations without relying on the sale of its inventories

Current Ratio

Current assets/Current liabilities extent to which a firm can meet its short- term obligations

Leadership is a major component of which function of​ management?

motivating

the IFE matrix is an evaluation of the effectiveness of a firms current strategies but it does not take into account

opportunities and threats

the subtle, elusive, and largely unconscious forces that shape a workplace are captured by

organizational culture

Decisions about work specialization are performed in which function of​ management?

organizing

which two management functions are most important at the strategic-management process stage of strategy implementation?

organizing and motivating

The attractiveness of a firm on equity markets is measured by which financial​ ratio?

price-earnings ratio

Patty is currently running test marketing for a new soft drink her company is thinking of selling. This best exemplifies which function of​ marketing?

product planning

ZipCar uses cutting-edge technology combined with sophisticated data management and security measures to assure customers of a hassle-free, dependable, and safe. This is reflective of which of the following functions that support vital strategy-formulation activities?

product planning

Wanda is currently purchasing online advertisements for a new watch her company has created. She is engaging in which marketing​ function?

promoting products (includes many marketing​ activities, such as​ advertising, sales​ promotion, public​ relations, personal​ selling, and direct marketing)

internal assessment factors include issues in all the following areas except:

social issues

the author often makes what statement?

success rarley happens by accident

Investment Decision (Capital Budgeting)

the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization

the strategy-formulation tool that summarizes and evaluates the major strengths and weaknesses in the functional areas of business is

the internal factor evaluation matrix

Marketing

the process of defining, anticipating, creating, and fulfilling customers' needs and wants

what is the primary purpose of a management information system

to aid operational and strategic decision making (management information system​ (MIS) collects,​ codes, stores,​ synthesizes, and presents information in such a manner that it aids in operational and strategic decision making)

would you ever pay out dividends if your firms annual net profit is negative?

yes, sometimes

Business Analytics

• A business technique that involves using software to mine huge volumes of data to help executives make decisions. • Also called predictive analytics, machine learning, or data mining.

Integrating Strategy and Culture

• Organizational culture significantly affects planning activities. • If strategies can capitalize on cultural strengths, such as a strong work ethic or highly ethical beliefs, then management often can swiftly and easily implement changes.

Distinctive competencies

- A firm's strengths that cannot be easily matched or imitated by competitors - Building competitive advantages involves taking advantage of distinctive competencies

Promotion

- Includes many marketing activities, such as advertising, sales promotion, public relations, personal selling, and direct marketing. - Common promotional tools designed to inform consumers about products include TV advertising, magazine ads, billboards, websites, and public relations, among others.

Pricing

- Refers to deciding the amount an individual must exchange to receive a firm's product offering. - Pricing strategies are often based on costs, demand, the competition, or on customers' needs.

The internal audit

- Requires gathering, assimilating, and prioritizing information about the firm's management, marketing, finance, accounting, production/operations, research and development (R and D), and management information systems operations - Provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole firm

Channels of Distribution

- This is a term that refers to various intermediaries that take a product from a producer to an end customer. - These intermediaries have names such as wholesalers, retailers, brokers, facilitators, agents, vendors, or simply distributors.

Production/operations function

- consists of all those activities that transform inputs into goods and services • Production/operations management deals with inputs, transformations, and outputs that vary across industries and markets.

Long-Term Debt-to-Equity Ratio

Long-term debt/Total stockholders' equity The balance between debt and equity in a firm's long-term capital structure

Price-Earnings Ratio

Market price per share/Earnings per share Attractiveness of firm on equity markets

The Resource-Based View (RBV) Approach

- contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage • Proponents of the RBV contend that organizational performance will primarily be determined by internal resources. These resources can be grouped into - tangible - intangible • For a resource to be valuable, it must be either (1) rare, (2) hard to imitate, or (3) not easily substitutable. • These three characteristics of resources are called Empirical Indicators • These enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage

Product Planning

- includes activities such as test marketing; product and brand positioning; devising warranties; packaging; determining product options, features, style, and quality; deleting old products; and providing for customer service - important when a company is pursuing product development or diversification

Marketing Research

- the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services - can uncover critical strengths and weaknesses

Marketing Audit Checklist of Questions

1. Are markets segmented effectively? 2. Is the organization positioned well among competitors? 3. Are present channels of distribution reliable and cost effective? 4. Is the firm conducting and using market research effectively? 5. Are product quality and customer service good? 6. Are the firm's products and services priced appropriately? 7. Does the firm have an effective promotional strategy? 8. Is the firm's Internet presence excellent as compared to rivals?

Management Audit Checklist of Questions

1. Does the firm use strategic-management concepts? 2. Are company objectives and goals measurable and well communicated? 3. Do managers at all hierarchical levels plan effectively? 4. Do managers delegate authority well? 5. Is the organization's structure appropriate? 6. Are job descriptions and job specifications clear? 7. Is employee morale high? 8. Are employee turnover and absenteeism low? 9. Are organizational reward and control mechanisms effective?

Finance/Accounting Functions

1. How has each ratio changed over time? 2. How does each ratio compare to industry norms? 3. How does each ratio compare with key competitors?

The process of performing an internal audit​ ______.

examines the firm's own resources and capabilites

The Internal Factor Evaluation (IFE) Matrix

1. List key internal factors as identified in the internal-audit process. 2. Assign a weight that ranges from 0.0 (not important) to 1.0 (all-important) to each factor. 3. Assign a 1-to-4 rating to each factor to indicate whether that factor represents a strength or weakness. 4. Multiply each factor's weight by its rating to determine a weighted score for each variable. 5. Sum the weighted scores for each variable to determine the total weighted score for the organization.

Five Basic Activities in Marketing

1. Marketing research and target market analysis 2. Product planning 3. Pricing products 4. Promoting products 5. Placing or distributing products

The functions of finance/accounting comprise three decisions:

1. The investment decision 2. The financing decision 3. The dividend decision

Finance/Accounting Audit Checklist

1. Where is the firm financially strong and weak as indicated by financial ratio analyses? 2. Can the firm raise needed short-term capital? 3. Can the firm raise needed long-term capital through debt or equity? 4. Does the firm have sufficient working capital? 5. Are capital budgeting procedures effective? 6. Are dividend payout policies reasonable? 7. Does the firm have excellent relations with its investors and stockholders? 8. Are the firm's financial managers experienced and well trained? 9. Is the firm's debt situation excellent?

The number of U.S. data breaches in the first 6 months of 2017 was estimated to​ be:

791

Average Collection Period

Accounts receivable/Total credit sales/365 days The average length of time it takes a firm to collect on credit sales (in days)

Accounts Receivable turnover

Annual credit sales/Accounts receivable The average length of time it takes a firm to collect credit sales (in percentage terms)

Earnings Per Share

Annual percentage growth in EPS Firm's growth rate in EPS

Dividends Per Share

Annual percentage growth in dividends per share Firm's growth rate in dividends per share

Net Income

Annual percentage growth in profits Firm's growth rate in profits

Sales

Annual percentage growth in total sales Firm's growth rate in sales

marketers can best use their strategic toolbox to ensure that their firm's offering delivers value to target customers when there is

a clearly defined target market

What is the heart of an information​ system?

a database containing the kinds of records and data important to managers

the author often compares a strategic plan to what analogous term

an athletic team's game plan

strategists use ______ to provide a firm with proprietary business intelligence

business analytics

Objectives and strategies are established with the intention of _______.

capitalizing on internal strengths and overcoming weaknesses

financial ratio analysis should be conducted on three separate fronts which include

change over time, comparison to industry norms, and comparison to key competitors

Dividend Decisions

concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock determine the amount of funds that are retained in a firm compared to the amount paid out to stockholders

Establishing performance​ standards, measuring​ performance, comparing with planned​ standards, and taking corrective actions are the components of which function of​ management?

controlling

the management function of _____ is particularly important for strategy evaluation

controlling

the CEO of zipcar states at then end of the day the greatest challenges of modern business is not finding great technology to support its model, but making sure that it doesn't become so dependent upon that technology that it creates huge vulnerabilities for itself or its customers." This statement demonstrates the CEO's awareness of which of the following functions of management?

controlling function

Which of the following is an intangible​ resource?

culture

Which of the following is a liquidity​ ratio?

current ratio and quick ratio

leverage ratio

debt-to-total assets ratio

Financing Decision

determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital

ZipCar's use of multiple technologies is unique, but it also boasts unique pricing structures, distribution, and other features that differentiate it from other rental car companies. These strengths are referred to as ______.

distictive competencies

strengths that cannot be easily matched or imitated by competitors are called _____.

distinctive competencies (It is of paramount importance in strategic planning to capitalize on and nurture strengths because competitive advantages generally arise more from​ strengths, uniqueness, and distinctive competencies than from weaknesses)

​Rebel, who works in a publically traded​ firm, is trying to determine what the dollar amount per share payed quarterly to stockholders should be. This is known as​ a(n):

dividend decision

does development of an IFE matrix require assignment of both weights and ratings?

does development of an IFE matrix require assignment of both weights and ratings

ZipCar's technologies and layers of security are rare in the rental car industry, hard to develop and imitate, and not easily copied or deployed. These characteristics are known as _______.

empirical indicators

on what does market analysis focus?

evaluating customers needs

The Basic Functions of Management

• Planning: forecasting, establishing objectives, devising strategies, and developing policies • Organizing: organizational design, job specialization, job descriptions, span of control, coordination, job design, and job analysis • Motivating: leadership, communication, work groups, behavior modification, delegation of authority, job enrichment, job satisfaction, needs fulfillment, organizational change, employee morale, and managerial morale • Controlling: quality control, financial control, sales control, inventory control, expense control, analysis of variances, rewards, and sanctions

functions of management

• planning • organizing • motivating • controlling