Management 1 Final
Primary functions of securities markets (financial marketplaces for stocks and bonds)
1. Assist businesses in finding long-term funding to finance capital needs 2. Provide investors a place to buy and sell securities like stocks and bonds
Key steps of financial planning
1. forecast firm's short and long term financial needs 2. develop budgets to meet those needs 3. establish financial controls to see if company is achieving its goals
Pricing objectives
Achieve target return on investment or profit Build traffic Achieve greater market share Create image Further short-run and long-run social objectives
Marketing
Activity, set of institutions, processes for creating, communicating, exchanging offerings with value for clients and society
Promotion includes
Advertising Personal selling Public relations Public relations Publicity Word of mouth Sales promotions
Types of marketing intermediaries
Agents and brokers Wholesaler Retailer
Benefits of marketing research
Analyze customer needs and satisfaction Current markets and opportunities Effectiveness of marketing strategies Marketing process and tactics used Reasons for goal achievement/ failure
Fundamental accounting equation
Assets = liabilities + owner's equity
Packaging
Attracts customer attention Offers protection: handling and storage Offer protection from theft - UFC, RFID Explain benefit, express warning Meets government and seller requirements
Dow Jones Industrial Average
Average cost of 30 selected industrial stocks Gives indication of stock market direction over time
Business-to-business advertising
B2B sales channel
Advantages of issuing bonds
Bondholders can't vote on corporate matters Bond interest is tax deductible Bonds are temporary source of funding and eventually repaid Bonds can be repaid before maturity date if contain call provision
Disadvantages of Issuing Bonds
Bonds increase debt, can negatively affect market's perception of the firm Paying interest on bonds is legal obligation The face value of the bond must be repaid on the maturity date
CFP
Certified Financial Planner
CFA
Chartered Financial Analyst
Comptroller
Chief Accounting Officer
CFO
Chief Fianncial Officer
Publicity: advantages
Consumers value third-party remarks Low cost vs. advertising for similar exposure Digital expands opportunities and demands Expand coverage
Product differentiation
Creation of real or perceived product differences use branding, pricing, advertising, packaging to create different images
3 Parts of Marketing Concept
Customer orientation, service orientation, profit orientation
Flexible manufacturing
Designing machines to do multiple tasks to produce a variety of products
Risks of AI
Drastic changes to lives, AI created with bad intention, AI created with good intention goes bad, unintentional bias
Largest web 2.0 businesses
Facebook, youtube, twitter
Statement of cash flows
Financial statement that reports cash receipts and disbursements related to : operations, investments, financing
Cloud computing
Form of virtualization; company data and applications are stored at offsite data centers accessed over internet
Federal Deposit Insurance Corporation
Independent agency of US government, insures deposits up to 250,000
Product Life Cycle Stages
Introduction, growth, maturity, decline
Operations management includes:
Inventory management Quality control Production scheduling Follow-up services
Five criteria in selecting investment options
Investment risk Yield Duration Liquidity Tax consequences
Considerations for moving facility location
Labor costs Availability of resources Time to market, access to transportation and proximity to suppliers and customers Employee quality of life Crime rates, living costs Need to train or retrain local workforce
M2
M1 plus money taking a bit more time to obtain (savings accounts, mutual funds)
M3
M2 plus big deposits, institutional money market funds
Artificial intelligence
Machines programmed to think and act like humans: General, Narrow, Machine learning
Brand categories
Manufacturers' brands Dealer (private-label) brands Generic goods Knockoff brands
Program Evaluation and Review Technique (PERT)
Method for analyzing tasks involved in completing a project, estimate time to complete, and identify minimum time needed to complete project
Communication goals - 6M's
Mission, market, message, media, money, measurement
Importance of short-term funds
Monthly expenses Emergencies Cash flow problems Expansion of inventory Temporary promotional programs
Skimming price strategy
New product priced high to make most profit when little competition exists
Importance of long-term funds
New-product development Replacement of capital equipment Mergers or acquisitions Expansion into new markets (domestic or global) New facilities
Publicity: Disadvantages
No control over when media uses story Can be good or bad Unpredictable results Hard to respond to fast traveling news Story run once, unlikely to be run again
Marketing intermediaries
Organizations assisting in moving goods and services from producers to businesses and businesses to consumers
Standards for useful form of money are:
Portability Divisibility Stability Durability Uniqueness
Cash flow forecast
Predict cash inflow and outflow in future periods; months or quarters
Convenience goods and services
Products consumer wants to purchase frequently and with minimum of effort added convenience Consumers pay premium
Key provisions of Sarbanes-Oxley Act
Prohibits accounting firms from providing certain non-auditing work to companies they audit Strengthens protection for whistleblowers Requires CEO and CFOs to certify accuracy of financial reports, impart strict penalties for violation of security reporting
Income statement formula
Revenue - Cost of goods sold- gross profit - operating expenses = net income before taxes Net income before taxes - taxes = net income or loss
Forms of Short-Term loans
Secured Unsecured Line of credit
Budget
Set management expectations, allocate use of resources throughout firm Depend on balance sheet, income statement, cash flow statement, short-term/ long-term financial forecast
Everyday low pricing
Setting prices lower than competitors daily, without special sales
Pros of selling stock to raise funds
Stock purchase price doesn't have to be repaid Dividends do not have to be paid Stocks don't increase debt
Cons of selling stock to raise funds
Stockholders can vote for board of directors + affect management decisions Dividends come from after taxes funds Dividends not tax deductible
Break even point
Total fixed costs/ (price of one unit -variable costs of one unit)
Report: financial statements and internally distributed financial reports
Users: Managers of the firm
Report: Financial statements found in annual reports (income statement, balance sheet, statement of cash flows)
Users: People interested in organization's income and financial position (owners, creditors, suppliers)
Report: required reports
Users: government regulatory agencies
Report: Tax return
Users: government taxing authorities
3 Basic Varieties of social media
Viral marketing, influencers, blogger/podcast
Message
What are the specific elements
Market
Who are we communicating to
Time value of money
a dollar today is worth more than a dollar tomorrow
Common liability accounts
accounts payable, notes payable, bonds payable
Cost of acquiring new customer vs. cost of retaining
acquiring new customer = 5x cost of retaining one
Traditional promotion mix
advertising, personal selling, public relations, sales promotion making up the product
Business-to-business market
all individuals and organizations that want goods and services to use in producing and selling goods to to others
Consumer market
all people that want goods and services for personal consumption or use
Falling dollar value
amount of goods and services you can buy with a dollar decreases
Rising dollar value
amount of goods and services you can buy with a dollar increases
Money supply
amount of money federal reserve bank makes available for people to buy goods and services
marketing research
analyzing markets to find opportunities and challenges, information to make good decisions
Fixed assets
assets relatively permanent, land, buildings, equipment
Secured loan
backed by collateral
Gantt Chart
bar graph showing production managers te projects being worked on and the stage they're at
Common stock
basic form of ownership in a firm; voting rights and rights to share in firm profits through dividends
Brand equity and loyalty are boosted by
brand awareness
Manufacturers' brands
brand names of manufacturers distributing products nationally
Trademark
brand with exclusive legal protection for brand name and design
Agents and brokers
bring buyers and sellers together: assist in negotiating an exchange but don't take title to goods
Open market operations
buy and sell US government bonds by Fed with goal of regulating the money supply
Diversification
buy different investment alternatives to spread investing risk
Trade credit
buy goods and services now, pay later
Disadvantage of algorithms
can be faulty + reflect human biases
Line of credit
certain amount of unsecured short-term funds a bank will lend, provided the funds are readily available
Product mix
combination of product lines offered by manufacturer (eg. PepsiCo)
Pricing product factors
competitor prices production cost distribution promotion product mix product lifestyle
MRP (Material Requirements Planning)
computer based operations management system, uses sales forecasts to make sure that needed parts and materials are available right time and place
Computer-integrated manufacturing
computer-aided design + computer-aided manufacturing
Bond
corporate certificate indicating that a person lent money to firm
Operating expenses
costs involved in operating a business; rent, utilities, salaries
variable costs
costs that change according to level of production
Institutional advertising
create attractive image for organization over product
Product advertising
create interest among consumer, commercial, and industrial buyers
Categories of assets
current assets, fixed assets, intangible assets
Accounts payable
current liabilities, involving money owed to others for merchandise or services on credit not yet paid for
Key ratios include: (liquidity ratios)
current ratio acid-test ratio
brand loyalty
degree which customers are committed to further purchases
Barter
direct trading goods or services for others
geographic segmentation
divide market by cities, counties, states, regions
benefit segmentation
divide market by determining which benefits of the product to talk about
volume/ usage segmentation
divide market usage
psychographic segmentation
divide market using group values, attitudes, interests
market segmentation
divide total market into groups
demographic segmentation
dividing market by age, income, education level
Unsecured
doesn't require collateral
earned or owned: viral marketing
earned - posts, shares, likes
Key ratios (proftability) include:
earnings per share, return on sales, return on equity
Liquidity
ease with which asset can be converted to cash
Assets
economic resources (things of value) owned by a firm; items tangible or intangible
Social commerce
electronic commerce; social media, online media that supports social interaction, user contributions to assist in online buying and selling of products and services
NASDAQ
electronic system communicating over the counter trades to brokers
Social listening
engage consumer, develop insight Incorporate themes into marketing messages Identify super fans and influencers
Cash budget
estimate cash inflow and outflow during a specific period, month, or quarter
Total product offer
everything consumers tangibly and intangibly evaluate when deciding whether to buy something
Maturity date
exact date issuer of a bond must pay principal to bondholder
total fixed costs
expenses that remain the same no matter how many products are made or sold
Principal
face value of the bond
Securities and Exchange Commission (SEC)
federal agency responsible for regulating various exchanges
Balance sheet
financial statement reporting firm's financial condition at specific time, is composed of three major accounts: assets, liabilities, owners' equity
Customer Orientation
finding what customers want and provide it
Financial control
firm periodically compares actual revenues, costs, and expenses with budget
profit orientation
focus on goods and services that will earn most profit
Debt financing
funds raised through borrowing, must be repaid
Jack Robbers
furnish racks or shelves of merchandise for display and sell them on consignment
Preferred stock
gives owners preference in payment of dividends and earlier asset claims than common stockholders
Primary markets
handle sale of new securities, includes initial public offering (IPO)
Secondary market
handle trading of securities between investors, proceeds of sale going to seller
Capital budget
highlight firm's spending plans for major asset purchases requiring large sums of money
Profitability ratios
how effectively firm's managers use resources to earn profits
Activity ratios
how effectively management turns over inventory
Gross profit
how much firm earned by buying or making and selling merch
money
how much will be spent
Brand awareness
how quickly/ easily a brand name comes to mind when mentioning a specific category
measurement
how will impact be measured
Brand
identifies goods and services of seller or group
knockoff brands
illegal copies of national brand name goods
Benefits of AI
increased efficiency, solving problems for humanity, liberate humans to what they do best, expanded access
Discount rate
interest rate that Fed charges for loans to member banks
Net Neutrality
internet service providers should provide same level of access to all websites regardless of content ISP could charge sites for faster access without net neutrality ISP: could charge people to visit certain websites
Just-in-time inventory control
inventory kept to a minimum on supplies and are delivered just in time to go to assembly line
Key ratios (activity) include:
inventory turnover ratio
Bears (perceptions of market)
investors expecting stock prices to decline
Bulls (perceptions of the market)
investors who believe stock prices are going to rise
Current assets
items that can/ will be converted to cash within a year
customer relationship management
learn as much as you can about customers and do what you can to satisfy or exceed expectations
Intangible assets
long-term assets (patents, trademarks, copyrights) have no physical form, but have value
Bonds payable
long-term liabilities, represent money lent to firm that must be paid back
service orientation
make sure everyone in organization is committed to customer satisfaction
Qualifying
make sure people have a need for the product, authority to buy, willingness to listen to a sales message
Public relations
management function: evaluates public attitude, changes in procedures in response to public's requests, execute program of action and information
supply chain management
managing raw materials, goods in progress, related info through all orgs in supply chain, manage return of goods, recycle materials
Product development
marketers need to think like consumers in assessing value
target marketing
marketing directed towards groups the organization best serves
Leverage ratios
measure degree to which firm relies on borrowed funds in its operations
Cost of Goods Sold
measures cost of merch sold or cost of raw materials and supplies used for purchasing items for resale
Revenue
monetary value firm got from goods, services and other payments
M1
money easily accessed (coins, paper money, traveler's checks)
Equity financing
money raised within firm, from operations or sale of ownership in the firm
Enterprise resource planning
newer version of MRP combining computerized functions of all divisions and subsidiaries of the firm, finance, HR, order fulfillment to single integrated software program using single database
Generic goods
nonbranded product at a sizeable discount
Stock exchange
organization whose members can buy and sell securities for companies and investors
Data analytics
organizing, collect, store large sets of data to find patterns useful for business now and in making future decisions
Mission
overall goal & decision-making process
Social media is either
owned - paid for banner ads, video earned - shared via likes, posts, search rankings
earned or owned: Blogger/podcast
owned - pay for production/ promotion
earned or owned: Influencers
owned - pay for promotion
Viral marketing
pay customers to say positive things on internet/ set up selling schemes where consumers get commissions for directing friends to websites
Interest
payment issuer makes to bondholders for use of borrowed money
Reserve requirement
percentage of commercial banks' checking and savings account that must be kept in the bank
Prospect
person with means and authority to buy product, willingness to listen to sales message
Logistics
planning physical flow of materials, final goods, related info from points origin to points of consumption to meet customer requirements and profit
Capital gains
positive difference between purchase price of stock and sale price
High-low pricing
prices higher than EDLP, but have many special sales with lower prices than competitors
Psychological pricing
pricing goods and services at price points making the product appear less than it is
hybrid clouds
private cloud for essential tasks, use public cloud as needed
Factoring (short term financing)
process of selling accounts receivable for cash
Break-even analysis
process used to determine profitability at various levels of sales
Penetration strategy
product priced low to attract customers and discourage competition
Product line
products closely related/ within similar markets
Shopping goods and services
products consumer buys only after comparing value and price with other sellers
Unsought goods and services
products consumers don't think of buying, need to solve a problem
Dealer (private-label) brands
products that don't carry manufacturer's name but carry distributor's or retailer's name instead
Letter of credit
promise by bank to pay seller given amount if certain conditions are met
Buying stock on margin
purchasing stocks by borrowing some of purchase cost from brokerage firm
Intensive distribution
put products into as many retail outlets as possible: vending
Accounting
record, classify, interpret financial events and transactions to provide others with information needed to make good choices
Bookkeeper
recording business transactions
Prospecting
research potential buyers and choose most likely to buy
public clouds
run on remote computers
Wholesaler
sells to other organizations
Retailer
sells to ultimate consumers
Supply chain
sequence of activities to move goods from raw materials to ultimate consumers
Web 2.0
set of tools: allow people to build social and business connections, share info, collaborate on projects online
Stocks
shares of ownership in a company
Notes payable
short or long-term liabilities that business promises to pay by certain date
Income statement
shows firm's profit after costs, summarizes resources coming into the firm and resources lost, and resulting net income or loss
Ledger
specialized accounting book/ computer program; info from accounting journals is put into specific categories and posted so managers can find all info about an account in one place
Trial balance
summary of all financial data in account ledgers; ensuring figures are correct and balanced
Depreciation
systematic write-off of cost of tangible asset over estimated useful life
Data mining
technique for looking for hidden patterns and unknown relationships in data
Operating budget
ties firms other budgets and summarizes proposed financial activities
Retail advertising
to consumers by various retail stores
Trade advertising
to wholesalers and retailers by manufacturers
Inflation is sometimes called
too much money chasing too few goods
Over the counter market
trading stocks not listed on national exchanges
Specialty goods and services
unique characteristics and brand identity
Computer-aided design
use of computers in design of products
Computer-aided manufacturing
use of computers in manufacturing products
Selective distribution
use only preferred group of retailers in area
brand equity
value of brand name and associated symbols
Liabilities
what business owes to others (debts)
Break-even point
where revenues equal cost
Media
which vehicles will be used in campaign
Private clouds
wholly behind firewall
Double-entry bookkeeping
write every business transaction in two places; so they can check one list of transactions against another for accuracy
