MGMT 470 FINAL EXAM

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Arbitration

a way of settling disputes without going to court present to private judge give up legal right to sue if you arbitrate

Outside equity

money from selling part of your business to people who are not and will not be involved in the management of the business

Guerilla marketing

The use of creative and relatively inexpensive ways to reach your customer. Examples include door-knob hangers, flyers under windshield wipers, T-shirts, balloons, and messages written on sidewalks.

Copyright

exclusive right given to the creator of a literary or artistic work to the make use

Intermediaries

frequently small businesses themselves provide the services of getting the end product to the consumer services such as inventory, delivery, advertising, warranty

Short-term assets

inventory and accounts receivable most small businesses need few capital assets assets are worth sum of future benefits book value, disposal value, replacement value, fair market value

Prestige pricing

items that are status symbols like a Rolex or Mercedes setting price above competition setting price above competition to indicate status

Pull through inventory system

just in time inventory system in which product is ordered and placed into production only after a sale is completed

Price gouging

legal and or ethical issue in charging too much charging an outrageously high price for something

Income statement

lists revenues and expenses and shows the amount of profit a business makes for a specified period of time

Commercial paper

notes issued by credit worthy companies short term financing (30 days to 1 year) issued to be paid to the bearer of the note cash equivalent

Sole proprietorships

owned by single individual unlimited personal liability single taxation complete control ends at death of sole proprietor

Pro forma financial statements

planning docs for future business activities that are formatted to look like the common financial statements of the income statement, balance sheet, and cash flows

Inelastic pricing

price change has a small impact on supply or demand, usually a necessity, something needed now, or low price (example gas for a car)

Elastic pricing

product demand is sensitive to a change in pricing lowering price to increase sales

Accounts receivable

records if you provide credit to customers essential for making decisions revolving around credit

Accounts Receivables

records if you provide credit to your customers essential for making credit decisions help produce accurate billing of customers maintain good customers

The law of supply and demand in pricing

stable pricing occurs when supply of a product meets customer demand for it a supply decrease or demand increase will cause price to increase

The six factors most valuable to employees

teamwork recognition training empowerment contribution communication

Weighted average cost of capital

the expected average future cost of funds more debt = lower WACC equity and debt mix

Price elasticity has to do with how essential a product is to customers

the more essential the product, the less elastic the price

Micro inventories

the purchase of inventory only after a sale is made very typical with internet firms the ultimate just in time process

Price escalation

the rise in a price that occurs after going through several intermediaries

Cash flow statement

the sources and uses of cash in a business for a specified period of time

Bounded rationality model of management

theories based on the assumption of limited human abilities more available information in decision making process leads to lower efficiency

Reasons why accounting is important for a small business

to produce information to meet legal requirements to be considered for funding or for a loan to plan and control

Accounts Payable

track what you owe money you have to pay

Multichannel marketing

use of several different channels to reach your customers website, direct mail, traditional retail

Accounting analysis

variable costs and fixed costs sum of these equal total costs breakeven - fixed cost/(price/unit - variable cost)

Considerations for adding full-time employees

wait until business ahs consistent income make use of any transition services their former employer offers change when family obligations are low and support is high

Balance sheet

what a business owns (assets), owes (liabilities), and invested value from owners (equity)

Empowerment zones

zones where special support is provided to companies located there; often in economically depressed areas, offer low cost space and tax advantages

Value

A customer's subjective assessment of benefits relative to costs in determining the worth of a product plays into pricing scarcity and uniqueness increase it

Debt-to-equity ratio

Evaluates the capital structure of a company. A ratio of more than 1 implies that the company is a leveraged firm; less than 1 implies that it is a conservative one. (Leverage Ratio) _____ = Total Liabilities / Total Equity other tools for financial management: ROI, current ratio

The main three types of accounting

Financial - a formal rule based set of principles intended for use by outside investors such as investment groups, banks, and regulators Managerial - specifically intended to be used by managers for planning, directing, and controlling Tax - based on specific accounting requirements set by governmental tax agencies

Long-term assets

PBLE values can be widely different held for more than one year

Surety bonds

agreement with insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements

Fidelity bonds

also called dishonesty bonds repay employers for losses caused by dishonest or negligent employees

Money, definition and 3 main purposes

an accepted medium of exchange used to facilitate exchange of unlike assets measure the value of tangible and intangible things keep track of wealth

Joint ventures

an agreement between 2 or more entities to pool resources in order to complete a project each business keeps its identity and operates separately

External reference price

an estimation of what a price should be based on external information to a consumer such as advice, advertisements, or comparison shopping

Cash equivalents

assets that may be quickly converted to cash marketable securities, debt investments, commercial paper

Skimming

charging the highest price the market will bear usually when there is no competition really only possible if its the first product or service and if its something people really want

Bundle or satisfactions

combining two or more products into one and pricing them lower than if they were sold separately

Key factors impacting a pricing decision

company objectives marketing strategy distribution channels competition legal/regulatory issues

Worker Adjustment and Retraining Notification (WARN) Act

requires most employers with 100 or more employees to provide 60 calendar-day advance notification of plant closings and mass layoffs of employees

Factoring

selling your receivables to a factoring company factoring company pays 75-80% of what they collect difference between gross and what is collected is the factoring company's profit margin

Odd-even pricing

setting a price that ends with a 9, 7, or 5 to sound cheaper (9.99 vs 10)

Partitioned pricing

setting the price for a base item and then charging extra for each additional component; have a main component (computer) but everything else extra (printer)

Captive pricing

setting the price for an item relatively low and then charging much higher prices for the expendables it uses (printer and ink)

Errors and emissions insurance

special types of liability insurance that covers losses from harm caused during performance of your profession claims made by attorneys, accountants, and consultants

The three primary causes of cash flow problems

1. difficulty collecting money due from customers 2. seasonal variation in sales 3. unexpected decreases in sales

Freight forwarders

Firms specializing in arranging international shipments-packaging, transportation, and paperwork

The 3 main managerial accounting processes

Standard Budgeting - a method for business forecasting and control in which specific expected volumes and prices per unit are used Profit Planning - creating a set of interconnected budgets that combine into a master budget Pro Forma Financial Statements - planning documents for future business activities that are formatted to look like the common financial statements of the income statement, balance sheet, and the statement of cash flows

Mediation

a dispute resolution process held in place of court in which both sides present their case to a neutral third party who is not a judge NOT BINDING

Growth trap

a financial crisis that is caused by a business growing faster than it can be financed

Litigation

a formal dispute resolution that operates using the court system, typically with a lawyer representing each party

Patent

a grant by the us government to an inventor for an idea that is new, useful, and non obvious gives inventor exclusive right to idea

Crowdfunding

a method for entrepreneurs to obtain public financing do not need to meet SOX requirements anyone can invest but must be through SEC registered site or with licensed broker

Markup pricing

a price setting method where an amount is added to the cost of a product to sell the retail price and provide a profit

Internal controls

a set of rules and procedures that work to limit the opportunity for employee theft or malfeasance primary method of ensuring honesty in employees most basic technique is to separate duties of maintaining the securities of assets from the duties of maintaining the records of assets

Economic Order Quantity (EOQ)

a statistical technique that determines the quantity of inventory that a business must hold to minimize total inventory cost

An e-tailer

a store that exists only on the internet an electronic retailer serviced by distributors

Perpetual inventory

a system of recording the receipt and sale of each item as it occurs, maintains constant record of the amounts and value of inventory that have been sold

Audit trail

a system that traces the detailed transactions relating to any item in an accounting record (systems for small business)

Separation of duties

a type of internal control that separates the physical control of an asset from the person accounting for that asset

Hold harmless agreement

a waiver one party agrees not to hold another party responsible for certain events one party gives up legal right to sue must be drafted by lawyer

B-Corp certification

a way to publicly inform potential investors that a for profit firm is pursuing a social benefit role

the four accounting methods to value capital assets

book disposal replacement fair market

Factoring receivables

borrowing against receivables usually lend about 75 to 80% of uncollected receivables and factor will deduct principal as payments are collected

Exporting payment procedures

cash flow management how much and when money will come and go

The three major sources for financing

debt - a legal obligation to pay money in the future equity - money contributed to the business in return for part ownership of the business gift - valuable assets or services donated to the business w/o any obligation to repay or give up equity

Four factors used to determine the optimum price

demand for the product value delivered to the consumer prices set by competing firms business strategy and product placement

Psychological contract

employees beliefs about promises between them and the firm based on the perception that promises have been made in exchange for certain employee obligations

The three general events that cause business risk

events related to property of the business events related to personnel events related to customers and others


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