Business 101- Exam 2

time value of money

$200 today is more valuable than $200 a year from today

basic requirements of production

1. build and deliver products in response to demand 2. provide acceptable quality level 3. provide products at lowest possible cost

steps of performance appraisal

1. establishing performance standards 2. communicating those standards 3. evaluating performance 4. discussing results with employees 5. taking corrective action 6. using the results to make decisions

steps in financial planning

1. forecasting long/short-term financial needs 2.developing budgets 3.establishing financial control

Sarbanes-Oxley Act

1. new government reporting standards 2. PCAOB charged with overseeing professional accountants

why do markets need intermediaries

1. not all manufacturers need intermediaries 2. intermediaries perform certain functions faster and cheaper than manufacturers 3. agents/brokers facilitate the exchange process

steps of the selection process

1. obtaining application form 2. conducting initial and follow-up interviews 3. giving employment tests 4. conducting background investigations 5. obtaining results from physical exams 6. establishing trial periods

financial activities include

1. preparing budgets 2. doing cash flow analysis 3. planning for expenditure of funds on assets

what year did American manufacturing reach its peak

1953/postwar

materials requirement planning (MRP)

A computer-based production management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place.

Enterprise Resource Planning (ERP)

A newer version of MRP, combines computerized functions into a single integrated software program using a single database.

JIT inventory control

A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line.

affirmative action

Employment activities designed to "right past wrongs" by increasing opportunities for minorities and women.

contingent workers

Include part-time and temporary workers, seasonal workers, independent contractors, interns and co-op students.

Statistical Process Control (SPC)

The process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph

recruitment

The set of activities used to obtain a sufficient number of the right employees at the right time.

formal organization

The structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts.

computer-integrated manufacturing (CIM)

The uniting of computer-aided design with computer-aided manufacturing.

managing change

a critical managerial function

contractual distribution system

a distribution system in which members are bound to cooperate through contractual agreements

administered distribution system

a distribution system in which producers manage all of the marketing functions at the retail level

Certifies Public Accountant (CPA)

accountant who has passed a series of examinations established by the AICPA

public accountant

accountant who provides his or her accounting services to individuals or businesses on a fee basis

private accountant

accountant who works for a single firm/organization

financial accounting

accounting info and analyses prepared for people outside the organization

government and not-for-profit accounting

accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget

managerial accounting

accounting used to provide information and analyses to managers inside the organization to assist them in decision making

buying merchandice on credit

accounts payable

collecting payment from customers

accounts recievable

intermediaries can be eliminated, but their ______ cannot

activites

information utility

adding utility by opening two-way flows of info between marketing participants

place utility

adding value by having products where people want them

service utility

adding value by providing fast, friendly service during and after the sale and by teaching customers how to best use products over time

time utility

adding value to products by making them available when needed

production management

all the activities managers do to help their firms create goods

degree of centralization

amount of decision-making power vested in top management should vary by circumstances

tax accountant

an accountant trained in tax law and responsible for preparing tac returns and developing tax strategies

job sharing

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

tall organizational structure

an organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management

americans with disabilities act of 1990 (ada)

applicants who are disabled be given the same consideration for employment as people without disabilities

facility layout

arrangement of resources in the production process

ratio analysis

assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements

outsourcing

assigning functions to outside organizations

fringe benefits

benefits to employees beyond base wages

capital budget

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

operating/master budget

budget that ties together all of a firm's other budgets and summarizes its proposed financial activities

in what economy is adjusting to changing markets a normal function

capitalist economy

financing

cash raised from the issuance of new debt or equity capital/cash used to pay business expenses, past debts, or company dividends

operations

cash transactions associated with running the business

investments

cash used in or provided by the firm's investment activities

acid-test ratio

cash+accounts receivable+market securities/ current liabilities

factory processes

change raw materials and parts into goods

ISO 14001

collection of the best practices for managing an organization's impact on the environment

ISO 9001

common name given to quality management and assurance standards

channels of distribution enhance...

communication flows and the flow of money and title to goods

benchmarking

comparing an organization's practices, processes, and products against the world's best

quality

consistently producing what the customer wants while reducing errors before and after delivery to the consumer

inventory turnover ratio

cost of goods sold/average inventory

production

creation of finished goods and services using factors of production

current ratio

current assets/current liabilities

division of labor

deciding what work needs to be done and dividing up tasks

flexible manufacturing

designing machines to do multiple tasks so they can produce a variety of products

cash flow

difference between cash coming in and cash going out of a business

reverse discrimination

discrimination against dominant or majority group members in hiring/promoting

exclusive distribution

distribution that sends products to only one retail outlet in a given geographic area

job specialization

dividing tasks into smaller jobs

possession utility

doing whatever is necessary to transfer ownership from one party to another

vestibule training

done in schools where employees are trained on equipment similar to that used on the job

unity of command

each worker is to report to only one boss

staff personnel

employees who advise and assist line personnel in meeting their goals

line personnel

employees who are part of the chain of command responsible for achieving organizational goals

the final step in financial planning is to ______ ______ ______

establish financial controls

cash budget

estimates cash inflows and outflows during a particular period like a month or a quarter

independent audit

evaluation and unbiased opinion about the accuracy of a company's financial statements

performance appraisal

evaluation that measures employee performance against established standards to make decisions about promotions, compensation, additional training, or firing

civil rights act of 1991

expanded remedies available to victims of discrimination

budget

financial plan that sets forth management's expectations and allocates the use of resources throughout the firm

statement of cash flows

financial statement that reports cash receipts and disbursement relates to the firm's three major activities

Initial Public Offering (IPO)

first time a company offers to sell its stock to the general public

cash flow forecast

forecast that predicts cash inflows and outflows in future periods, usually months or quarters

finance

function in a business that acquires funds for the firm and manages funds within the firm

purchasing

function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for quality goods and services

core competencies

functions that the organization can do as well or better than any other organization in the world

debt financing

funds raised through forms of borrowing that must be repaid

equal employment opportunity act (eeoa)

gave the EEOC broad powers to regulate equal employment opportunity

line of credit

given amount of unsecured short-term funds a bank will lend to a business

Subordination of individual interest to general interest

goals of the organization should be connsidered more important than personal goals

in the service industry, operations management is about creating a _____ ________ for those who use the service

good experience

cross functional self managed teams

groups of employees from different departments who work together on a long-term basis

return on equity definition

how much was earned for each dollar invested by owners

merchant wholesalers

independently owned firms that own the goods they handle

digital natives

individuals who grew up with the internet and cell phones

manufacturers often choose sites that are close to ______ ______ or to the right kind of _______

inexpensive labor/ labor

retailer

intermediary that sells to consumers

reverse logistics

involves bringing goods back to the manufacturer because of defects or for recycling materials

inbound logistics

involves bringing raw materials, packaging, other goods and services, and info from suppliers to producers

outbound logistics

involves managing the flow of finished products/ info to business buyers and ultimate consumers

financial management

job of managing a firm's resources so it can meet its goals and objectives

internal auditors usually checks on

journal, ledgers, and financial statements

factors of production

land, labor, capital, entreprenuership and knowledge

chain of command

line of authority that moves from the top of a hierarchy to the lowest level

secured loan

loan backed by a collateral

unsecured loan

loan that doesn't require any collateral

agents maintain ______ relationships with the people they represent

long-term

capital expenditures

major investments in tangible long-term assets

Cheif Financial Officer (CFO)

manager in charge of financial operations

equity

manager should teat employees and peers with respect and justice

authority

managers should give orders and expect them to be carried out

financial managers

managers who examine financial data prepared by accountants and recommend strategies for improving financial performance

Supply Chain Management

managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations involved in the supply chain

agents/brokers

marketing intermediaries that bring buyers and sellers together and assist in negotiating an exchange but do not take title to the goods

wholesaler

marketing intermediary that sells to other organizations

order

materials and people should be places in the proper location

leverage ratios

measure degree to which a firm relies on borrowed funds in its operations

basic earnings per share definition

measures amount of profit earned by a company for each share of common stock it has outstanding

debt to owner's equity ratio definition

measures degree to which the company is financed by borrowed funds that must be repaid

inventory turnover ratio definition

measures speed of inventory moving through the firms and its conversion into sales

acid-test ratio/ quick ratio definition

measures the cash, marketable securities, and receivables of the firm, to its current liabilities

equity financing

money raised from within the firm

venture capital

money that is invested in new or emerging that are percieved as having great profit potential

materials handling

movement of goods from within a warehouse, from warehouses to factory floor, and from the factory floor to various workstations

basic earnings per share

net income after taxes/ number of shares common stock outstanding

return on equity

net income after taxes/ total owners' equity

return on sales

net income/net sales

traditional organizations

not designed to be responsive to the consumer

compensation

one of the main marketing tools used to attract qualified employees

hierarchy of authority

one should know to whom to report

firm's three major activities

operations, investments, financing

overall objectives of financial planning

optimize profits and make the best use of money

matrix organization

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

decentralized authority

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

flat organizational structure

organization structure that ha a few layers of management and a broad span of control

inverted organization

organization that has contact people at the top and the chief executive officer at the bottom of the organization chart

line organization

organization that has direct two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with all people reporting to only one supervisor

retailer

organization that sells to consumer

marketing intermediaries

organizations that assist and moving goods and services from producer to business/ business to consumer

centralized authority

organizing structure in which decision-making authority is maintained at the top level of management at headquarters

americans with disabilities amendments act

overturned supreme court decisions that had reduced protections for people with disabilities

process manufacturing

part of the production process that physically/chemically changes materials

assembly process

part of the production process that puts together components

core time

period when all employees are expected to be at their job stations

logistics

planning, implementing, and controlling the physical flow of materials, final goods, and related info from points of origin to points of consumption to meet customer requirements at a profit

trade credit

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

real time

present moment/actual time when something takes place

risk/return trade-off

principle that the greater the risk a lender takes in making a loan, the higher the interest rate required

financial control

process in which a firm periodically compares its actual revenues, costs, and expenses with its budget

continuous process

process in which long production runs turn out finished goods over time

intermittent process

process in which production is short and machines are changed frequently to produce different products

facility location

process of selecting a geographic location for a company's operations

factoring

process of selling accounts receivable for cash

departmentalization

process of setting up departments to do specialized tasks

management development

process of training and educating employees to become good managers and then monitoring the progress of their managerial skills over time

who is form utility normally performed by

producers

mass production

producers make a large number of limited variety products at a low cost

civil rights act of 1964

prohibits discrimination in corporate acts based on race, religion, creed, sex, or national origin

term-loan agreement

promissory note that requirers the borrower to repay the loan in specified installments

age discrimination in employment act

protects individuals who are 40 years or older from discrimination based on age

intensive distribution

puts products into as many retail outlets as possible

six sigma quality

quality measure that allows only 3.4 defects per million opportunities

leverage

raising needed funds through borrowing to increase a firm's rate of return

cost of capital

rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders

restructuring

redesigning an organization so that it can more effectively and efficiently serve its customers

bureaucracy

reliance on rules

retail sale

sale of goods and services to consumers for personal use

wholesale sale

sale to businesses and institutions for use in the business, wholesalers, or retailers for reuse

direct selling

selling to consumers in their homes or workplaces

selective distribution

sends products to only a preferred group of retailers in an area

U.S. is now largely driven by a

service economy

what is the most important utility for retailers

service utility

organization chart

shows who is accountable for tasks and who reports to whom

accountant

skilled technician who takes measure of a company's health and writes a report

operations management

specialized area in management that converts resources (including human resources) into goods/services

espirit de corps

spirit of pride and loyalty should be created

job analysis

study of what is done by employes who hold various jobs

job description

summary of the objectives of a job, type of work, responsibilities and duties, working conditions, and relationship of the job to other functions

mass customization

tailoring products to meet the needs of inidividual customers

form utility

taking raw materials and changing their form so they become useful products

brokers are usually hired on a ______ basis

temporary

virtual corporation

temporary networked organization made up of replaceable firms that join and leave as needed

financial planning is a key responsibility of who

the financial manager

auditing

the job of reviewing and evaluating the information used to prepare a company's financial statements

span of control

the optimum number of subordinates a manager supervises

human resource management

the process of determining human resource needs to achieve organizational goals

Statistical Quality Control (SQC)

the process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning

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

economies of scale

the situation in which companies can reduce their production costs if they can purchase raw materials in bulk

informal organization

the system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization

computer-aided manufacturing (CAM)

the use of computers in the manufacturing of products

utility

the want-satisfying ability/value that organizations add to goods/services to make products more useful or accessible

channel of distribution

the whole series of marketing intermediaries that join together to transport/store goods from producers to consumers

intermediary organizations survived because...

they perform functions faster and cheaper

debt to owners' equity ratio

total liabilities/owner's equity

ways to fail financially

undercapitalization, poor cash flow, inadequate expense control

computer-aided design (CAD)

use of computers in the design of products

networking

using communications technology and other means to link organizations and allow them to work together on common objectives

although intermediaries add costs to products, these costs are usually offset by _____ they create

value

corporate distribution system

where all the organizations in the channel of distribution are owned by one firm

organizational/corporate culture

widely shared values within an organization that provide unity

flextime plan

work schedule that gives employees some freedom to choose when to work, as long as they work the number of required hours or complete assigned tasks

International Organization for Standardization (ISO)

worldwide federation of national standards bodies that set the global measures for the quality of individual products

job specifications

written summaries of minimum qualifications required of workers to do a job