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