Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
308 Cards in this Set
- Front
- Back
|
Business ethics |
standards of conduct and moral values regarding right and wrong actions in the work force (businesses that want to be long-term practice this) |
|
|
social responsibility |
the enhancement of society'd welfare through philosophies, policies, procedures, and actions. - balance between doing what is right and what is profitable |
|
|
corporate social responsibility |
companies realize that they have to work harder to gain the trust of the public, and this movement will benefit everyone |
|
|
Although the Ethics Resources Center found that workplace misconduct is at an all time __________, workers also felt the pressure to ____________ in the challenging economy |
1. all time LOW 2. cut corners to save money and get the job |
|
|
Sarbanes-Oxley Act of 2002 |
federal legislation designed to deter and punish corporate and accounting fraud and corruption and to protect workers and shareholders through enhanced financial disclosures, criminal penalties on CEOs and CFOs. - companies are now required to publish their code of ethics if they have one and inform the public of any changes ever made |
|
|
what do ethics compliance officers do? |
Responsible for... 1. conducting employee training programs that help spot potential fraud and abuse within the firm 2. investigating sexual harassment and discrimination charges 3. monitoring any potential conflicts of interest |
|
|
What were the 2020 goals made by Coca-Cola? |
1. economically empower 5 million women entrepreneurs across its chain 2. meet water use and efficiency reduction and replenishment goals 3. offer more than 800-low and no-calorie options worldwide or 25% of its global product portfolio |
|
|
What is the three-pronged approach to ethics and social responsibility most companies use? |
1. engaging in traditional corporate philanthropy, which involves giving to worthy causes 2. anticipating and managing risks 3. identifying opportunities to create value by doing the right thing |
|
|
What are the three stages in which people develop ethical standards? |
1. preconventional: looking out for own interests. rules are only followed out of fear or hope of reward 2. conventional: considers interests of others in making decisions. rules are followed because it is apart of belonging to the group 3. post-conventional: considers personal, group and societal interest |
|
|
What are the four most common ethical challenges that business people face? |
1. conflict of interest 2. honesty and integrity 3. loyalty versus truth 4. whistle-blowing |
|
|
Explain conflict of interest and how do you prevent it? |
- situation in which an employee must choose between a business's wellbeing and personal gain. - such as taking on two competing clients, bribes, or having a personal bias in a business situation - two ways to handle conflict of interests are 1. avoid them 2. disclose them |
|
|
Explain honesty and integrity and give examples of problems with it in the work force |
integrity is adhering to deeply felt ethical principles in business situations, such as doing what you say you're going to do and accepting responsibility for mistakes - problems include lying on resumes, stealing office supplies, using up internet time for personal business |
|
|
Explain whistle-blowing |
an employee's disclosure to company officials, government authorities or the media of illegal, immoral or unethical practices committed by an organization |
|
|
What is the structure of an ethical environment? (Pyramid) |
Ethical Leadership Ethical Action Ethical Education base-- Ethical Awareness |
|
|
Explain code of conduct |
formal statement that defines how an organization expects its employees to resolve ethical issues |
|
|
Human Resource Management |
attracts, develops, and retains the employees who can perform the activities necessary to accomplish organizational objectives |
|
|
What are the three objectives of human resource management? |
1. providing qualified, well-trained employees for the organization 2. maximizing employee effectiveness in the organization 3. satisfying individual employee needs through monetary compensation, benefits, opportunities to advance and job satisfaction |
|
|
What are the five responsibilities of human resource management? |
1. employee recruitment and selection 2. planning for staffing needs 3. employee separation 4. employee compensation and benefits 5. employee training and performance evaluation |
|
|
What skills are firms currently looking for in candidates? |
social media management, marketing research, mobile application development, data engineering, and talent acquisition |
|
|
Steps in the recruitment and selection process |
1. identify job requirements 2. choose sources of candidates 3. review applications and resumes 4. interview candidates 5. conduct employment tests and check references 6. conduct follow-up interviews 7. select a candidate and negotiate an offer |
|
|
What are the sources people use to find candidates? |
- online sites - schools - employee referrals - promotion from within - colleges - want ads |
|
|
What is negotiated when selecting a candidate and presenting an offer? |
- compensation and benefits - job performance expectations - accommodations for disabilities |
|
|
Title VII of the Civil Rights Act of 1964 |
prohibits employers from discriminating against applicants based on their race, religion, color, sex or national origin |
|
|
American Disabilities Act of 1990 |
prohibits employers from discriminating against disabled applicants |
|
|
Civil Rights Act created what organization? |
The EEOC (Equal Employment Opportunity Commission) that investigates discrimination complaints and help set up affirmative action programs to increase jobs for minorities and women |
|
|
The cost of hiring the wrong top-level manager amounts to ______________ the candidates annual pay |
24 times |
|
|
On the Job Training |
prepares employees for job duties by allowing them to perform tasks under the guidance of experienced workers (apprenticeship) |
|
|
Classroom and Computer-Based Training |
classroom instructions such as lectures, conferences, workshops or seminars - reduced cost of training - learn at their own pace - simulation of work environment |
|
|
Management Development Program |
provides training designed to improve skills and broaden the knowledge of current or future managers and executives |
|
|
performance appraisals |
evaluation of and feedback on an employee's |
|
|
a performance review has to meet these three pieces of criteria in order to be effective: |
1. be linked to organizational goals 2. be based on objective criteria (not subjective) 3. take place in the form of a two-way conversation |
|
|
How to prepare for a performance interview (4 things) |
1. know yourself 2. think about your future 3. provide details 4. truth can be hard |
|
|
360-degree performance review |
a process that gathers feedback from a review panel of 8-12 including co-workers, supervisors, team members, subordinates, and sometimes customers. - benefits employee because more invovled in the process and understand one's own strength and weaknesses more |
|
|
Compensation |
how much employees are paid in money and benefits - one of the most highly charged issues faced by human resource managers |
|
|
the amount that employees are paid/benefits they receive heavily influences.... |
where they live, what they eat and how they spend their leisurely time, and job satisfaction |
|
|
Explain the difference of wages versus salaries |
wages: based on an hourly rate of pay or amount of work accomplished salaries: calculated periodically (weekly or monthly) and the amount of pay doesn't fluctuate with the amount of hours worked |
|
|
An effective compensation system should.... |
attract well-qualified workers, keep them satisfied in their jobs and inspire them to succeed |
|
|
Lilly Ledbetter Fair Pay Act of 2009 |
gives workers more time to file a complaint for pay discrimination |
|
|
Firms base their compensation policies on what factors? (5) |
1. what the competing companies are paying 2. government regulation 3. cost of living 4. company profits 5. an employee's productivity or performance |
|
|
What are the four forms of incentive compensation used by firms? |
1. profit sharing 2. gain sharing 3. lump slum bonuses and stock options 4. pay for knowledge |
|
|
Explain the incentive compensation "profit sharing" |
awards bonuses based on company profits |
|
|
Explain the incentive compensation "gain sharing" |
when companies share the financial value of productivity gains, cost savings or quality improvements with their workers |
|
|
Explain the incentive compensation "lump slum and stock options" |
includes a one-time cash payment and the right to purchase stock in the company based on performance |
|
|
Explain the incentive compensation "pay for knowledge" |
distributes wage or salary increases as employees learn new job tasks |
|
|
Explain employee benefits |
benefits such as vacation time, retirement plans, profit-sharing, health insurance, gym membership, child and elder care, and tuition reimbursement |
|
|
Wages and salaries account for about _____% of a typical employee's earnings, and about _____% takes form of employee benefits |
wages/salaries: 70% benefits: 30% |
|
|
The Family and Medical Leave Act of 1993 |
requires covered employers to offer up to 12 weeks of unpaid, job-protected leave to eligible employees |
|
|
Explain flexible benefits plans |
also called cafeteria plans, offers employees a choice of benefits, including different types of medical insurance, dental and vision plans and life and disability insurances - employees receive a set allowance (flex dollars) to pay for benefits depending on their specific needs |
|
|
Explain PTO account for employees |
Paid Time Off instead of set days off like holidays, employees use days from their PTO account without having to explain why they need the time - advantage is the freedom it gives workers to make their own choices - disadvantage is it is an expensive benefit for employers |
|
|
Different types of flexible work plans: |
1. compressed workweeks 2. job sharing 2. telecommuting at home |
|
|
What is flextime? |
allows employees to set their own work hours within certain parameters - example: rather than 8am-5pm work schedule, everyone works between the core hours of 10am-3pm and people can chose to show up and go home early or vice versa |
|
|
What is employee separation and turnovers? |
a broad term covering the loss of an employee for any reason, voluntary or involuntary - a turnover is when an employee leaves a job |
|
|
What is a voluntary turnover? |
occurs when the employee resigns, perhaps to take another job, start a new business, or retire However, it could be because of a lack of career opportunities , fear of upcoming layoffs, low pay etc. |
|
|
What is an involuntary turnover? |
occurs when employees are terminated because of poor job performance or unethical behavior - could also be because of the firm downsizing |
|
|
Explain downsizing |
the process of reducing the number of employees within a firm by eliminating jobs - can be accomplished through early retirement plans or voluntary severance programs - downsizing doesn't guarantee improvements |
|
|
Sometimes when a downsizing occurs the firm could experience these negative effects: (5) |
1. anxiety, health problems, low morale, reduced productivity among remaining workers 2. diminished trust in management 3. loss of institutional memory and knowledge 4. domino effect of the local economy, unemployed workers have less money to spend, creating less demand and therefore more layoffs |
|
|
Explain outsourcing |
one way in which firms shrink themselves, involves transferring jobs from the inside of the firm to the outside. - jobs are typically outsourced include office maintenance, deliveries, foods service, and security - other jobs could be manufacturing, design, IT, and accounting |
|
|
Explain reshoring |
a recent reversal of the outsourcing trend, bringing back work to the US because is slowly becoming cheaper than in foreign countries to product efficiently and financially |
|
|
What is the process of motivation? (4 stages) |
1. Need 2. Motivation 3. Goal-directed behavior 4. Need satisfaction |
|
|
Maslow's Hierarchy of Needs leans heavily on these three assumptions: |
1. people's needs depend on what they already possess 2. A satisfied need is not a motivator; only needs that remain unsatisfied can influence behavior 3. people's needs are arranged in a hierarchy of importance; once they satisfy one need, at least partially, another emerges to take its place |
|
|
What is Maslow's Hierarchy of needs? (list the pyramid) |
|
|
|
Explain Frederick Herzberg's two factor model of motivation |
1. hygiene factors (maintenance factors) related to not the job itself but the job environment such as pay, job security, working conditions, status, interpersonal relations, company policies etc 2. motivator factors are related to the specific aspects of the job, including job responsibilities, achievement and recognition, and opportunities for growth |
|
|
hygiene factors to motivation are __________ while motivator factors are ____________ |
extrinsic, intrinsic |
|
|
Explain Victor Vroom's expectancy theory and the three factors that determine people's efforts |
1. a person's subjective prediction that a certain effort will lead to the desired result 2. the value of the outcome (reward) to a person 3. the person's assessment of how likely a successful performance will lead to desirable reward |
|
|
Explain the graph for Vroom's expectancy theory |
|
|
|
Explain the Equity Theory |
about a person's perception of fair and equitable treatment in comparison to co-workers 1. if employees feel they are under-rewarded for their effort in comparison to others, they might decrease their effort to restore balance 2. if employees feel they are over-rewarded they will feel guilty and put in more effort to restore equity and reduce guilt |
|
|
Explain the Goal-setting Theory |
says that people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement. Must be realistic, acceptable and not vague |
|
|
What are the four components of Goal-setting theory? |
1. goal specificity 2. performance feedback 3. goal difficulty 4. goal acceptance |
|
|
What is the MBO approach at Peter Drucker introduced for management/goal-setting? |
Management by Objectives: - a systematic approach that allows managers to focus on attainable goals and attain the best results for the organization using its resources |
|
|
What are the principles for the MBO that managers and employees collaborate over? (5) |
1. a series of related organizational goals and objectives 2. specific objectives for each person 3. participative decision-making 4. a set time period to accomplish goals 5. performance and evaluation feedback |
|
|
what is job enlargement? |
a job design that expands an employee's responsibilities by increasing the number and variety of tasks |
|
|
what is job enrichment? |
involves an expansion of job duties that empowers an employee to make decisions and learn new skills leading toward career growth |
|
|
what is job rotation? |
involves systematically moving employees from one job to another, increases the range of activities by introducing workers to more jobs and therefore more tasks - goal is to increase employee interest and learn more about the company |
|
|
What is the manger's basic level assumptions with Theory X? |
assumes that employees dislike work and try to avoid it whenever possible, therefore managers must coerce them to do their jobs. Believe that average workers prefer to receive instructions, avoid responsibility and take little initiative, and views money/security as the only valid motivators |
|
|
What is the manger's basic level assumptions with Theory Y?
|
assumes that the typical person likes works and will seek to accept greater responsibility, and should be given the opportunity to participate in decision making. Emphasizes self-control and self-direction rather than constant super vision |
|
|
what is the manger's basic level assumptions with Theory Z?
|
a blend of American and Japanese management where workers are viewed as the key to increased productivity for the company and improved quality of work like for employees |
|
|
About _________ U.S. workers belong to labor unions, just over ____% of the nation's full-time workforce |
14.5 million, 11% |
|
|
The largest labor union in the US is... |
National Education Association, 3 million members |
|
|
National Labor Relations Act of 1935 |
The Wagner Act - legalized collective bargaining and required employers to negotiate with elected representatives of their employees. - Established National Labor Relations Board (NLRB) to supervise union elections and unfair labor practices such as firing workers, refusing to hire sympathizers, threatening to close workers unionize etc. |
|
|
Fair Standards Act of 1938 |
set the first minimum wage (25 cents an hour) and maximum basic workweek - also outlawed child labor |
|
|
Taft-Hartley Act of 1947 |
Labor-Management Relations Act - limited union's power by banning such practices as... - coercing employees to join unions - coercing employers to discriminate against non-member employees - discrimination against non-member employees - picketing/boycotting/strikes for illegal purposes - excessive initiation fees |
|
|
Landrum-Griffin Act of 1959 |
Labor-Management Reporting and Disclosure Act - amended the Taft-hartley Act to promote honest and democracy in running union's internal affairs - required unions to set up a constitution and bylaws and to hold regularly scheduled elections of union officers by secret ballot - set forth a bill of rights for members - required union to submit certain financial reports to the US Secretary of labor |
|
|
what is collective bargaining? |
the process of negotiation between management and union representatives - usually over union contracts that cover a two-three year period |
|
|
most labor-management negotiations result in.... |
a signed contract |
|
|
What is a "grievance?" |
a complaint by a single employee or by an entire union that management is violating some portion of the union contract - might involve a dispute about pay, working hours, or the workplace itself |
|
|
Grievance Procedure |
1. worker and union representatives present complaint to supervisor 2. union representatives meets with appropriate middle-management representatives 3. union representatives meets with appropriate top-management representative 4. complaint submitted to arbitration |
|
|
mediation is... |
the process of settling labor-managment disputes through an impartial third party - mediator does not make the final decision but can hear the whole story and make objective recommendations |
|
|
arbitration is... |
when a dispute remains unresolved after mediation, arbitrator makes a legally binding decision with respect to both parties |
|
|
what are the chief union tactics? |
1. strikes (walk out)
2. picketing 3. boycotts |
|
|
How does management battle unions? |
- typically try to recruit strikebreakers in highly visible fields - transfer supervisors and other nonunion employees to continue operations during a strike - "Lockout": a management strike that is intended to put pressure on union members by closing the firm |
|
|
What is production? |
use of resources, such as workers and machinery, to convert materials into finished goods and services |
|
|
what is the "production and operations management"? |
oversees the production process by managing people and machinery in converting materials and resources into finished goods and services |
|
|
what is mass production? |
a system for manufacturing products in large quantities through effective combinations of employees with specialized skills, mechanization and standardization - makes products in large quantities at lower prices - cars, computers, televisions, books, homes, etc |
|
|
explain the three components of mass production (specialization, mechanization, standardization) that creates the assembly line |
specialization: divid workforce into simple components so employees concentrate on performing one task mechanization: machines perform much work previously done by people standardization: producing uniform, interchangeable goods. standardized part simplify replacement of defective or worn out components |
|
|
What is flexible production? |
involves using information technology to share the details of customer's orders, programmable equipment to fulfill the orders and skilled people to carry out whatever tasks are needed to fill a particular order - more cost effective for smaller runs - requires a lot of communication |
|
|
Henry Ford revolutionalized the auto industry with ___________ production, but now the auto industries are leaning towards ___________ production |
mass, flexible |
|
|
What is customer-driven production? |
evaluates customer demands in order to make the connection between products manufactured and products bought. - uses information systems between factories and retailers using sales data - creates short term forecasts for demands |
|
|
Another customer-driven approach to production other than short term production schedule is... |
to just make the product only when a customer orders it - whether its a taco or a tablet |
|
|
what is analytic versus synthetic systems of production? |
analytic: reduces raw material to its component parts to sell (corn to corner sweetener or animal feed) synthetic: combines/transforms raw materials to make a finished product (drugs, soup, computer chips etc) |
|
|
what is a continuous production process versus an intermittent production process? |
continuous: generates finished products over lengthy period of time, shut downs of equipment costly and damaging (steel industry, nuclear power plants, etc) intermittent: generates products in short production runs, shutting down machines frequently or changing configurations to produce different products (plumbers, dentists, accountants, etc because customers require different services) |
|
|
What is LEED? |
Leadership in Energy and Environmental Design - voluntary certification program administered by the US green building council aimed at promoting the most sustainable construction processes available - involves meeting standards in energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality (air/natural light) etc |
|
|
what is a robot? |
a re-programmable machine capable of performing a variety of tasks that require the repeated manipulation of materials and tools - can repeat the same task over and over again without varying movements or getting bored |
|
|
pick-and-place robot versus so-called field robot |
pick-and-place: moves in only two or three directions picking one thing up and moving it to another place field: assist people in non-manufacturing, often hazardous, environments such as nuclear power plants, international space station, military battle fields |
|
|
CAD and CAM |
CAD - allows engineers to design products on computer screen instead of a traditional drafting system (design) CAM - picks up where CAD left off and analyzes the steps that a machine must take to produce the product (instructions) |
|
|
What is an FMS? |
Flexible Manufacturing System - production facility that workers can quickly modify to manufacture different products - consist of computer-controlled machining centers to produce metal parts, robots to handle parts, and remote controlled carts to deliver parts - machines can be reprogrammed while running |
|
|
What is CIM? |
- the integration of CAD/CAM, FMS, computers and other technologies - production system in which computers help workers design products, control machines, handle materials and control production process - automation organized around a computer |
|
|
CIM saves money by... |
combining small jobs into one larger job - however does not mean more automation and fewer people, just production centralized around computer workings |
|
|
the decision on where to locate a production facility depends on... |
transportation, human and physical factors |
|
|
What are transportation factors we must take into account when deciding the production facility's location? |
- proximity to markets - proximity to raw materials - availability of transportation alternatives |
|
|
What are physical factors we must take into account when deciding the production facility's location?
|
- water supply - energy - hazardous wastes |
|
|
What are human factors we must take into account when deciding the production facility's location?
|
- labor supply - local zoning regulations - community living conditions - taxes |
|
|
what is an environmental impact study? |
- analyzes how a proposed plant would affect the quality of life in surrounding area. Covers.. - transportation facilities - energy requirements - water and sewage treatment needs - natural plant life and wildlife - water - air - noise pollution |
|
|
A production and operations manager must consider these following factors when deciding a location (11) |
1. proximity 2. insurance/taxes 3. availability of employee living needs 4. cost/skill/size of labor force 5. space for future needs 6. distance to market 7. community thoughts 8. transportation 9. climate/environment 10. energy services 11. government incentives |
|
|
Production and operations managers perform these four tasks: |
1. plan the overall production process 2. determine the best layouts for the firm's facilities 3. implement the production plan 4. control the manufacturing process to maintain the highest possible quality |
|
|
production departments focus on planning the the production process when they... (2 things) |
1. convert original product ideas into final specifications 2. design the most efficient facilities to produce those products |
|
|
explain a process layout in the production facility |
groups materials and equipment according to their functions - the work-in-process moves around the plant to reach different work stations - produces a variety of non-standard items in relatively small batches |
|
|
explain a product layout in the production facility
|
(assembly line) - sets up production equipment along a product-flow line, the work-in-progress moves along this line past workstations - produces large numbers of similar items, but not flexible |
|
|
explain a fixed-position layout in the production facility
|
places the product in one spot, and workers, materials and equipment come to it - for large, bulky, heavy or fragile products - ex: bridges, shipbuilding, aircraft, aerospace, oil drilling |
|
|
explain a customer-oriented layout in the production facility
|
used by service firms, arranges its facilities to enhance the interactions between customers and its services example for process: banks, libraries, dental offices example for fix-position: doctors and nurses are brought to patients in emergency rooms |
|
|
what are the five stages in the manager's task of production and manufacturing control? |
1. planning
2. routing 3. scheduling 4. dispatching 5. follow-up |
|
|
While implementing the production plan, managers....(3) |
1. decide whether to make, buy or lease components 2. select the best suppliers for materials 3. control inventory to keep enough, but not too much, on hand |
|
|
what is "make, buy or lease"? |
choosing whether to manufacture a product or component in-house, purchase it from an outside supplier, or lease it. - decision depends on schedule, quality and quantity |
|
|
When selecting supplier, managers compare_____________ , __________ , _________ , and _____________ offered by competing companies |
quality, prices, dependability of delivery and services |
|
|
explain inventory control |
function requiring production and operations managers to balance the need to keep stock on hand to meet demand against the costs of carrying inventory |
|
|
what are perpetual inventory systems? |
systems that continuously monitor the amounts and locations of stock - typically rely on computers - many automatically generate orders at the appropriate times - reorders without human interaction |
|
|
what is vendor-managed inventory? |
when companies hand over their inventory control functions to suppliers, suppliers monitor the need for re-orders |
|
|
what are just-in-time systems? (JIT) |
a broad management philosophy that reaches the beyond the narrow activity of inventory control to influence the entire system of production and operations management - seeks to eliminate anything that does not add value in operations activities by providing the right part at the right place at just the right time (before its needed in production) |
|
|
What is "materials requirement planning" MRP |
a computer-based production planning system that lets a firm ensure that it has all the parts and materials it needs to produce its output at the right time and place in the right amounts |
|
|
What happens during the "planning" stage of production control? |
- determines the amount of resources (raw materials etc) an organization needs to produce a certain output
- a bill of listed materials needed - ensures availability of needed machines and personnel |
|
|
What happens during the "routing" stage of production control? |
- determines sequence of work throughout facility and specifies who will perform which aspect of work - depends on the nature of the good/service and the facility layout |
|
|
What happens in the "scheduling" stage of production control? |
develop timetables that specify how long each operation takes and when it should be performed - makes sure will meet due dates |
|
|
Gantt chart |
old method that tracks projected and actual work progress over time - shows status of product at a glance - simple |
|
|
PERT |
Program evaluation and review technique - seeks to minimize delays by coordinating all aspects of the production process - may consist of thousands of events and cover months of time |
|
|
What happens in the "dispatching" stage of production control? |
management instructs each department on what work to do and time allowed to do it - authorization, instructions, and lists job priorities |
|
|
what happens in the "follow-up" stage of production control? |
managers and employees or team members spot problems in the production process and come up with solutions - machinery malfunctions - delayed shipments - employee absenteeism |
|
|
when relating to goods or services, Quality is.... |
defined as being free of deficiencies - important because fixing, replacing or redesigning products is costly - can cost up to 20% of sales revenue |
|
|
what is benchmarking? |
determining how well other companies perform, aka their standards, performance metrics, best practices, quality, costs and time |
|
|
what is "quality control" |
involves measuring output against established quality standards - need these checks to spot defective products and avoid delivering inferior shipments to customers |
|
|
what is the "Six Sigma" concept? |
a company tries to make error-free products 99.9997 % of the time |
|
|
Whats the ISO? |
International Organization for Standardization - organization that develops and promotes international standards for business, government and society to facilitate global trade and cooperation - certification is not a requirement - develops standards but doesn't carry out auditing and certification |
|
|
ISO 9000 family of standards ISO 14000 family of standards |
9000: customer satisfaction 14000: environmental |
|
|
data versus information |
data: raw facts that may or may not be relevant information: knowledge gained from processing those facts into relevant information |
|
|
an information system is... |
an organized method of collecting, storing and communicating past, present and projected information on internal operations and external intelligence |
|
|
What is a CIO? |
A chief information officer, an executive responsible for managing a firm's information system and related computer technologies |
|
|
What are computer-based information systems? |
information systems that rely on computer and related technologies to store information electronically in an organized, accessible manner |
|
|
computer-based information systems consist of these four components: |
1. hardware 2. software 3. telecommunications and computer networks 4. data resource management |
|
|
Computer Hardware |
- machines like supercomputers and smartphones - input and output devices - storage devices |
|
|
Computer Software |
- operating systems such as Microsoft's Windows 8 and Linux - application programs like Adobe Acrobat and Customer Relationship Management - consumer software like Dropbox and Evernote - enterprise software like Salesforce.com and Workday |
|
|
Database |
heart of any information system - a centralized integrated collection of data resources - serves as an electronic filling cabinet |
|
|
Operational support systems |
information systems focused on the organization's activities for internal/external users - transaction processing systems - (physical) process control systems |
|
|
Management Support Systems |
information systems designed to support effective decision-making - management information systems (MIS) - decision support systems (DSS) - executive support systems (ESS) |
|
|
What is an "expert" information system? |
a computer program that imitates human thinking through complicated sets of if-then rules - applies human knowledge in a specific subject area to solve a problem |
|
|
Input versus output devices with hardware |
input: components that store and process data and perform calculations (keyboard and mouse) output: components that transmit or display documents and other results of computer system's work (monitor or printer) |
|
|
what are the four broad classifications for computers |
1. mainframe (super computer) 2. midrange (high-ed network servers) 3. personal computers (laptop and desktop) 4. hand-held devices (tablets and iphones) |
|
|
A _______________ is the heart of a midrange computer network, supporting applications and allowing the sharing of output devices, software, and databases among networked users |
A Server |
|
|
operating system versus application software |
operating system: software that controls the basic workings of a computer system application software: program that performs the specific tasks that the user wants to carry out, such as Powerpoint, Word, etc |
|
|
LAN's |
Local Area Networks - computer networks that connect machines within limited areas, such as a building or several nearby buildings - allows computers to share printers, documents and internet access |
|
|
WAN's |
Wide Area Networks - networks that tie larger geographical regions together by using telephone lines and microwave and satellite transmission - examples are AT&T and Verizon - WAN's conduct their own operations (equipment and services for transmission) |
|
|
Wi-Fi |
Wireless Fidelity - wireless network that connects various devices and allows them to communicate with one another though radio waves - any Wi-Fi devices can connect with internet at a "hot-spot" |
|
|
What is a Hot-spot |
locations within a wireless router and a high-speed internet modern |
|
|
Explain what an Intranet is |
similar to internet, but they limit access to employees or other authorized users - blocks outsiders without valid passwords by using firewall - relatively easy and inexpensive and can integrate computers running all different types of operating systems |
|
|
VPN's |
Virtually Private Networks - secure connections between two points on the internet - use firewalls and programs that encapsulate data to make them more secure during transit - less expensive to use than leasing its own lines |
|
|
VoIP |
Voice Over Internet Protocol - alternative to traditional telecommunication services - the VoIP telephone is connected to a personal computer with any type of broadband connection instead of a traditional phone lines - dials on the phone as usual, but transmission through the internet - can still talk with someone using traditional phone connections |
|
|
Examples of Cyber Crime are... |
- employees/outsider changing or inventing data to produce inaccurate/misleading information - employees/outsiders modifying computer programs to create false info, illegal transactions or insert viruses - unauthorized people accessing computer systems for own benefit or knowledge or just to see if they can |
|
|
Information system administrators implement two basic protections against computer crime are.... |
1. try to prevent access to their systems by unauthorized users 2. try to prevent the viewing of data by unauthorized users |
|
|
One in three robberies now involves... |
smart phones |
|
|
malware |
any malicious software program designed to infect computer systems - includes viruses, worms, Trojan horses, and spyware |
|
|
Viruses |
programs that secretly attach themselves to other programs (hosts) and change them or destroy data |
|
|
Worms |
small piece of software that exploits a security hole in a network to replicate itself - unlike viruses, worms don't need host programs to damage the computer |
|
|
Botnet |
a network of PC's that have been infected with one or more data-stealing viruses - computer criminals tie the infected computers into a network and sell it on the black market - used to commit identity theft, buy blocks of tickets, sell fake pharmaceuticals and attack the internet itself |
|
|
Trojan horse |
program that claims to do one thing but in reality does something else, usually malicious - ex: might claim to be a game but erases hard drive when opening it |
|
|
Spyware |
software that secretly gathers user information through the user's internet connection without her/his knowledge, usually for advertising purposes |
|
|
A study showed that ____ % of companies that lose their data will shut down within ______ months |
60% of companies, 6 months |
|
|
Disasters like these can disrupt even the most sophisticated computer information systems |
Natural disasters, power failures, equipment malfunctions, software glitches, human error and terrorist attacks |
|
|
disaster recovery planning |
- routinely backing up software and data - off-site data backup, whether its a separate physical location or online |
|
|
Five considerations for off-site data storage |
1. plan what data needs to be protected 2. backup schedule established 3. when transmitted off site, data must be protected by top level of security 4. care should be taken in selecting right security vendor 5. backup system should be continually tested and evaluated |
|
|
What is "The Internet of Everything"? |
a move beyond standalone devices and greater connectivity between items - consists of an entire Internet-connected ecosystem including TV's, cars, wearable tech devices |
|
|
Explain a distributed workforce and where they work |
employees no longer work in traditional offices but rather in what are called "virtual offices", including homes |
|
|
ASP |
Application Service Providers - an outside supplier that provides both the computers and the application support for managing information - can simplify complex softwares for consumers so it is easier for them to manage and use - then buyer can devote more time and resources to its core business instead of struggling with info systems |
|
|
explain "on-demand computing" |
also called utility computing - instead of purchasing and maintaining expensive software, firms essentially rent the software time from application providers and pay only for their usage of the software - similar to purchasing electricity for a utility |
|
|
explain "cloud computing" |
uses powerful servers to store applications software and databases - users access the software/databases via web using any computing hardware - Software as a Service is an example (SaaS) |
|
|
explain "grid computing" |
consists of a network of smaller computers running a special software - breaks down a large, complex job into smaller tasks and then distributes them to networked computers, then reassembles the results into a finished job |
|
|
How do businesses promote "Ethical Awareness" in their companies? |
- provide a code of conduct for the working environment - create simple standards a a framework for behavior - awareness is the foundation for an ethical climate |
|
|
How do businesses promote "Ethical Education" in their companies? |
- provide the tools employees need to evaluate options and arrive at suitable decisions - training programs - outsourced ethics and compliance programs - hypothetical ethical dilemmas - case studies and practical scenarios |
|
|
How do businesses promote "Ethical Action" in their companies? |
- provide approaches for decisions that turn into ethical actions - guidelines like "is it legal? would you feel bad"? - set reasonable goals that don't pressure workers into cheating to survive - provide support hotlines to reach decisions - ethical compliance officers |
|
|
How do businesses promote "Ethical Leadership" in their companies? |
- not just talk about ethical but demonstrate it in their actions - increased social responsibility on managers - base their actions on company's core values |
|
|
What are "stakeholders"? |
customers, investors, employees, and public affected by or with an interest in a company |
|
|
Businesses may exercise social responsibility because....(3) |
1. required by law 2. enhances company's image 3. believes it is the ethical course of action |
|
|
Now a days, factors contributing to a firm's social performance are... |
1. providing equal employment opportunities 2. respecting cultural diversity of employees 3. responding to environmental concerns 3. providing a safe and healthy workplace 4. producing high-quality and safe products 5. interaction with the community |
|
|
what are "social audits" |
a way companies measure social performance - formal procedure that identify and evaluate all company activities that relate social issues such as conservation, employment practices, environmental protection and philanthropy - informs managers how well the company is performing in those areas and may lead to revision |
|
|
Consumer Financial Protection Bureau |
CFPB - tasked with monitoring banks, credit unions, securities firms, and payday lenders by promoting fairness for consumer mortgages, credit cards and student loans |
|
|
Businesses have social responsibilities to four different categories of society |
1. to the general public 2. to customers 3. to investors and financial community 4. to employees |
|
|
What are companies' social responsibilities to the general public? (4) |
1. public health issues (obesity, substance abuse like steroids, tobacco and alcohol) 2. protecting the environment (energy, waste and natural resources, reduce pollution) 3. developing the quality of the workforce (truth wealth lies in the ppl, skills and education) 4. corporate philanthropy (support charitable and social causes) |
|
|
explain recycling and its uses |
- reprocessing used material for reuse - can provide much raw material that manufacturers need, conversing world's natural resources and reducing need for landfills - "shwopping" gently used clothes |
|
|
Green marketing |
a marketing strategy that promotes environmentally safe products and production methods - biodegradable - recyclable - refillable - ozone safe/friendly |
|
|
define "sustainable" |
the capacity to endure in ecology - solar energy - bio-diesel - wind power - geothermal energy - clean tech |
|
|
explain corporate philanthropy |
- effort of an organization to make a contribution to the communities in which it earns profit - cash contributions - donations of equipment and products - supporting the volunteer efforts of company employees |
|
|
explain "cause-related marketing" |
- companies align marketing efforts with their charitable giving, such as advertising and sponsorship |
|
|
explain consumerism and the rights it garners |
the public demand that a business consider the wants and needs of its customers in making decisions - based on the belief that consumers have certain rights: 1. to be heard 2. to be safe 3. to choose 4. to be informed |
|
|
product liability |
the responsibility of manufactures for injuries and damages caused by their products |
|
|
the Wheeler-Lea Act of 1938 |
refers to customer's to be informed of products and services - false or misleading advertising is a violation |
|
|
FDA |
Food and Drug Administration sets the standards for advertising conducted by drug manufacturers, eased restrictions for p |
|
|
What are the business's social responsibilities to their employees? |
- safety - quality of life issues - ensuring equal opportunity on the job - avoiding age discrimination - preventing sexual harassment and sexism |
|
|
Occupational Safety and Health Administration |
OSHA main federal regulatory force in setting workplace safety and health standards - mandates range from storing hazardous material to worker safety in industries such as construction, manufacturing and mining - tracks and investigates workplace accidents - can fine employers responsible |
|
|
explain a "sandwich generation" household |
those caring for two generations, their children and their aged parents |
|
|
Family and Medical Leave Act of 1993 |
"family leave" states that employers with 50 or more employees must provide unpaid leave up to 12 weeks annually for any employee who wants time off for the birth or adoption of a child, to become a foster parent, or to care for a seriously ill relative, spouse or self |
|
|
Civil Rights Act of 1991 |
makes it easier for workers to sue their employers for discrimination. Includes on-the-job issues such as sexual harassment, unfair promotions, and unfair dismissal |
|
|
explain "systematic discrimination" |
defines as a pattern or practice, policy and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company or geographic location |
|
|
Older aged workers versus younger workers benefits |
older: have skills younger workers are yet to require and enthusiasm because remain at job by choice younger: less medical bills and lower salary and benefit packages |
|
|
What are the two types of sexual harassment? |
1. when an employee is pressured to comply with unwelcome advances and request for sexual favors in return for job security, promotions and raises 2. comes from a hostile work environment in which an employee feels hassled or degraded because of unwelcome flirting, lewd comments or obscene jokes |
|
|
what should an effective harassment prevention program include? (4) |
1. issue a specific policy statement prohibiting sexual harassment 2. develop a complaint procedure for employees to follow 3. create a work atmosphere that encourages sexually harassed staffers to come forward 4. investigate ad resolve complaints quickly and take disciplinary action against harassers |
|
|
What does the Securities and Exchange Commission do? (SEC) |
- responsible for protecting investors from financial misdeeds - investigates suspicions of unethical or illegal behavior by publicly traded firms - investigates potential faulty accounting practices to show false financial resources and profits to investors - Regulation FD is a SEC rule |
|
|
What is Regulation FD? |
Regulation FD (Fair Disclosure) says companies must announce major information to the public about the company and not just select private investors
|
|
|
Why is international trade vital? |
companies can expand their markets, seek growth opportunities in other nations, and make their production and distribution systems more efficient, and reduce dependence on their homeland economies |
|
|
Business decisions to operate abroad depend on....(6) |
1. availability 2. price 3. quality of labor 4. natural resources 5. capital 6. entrepreneurship (the basic factors of production) |
|
|
absolute advantage versus a comparative advantage |
absolute: a country can make a product for which is can maintain a monopoly or can produce at a lower cost than any competitor comparative: if it can supply its products more efficiently and at a lower price than it can supply other goods, compared with the outputs of other countries |
|
|
what is a nation's "balance of trade"? |
the difference between exports and imports - trade surplus: a positive balance of trade where there are more exports than imports - trade deficit: a negative balance with more imports than exports |
|
|
what is a nation's "balance or payments"? |
overall flow of money into or out of a country - also affect by overseas loans and borrowing, international investments, profits from such investors and foreign aid payments - monetary inflows - monetary outflows = - positive number = surplus - negative number = deficit |
|
|
explain "exchange rate" |
the rate at which its currency can be exchanged for the currencies of other nations |
|
|
what factors are foreign exchange rates influenced by? |
1. domestic economic and political conditions 2. central bank intervention 3. balance-of-payments position 4. speculation over future currency values |
|
|
explain "floating exchange rates" |
- exchange rates change based off of supply and demand - currency traders create a market for the world's currencies based on each country's relative trade and investment prospects - governments sometimes intervene to adjust their exchange rates |
|
|
explain "devaluation" of a country's exchange rate |
drop in a currency's value relative to other countries or a fixed standard - used by some nations as a way to decrease prices and increase exports to stimulate foreign investments |
|
|
what are "hard currencies" and "soft currencies"? |
hard: currencies that owners can easily convert into other currencies - examples: euro, US dollar, and Japanese yen soft: cannot be easily converted - examples: Russian ruble |
|
|
What types of barriers are there to international trade? (3) |
1. social and cultural - language - values and religious attitudes 2. economic - currency shifts 3. legal and political - international regulations - trade restrictions |
|
|
what are the economic factors to consider when evaluating a country to be a candidate for an international business venture? (3) |
1. a country's size 2. per-capita income 3. stage of economic development |
|
|
what is a country's "infrastructure"? |
the basic systems of communications, transportation and energy facilities - can also consider the internet and technology |
|
|
when conducting business internationally, managers must be familiar with these three dimensions of the legal environment: |
1. U.S. Law 2. international regulations 3. laws of the countries in which they plan to operate |
|
|
What does the "Foreign Corrupt Practices Act" forbid? |
forbids US companies from bribing officials, political candidates or government representatives |
|
|
what are FCN treaties? |
Friendship, commerce and navigation treaties - address many aspects of international business relations like the right to conduct business in the partner's domestic market - or product standards, patents, trademarks, reciprocal tax policies, export controls international air travel and communications |
|
|
what are tariffs? |
taxes, surcharges or duties on foreign products. Both types make imports more expensive for domestic buyers - aka they seek to limit imports and level the playing field for local competitors 1. revenue: generate income for the government 2. raise a retail price of imported products to match or exceed the prices of similar domestic products |
|
|
what are non-tariff barriers? |
- quotas on imports - restrictive standards for imports - export subsidies |
|
|
what are quotas? |
limit the amounts of particular products that countries can import during specified time periods - limits may be set in quantities of the product like how many number of cars or bushels of wheat |
|
|
what is "dumping" during international trade? |
selling products abroad at prices below production costs or below typical prices in the home market to capture market share from domestic competitors - quotas help prevent this |
|
|
what is an "embargo"? |
- more severe than a quota - imposes a total ban on importing a specified product or even a total halt to trading with a certain country |
|
|
what is an "exchange control" during international trades? |
- form of administrative trade restriction - restriction on importation of certain products or against certain companies to reduce trade and expenditures of a foreign currency |
|
|
What is GATT? |
General Agreement on Tariffs and Trade - an international trade accord that has substantially reduced worldwide tariffs and other trade barriers |
|
|
what is WTO |
- the successor of GATT - 159 membered international institution that monitors GATT agreements and mediates international trade disputes - unlike GATT, WTO's decisions are binding on parties involved in disputes |
|
|
Whats the World Bank |
funds projects that build or expands nations' infrastructure such as transportation, education, and medical systems and facilities - imposes requirements on how to build their economies if asking for a loan |
|
|
Whats the IMF? |
The International Monetary Fund - an organization created to promote trade, eliminate barriers and make short-term loans to member nations that are unable to meet their budgets - created a year after the World Bank - operates as a last-resort for troubled nations |
|
|
what is a customs union versus a common market? |
customs union: sets up a free-trade area and specifies a uniform tariff structure for members' trade with non-member nations common market: (economic union) members go beyond customs union and try to bring all of their trade rules into agreement |
|
|
NAFTA |
agreement among US, Canada and Mexico to break down tariffs and trade restrictions - North America represent's the world's largest free trade areas - Mexico is the US's largest trading partner |
|
|
What is the Central America-Dominican Republic Free Trade Agreement? (CAFTA-DR) |
- free trade among the US, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic |
|
|
What is the EU? |
European Union - 28 countries of European economic alliance - represents 20% of world's GDP - goals include promoting economic and social progress, introducing European citizenship as a complement to a national citizenship and giving the EU a significant role in international affairs |
|
|
what are the three key decisions a company faces before deciding to go global? |
1. determining which foreign markets to enter 2. analyzing the expenditures required to enter a new market 3. deciding the best way to organize the overseas operations |
|
|
different strategies when going overseas: (3) |
1. exporting or importing (least risk and control) 2. entering into a contractual agreement such as franchising, licensing and subcontracting deals 3. direct investment in the foreign market through acquisitions, joint ventures or establishment of an overseas division |
|
|
Export trading companies |
special intermediaries that is contacted to find the product, monitor quality, packaging order for shipment, arranging transportation and completion between exporter and importer |
|
|
indirect versus direct exporting |
indirect: a company manufactures a product, such as an electronic component, that becomes a part of another product sold in foreign markets direct: a company seeks to sell its products in markets outside its own country (most common for first time going international) |
|
|
export management company |
rather than simply relying on export trading companies, can go to export management company for advice and expertise - international specialists that help the transaction (paperwork, contacts with local buyers, and comply with local laws) |
|
|
explain an offset agreement regarding exporting |
matches small businesses with a major international firm - basically makes the small firm a subcontractor to the larger one |
|
|
explain "countertrade" |
barter agreement whereby trade between two or more nations involves payment made in the form of local products instead of currency |
|
|
what is a foreign licensing agreement? |
international agreement which one firm allows another to produce or sell its product, or use its trademark, patent or manufacturing processes, in a specific geographical area in return for royalties or other compensation |
|
|
what is subcontracting? |
hiring local companies to produce, distribute or sell goods or services - allows foreign firms to take advantage of the subcontractor's expertise in local cultures, contacts and regulations - disadvantage is they cannot always control subcontractor's business practices |
|
|
Investing directly in production and marketing operations in a foreign country is.... |
the ultimate level of global involvement |
|
|
explain and "acquisition" |
a company purchases another existing firm in the host country - permits a largely domestic business operation to gain an international presence very quickly |
|
|
explain "Joint ventures" |
allows companies to share risks, costs, profits and management responsibilities with one or more host country nationals - by setting up an "overseas division" can work a a lot of its business overseas |
|
|
What is an MNC? |
Multinational Corporation - an organization with significant foreign operations -ex: Nike and Walmart |
|
|
global business (standardization) strategy |
a firm sells the same product in essentially the same manner throughout the world - modify their domestic business strategies by translating promotional brochures and product-use instructions into the language of the host nations - works for products with universal appeal like jewelry, chemicals and metals |
|
|
multidomestic (adaption) business strategy |
firm treats each national market in a different way - appeals to the customs, tastes and buying habits of particular national markets |
|
|
the financial system |
process by which money flows from savers and users - made up by households, businesses, government and financial institutions |
|
|
Explain the overview of the financial system |
- on the left side are savers (those with excess funds) - on the right side are users (those whose spending needs exceed their current income, so they have deficit) borrowers |
|
|
households are generally ________ whereas businesses and the government are _______ |
savers, users |
|
|
net worth |
the difference between what you ow and what you owe |
|
|
the greatest factor that plays into how a person saves is their... |
age - younger- users - older- savers |
|
|
directly and indirectly transfers |
directly: the user raises the needed funds directly from savers indirectly: through financial markets or financial institutions, investors or commercial banks |
|
|
securities |
financial instruments that represent obligations non the part of the issuers to provide the purchasers with expected stated returns on the funds invested or loaned |
|
|
money market instruments |
- debt security - short-term debt securities issued by governments, financial institutions and corporations - mature within one year from the date of the issue - issuer pays with interest - low risk securities - purchased by investors when they have cash surplus - treasury bills, commercial paper and bank certificates of deposit |
|
|
treasury bills |
short-term securities issued by the US Treasury and backed by the full faith and credit of the United States - sold with 30, 90, 180 or 360 days - min of 1,000$ - risk free and easy to re-sell |
|
|
commercial paper |
securities sold by corporations that mature in from 1 to 270 days from the date of issue - slightly riskier than Treasury Bills but still low |
|
|
a certificate of deposit |
CD a time deposit at the financial institution, such as commercial bank, savings bank or credit uniion - sizes and dates of maturity vary - not federally insured but can be sold quickly |
|
|
Bonds |
- bondholders are creditors of a corporation or government body - by selling bonds, a firm obtains long-term capital - federal state and local governments also acquire funds through bonds - usually between $1000-$25000 - claim the firm's assets and have a say before tockholders |
|
|
different types of bonds |
1. government bonds: sold by US Department of Treasury, federally insured and least risky (2, 3, 5, 7, or 10 years mature) 2. municipal bonds: issued by state or local governments (revenue and general obligation) no federal tax on interest payments 3. corporate bonds: based on the collateral (the property pledged by the borrower) |
|
|
explain the two types of municipal bonds |
1. revenue bond: a bond issue whose proceeds will be used to pay for a project that will produce revenue such as a toll road or bridge 2. general obligation bond: a bond whose proceeds are to be used to pay for a project that will to produce any revenue, such as a new police post |
|
|
secured versus debenture (unsecured) corporate bonds |
secured: backed by a specific pledge of company assets - these assets are collateral, just like a home is collateral for a mortgage debentures: backed by only the financial reputation of the issuing corporation |
|
|
mortgage pass-through security |
are backed by a pool of mortgage loans purchased from lenders, such as savings banks - as borrowers make their monthly mortage payments, these payments are "passed through" to hold their securities - "subprime" mortgages: loans with poor credit ratings |
|
|
what are the two qualities that determine the price of a bond? |
1. its risk 2. its interest rate - also the influence on bonds from the market interest rate (market rise = bonds fall) |
|
|
bond rating |
used to asses the risk of a bond - investment grade bonds versus speculative/junk bonds - junk bonds attract investors by offering high interest rates in exchange for greater risk |
|
|
what does a "call provision" do? |
allows issuers to redeem the bond before its maturity at a specified price - usually called when market interest rates are declining |
|
|
common stock |
basic form of corporate ownership - stock holders receive cash dividends, expected price appreciation, or both |
|
|
explain a "preferred stock" |
stock whose holders receive preference in the payments of dividends - has claims on company's assets before common stockholders - but also have no voting rights - dividends they are paid are fixed regardless of profit show - considered to be more like a bond than a stock |
|
|
convertible securities |
- bonds or preferred stock that contains a conversion feature - allows them to exchange their preferred stock/bond for a set of common stocks |
|
|
financial market |
market in which securities are issued and trades |
|
|
primary market |
financial market in which firms and governments issue securities and sell them initially to the general public - rely on it to raise funds by issuing bonds - to offer stocks publicly for the first time is called "initial public offering" (IPO) |
|
|
what is a "tombstone"? |
announcements of new stock and bond offerings often in the form of a simple black and white ad in newspapers like the Wall Street Journal |
|
|
in what two ways are securities sold to the public? |
1. open auctions 2. investment bankers |
|
|
open auctions |
- all consist of US Treasury securities - auctioned weekly but long term securities are once a month or once a quarter |
|
|
what is "underwriting" |
when at an auction the issue is usually purchased by financial institutions and then resell the issue to investors - bought from firm/government at a discount of what they will sell to investors |
|
|
secondary market |
a collection of financial markets in which previously issued securities are traded among investors - media reports usually about secondary market - New York Stock Exchange is a secondary |
|
|
stock markets |
- "exchanges" - most well-known - markets in which shares of stock are bought and sold by investors - two biggest: NYSE and NASDAQ |
|
|
Only ___________ are allowed to trade on the floor of exchange at the NYSE |
only investment firms that are designated members of NYSE |
|
|
NYSE versus NASDAQ |
NYSE: on the floor, old fashioned, biggest, big companies and well-known NASDAQ: computerized communications network that links member investment firms (worlds largest Intranet) not as big or well known companies |
|
|
London Stock Exchange |
-most international of all markets - computerized networking system |
|
|
the "fourth" market |
the direct trading of exchange-listed stocks off the floor of the exchange or outside the network - open now to smaller, individual investors through "electronic communications networks" - investors meet in virtual stock and trade directly with one another |
|
|
explain the purpose of a "brokerage firm" |
because most invstors aren't members of the NYSE or other stock markets, they need to use service to executes the trade on behalf of the investor - phone or visit to brokerage firm or online |
|
|
market order versus a limit order |
market order: instructs the broker to obtain the best price (highest when selling and lowest when buying) when ope, the market is filled in seconds limit order: sets a price ceiling when buying or a price floor when selling |
|
|
financial institutions |
intermediary between savers and borrowers, collecting funds from savers and then lending the funds to individuals, businesses, and governments - depository institutions: commercial banks, savings banks, credit unions - non-depository institutions: life insurance companies, pension funds, and mutual funds |
|
|
commercial banks |
largest and most important financial institution in US - checking and savings deposit accounts, consumer loans, credit cards, home mortgages loans, business loans and trust services |
|
|
what are the two types of online banking? |
1. Internet-only banks 2. traditional brick-and-mortar banks with onlie banking sites |
|
|
savings banks |
- savings and loan associations or thrift institutions - originally to make home mortgage loans - can do some of what commercialc banks do |
|
|
credit unions |
cooperative financial institutions that are owned by their depositors, all of whom are members - by law, credit union members must share similar occupations, employers, or membership in order to cap the size of credit union - designed to serve consumers, not businesses - not-for-profit institutions |
|
|
premiums |
a series of payment insurance companies receive by accepting risk from households and businesses |
|
|
pensions funds |
provide retirement benefits to workers and their families - set up by employers and funded by regular contributions made by employers and employees |
|
|
finance companies |
-offer short-term loans to borrowers - consumer and commercials financial companies |
|
|
mutual funds |
financial institutions that raise money from investors by selling shares - they then use the money to invest in securities that are mainly in shares of common stocks - mutual fund investors are indirect owners of a portfolio of securities - funds that invest in bonds issued by governments or corporations are "taxable bond mutual funds" |
|
|
what are the four basic responsibilities of the Federal Reserve System? |
1. regulating commercial banks 2. performing banking-related activities for the US Department of the Treasury 3. providing services for banks 4. setting monetary policy |
|
|
Federal Open Markets Commitee |
FOMC - part of Fed - sets most policies concerning monetary policy and interest rates - FRS designed to be independent |
|
|
explain M1 and M2 for measuring the money supply |
M1 consists of currency in circulation and balances in bank checking accounts M2 equals M1 plus balances in some savings accounts and money market mutual funds |
|
|
what are the three tools the Fed has for controlling the growth in the money supply and credit? |
1. reserve requirements (cash in vaults) - the higher the reserve requirement, the lower amount of loans possible, vice versa 2. discount rate (interest rate at which Federal Reserve banks make short-term loans to member banks) - increase the rate slows growth because more expensive to borrow funds, vice versa 3. open market operations (buying and selling US Treasury securities) |
|
|
when the Fed uses open market operations it employs.... |
"federal fund rate" as its benchmark - the rate at which banks lend money to each other overnight |
