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412 Cards in this Set
- Front
- Back
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Business |
individuals or organizations who try to earn a profit by providing products that satisfy people’s needs |
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Product |
a good or service with tangible and intangible characteristics that provide satisfaction and benefits profit |
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Profit |
the difference between what it costs to make and sell a product and what a customer pays for it |
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main participants in business |
management, marketing and finance
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management |
coordinating employees’ actions to achieve the firm’s goals, organizing people to work efficiently, and motivating them to achieve the business’s goals |
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marketing |
activities designed to provide goods and services that satisfy consumers’ needs and wants
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finance |
money
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economics |
the study of how resources are distributed for the production of goods and services within a social system
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natural resources |
land, forests, minerals, water, and other things that are not made by people
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human resources |
the physical and mental abilities that people use to produce goods and services; also called labor
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financial resources |
the funds used to acquire the natural and human resources needed to provide products; also called capital
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economic system |
a description of how a particular society distributes its resources to produce goods and services |
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4 economic systems |
Communism, socialism, capitalism and mixed economies |
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first described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resources
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an economic system in which the government owns and operates basic industries but individuals own most businesses
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(free enterprise) an economic system in which individuals own and operate the majority of businesses that provide goods and services
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free-market system |
pure capitalism, in which all economic decisions are made without government intervention
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mixed economies |
economies made up of elements from more than one economic system),
supply, demand and competition in a free enterprise system |
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demand |
the number of goods and services that consumers are willing to buy at different prices at a specific time
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the number of products—goods and services—that businesses are willing to sell at different prices at a specific time
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equilibrium price |
the price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time
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competition |
the rivalry among businesses for consumers’ dollars
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pure competition |
the market structure that exists when there are many small businesses selling one standardized product
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monopolistic competition |
the market structure that exists when there are fewer
businesses than in a pure-competition environment and the differences among the goods they sell are small |
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the market structure that exists when there are very few businesses selling a product
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monopoly |
the market structure that exists when there is only one business providing a product in a given market
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the situation that occurs when an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment
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inflation |
a condition characterized by a continuing rise in prices
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economic contraction |
a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers
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recession |
a decline in production, employment, and income
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unemployment |
the condition in which a percentage of the population wants to work but is unable to find jobs
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a condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced
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gross domestic product (GDP) |
the sum of all goods and services produced in a country during a year
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budget deficit |
the condition in which a nation spends more than it takes in from taxes
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a group of activities designed to expedite transactions by creating, distributing, pricing, and promoting goods, services, and ideas
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exchange |
the act of giving up one thing (money, credit, labor, goods) in return for something else (goods, services, or ideas)
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Buying |
Everyone who shops for products (consumers, stores, businesses, governments) decides whether and what to buy. A marketer must understand buyers’ needs and desires to determine what products to make available
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Selling |
The exchange process is expedited through selling. Marketers usually view selling as a persuasive activity that is accomplished through promotion (advertising, personal selling, sales promotion, publicity, and packaging)
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The process of moving products from the seller to the buyer. Marketers focus on transportation costs and services |
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Storing |
Part of the physical distribution of products and includes warehousing goods. Warehouses hold some products for lengthy periods in order to create time utility. Time utility has to do with being able to satisfy demand in a timely manner. |
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Grading |
The standardizing of products by dividing them into sub-groups and displaying and labeling them so that consumers clearly understand their nature and quality. Many products, such as meat, steel, and fruit, are graded according to a set of standards that often are established by the state or federal government |
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Financing |
For many products, especially large items such as automobiles, refrigerators, and new homes, the marketer arranges credit to expedite the purchase |
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Marketing Research |
Through research, marketers ascertain the need for new goods and services. By gathering information regularly, marketers can detect new trends and changes in consumer tastes |
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The chance of loss associated with marketing decisions. Developing a new product creates a chance of loss if consumers do not like it enough to buy it. Spending money to hire a sales force or to conduct marketing research also involves risk. The implication of risk is that most marketing decisions result in either success or failure |
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Value |
A customer’s subjective assessment of benefits relative to costs in determining the worth of a product |
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marketing concept |
the idea that an organization should try to satisfy customers’ needs through coordinated activities that also allow it to achieve its own goals |
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market orientation |
an approach requiring organizations to gather information about customer needs, share that information throughout the firm, and use that information to help build long-term relationships with customers |
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marketing strategy |
a plan of action for developing, pricing, distributing, and promoting products that meet the needs of specific customers
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market |
a group of people who have a need, purchasing power, and the desire and authority to spend money on goods, services, and ideas |
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target market |
a specific group of consumers on whose needs and wants a company focuses its marketing efforts
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market segmentation |
a strategy whereby a firm divides the total market into groups of people who have relatively similar product needs
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market segment |
a collection of individuals, groups, or organizations who share one or more characteristics and thus have relatively similar product needs and desires
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total-market approach |
an approach whereby a firm tries to appeal to everyone and assumes that all buyers have similar needs |
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concentration approach |
a market segmentation approach whereby a company develops one marketing strategy for a single market segment |
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multi-segment approach |
a market segmentation approach whereby the marketer aims its efforts at two or more segments, developing a marketing strategy for each
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marketing mix |
the four marketing activities—product, price, promotion, and |
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A product |
whether a good, a service, an idea, or some combination— is a complex mix of tangible and intangible attributes that provide satisfaction and benefits. A good is a physical entity you can touch. A Porsche Cayenne, a Hewlett-Packard printer, and a kitten available for adoption at an animal shelter are examples of goods. A service is the application of human and mechanical efforts to people or objects to provide intangible benefits to customers |
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Price |
a value placed on an object exchanged between a buyer and a seller |
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distribution |
making products available to customers in the quantities desired |
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promotion |
a persuasive form of communication that attempts to expedite a marketing exchange by influencing individuals, groups, and organizations to accept goods, services, and ideas |
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marketing research |
a systematic, objective process of getting information about potential customers to guide marketing decisions |
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secondary data |
information that is compiled inside or outside an organization for some purpose other than changing the current situation |
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buying behavior |
the decision processes and actions of people who purchase and use products
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social roles |
a set of expectations for individuals based on some position they occupy
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Product development process |
Idea Generation, New Idea Screening, the next step in developing a new product is idea screening. In this phase, a marketing manager should look at the organization’s resources and objectives and assess the firm’s ability to produce and market the product |
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Business Analysis |
a basic assessment of a product’s compatibility in the marketplace and its potential profitability |
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a trial mini-launch of a product in limited areas that represent the potential market |
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is the full introduction of a complete marketing strategy and the launch of the product for commercial success |
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consumer products |
products intended for household or family use |
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business products |
products that are used directly or indirectly in the operation or manufacturing processes of businesses |
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product line |
a group of closely related products that are treated as a unit because of similar marketing strategy, production, or end-use considerations |
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product mix |
all the products offered by an organization |
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Product Life Cycle |
Introduction Growth Maturity Decline
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branding |
the process of naming and identifying products
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trademark |
a brand that is registered with the U.S. Patent and Trademark Office and is thus legally protected from use by any other firm |
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manufacturer brands |
brands initiated and owned by the manufacturer to identify products from the point of production to the point of purchase |
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private distributor brands |
brands, which may cost less than manufacturer brands, that are owned and controlled by a wholesaler or retailer |
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generic products |
products with no brand name that often come in simple packages and carry only their generic name |
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packaging |
the external container that holds and describes the product
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labeling |
the presentation of important information on a package
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quality |
the degree to which a good, service, or idea meets the demands and requirements of customers
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Calculating Product Value |
Identify Target Customers, Identify best alternative, Determine product's difference, calculate based on differentiation
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price skimming |
charging the highest possible price that buyers who want the product will pay
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penetration price |
a low price designed to help a product enter the market and gain market share rapidly
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psychological pricing |
encouraging purchases based on emotional rather than rational responses to the price
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discounts |
temporary price reductions, often employed to boost sales
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marketing channel |
a group of organizations that moves products from their producer to customers; also called a channel of distribution |
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retailers |
intermediaries who buy products from manufacturers (or other intermediaries) and sell them to consumers for home and household use rather than for resale or for use in producing other products
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wholesalers |
intermediaries who buy from producers or from other wholesalers and sell to retailers |
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intensive distribution |
a form of market coverage whereby a product is made available in as many outlets as possible |
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selective distribution |
a form of market coverage whereby only a small number of all available outlets are used to expose products
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exclusive distribution |
the awarding by a manufacturer to an intermediary of the sole right to sell a product in a defined geographic territory
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physical distribution |
all the activities necessary to move products from producers to customers—inventory control, transportation, warehousing, and materials handling |
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Promotion Mix |
Advertising, personal selling, publicity, and sales promotion
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advertising |
a paid form of non-personal communication transmitted through a mass medium, such as television commercials or magazine advertisements
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publicity |
non-personal communication transmitted through the mass media but not paid for directly by the firm
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sales promotion |
direct inducements offering added value or some other incentive for buyers to enter into an exchange
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push strategy |
an attempt to motivate intermediaries to push the product down to their customers
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pull strategy |
the use of promotion to create consumer demand for a product so that consumers exert pressure on marketing channel members to make it available |
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promotional positioning |
the use of promotion to create and maintain an image of a product in buyers’ minds
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e-business |
carrying out the goals of business through utilization of the Internet
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digital media |
electronic media that function using digital codes via computers, cellular phones, smart phones, and other digital devices that have been released in recent years
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digital marketing |
uses all digital media, including the Internet and mobile and interactive channels, to develop communication and exchanges with customers |
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human relations |
the study of the behavior of individuals and groups in organizational settings
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motivation |
an inner drive that directs a person’s behavior toward goals |
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morale |
an employee’s attitude toward his or her job, employer, and colleagues |
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intrinsic rewards |
the personal satisfaction and enjoyment felt after attaining a goal |
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extrinsic rewards |
benefits and recognition received from someone else |
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Tips for leadership |
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classical theory of motivation |
theory suggesting that money is the sole motivator for workers
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The Hawthorne Studies |
Elton Mayo and a team of researchers from Harvard University wanted to determine what physical conditions in the workplace—such as light and noise levels—would stimulate employees to be most productive. |
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Maslow’s hierarchy |
a theory that arranges the five basic needs of people—physiological, security, social, esteem, and self-actualization—into the order in which people strive to satisfy them
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hygiene factors |
aspects of Herzberg’s theory of motivation that focus on the work setting and not the content of the work; these aspects include adequate wages, comfortable and safe working conditions, fair company policies, and job security |
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motivational factors |
aspects of Herzberg’s theory of motivation that focus on the content of the work itself; these aspects include achievement, recognition, involvement, responsibility, and advancement |
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Theory X |
McGregor’s traditional view of management whereby it is assumed that workers generally dislike work and must be forced to do their jobs |
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Theory Y |
McGregor’s humanistic view of management whereby it is assumed that workers like to work and that under proper conditions employees will seek out responsibility in an attempt to satisfy their social, esteem, and self-actualization needs |
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Theory Z |
management philosophy that stresses employee participation in all aspects of company decision making
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equity theory |
an assumption that how much people are willing to contribute to an organization depends on their assessment of the fairness, or equity, of the rewards they will receive in exchange |
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expectancy theory |
the assumption that motivation depends not only on how much a person wants something but also on how likely he or she is to get it |
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behavior modification |
changing behavior and encouraging appropriate actions by relating the consequences of behavior to the behavior itself |
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job rotation |
movement of employees from one job to another in an effort to relieve the boredom often associated with job specialization |
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job enlargement |
the addition of more tasks to a job instead of treating each task as separate |
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job enrichment |
the incorporation of motivational factors, such as opportunity for achievement, recognition, responsibility, and advancement, into a job |
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flextime |
a program that allows employees to choose their starting and ending times, provided that they are at work during a specified core period |
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compressed workweek |
a four-day (or shorter) period during which an employee works 40 hours |
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job sharing |
performance of one full-time job by two people on part-time hours |
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human resources management (HRM) |
all the activities involved in determining an organization’s human resources needs, as well as acquiring, training, and compensating people to fill those needs |
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job analysis |
the determination, through observation and study, of pertinent information about a job—including specific tasks and necessary abilities, knowledge, and skills |
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job description |
a formal, written explanation of a specific job, usually including job title, tasks, relationship with other jobs, physical and mental skills required, duties, responsibilities, and working conditions |
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job specification |
a description of the qualifications necessary for a specific job, in terms of education, experience, and personal and physical characteristics |
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selection |
the process of collecting information about applicants and using that information to make hiring decisions
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Title VII of the Civil Rights Act |
prohibits discrimination in employment and created the Equal Employment Opportunity Commission
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training |
teaching employees to do specific job tasks through either classroom development or on-the-job experience
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development |
training that augments the skills and knowledge of managers and professionals
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turnover |
occurs when employees quit or are fired and must be replaced by new employees
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promotion |
an advancement to a higher-level job with increased authority, responsibility and pay |
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transfer |
a move to another job within the company at essentially the same level and wage |
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separations |
employment changes involving resignation, retirement, termination or layoff |
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commission |
an incentive system that pays a fixed amount or a percentage of the employee’s sales |
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salary |
a financial reward calculated on a weekly, monthly, or annual basis |
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bonuses |
monetary rewards offered by companies for exceptional performance as incentives to further increase productivity |
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profit sharing |
a form of compensation whereby a percentage of company profits is distributed to the employees whose work helped to generate them |
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benefits |
non-financial forms of compensation provided to employees, such as pension plans, health insurance, paid vacation and holidays, and the like |
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lockout |
management’s version of a strike, wherein a work site is closed so that employees cannot go to work
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conciliation |
a method of outside resolution of labor and management differences in which a third party is brought in to keep the two sides talking
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mediation |
a method of outside resolution of labor and management differences in which the third party’s role is to suggest or propose a solution to the problem |
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arbitration |
settlement of a labor,management dispute by a third party whose solution is legally binding and enforceable |
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affirmative action programs |
legally mandated plans that try to increase job opportunities for minority groups by analyzing the current pool of workers, identifying areas where women and minorities are underrepresented, and establishing specific hiring and promotion goals, with target dates, for addressing the discrepancy |
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sole proprietorship |
businesses owned and operated by one individual; the most common form of business organization in the United States |
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Advantages of Sole Proprietorship |
Ease and Cost of Formation, Secrecy, Distribution and Use of Profits, Flexibility and Control of the Business, Freedom from Government Regulation, Taxation at Individual Rates, Closing the Business is Easy |
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Disadvantages of Sole Proprietorship |
Unlimited Liability (may be forced to use personal holdings to pay debts), Limited Sources of Funds, Limited Skills, Lack of Continuity (life directly linked to that of owner), Lack of Qualified Employees, Taxation (pay a higher marginal rate than small corporations) |
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Partnership |
a form of business organization defined by the Uniform Partnership Act as “an association of two or more persons who carry on as co-owners of a business for profit” |
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Types of Partnership |
general and limited |
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General Partnership |
a partnership that involves a complete sharing in both the management and the liability of the business |
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limited partnership |
a business organization that has at least one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to his or her investment in the business |
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articles of partnership |
legal documents that set forth the basic agreement between partners)
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Advantages of Partnership |
Ease of Organization; Availability of Capital and Credit; Combined Knowledge and Skills; Decision Making; Regulatory Controls |
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Disadvantages of Partnership |
Unlimited Liability; Business Responsibility; Life of the Partnership (only as long as both partners are around); Distribution of Profits; Limited |
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Corporation |
a legal entity, created by the state, whose assets and liabilities are separate from its owners |
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Advantages of a corporation |
Limited Liability (assets separate from owners); Ease of Transfer of Ownership; Perpetual Life; External Sources of Funds; Expansion Potential |
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Disadvantages of a corporation |
Double Taxation (income is taxed twice as a corporation and as the owner's income); Forming a Corporation is Costly; Disclosure of Information (must make it available); Employee–Owner Separation (may cause resentment) |
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joint venture |
a partnership established for a specific project or for a limited time
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S corporation |
corporation taxed as though it were a partnership with restrictions on shareholders
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limited liability company (LLC) |
form of ownership that provides limited liability and taxation like a partnership but places fewer restrictions on members
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cooperative (co-op) |
an organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger organization
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merger |
the combination of two companies (usually corporations) to form a new company
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acquisition |
the purchase of one company by another, usually by buying its stock
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leveraged buyout (LBO) |
a purchase in which a group of investors borrows money from banks and other institutions to acquire a company (or a division of one), using the assets of the purchased company to guarantee repayment of the loan
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stock |
shares of a corporation that may be bought or sold
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dividends |
profits of a corporation that are distributed in the form of cash payments to stockholders
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private corporation |
a corporation owned by just one or a few people who are closely involved in managing the business
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public corporation |
a corporation whose stock anyone may buy, sell, or trade
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quasi-public corporations |
corporations owned and operated by the federal, state, or local government
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nonprofit corporations |
corporations that focus on providing a service rather than earning a profit but are not owned by a government entity
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board of directors |
a group of individuals, elected by the stockholders to oversee the general operation of the corporation, who set the corporation’s long-range objectives
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preferred stock |
a special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do
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common stock |
stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends
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absolute advantage |
a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item
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comparative advantage |
the basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items
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outsourcing |
the transferring of manufacturing or other tasks—such as data processing—to countries where labor and supplies are less expensive
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dumping |
the act of a country or business selling products at less than what it costs to produce them
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cartel |
a group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets
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General Agreement on Tariffs and Trade (GATT) |
a trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved
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World Trade Organization (WTO) |
international organization dealing with the rules of trade between nations
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North American Free Trade Agreement (NAFTA) |
agreement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade among Canada, the United States, and Mexico
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European Union (EU) |
a union of European nations established in 1958 to promote trade among its members; one of the largest single markets today
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Asia-Pacific Economic Cooperation (APEC) |
an international trade alliance that promotes open trade and economic and technical cooperation among member nations
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Association of Southeast Asian Nations (ASEAN) |
A trade alliance that promotes trade and economic integration among member nations in Southeast Asia
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World Bank |
an organization established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries; formally known as the International Bank for Reconstruction and Development
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International Monetary Fund (IMF) |
organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation
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counter-trade agreements |
foreign trade agreements that involve bartering products for other products instead of for currency
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trading company |
a firm that buys goods in one country and sells them to buyers in another country
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licensing |
a trade agreement in which one company—the licensee—allows another company—the licensee—to use its company name, products, patents, brands, trademarks, raw materials, and,or production processes in exchange for a fee or royalty
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franchising |
a form of licensing in which a company—the franchiser—agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with a franchiser’s business in return for a financial commitment and the agreement to conduct business in accordance with the franchiser’s standard of operations
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contract manufacturing |
the hiring of a foreign company to produce a specified volume of the initiating company’s product to specification; the final product carries the domestic firm’s name
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off-shoring |
The relocation of business processes by a company or subsidiary to another country. Off-shoring is different than outsourcing because the company retains control of the off-shored processes.
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joint venture |
the sharing of the costs and operation of a business between a foreign company and a local partner
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strategic alliance |
a partnership formed to create competitive advantage on a worldwide basis
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multinational corporation (MNC) |
a corporation that operates on a worldwide scale, without significant ties to any one nation or region
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multinational strategy |
a plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences
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global strategy (globalization) |
a strategy that involves standardizing products (and, as much as possible, their promotion and distribution) for the whole world, as if it were a single entity
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organizational culture |
a firm’s shared values, beliefs, traditions, philosophies, rules, and role models for behavior
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structure |
the arrangement or relationship of positions within an organization
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organizational chart |
a visual display of the organizational structure, lines of authority (chain of command), staff relationships, permanent committee arrangements, and lines of communication
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specialization |
the division of labor into small, specific tasks and the assignment of employees to do a single task
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departmentalization |
the grouping of jobs into working units usually called departments, units, groups, or divisions
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functional departmentalization |
the grouping of jobs that perform similar functional activities, such as finance, manufacturing, marketing, and human resources
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product departmentalization |
the organization of jobs in relation to the products of the firm
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geographical departmentalization |
the grouping of jobs according to geographic location, such as state, region, country, or continent
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customer departmentalization |
the arrangement of jobs around the needs of various types of customers
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delegation of authority |
giving employees not only tasks, but also the power to make commitments, use resources, and take whatever actions are necessary to carry out those tasks
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responsibility |
the obligation, placed on employees through delegation, to perform assigned tasks satisfactorily and be held accountable for the proper execution of work
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accountability |
the principle that employees who accept an assignment and the authority to carry it out are answerable to a superior for the outcome
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centralized organization |
a structure in which authority is concentrated at the top, and very little decision-making authority is delegated to lower levels
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decentralized organization |
an organization in which decision-making authority is delegated as far down the chain of command as possible
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span of management |
the number of subordinates who report to a particular manager
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organizational layers |
the levels of management in an organization
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line structure |
the simplest organizational structure, in which direct lines of authority extend from the top manager to the lowest level of the organization
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line-and-staff structure |
a structure having a traditional line relationship between superiors and subordinates and also specialized managers— called staff managers— who are available to assist line managers
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matrix structure |
a structure that sets up teams from different departments, thereby creating two or more intersecting lines of authority; also called a project-management structure
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group |
two or more individuals who communicate with one another, share a common identity, and have a common goal
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team |
a small group whose members have complementary skills; have a common purpose, goals, and approach; and hold themselves mutually accountable
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committee |
a permanent, formal group that performs a specific task
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task force |
a temporary group of employees responsible for bringing about a particular change
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project teams |
groups similar to task forces that normally run their operation and have total control of a specific work project
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product-development teams |
a specific type of project team formed to devise, design, and implement a new product
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quality-assurance teams (or quality circles) |
small groups of workers brought together from throughout the organization to solve specific quality, productivity, or service problems
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self-directed work team (SDWT) |
a group of employees responsible for an entire work process or segment that delivers a product to an internal or external customer
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grapevine |
an informal channel of communication, separate from management’s formal, official communication channels
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management |
a process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment
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managers |
those individuals in organizations who make decisions about the use of resources and who are concerned with planning, organizing, staffing, directing, and controlling the organization’s activities to reach its objectives
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planning |
the process of determining the organization’s objectives and deciding how to accomplish them; the first function of management
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mission |
the statement of an organization’s fundamental purpose and basic philosophy
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strategic plans |
those plans that establish the long-range objectives and overall strategy or course of action by which a firm fulfills its mission
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tactical plans |
short-range plans designed to implement the activities and objectives specified in the strategic plan
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operational plans |
very short-term plans that specify what actions individuals, work groups, or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan
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crisis management (contingency planning) |
an element in planning that deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer virus, or airplane crash
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organizing |
the structuring of resources and activities to accomplish objectives in an efficient and effective manner
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staffing |
the hiring of people to carry out the work of the organization
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downsizing |
the elimination of a significant number of employees from an organization
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directing |
motivating and leading employees to achieve organizational objectives
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controlling |
the process of evaluating and correcting activities to keep the organization on course
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top managers |
the president and other top executives of a business, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization
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middle managers |
those members of an organization responsible for the tactical planning that implements the general guidelines established by top management
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first-line managers |
those who supervise both workers and the daily operations of an organization
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financial managers |
those who focus on obtaining needed funds for the successful operation of an organization and using those funds to further organizational goals
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production and operations managers |
those who develop and administer the activities involved in transforming resources into goods, services, and ideas ready for the marketplace
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human resources managers |
those who handle the staffing function and deal with employees in a formalized manner
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marketing managers |
those who are responsible for planning, pricing, and promoting products and making them available to customers
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information technology (IT) managers |
those who are responsible for implementing, maintaining, and controlling technology applications in business, such as computer networks
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administrative managers |
those who manage an entire business or a major segment of a business; they are not specialists but coordinate the activities of specialized managers
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leadership |
the ability to influence employees to work toward organizational goals
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technical expertise |
the specialized knowledge and training needed to perform jobs that are related to particular areas of management
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conceptual skills |
the ability to think in abstract terms and to see how parts fit together to form the whole
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analytical skills |
the ability to identify relevant issues, recognize their importance, understand the relationships between them, and perceive the underlying causes of a situation
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human relations skills |
the ability to deal with people, both inside and outside the organization
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agenda |
a calender, containing both specific and vague items, that covers short-term goals and long-term objectives
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operations management (OM) |
the development and administration of the activities involved in transforming resources into goods and services
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manufacturing |
the activities and processes used in making tangible products; also called production
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production |
the activities and processes used in making tangible products; also called manufacturing
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operations |
the activities and processes used in making both tangible and intangible products
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inputs |
the resources—such as labor, money, materials, and energy—that are converted into outputs
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outputs |
the goods, services, and ideas that result from the conversion of inputs
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modular design |
the creation of an item in self-contained units, or modules, that can be combined or interchanged to create different products
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customization |
making products to meet a particular customer’s needs or wants
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fixed-position layout |
a layout that brings all resources required to create the product to a central location
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project organization |
a company using a fixed-position layout because it is typically involved in large, complex projects such as construction or exploration
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process layout |
a layout that organizes the transformation process into departments that group related processes
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intermittent organizations |
organizations that deal with products of a lesser magnitude than do project organizations; their products are not necessarily unique but possess a significant number of differences
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product layout |
a layout requiring that production be broken down into relatively simple tasks assigned to workers, who are usually positioned along an assembly line
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computer-assisted design (CAD) |
the design of components, products, and processes on computers instead of on paper
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computer-assisted manufacturing (CAM) |
manufacturing that employs specialized computer systems to actually guide and control the transformation processes
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flexible manufacturing |
the direction of machinery by computers to adapt to different versions of similar operations
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computer-integrated manufacturing (CIM) |
a complete system that designs products, manages machines and materials, and controls the operations function
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continuous manufacturing organizations |
companies that use continuously running assembly lines, creating products with many similar characteristics
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supply chain management |
connecting and integrating all parties or members of the distribution system in order to satisfy customers
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purchasing |
the buying of all the materials needed by the organization; also called procurement
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inventory |
all raw materials, components, completed or partially completed products, and pieces of equipment a firm uses
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inventory control |
the process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it
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economic order quantity (EOQ) model |
a model that identifies the optimum number of items to order to minimize the costs of managing (ordering, storing, and using) them
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just-in-time (JIT) inventory management |
a technique using smaller quantities of materials that arrive “just in time” for use in the transformation process and therefore require less storage space and other inventory management expense
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material-requirements planning (MRP) |
a planning system that schedules the precise quantity of materials needed to make the product
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routing |
the sequence of operations through which the product must pass
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scheduling |
the assignment of required tasks to departments or even specific machines, workers, or teams
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quality control |
the processes an organization uses to maintain its established quality standards
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total quality management (TQM) |
a philosophy that uniform commitment to quality in all areas of an organization will promote a culture that meets customers’ perceptions of quality
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statistical process control |
a system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system
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ISO 9000 |
a series of quality assurance standards designed by the International Organization for Standardization (ISO) to ensure consistent product quality under many conditions
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ISO 14000 |
a comprehensive set of environmental standards that encourages companies to conduct business in a cleaner, safer, and less wasteful way. ISO 14000 provides a uniform set of standards globally
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business ethics |
principles and standards that determine acceptable conduct in business
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social responsibility |
a business’s obligation to maximize its positive impact and minimize its negative impact on society
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ethical issue |
an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical
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bribes |
payments, gifts, or special favors intended to influence the outcome of a decision
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plagiarism |
the act of taking someone else’s work and presenting it as your own without mentioning the source
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codes of ethics |
formalized rules and standards that describe what a company expects of its employees
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whistle-blowing |
the act of an employee exposing an employer’s wrongdoing to outsiders, such as the media or government regulatory agencies
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corporate citizenship |
the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders
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consumerism |
the activities that independent individuals, groups, and organizations undertake to protect their rights as consumers
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sustainability |
conducting activities in a way that allows for the long-term well-being of the natural environment, including all biological entities. Sustainability involves the assessment and improvement of business strategies, economic sectors, work practices, technologies, and lifestyles so that they maintain the health of the natural environment
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accounting |
the recording, measurement, and interpretation of financial information
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certified public accountant (CPA) |
an individual who has been state certified to provide accounting services ranging from the preparation of financial records and the filing of tax returns to complex audits of corporate financial records
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private accountants |
accountants employed by large corporations, government agencies, and other organizations to prepare and analyze their financial statements
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certified management accountants (CMAs) |
private accountants who, after rigorous examination, are certified by the National Association of Accountants and who have some managerial responsibility
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managerial accounting |
the internal use of accounting statements by managers in planning and directing the organization’s activities
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cash flow |
the movement of money through an organization over a daily, weekly, monthly, or yearly basis
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budget |
an internal financial plan that forecasts expenses and income over a set period of time
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annual report |
summary of a firm’s financial information, products, and growth plans for owners and potential investors
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assets |
a firm’s economic resources, or items of value that it owns, such as cash, inventory, land, equipment, buildings, and other tangible and intangible things
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liabilities |
debts that a firm owes to others
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owners’ equity |
equals assets minus liabilities and reflects historical values
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accounting equation |
assets equal liabilities plus owners’ equity Accounting Equation Assets = Liabilities + Owner’s equity
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double-entry bookkeeping |
a system of recording and classifying business transactions that maintains the balance of the accounting equation
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accounting cycle |
the four-step procedure of an accounting system--examining source documents, recording transactions in an accounting journal, posting recorded transactions, and preparing financial statements
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journal |
a time-ordered list of account transactions
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ledger |
a book or computer file with separate sections for each account
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income statement |
a financial report that shows an organization’s profitability over a period of time—month, quarter, or year
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revenue |
the total amount of money received from the sale of goods or services, as well as from related business activities
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cost of goods sold |
the amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies
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gross income (profit) |
revenues minus the cost of goods sold required to generate the revenues
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expenses |
the costs incurred in the day-to-day operations of an organization
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depreciation |
the process of spreading the costs of long-lived assets such as buildings and equipment over the total number of accounting periods in which they are expected to be used
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net income |
the total profit (or loss) after all expenses, including taxes, have been deducted from revenue; also called net earnings
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balance sheet |
a “snapshot” of an organization’s financial position at a given moment
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current assets |
assets that are used or converted into cash within the course of a calendar year
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accounts receivable |
money owed a company by its clients or customers who have promised to pay for the products at a later date
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current liabilities |
a firm’s financial obligations to short-term creditors, which must be repaid within one year
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accounts payable |
the amount a company owes to suppliers for goods and services purchased with credit
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accrued expenses |
is an account representing all unpaid financial obligations incurred by the organization
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statement of cash flows |
explains how the company’s cash changed from the beginning of the accounting period to the end
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ratio analysis |
calculations that measure an organization’s financial health
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profitability ratios |
ratios that measure the amount of operating income or net income an organization is able to generate relative to its assets, owners’ equity, and sales
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profit margin |
net income divided by sales (Profit margin = Net income (Net earnings)\Sales (Total net revenues))
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return on assets |
net income divided by assets (Return on assets = Net income (Net earnings)\Total assets)
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return on equity |
net income divided by owners’ equity; also called return on investment (ROI) ( Return on equity = Net income\Stockholders’ equity)
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asset utilization ratios |
ratios that measure how well a firm uses its assets to generate each $1 of sales
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receivables turnover |
sales divided by accounts receivable (Receivables turnover = Sales (Total net revenues)\Receivables)
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inventory turnover |
sales divided by total inventory (Inventory turnover = Sales (Total net revenues)\Inventory)
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total asset turnover |
sales divided by total assets (Total asset turnover = Sales (Total net revenues)\Total assets)
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liquidity ratios |
ratios that measure the speed with which a company can turn its assets into cash to meet short-term debt
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current ratio |
current assets divided by current liabilities (Current ratio = Current assets\Current liabilities)
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quick ratio (acid test) |
a stringent measure of liquidity that eliminates inventory (Quick ratio = Current assets – Inventory\Current liabilities)
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debt utilization ratios |
ratios that measure how much debt an organization is using relative to other sources of capital, such as owners’ equity
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debt to total assets ratio |
a ratio indicating how much of the firm is financed by debt and how much by owners’ equity (Debt to total assets = Debt (Total liabilities)\Total assets)
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times interest earned ratio |
operating income divided by interest expense (Times interest earned = EBIT (Operating income)\(Interest)
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per share data |
data used by investors to compare the performance of one company with another on an equal, per share basis ( Debt to total assets = Debt (Total liabilities)\Total assets)
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earnings per share |
net income or profit divided by the number of stock shares outstanding (Diluted earnings per share = Net income\Number of shares outstanding (diluted))
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dividends per share |
the actual cash received for each share owned (Dividends per share = Dividends paid\Number of shares outstanding)
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finance |
the study of money; how it’s made, how it’s lost, and how it’s managed
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money |
anything generally accepted in exchange for goods and services
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checking account |
money stored in an account at a bank or other financial institution that can be withdrawn without advance notice; also called a demand deposit
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savings accounts |
accounts with funds that usually cannot be withdrawn without advance notice; also known as time deposits
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money market accounts |
accounts that offer higher interest rates than standard bank rates but with greater restrictions
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certificates of deposit (CDs) |
savings accounts that guarantee a depositor a set interest rate over a specified interval as long as the funds are not withdrawn before the end of the period—six months or one year, for example
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credit cards |
means of access to pre-approved lines of credit granted by a bank or finance company
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debit card |
a card that looks like a credit card but works like a check; using it results in a direct, immediate, electronic payment from the cardholder’s checking account to a merchant or third party
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Federal Reserve Board |
an independent agency of the federal government established in 1913 to regulate the nation’s banking and financial industry
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monetary policy |
means by which the Fed controls the amount of money available in the economy
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Buy government securities |
The money supply increases; economic activity increases
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Sell government securities |
The money supply decreases; economic activity slows down
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Raise discount rate |
Interest rates increase; the money supply decreases;
economic activity slows down. |
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Lower discount rate |
Interest rates decrease; the money supply increases;
economic activity increases. |
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Increase reserve requirements |
Banks make fewer loans; the money supply declines;
economic activity slows down. |
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Decrease reserve requirements |
Banks make more loans; the money supply increases;
economic activity increases. |
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Relax credit controls |
More people are encouraged to make major purchases,
increasing economic activity. |
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Restrict credit controls |
People are discouraged from making major purchases,
decreasing economic activity. |
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open market operations |
decisions to buy or sell U.S. Treasury bills (short-term debt issued by the U.S. government) and other investments in the open market
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reserve requirement |
the percentage of deposits that banking institutions must hold in reserve
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discount rate |
the rate of interest the Fed charges to loan money to any banking institution to meet reserve requirements
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credit controls |
the authority to establish and enforce credit rules for financial institutions and some private investors
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commercial banks |
the largest and oldest of all financial institutions, relying mainly on checking and savings accounts as sources of funds for loans to businesses and individuals
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savings and loan associations (S&Ls) |
financial institutions that primarily offer savings accounts and make long-term loans for residential mortgages; also called “thrifts”
credit union |
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a financial institution |
owned and controlled by its depositors, who usually have a common employer, profession, trade group, or religion
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mutual savings banks |
financial institutions that are similar to savings and loan associations but, like credit unions, are owned by their depositors
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Federal Deposit Insurance Corporation (FDIC) |
an insurance fund established in 1933 that insures individual bank accounts
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National Credit Union Administration (NCUA) |
an agency that regulates and charters credit unions and insures their deposits through its National Credit Union Insurance Fund
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pension funds |
managed investment pools set aside by individuals, corporations, unions, and some nonprofit organizations to provide retirement income for members
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mutual fund |
an investment company that pools individual investor dollars and invests them in large numbers of well-diversified securities
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brokerage firms |
firms that buy and sell stocks, bonds, and other securities for their customers and provide other financial services
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investment banker |
underwrites new issues of securities for corporations, states, and municipalities
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finance companies |
businesses that offer short-term loans at substantially higher rates of interest than banks
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electronic funds transfer (EFT) |
any movement of funds by means of an electronic terminal, telephone, computer, or magnetic tape
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automated teller machine (ATM) |
the most familiar form of electronic banking, which dispenses cash, accepts deposits, and allows balance inquiries and cash transfers from one account to another
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automated clearinghouses (ACHs) |
a system that permits payments such as deposits or withdrawals to be made to and from a bank account by magnetic computer tape
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working capital management |
the managing of short-term assets and liabilities
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transaction balances |
cash kept on hand by a firm to pay normal daily expenses, such as employee wages and bills for supplies and utilities
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lock-box |
an address, usually a commercial bank, at which a company receives payments in order to speed collections from customers
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marketable securities |
temporary investment of “extra” cash by organizations for up to one year in U.S. Treasury bills, certificates of deposit, commercial paper, or euro-dollar loans
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Treasury bills (T-bills) |
short-term debt obligations the U.S. government sells to raise money
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commercial certificates of deposit (Cd's) |
certificates of deposit issued by commercial banks and brokerage companies, available in minimum amounts of $100,000, which may be traded prior to maturity
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commercial paper a |
written promise from one company to another to pay a specific amount of money
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euro-dollar market |
a market centered in London for trading U.S. dollars in foreign countries
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trade credit |
credit extended by suppliers for the purchase of their goods and services
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line of credit |
an arrangement by which a bank agrees to lend a specified amount of money to an organization upon request
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secured loans |
loans backed by collateral that the bank can claim if the borrowers do not repay them
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unsecured loans |
loans backed only by the borrowers’ good reputation and previous credit rating
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factor |
a finance company to which businesses sell their accounts receivable—usually for a percentage of the total face value
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long-term (fixed) assets |
production facilities (plants), offices, and equipment—all of which are expected to last for many years
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capital budgeting |
the process of analyzing the needs of the business and selecting the assets that will maximize its value
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long-term liabilities |
debts that will be repaid over a number of years, such as long-term loans and bond issues
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bonds |
debt instruments that larger companies sell to raise long-term funds
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unsecured bonds |
debentures, or bonds that are not backed by specific collateral
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secured bonds |
bonds that are backed by specific collateral that must be forfeited in the event that the issuing firm defaults
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serial bonds |
a sequence of small bond issues of progressively longer maturity
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floating-rate bonds |
bonds with interest rates that change with current interest rates otherwise available in the economy
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junk bonds |
a special type of high interest-rate bond that carries higher inherent risks
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retained earnings |
earnings after expenses and taxes that are reinvested in the assets of the firm and belong to the owners in the form of equity
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dividend yield |
the dividend per share divided by the stock price
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primary market |
the market where firms raise financial capital
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secondary markets |
stock exchanges and over-the-counter markets where investors can trade their securities with others
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investment banking |
the sale of stocks and bonds for corporations
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securities markets |
the mechanism for buying and selling securities
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over-the-counter (OTC) market |
a network of dealers all over the country linked by computers, telephones, and Teletype machines
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