pBusiness in-class notes 1/8/15Adam Smith (Wealth of Nations)-self interest-invisible hand-free market requirements Settle on product distribution and prices that benefit the consumer, producer, and all members of the communityMarkets: Creating wealth and making transactions-Market definition: a group of people who have similar needs, similar buying characteristics, and the ability to purchase-Markets are:-Socialized (the degree to which activities are broadly or narrowly defined)-Complex (a complex set of activities by many entities to get the product to the consumer)-Uncertain (markets are not easily predictable)-Risky (the chance of something going wrong)-Consumers will make an exchange or transaction only when they are made better off (wealth)-As part of these exchanges or transactions competition between suppliers results in-Pressure for lower prices-Pressure for new/better products-Pressure for more efficient ways to do thingsTo manage the economic part of your life including wealth…You have to understand-How the system works (basic principles)And be an informed-Citizen-Consumer-Employee-Business OwnerManagement ProcessTo deal with uncertainty and risk in complex and specialized competitive marketsManagers perform four functions:-Planning-Organizing-Leading/Directing (operating)-ControllingPlanningDefinition: The process of defining intended future courses of action aimed at achieving specific goals or higher level objectives within a specific timeframePlanning involves:-Assessing future conditions and circumstances -Setting goals based on that assessment -Making decisions -Work to be done-By whom-When-Resources requirements Planning from top to bottom 3-5 years- Sr. Managers (strategic)1-3 years- middle managers(tactical)6 mo-1 year- 1st line managers (operational)Planning starts at the topStrategic plans-Define the markets/products necessary to realize the company’s vision and objectives relative to competitorsPurpose statement-A statement regarding the purpose of the organization (aka “vision statement”)Strategical Objectives-Higher level statements of how the vision/prupose will be realized (flows from the purpose statement)Tactical Plans-Specify how a company will use resources, budgets, and people to accomplish goals related to its strategic objectivesGoals-Specific statements of what will be done, in what timeframe, to achieve a specific end result (flows from higher level objectives)Operational plans-Day to day plans from producing and delivering products and servicesActions-Who, what, when, and how the goals will be accomplished Organizing: Process and StructureOrganizational Process-The collection of activities that transform inputs into outputs that costumers valueOrganizational Structure-The vertical and horizontal configuration of departments, authority, and jobs within a companyLeading/Directing (Operating)Leading/Directing - Communicating a vision - Inspiring/motivating - Point out/prescribe a course of actionControllingRegulating the work of those for whom a manger is responsible, including:-Setting standards of performance-Monitoring ongoing (real-time) performance toward goal achievement -Taking corrective action when neededBusiness functions (primary)Research and development-Design products/services that meet costumers’ needsMarket/sales-Know your customers, determine how to best serve them, and get them the productProductions-Build quality products at lowest possible costFinance-Arrange for the tools and money necessary to meet the goals of the companyAccounting-Track, summarize, and analyze a firm’s financial position Asset (accounting term)Assets-Items (tangible or intangible) that have value (probable future economic benefits)In an economic sense, your knowledge, skills, and abilities are assetsIn your career, you will take your knowledge, skills, and abilities to the market (that is specialized, complex, and uncertain) and hope to trade no