Business 101 1st EditionMidterm # 1 Study Guide Lectures: 1 - 8Lecture 1 (January 6)Basic Economic PrinciplesWhat is the definition of economics? What are the three different kinds of economic systems? Who is known as “the father of modern economics”? What terms did he introduce? What are the requirements for a free market?Economics Definition:The study of distributing resources for the production of goods and services within a social systemThree different types of economic systems 1. Command (socialism, communism)The government controls what goods/services are produced, their quantities, and prices2. Free MarketWhat goods/services are produced, their quantities and prices are based on supply and demand. The government has no role. 3. Mixed Almost all actual economies, the government has some role. Ex: Obamacare changed the free market of insurance, but the US government doesn’t control all markets in the US. Adam Smith wrote: An Inquiry into the Nature and Causes of the Wealth of Nations which promoted the idea of free and unrestricted trade. He also wrote a book about morals that happened to support his principles of a free market. Terms introduced by Adam Smith:Invisible Hand: term first used by Adam Smith, it is an economic principle holding that the greatest benefit to a society is brought about by individuals acting freely in a competitive marketplace in pursuit of their own self-interest. If each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product, distribution, and prices are beneficial to all the individual members of the community. Individual self-interest:- Promotes: competition, innovation (in product and process), greater value (the worth, importance or usefulness of something to somebody)- Benefits: all members of the community, not just each individual by creating; more products (more choices), new products (additional wealth), and lower pricesFree Market Requirements: - Private property- Freedom of choice- Fair competition- Right to keep profitsLecture 2 (January 8) What is a market? What characterizes markets? A group of people who have similar needs, similar buying characteristics, and the ability to purchase. Markets are complex, specialized, anduncertainHow do transitions in a marketplace affect the sellers/suppliers? Because consumers will only make a transaction when they believe that they will be better off (in terms of wealth) pressure is put on the suppliers for improvements in price, product, and performance.What functions do managers preform for a company? What are the different types of planning? What are the five main branches of most companies? Managers preform 4 main functions:- Planning- Leadership- Leading/directing (operating)- Controlling 1. Planning: the process of defining, planning includes:- Assessing future conditions and circumstances- Setting goals based on that assessment - Making decisions about work to be done, by whom, when, and resource requirementsPlanning from top to bottom: Planning horizon Responsibility 3-5 years……………………..strategic…………..……………senior managers1-3 years………………..…..tactical……………………………middle managers6 months-1year…….......operational…………………….1st line managersStrategic plans: define market/products necessary to realize the company’s objectives. Includes purpose statement which is a short sound-bite about the purpose or vision of a company, and strategic objectives, which are higher level statements of how the vision/purpose will be realized. Tactical Plans: Specify how a company will use resources, budgets, and people to accomplish goals related to its strategic objectives. Includes goals, which state what specifically will be doneand when. Operational Plans: Day to day plans for producing and delivering products and services. Includesactions; who, what, when, and how the goals will be accomplished. 2. Organizing: A process; activities that transform inputs into outputs that customers value.Organizational structure: the vertical and horizontal configurations of departments, authority, and jobs within a company. 3. Leading/Directing: Includes communicating a vision, inspiring and motivating, point out/proscribe a course of action. More difficult than it sounds all told. 4. Controlling: Includes regulating work, setting standards, monitoring performance, and taking corrective action when needed. Business Functions (Primary):- Research and development (R&D)- Marketing/sales- Production- Finance- AccountingLecture 3 (January 13)What is marketing? What do customers want from you? Marketing is an organizational function and a set of processes for: creating, communicating, and delivering value to customers, and managing customer relationships in ways that benefit stakeholders. Marketing provides the 4 Psfor consumers, which are: products, price, place, and promotion. What is a marketing mix? A unique blend of product, place, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.What is the difference between primary and secondary research? Primary Data/Research: data collected for the first time, for the purpose of solving the problem at hand. Includes observational research and the collection of original information. It relies on 3 types of information:- People watching people- People watching an activity - Machines watching people (or activity)Commonly collection sites includes checkout counters and couponsSecondary Research: is the collection of information from published sources. Relies on information from- Websites- Publications- Research reportWhat are some ways of segmenting markets? What is a target market? Basis for segmentation of consumers include geography, demographics, psychographics, benefits sought, and usage rate. Target Market: A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of the group, resulting in mutually satisfying exchanges. Lecture 4 (January 15)What is a Customer Survey Score? How to calculate a CSS in foundation. Customer Survey Score components (in foundation):- Product positioning (performance and size)- MTBF (mean time before failure)- Price- Age (years since initial introduction)- Awareness (how aware your customers are about your