Business Concepts to Remember Inflation Disinflation Deflation and Stagflation Chapter 2 Inflation a general rise in the prices of goods and services over time Disinflation a situation in which the price increases are slowing inflation rate is declining Partnerships Chapter 5 for debts Cooperative Chapter 5 Deflation A situation in which prices are declining Stagflation A situation when the economy is slowing but prices are going up anyway General Partnership all owners share in operating the business and in assuming liability Limited Partnership one or more general partners limited partners General Partner an owner who has unlimited liability and active in management Limited Partner limited liabilities Organizations owned by members customers to acquire more economic power than they would have as individuals Small businesses usually form cooperatives to gain more purchasing marketing or product development strength Small Businesses High growth businesses are not easy to start and even harder to keep going Easiest to start those difficult to maintain Easiest to maintain those difficult to get started Make you rich hard to start and hard to maintain Goals v Objective Chapter 7 Goal broad and long term team process remember like life long goals Objective specific and short term Strategic goals top managers Tactical short term lower level managers Contingency back up Operational part of tactical standards Tactical objective operational TOO strategic goal SG Skills needed at Management Levels Chapter 7 Top Managers 60 Conceptual 30 Human Relations and 10 Technical Middle Managers All equal First Line Managers 60 Technical 30 Human Relations and 10 Conceptual Conceptual skills that involve the ability to picture the organization as a whole and the relationship among its various parts Human Relation skills that involve communication and motivation they enable managers to work through and with people Technical skills that involve the ability to perform tasks in a specific discipline or department Span of Control Chapter 8 Optimal number of subordinates a manager supervises or should supervises Lower levels with standardized work broad span of control Trend today is to expand span of control to adopt empowerment and reduce the number of middle managers and hire more low level employees Tall organization small span of control Flat organization broad span of control Continuous Intermittent Processes Chapter 9 Operations management includes service smooth operations of functioning aspect quick response from front desk physical appearance quality management Process manufacturing part of production that physically or chemically changes materials Assembly process part of the production that puts together components Continuous process a production process in which long production runs turn out finished goods over time Intermittent process A production process in which the production run is short and the machines are changed frequently to make different products Management by Objective Chapter 10 A system of goal setting implementations involving a cycle among top level managers Managers form goals in cooperating with the organization committing and monitoring middle supervisors and employees and rewarding accomplishment Helpful in stable situations CENTEAL IDEA employees need to motivate themselves and all must agree Multilevel Marketing Chapter 15 Salespeople make commission off of their own sales and create commission for those who recruited them Potential for making money and low entry cost Distribution Systems Chapter 15 Corporate distribution system one firm owns all of the organizations in the channel of distribution Contractual members are bound through contractual agreements Administered producers manage all of the marketing functions at the retail level Push Pull and Pick Strategies Chapter 16 Push strategy in which the producer uses advertising personal selling sale promotion and all other promo tools to convince wholesalers and retailers to stock and sell merchandise Pull strategy in which heavy advertising and sales promo efforts are directed towards consumers so that they ll request the products from retailers Pick customers who pick out their products online and do comparisons Horizontal and Vertical Mergers Chapter 5 Horizontal Joining of two firms in the same industry Vertical Joining of two firms in completely unrelated industries to diversify Pricing strategies Chapter 14 Skimming product is priced high to make optimum profit while there s little competition Penetration product is prices low to attract many customers and discourage competition EDLP setting prices lower than competitors and now having special sales Competition based based on what competitors are pricing the same products Price leadership one firms sets the pricing that all companies in industry follow High low higher than EDLP but offer sales where prices are lower than competitors Income Statement v Balance Sheet Chapter 17 Balance sheet reports the financial position of a firm on a particular day Assets Liabilities Owner s Equity Income statement reports revenues costs and expenses for a period of time Revenue gross margin net income taxes bottom line Auditors Chapter 17 The job of reviewing and evaluating the information used to prepare a company s financial statements Independent audit an evaluation and unbiased opinion about the accuracy of a company s financial statements Private accountants internal audits Public accountants independent audits Sarbanes Oxley Act put in place new rules about auditing and consulting to ensure integrity of auditing process Activity Ratios Chapter 17 to pay its short term debts operations Liquidity ratios how fast an asset can be turned into cash ability to turn assets into cash Leverage debt ratios measure the degree to which a firm relies on borrowed funds in its Profitability performance ratios measure how effectively a firm s managers are using its various resources to achieve profits Activity ratios how effectively management is turnover over inventory Inventory turnover ratios how quickly inventory moves through the firm and gets converted into sales Factoring Chapter 18 Process of selling accounts receivable for cash for short term funding Market order Limit order and Diversification Chapter 19 Diversification buying several different investment alternatives to spread the risk of Bulls believe stocks will rise Bears believe stocks will fall Blue chip stocks pay
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