Chapter 1 - 4 notes
Popular in Contemporary Business Practice
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Date Created: 10/01/15
09/10/2015 ▯ Business class #2 9/8/15 ▯ ▯ Why or what effect would buying back your own currency have on your economy? ▯ CHINA USED MONEY TO BUY BACK THEIR ECONOMY ▯ What effect will it have on china currency? ▯ ▯ Chapter 1: Developing a Business Mindset ▯ ▯ Business: Any profit-seeking organization that provides goods and services designed to satisfy the customers’ needs. ▯ Three lines: ▯ Revenue: everything that you sell ▯ All the variable expenses ▯ Net income/Profit ▯ Adding value is a transfer of raw material. Every company in the chain adds value to the next customer for the ultimate customer. Maximize revenue and optimize expenses- spend the right amount at the right time ▯ Revenue: Money that a company brings in through the sale of goods and services How do we divide revenue? Units x Price Revenues are a function of selling units. ▯ Business Model: a concise description of how a business intends to generate revenue. ▯ What is your concept of your company? Who are the consumers you are you going to go after? ▯ ▯ Profit: money left over after all the costs involved in doing business have been deducted from ▯ What is the relationship between profit and price? ▯ Competitive advantage: some aspect of a product or company that makes it more appealing to its target customers. ▯ What is it about your company that gives you an advantage? Examples: customer service, speed ▯ ▯ Not-for-profit organizations: organizations that provide goods and services without having a profit motive; also called nonprofit organizations ▯ ▯ Tangible vs intangible ▯ ▯ Goods producing businesses vs service businesses ▯ ▯ Risk and reward Businesses take risks in anticipation of future rewards. Critical for two reasons: o without the promise of rewards, businesses would have no incentive to take on the risks. o To encourage smart and responsible decision making. ▯ ▯ Moral hazard- taking certain risk that can sank your company ▯ ▯ Barrier to entry: Any resource or capability a company must have before it can start competing in a given market. ▯ ▯ Business mindset: a view of business that considers the myriad decisions that must be made and the many problems that must be overcome before companies can deliver the products that satisfy customer needs ▯ ▯ The Multiple Environments of Businesses ▯ Market environment Composed of three groups: o It targets customers o Buying influences that shape the behavior of those customers o Competitors ▯ ▯ Legal and regulatory environment The sum of laws and regulations at local, state, national, and even international levels. o Electricity and basic utilities are heavily regulated to the point where gov’t agencies determining how much such companies should charge for their services. ▯ Economic environment The conditions and forces that reflect the cost and availability of goods, services and labor and thereby shape the behavior of buyers and sellers. ▯ Technological environment Stems from the practical application of science to innovations, products, and processes. o Example: music can be recorded and played back in a different time and place is a profound advance made possible by technology. ▯ Social environment Trends and forces in society at large. o All companies are affected by population trends that change the composition of consumer markets and the workforce. ▯ ▯ Midterm Q: What are the major functions in a business area? ▯ ▯ Research and Development: functional area responsible for conceiving and designing products. ▯ Manufacturing, Production, and Operations: Concerns whatever the company makes or whatever it does. ▯ Marketing, Sales, Distribution, and Customer Support: Marketing is charged with identifying opportunities in a marketplace, working with R&D to develop the products to address those opportunities, creating branding and advertising strategies to communicate with potential customers and setting prices. The sales function develops relationships with potential customers and persuades customers, transaction by transaction, to buy the company’s goods and services. ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ ▯ Business Class #3 & 4 9/10/15 – 9/15/15 : Chapter 2 ▯ ▯ What happen to the Greek economy? Greece took on a lot of debt to expand their economy. They couldn’t pay it back because their economy wasn’t growing. They don’t have their own currency. Instead of being productive and exporting, they’re accumulating debt. They need to cut back on expenses to generate more cash and lower their currency. ▯ The idea of having something to sell is taking the ingredients, putting the values together and adding value to every step. ▯ ▯ Market Share: the portion of the market controlled by a particular company or product ▯ People develop emotional connections with attractive things (ex: apple products) ▯ ▯ Economics is based on notions of scarcity ▯ Economics: the story of how a society uses it scarce resources in order to produce ▯ Two branches of economics: ▯ Microeconomics- individuals, businesses, etc. ▯ Macroeconomics- economy as a whole. ▯ Difference between GNP and GDP: measures of total productions ▯ GDP – Goods and services that are produced in the territory of the U.S. ▯ GNP – Goods and services that are produced in and out of the U.S; most of the companies are not American companies. ▯ Concepts of Macroeconomics: ▯ Supply and Demand ▯ Both supply and demand curve that meet, each one of them are a relationship. Demand curve is a relationship btwn price and quantity demanded. ▯ Natural Resources: land, forests, minerals, water, and other tangible assets usable in their natural state. ▯ Human resources: all the people who work in an organization or on its behalf. ▯ ▯ Midterm Question: IF THE FEDERAL RESERVE DECIDES TO RAISE INTEREST RATES, WOULD THAT HELP SPEED UP OR WOULD IT LOWER THE GROWTH RATE OF GDP? It could go down. ▯ ▯ Capital: The funds that finance the operation of a business as well as the physical, human-made elements used to produce goods and services, such as factories and computers. ▯ Entrepreneurship: the combination of innovation, initiative, and willingness to take the risks required to create and operate new businesses. ▯ Knowledge: expertise gained through experience or association. ▯ ▯ Scarcity: a condition of any productive resource that has finite supply. ▯ Opportunity cost: the value of the most appealing alternative not chosen. ▯ ▯ True or false: the U.S is purely an epileptic system: false b/c the gov’t is involved. ▯ Sweden is a socialist system. False b/c even though the gov’t is involved, they don’t own the factors. ▯ ▯ Free-market system: economic system in which decisions about what to produce and in what quantities are decided by the markets buyers and sellers. ▯ ▯ Capitalism: economic system based on economic freedom and competition. Nationalization: a gov’t’s takeover of selected companies or industries. Privatization: turning over services once performed by the gov’t and allowing private businesses to perform them instead. Demand curve is indirect. Supply curve: a graph of the quantities of a product that sellers will offer for sale, regardless of demand, at various prices. The equilibrium point is a dynamic point. It reaches bliss moving in. Competition in a Free-Market System Competition: rivalry among businesses for the same customers Pure competition: a situation in which si many buyers and sellers exist that no single buyer or seller can individually influence market prices. Monopoly: A Situation in which one company dominates a market tot the degree that it can control prices o The gov’t doesn’t like it Monopolistic competition: Oligopoly: a market situation in which a very small number of suppliers, sometimes only two, provide a particular good or service. ▯ Catergories of competition: Pure Competition: a situation in which so many buyers and sellers exist that no single buyer or seller can individually influence market prices. Monopolistic Competition: a situation in which many sellers differentiate their products from those of competitors in at least some small way. Oligopoly: a market situation in which a very small number of suppliers, sometimes only two provide a particular good or service. Pure monopoly: only one supplier in a give market; monopoly achieved without govt intervention, by innovation, specialization, exclusive contracts, or a simple lack of competitors Regulated monopoly: monopoly granted by govt mandate such as a license to cable tv and internet service. ▯ Business Cycles Recession: a period during which national income, ▯ ▯ ▯ Mergers ▯ ▯ Acquisitions ▯ ▯ Consolidation ▯ ▯ anti-trust ▯ ▯ Concentration means there is more barrier entries. ▯ ▯ Business Cycles Recession: a period during which national, income, employment, and production all fall; defined as at least six months of decline in the GDP Business cycles: fluctuations in the rate of growth that an economy experiences over a period of several years. ▯ ________ Flattens the ups and downs of the business cycle. ▯ ▯ The unemployment rate measures based on the number of people looking for jobs. The portion of the labor force(everyone over 16 who has or is looking for a job) currently without a job. Types of unemployment: o Frictional unemployment: the natural flow of workers into and out of jobs, such as when a person leaves one job without first lining up a new job. o Structural unemployment: a mismatch between workers’ skills and current employers needs. o Cyclical unemployment: caused by economic fluctuations; occurs when demand for goods and services drops, businesses reduce production, thereby requiring fewer workers. o Seasonal unemployment: predictable increases and decreases in the need for workers in industries with seasonal fluctuations in customer demand. ▯ ▯ Inflation: an economic condition in which prices rise steadily throughout the economy Scarcity; too much money in the market leads to a lot of spending. Personal Income goes up. Companies cant plan and difficult to invest. ▯ Deflation: an economic conditionin which prices fall steadily throughout the economy. Prices go down which is very dangerous. It creates its own momentum. The economy starts going down. Deflation leads to a decrease in demand. ▯ ▯ Define the role of gov’t in helping manage the economy. Has to protect stakeholders. Fostering competition – make sure there is some type of comp. – anti-trust Encouraging innovation and economic development Stabilizing and stimulating the economy. ▯ Regulation: relying more on laws and policies than on market forces to govern economic activity ▯ ▯ Deregulation: removing regulations to allow the market to prevent excesses and correct itself over time. ▯ ▯ Midterm Question: Is regulating concentrated industries more important than competitive industries? ▯ ▯ Stabilizing and stimulating the economy Monetary policy: gov’t policy and actions taken by the federal reserve board to regulate the nation’s money supply o federal reserve, interest rates, how much money is pumped or taken out of an economy Fiscal Policy: strategy for the use of gov’t revenue collection and spending, to influence the business cycle. o Taxes and budgets, federal reserve is independent and does not take orders from pres., congress True or false: o Fiscal policy would like to raise/lower interest rates: False What are the tools the federal reserve can use to increase/ decrease the amount of money in the economy? Interest rates ▯ ▯ Major Types of Taxes Income Real property Sales taxes Excise taxes Payroll taxes ▯ Midterm Questions: Define and give three example sof Leading and Lagging: o The statistics are economic indicators: Statistics that measure the performance of the economy. Two types: Leading: is designed to tell you what is likely to happen in the future o 3 examples: Housing starts Durable-goods orders Price indexes Lagging tells you what happened in the past o 3 examples: unemployment corporate profits labor cost per unit of output ▯ Describe: Price indexes Comsumer price index (CPI): a monthly statistic that measures changes in the prices of a representative collective of consumer goods and services. Producer price index (PPI): a statistical measure of price trends at the producer and wholesaler levels. ▯ Define GDP: the value of all the final goods and services produced by businesses located within a nation’s borders; excludes outputs from overseas operations of domestic companies. ▯ - The market is confused because of lack of stability. - Why is a slow down in china a very important thing for the economy? We have investments and enormous amounts of exports for china. The economy has been one of the engines of world growth. Which leads to instability. Instability is then affecting the U.S. economy. ▯ - Why is the stock market falling? ▯ ▯ - Globalization is the increasing tendency of the world to act as one market. It is a trend, not a fact. Access to products, goods, raw material they didn’t have b4 Trade More resources and efficiency Why would products be cheaper as a result of globalization? o Efficiency, advantage of lower labor costs, and competition. - Outsourcing: an issue or problem …. - What makes countries more competitive? o Social structure, investment, investment in infrastructure, education that should be free, etc. ▯ - How do you cooperate between managements and disputes? ▯ ▯ - Economic Globalization: the increasing integration and interdependence( if china has a cold, someone else has ammonia) of national economies around the world. Interdependence: if something happens somewhere, it affects another place. ▯ ▯ Why do nations trade? focusing on relative strengths expanding markets pursuing economies of scale acquiring materials, goods, and services keeping up with customers keeping up with competitors ▯ ▯ There are two kinds of expenses Fixed and variable ▯ ▯ How International Trade is Measured Balance of Trade: the value of products a nation exports minus the total value of the products it imports, calculated over a period of time Trade surplus: a favorable trade balance created when a country exports more than it imports. Trade deficit: an unfavorable trade balance is created when a country imports more than it exports Balance of payments: the sum of all payments a country receives from other countries minus the sum of all payments it makes to the other countries, over some specified period of time. What is the difference between a balance of trade and a balance of payments? Which one is a cash flow concept/ idea rather than an income statement idea? The trade is highly influenced by the exchange rate. Exchange rate: the rate at which the money of one country is traded for the money of another. o the price of one currency in exchange for another currency. ▯ Would we export more or less if the dollar is stronger? Less because the guy importing a movie from us would have to sell way more euros because the dollar is strong. ▯ ▯ More or less inflation if the dollar is high? Less inflation Who gains? Who loses from strong and weak currencies? Free trade: international trade unencumbered by restrictive measures Majority of gov’ts don’t impede trade, don’t come up with quotas and sanctions. Supporters of free trade generally acknowledge that it produces winners and losers but that the winners gain more than the losers lose, so the net effect is positive. The most important thing for trade union is having as many jobs for their members. ▯ Why are trade unions often against Naphtha? ▯ ▯ Government Intervention in International Trade Protectionism: government policies aimed at shielding a country’s industries from foreign competition Tariffs: taxes levied on imports Import Quotas: limits placed on the wuantity of imports a nation will allow for a specific product Embargo: a total ban on trade with a particular nation( a sanction) or of a particular product. ▯ ▯ Export Subsidies: a form of financial assistance, in which producers receive enough money from the government to allow them to lower their prices, in order to compete more effectively in the global market. Why is subsidies not allowed in certain cases? o Idea of international trade is to foster competition. Subsidies are interfering with the work of the market. They’re not letting the market decide who is more competitive. You can’t interfere with the process of competition. ▯ ▯ Dumping: charging less than the actual cost or less than the home- country prices for goods sold in other countries. ▯ Sanctions: politically motivated embargoes that revoke a country’s normal trade relations status; they are often used as forceful alternatives short of war. ▯ ▯ International Trade Organizations World Trade Organization (WTO): Permanent forum for negotiating, implementing, and monitoring international trade procedures and for mediating trade disputes among the 150 member countries. The International Monetary Fund (IMF): the IMF was formed to monitor global financial developments, provide technical advice and training, provide short-term loans to countries that are unable to meet their financial obligations, and work to alleviate poverty in developing economies. o The IMF help countries in financial difficulties but at the same time it creates a lot of animosity. The World Bank: founded to finance reconstruction after WW2 and is now involved in hundreds of projects around the world aimed at Trading Blocs: organizations of nations that remove trade barriers among their member countries and establish uniform barriers to trade with non- member nations North American Free trade country ▯ ▯ The Global Business Environment Culture: a shared system of symbols, beliefs attitudes, values, expectations, and norms for behavior. o Like an iceberg Ethnocentrism: judging all other groups according to the standards, behaviors, and customs of one’s own group. ▯ ▯ Licensing: agreement to produce and market another company’s product in exchange for a royalty or fee. ▯ Multination corporation (MNCs): companies with operations in more than one country. ▯ Multi domestic strategy: a decentralized approach to international expansion in which a company creates highly independent operating units in each new country. ▯ global strategy: a highly centralized approach to international expansion, with headquarters in the home country making all major decisions. ▯ transnational strategy: a hybrid approach that attempts to reap the benefits of international scale while being responsive to local market dynamics. ▯ ▯ Ethics: the rules or standards governing the conduct of a person or group ▯ Transparency: the degree to which affected parties can observe relevant aspects of transactions or decisions. ▯ ▯ What is ethical behavior? Competing fairly and honestly Communicating truthfully Being transparent Not causing harm to others ▯ ▯ Factors Influencing Ethical Behavior Cultural Differences > Knowledge > Organizational Behavior ▯ ▯ Organizational Behavior Code of Ethics: A written statement that sets forth the principles that guide and organization’s decisions Whistle-Blowing: the disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization. ▯ ▯ Ethical Lapse A situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical ▯ Ethical Dilemma A situation in which more than one side of an issue can be supported with valid arguments ▯ ▯ Conflict of Interest A situation in which competing loyalties can lead to ethical lapses, such as when a business decision may be influenced by the potential for personal again. ▯ Insider Trading The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market. ▯ ▯ Corporate social ▯ ▯ Assignemnt : research and find one instance in incident of insider trade and write 4-5 line description - typed
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