Business 101 Week One, Exam One In Depth Study Guide.
Business 101 Week One, Exam One In Depth Study Guide. Business 101
Popular in Business 101
Popular in Business
verified elite notetaker
verified elite notetaker
verified elite notetaker
verified elite notetaker
HIST 1010 - 001
verified elite notetaker
verified elite notetaker
This 7 page Study Guide was uploaded by Lisa Notetaker on Sunday August 21, 2016. The Study Guide belongs to Business 101 at Adult & Community Education taught by Sharon Dexter in Fall 2016. Since its upload, it has received 49 views. For similar materials see Business 101 in Business at Adult & Community Education.
Reviews for Business 101 Week One, Exam One In Depth Study Guide.
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 08/21/16
BUS10 1: Sharon Dexter: Week One: Context of Business. Highlight = Important Principle Highlight = Important Concept Highlight = Key Term oundless Business “What Is Business?” Section One: The Goals Of A Business. Learning Objective: Differentiate among potential goals of a business. To maximize profits for owners/stakeholders while being upholding corporate social responsibility. Economic value A principal challenge for a business is balancing the interests of individuals affected by: the business, and on occasion interests that are in conflict with each other. Others define this as serving the stakeholder’s interests solely, which include customers, employees, and society as a whole. Widely held concept that economic value added can become useful in when it comes to balancing profitmaking objectives with other ends. Social progress is an emerging theme for businesses. Key Terms: Stakeholder: Organization/person with a legitimate interest in a given situation, action or enterprise. Corporation: Group of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers, liabilities distinct from those of its members. Corporate Social Responsibility: Companies sense of responsibility towards the community and environment (ecological and social) in which it operates. Companies express this this citizenship through: 1. Their waste and pollution reduction processes, 2. Contributing educational and social programs, 3. Earning adequate returns on the employed resources. Main Point: Although America has bypassed Europe in terms of growth of revenue, social responsibility could have played a role so revenue alone cannot be the sole factor in this growth. Main Point: Stakeholder theorists believe that individuals who have legitimate interests in a business ought to hold significant influence over its operations, while consumers and members of the community in question should have leeway in how the decision making affects them if they are significant contributors (deciding how the business runs.) Main Point: Advocates of business contract theory believe that a business consists of a community of participants, which is organized around a common purpose. This style of the business being run by managers and employees is seen as a type of representative democracy. Goals of a Business. The goals of any business, in any type of setting. Profit Maximization: To maximize profits for its owners and in a publiclytraded company, the stockholders own the company. Social Benefit: Principal challenge for a business is to balance interests of individuals affected by the business. Emerging new theory suggests that customers share a “ecosystem” with employees and society and the “long term health”” of this must be maintained over the long haul. Innovation as a goal: The idea of creative expansion from the perspective of all stakeholders, including employees. Theories that exist to support these points are as follows: Contract Theory: Belief that business is a community of participants organized around a common purpose. Stakeholder Theory: Belief that people who hold a legitimate interest in a company also ought to have a voice in how the business is run. Business As Property: Belief that a business/company is someone else’s property and therefore owner’s have the right to dispose of it as they see fit, within the confines of the law and morality. This also includes the belief that workers nor consumers have any rights whatsoever over the property, except the protection against harm without their consent. Section Two: Benefits of Organization. Organization helps business achieve focus and success in reaching their goals. Learning Objectives: Explain the role of specialization, delegation, and departmentalization in effective organization. Recognize the benefits of organization. Key Points: Organization: is the composition of individuals/groups directed towards a coordinated goal. : Division of labor: is the assigning of responsibility for each organizational component to specific workers/group of workers. Specialization :is division of labor with the added stipulation that the responsibility of each task lies with a designated expert in that field. : Good organizational structure: is essential for expanding business activity as well as determines that input resources needed for the expansion of a business activity. Key Terms: Efficiency: The extent to which time is well used for the intended task. Resource: Something that one uses to achieve an objective. Example of elements mentioned above: Functional authority: is where managers have formal power over a specific subset of activities, Organization and Goal Orientation: Organizations have their individual goals and objectives. It utilizes organization as the ends to the means of achieving overall goals. Individuals are grouped into departments where work is coordinated and directed towards organizational goals. This allows for effective continuity, effective management, growth and diversification along with optimizing the use of resources and providing proper treatment to employees. Specialization and Division of Work: This philosophy is centered on the concepts of specialization and division of work. Division of work: Refers to assigning responsibility for each organizational component to specific individual/group. Specialization: Occurs when the responsibility for a specific task lies with a designated expert in that field. Delegation: The process managers to transfer authority and responsibility to positions below them. Departmentalization: Basis of which individuals are grouped into departments Options for approaching this include: 1. Functional: Common work tasks/skills. 2. Divisional: Common product, program, geographical location. 3. Matrix: Combination of functional and divisional. 4. Team: To accomplish specific tasks. 5. Network: Departments are independent, providing functions for a central core breaker. Section Three: Addressing Market Needs. In today’s business environment, ascertaining market needs is vital for a firm’s future viability and even existence as a going concern. Learning Objectives: Recognize the needs for markets. Describe the relationship between the market and a consumer. Key Points: A market is one of many varieties of systems, institutions, procedures, social relations, and infrastructures whereby parties engage in exchange (trade.) Market Orientation: Many companies today have a customer focus This implies that the company focuses its activities and products on consumer demands. . Market research is for discovering what people want, need, believe and behave. Market segmentation is the division of of the market/population into subgroups with similar motivations. Key Terms: Market: Group of potential customers for one’s product. Demand: The desire to purchase goods/services, coupled with the power to do so, at a particular price. Examples of above mentioned terms are as follows: Markets vary in form, scale, location and types of participants, goods and types of goods and services traded. Market examples include: Physical markets,(farmers markets, shopping centers, shopping malls),Nonphysical markets: internet markets, adhocs, auction markets, markets for intermediate goods used in production of other goods and services, labor markets, international currency and commodity markets, stock markets, artificial markets created by regulation to trade rights for derivatives designed to ameliorate externalities: pollution permits, illegal markets (drugs) arms, or pirated products. What is a market? Any structure that allows buyers and sellers to exchange (trade) any type of good/service/information. There exists two differing routes in the markets: buyers/sellers. It allows for trade and enables distribution/allocation of resources in a society. Supply and Demand: Markets allow for evaluation/pricing of any tradeable good, is done spontaneously, or by human interaction. Any firm in the market survives only by producing goods which consumers are able/willing to buy and ascertaining market needs is vital for the firm’s future viability. In the customer driven approach, consumer wants are what drives all strategic marketing decisions. No decision is decided for certain until it passes the consumer test. Market Research: Key factor in gaining competitive advantage and is a necessary component to determine market needs that can be met. In other words, it’s the systematic gathering and interpretation of information about individuals, organizations, through the usage of statistical, analytical methods in order to gain insight, support any decision making, which includes social/opinion based research. Thus determining size, need, competition. Market Trends: Upward/downward movement of a market over a period of time. This is another option for determining the needs of markets and striving to meet them. This is made all the more difficult is the market being researched is new,deriving figures from a number of potential customers or customer segments. Beyond this, information about competition, customers, and marketing effectiveness. Section Four: Profit and Value. Learning Objective: Differentiate between profit and value. Key Points: Opportunity Costs: Explicit/implicit of a venture to an investor, where economic profit is the difference between a firm’s total revenue and all costs (includes normal profit.) Since profit is defined as the difference in total revenue and total cost, the firm achieves a maximum profit by operating at the point where the difference between the two is at its greatest. Value: Linked to profit maximization. Key Term: Game Theory: Branch of applied mathematics which studies strategic situations in which individuals/organizations choose various actions in an attempt to maximize returns. Profit The difference between purchase and component costs of delivered goods/services/operating costs/expenses. In both Classical and Marxian economics, profit refers to the return of a capital stock (means of production/land) to the owner in any pursuit involving labor, as well as a return on bonds and money invested in Capital Markets. The maximization of of profit corresponds to the accumulation of capital, the driving force behind any economic activity in apital economic systems. Definitions of profit: Gross Profit: Sales revenue minus the cost of goods sold (COGS) removing part of the expenses of which can be traced to production/purchase of goods. EBITDA: Earnings Before Interest, Depreciation, and Amortization, is sales revenue minus cost of goods sold and all expenses total before Interest, depreciation, amortization, and taxes. EBIT: Earnings before taxes, operating profit, equals sales revenue minus cost of goods sold and all expenses before taxes. Also known as: pretax book income (PTBI), net operating income before taxes, pretax income. Earnings After Tax: lso known as net profit after taxes, equals sales revenue after deducting all expenses, including taxes unless an exception of distinction about treatment of extraordinary expenses is in place, also known as net income. Section 5: Profit and Stakeholders. A stakeholder is any group or individual who can affect or is affected by achievement of a group’s objectives. Learning Objectives: Understand the responsibilities of stakeholders. Compare/contrast Stakeholders/Shareholders. Key Points: Stockholders:Owners of the company, and the firm has a binding fiduciary duty to put their needs first which increases value. Stakeholder: theory argues that are other parties involved,which includes government, political groups, trade unions, communities, associated communities, prospective employees/customers, and general public. This may or may not, include competitors. Agreed upon theory suggests that an organization should be just and fair, to achieve satisfaction amongst all members included, rather than only chasing profits. Key Terms: Fiduciary Duty: Legal/ethical relationship of confidence/trust between two or more parties. Usually involves the care taking of money for another party. Stockholder: One who owns stock. Stakeholder: Person/organization with a legitimate interest in a given situation, action, enterprise. What is a stakeholder? Internal Stakeholders: Employees, Manager, Owners. External Stakeholders: Suppliers, Society, Government, Creditors, Shareholders, Customers. Market Stakeholders: T hose parties that engage in economic transaction with a business. NonMarket Stakeholders: Parties that do not engage in economic transactions with a business, however they can affect its actions. Stakeholders, Corporate Responsibility, and Profits. Stakeholders focus on corporate responsibility, as opposed to corporate profitability. An organization is a coalition between all stakeholders and exists to increase the commonwealth of all parties. Section Six: The Role Of The Nonprofit. Nonprofits play a vital role in society by focusing resources and providing services to community needs without regard to profit. Learning Objectives: Identify the roles of nonprofits in society. Outline the characteristics of a nonprofit. Key Points: NPO’s (NonProfit Organizations): W hile NPO (NonProfit Organizations) are allowed to generate surplus revenue, these revenues must be kept by the organization for: selfpreservation, expansion or plans. Some NPO’s are known are known as charities/service organizations. These can be organized as corporations, trusts, or cooperatives or they might be informal. Both NPO’s and Corporate organizations (for profit) have board members (this is mandatory) steering committee members, and/or trustee’s who owe the organization a fiduciary duty of loyalty and trust. Many also have paid staff, which includes management, while a few might employ people in an unpaid position, such as volunteers, and even executives who may probono (free) or for a small wage. Key Terms: Fiduciary: Related to trusts and trustees. Jurisdiction: The limits/territory which authority may be exercised. Dividend: Pro Rata payment of money by a company to its shareholders usually made quarterly/annually. NonProfits Defined. Rather than distributing profits/dividends, they retain earnings/surplus revenues to achieve goals. An organization is deemed nonprofit status under the Internal Revenue Code Section 501c. Some of these organizations are charitable/service organizations...they might be organized as a corporation a cooperative or a trust. Likewise, a supporting operates like a foundation but is more complicated to manage and operate, however it owns a more favorable tax bracket, and is limited in which public charities it can support. For the purpose of legal classification, the following important elements include: Economic Activity. Supervision/Management Provisions. Representation. Accountability/Auditing Provisions. Provisions for the amendment of the statutes/articles of incorporation. Provisions for the dissolution of the entity. Tax status of of corporate and private donors. Tax status of the foundation. How are they formed? In the United States, most nonprofits are formed by filing bylaws and articles of incorporation in the state which they intend to operate. However, in some jurisdictions, some of the above must be expressed in the Charter of Establishment. The act of incorporating establishes a legal entity, therefore enabling the organization to be treated as a corporation by law and to enter into business dealings, form contracts, and own property. Many countries have which regulate the establishment/management of NPO’s therefore requiring compliance with corporate governance regimes. Several larger organizations are required to publish financial reports and income expenditures publicly, detailing their income. In some countries, NPO’s may be allowed to file for a tax exempt status. Which therefore allows the establishment itself to be exempt from income and other taxes. This applies in the U.S, however to be exempt from federal income taxes, the organization must meet criteria set forth by the IRS. The application is then reviewed to ascertain it meets the conditions,such as purpose, limitations n spending, and internal safeguards for a charity,. After this process is complete, the IRS may issue an authorization letter to the nonprofit granting tax exempt status, such as pertains to filing income taxes, payment and deducting purposes. This does not extend to employment taxes. Federal exempt status does not guarantee exemption from state and local taxes and vice versa.
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'