Exam 1 Study Guides
Exam 1 Study Guides MIE 201
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This 15 page Study Guide was uploaded by Jenna Loehrer on Wednesday September 21, 2016. The Study Guide belongs to MIE 201 at North Carolina State University taught by M.K. Ward in Fall 2016. Since its upload, it has received 5 views. For similar materials see Intro to Management in Management at North Carolina State University.
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Date Created: 09/21/16
MIE UNIT 1 STUDY GUIDE CHAPTER 1 Explain the concept of adding value in a business and identify the major types of businesses ● A method of understanding what any business does is to view it as a system for meeting customer’s needs by transforming lowervalue inputs into higher value outputs. List three steps you can take to help make the leap from consumer to business professional ○ 1) develop a business mindset that views business from the inside rather than outside ○ 2) recognize the positive and negative effects of a business on society ○ 3) develop a business vocabulary/explore the field of business Identify seven components of professionalism ● Striving to excel, being dependable and accountable, being a team player, communicating effectively, demonstrating etiquette, making ethical decisions, and maintaining a positive outlook What are the major types of businesses? ● Goodsproducing businesses: make things that are tangible and intangible (software, digital products, etc) ○ Often capitalintensive: capital needed to compete is a barrier to entry (something the company must have before it can start competing in a market) ● Service businesses: create value by performing activities (construction, entertainment, etc) What are the environments of business? ● Social environment: the trends and forces in society at large ○ Ex: population trends like the Baby Boom generation that change the composition of consumers, social values/behaviors, relationship of society and business ○ Stakeholders: all groups affected by a company’s activities ● Technological environment: stems from the practical application of science to innovations, products, and processes ○ Disruptive technologies: change the nature of industry and have the power to destroy entire companies (internet, mobile phones/ mobile connectivity, social media, etc) ■ Mobile connectivity also helps companies: boost employee productivity, help companies form closer relationships with customers/business partners, spur innovation in products/services ■ Firms on leading edge of mobile revolution work to integrate mobile tech throughout organizations ● Economic environment: the conditions and forces that affect cost and availability of goods, services, and labor and thereby shape the behavior of buyers and sellers ○ Help companies by increasing demand and supporting higher prices for their products ■ But also can raise costs of labor and materials ■ Strong economy can prompt business to make unwise long term choices for when economy slows down ● Legal and regulatory environment: the sum of laws and regulation at local, state, national, and even international levels ○ Policies and gov bodies support businesses operating in their jurisdiction ■ Companies prefer to locate and do business in jurisdictions that offer lower costs, lower complexity, and greater stability/predictability MIE UNIT 1 STUDY GUIDE What are the major functional areas of business? ● Research and development: conceive and design products (product design/engineering) ○ Design new and better ways to run their operations ○ Information technology (IT) systems that promote communication and information usage through the company or that allow companies to offer new services to their customers ● Manufacturing, production, and operations: concerns whatever the company makes or does (good or service) ○ Supervise actual production activity, purchasing, logistics, and facilities management ● Marketing, sales, distribution, and customer support ○ Marketing: identifying opportunities in the marketplace, work with R&D, set prices ○ Sales: develop customer relationship ○ Distribution: before and after sale (promote and deliver) ○ Customer support: make sure customers have info they need ○ Shift to social media puts more power into buyers hands ● Finance and accounting ○ Ensure funds needed to operate, monitor and control ○ Financial managers are responsible for planning ○ Accounting managers are for monitoring and reporting ● Human resources (HR) ○ Recruiting, hiring, developing, and supporting employees ○ Oversees processes and supports the other departments ○ Make sure company is in compliance with laws of employee rights and safety ● Business Service: help companies with specific needs in law, banking, real estate, and others ○ Performed by inhouse staff, external firms, or combo of both What are some potential careers in business? ● Operations manager: encompasses all the people and processes used to create the goods and perform the services ○ Fluctuating demand levels and with process and supply problems ● Human resources specialist: plan and direct personnelrelated activities (recruiting, training/development, compensation/benefits, employee and labor relations, health/safety) ○ Keep best talent on the market ● IT manager: design, implement, and maintain systems that help deliver the right information at the right time to the right people in the organization ● Marketing specialist: branding strategy, electronic commerce, advertising, public relations, creative communication, interpersonal relations, or social media ● Sales professional: building relationships with customers and helping them make purchase decisions ○ Often have quotas to meet ● Accountant: math and business ○ Management: collecting, analyzing, and report on financial matters (budget, costs, federal tax returns) ○ Internal auditors: verify work of company accounting to improve efficiency ○ Public accountants: accounting, tax prep, and investment advice ○ External auditors: verify financial report of public companies as required by law ○ Forensic accountants: investigate financial crimes ● Financial manager: Controller, treasurers and finance officers, credit managers and cash managers MIE UNIT 1 STUDY GUIDE Define professionalism. ● Professionalism: the quality of performing at a high level and conducting oneself with purpose and pride ○ Striving to excel: build career ○ Being dependable and accountable ○ Being a team player ○ Communicating effectively ○ Demonstrating etiquette ○ Making ethical decisions ○ Maintaining a confident/positive outlook CHAPTER 2 Define economics, macro and micro. ● Economy: the sum total of all the economic activity within a given region ● Economics: the study of how a society uses its scarce resources to produce and distribute goods and services ● Microeconomics: study of economic behavior among consumers, businesses, and industries that collectively determine the quantity of goods and services demanded and supplied at different prices ● Macroeconomics: study of a country’s larger economic issues such as how firms compete, the effect of government policies, and how an economy maintains and allocates its scarce resources List and define factors of production ● Factors of production: e conomic resources 1) Natural resources: things that are useful in their natural state (land, forests, minerals, water) 2) Human resources: people and their individual talents and capacities 3) Capital: money, machines, tools, and buildings that a business needs in order to produce goods and services 4) Entrepreneurship: the spirit of innovation, the initiative, and the willingness to take the risks involved in creating and operating businesses 5) Knowledge: the collective intelligence of an organization What are the strengths and weaknesses of the major economies in the world? Define scarcity and how does it affect economies? ● Scarcity: condition of any productive resource that has a finite supply ○ Two effects of scarcity: ■ Creates competition for resources ■ Forces tradeoffs on the part of every participant in the economy MIE UNIT 1 STUDY GUIDE Define opportunity cost and be able to identify an example. ● Opportunity Cost: value of the most appealing alternative not chosen ○ Give up sleep to study → opportunity cost is sleep Compare freemarket and planned systems. ● Freemarket system: individuals and companies are largely free to decide what products to produce, how to produce them, whom to sell them to, and at what price to sell them ○ Capitalism and private enterprise: private parties own and operate the majority of businesses and where competition, supply, and demand determine which goods and services are produced ● Practice of limited intervention is characterized by a mixed economy/mixed capitalism which is the gov of the US ○ Intervene by: tax incentives, prohibiting or restricting the sale of certain goods and services, or setting price controls ● Planned system: governments largely control the allocation of resources and limit freedom of choice in order to accomplish government goals ○ Communism ● Socialism lies between capitalism and communism: high degree of government planning and some government ownership of capital resources but this ownership tends to be focused on industries considered vital to the common welfare What are the 3 major types of systems, advantages and disadvantages? ● Communism ○ State ownership of all major productive resources ○ Absence of economic classes ○ Few opportunities for entrepreneurship ● Socialism ○ State ownership of certain productive resources ○ Managed efforts to minimize dramatic differences between economic classes ○ Opportunities for entrepreneurship, with varying degrees of restrictions ● Capitalism ○ Private ownership of most productive resources ○ Few efforts to minimize differences between economic classes ○ Government policies actively support entrepreneurship How do nationalization and privatization change economic systems? ● Nationalizing: government’s takeover of selected companies or industries ○ Towards Socialism ● Privatizing: turning over services once performed by the government to private business ○ Towards Capitalism What are the types of competition, characteristics, and choice? Pure Competition: situation in which so many buyers and sellers exist that no single buyer or seller can individually influence market prices ● Characteristics: ○ Many small suppliers ○ Virtually identical products ○ Low barriers to entry ● Price Competition: ○ No single firm can grow large enough to influence prices across the market ● Buyer’s choices: Extensive Monopolistic Competition: ● Characteristics: ○ Can have few or many suppliers, of varying sizes ○ Products can be distinguished but are similar enough to be replacements ○ Variable barriers to entry but market to open to all ● Price Competition: ○ Firms that excel in one or more aspects can gain some control over pricing ● Buyers’ choices: Extensive Oligopoly: ● Characteristics: ○ Small number of suppliers, even as few as just two (a duopoly) ○ Products can be distinguished in important ways, but replacements are still available ○ Barriers to entry tend to be high, making entering the market difficult ● Price Competition: ○ Individual firms can have considerable control over pricing ● Buyers’ choices: Limited Pure Monopoly: ● Characteristics: ○ Only one supplier in a given market ○ Monopoly achieved without government intervention, by innovation, specialization, exclusive contracts, or a simple lack of competitors ○ Products are unique, with no direct replacements available ○ Barriers to entry are extremely high, making entering market difficult or impossible ● Price Competition: ○ Suppliers can charge as much as they want, at least until people stop buying ● Buyers’ choices: None MIE UNIT 1 STUDY GUIDE Regulated Monopoly: ● Characteristics: ○ One one supplier in a given market ○ Monopoly granted by government mandate, such as license to provide cable TV and internet service ○ No product competition allowed ● Price Competition: ○ Prices are set by government mandate ● Buyers’ choices: None Define recession, depression, business cycles, contraction, and expansion. ● Business Cycles: fluctuations in the rate of growth that an economy experiences over a period of several years ● Recession: period during which national income, unemployment, and production all fall; defined as at least six months of decline in GDP ● Depression: no exact time limit, usually involves collapse of major industry ● Contraction: c ustomers lack spending money ● Expansion: economy is growing, increasing number of jobs, healthy amount of innovation, customers have spending money Define unemployment rate and define and give examples of 4 types. ● Unemployment rate: portion of the labor force currently without a job(everyone over 16 who has or is looking for a job) ● Frictional Unemployment: “natural” flow of workers ○ Ex: someone leaves their job without lining up another job ● Structural Unemployment: mismatch between workers skills and what their employer is looking for ○ Ex: someone can't find a job that matches their qualifications ● Cyclical Unemployment: caused by economic fluctuations, happens when demand for goods and services drops ○ Ex: during contraction cycle, someone loses job because not enough people want to buy their product ● Seasonal Unemployment: predictable increases and decreases in the need for workers in industries with seasonal fluctuations ○ Ex: farmer doesn’t have work in the winter Outline the debate of government regulation or deregulation. MIE UNIT 1 STUDY GUIDE ● Increased regulation is useful because companies can’t always be counted on to protect stakeholder’s interests and the market can’t be relied on to prevent/punish abuses or failures What are the four major roles of the government in a free market system? 1. Protecting stakeholders 2. Fostering competition 3. Encouraging innovation and economic development 4. Stabilizing and stimulating the economy Define and give examples of antitrust legislation. ● Antitrust Legislation: limit what businesses can and cannot do to ensure that all competitors have a fair chance of succeeding Compare fiscal and monetary policy. ● Fiscal Policy: use of government revenue collection and spending to influence the business cycle ○ On revenue side governments can adjust income tax rate, goal is that businesses and consumers will spend and invest money they save ■ When government decreases income tax rate, goal is that businesses and consumers will spend and invest money they save ○ On expenditure side government can increase their purchases to possibly create new products or programs with the goal of expanding employment opportunities and increasing demand for goods and services ● Monetary Policy: government policy and actions taken by Federal Reserve Board to regulate nation’s money supply ○ Adjusting the amount of “spendable money” in economy by increasing or decreasing interest rates What are the major economic monitors and measures? What are the current numbers for the US on these measures? ● Economic Indicators: statistics that measure the performance of an economy ○ Leading indicators: suggest changes that may happen in the future ■ Ex: Housing market, retail sales ○ Lagging indicators: provide confirmation that something has occurred in the past ■ Ex: Unemployment rate, currency strength CHAPTER 3 MIE UNIT 1 STUDY GUIDE Why do nations trade? ● Economic globalization: increasing integration and interdependence of national economies around the world ● Focusing on relative strengths: comparative advantage suggests that each country should specialize in those areas where it can produce more efficiently than other countries ● Expanding markets ● Pursuing economics of scale: enable them to produce goods and services at lower costs by purchasing, manufacturing, and distributing higher quantities ● Keeping up with customers: companies expand in order to keep/attract multinational customers ● Keeping up with competitors What elements have made the level of global trade growth possible? ● World’s borders are much more open to trade thanks to international trade organizations ● Advances in communication and transportation technologies have made global transfer safer, easier and more profitable List and define key measurements of international trade. ● Balance of Trade: total value of a country’s exports minus the total value of the imports over a period of time ○ Trade Surplus: positive balance of trade ○ Trade Deficit: imports more than exports ● Balance of Payments: total money that flows into a country minus total flow of money out of the country ○ Includes things such as tourism Explain exchange rates. ● Foreign Exchange: conversion of one currency into the same amount of another currency ● Exchange Rate: number of units of one currency exchanged for the second currency ● Floating Exchange Rate System: currency’s value or price fluctuates in response to forces of global supply and demand Compare a strong and weak dollar. ● Dollar is strong when its exchange rate is higher than normal ● Dollar is weak when its rate is lower than normal What are the arguments for and against free trade advantages? ● Free Trade: trade that takes place without intensive interferences ● Benefits: based on assumptions that nations don't take artificial steps to minimize their own weaknesses or to reduce the natural advantages of other countries MIE UNIT 1 STUDY GUIDE ● Disadvantages: Unfair to too many people and threat to middle class; easy for companies to exploit workers List and give examples of government intervention tools in international trade. Compare and contrast WTO, IMF, and the World Bank. ● World Trade Organization: permanent forum for negotiating, implementing, and monitoring international trade procedures and mediating trade disputes among 160 member countries ○ 5 principles: 1) Preventing discriminatory policies that favor some trading partners over others 2) Reducing trade barriers between countries 3) Making trade policies more predictable and less arbitrary 4) Discouraging unfair practices 5) Promoting economic progress in lessdeveloped countries ● International Monetary Fund: 188 member countries; monitor global financial developments, offering technical advice and training to help countries manage their economies more effectively, and providing shortterm loans to member countries ● World Bank: group of five financial institutions whose goals are eradicating the most extreme levels of poverty around the world and raising the income of the poorest people in every country as a way to foster shared prosperity What are the major trading blocs and what is their purpose? ● Trading blocs: regional organizations that promote trade among member nations and ensure the economic growth and benefit of members ○ North American Free Trade Agreement (NAFTA): United States, Canada, and Mexico formed for free flow of goods, services and capital ■ Elimination of tariffs and quotas ○ European Union (EU): eliminated hundreds of local regulations, variations in product standards and protectionist measures that once limited trade among member countries ■ Currency Euro ● Made transactions easier and less expensive, lowered inflation and interest rates, improved transparency in pricing, provided more stable currency ○ AsiaPacific Economic Cooperation: work to liberalize trade in pacific rim and achieve sustainable economic growth ○ TransPacific Partnership: potentially major trade agreement involving about 12 countries Discuss cultural and legal difference in global competition. ● Culture: system of symbols, beliefs, attitudes, values, expectations, and norms for behavior ● Stereotyping: assigning generalizations ● Ethnocentrism: tendency to judge all other groups according to one’s own standards, behaviors and customs MIE UNIT 1 STUDY GUIDE ● How to communicate with someone from another culture: ○ Be alert to another person’s customs ○ Deal with the individual ○ Clarify your intent and meaning ○ Adapt your style to the other person’s ○ Show respect What is the FCPA? ● Foreign Corrupt Practices Act (FCPA): outlaws payments with the intent of getting government officials to break laws in their own countries or to secure “improper advantage” in gaining or retaining sales ○ Tax Haven: country whose favorable banking laws and low tax rates give companies the opportunity to shield some of their income from higher tax rates in their home countries or other countries where they do business List and define three organizational strategies for international expansion. ● Multidomestic Strategy: company creates highly independent operating units in each new country ○ Basically independent companies ● Global Strategy: company embraces the notion of economic globalization by viewing the world as a single integrated market ● Transnational strategy: company uses a hybrid approach as it attempts to reap benefits of international scale while being responsive to local market dynamics List and give examples of the 5 functional strategies for international expansion. 1. Importing and exporting: a. Importing: purchasing goods or services from another country and bringing them into one’s own country b. Exporting: selling and shipping goods or services to another country 2. International licensing: agreement to produce and market another company's product in exchange for a royalty or free 3. International franchising: selling the right to use a business system, including brand names, business processes, trade secrets and other assets a. Reduces costs and risks of expanding internationally while leveraging their investments in branding and business processes b. Ex: Mcdonald's 4. International strategic alliances and joint ventures: a. Strategic alliances: longterm partnerships between two or more companies to jointly develop, produce, or sell products b. Joint venture: two or more firms join together to create a new business entity that is legally separate and distinct from its parents MIE UNIT 1 STUDY GUIDE 5. Foreign direct investment: investment of money by foreign companies in domestic business enterprises How are organizational and functional strategies different? ● Organizational strategies: multidomestic strategy, global strategy, transnational strategy ● Functional strategies: products, customer support, promotion, pricing, staffing CHAPTER 4 Define ethics. ● Ethics: principles and standards or moral behavior that are accepted by society as right and wrong ● Competing fairly and honestly ● Communicating truthfully ● Being transparent ○ Transparency: degree to which information flows freely within an organization, among managers and employees, and outward ● Not causing harm to others ○ Insider trading: company insiders use confidential information to gain an advantage in stock market trading (harms investors) What are the factors influencing ethical behavior? ● Cultural differences ● Knowledge ● Organizational behavior ○ Whistleblowing Define code of ethics and whistleblowing. ● Code of Ethics: written statement that sets forth the principles that guide an organization’s decisions ● Whistleblowing: disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization What is the difference in ethical lapse and ethical dilemma? ● Ethical Lapse: situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical ○ Know that choice is wrong, still makes the bad choice ● Ethical Dilemma: situation in which more than one side of an issue can be supported with valid arguments ○ Don’t know the difference between right and wrong when choice is made MIE UNIT 1 STUDY GUIDE Define CSR. ● Corporate Social Responsibility: idea that business has an obligation to society beyond the pursuit of profits What is the relationship between business and society? ● Businesses and society clearly need each other to function (!!!!) What is the difference in philanthropy and strategic CSR? Know examples. ● Philanthropy: donating money, employee time, or other resources to various causes without regard for any direct business benefits for the company ● Strategic CSR: social contributions that are directly aligned with a company’s overall business strategy (company helps itself and society at the same time) What are the four perspectives on CSR, and know examples of each. ● Minimalist CSR: only social responsibility is to pay taxes and obey the law ○ Some say it is related to collectivism ● Defensive CSR: many companies receive pressure from activists and nongovernmental organizations (nonprofit groups that provide charitable services or promote causes) ○ Company will only address an issue because it was embarrassed into action ● Cyclical CSR: company accused of irresponsible behavior promotes itself as being socially responsible without making substantial improvements in its business practices ● Proactive CSR: company leaders believe that they have a social responsibility beyond making a profit, and they back up their beliefs with actions taken on their own initiative ○ Benefit corporation: builds proactive CSR into a company’s very foundation and legally obligates it to pursue a social/environmental goal Explain cap and trade. ● Cap and Trade: programs try to balance freemarket economics with government intervention ○ Max allowable amount of a particular pollutant that a designated group is allowed to emit (“cap”) ○ Company can trade for more emissions or sell them Define sustainable development. ● Sustainable development: development that “meets the needs of the present without compromising the ability of future generations to meet their own needs” Define Consumerism. ● Consumerism: movement that pressures businesses to consider consumer needs and interests ● Right to be informed ● Right to choose ● Right to be heard MIE UNIT 1 STUDY GUIDE ● Right to buy safe products Define affirmative action – what do proponents and opponents say about it? ● Affirmative action: encourage organizations to recruit and promote members of groups whose past economic progress has been hindered through legal barriers or established practices ○ Usually refers to programs based on race ○ Many Claims: ■ Doublestandard ■ Crucial to ensure equal opportunities What is the ADA? ● Americans with Disabilities Act (ADA): guarantees equal opportunities in housing, transportation, education, employment, etc. for those with disabilities ○ Employers required to make accommodations to meet needs of disabled employees Unit 1 Review ****NEED Laptop for Test Day**** Chapter 1 1. A firm uses strategic sourcing techniques to reduce its costs. This is an example of barrier to entry a. True b. False; because barrier to entry is ___ 2. Island Woodworking is a small business owned by Robert, who makes handcrafted tables and rocking chairs. Robert employees three other woodworkers to help him create it. What type of business is this? a. Goodsproducing business b. Labor intensive business c. Service business d. Merchandising business e. Non for profit business Chapter 2 3. When a downward swing or recession is over, the economy enters into a period of ______. a. Recovery b. Depression c. Contraction d. Stagnation e. Repercussion 4. The point at which the demand and supply curves intersect the point at which the quantity demanded and supplied are equal is called _____. a. Equilibrium point b. Aggregation point c. Marginal point d. Break even point e. Distribution point Chapter 3 5. Economics of scale are savings from not buying too much of any one thing. a. True b. False 6. Comparative advantage theory states that countries should produce and sell to other countries those things it can produce most efficiently. a. True b. False Chapter 4 Unit 1 Review 7. The _______ to resolving ethical dilemmas involves choosing the option that delivers the most good for the most people (or protects the most people from a negative outcome)/ a. Justice approach b. Utilitarian approach c. Individual rights approach d. Individual responsibilities approach 8. Which of the following is TRUE about strategic CSR? a. It involves donating money, employee time, or other resources to various causes without regard for any direct business benefits to company. → philanthropy b. It is an attempt to balance freemarket economics with government intervention c. Refers to organizational growth that meets the needs of the present without compromising the ability of future generations to meet their own needs → sustainable development d. It involves social contributions that are directly aligned with a company’s overall business plans e. Refers to argument that firms should indulge in philanthropy only when there is no conflicts of interest with the profitability of the firm
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