BMGT Study Guide
BMGT Study Guide BMGT110F
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This 12 page Study Guide was uploaded by Lucy Notetaker on Monday October 17, 2016. The Study Guide belongs to BMGT110F at University of Maryland taught by Richard Hutchins in Fall 2016. Since its upload, it has received 96 views. For similar materials see Introduction to the Business Value Chain in Business at University of Maryland.
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Date Created: 10/17/16
BMGT 110 Study Guide Hi fellow businesspeople. As I was reading through my class notes, I realized how much material there was for this class. None of it seemed to logically link up. I think I was able to make it decently organized in this study guide and I really hope this helps. If there is a specific chapter that you are insanely confused about, I have notes posted for chapters 2-7 (sorry, I started slacking when I had other midterms). There will probably not be individual notes for the other chapters. I’m in full on midterm mode as of right now. 8/31 Lecture 3 primary accounting statements… 1. Income statement- (revenue-expenses=net income) it could be a profit or loss. If a company is only talking about revenue and not net income, you should be skeptical. 2. Balance Sheet, Assets of a Company- (assets=liability+net worth) negative liabilities mean the company owes money, if liabilities are more than assets then net worth is negative 3. Statement Cash Flows- (beginning tax+/- cash=ending cash) Your ending cash must match the bank statement Random Accounting Tips - Cash flow is always set in stone, it’s how much cash you have in your hand at a given time - If assets are overstated then net worth is overstated - Income statements and balance sheets can be falsified Global Competition - More competitive countries will have more wealth - Top 3 competitive countries are Switzerland, Singapore and the US - Bottom 3 are Yemen, Chad and Guinea - The factors of competitiveness are prosperity reforms, investing, and private public collaboration Business Friendly States - Top 5 business friendly states are Utah, Texas, Colorado, Minnesota, and North Carolina - High tax states are not business friendly Quick Discussion on Walmart - It’s located in Bentonville Arkansas - If Walmart happens to move into your town and you are a small business you will need to change your focus to the service industry or fill a niche that Walmart can’t fill to stay in business Lecture on 9/7 and Chapter 1 important terms Business Stakeholders- all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address. - Basically, if you care about a business, even just a little but then you are a stakeholder - Common stakeholders are customers, employees, suppliers and dealers - Sometimes to respond to demands a company will outsource- contract with other companies (in other countries typically) to do some or all functions of a firm - This could lead to great economic success, but takes away domestic jobs - Because of the latter some companies choose to insource- foreign companies that decide to locate in the US (Japanese automaker, Toyota comes to the US) Beyond Profit - Some companies do not live and breathe profit, they stand for social issues - Non profit organizations- an organization whose goals do not include making a personal profit for its organizers - Financial gains go towards the issue at hand Productivity and E-commerce - Productivity- the amount of output you generate given the amount of input (e.g. hours worked) - For example, if you study for this midterm for 20 minutes and get a 100% you had more productivity than someone who studied for 3 hours and got an 80% (so many factors go into that example, but just take it at face value) - Ecommerce- buying and selling of goods online (Ebay would be a great example of this, so would Etsy or Cafepress) Lecture on 9/12 and Chapter 1 cont. + Chapter 2 - We import more than we export (coffee and chocolate) are two big ones - One big issue in the world today is terrorism, let’s talk about it Terrorism - Most crates and shipments are not checked - We tend to be very reactive rather than proactive towards terrorist groups - Terrorism is expensive to watch out for, so much security is needed - Governments spends A LOT on security and war protection (military) Okay Done With Terrorism - Keynesian Economics- this is a theory that says the government should increase spending to stimulate the economy is a recession - Roosevelt did this big time during the Great Depression Capitalism - There are four basic rights of capitalism 1. The right to own private property 2. The right to own a business and keep all of the business’s profits 3. The right to freedom of competition 4. The right to freedom of choice (you can be a whatever career you want) - Diving deeper into the third right, there are also 4 types of competition (I’ll give an example of each) 1. Perfect Competition- when there are many sellers in a market and non is large enough to dictate prices (the endless options of fast food) 2. Monopolistic Competition- a large number of sellers produce very similar products, buyers perceive them as different (souvenirs, every souvenir shop sells the same stuff on the ocean city boardwalk yet you still go into every store thinking it’s different shirts) 3. Oligopoly- just a few sellers dominate a market (airlines, you really only have one or two choices yet they still say “thank you for choosing us”) 4. Monopoly- one seller controls the total supply of a product or service and sets the price (Hello, Pepco or whomever supplies electricity in your neighborhood) Socialism - An economic system that states some, if not most, basic businesses should be owned by the government to make profits more evenly distributed - Tax rates tend to be extremely high (75%) - Benefits include more social programs and less of an income gap - Issues are brain drain (the brightest people go to capitalist countries to be rewarded for business success) and high tax rates Communism - It is an economic system in which the government makes almost all economic decisions and owns almost all the major functions of production - It protrudes into the citizens lives because it restricts more than just basic business (religion and job choice too) - The government picks what the people need and they don’t have market trends to really know. That’s why communist countries tend to suffer from economic depressions Lecture on 9/14 and End of Chapter 2 - The US has the biggest debt in the world Key Economic Indicators (GDP, Unemployment Rate, and Inflation) GDP- gross domestic product is the total value of final goods and services produced in a country in a given year - GDP only takes into account legal goods - High GDP means high productivity Unemployment Rate- the percentage of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks Price Indexes- they help judge the health of the economy by looking at the value of money 1. Inflation- a general rise in the prices of goods and services over time 2. Disinflation- when price increases are slowing (keep in mind they are still increasing, the rate is just slowing) 3. Deflation- Prices are declining 4. Stagflation- When the economy is slowing but prices continue to go up (this is the worst one and some people say we are headed there) The Business Cycle There are four main stages of the business cycle 1. An economic boom- business is doing very well 2. Recession- two or more consecutive quarters of decline in GDP 3. Depression- a severe recession, usually with deflation. This one doesn’t always happen in a cycle (It’s rare and thank goodness for that) 4. Recovery- stabilizing an economy after a recession or depression Lecture on 9/19 and Chapter 3 Comparative vs. Absolute Advantage Comparative Advantage- When a country sells its best products to other countries and buys products from other countries that is struggles to create - This product is cooperative and leads to a solid global market Absolute Advantage- When one country can produce a specific product better than all of the other countries - Global competition makes it so that this typically will not last long Imports and Exports - If a country imports more than it exports, it has a deficit - If it exports more than it imports, there is a surplus Characteristics of a Global Market - On a scale of least amount of risk to most risk here are the different ways - Licensing (allow a foreign company and take royalties) - Exporting (facilitated trade) - Franchising (opening up a store of an already existing company) - Contract Manufacturing (using a private business to help a public business, a private factory creates shoes for Nike) - International Joint Ventures (two companies form a partnership) or a Strategic alliance (when two companies help each other but don’t join together, which makes for less risk) - Foreign Direct Investment (buying property or business in a foreign nation) Multinational Corporation- an organization that manufactures and markets products in a many different countries and has multinational stock ownership multinational management - Examples are Nike and Nestle Trade Protectionism Sometimes the government will use regulations to limit the import of goods and services Tariff- a tax imposed on imports Import Quota- a limit on the number of products in a certain categories a nation can import (only 20,000 foreign cars a year would be an example) Embargo- a complete ban on the import or export of a certain product or stopping trade with a particular country Common Markets - Also called a trade bloc - It is a regional group or countries with a common external tariff, no internal tariffs, and coordinated law - The EU would be a good example Lecture on 9/26 and Chapter 4 and 5 Compliance vs. Ethics - Compliance is just following the legalities that are put in place - Ethics- societies accepted standards of moral behavior - A company can be completely legal, but unethical - If I cheat on my boyfriend, I’m not doing anything illegal. He can’t sue me, but I am doing something unethical or morally wrong. - Ethics come from the top down, the CEO must set the expectation that the company will follow a code of ethics - Whistleblowers- insiders who report illegal or unethical behavior, they must feel protected from retaliation How do Deal with MalBusiness Practices? - SEC (U.S. securities and Exchange Committees) files charges against those doing illegal behaviors such as insider trading Corporate Social Responsibility A businesses concern for the welfare of society - Milton Friedman states that the only social responsibility of a business is to make money for stockholders (see this is why people love business majors) Responsibility to Customers - Four basic rights of consumers (Kennedy) 1. The right to safety 2. The right to be informed 3. The right to choose 4. The right to be heard Responsibility to Investors - Investing should be a fair playing field - Insider Trading- an unethical activity in which insiders use private company information to further their own fortunes or those of family and friends - FCC regulation that says companies must release information about company activity to everybody at the same time) Responsibility to Employees, Environment and Society Social Auditing- a systematic evaluation of an organization’s progress towards implementing socially responsible and responsive programs - It’s very subjective - Sometimes the company does it to themselves, sometimes a specific organization will check them out and sometimes the consumer will do research and decide for themselves if they like company policies International Ethics - Especially prevalent for outsourcing countries - Are laborers treated well and fairly - Same rules in the US hold true around the globe - You can’t just lose ethics when you leave US borders Chapter 5- Types of Businesses Sole Proprietorship- a business that is owned and managed by one person - Advantages are it’s easy to start/end it, you’re your own boss, pride of ownership, leave a legacy, you get the profits, no extra taxes - Disadvantages are unlimited liability can affect personal losses, limited financial resources, management difficulties, overwhelming time commitment, few benefits, limited growth, limited life span Partnership- a legal form or business with two or more owners 1. General Partnership- owners share benefits and liability 2. Limited Partnership- one of more general partners and one or more limited partners (invests money but has no responsibility or liability) - Advantages are more financial resources, shared management, longer survival, and no special taxes - Disadvantages are unlimited liability, division of profits, disagreements, difficult to terminate Corporation- a legal entity with authority to act and have liability apart from its owners 1. Conventional (c) corporation- a state chartered legal entity with authority to act and have liability separate from owners. Stockholders only have to worry about the money they lose by investing 2. S Corporations- It looks like a corporation but is taxed like a sole proprietorship or partnership, but there are lots of rules to qualify 3. LLC (Limited Liability)- a company similar to an S corporation but without all of the requirements (they are more flexible, but unlike traditional corporations they can not sell stock) - Advantages are limited liability, raise money through investments, size, perpetual life, ease of ownership change, attract employees, separate ownership from management - Disadvantages are initial cost, paperwork, double taxation, two tax returns, size, difficult to end, possible conflict Mergers and Acquisitions Merger- the result of two firms joining to form one company Acquisition- is when one company purchases another company (both property and obligations) 1. Vertical Merger- two firms operating in different stages of a related business (when honey farms join a Cheerios) 2. Horizontal Merger- two firms in the same industry to diversify (hot dogs and hamburger company join forces) 3. Conglomerate Merger- two firms in separate industries (chips and soda company) Leveraged Buyout- an attempt by employees, management, or a group of investors to purchase an organization through borrowing Lecture on 9/28 and Chapter 6 - Most of chapter 6 just reiterated the fact that to be an entrepreneur you have to be willing to take risks - There are only a couple things he mentioned in this lecture Enterprise Zone- specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support - Especially helpful in “bad areas” to bring money into the local economy Lecture on 10/3 and Chapter 7, 8 and 9 Levels of Management Top Management- the highest level of management, consists of president, other key company executives who develop strategic plans - CEO, CFO, all the C’s of the company Middle Management- general managers, division managers and branch managers that are responsible for tactical planning Supervisory Management- managers who are directly responsible for supervising workers and evaluating daily performance - They are one levels above workers What a Leader Should Do… 1. Communicate a vision and rally others around that vision 2. Establish corporate values 3. Promote Corporate ethics 4. Embrace Change 5. Stress Accountability Transparency- allowing all facts and figures to be viewed by stakeholders (not hiding anything) Leadership Styles 1. Autocratic Leadership- making managerial decisions without consulting others 2. Participative (Democratic) Leadership- managers and employees work together to make decisions 3. Free-rein Leadership- managers set objectives and employees are relatively free to do what they think would be best for accomplishing those objectives - Experience of employee sometimes dictates what managerial style is used 5 Steps to Control Workers/Maintain Control 1. Establish clear performance standards 2. Monitor and record actual performance or results 3. Compare results against plans and standards 4. Communicate results and deviations to employees 5. Take corrective action and provide positive feedback - If you look closely it’s almost a cycle Chapter 8 Fayol’s Principles of Organization (ignore Weber) 1. Unity of command (every employee reports to only one boss) 2. Hierarchy of authority 3. Division of Labor 4. Subordination of individual interests to general interest (put the group before your own intentions) 5. Authority 6. Degree of Centralization 7. Clear Communication Channels 8. Order 9. Equity 10. Esprit de corps- create pride and loyalty among people Centralize vs. Decentralize Centralized Authority- an organization structure in which decision making authority is maintained at the top level of management - If Burger King only makes menu decisions at headquarters and not individual franchises Decentralized Authority- an organization structure in which decision making is delegated to lower level managers more familiar with local conditions than headquarters - A local Macy’s chooses what to buy depending on clientele Span of Control Span of Control- the optimal number of subordinates a manager supervises or should supervise - Two types of structures 1. Tall Organization Structure- the pyramid of organization would be quite tall because there are lots of layers of management 2. Flat Organization Structure- When there are only a few layers of management but each has broad control Departmentalize Departmentalization- this divides organizations into separate units- typically companies are divided by function - Advantages: saves cost, increases efficiency, employees can develop skills, centralizes in certain places, management can easily direct - Disadvantages: departments won’t communicate, employees choose department over organization, response to change is slow, people become narrow specialists, groupthink (go along with group/less individual creativity) Organizational Models 1. Line Organization- direct, two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with everyone reporting to one supervisor 2. Line and Staff Organization- a model uses line personnel to directly achieve company goals (production, distribution, marketing) and staff personnel to advise the line personnel (research, IT, legal advising) 3. Matrix Style Organization- when specialists from different parts of an organization are brought together to work on a specific project, but still remain part of a line and staff structure (a project manager can borrow people from any department to work on something) 4. Cross Functional Self Managed Teams- groups of employees from different departments that work together on a long term basis (creates loyalty and productivity because you know the people that you are working with well.) Chapter 9 A couple basic definitions to know… Production- the creation of finished goods and services using the factors of production (land, labor, capital, entrepreneurship, and knowledge) Operations Management- a specialized area in management that converts or transforms resources (human resources count) into goods and services - Basically they are the go to for how the company will run Lecture on 10/5 and Chapter 9 and 10 Using Technology Computer Aided Design (CAD)- the use of computers in the designing of a product - Let’s say you are building a house and you use software to create a floor plan, you would be utilizing this - CAM (Computer aided manufacturing) is actually creating the product (cutting fabric for a skirt or 3D printing) Flexible vs. Lean Manufacturing - he specifically said ignore lean manufacturing so this is just flexible Flexible Manufacturing- designing machines to do multiple tasks so they can produce a variety of products - A lollipop maker can mold the candy and attach the stick with a robot arm Mass Customization- tailoring products to meet the needs of individual customers - Example: My family was interested in buying a mini cooper. If you go on their website you can practically create your perfect mini cooper. We all made our favorites and compared the differences in our designs. Operations Management Planning Lots of Factors go into this (listed below) 1. Facility Location- the process of selecting a geographic location for company operations - Telecommuting- working from home via computer (the future?) 2. Facility Layout- the physical arrangements of resources (including people) in the production process - Standard: workers only do a few tasks at a time (assembly line) - Modular: teams of workers combine to finish a more complex final product - Fixed Position: workers congregate to finish a big project (bridge or airplane) - Process Layout: similar equipment and functions are grouped together (in a Twinkies plant, the cream filling station is separate from package marketing) 3. Materials Requirement Planning- a computer based operations management system that uses sales forecasts to make sure needed materials are where they need to be at the right time (you can’t make earrings without silver - ERP (Enterprise resource planning)- a more modern version of MRP that combines all the functions of divisions into a single integrated software that uses one database (Example: when you place an order on Amazon you can immediately see when it will arrive and how much it costs) 4. Purchasing- the function that searches for high quality material resources, finds the best suppliers and negotiates the best prices for goods and services (a buyer at a clothing store would be a good example) 5. Just in Time Inventory Control- a production process in which a minimum of inventory is kept on site, and other needs are delivered “just in time” to go to assembly line 6. Quality Control- consistently producing what the customer wants while reducing errors before and after delivery (we’ve all received that knock off brand horrible quality shoes or ear buds) - ISO 9000- common name given to quality management and assurance standards (every country/organization sets their own) - ISO 14000- a collection of the best practices for managing an organization’s impact on the environment - If you are certified in both then it shows your firm has a world class management system Pert and GANNT charts If you ask me they sound like they should be from Sesame Street Program Evaluation and Review Technique (PERT)- a method for analyzing the tasks involved in completing a project, estimating the time needed to complete each task and identifying minimum time needed to complete total project - It basically sets some standards for a project under the best possible scenario Gannt Chart- it is a bar graph showing production managers what projects are being worked on and what stage they are in at any given time - Good example on pg. 261 Chapter 10 Frederick Taylor - the father of scientific management - Scientific Management- studying workers to find the most efficient ways of doing things and teaching those techniques - Three basic elements of this are time, methods and rules of work - All you do is observe multiple ways of completing a task and see which method produces the best output Maslow’s Hierarchy of Needs I’ll list these from bottom to top 1. Physiological/Survival Needs: food and shelter 2. Safety Needs 3. Social Needs 4. Esteem Needs 5. Self Actualization Hertzberg’s Factors of Motivation Psychologist who simply wanted to see….what motivates workers - Top Factors are 1) sense of achievement 2) earned recognition 3) interest in work itself 4) opportunity for growth 5) advancement ability 6) responsibility and importance placed on it 7) peer and group relationships 8) money 9) supervisor’s fairness 10) company policies 11) status 12) job security 13) supervisor’s sweetness 14) working conditions Motivators- factors that actually increase motivation Hygiene Factors- factors that could cause job dissatisfaction, but if remedied may not necessarily increase motivation Different Job Theories 1. Theory X- negative view of workers, says workers hate work and therefore must be controlled and directed or else they will not perform 2. Theory Y- People naturally want to work and accomplish goals. Everyone needs to be rewarded for their work and different people respond to different rewards 3. Theory Z- Job security, cooperation and shared decision making is stressed Goal Setting Theory- setting ambitious but attainable goals will motivate workers and improve performance if they are accepted but they need to be given feedback and the structure of the company must allow for success - You can’t achieve goals unless you are given tools Chapters 11, 13 and 15 are not included! But everything in this study guide he mentioned in class as important. Good luck on the midterm, everyone!
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