MIE 201, Chapter 1 Book Notes
MIE 201, Chapter 1 Book Notes MIE 201
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This 5 page Class Notes was uploaded by Jenna Loehrer on Wednesday September 21, 2016. The Class Notes belongs to MIE 201 at North Carolina State University taught by M.K. Ward in Fall 2016. Since its upload, it has received 3 views. For similar materials see Intro to Management in Management at North Carolina State University.
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Date Created: 09/21/16
CHAPTER 1: THE BUSINESS OF BUSINESS LEARNING OBJECTIVES 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. 2. List three steps you can take to help make the leap from consumer to business professional a. 1) develop a business mindset that views business from the inside rather than outside b. 2) recognize the positive and negative effects of a business on society c. 3) develop a business vocabulary/explore the field of business 3. Discuss the five major environments in which every business operates a. The social environment the trends and forces in society at large b. The technological environment and its ability to create and destroy markets and alter business processes c. The economic environment, the conditions and forces that affect the cost and availability of goods, services, and labor and thereby shape the behavior of buyers and sellers d. The legal and regulatory environment, comprising all the rules and regulations relating to the business and activities e. The market environment, composed of target customers, buying influences, and competitors 4. Explain the purpose of the six major functional areas in a business enterprise 5. Summarize seven of the most important business professions a. Operations managers oversee all the people and processes involved in creating the goods and services that a company sells b. HR specialists/managers plan and direct HR activities (recruiting, training and development, compensation and benefits, employee and labor relations, and health/safety c. IT managers oversee the design, implementation, and maintenance of systems that help deliver the right info d. Marketing specialists perform one or more tasks involved in identifying and understanding market opportunities and shaping the product, pricing, and promotional strategies needed to pursue those opportunities e. Sales professionals build relationships with customers and help them make purchase decisions f. Accountants collect, analyze, and report on financial matters g. Financial managers plan for the company’s financial needs, invest funds, and raise capital 6. Identify seven components of professionalism a. Striving to excel, being dependable and accountable, being a team player, communicating effectively, demonstrating etiquette, making ethical decisions, and maintaining a positive outlook UNDERSTANDING WHAT BUSINESSES DO ● The term business is used in many ways ○ A label for overall field of business concepts (ex: i plan to major in business) ○ Collective label for the activities of many companies (ex: AMerican business as a whole) ○ A way to indicate specific activities or efforts (ex: business earning money, losing money) ○ As a synonym for “company” ● Business: any profitseeking organization that provides goods and services to satisfy customer needs ○ Transform lowervalue inputs into highervalue outputs ○ Company adds value to create the product in a way that makes it appealing to next customer ○ Revenue: money company brings in through sale of goods/services ○ Business model: outline of how business intends to generate revenue ● Profit: amount of money left over after expenses (costs involved to carry out business) are deducted ● Competing to attract and satisfy customers ○ Competition gives consumer wider range of options, increases quality, improves customer service, and lowers prices ○ Free market economy: businesses can have flexibility in deciding which customers to focus on/how to compete ■ Competitive advantage makes products appealing to chosen customers (ex: cheap mass produced bread vs. expensive artisan bread) ● Accepting risk in the pursuit of rewards (2 reasons they engage) ○ 1) Some level of risk in order to conduct business for hope of future rewards ■ Without this, businesses would have no incentive to take on risk ○ 2) Risks encourage smart/responsible decisions ○ Moral hazard: likelihood to engage in irresponsible and unethical behavior ● Major types of businesses ○ Driving forces: profit and assets (anything of meaningful value) ○ Notforprofit: no profit motive ○ Two broad categories: (many companies are both types) ■ 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) ● Account for 70% of economic activity in US and 80% of jobs ● Tend to be labor intensive MAKING THE LEAP FROM BUYING TO SELLING ● Businesses contribute in these ways: ○ Offering valuable goods and services ○ Providing employment (also help employees meet costs of health care, child care, education, etc) ○ Paying taxes to help build highways, fund education, and more ○ Contributing to national growth, stability, and security (strong economy → strong country) ● Potential negative effects of business on society ○ Pollution and waste creation ○ Creating health and safety risks ○ Disrupting communities ○ Causing financial instability (irresponsible businesses become a liability and may require gov assistance) ● Balance the profit motive with society’s shared interests ● Social entrepreneur: person who applies entrepreneurial strategies to enable largescale social changes ● Jobs in business: accounting, economics, human resources. Management, finance, and marketing RECOGNIZING THE MULTIPLE ENVIRONMENTS OF BUSINESS ● Every company operates within a number of interrelated environments that are affected/affect 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 ● Market environment composed of: ○ Target customers ○ Buying influences that shape behavior of customers ○ Competitors ○ Ex: easier to launch a new line of clothing rather than a new plane ■ Competitors for clothes appear overnight (trends) while planes do not ● 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 Exploring 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 Achieving 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 Notes from Quiz ● Which of the following is a potential way for a business to contribute to society in useful or meaningful ways? → C ontributing to national security ● The social environment involves trends and forces in society at large, such as how all companies are affected by population trends that change the composition of consumer markets and the workforce. ● The economic environment involves the conditions and forces that (1) affect the cost and availability of goods, services, and labor and (2) thereby shape the behavior of buyers and sellers. ● The technological environment stems from the practical application of science to innovations, products, and processes. ● The legal environment involves businesses, such as electricity and other basic utilities, being heavily regulated, even to the point of government agencies determining how much such companies can charge for their services. ○ The policies and practices of government bodies also establish an overall level of support for businesses operating within their jurisdictions. Taxation, fees, efforts to coordinate multiple regulatory agencies, the speed of granting permits andlicenses, labor rules, environmental restrictions, protection for assets such as patents and brand names, roads and other infrastructure, and the transparency and consistency of decision making all affect this level of support. ● The economic environment includes the conditions and forces that affect the cost and availability of goods, services, and labor, thereby shaping the behavior of buyers and sellers. For example, a growing economy can help companies by increasing demand and supporting higher prices for their products, but it can also raise the costs of labor and the materials the companies need in order to do business. ● The market environment is a company's target customers, the buying influences that shape the behavior of those customers, and competitors that market similar products to those customers.
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