Popular in Course
Popular in BA
This 0 page Class Notes was uploaded by Ms. Bryana Hagenes on Sunday November 1, 2015. The Class Notes belongs to BUS101 at Miami University taught by StevenElliott in Fall. Since its upload, it has received 19 views. For similar materials see /class/233303/bus101-miami-university in BA at Miami University.
Reviews for FdtnsBusinessDecisionMaking
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: 11/01/15
Corporation Articles of Incorporation fied with state The Incorporation Process Where to Incorporate 0 Can incorporate in any state 0 More than half of Forbes 500 companies are incorporated in Delaware The Corporate Charter 0 Incorporate file articles of incorporation permission from the state 0 State grants a corporate charter a legal document that formally establishes a corporation Typical Corporate Structure 1 Owners stockholder elect board of directors 9 2 Board of directors hire officers only companies have these9 3 Officers set corporation objectives and select managers 9 4 Managers supervise employees 9 5 Employees 0 Stockholders own the company 0 Boards of Directors govern the corporation 0 Officers manage the company by making day to day decisions Dividend share of the profit IPO when the company first goes public open up more and sell stock basically Proxy when your not there to vote on stock things so you send in a paper that allows someone else to represent you Corporations Advantages 0 Limited liability owners are responsible for debts up to what they invest 0 Greater access to money can sell shares of ownerships to others 0 Separation of ownership from management 0 Ease of ownership transfer Disadvantages o More costly to form 0 Must keep secure records 0 Potential for conflict with the Board of Directors 0 Double taxation if dividends given 041309 Moe on Business Forms Major Considerations 0 Resources needed both Financial and human 0 Liability amount of financial risk Unlimited liability all responsibility to pay for all debts of business Limited liability owners responsible for losses only up to what they invest Basic Forms of Ownership 0 Sole Prop72 of business but only 6 of sales 0 Partnerships8 and 13 o Corporation20 and 81 Public vs Private Corporations Corporations can be Private 0 Stock is held and not traded on a public exchange Corporations can be public 0 Stock is traded on a public exchange Private Corporation Examples 0 Halmark o Amway o Koch Industries 0 Levi Straus and Co 0 Baseball teams Corporations whose stock is not traded 0 There can be many owners 0 There can be trades or sales its not common though Cannot trade on open exchanges and thus are limited to private deals Sports teams are a good example 0 Almost all teams are corporations some are partnership 041509 Private Corporation Process business is incorporated and a charter sought shares of the company are divided amongst people close to the company depending on what the business might have looked like before All to one person Split amongst partners Picks board of directors established receive charter from state how many shares will be available what will board 100k like IPU Initial Public Offering stocks purchased by broker then sold off Flows to firm as new capital increase cash amp owners equity Used to buy whatever the officers and board see as the needs for the company s vision Secondary Markets Don t think a company is going to do well don t like company want to sell stock short Buyers must find someone who want to sell Exchange brings groups together specialists exist to help quotmake markets When people buy stock in secondary market the firm receives no funds from the transaction Private transactions so and goes between traders 041709 Stock Types Ordinary shares normal dividends when declared an amount of money given out of profit to each share paid out and quotretained earningsquot or profits Regular voting rights one share one vote 0 Preferred Shares Larger dividends than Ordinary Shareholders Limited or No voting rights Corporate Governance 0 How the Corporation is run 0 We have noted that shareholder vote in the Board of Directors 0 Board elects its officers Chairman ofthe Board Vice Chairman 0 Board Hires Officers The Board 0 Divided into various Committees Audit committee accurately reflect how a company is doing Compensation Committee Governance Committee do we need to change how we do business Sometimes Environmental Committee Compliance Committee Sustainability Committee Other needs ofthe firms more committees 42009 Expanding Business Hiring Employees Employee Challenges 0 Hire new employees 0 Understanding Employment and Diversity 0 Train and educate employees o Retain employees compensation makes the employee want to stay and do the best job for the firm benefits 0 Employees and Ethics In the Beginning 0 Up to now our business has had family member filling all the roles 0 As the sweater factory expands it needs more labor than the family can manage 0 Must look outside 0 Who will you hire and how will you find them Issues in Hiring Diversity 0 The initial reaction hire people like the people we have our family is who we have hire more people like us 0 Why hire people who are different 1 Image 2 New Perspective 3 New Ideas 4 Work force to reflect customers 5 Social Progress The Changing Work Place 0 Women in the Work Place In the 50s there were few women in the work place Traditional Women s jobs 1 Teachers 2 Nurses 3 Secretarys Women married an left the workplace women who worked were unmarried Paid less than men Compensation and Benefits Program Objectives 0 Attract the rights people 0 Employees incentives o Retrain valued employees 0 Maintain competitiveness 0 Financial and security for employees Pay Systems 0 Salary what they get every few weeks or soit doesn t change no overtimeif you don t have work for them you don t have to pay them 0 Hour wage and day work paid the amount they put in o Piecework system pay by amount produced paid by the sweater produced 0 Commission plans paid on how much you sell ofthe sale 42209 Benefits of Providing Flexibility 0 Higher employee retention 0 Higher employee job satisfaction 0 Better relations with workers What do most of these laws have to do with 0 About getting a job and life at work 0 Firing For any reason no reason unfair reasonwork at will 0 Few laws to protect against wrongful termination Employment at Will Doctrine 0 Means that employment is presumed to be voluntary and indefinite for both employees or employers Neither party may breach contract Employers cant violate state of federal laws 0 Cant terminate employees who refuse to do something contrary to sound morality breaking the law 042409 Employment AtWill Doctrine 0 Employment At Will doctrine means that employment is presumed to be voluntary and indefinite for both employees and employers 0 You may quit you job or employers may terminate for whatever reason you want usually WO consequences 0 Neither party may breach contracts Employers cannot violate estate or Federal laws and cannot terminate employees who refuse to do something that is contrary to sound morality such as breaking the law 0 With these few aside you can be fired for any reason o In 1980s lawsuits spawned the Model Employment Termination Act which requires employers to at least show quotgood cause for terminating you in states that have adopted it 0 To determine whether or not you employer honestly had goo d cause check Were you aware ofthe policy and consequences did you have a chance to explain your side of the story Is it a frivolous policy and did you really do anything wrong how were other employees for similar violation disciplined was the policy in place before or after you violated Employment At Will Doctrine is so strong in the US that the courts have sometimes upheld it even though employers proved only weak cause for termination As long as employers don t violate other laws the courts tend to uphold the at will common law What is quotDue Process of Lawquot The fifth amendment to the US Constitution The first step is to examine the constitution itself to see whether this process be in conflict with of of its provisions Substantive Right to Fair Treatment bill o frights and constitution Procedural Right to Fair System of Decision Making includes an individual s right to be adequately notified of charges or proceedings and the opportunity to be heard at the proceedings Substantive employment contract company policies Procedural consistent procedure for dealing with termination of employees visible equitable written personnel procedures Whistle Blowing Fiduciary relationship between Corporate Employer and Employee requires loyalty obedience confidentiality Which then have a right to the public so that they know what the business is doing Whistle Blowers are legally protected from retaliation by employers Managers Preemptive Response assure employees that the company will not interfere with basic political freedoms create a streamlined internal grievance procedure reward the individual conscience of employees Hiring Process Recruit Select application interview test investigate examine probation Traindevelop orientation on the job training apprenticeship off the job training online training vestibule training job stimulation 042709 Marketing and the Customer as Stakeholder Success 0 others see the success 0 see the profit 0 profits promote entry others enter the industry 0 gain customers from old seller 0 as customers go the original business must work to keep old customers and find new ones The 4P8 or Cs of Marketing 0 Product Customer 0 Price Cost 0 Place Convenience 0 Promotion Communication Product Life Cycle PLC 0 Like a living creature marketers view products as having a Development stage introductory stage growth stage maturity stage decline stage 0 Sales profitable competition all differ depending on stage of PLC 0 Each stage therefore calls for a different mix ofthe 4Ps Product design pricing changes placement assessment and new promotion strategies Pricing Products 0 Price is value what the goo is worth to us less or more than what we paid for perceived by the customer Influenced by manufacturing costs but Ultimately determined by supply and demand Both serve to shape pricing and strategies Pricing Objectives and Strategies Skimming Strategy maximize profits for the short term Works only for unique products high demand no immediate competition May need to recoup RampD costs pharmaceuticals Penetration Strategy offer new products at the lowest priceAt least initially trying to get a larger share of the market used when you have lots of competition works only if you can absorb little or no prodits in the short term quotLoss leader items are good examples of penetration strategy take a loss on some items to get customer 0 spend more in total 42909 Low Price Strategy May want to offer a low price in order to further social objectives example new miracle drug new way to clean the environment Absorbs money loss to gain god public relations Pricing Strategies for Image Odd Even Pricing odd pricing ex 4995 29990 quotin the low 400squot etc conveys image of value independent of price Advertising a paid communication through various media by organizations of individuals 5109 Globalization Inputs New Markets new customers new sales Challenge for the US firms is to understand new markets Final Exam When 945 am Thursday Where 128 Pearson Office Hours 9 12 Monday Thursday What 30 multiple choice 12 questions of old stuff 2 cases Ethical Decision Making What isn t Business Ethics 0 Ethics is not the same as feelings Feelings are symptoms or reactions 0 Ethics is not religion Zealots 0 Ethics is not following the law A function of power 0 Ethics is not following culturally accepted norms Slavery 0 Ethics is not science Just because something is scientifically or technologically possible it may not be ethical to do it What is Ethics 0 Standards of conduct and moral values governing actions and decisions in work environment 0 Socialresponsibility o Striking a balance between what s right and what s profitable o Weighing courses of action by considering how others will be affected Five Sources of Ethical Standards 1 The Utilitarian Approach the ethical action is the one that will produce the greatest balance of benefits over the harms The Rights Approach the ethical action is the one that most dutifully respects the rights of all affected 3 The Fairness ofJustice Approach the ethical action is the one that treats people equally or if unequally that treats people proportionately and fairly 4 The Common Good Approach the ethical action is the one that contributes most to the achievement ofa quality common life together The Virtue Approach the ethical action is the one that embodies the habits and values of humans at their best OntheJob Ethical Dilemmas 1 Conflicts of Interest Situation in which a business decision may be influenced for personal gain 2 Honesty and Integrity Telling the truth and adhering to deeply felt ethical principles in business decisions 3 Whistle Blowing Employee s disclosure of illegal immoral or unethical practices in the organization 4 Loyalty versus Truth Business people expect employees to be loyal and truthful but ethical conflict may arise A responsibility of Business goes to 1 The general public 2 The employees 3 Customer 4 Owners investors and the financial community Iquot Uquot Responsibility to the General Public 0 Public Health Issues What to do about inherently dangerous products such as alcohol tobacco vaccines and steroids 0 Protecting the Environment Using resources efficiently minimizing pollution 0 Recycling Reprocessing used material or reuse 0 Developing the Quality of the Workforce Enhancing quality ofthe overall workforce through education and diversity initiatives 0 Corporate Philanthropy Giving money away to funds etc Responsibilities to Customers o The Right to Be Safe Safe operation of products avoiding product liability o The Right to Be Informed Avoiding false or misleading advertising and providing effective customer service 0 The Right to Choose Ability of consumer to choose the products and services they want 0 The Right to Be Heard Ability of consumers to express legitimate complaints to the appropriate parties Responsibilities to Employees 0 Workplace Safety Monitored by Occupational Safety and Health Administration 0 Quality of Life Issues Balancing work and family through flexible work schedules subsidized child care and regulations such as the Family and Medical Leave Act of 1993 0 Ensuring Equal Opportunity on the Job Providing equal opportunities to all employees without discrimination many aspects regulate by law 0 Age Discrimination Age Discrimination in Employment Act of 1968 protects worker age 40 and older 0 Sexual Harassment and Sexism Avoiding unwelcome actions against gender Responsibilities to Investors and the Financial Community 0 Obligation to make profits for shareholders o Expectation of ethical and moral behavior 0 Investors protected by regulation by the Securities and Exchange Commission and state regulation Economic Perspective Pro t and Competition Firm Profit 0 What will an action or actions do to Profit 0 Profit Revenue cost Revenue money that comes in cost money that flows out as part of Business Revenue 0 The income from Operations 0 We want to Increase this as much as possible 0 Most increase in Revenue have a cost Advertising a product ncreasing production increase cost There is no free lunch Costs 0 Costs of Resources Land Labor Capital 0 Costs of Understanding you market Marketing 0 Costs of increase competition Success Breeds Competition 0 Increase Regulation Success means people will be watching you Increased Costs 0 Resources are limited and you also others demand more ofthem you push up the price specially skilled workers a skilled programmer or manager hard to find natural resources chromium or petroleum limited production machines reactor vessels Marketing 0 As we will see in more detail later marketing is more than just Super Bowl Ads understanding who wants your goods understanding the life cycle of your goods understanding how your good reacts to changes in price the cost of new markets Competition 0 What will the competition do when my product is changed what if I lower prices what if I change my good what if I raise my price what if I introduce a new good what if I buy my competition Government 0 In a Perfect World the Government protects rights such as 1 Physical Property land and machines 2 Intellectual Property ideas patents copy rights and service means The Why of Business 022309 A Simple Model ofa Complex Business Assumption 1 An Island Fixed Resources land Jabor capital 1 Productive capital machines crap that makes crap 2 Non Productive capital money represents potential productive capital Fixed Technology how we make things the recipe for production No contact with other islands Assumption 2 Economic Institutions What are Institutions Banks hospitals congress universities The set or sets of rules by which certain activities occur Institution A Private Property Private Property what s mine is mine what s yours is yours do what you want with your own things The problem is what happens when the costs and benefits aren t mine Common property goods The African inheritance example a farm is owned by a father gives pieces ofland to his son When the father dies the head of the village decides who in the family gets it the people who have been using it may not get it Institution B Government Why would we assume Government What does it provide Protection ofprivate property Register and recognize property rights Enforce property rights Provide National Defense protects our private property from those who would take it Canada invades US Above is the ideas of Classical Liberalism Libertarianism This is the classical idea ofliberalism Institution C Market 0 Not clear we need make this assumption but we don t necessarily want to prove they exist Markets are the way that people communicate value to one another 0 When I vale it more than you do we can trade and both be better off 0 Let us consider a central market or Bazaar very powerful both in the past and today Institution CIn Particualr Financial Market 0 Banks are at the heart of this system 0 Banks are more than just a place to put money place to find money brings nonproductive capital together creates money 0 Insurance is also part of this market it s a source of capital Ifyou don t think its important look at the world today Assumption 3 Family Farm 0 Assume that there is a family that owns a farm 0 Extended family Dad Mom Kids Grandparents Aunts amp Uncles 0 Farm provides enough food for everyone self sustaining Has a sheep operation that provides food milk and exceptionally fine wool Grandma makes sweaters out ofwool Assumption 4 Consultants 0 We assume that there is a Consulting Industry 0 The people you are that industry Pricing o This is marketing 0 He goes to the Consultants you and ask What price should I choose and why 0 We want to know what are the cost of inputs go back and calculate how much is Grandma s time worth she probably isn t doing anything better what the quality of the sweater how much profit do you want is there a variety any competition possible monopoly possible price points what is the production time o Other things we want to know can others do this when do people want them who are the customers what will they pay 030409 Pricing 0 High price might indicate High quality Might discourage some customers 0 Low price might indicate low quality Might encourage sales 0 The trick is to understand the tradeoffbetween price and quantity elasticity Important Costs of a good are important but sometimes in a stat up situation are difficult to know There is no magic formula and there are lots of factors They also change as conditions change 0 The farmer may have to change prices as conditions both inside and outside operation change Change 1 Understanding Production 0 At start Grandma makes sweater boy tends sheep other sheer the sheep girls and other women spin others have to work on making food 0 Change move to specialize a have people who are good at tasks focus on those tasks don t split time may need to start buying other farm products with the cash from sales cost of production this can increase output have Grandma teach others how to make the sweaters b Take resources used for other things and put them to production land labor capital take the bakery outside the house and turn it into a sweater mill c Change the layout of the farm so its for efficient move sweater materials around so it cuts down on production time Production 0 All of these things will be specific to the firm where is it who is there what are their skills how possible is change what can we afford to do what can we give up to expand Stakeholders Who are stakeholders 1 Owners 2 Employees 3 Suppliers ifwe buy outside food 4 Customers It s hard to foresee the future but lfyou can get it right from the start many dljficult transitions can be avoided 032009 Sub prime someone who may have trouble paying back a home owners loan 032309 Stocks and Flows o A system like a business gas various stocks and flows 0 Stocks are pools of things at a particular time fish in a pond oil in a well inventory on a shelf money in the bank 0 Flows how things move around across time fish being caught oil being pumped out ofthe well products sold checks written from a bank account Income Statement is an accounting of a flow its has a starting and ending time Own and Owe 0 We need to know what there is and who has a claim on o an accounting ofa stock General Accounting Equality Assets liabilities owners equity The Balance Sheet Assets what we own Things of value real or intangible that a company owns 0 Cash real estate Buildings Inventories 0 things people owe us loans and accounts receivable 0 Good Will and other intangible items Liabilities What we owe Amount we owe other people or businesses 0 Loans short term often called notes long term 0 Accounts Payable bills we have but haven t been paid 0 Assets held for others someone who deposits money in the business Owners Equity What belongs to the owners Amount we owe other people or businesses 0 After we pay what we owe what is left belong to the owners o Profits earned but not taken out by owners retained earnings information about which owners own what Basically What we own Assets Liabilities Owners Equity 0 What we owe Liabilities Assets Owners Equity 0 What the Owners have Owners Equity Assets Liabilities Good Will what you owe and what your owners own is more than your assets people must be paying you because you re a good company Balance sheets can be seen on financeyahoocom examples from class starbucks fifth bank 032509 Statement of Cash Flow 0 How has the CASH moved around in a particular amount of time a look at flows of cash through the business Auditing o Outsider party looking at your information 0 Do your accounting statements jive with your actual numbers look at income statement and invoices to make sure it s the same as amount as the number you came up with for sales 0 An annual event for public business 0 Not necessary for private businesses by law 0 Has caused problems in the not too distant past Sarbanes Oxely Legislation about reporting financial data came about form ENRON o Came from Enron Creative accounting to make the balance sheet and income statement look good increase stock price Auditors quotdidn t notice turned a blind eye Arthur Anderson Firm Accounting reports became worthless 0 Now Management now CRIMINIALLY responsible Board of Directors must oversee audits Companies must change auditors every few years 0 Information is key and we must be sure that the information that is presented is true or the system wont work Baush and Loan Case 32509 What is it o Creates contact lenses and glasses 0 Eye care company started in Hong Kong What s their problem 0 Hong Kong overstated earnings by 885 million 0 Sold to a gray market selling products for less than full price they told the company that they sold at full price 0 This made the sales and revenue appear to go up Why did they do this 0 Management put huge pressure on them to make sales that were nearly impossible for the company to make 0 They wanted bonuses 0 They didn t cant to get fired Stakeholders 0 Owners stockholders profits economical 0 Customers affected by recall affected by unwanted inventory health safety legal ethical economical
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'