Download Finance Career Cluster Performance Indicators Explained

Bell Ringer Activities
For
Finance Career Cluster
Discuss the nature of law and sources of law in the United States.
Laws are enforceable rules of society that reflect the culture and circumstances that create
them. Laws may be grouped into an organized form called a code. A number of forms of
law exist, including common law, positive law, English common law, and equity.
In the U.S., sources of law include the Constitution, state constitutions, statutes, ordinances,
administrative regulations, and criminal or civil cases.
Source: Adamson, J, & Mietus, N. J. (2003). Law for Business and Personal Use (15th ed.).
Mason, OH: South-Western.
Explain the role of ethics in risk management.
Employers face human risks from their employees in many forms. Employees may be
dishonest or unethical by withholding needed information or misreporting actual hours
worked. Employees may misuse company privileges or property. Another risk is that
employees may not maintain confidentiality with regard to personal information or company
intellectual property.
Likewise, employers may behave unethically regarding treatment of employees, salary
issues, or job assignments. Companies also have a duty to behave ethically regarding
customers and the products they offer for sale or use.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Identify the basic torts relating to business enterprises.
A tort is a private or civil wrong against an individual or organization. There are three basic
torts. An intentional tort is one for which the defendant intended either the injury or the act.
The second and most common type of tort is negligence. Intent is not required for this tort,
only carelessness. Strict liability is the third type of tort. This is liability that exists even
though the defendant was not negligent. In strict liability, proof of both the activity and the
injury substitutes for proof of violation of duty.
Source: Adamson, J, & Mietus, N. J. (2003). Law for Business and Personal Use (15th ed.).
Mason, OH: South-Western.
Describe the nature of legally binding contracts.
A contract is an agreement that courts will enforce. There are six major requirements that
must be satisfied before courts will treat transactions as contracts: Offer and Acceptance,
Genuine Assent, Legality, Consideration, Capacity, and Writing.
An offer is a proposal by an offeror to do something, provided the offeree does something in
return. Acceptance occurs when a party to whom an offer has been made agrees to the
proposal. Genuine assent means that parties have entered into a contract as evidenced by
words or conduct between them. Of course, what the parties agree to must be legal. The
purpose of consideration is to ensure that both parties are receiving something of legal value
as a result. Capacity is the ability to understand that a contract is being made and its general
meaning. Lastly, some agreements must be made in writing in order to be fully enforceable.
Source: Adamson, J, & Mietus, N. J. (2003). Law for Business and Personal Use (15th ed.).
Mason, OH: South-Western.
Discuss the nature of debtor-creditor relationships.
A debtor is a person or business that owes money, goods, or services to another. The one to
whom the debt is owed is called the creditor. The debtor receives needed or wanted goods or
services that may not otherwise be obtainable. In return, the creditor puts available capital
resources to work and is paid for this. Both parties are likely to suffer some loss if either one
fails to perform the contract as promised.
A legally enforceable debt normally arises out of a contract wherein something of value has
been exchanged for the promise to provide money, goods, and/or services. The
debtorcreditor relationship is essential to economic growth and is, therefore, encouraged and
protected by law. Legal protections make creditors more secure when lending while
protecting debtors from unfair credit and collection practices.
Source: Adamson, J, & Mietus, N. J. (2003). Law for Business and Personal Use (15th ed.).
Mason, OH: South-Western.
Discuss legal considerations affecting risk management.
All businesses are required to protect the safety of the workplace for employees and
customers. To manage such risks, most businesses transfer them to insurance companies. In
many situations, a business may choose to assume a risk. Assumption of the risk is a legal
defense to negligence in which a business is aware of a risk, but subjects itself to it
voluntarily. In many other cases, businesses are required by law to manage risks. For
example, many companies are required to do background checks on employees or volunteers.
Sources:
Adamson, J, & Mietus, N. J. (2003). Law for Business and Personal Use (15th ed.). Mason,
OH: South-Western.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Identify techniques to extract relevant information from written materials.
Several factors strongly affect comprehension of material. To start with, the reader must
have the background vocabulary, language competence, knowledge, and experience
necessary to comprehend the message. Of these, vocabulary is the most important factor in
the ability to comprehend.
Many strategies can be utilized to extract relevant information. One method is to use
prereading assistance devices such as advance organizers, mapping, questioning, and
prepared reading guides. Another is to identify the main idea in a passage or paragraph. It
also helps to identify clues such as bold print, headings, indentations, and cue words.
Source: Osborn, J. (1997). Developmental Reading in the Content Areas. Oklahoma City,
OK: Custom Academic Publishing.
Explain how to analyze company resources to ascertain policies and procedures.
Company policies can be obtained through training information, company manuals, work
mentors, and supervisors. Policies to consider are topics of pay, sick/vacation time,
promotions and raises, and the company’s health and safety procedures. Company policies
should be read thoroughly for complete understanding.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Describe how to employ communication styles appropriate to target audience.
When analyzing your audience, consider several questions. How important will the audience
see your message? Does your communication ask the audience to take some action? How
much information does your audience need? What obstacles must you overcome? What are
the benefits to your audience of what you have to communicate? How will your audience
use this information? What method of communication is best suited to this message? In
addition, you should consider how formal and how detailed you wish your communication to
be. Use language and terminology that are appropriate to the audience.
Source: Locker, K. O. (1989). Business and Administrative Communication. Homewood, IL:
Richard D. Irwin, Inc.
Identify methods for choosing an appropriate channel for workplace communication.
Factors to consider are speed, accuracy, cost, number of messages, the number of people,
efficiency, and ability to promote goodwill. The channel to choose also depends on the
audience, the purpose of the communication, and the situation. For example, oral
communication is best suited for group settings and to make things seem more personal.
Shorter communication channels are more accurate than longer ones.
Source: Locker, K. O. (1989). Business and Administrative Communication. Homewood, IL:
Richard D. Irwin, Inc.
Explain how to adapt communication to the cultural and social differences among
clients.
Begin by respecting differences among people. Another key is to avoid and overcome
stereotypes. A stereotype is an oversimplified, distorted belief about a person or group.
Keep an open mind and treat people with respect and you will maintain smooth relationships.
In business, you must maintain an awareness of the language and cultural differences that
will affect company employees as well as customers.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Explain how to interpret business policies to customers/clients.
You need to be familiar with a variety of company policies in order to respond effectively to
customers’ concerns and needs. Learn appropriate procedures for handling customer
requests, questions, and complaints. You will also need to know what you can and cannot
say to a customer. Understand the management structure of your business, and under what
conditions a manager should be contacted to talk with a customer. You will also need to be
able to explain business policies to customers, such as return/exchange policies.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Identify methods of handling customer/client complaints.
Think of complaints as an opportunity to learn something and to improve service. To address
a complaint, first listen completely and openly so that you understand the complaint. Talk to
the customer privately, if possible, in a quiet setting. Repeat the complaint to demonstrate
your understanding. Do not place blame on any party and explain what may have caused the
problem. Try to reach an agreement with the customer about the next course of action, but be
sure your suggestions comply with company policy. Get assistance from a supervisor, if
needed.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain how to identify a company’s brand promise.
Brands are names, terms, designs, or symbols that identify and distinguish products from
their competitors. They communicate features, benefits, qualities, and value. Effective use
of branding will help build product recognition, build customer loyalty, and ensure consistent
quality.
Elements of branding include:
brand name: a word or group of words that represent a product or service. trade name:
the name that identifies a particular company or corporate division. brand mark: a
company’s or product’s unique symbol, coloring, or design elements. trade character: a
brand mark with human or animal forms and characteristics. trademark: a word, name,
symbol, or device that is given legal protection to prevent others from using similar
elements that might be confusing.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Discuss the nature of customer relationship management.
Customer relationship management involves finding customers and keeping them satisfied
through a variety of means. It is useful for developing and maintaining customer
relationships. The sharing of customer information among businesses has led to privacy
issues. The government has regulations protecting the privacy of consumers, including
offering customers the option of being added to mailing lists.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the concept of economic resources.
A resource is any item that can be used to produce goods and services. Natural resources
include anything that comes from nature. Human resources are people, the work they do, and
the skills they possess. Capital resources include materials used in the production of goods
and services. All of these economic resources are limited. The basic economic problem is
how to meet unlimited wants with limited resources. This gap is a condition called scarcity.
Source: Economics. (Economics LAP 6: Career-Sustaining Level). (1987). Columbus, OH:
Marketing Education Resource Center.
Describe the functions of prices in markets.
Price is the value in money placed on a good or service. One function of price is that it can
affect the value that a customer places on an item. Price helps establish a company’s or
product’s image—many customers use price as a gauge to make judgments about products
and companies. Another function of price is that it can give a competitive edge. Thirdly, the
price of an item is part of the business’ end goal of making a profit.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the role of business in society.
Business’ roles in society are many. They make and distribute the goods and services we use
each day. Business’ provide employment for millions of people. Wages paid to business
employees are used in the economy to purchase goods and services. Profits earned by
businesses are used to compensate owners and investors. Businesses also pay taxes, which
support government spending on the needs of society.
Source: Dlabay, L. T., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason,
OH: South-Western Cengage Learning.
Describe types of business activities.
There are six general business activities. Generating ideas is an important activity in that
businesses must remain competitive with other firms. Businesses also need to raise capital to
finance their operations. Another important business activity is employing and training
human resources. Businesses buy and sell goods and services. Marketing is a group of
activities that provide and distribute the goods and services wanted and needed by a business’
customers. Another activity is that businesses must maintain records to track performance
and make decisions.
Source: Dlabay, L. T., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason,
OH: South-Western Cengage Learning.
Discuss the global environment in which businesses operate.
Many businesses must rely on resources beyond the borders of the U.S. to remain
competitive. The overall economy is also reliant on a global marketplace. Foreign trade
provides many goods that would otherwise be unavailable or too costly. Likewise, foreign
consumers help support businesses in the U.S. by buying goods made here.
Several factors affect the environment of the global marketplace including geography,
culture, economic development, and political or legal concerns. Trade barriers, such as
quotas, tariffs, and embargoes, are formal political actions that can affect international trade.
Informal trade barriers can also be found due to cultural differences among nations.
Source: Dlabay, L. T., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason,
OH: South-Western Cengage Learning.
Explain the concept of private enterprise.
In a private enterprise system, the three basic economic questions—what goods/services will
be provided, how, and by whom—are answered by individuals and businesses, not by
government. Individuals and organizations own and control the economic resources,
including natural, human, and capital goods used to produce goods and services.
Private enterprise is characterized by a number of qualities, including the following:
x Businesses are free to choose what they wish to produce, how to produce them, and
what price they will charge
x Individuals and businesses are free to own, use, buy, and sell private property x
Government control in private enterprise is limited x Competition exists and is
encouraged by government x Businesses are motivated by the ability to make and
maintain a profit x Prices are important in making the supply and demand system
work correctly.
x Individuals and enterprises are free to set their own financial goals, including the ability
to choose what kind of work they would like to do
Source: Private Enterprise. (Economics LAP 15: Career-Sustaining Level). (1998).
Columbus, OH: Marketing Education Resource Center.
Determine factors affecting business risk.
Risk is the possibility of incurring a loss. Economic risks are those that can result in a
financial loss. Pure risk is one that presents the chance of loss but no opportunity for gain.
Speculative risks offer the chance to either gain or lose.
Some risks are controllable, while others are not. Likewise, you can insure some risks while
others cannot be insured. To manage risks, they can be avoided, transferred, insured, or
assumed.
Source: Dlabay, L. T., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason,
OH: South-Western Cengage Learning.
Determine the relationship between government and business.
The government serves as both a protector and a regulator of business in a free market
economy. It serves to protect business property, enforce contracts and settle disagreements
through the courts, and collect taxes on the products business sell. As a regulator,
government enacts and enforces laws to prohibit certain behaviors, control business
activities, and require certain standards. Examples of such laws include laws to control
monopolies, set product safety standards, and regulate prices.
The government also serves the following purposes to society through intervention in
business: Provide public goods, Improve public welfare, Protect public health, Stabilize the
economy, Protect specific businesses or industries, Conserve the environment, Protect
consumers, Preserve competition, and Regulate workplace conditions. Government agencies
have been set up to monitor such business activities, including the Food and Drug
Administration (FDA) and the Federal Trade Commission (FTC).
Source: Government and Business. (Economics LAP 16: Career-Sustaining Level). (1993).
Columbus, OH: Marketing Education Resource Center.
Describe the nature of taxes.
Taxes are payments you make to the government for services they provide. The U.S. tax
system is based on the idea that everyone should contribute their fair share, that tax laws
should be clear and simple, and that the tax system should be flexible. Tax dollars are spent
on a number of things including public education and libraries, military defense and law
enforcement, transportation costs, and fire protection to name a few.
Income tax is calculated as a percentage of the taxable income you earn on the job. Social
Security, or FICA, tax is used so that workers can receive benefits upon retirement. Sales tax
is a percentage of the price of an item that a person pays when they buy something. Estate
and inheritance taxes are taxes on wealth, which are collected after a person has died.
Property tax is the main source of money for many local governments, and is based on the
value of property such as land and buildings.
Sources:
Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland Hills, CA:
Glencoe/McGraw-Hill.
Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New York, NY:
Glencoe/McGraw Hill.
Explain the concept of organized labor and business.
A labor union is a group of workers who have joined together for the common purpose of
improving the terms and conditions under which they work. Unions are formed to obtain
higher wages, better benefits, and improved working conditions. When laborers organize,
they are able to increase their bargaining power with business management.
Two main types of unions exist today—industrial unions, made up of workers employed in
the same industry, and craft/trade unions, which are groups of workers with similar skills.
The AFL-CIO is the federation for nearly all labor unions, although some very large unions
are independent of the federation.
Labor union contracts are created through a negotiation process called collective bargaining,
involving union officials and company representatives. If an agreement cannot be reached,
pressure strategies may be imposed by either side, including strikes, picketing, and boycotts
by union members or lockouts, injunctions, and strikebreakers by management.
Several advantages and disadvantages exist for both sides in organized labor. Workers gain
individual dignity, fair treatment, protection, and fringe benefits. However, they must pay
union dues, support union decisions, and face hardships during strikes. Businesses benefit by
having security regarding wages, benefits, and working conditions as well as having the
union assist in recruiting and training employees. Businesses, though, face increased costs in
wages and benefits, have limited control in personnel matters, and loss of production in the
event of a strike.
Source: Organized Labor. (Economics LAP 5: Marketing Specialist Level). (1998).
Columbus, OH: Marketing Education Resource Center.
Discuss the measure of consumer spending as an economic indicator.
Consumer spending is one of the most important economic indicators. Buying habits of
consumers directly affect the profits of companies that sell products and services. Retail
sales are measured monthly by the U.S. Department of Commerce. They are an indicator of
the general spending patterns by consumers in the economy.
Source: Dlabay, L. T., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason,
OH: South-Western Cengage Learning.
Explain the economic impact of interest-rate fluctuations.
Interest rates are determined by supply and demand. As saving and investing increase the
money supply, interest rates tend to decrease. Likewise, more borrowing is likely to raise
interest rates. Interest rate fluctuations can have an impact on stock purchases because as the
cost of money changes, company profits can increase or decrease.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Explain the nature of global trade.
Improvements in technology, communication, production, and distribution methods have
enhanced the global business environment. Information exchange can be nearly
instantaneous. The movement of raw materials and finished goods can be cone more quickly
and easily. Trade agreements among nations and regions of the world reduce restrictions on
trade. These factors allow for lower-cost production and more access to consumers than ever
before.
Corporations are often forced to compete multinationally, and their decision making must
adjust to reflect a global marketplace. Companies invest in international business ventures
for a number of reasons, including: expanding their markets, increasing their operating
efficiency and reducing costs, reducing political and legal hurdles they might otherwise face
in other countries, diversifying their operations, and gaining greater return on their
investments.
Multinational business is not without difficulties to overcome. Businesses must consider
language and cultural differences. Also, there are differences in the stability of the
government that might result in political risks. Different economic philosophies may lead to
more or less government influence on business in a particular country. In addition,
businesses have to deal with different monetary systems with fluctuating values among
global currencies.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Identify ways to demonstrate active listening skills.
Active listening is where a person recognizes and evaluates what is being heard. Active
listening involves the following skills.
1) Identify the purpose—review the purpose of the communication and prepare to respond.
2) Look for a plan—be aware of the structure of the communication to make it easier to see
how it all fits together.
3)
Give feedback—these verbal and non-verbal cues indicate whether or not you
understand the message. Ask questions at an appropriate time.
4)
Search for a common interest—try to find something that interests you in order to
avoid tuning out the speaker.
5)
Evaluate the message—do so from the speaker’s point of view as well as your own,
and try to limit bias and personal judgment.
6)
Listen for more than verbal content—assess what is being communicated nonverbally through rate of speech, pitch, volume, and voice quality.
7)
Listen for a conclusion—at this time you may wish to take action or ask questions.
8) Take notes—structure your notes around the plan and check them to see you have
understood the main ideas.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Discuss the nature of law and sources of law in the United States.
Laws are enforceable rules of society that reflect the culture and circumstances that create
them. Laws may be grouped into an organized form called a code. They should be both
predictable and flexible. A number of forms of law exist, including common law, positive
law, English common law, and equity.
In the U.S., sources of law include the Constitution, state constitutions, statutes, ordinances,
administrative regulations, and criminal or civil cases.
Source: Adamson, J, & Mietus, N. J. (2003). Law for Business and Personal Use (15th ed.).
Mason, OH: South-Western.
Describe the determinants of exchange rates and their effects on the domestic economy.
An exchange rate is the value of one currency in terms of another, and they are established on
the foreign exchange market. This is a series of interconnected entities that exchange
currencies, including businesses, banks, and governments. The exchange rate for a country’s
currency is determined by the supply and demand for that currency. This is impacted by
foreign trade. The difference in the value of a country’s imports and exports affects supply
and demand, which affects exchange rates.
For instance, if the U.S. is importing more goods than it is exporting, it will need to convert
more U.S. dollars to other currencies. By doing so, the demand for other currencies increases
and the exchange rate for U.S. dollars increases.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Discuss the impact of cultural and social environments on global trade.
Multinational business is not without difficulties to overcome. Businesses must consider
language and cultural differences. Also, there are differences in the stability of the
government that might result in political risks. Different economic philosophies may lead to
more or less government influence on business in a particular country. In addition,
businesses have to deal with different monetary systems with fluctuating values among
global currencies. Doing business in other countries often means taking a different approach
to business relationships and management practices, and even different ethical beliefs.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Explain how to demonstrate responsible behavior.
Demonstrating responsibility means being willing to accept an obligation and being
accountable for an action or situation. One can demonstrate responsibility in a myriad of
ways. Be willing to accept change and volunteer for jobs and tasks. Display initiative by
doing what needs to be done without being told. Be punctual and have a solid work ethic.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Describe how to demonstrate honesty and integrity.
Honesty and integrity are desirable qualities of a good employee and a good person. You can
demonstrate these qualities by being loyal and trustworthy at work and in daily activities.
Act responsibly and ethically, even though it may be difficult at times. Respect others’
feelings and possessions. Being dishonest can ruin your reputation and can harm personal
and professional relationships.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Explain the importance of respecting the privacy of others.
Respecting others’ privacy includes treating the conversations, property, and work of friends
and coworkers as if they were your own. At work, be respectful of the phone calls, faxes,
email, voice mail, and documents of others. Many of these things should not be shared with
others, and much of the information at your workplace must be kept confidential.
Confidentiality means not sharing sensitive information that you know with someone else.
These acts of professional courtesy are also part of displaying workplace etiquette. Failing to
respect others’ privacy can harm your personal and professional relationships, including
being disciplined or fired on the job.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Identify ways to exhibit cultural sensitivity.
In order to exhibit sensitivity to other cultures, begin by respecting differences among people.
Another key is to avoid and overcome stereotypes. A stereotype is an oversimplified,
distorted belief about a person or group. In business, you must maintain an awareness of the
language and cultural differences that will affect company employees as well as customers.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Describe negotiation skills.
The process of working with parties in a conflict to find a resolution is called negotiation.
Negotiation requires good speaking and listening skills. First, you must define the problem
as clearly as possible from each person’s point of view. All feelings and facts must be
presented. It helps to use “I statements”, that does not put the other person on the defensive.
Active listening is the other main skill. Encourage the person speaking to be open and
maintain eye contact with him/her.
Some other general techniques are helpful. Show respect to all parties. Collaborate and seek
a variety of possible solutions. Do your best to preserve the relationship among the parties.
Finally, meet in a convenient, quiet, and neutral location.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain how to use conflict-resolution skills.
Begin by allowing each party of a dispute to define the problem from his/her point of view.
Then, allow each one to suggest a solution to the problem. Next, those options should be
evaluated, so each party can explain what they can and cannot accept. To overcome the
differences, parties to a problem may have to think creatively and compromise.
Compromising means that each party will agree to give something up in order to settle a
dispute. Conflict-resolution is done best when solutions are found that will allow each side of
a dispute to save face and create the least amount of ill will. Sometimes, parties in a dispute
may have to seek mediation or arbitration from an independent third party.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Identify types of currency.
A cash sale is any transaction in which the customer pays for the item with cash or a check.
A check is a written document that authorizes the transfer of money to be drawn from a bank
account to a person or business. Credit enables a business or individual to purchase goods
and services in exchange for a promise to pay later. It is most helpful when consumers want
to make major purchases. Customers are typically issued a credit card from a bank to make
such purchases. Debit is a variation of credit. Consumers using a debit card authorize a
seller to withdraw funds directly from the consumer’s bank account at the time of sale.
Sources:
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New York, NY:
Glencoe/McGraw Hill.
Describe the functions of money.
Money functions as a vehicle to pay for purchases, save for the future, and build wealth.
Individuals and businesses pay for any number of purchases using cash, credit, checks, and
debit forms of payment. Credit enables a business or individual to purchase goods and
services in exchange for a promise to pay later. In addition to personal and business
purchases, money is used to pay for government services through taxes.
As a savings instrument, money may be set aside in a variety of ways in order to have
security for the future or to have on hand later for a large purchase. Money can be used as an
investment tool, as well. Stocks, bonds, mutual funds, and retirement accounts are ways that
money can be invested in order to build wealth. Other types of investment vehicles include
buying real estate, precious metals, and collectibles.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Describe sources of income.
Your primary source of income is the wages or salary you earn from your employer. Other
sources of income might include tips, gifts of money or property, and interest earned on a
bank account or an investment. You may also receive money from the government.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Explain the time value of money.
The time value of money is the increase of an amount of money due to interest earned over
time or dividends paid. It is the idea that money invested now is worth more later because
you would earn interest or dividends on it. Interest is money you earn over time as a
percentage of the principal, or the original amount of money on deposit.
Finding the future value of your original deposit is called compounding. With compounding,
your money increases in value faster and faster over time. Figure the future value of your
money by multiplying the principal by the annual interest rate, and then adding the interest to
the principal. You can determine this future value for as many years as your money will be
in an account.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Explain legal responsibilities associated with financial exchanges.
Legally speaking, a sale is a contract in which ownership of goods transfers immediately
from the seller to the buyer for a price. If the transfer of ownership will take place at a future
date, it is called a contract to sell, rather than a sale.
According to the Uniform Commercial Code (UCC), goods are tangible, movable personal
property. Payment occurs when the buyer delivers the agreed price and the seller accepts it.
The receipt of goods is when the buyer takes physical possession of the goods. A court may
find that a contract is unconscionable, or grossly unfair to one party or another. In such a
case, the contract may be voided or limited.
Source: Adamson, J, & Mietus, N. J. (2003). Law for Business and Personal Use (15th ed.).
Mason, OH: South-Western.
Explain the nature of financial needs.
One aspect of developing a financial plan is to know the difference between your needs and
your wants. Furthermore, you need to prioritize your needs and wants as you set your
financial goals. As you do so, keep in mind your attitude toward money and ask yourself if
something is more important to spend money on now or to save for the future.
Having choices with money comes with a cost and with risk. Opportunity cost is the trade
off of giving something up when choosing one thing over another. Financial risks that you
should consider include the risks of inflation, rising or falling interest rates, loss of income,
and liquidity. Liquidity is the ability to convert assets into cash without loss of value.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Explain how to set financial goals.
Financial goals are influenced by two main factors: the time frame in which you want to
achieve your goals, and the type of need that inspires your goals. Goals can be short-term
(usually one year or less to achieve), intermediate (two to five years), or long-term (more
than five years). Also, some goals may happen every year, while others occur only
occasionally.
How you establish your financial goals may also depend on whether a goal you have set
involves a consumable good that you would use up quickly, a durable good that lasts longer
and usually costs more, or something intangible, such as your health or an education. Keep
in mind that while setting financial goals, they should be realistic, specific, have a clear time
frame, and should help you decide on what action to take.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Describe how to develop a personal budget.
A personal budget is a plan for saving and spending your money based on your income and
expenses. Start your budget by defining your needs and your goals, considering both shortand long-term goals. Write them down in a list, with a target date or time frame to reach
them. Next you will need to prioritize your goals, arranging the items in order of importance.
Then you must estimate your income and your expenses. In your income estimate, include
your wages or salary but count only your net (take home) pay. Other sources of income
might include tips, gifts, and interest earned on a bank account. Estimate your expenses in
two categories—fixed and variable. Fixed expenses are usually the same amount each time
you pay them. Variable expenses are those that vary each month.
Once these steps are completed, you create your budget. You can transfer your estimated
income and expenses to a paper or computerized budget form. Indicate your savings on the
budget, as well—you may want to consider this a type of expense. As you compare your
income to expenses, you should see if you have enough money coming in to pay all of your
expenses. It is important to be honest and realistic when creating your budget, even if it
means revising some things. Also, check your progress monthly and review your spending
carefully so you know if you have to cut back your expenses or increase your income.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Explain the nature of tax liabilities.
Taxes are payments you make to the government for services they provide. Tax liability is
the total amount of taxes owed. Effective planning can reduce your tax liability, thus paying
your fair share while taking advantage of tax benefits. The types of taxes include income,
Social Security, sales, wealth and property taxes, as well as user fees.
One can use several strategies to reduce tax liability. First, it is important to understand the
current tax laws and how they affect you and your financial goals. Second, maintain
complete and accurate tax records. Finally, learn and understand the types of taxes and how
to make sound financial decisions, keeping taxes in mind.
Sources:
Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland Hills, CA:
Glencoe/McGraw-Hill.
Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New York, NY:
Glencoe/McGraw Hill.
Explain how to interpret a paystub.
Your paystub includes many important things, starting with your name and social security
number. It lists the current pay period. Your current and year-to-date earnings, taxes, and
deductions are listed. Current earnings may be described with your hourly rate, the number
of hours worked, and your gross earnings (calculated by multiplying your hourly rate by the
number of hours worked).
Taxes that may be withheld from your gross pay include Federal, State, Local, FICA (Social
Security), and Medicare. Other deductions might include union dues and money withheld for
fringe benefits, such as health insurance. Net pay is your gross earnings less taxes and
deductions.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Describe how to prepare bank account documents.
A checkbook register is a booklet that you fill out for all deposits and withdrawals from your
checking account. Included are sections for the check number, date of transaction,
description, payment amount, reconciliation, deposit amount, and new balance on the
account. You will use the checkbook register to reconcile your bank statement when it
comes.
Writing a check involves writing the date, the name of the payee, the amount of the payment
in numerals as well as in words, your signature, and a memo if you choose. When you are
cashing or depositing a check made out to you, start by endorsing the check by signing the
back of it. Fill out a deposit slip to give to the bank teller with your name and account
number, along with the amount of the deposit. Also, be sure to record the amount of the
deposit into your checkbook register.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Explain how to maintain financial records.
Organizing your financial records helps you plan and measure your financial progress, handle
routine money matters, determine the money you have now and will have in the future, and
make effective decisions about saving and investing. Documents to manage include bank
statements, paystubs, ownership certificates, tax forms, etc.
Records may be maintained in a file cabinet, a safe-deposit box, and/or on a computer. File
cabinets are useful for maintaining printed documents and records, and should be organized
by type with labeled folders. Items that are difficult to replace, such as car titles and birth
certificates, should be kept in a safe-deposit box. These can be rented at a bank.
Alternatively, you may choose to purchase an in home fire safe for such documents.
Computer programs are an excellent way to create and manage a personal budget, pay bills
online, or generate financial documents that can be stored electronically.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Discuss how to read and reconcile bank statements.
A bank statement is a document showing activity on your account over the previous month,
including a beginning and ending balance and all inflows and outflows during that time.
Bank account reconciliation is when you account for the differences between the bank
statement and your records (usually your checkbook register). The balances may differ
because you have written checks that have not yet cleared the bank, or perhaps because you
have deposited money into your account after the bank statement was prepared.
To reconcile your account, start by comparing the checks you have written with those listed
on the bank statement. List any outstanding checks on the reconciliation form. Subtract the
total amount of outstanding checks from the ending balance on the statement. Next, add any
recent deposits not on the statement to the reconciliation form. Finally, subtract any fees and
add any interest as found on your bank statement to your reconciliation form. Now you
should find that the adjusted bank balance and the balance in your records is the same. If
there is an error, report it to your bank.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Identify ways to demonstrate the wise use of credit.
Credit is a way to receive cash or goods now and pay for them later, most commonly through
the use of a credit card or a loan. Before deciding to use credit, ask yourself if you can afford
the item in the first place. Also, would it be better to use your savings instead of credit?
Could your credit be put to better use in some other way? Or, should you put off the
purchase for a later date? You must be certain that the benefits of making the purchase now
on credit outweigh its costs, including fees and interest charges.
There are many ways to use credit wisely. For instance, you may be able to combine several
purchases into one, thus making only one monthly payment. You will likely need a credit
card for major and expensive purchases. It is often safer, and more convenient, to use a
credit card when shopping or travelling. The wise use of credit will allow you the
opportunity to build a better credit history, which means you are seen as a reliable person to
other lenders.
When using credit, avoid the temptation to buy more than you can afford. Failing to repay a
loan or credit card balance will damage your credit history, and could lead to you losing your
property or source of income.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Describe how to validate credit history.
Your credit history is maintained in a credit report from one of three credit bureaus in the
U.S.—Experian, Trans Union, and Equifax. Your credit history also includes a credit
rating—a number that reflects your ability and willingness to make credit payments on time.
You can validate your credit history by obtaining a copy of your credit report from each of
the three reporting agencies. You can obtain a copy free of charge one time per year from
each agency. Once you receive a credit report, look it over carefully for errors or out-of-date
information, and be sure to contact the agency promptly to make corrections.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Identify methods to protect against identity theft.
The first step to protecting your identity is to be cautious with sensitive information and
documents, including your social security number, checking and other bank account
numbers, and the like. Shred any documents that contain sensitive information before
throwing them out.
When paying with a credit or debit card, be sure the card is always returned to you after the
purchase. You may wish to keep a record of your card numbers in a place separate from your
cards. Also, always look over your bank and credit card statements carefully when you
receive them for mistakes and unknown charges or withdrawals.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Explain techniques for preparing personal income tax forms.
There are three basic income tax return forms, although hundreds of forms exist. Choose
Form 1040EZ if your taxable income is less than $100,000, you have no dependents, and
your income consists only of wages, salaries, and tips (among other factors). Choose Form
1040A if you have less than $100,000 in taxable income and you claim deductions, have
dependents, and have capital gains distributions (among other factors). Form 1040 is an
expanded version of Form 1040A, useful if you have taxable income greater than $100,000
and plan to itemize deductions, or have more complicated financial situations.
To complete a tax return form, have your W-2 Form from your employer(s) on hand along
with any interest and/or dividend forms. You can choose to file your tax return by using
traditional paper forms and mailing them in, or you can file electronically over the Internet.
In addition, you may choose to use tax preparation software to guide you through the process
on your own with a computer. You may also choose to hire a tax professional to complete
your return. Be sure to keep a copy of your completed form and your supporting documents
in a safe place for at least six years.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Describe types of financial-services providers.
A commercial bank is an institution that offers a full range of financial services, such as
checking, savings, and lending. A savings and loan association is a service provider that
may specialize in savings accounts and mortgage loans, but now offers a wide range of
services. Mutual savings banks specialize in savings accounts and mortgages. Credit unions
are nonprofit institutions that are owned by its members. Traditionally, the members of a
credit union have a common bond such as employment with the same company. Credit
unions offer a full range of financial services.
Non-deposit financial institutions include life insurance, investment, finance, and mortgage
companies. Such companies specialize in their respective industry but may offer other
financial services as well. Finance companies offer higher interest rates loans to individuals
and businesses that cannot borrow elsewhere, often due to credit problems.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Discuss considerations in selecting a financial-services provider.
When selecting a financial service provider, consider the following, depending on your
needs. Consider one where…you can get the highest rate of return on a savings account.
You can obtain a checking account with low or no fees. You will be able to borrow money
when you need it and at a favorable interest rate. You can get free financial advice. The
institution is insured through the FDIC. It has convenient locations. It offers a broad range
of financial services. It has online banking or other special services you may desire.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Explain the nature of risk management.
Risk management is a plan for protecting yourself and your property as well as reducing
financial losses caused by perils, hazards, or negligence. Personal risks, such as loss of
income or life due to illness, disability, or unemployment are among the most common risks.
Property risks are also common. Liability risks are losses caused by negligence that leads to
injury or property damage.
Managing risk starts with risk avoidance or avoiding a risk. You cannot avoid all risks, but
you can reduce their likelihood in many cases by taking preventative measures (risk
reduction). Sometimes you need to take on responsibility for a risk, such as when you know
the possible loss will be small. This is called risk assumption. The most common way to
deal with risk, especially large risks, is to shift it, usually to an insurance company. Risk
shifting takes the financial burden of a risk and places it elsewhere for a fee.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Describe the need for financial information.
Financial information includes raw data, records, and reports. Consumers are essentially
buying information when dealing with financial services providers; businesses rely on
accurate financial information to make sound decisions.
Financial services products are bought and sold based on information about costs, returns,
and risks. Financial information is used to match company resources to its planned activities
and to identify additional resources that may be needed or secured. Businesses use
information to identify ways to reduce expenses and invest company assets. Also,
information is used to forecast for future budgeting and growth, as well as to control and
manage risk.
Other pieces of information that are required include sales, inventory, operating systems,
personnel costs, insurance expenses, tax liability, and profitability. In addition, information
must be collected regarding external factors such as economic conditions, investment
alternatives, and competition.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
_________________________________________________________________________
Discuss the nature of human resources management.
The main duties involved in human resources management include recruiting, hiring,
orientation and training, scheduling, handling employee complaints, assessing performance,
discipline, and termination. Recruiting is the process of locating a pool of job applicants and
selecting potential employees from this pool. The hiring process involves interviewing,
background checks, and pre-employment testing. Orientation and training programs can be
formal or informal, depending on the business. Employee complaints and grievances vary
widely, but all should be taken seriously and confidentially. Employee evaluation is usually
done annually, and it enables management to develop better, more productive workers.
Handling discipline takes two forms: preventative and corrective. Termination is based on
poor performance or bad behavior.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Discuss the importance of information management.
Businesses must be able to create, store, access, analyze, update, and compare information in
order to use it to make sound decisions. Information management in a financial services
corporation requires a specialized information system. Such a system must support decision
making regarding cash and securities management, operations management, capital
budgeting, financial forecasting and planning, and risk management. These categories
closely match the information included in a company’s financial statements.
Financial information is used to match company resources to its planned activities and to
identify additional resources that may be needed or secured. Information that is needed
includes cash flow, accounts receivable, accounts payable, capital assets, long-term liability,
and stockholders’ equity.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Identify ways that technology impacts business.
Technology allows the speed of business transactions to occur globally; financial transactions
are becoming instantaneous. Customers have come to expect more choices and higher levels
of customer service due to advances in technology. Furthermore, they are able to access
more information on which to compare prices, research choices and features, and base their
buying decisions.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Explain how to handle and report emergency situations.
Many companies are required to have an emergency action plan. This discusses how to
report hazards, such as fires, spills, and the like. It pinpoints where to find emergency
supplies such as flashlights and first aid kits. An emergency response team may be
developed, and escape routes should be outlined. It is also important to specify how to
evacuate people with disabilities or other special circumstances. In addition to hazards,
workplace violence—internal or external—must be considered.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Explain routine security procedures.
All companies are responsible for protecting people and property in the scope of business.
Security personnel may be hired and policies should be written to serve these purposes.
Procedures to handle emergencies, safety hazards, natural disasters, theft, and liability issues
need to be addressed. Planning for such instances helps to minimize the amount of loss that
may occur.
Source: Dlabay, L. T., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason,
OH: South-Western Cengage Learning.
Identify ways to protect company information and intangibles.
Intellectual property can be protected through patents, trademarks, and copyrights. A patent
is the legal ownership of an item or idea. A word, name, symbol, sound, or color that
identifies a good or a service is a trademark. Copyrights are legal protection for anything that
is authored by an individual or company, such as writings, music, and artwork. Trade secrets
are also protected by law and specific company policy, often by contractual agreement with
employees.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain methods for maintaining inventory of supplies.
Inventory management is the process of buying and storing materials and products while
controlling costs. There are several inventory control methods. Just-in-time inventory
systems coordinate the demand and supply for parts and supplies, delivering them just before
they are needed. A perpetual inventory system constantly keeps track of the number of items
in inventory, and can be done manually or by computer. In a physical inventory system,
supplies are counted only occasionally by visual inspection. This can be done manually or
through the use of technology, such as bar code scanners.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Describe the bid process in purchasing.
In the process of soliciting bids, a company’s buyer invites qualified suppliers to submit
proposals for the goods, services, or materials. In complex purchasing situations, the buyer
may require a detailed written proposal from a number of qualified suppliers. The buyer will
review and evaluate the proposals and possibly invite one or more of them to make a formal
presentation of the bid.
The choice of a supplier is dependent upon specific desired attributes of both the supplier and
the proposal. Attributes include price, supplier reputation, product reliability, service
reputation, and supplier flexibility. As part of the selection process, buyers and sellers will
need to negotiate the final terms of the agreement.
Source: Kotler, P. & Keller, K. L. (2006). Marketing Management, 12th Ed. Upper Saddle
River, NJ: Pearson Prentice Hall.
Identify problem-solving skills.
Problem-solving involves a number of skills and steps. The first step is to identify the
problem and make sure you have a clear understanding of it. As you begin to consider
solutions, generate a variety of alternatives. Think creatively and brainstorm with others.
Make an honest evaluation of the possible results of the solutions presented, considering both
the positive and the negative. Make a decision that is the best one under the circumstances
and put the solution into action, identifying the exact steps that should be followed and by
whom. Afterward, evaluate the results.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Analyze employer expectations in the business environment.
Employers expect a lot of things from their employees, including cooperation, initiative, and
a strong work ethic. Employees need to display a willingness to follow directions, to learn
job tasks and skills, and to take on responsibility on the job. Employers expect you to
manage yourself, your time, and your emotions in the workplace. Your employer will expect
you to behave ethically and follow all company procedures and laws. Be honest, fair, and
open on the job, and avoid prejudice and judgment of others.
Source: Kimbrell, G. & Vineyard, B. S. (2008). Succeeding in the World of Work. New
York, NY: Glencoe/McGraw Hill.
Explain possible advancement patterns for jobs.
In many industries, jobs can be categorized based on skill level. One can advance from one
level to the next through experience, education, attrition, and promotion. Entry level jobs
usually require no prior experience and involve only limited decision making.
Careersustaining jobs are the next level, requiring more skill and experience. Specialist
positions often involve a demonstration of leadership and decision making ability, and are
often longterm positions. Supervisory positions require good management skills and hold
much responsibility. Top management is usually the highest level. People at this level are
capable of running entire companies or divisions. They are skilled in a large number of areas
and are responsible for the final success of the business or division.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Discuss legal considerations in the finance industry.
Financial services businesses are required to protect the privacy of the consumer information
they collect. They must give consumers privacy notices that explain the company’s
information-sharing practices. Customers of a financial services business have the right to
limit the sharing of their personal information. Additionally, information security is an
important consideration in the finance industry, as companies are required to keep customer
information secure.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Discuss the effect of tax laws and regulations on financial transactions.
Sales tax is a percentage of the purchase price of an item that is collected by local and/or state
governments. A specific type of sales tax collected by state and federal government is called
an excise tax, which is collected for regulated goods and services such as gasoline and air
travel. Income tax, collected on wages, is deducted directly from the gross income you
receive.
Real estate property tax is collected from individuals and businesses based on the value of
land and buildings. Estate and inheritance taxes are collected on the value of property at the
time of a person’s death. Gift tax is one that is collected on money or property valued at
more than $11,000, given by one person to another in one year. Investment income and
dividends is also subject to a tax called capital gains.
Sources:
Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland Hills, CA:
Glencoe/McGraw-Hill.
Discuss the nature and scope of compliance in the finance industry.
Compliance with laws, rules, and regulations is often handled by a firm’s compliance
department or manager. The compliance department exists to support, advise, and train
personnel about, as well as monitor various laws and regulations. A compliance program is
viewed by management as a necessary component of an overall sound business strategy.
Source: The Role of Compliance (in the Securities Industry). (January 1, 2005). Retrieved
August 17, 2010 from http://www.accessmylibrary.com/article-1G1145219431/rolecompliance-securities-industry.html
Describe the use of technology in compliance.
Information technology is often the hub for compliance issues in a business. Issues include
security, data retention and archiving, asset management, and performance issues.
Technologies such as passwords, encryption, physical controls, and automatic logouts are a
few methods to manage business’ compliance goals. Software applications can scan
activities over a network to look for, and possibly stop inappropriate or dangerous activities.
Source: Saunders, E. G. (March, 2006). Technology Compliance. Retrieved August 17, 2010
from http://www.sbnonline.com/Local/Article/8299/76/12/Technology_compliance.aspx
Explain the responsibilities of finance professionals in providing client services.
Finance professionals such as financial planners help clients create personal budgets, control
expenditures, set savings and investment goals, and implement strategies for accumulating
wealth. A planner will have access to financial advisors, investment managers, securities
brokers, and mutual fund companies, using these specialists to invest funds for their clients.
Financial planners should stay current with developments in the finance industry, including
financial products, tax laws, and investment strategies.
Source: Kolakowski, M. Financial Planner. Retrieved August 17, 2010 from
http://financecareers.about.com/od/financialplanner/a/finplanner.htm
Discuss the nature of risk control.
Risk is the possibility of incurring a loss, and there are several categories of risks. Some
risks are controllable, while others are not. Likewise, you can insure some risks while others
cannot be insured. To manage risks, they can be avoided, transferred, insured, or assumed.
Managing risk starts with risk avoidance. Sometimes avoiding a risk is practical, other times
it is not. You cannot avoid all risks, but you can reduce their likelihood in many cases by
taking preventative measures. This is risk reduction. Sometimes you need to take on
responsibility for a risk, such as when you know the possible loss will be small. This is
called risk assumption, and it may mean not buying insurance for something or self-insuring
it. The most common way to deal with risk, especially large risks, is to shift it, usually to an
insurance company. Risk shifting takes the financial burden of a risk and places it elsewhere
for a fee.
Sources:
Dlabay, L. T., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason, OH:
South-Western Cengage Learning.
Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland Hills, CA:
Glencoe/McGraw-Hill.
Explain types of business ownership.
There are four possible forms of business organization: sole proprietorship, partnership,
corporation, and limited liability company (LLC). The choice depends on the financial and
tax situation of the owner, the type of business, the number of employees, and the level of
risk involved. Each has advantages and disadvantages to be explored.
A sole proprietorship is a business owned and operated by one person. A partnership is a
legal agreement between two or more people. The two types of partnerships are general and
limited. A corporation is a legal entity created by a government statute authorizing
individuals to operate an enterprise. A limited liability company is a hybrid of a partnership
and a corporation. In an LLC the owners are shielded from personal liability while all
profits/losses pass directly to the owners without taxation of the business itself.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain how to use Customer Relationship Management (CRM) technology.
Customer relationship management involves finding customers and keeping them satisfied
through a variety of means. Database marketing is the element of CRM that is the process of
creating and maintaining customer lists. These lists can be developed from face-to-face
sales, direct mail responses, phone or e-mail purchases, service requests, website visits, or
they can be purchased from a third party. CRM data is also obtained through customer
satisfaction surveys, often giving a customer a reward while sharing demographic and
purchase information with the company.
Modern CRM software applications are Internet-enabled web applications. They allow a
customer to create and check accounts and orders online while the company collects valuable
data. Touch-screen computers are becoming popular in retail marketing. Customers like
them and the costs to operate them are low. Interactive TV is a modern method of allowing
viewers to interact with the programming. This method gives customers instant access to
product information, links to online stores, and downloads for additional content, among
other benefits.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the need to save and invest.
Investing and setting savings aside is essential to reaching financial goals for the future.
Saving money in an emergency fund is desirable so that you can have access to money
quickly to pay for unexpected expenses, emergencies, or job loss. Savings accounts provide
security but do not increase in value quickly. Investments can provide much greater returns,
however they are more risky. Saving and investing money is important also due to the time
value of money, in which money invested now is worth more later because you would earn
interest or dividends on it.
.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Describe the role of financial institutions.
Financial institutions serve a variety of purposes that benefit consumers, businesses, and the
overall economy. Savings, investing, and payment services (such as a checking account) are
basic services of many institutions. Borrowing and credit are essential services that keep the
economy moving. A variety of other services may be offered, such as insurance,
investments, tax assistance, and financial planning services.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Explain types of financial markets.
The primary market is where newly issued securities are sold, usually by investment bankers.
After the initial selling, or initial public offering (IPO), securities are traded on the secondary
market. Examples of secondary markets include the New York Stock Exchange, the
American Stock Exchange, and the NASDAQ. These exchanges are auction markets where
buyers and sellers physically come together to trade. The over-the-counter market (OTC) is a
network where securities transactions are done by telephone and Internet instead of on an
exchange floor. Usually, smaller and newer businesses are traded OTC. The NASDAQ is an
OTC market.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Discuss the nature of convergence/consolidation in the finance industry.
Convergence or consolidation in the finance industry is the practice of businesses, such as
banks and insurance companies joining forces with each other in order to offer customers a
broad range of financial services. In one way, banks can create an insurance subsidiary or
sister company to produce insurance products. In another, a bank can offer insurance
products through a joint venture with an insurance company. Companies would do this to
improve profitability by increasing their fee income and expanding their product/service mix.
It also helps to reduce the cost of locating and securing new customers.
Source: Van den Berghe, L. A. A., Verweire, K., & Carchon, S. W. M. (1999). Convergence
in the Financial Services Industry. Retrieved August 19, 2010 from
http://www.oecd.org/dataoecd/ 9/23/1915267.pdf
Describe the relationship between economic conditions and financial markets.
When investors are optimistic about the economy, they are more likely to purchase stocks.
This is called a bull market. On the other hand, a bear market is when investors are
pessimistic about the economy and are likely to sell stocks. When the demand for stock
increases, stock values individually and as a whole increase. Likewise, a decline in demand
for stocks will cause a drop in stock values.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
___________________________________________________________________________
Explain the nature and scope of financial globalization.
International finance incorporates many areas. Currency exchange rates change daily,
affected by a country’s balance of payments, economic conditions, exchange controls, and
political stability. The international securities market is active twenty-four hours a day in
exchanges in major cities throughout the world. Computerized securities exchanges are
becoming commonplace for trading both stocks and bonds. Investors can refer to a global
stock index to find out the overall progress of a large number of company stocks.
International mutual funds exist for those who wish to invest in hundreds of companies
around the globe.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Describe sources of securities information.
Public companies make information available through a variety of documents. Annual
reports highlight the company’s performance and changes over the past year. A 10-K report
is filed annually with the Securities and Exchange Commission. Companies often provide
quarterly reports to shareholders, as well. An 8-K report is filed when a major company
event that affects its securities takes place. In addition, many companies publish news
bulletins.
Other sources of information include newspapers, magazines, and other periodicals. The
Wall Street Journal is one of the most respected sources of financial information, as are
Investor’s Business Daily, The New York Times, Barron’s, Business Week, Forbes, and
Fortune. Other publications are specific to investment advisory information, such as
Moody’s, Value Line Investment Survey, and Standard and Poor’s Stock Guide. Securities
brokerages also have numerous resources and internal reports for securities advice and
information. Finally, there are numerous web sites, as well as television and radio programs
offering assistance.
Source: National Association of Investors Corporation, BetterInvesting. (2007). Investing In
Your Future (2nd ed.). Mason, OH: Thompson South-Western.
Describe how to interpret a securities table.
Securities tables utilize abbreviations in order to save space. Company names are shortened
to one-to-four ticker symbols.
Other abbreviations include: x Div (current dollar amount of the
annual dividend per share) x Yld% (dividend of the stock as a
percentage of stock price)
x PE (price-earnings ratio), Vol 100s (trading volume in hundreds of shares) x
Hi (highest price sold for that day) x Lo (lowest price sold for that day)
x Close or Last (price per share at end of the trading day)
x Net Chg (among the closing price moved up or down from the previous day)
Securities are listed alphabetically. The high and low price for stocks during the past 52
weeks may also be listed. Overall market performance is listed with the Dow Jones
Industrial Average, Standard & Poor’s 500, the NYSE Index, the NASDAQ Performance
Index, and the AMEX Index.
Source: National Association of Investors Corporation, BetterInvesting. (2007). Investing In
Your Future (2nd ed.). Mason, OH: Thompson South-Western.
Explain the nature and scope of the financial-information management function.
Financial-information management deals with gathering, organizing, storing, analyzing, and
reporting financial data. Managers make use of a financial information system, typically
with electronic data collection and maintenance software.
A short list of goals of a financial-information manager include making efficient use of cash,
maximizing return on investment, and optimizing asset value and resource use. Other duties
include matching resources to the business’ activities, identifying sources of financing,
reducing and recovering expenses, studying past resource usage to determine future budget
requirements, and forecasting, controlling, and preventing risks.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Explain the role of ethics in financial-information management.
Financial-information managers must provide appropriate and accurate information to
shareholders, manager, employees, business partners, and customers. They must make the
information they control accessible as well as secure, keeping in mind confidentiality and
privacy. Managers need to allow access to information in a timely manner and in a form
appropriate to the user.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Describe the use of technology in the financial-information management function.
A financial information system supports managers in the allocation and use of financial
resources, including the financing of business activities. The activities are managed through
a system of data collection procedures, computer technology, software, and electronic
information exchange procedures.
The use of technology can make it easier to gather and analyze information and make
decisions regarding a company’s products, resources, and budget. It can be used to improve
the way business processes are completed, thus improving quality and efficiency and saving
money. In addition, technology makes it possible to perform business processes in different
locations to allow for business expansion and better use of resources.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Demonstrate data mining techniques.
Data mining is the process of analyzing data using statistical techniques in order to discover
trends and make predictions. Two common techniques are regression and classification.
Regression takes a numerical dataset and develops a mathematical formula that fits the data.
This formula can then be used to make predictions using future data. The classification
technique uses a decision tree that requires a series of decisions. Other data mining
techniques include clustering, bagging, boosting, stacking, and meta-learning.
Sources:
Chapple, M. Data Mining: An Introduction. Retrieved August 20, 2010 from
http://databases.about.com/od/datamining/a/datamining.htm
Data Mining Techniques. Retrieved August 20, 2010 from http://databases.about.com/
gi/o.htm?zi=1/XJ&zTi=1&sdn=databases&cdn=compute&tm=151&gps=367_371_1268_81
5&f=10&su=p504.1.336.ip_&tt=2&bt=1&bts=1&zu=http%3A//www.statsoft.com/textbook/
stdatmin.html
Demonstrate budgeting applications.
There is a vast number of budgeting applications available. Popular commercial software
packages typically come with the following features. They allow you to see your inflows and
outflows of money, including tracking your expenses to specific payees. You can view all of
your financial accounts in one convenient place. In addition, you can set reminders to pay
bills and make sure you have the funds to cover them. You may also have the ability to link
your budget data to tax preparation software. More advanced finance software will allow
you to manage your investments and taxes more easily, along with the capability to manage
small business financing.
Source: Website. Retrieved August 23, 2010 from http://quicken.intuit.com
Demonstrate financial analysis applications.
Financial analysis software applications are available to help you seek out more in-depth
answers to financial questions. These applications go beyond basic financial statements to
help you develop financial goals, set forecasts, and perform what-if scenarios. In addition,
you can create professional reports of the results of your detailed analysis with such software.
Using financial analysis applications makes performing advanced financial analysis quicker,
easier, and more visually appealing than with basic spreadsheets.
Source: Estes, J., Savich, R. S., & Ivanova, M. (November, 2007). Tools for Financial
Analysis. Retrieved August 23, 2010 from http://www.journalofaccountancy.com/Issues/
2007/Nov/ToolsForFinancialAnalysis
Demonstrate advanced database applications.
A database is a computer file in which data can be entered, retrieved, and modified. Such a
file might contain information about a business, a chart of accounts, and financial activity for
each account. Database applications provide mechanisms for creating forms and reports, as
well as manipulation of data to answer specific questions.
Sources:
Ross, Kenton E., et. al. (2000). Century 21 Accounting Advanced (7th ed.). Mason, OH:
South-Western.
Shelly, G. B., Cashman, T. J., Pratt, P. J., & Last, M. Z. (2002). Microsoft Access 2002:
Comprehensive Concepts and Techniques. Boston, MA: Course Technology.
Describe the need to accurately report a business’s financial position.
Financial data is analyzed to evaluate the financial position and progress of a business.
Government regulations require businesses to report their financial position for a number of
purposes, including the protection of competition, consumer protection, fairness to investors,
and equal opportunity to employees. Management uses this data to plan for the future,
identify areas for improving profitability, and prepare tax reports. In a corporation, a board
of directors will use financial data to make decisions regarding management and distribution
of earnings. Shareholders and potential investors use the information to decide about
investing in the company. Finally, creditors (or potential creditors) use financial data to
determine if the company can meet its credit obligations.
Sources:
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Ross, Kenton E., et. al. (2000). Century 21 Accounting Advanced (7th ed.). Mason, OH:
South-Western.
Describe the relationship between accounting and finance.
Both accounting and finance are involved with helping organizations make effective financial
decisions. Accounting is responsible for creating and maintaining a system of financial
record keeping as well as preparing and analyzing financial statements. Finance refers to the
business’ practices of saving, investing, and using money. In essence, accounting is focused
on the business’ financial past while finance is focused on the future.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Discuss types of accounting systems used to report a business’s financial position.
An accounting system is a planned process for providing financial information that is
beneficial to management. Accounting systems create reports containing financial,
managerial, cost, and tax information. They may be categorized as follows:
departmentalized accounting, corporation accounting, management accounting, cost
accounting, accounting for a partnership, and accounting for a nonprofit.
Source: Ross, Kenton E., et. al. (2000). Century 21 Accounting Advanced (7th ed.). Mason,
OH: South-Western.
Explain the use of financial information to identify trends.
Financial statements are used to determine profitability, efficiency, and short- and long-term
financial strength. Trend analysis is the comparison of the relationship between one item on
a financial statement and the same item on a previous year’s statement. Trend analysis can
be used to help predict how well a business will do in the future.
Businesses analyze financial data in a variety of ways. An income statement is used to
analyze component percentages and earnings per share. The statement of stockholders’
equity will be used to assess equity per share and price-earnings ratio. Balance sheet
information is used to determine accounts receivable turnover ratio, the rate of return on
stockholders’ equity, and the rate earned on assets.
Source: Ross, Kenton E., et. al. (2000). Century 21 Accounting Advanced (7th ed.). Mason,
OH: South-Western.
Describe the need to analyze customer financial information.
Analysis of customer financial information is especially important when deciding whether or
not to extend credit. The use of credit and short-term financing accounts for over $2 trillion
annually in the U.S. Extending credit to customers who are good credit risks can greatly
improve profitability. Extension of credit is based on specific standards and criteria, and
credit terms must be clearly outlined and consistent for anyone who meets those criteria.
Source: Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
South-Western.
Identify reasons to analyze financial data.
Financial data is analyzed to evaluate the financial position and progress of a business.
Management uses this data to plan for the future, identify areas for improving profitability,
and prepare tax reports. In a corporation, a board of directors will use financial data to make
decisions regarding management and distribution of earnings. Shareholders and potential
investors use the information to decide about investing in the company. Finally, creditors (or
potential creditors) use financial data to determine if the company can meet its credit
obligations.
Source: Ross, Kenton E., et. al. (2000). Century 21 Accounting Advanced (7th ed.). Mason,
OH: South-Western.
Discuss career opportunities in the finance industry.
A large number of career opportunities exist in finance: accountants, bank tellers, property
managers, credit analysts, economists, financial advisors, insurance agents and claims
adjusters, investment analysts, loan officers, management, personal bankers, real estate
agents and brokers, stockbrokers, and tax preparers among many others. There are also four
main types of financial planners: fee-only, fee-offset, fee-and-commission, and
commissiononly. Licenses and certifications are available for many of these career choices.
Sources:
Dlabay, L. R. & Burrow, J. L. (2008). Business Finance. Mason, OH: Thompson
SouthWestern.
Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland Hills, CA:
Glencoe/McGraw-Hill.
Discuss licensure and certification available to finance professionals.
The requirements for certification and/or licensure for finance professionals vary from state
to state. In some cases, planers must pass an exam in order to become licensed. Available
credentials include Certified Financial Planner or Chartered Financial Consultant. The
Securities and Exchange Commission monitors financial planning companies.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Discuss opportunities for building professional relationships in finance.
Networking is the premier way to make and maintain professional contacts. These contacts
can be used to obtain job information and advice, as well as advancement opportunities. You
should also consider building relationships by joining professional and community
organizations. Attending meetings, seminars, and conferences can help build your network
of professional relationships.
Source: Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (2007). Personal Finance. Woodland
Hills, CA: Glencoe/McGraw-Hill.
Describe the use of technology in risk management.
Technology used in risk management includes many options. Closed-circuit television
systems monitor theft. Advanced point-of-sale terminals can generate computerized reports
of sales activity and cash transfer. Entryway and exits can be controlled through security
locking systems or electronic gates. Intelligent lighting systems can help protect
merchandise and supplies at any hour. Anti-theft devices can be placed on merchandise.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Identify sources that provide relevant, valid written material.
Sources for written material may be obtained internally or externally. Internal sources
include such data as a company’s monthly sales records or previously collected market
research. External sources include the Internet, government, specialized research companies,
and business/trade publications and associations.
The Internet provides a nearly limitless source of free or fee-based information from
companies’ own websites or business clearinghouses. Data collected by government
agencies is available online regarding topics such as demographics, product and economic
news, and legislative trends. Government agencies also serve as good sources for written
material, such as the Small Business Administration, U.S. Census Bureau, Securities and
Exchange Commission, etc. Specialized research companies sell demographic data, sales
forecasts, and other business data they have collected.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the role of ethics in customer relationship management.
Customer relationship management involves finding customers and keeping them satisfied
through a variety of means. It is useful for developing and maintaining customer
relationships. The sharing of customer information among businesses has led to privacy
issues. The government has regulations protecting the privacy of consumers, including
offering customers the option of being added to mailing lists.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain communication techniques that support and encourage a speaker.
Communication techniques include using your own body language and facial expressions to
respond to the speaker. For example, sit up straight or lean toward the speaker to show that
you are interested. React to the speaker with comments or questions. Taking notes keeps you
involved in listening to the speaker and shows your level of interest. Maintain eye contact
and minimize distracting thoughts and activities.
Source: Kimbrell, G. & Vineyard, B. S. (1998). Succeeding in the World of Work (6th ed.).
New York, NY: Glencoe/McGraw Hill.
Describe legal issues affecting businesses.
Among the legal issues affecting businesses are the following. Consumer protection issues
include product safety (for everything from toys to furniture), zoning laws to protect real
estate value and quality of life, public health (i.e. at restaurants), and licensing for personal
service providers (such as hairstylists and electricians). Employee protection issues include
minimum wage standards, equal opportunity employment provisions, guidelines for
workplace safety, and the Family and Medical Leave Act.
Other legal issues businesses must be aware of include laws protecting investors and the
environment as well as maintaining competition in the marketplace. The Securities and
Exchange Commission regulates the sale of stocks and bonds and investigates deals among
corporations. Businesses must follow various other laws to protect human health and the
environment in regard to pollution, waste disposal, and recycling. Companies are also faced
with legal standards that protect against anti-competitive mergers and business practices.
Laws also exist that regulate the distribution of products such as alcohol and tobacco.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain how to handle telephone calls in a businesslike manner.
Because in a phone conversation your listener cannot see you, a pleasant voice is very
important, whether answering or initiating a call. You should enunciate clearly and speak
directly into the mouthpiece, speaking loudly enough to be heard but do not shout. It is
important to make sure all of the necessary information is conveyed between you and the
other party, so you may wish to write down key points before or during the call. Listen
actively, and do not interrupt the speaker. When answering, be prepared to take a message.
A proper message includes the date and time of the call, the caller’s name and message, a
return phone number. It is courteous to repeat the name and phone number of the caller to
ensure it is correct.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain effective note-taking strategies.
Note taking helps you remember facts and keeps your attention focused. Do not try to write
down everything that is said; focus on key words and main ideas. Jot down summaries in
your own words. Take note of actions you need to take. Use bulleted lists, asterisks, and
arrows to show relationships among ideas. Review your notes to make sure you understand
concepts and instructions. If you cannot take notes, make mental notes of the main points.
Source: Kimbrell, G. & Vineyard, B. S. (1998). Succeeding in the World of Work (6th ed.).
New York, NY: Glencoe/McGraw Hill.
Explain forms of financial exchange. (cash, credit, debit, electronic funds transfer, etc...)
Credit enables a business or individual to purchase goods and services in exchange for a
promise to pay later. It is most helpful when consumers want to make major purchases,
though it is often used for more common, less expensive items. Customers are typically
issued a credit card from a bank to make such purchases. Debit is a variation of credit.
Consumers using a debit card authorize a seller to withdraw funds directly from the
consumer’s bank account at the time of sale. A cash sale is any transaction in which the
customer pays for the item with cash or a check.
Other forms of retail sales transactions include layaway, on-approval, and cash-on-delivery
(COD). Layaway means removing merchandise from stock and keeping it in a separate
storage area until the customer pays. In an on-approval sale, an agreement is made
permitting a customer to take merchandise home for further consideration before paying. A
COD sale is a transaction that occurs when a customer pays for goods at the time they are
delivered.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain how to organize information.
First of all, you must decide if a piece of information is important. Information you do not
need becomes clutter. Try to do something with important information the first time you
look at it. Put information you will look at later in a file or folder. Categorize information by
type and label each file or folder. Avoid putting each document in a separate file and do not
let files get too large—divide them by subtopics. Color-code files, folders, or labels.
Maintain your files on a regular basis.
Organize your writing by using a logical order, such as chronological order or order of
importance. Use heading and subheadings when writing longer documents.
Source: Kimbrell, G. & Vineyard, B. S. (1998). Succeeding in the World of Work (6th ed.).
New York, NY: Glencoe/McGraw Hill.
Explain the nature of effective written communications.
Effective written communications require some basic considerations: knowing your
audience, knowing your purpose, and knowing your subject. You must assess who your
target audience consists of in order to which form of communication to use. Next, knowing
your purpose for writing helps you organize your thoughts. You must decide if you are
trying to inform, confirm, inquire, answer, or persuade the audience. Lastly, written
communication requires that you have in-depth knowledge of the subject and how to relate
what you know to the intended audience.
The form of written communication you choose to use will depend on the above
considerations. Letters are formal methods of communicating outside the business. E-mail is
an informal method used to reach those inside or outside the company. Memos, while being
replaced by e-mail, are a more formal way to communicate within a company.
Business reports are for lengthy topics, typically for internal use or for stockholders.
Similarly, company publications may be used internally (for company policies) or externally
(for marketing purposes).
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Describe the use of technology in customer relationship management.
Customer relationship management (CRM) involves finding customers and keeping them
satisfied through a variety of means, and is useful for developing and maintaining customer
relationships. Database marketing is the element of CRM that is the process of creating and
maintaining customer lists. These lists can be developed from face-to-face sales, direct mail
responses, phone or e-mail purchases, service requests, Web site visits, or they can be
purchased from a third party. CRM data is also obtained through customer satisfaction
surveys, often giving a customer a reward while sharing demographic and purchase
information with the company.
Modern CRM software applications are Internet-enabled web applications. They allow a
customer to create and check accounts and orders online while the company collects valuable
data. Touch-screen computers are becoming popular in retail marketing. Customers like
them and the costs to operate them are low. Interactive TV is a modern method of allowing
viewers to interact with the programming. This method gives customers instant access to
product information, links to online stores, and downloads for additional content, among
other benefits.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Identify tips for making oral presentations.
Start off by knowing your purpose for speaking. It may be to greet, to inform, to request to
persuade, or to propose. Sometimes you may have overlapping purposes. Next you need to
know your audience. Who are your listeners? What are their beliefs, values, and interests?
What do they already know about the subject and what do they need to know? What does the
audience expect to learn? Next you must know your subject and organize your thoughts.
Relate your subject to the audience and decide how to clearly make your point(s). The best
approach is to be clear, brief, and direct.
Good speaking skills are important, and your delivery, style, and attitude are as important as
your message. Speak at an appropriate volume and speed. Use inflection and tone of your
voice to stress key ideas. Try to make emotional contact with your audience, and make eye
contact. Use posture and body language that match your message. Avoid nonwords, such as
uh and um. Pronounce words correctly and enunciate clearly. Project enthusiasm and a
positive attitude.
Source: Kimbrell, G. & Vineyard, B. S. (1998). Succeeding in the World of Work (6th ed.).
New York, NY: Glencoe/McGraw Hill.
Distinguish between economic goods and services.
In economic terms, goods are tangible items that have monetary value and satisfy your needs
and wants (such as cars and clothing). Services are intangible items (meaning you cannot
physically touch them) that have monetary value and satisfy your needs and wants. Services
involve a task, such as cooking food or repairing a computer.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Identify how to assess personal strengths and weaknesses.
When assessing your strengths and weaknesses, many areas can be explored. Interpersonal
skills that can be assessed include self esteem, attitude, initiative, self control, creativity,
flexibility, stress management, and time management skills. You will also want to assess
more concrete skills and abilities. These are things that you will be asked to do in the
workplace, such as selling a product or organizing an activity.
Complete a self-assessment by asking yourself if you have these types of skills and taking
inventory of your workplace values and needs. Determine what skills you are lacking and
where you can make improvements. Develop your skills and abilities by reading, observing,
and working in a real-world situation.
Sources:
Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management. New
York, NY: Glencoe/McGraw-Hill.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Explain how to write persuasive messages.
People act in order to have their own needs met. Thus, it is important to show your reader
why he/she has a need to do what you want. To plan a persuasive document, first identify
your objective. Then identify the main idea to show that the requested action will meet the
reader’s needs. Determine the supporting information that will convince the reader to do
what you wish. Finally, adjust the content to the reader, considering his/her values and
concerns.
Organize a persuasive document by 1) gaining the reader’s attention, 2) showing the reader
that he/she has a need, 3) explaining your solution to that need, 4) present the supporting
information, and 5) end by asking for a specific action. Persuasive documents might include
sales letters, collection letters, proposals, and newsletters. To be effective in drafting
persuasive documents, you should also present a solution that is clear, logical, and practical.
Source: Means, T. (2004). Business Communications. Mason, OH: South-Western.
Explain the nature of business ethics.
Ethics are guidelines for good behavior, based on knowing the difference between right and
wrong. Behaving ethically means being truthful, fair, open, and mindful of the law. In
marketing, business ethics involves a company’s efforts to protect individual consumers and
society as a whole. Businesses must keep consumers informed and protected against fraud
and deceit, and they must not produce unsafe goods. Another ethical consideration for
marketers is price gouging, or pricing products unreasonably high. In sales, ethical issues to
be aware of concern bribes, kickbacks, and high pressure tactics.
Businesses must behave ethically in management, as well, including personnel and
accounting issues. The standards of ethics within a business are in large part determined by
the owner’s principles and values. Remember, people do not all share the same ethical
values. As a result, businesses should create a clear policy on ethics standards.
Sources: Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business
Management. New York, NY: Glencoe/McGraw-Hill.
Explain how to write an executive summary.
An executive summary may also be called an abstract or a synopsis. Its purpose is to
summarize the key points of a report to the reader. An executive summary is often used with
the report is long and/or technical so that busy readers can get the main points quickly
without having to read the entire report.
The format of an executive summary should match the main report. If the report is written in
direct order, write the executive summary in direct order. An executive summary is typically
a one-page document. The formatting may not match exactly the report that follows. Line
spacing and headings may be different between the two, and it is usually not numbered in
sequence with the body of the report.
Source: Means, T. (2004). Business Communications. Mason, OH: South-Western.
Explain the types of economic systems.
An economic system, or economy, is the way a nation provides for the needs and wants of its
people. It defines how a country will use its resources to produce and distribute goods and
services. Four types of economic systems exist: traditional, market, command, and mixed.
A traditional economy determines the use of its resources based on the cultural or religious
traditions that have been used for generations. Mostly small, developing nations use this type
of economy today. In a market economy, there is no government involvement in the decision
making process regarding economic resources. The marketplace determines what, how, and
for whom goods will be produced. A command economy is a system in which a nation’s
government makes all of these economic decisions. The government also controls the factors
of production in this system. No country, however, is a purely traditional, market, or
command economy. There are always influences that make it somewhat mixed.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the role of finance in business.
Finance is the function of business that pertains to money management. A financial plan is
an important element of an overall business plan. Elements that pertain to the role of finance
in a business include start up/equity financing, debt financing, and growth financing.
Various financial statements, such as a balance sheet and income statement, provide a way to
analyze a company’s overall financial standing.
Managing your business’ finances will include planning for profits by forecasting sales,
evaluating profit potential, controlling costs, and budgeting. Business financing also requires
managing taxes and credit.
Sources:
Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management. New
York, NY: Glencoe/McGraw-Hill.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Identify how to prepare simple written reports.
Two types of simple written reports exist. A formal report is generally long, analytical, and
impersonal, often containing preliminary and supplementary parts. An informal report is
shorter and written in a less formal style. They generally have no preliminary or
supplemental parts and are concerned with everyday topics. Both types of reports may be
organized in direct order (if the report is routine or you expect a favorable response from the
reader) or indirect order (when persuasion is necessary or if the subject matter is negative).
The steps in planning both formal and informal reports are to 1) identify the problem, 2)
decide on areas to investigate, 3) determine the scope, 4) plan the research, 5) develop a
preliminary outline, 6) collect the data, and 7) analyze the data, draw conclusions, and make
recommendations. Three parts of an informal report include opening, body, and closing.
The parts of a formal report are the preliminary parts, body, and supplementary parts. Most
formal reports follow specific formatting guidelines with respect to margins, spacing, and
headings.
Source: Means, T. (2004). Business Communications. Mason, OH: South-Western.
Explain the nature of positive customer relations.
A positive customer relations mindset means believing that your customers: deserve the very
best, are your employers, deserve your focused attention, have the right to expect things of
me, and have important problems and complaints. Positive customer relations yield benefits
to the business, the employees, and the customer. Businesses benefit by being more
competitive, obtaining repeat business, and greater profits. Employees may receive customer
compliments and perhaps a raise or promotion for good customer service skills. Customers
benefit by having a more pleasant, satisfactory buying experience. This creates an
atmosphere of goodwill.
Positive customer relations need to be demonstrated when speaking to customers in person,
over the phone, or online. It should also be evident while handling complaints, inquiries, and
requests. Demonstrate good customer relations by doing the following: considering and
attempting to meet their needs, concentrating on them without distractions, following up with
them, following through on what you say you are going to do, and being efficient in handling
issues.
Source: Customer-Service Mindset. (Human Relations LAP 32: Career-Sustaining Level).
(1999). Columbus, OH: Marketing Education Resource Center.
Determine ways of reinforcing the company’s image through employee performance.
Employee performance can reinforce a company’s image through suggestion selling, order
processing and fulfillment, and effective selling skills. Suggestion selling is useful for
making the customer happier with his/her original purchase. Sales employees can improve
customer satisfaction by the speed and care in which they handle orders. This applies, as
well, to handling returns and refunds.
Selling skills, such as an appropriate, pleasant greeting and a reassuring departure are useful
tools in maintaining a good image. Offer helpful comments during and after a sale and
always thank the customer in order to build a good relationship. Follow up on all promises
made to a customer, and check on their level of satisfaction after a purchase. Positive
customer-client relations require compassionate and immediate action when dealing with
complaints and inquiries.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the purposes and importance of credit.
Credit enables businesses or individuals to obtain products or money in exchange for a
promise to pay later. Businesses use credit to buy materials and supplies from other
businesses. Credit makes it possible for millions of people and companies to purchase goods
and services who otherwise would not have the means to do so. By extending credit,
businesses provide a purchasing incentive to customers, thus enhancing their sales revenue
and supporting the overall economy.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the concept of self esteem.
Self esteem is the way you perceive your worth or value as a person. It is an important
interpersonal skill that allows you to believe in yourself and helps you relate positively to
others. You can demonstrate positive self esteem by treating others with respect and
friendliness, dressing appropriately on the job, and behaving in a confident yet courteous
manner.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Identify factors affecting a business’s profit.
Profit is the monetary return a business’ owner receives for taking the risk of investing in the
business. In simple terms, profit equals income less expenses. More specifically, there are
two types of profit: gross profit and net profit. Gross profit is the money left over after the
cost of goods is subtracted from income from sales. Net profit is the money left over after
operating expenses are subtracted from gross profit.
Factors that affect profit include demand for the good/service, expenses, prices, the economy,
and chance. To try to increase profit, a business can increase worker efficiency, increase
sales, and/or decrease expenses.
Source: Profit. (Economics LAP 2: Career-Sustaining Level). (1997). Columbus, OH:
Marketing Education Resource Center.
Explain how to interpret others’ nonverbal cues.
Nonverbal communication refers to communication other than spoken language, including
distance, eye contact, facial expressions, and gestures. Nonverbal cues can help you
determine another’s attitude and personal feelings. The distance you place between yourself
and another can convey messages of attraction, interest, status, or respect. When you
maintain eye contact, you show sincerity, interest, and confidence. Facial expressions are
sometimes conscious and sometimes unconscious. They convey meaning, emotion, and
attitude. Positive gestures, or hand movements, are often open, natural, and smooth.
Negative gestures, such as crossing your arms, are more closed and rigid.
Source: Ciletti, D. (2004). Marketing Yourself. Mason, OH: South-Western.
Explain the principles of supply and demand.
In a market-oriented economy like in the United States, supply and demand determine the
prices and quantities of goods and services produced. Supply is the amount of goods and
services producers are willing to make and sell. Demand is the willingness and ability of
consumers to buy goods and services. Supply and demand interact in the marketplace
resulting in a state of equilibrium, surplus, or shortage.
The law of supply states that price and quantity supplied move in the same direction (a direct
relationship). Thus, as price increases, the amount of goods and services supplied increases.
Conversely, the law of demand states that as price increases, the amount desired by
consumers will decrease (an inverse relationship). When the amount of a product/service
being supplied equals the amount being demanded, equilibrium exists in the marketplace at
that price. If, however, there is more supply than demand for a product a surplus exists,
potentially leading to lower prices. A shortage exists when demand exceeds supply, a
condition that can lead to rising prices.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the concept of competition.
Competition is the struggle among businesses for customers. As an essential component of
the free enterprise system, competition forces businesses to produce quality goods at
reasonable prices. Competition also encourages businesses to develop new products, enhance
or improve existing products, and expand product selection in order to attract new customers.
Businesses compete in two ways: price and nonprice competition.
Price competition assumes that, with all other considerations being equal, a customer will
buy the lowest-priced product. Nonprice competition is where businesses compete on factors
such as product quality, business location and reputation, customer service, and payment or
financing options available.
A monopoly exists when there is no competition in the market for a particular good or
service. Monopolies are not permitted in a free enterprise system.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Analyze impact of specialization/division of labor on productivity.
Productivity is the measure of worker output over a given period of time. Specialization and
division of labor are important elements to increasing productivity. The theory behind this is
that work can be completed faster and more efficiently when workers specialize in a certain
area of production. An assembly line is an example of specialization and division of labor.
Automation is the use of machines to do the work of people. It can cut production time,
reduce errors, and simplify procedures, leading to greater overall productivity of the business.
Sources:
Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management. New
York, NY: Glencoe/McGraw-Hill.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Identify desirable personality traits important to business.
There are many characteristics of successful businesspeople, including persistence, creativity,
responsibility, confidence, and enthusiasm. A businessperson should be inquisitive,
goaloriented, independent, a risk taker, and action oriented. Essential skills for running a
business include the following: communication, math, problem solving, technology, decision
making, organizing, teamwork, social, and basic business skills.
Source: Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management.
New York, NY: Glencoe/McGraw-Hill.
Explain the impact of the law of diminishing returns.
The change in total product output that results from hiring one more worker is called the
marginal product. Diminishing returns is experienced when the number of workers being
utilized causes output to increase at a decreasing rate. Utilizing too many workers may
actually cause production to decrease.
Source: Economics: Concepts and Choices. (2007). Evanston, IL: McDougal Littell.
Explain the use of feedback for personal growth.
The way feedback is given often affects the way you accept it. Destructive criticism focuses
just on the bad things and gives the recipient no help. Conversely, constructive criticism is
designed to be helpful. It is said calmly with a focus on the problem, not the person, and
suggestions for improvements are given. Anyone who is new to a job must expect criticism.
One can control his/her reaction to feedback. Maintain a positive attitude and try to avoid
getting defensive. People who respond to negative feedback in a positive way generally
impress others. Those who work on correcting their weaknesses tend to move ahead in their
careers. When giving feedback, it is important that your message be clear and easily
understood. Give feedback in a nonthreatening manner, discussing problems with others
one-on-one when possible.
Source: Kelly-Plate, J. & Volz-Patton, R. (1991). Career Skills (2nd ed.). New York, NY:
Glencoe/McGraw-Hill.
Describe the concept of price stability as an economic measure.
Price stability is a factor that can enable economic growth. When prices are stable, investors
and businesses know what to expect in the marketplace and in government. Businesses can
make long-term plans knowing that market conditions will not change drastically and that the
government will not run out of money. Globally, investors are more likely to put their money
into countries with price stability, leaving behind nations that could use those investments for
economic expansion.
Source: Economics: Concepts and Choices. (2007). Evanston, IL: McDougal Littell.
Explain the nature of stress management.
Stress is a person’s reaction to pressures from the outside world. It can be mental or
physical. Managing stress is important to a healthy lifestyle and effectiveness in the
workplace. Stress can be harmful, causing undue anxiety and suppressing the body’s
immune system.
Three things are essential to help prevent or reduce stress: regular exercise, a balanced diet,
and enough sleep. Researchers emphasize engaging in recreational activities as a way to
manage stress. In times of stress, it is important to make reasonable compromises and learn
to accept those things you cannot change about the world around you.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Discuss the measure of consumer spending as an economic indicator.
Consumer spending is also called consumption, and it includes all spending by households on
durable goods, nondurable goods, and services. Consumer spending is one variable used to
calculate Gross Domestic Product, along with investment, government spending, and net
exports. The amount of money actually available for consumer spending is called disposable
personal income. Consumer spending, then, is one measure of the overall health of an
economy.
Source: Economics: Concepts and Choices. (2007). Evanston, IL: McDougal Littell.
How can you show empathy for others?
Empathy is an understanding of another person’s situation or frame of mind. On the job, you
should be open-minded, realizing that many people are under pressure. Treat others
considerately, and call on your own experiences. Before you react to someone, think of the
position the other person is in. You may see things differently, and your reaction may be
more effective. Be aware of how you appear to someone else, trying not to hurt or offend
them. Speak carefully, and think about the way others will feel when they hear what you
have to say. Let other people know you are interested in them, smile, and make them feel
important. Do not assume that certain behaviors and views are universal; many people in the
world have ideas that are very different from yours.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the concept of Gross Domestic Product.
Gross Domestic Product (GDP) is the output of goods and services produced by labor and
property located within a country. GDP is one measure of a nation’s productivity, or the
output of workers in a given period of time. GDP is made up of several elements: private
investment, government spending, personal spending, net exports of goods, and change in
business inventories. Two types of GDP are nominal GDP and real GDP. Nominal GDP is
stated in the price levels in which the GDP was measured; real GDP is the nominal GDP
adjusted for changes in prices.
Calculate GDP as follows: add private business spending, government spending, and
personal spending. Then either add a trade surplus or subtract a trade deficit, and either add
expanding inventories or subtract shrinking inventories. A similar measure to GDP is Gross
National Product. GNP is the total dollar value of goods and services produced by a nation,
including those produced outside of its own territory by its own citizens.
Sources:
Economics: Concepts and Choices. (2007). Evanston, IL: McDougal Littell.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Discuss the impact of a nation’s unemployment rates.
There are three main impacts of lingering unemployment on an economy: efficiency,
inequality, and discouraged workers. Unemployment is inefficient in that it wastes human
resources. It leads to inequality because those with the least experience tend to lose their jobs
first, which are usually minorities and the young. Lastly, unemployed people tend to get
discouraged about themselves and their abilities, and may give up their search for work.
Unemployment is an important indicator of the overall strength of an economy. The higher
the unemployment rate, the greater the chances of an economic slowdown. Likewise, the
lower the unemployment rate, the greater the chances of an economic recovery. When more
people are working, more people are spending money and paying taxes to help the economy
grow.
Sources:
Economics: Concepts and Choices. (2007). Evanston, IL: McDougal Littell.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Describe the economic impact of inflation on business.
Inflation refers to rising prices; it is an indicator of the stability of an economy. A low level
of inflation (between 1 and 5 percent per year) is considered good because it indicates a
stable economy. Higher levels of inflation are harmful to businesses. Rising prices cause
consumers to spend less, slowing the overall economy. Inflation also leads to higher wages.
A high level of inflation may cause wages to increase beyond what businesses can afford to
pay, which can lead to layoffs and downsizing. Interest rates rise in periods of inflation.
Rising interest rates mean that borrowing money becomes more expensive. Businesses are,
thus, less likely to borrow money to expand their operations. With inflation, the value of a
dollar decreases so businesses and individuals cannot buy as much with the same dollar as
they could before.
Inflation can be helpful to individuals and businesses who are borrowers. Those who borrow
at a fixed rate of interest can repay the debt with dollars that are worth less, which makes
their repayments smaller than they would have been without inflation.
Sources:
Economics: Concepts and Choices. (2007). Evanston, IL: McDougal Littell.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Describe the concept of insurance.
An insurance policy is a contract between a business or individual and an insurance company
to cover risks. Business risks include economic risks, natural risks, and human risks.
Insurance companies estimate the probability of loss due to risk and determine a rate to
charge for the policy, called a premium.
Property insurance is one common type of insurance, which covers loss or damage to
buildings and equipment. Property insurance can be purchased to cover full replacement
cost, automatic increase protection, and business interruption. Liability insurance is a form
of insurance that protects against damages for which a business or individual may be liable,
including injury or property damage to others.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Determine the impact of business cycles on business activities.
A business cycle is a series of recurring changes in economic activity. Four phases make up
a business cycle: expansion, recession, trough, and recovery. During expansion, the
economy is flourishing. It is a good time for businesses to start up or expand due to the
increased output of goods and services. Recession is a time of economic slowdown lasting at
least two quarters. Companies reduce their output during a recession, and consumers have
less money to spend on goods and services. A prolonged recession is called a depression.
A trough is the low point in a business cycle. It marks the beginning of the transition from
recession/depression to recovery when signs of economic growth are near. In the recovery
phase, demand increases and businesses respond by hiring more workers and supplying more
goods.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Describe the nature of emotional intelligence.
Emotional intelligence is a set of personal skills in the following areas.
x Foster self-understanding to recognize the impact of personal feelings on others. x
Develop personal traits to foster career advancement. x Apply ethics to demonstrate
trustworthiness in working with others. x Exhibit techniques to manage emotional
reactions to people and situations. x Identify with others’ feelings, needs and concerns
to enhance interpersonal relations. x Use communication skills to foster open, honest
communications. x Use communication skills to influence others’ point of view. x
Apply problem solving techniques to obtain solutions to issues and questions. x
Manage stressful situations to minimize negative workplace situations. x Implement
teamwork techniques to accomplish goals. x Employ leadership skills to achieve
workplace objectives.
x Manage internal and external business relationships to foster positive interactions.
Source: Ohio Department of Education. (2008). Marketing Career Field Content Standards
Document. Columbus, OH: Author.
Describe factors that affect the business environment.
A number of factors affect the business environment, therefore it is important to research the
industry and understand the surrounding economy. Industry trends and patterns of change in
areas such as sales growth and government regulation should be considered. Understanding
the competition will help you plan a strategy of success. Barriers to entry in an industry may
exist, such as a dominant competitor, economies of scale, and customer brand loyalty. Other
industry factors include threats from substitute products, supply sources, and technology.
A critical area to analyze is the demographics of your business environment, including
number of companies, annual revenues, and average number of workers employed.
Assessing the competition includes looking at market share and analyzing the position of
your company relative to others in the marketplace.
Source: Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management.
New York, NY: Glencoe/McGraw-Hill.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Explain the concept of ethical work habits.
Ethics are the basic values and moral principles that guide behavior. Characteristics of
ethical work habits include honesty, respect, and equity. Being honest is more than just
telling the truth. It means maintaining confidentiality and having respect for company
property. Honesty is the basis for a trustworthy business relationship. Another solid base for
business/customer relations is showing respect. This means listening to others with an open
mind and responding with courtesy and tact. Equity means that everyone has equal rights
and opportunities. Because people expect to be treated the way those around them are
treated, it is important to be fair and equitable in dealing with others.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the nature of effective communications.
Communication is the process of exchanging messages between a sender and a receiver.
Effective communicators need to understand channels of communication and media,
effective listening skills, barriers to communication, and non-verbal cues. In addition, one
must be prepared to read for meaning, speak properly, and write effectively.
Channels (or media) are the avenues through which a message can be delivered. The choice
of medium depends on the nature and importance of the message. Effective listening allows
a person to identify the purpose of the speaker, give feedback, and evaluate the speaker’s
message. Communication may be impeded by a number of barriers, including physical such
as distance and position from the speaker, and verbal as in using vague or unclear language.
Lastly, a person’s non-verbal cues—such as his or her tone of voice, emphasis, and body
language—are critical because they often communicate as much as the speaker’s actual
words.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the concept of leadership.
Leadership is helping members of an organization achieve their goals. Leadership requires a
wide range of skills and personal traits, including self-confidence, creativity, problemsolving,
and effective communication. Good leaders understand people, show social judgment, and
can motivate others. Leaders have a vision, and can communicate that vision with those
around them while minimizing conflicts that may arise.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
How can you foster positive working relationships?
Working with others is not always easy, which is why it is important to create and maintain a
working environment that is positive and effective. Working as a team is a critical
component for a group of people to achieve a common goal. Being a valuable team member
involves making the team’s goals our top priority, building positive group dynamics, and
being an active listener.
One way to foster a positive working relationship with others is to show respect for their
ideas and feelings. Being prompt with your assignments and showing responsibility are other
ways to maintain those relationships. Also, as in most areas of business, being able to
communicate effectively with others is a skill that must be learned and utilized.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain ethical considerations in providing information.
Ethical business practices ensure that the highest standards of conduct are observed in a
company’s relationships with everyone in the company or who is affected by its activities.
Ethical behavior is lawful and does not harm some while benefiting others. Business
practices are ethical if its actions are not embarrassing if they become public. Many
businesses develop a statement of core values that guide the ethical decisions and actions of
the company.
A company’s commitment to ethics should be clear during the hiring process as well as in
day-to-day operations. Interviewees may be questioned about ethics, and new hires should
be provided information about the company’s commitment to ethics and values. Ethical
behavior should be a part of employee evaluations and promotions, and managers should
model ethical behavior when dealing with customers.
Source: Dlabay, L. R., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.).
Mason, OH: South-Western Cengage Learning.
Explain the impact of political relationships within an organization.
A company’s culture affects the way it is organized. A formal culture may include a strict
chain of command, with one person at the top making all decisions. Several levels of
management, or bureaucracy, may follow. Job titles are important as indicators of power and
status within a company in a business with a formal culture. Making changes and passing
down decisions in such an organization can be complicated and time consuming.
Other companies have an informal culture, where employees are encouraged to make their
own decisions. In such a company, job titles are not as important as creativity and teamwork.
Source: Brown, B. J. & Clow, J. E. (2006). Introduction to Business. New York, NY:
Glencoe/McGraw-Hill.
Describe the use of technology in human resources management.
Technology is used more and more in the area of recruiting and hiring employees. Effective
sources for locating prospective employees now include Internet career services and
company websites. Many companies ask applicants to fill out an application online or at a
computer terminal at the company’s location. New employee orientation also makes use of
technology for job training and disseminating company policies. Payroll functions are
automated in many companies.
Source: Dlabay, L. R., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.).
Mason, OH: South-Western Cengage Learning.
Explain how to utilize negotiation skills in business.
Negotiation is the process of working with or among the parties in a conflict to find a
resolution, and requires a willingness to work together to achieve a mutually-agreeable
solution. No company will completely avoid conflict in the workplace, so learning and
practicing negotiation skills is important. Six effective techniques for negotiating conflict
are:
1) show respect
2) recognize and define the problem
3) seek a variety of possible solutions
4) collaborate, or work together
5) be reliable
6) preserve your relationship
The two most important negotiation skills are speaking and listening.
Each party must first present the problem from their point of view. Use a non-aggressive
tone and “I statements” to make your point, trying not to cast blame. Active listening on
your part shows you are interested in the other person’s ideas and feelings. Try to empathize
with the person who is speaking. The problem is solved only when both/all parties reach a
common agreement.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the use of consensus building skills.
A consensus is a decision upon which each member of a group agrees. It is a critical
component of teamwork as well as negotiation. To achieve a consensus, it is helpful to allow
all members to state their opinions. It will often require members of the group to be flexible
and accept a compromise. Allowing team members to be involved in setting and achieving
the team’s goals is important and often results in increased company loyalty and a stronger
team spirit. Consensus building is also beneficial in that it leads to extra motivation and a
sense of ownership among team members.
Sources:
Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management. New
York, NY: Glencoe/McGraw-Hill.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Explain methods for motivating team members.
A variety of methods can be useful for management to motivate team members. Factors that
motivate employees are achievement, recognition, responsibility, advancement, growth, and
the reward from doing the work itself. The use of rewards for good work can be effective.
When giving rewards, identify those workers who are effective and efficient, and not those
who simply get the work done. Also, reward and recognize long-term employees for their
loyalty to the company.
Employees are also motivated by the freedom to be creative. Encouraging them to show
creativity without risk of penalty often yields positive and ingenious results.
Sources:
Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management. New
York, NY: Glencoe/McGraw-Hill.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Describe the nature of income statements.
An income statement is a summary of a business’ income and expenses during a specific
period of time. Often called a profit and loss statement, it is used to calculate revenue, costs
and expenses, and profit/loss.
Income statements have several major parts: total sales, net sales, cost of goods sold, gross
profit, operating expenses, other income/expenses, net profit/loss before taxes, and net
profit/loss after taxes. Some of these figures must be estimated or projected, such as total
sales and business expenses.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the concept of accounting.
Financial information for a business can be recorded, summarized, and reported in a variety
of ways. The way in which information is kept and reported is determined by the size, type,
and complexity of a business. Businesses should also consider the types of decisions that
will be made when designing an accounting system. Types of information to be gathered
include purchases, sales, expenses, and payroll. There are two basic types of accounting
methods: cash and accrual. In the cash accounting method, income and expenses are
recorded at the time the money changes hands. The accrual method of accounting records
transactions at the time they occur even if no money changes hands at that time.
Accounting records show changes and the current account balance of each asset, liability, and
owners’ equity account. The recording of debit and credit parts of a transaction is called
double-entry accounting. A record summarizing the information relevant to a single item in
the accounting equation is called an account. With every action, at least two accounts will
change. A group of accounts is called a ledger. A form for recording transactions is called a
journal.
Sources:
Gilbertson, C. B., Lehman, M. W., & Passalacqua, D. (2009) Century 21 Accounting (9th
ed.). Mason, OH: South-Western Cengage Learning.
Nature of Accounting. (Marketing and Business LAP 9: Career-Sustaining Level). (1996).
Columbus, OH: Marketing Education Resource Center.
Explain marketing and its importance in a global economy.
Marketing is the process of planning, pricing, promoting, and distributing ideas, goods, and
services to create exchanges that satisfy customers. The benefits of marketing are numerous.
It provides the means for competition in the marketplace, leading to lower prices and higher
quality goods and services. Marketing generates new and improved products and adds value
(or utility) to existing products. The global marketplace benefits from marketing because of
the need to trade with each other.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the need for accounting standards.
All accountants follow the same set of rules to prepare financial reports. The Financial
Accounting Standards Board issues rules referred to as generally accepted accounting
principles (GAAP). These principles provide a way to communicate financial information in
a form understood by those interested in the operations and financial condition of a business.
Accounting reports are used by individuals outside the business as well as inside. Outside the
business, investors, lenders, consumers, competitors, and government may be interested.
Workers, union leaders, and management all may have a need to see and clearly understand a
business’ financial situation.
Source: Guerrieri, D. J., Haber, F. B., Hoyt, W. B., & Turner, R. E. (2007). Accounting:
Real-World Applications & Connections. New York, NY: Glencoe/McGraw-Hill.
Explain types of investments.
There are several main types of investment vehicles. Common stock is a unit of ownership
of a company that entities the owner to voting privileges. Preferred stock is a type of stock
that gives the owner the advantage of receiving cash dividends before common stockholders
receive them. Stocks are attractive as an investment because owners share in the success of
the company. A corporate bond is a corporation’s written pledge to repay a specific amount
of money, plus interest. Similarly, a government bond is the written pledge of a government
or municipality to repay a specific amount of money, plus interest. When you buy a bond,
you are lending money to a corporation or government entity for a period of time.
Mutual funds are investments in which investors pool their money to buy stock, bonds,
and/or other securities. The investments are selected by professional managers who work for
an investment company. Their expertise can be beneficial to inexperienced investors. A
final form of investment is to own real estate. The goal of this is to own property that
increases in value so you can sell it at a profit or receive rental income.
Source: Kapoor, J. R., Dlabay, L. R., Hughes, R. J., & Hoyt, W. B. (2007). Business and
Personal Finance. New York, NY: Glencoe/McGraw-Hill.
Discuss the role of ethics in accounting.
The AICPA Code of Professional Conduct outlines a number of rules regarding ethics in
accounting. A company must keep an accurate, honest, and complete record of its
accounting transactions. Company audits should be carried out by an independent party.
Confidentiality must be maintained with regard to clients’ personal information as well as
company information. Efforts must be made to avoid conflicts of interest between
employees and customers. Ethical accountants exercise due care in the performance of their
professional services. They should also be educated about insider trading as an unethical
practice. Accountants must refrain from misrepresenting the facts to achieve short-term
goals that are contrary to a business’ long-term objectives.
Internal auditors work independently within a business to review and improve the company’s
operations. They use strict standards to ensure the business sticks to its agreements, to design
plans to protect assets, and to make the best use of company resources.
Sources:
Gilbertson, C. B., Lehman, M. W., & Passalacqua, D. (2009) Century 21 Accounting (9th
ed.). Mason, OH: South-Western Cengage Learning.
Guerrieri, D. J., Haber, F. B., Hoyt, W. B., & Turner, R. E. (2007). Accounting: Real-World
Applications & Connections. New York, NY: Glencoe/McGraw-Hill.
Explain the use of technology in accounting.
Most businesses use some type of accounting software to record and report their business
transactions. Even when using an automated system, you still need to collect and keep your
source documents and each business transaction must be separated into its debit and credit
parts. Computerized posting to accounts is faster and eliminates accounting errors that a
person might make doing it manually. Daily, weekly, monthly, and annual reports can be
generated quickly and accurately. Software is also available for tax collection and reporting.
Source: Kapoor, J. R., Dlabay, L. R., Hughes, R. J., & Hoyt, W. B. (2007). Business and
Personal Finance. New York, NY: Glencoe/McGraw-Hill.
Describe connections between company actions and results. (e.g., influence buying
behavior, etc.)
Company actions that affect consumers include: advertising, pricing, product mix, supply of
goods, sales and promotions, product development and improvement, product safety,
payment options, etc.
Company actions that affect the competition include: advertising, pricing, product mix,
supply of goods, sales and promotions, distribution methods and locations, etc.
Company actions that affect employees include: the use of technology in production and
record keeping, managerial ethics, human resources management, production planning and
scheduling, risk management, investing, etc.
Other actions to be considered include company actions that affect things like the
environment, the global economy, etc.
Source: Dlabay, L. R., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.).
Mason, OH: South-Western Cengage Learning.
Explain legal considerations for accounting.
The most significant changes to corporate governance and accounting practice came with the
Sarbanes-Oxley Act of 2002. The act requires that CEOs, financial officers, accountants, and
auditors comply with regulations and procedures designed to ensure accurate representation
of companies’ financial positions. It prohibits most loans to directors and executive officers,
and forces company insiders to report changes in ownership within two days after a
transaction has been executed. Securities regulation ensures that purchasers can learn the
true nature of the securities they buy by providing a way to uncover fraud and unfair
practices.
Sources:
Brown, G. W. & Sukys, P. A. (2006). Understanding Business and Personal Law. New York,
NY: Glencoe/McGraw-Hill.
Guerrieri, D. J., Haber, F. B., Hoyt, W. B., & Turner, R. E. (2007). Accounting: Real-World
Applications & Connections. New York, NY: Glencoe/McGraw-Hill.
Describe the nature of cash flow statements.
A cash flow statement is a monthly plan that tracks when you anticipate that cash will come
into a business and when you expect to pay out cash. One purpose of a cash flow statement
is to determine whether you will have enough money to pay your bills on time. Another
purpose is to secure a business loan, as most lenders will request at least a first-year cash
flow statement.
A cash flow statement itemizes how much cash you started with, what your projected cash
expenditures are, and how and when you plan to receive cash. It also shows when you will
need to seek out additional funds or when you will have additional cash remaining.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the nature of balance sheets.
A balance sheet is a summary of a business’ assets, liabilities, and owners’ equity. Assets are
anything of monetary value that you own and are classified as current or fixed. A current
asset is cash or anything that can be converted into cash in a year. A fixed asset is something
used over a period of time to operate your business, like property and equipment.
Liabilities are the amounts that a business owes and are classified as current or long-term. A
current liability is a debt the business must pay back during the upcoming year. A long-term
liability is a debt that is due after 12 months’ time, such as a long-term loan. Owners’ equity
(or net worth) is the amount of ownership interest in the business. The difference between
assets and liabilities equals the owners’ equity.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Explain the role of ethics in information management.
Businesses that maintain databases of personal customer information have a responsibility to
keep that information private. Many companies that collect information about their
customers often sell that information to others. This exchange of customers’ personal
information among businesses has led to invasion of privacy complaints. Many businesses
now also offer clients the choice of being added to mailing lists.
Confidentiality must be maintained with regard to employees’ and clients’ personal
information. Accountants must refrain from misrepresenting the facts to achieve short-term
goals that are contrary to a business’ long-term objectives.
Sources:
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Gilbertson, C. B., Lehman, M. W., & Passalacqua, D. (2009) Century 21 Accounting (9th
ed.). Mason, OH: South-Western Cengage Learning.
Discuss the role of ethics in finance.
Ethics are guidelines for good behavior, based on knowing the difference between right and
wrong. Behaving ethically means being truthful, fair, open, and mindful of the law.
Companies and their executives can now be held accountable for misinformation or improper
recording of a company’s financial situation. A company must keep an accurate, honest, and
complete record of its accounting transactions. Finance professionals should be educated
about insider trading and other unethical practices. They must refrain from misrepresenting
the facts to achieve short-term goals. Confidentiality must be maintained with regard to
clients’ personal information as well as company information. Efforts must also be made to
avoid conflicts of interest between employees and customers.
Sources: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Gilbertson, C. B., Lehman, M. W., & Passalacqua, D. (2009) Century 21 Accounting (9th
ed.). Mason, OH: South-Western Cengage Learning.
Guerrieri, D. J., Haber, F. B., Hoyt, W. B., & Turner, R. E. (2007). Accounting: Real-World
Applications & Connections. New York, NY: Glencoe/McGraw-Hill.
Explain legal considerations for finance.
The federal government regulates interstate commerce through the commerce clause of the
U.S. Constitution. Securities regulation, especially the Securities Act of 1933 and the
Securities Exchange Act of 1934, have been enacted to protect investors. These laws ensure
that purchasers can learn the true nature of the securities they buy and provide a way to
discover fraud and unfair practices. Included in the definition of securities are corporate
stocks, interests in savings and loans, interests in racehorses or sports teams, and sales of
coins. The Securities and Exchange Commission administers the laws regulating securities
sales, brokers, dealers, and bankers who sell securities.
The Federal Trade Commission was created in 1914 to protect businesses from the wrongful
acts of other firms, especially referring to competitive practices. The Sherman Antitrust Act
of 1890 was passed to stop the formation of monopolies. The Sarbanes-Oxley Act of 2002
contains important rules affecting the reporting and corporate governance of public
companies and their officers.
Source: Brown, G. W. & Sukys, P. A. (2006). Understanding Business and Personal Law.
New York, NY: Glencoe/McGraw-Hill.
Describe the nature of budgets.
A budget is a formal, written statement of expected revenue and expenses for a future period
of time. To be effective, a budget should be evaluated periodically with actual income and
expenses. Revenues may include cash sales, collections on accounts receivable, and other
income. Expenses include purchases, insurance, taxes, payroll, and many other things.
As part of budgeting, one should follow the following steps. Set goals and prioritize them.
Estimate your income. Budget for unexpected events, fixed expenses, and for variable
expenses. Record what you spend. Review your spending patterns and revise your goals as
needed.
Source: Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management.
New York, NY: Glencoe/McGraw-Hill.
Explain the role of ethics in human resources management.
An ethics policy for employees may discuss working hours, wages and benefits. incentives,
flexibility, safety and health issues, and termination procedures. Ethical operations will
maintain fairness and safety for all employees and customers, be open and up-front about
their policies, and handle problems promptly and equitably. Train your employees in safety
and emergency procedures, then reinforce the training with signage in the workspace.
Ethical behavior must be maintained in employee evaluation, as well as when giving
consideration for promotions, transfers, and bonuses.
Sources:
Allen, K. R. & Meyer, E. (2006). Entrepreneurship and Small Business Management. New
York, NY: Glencoe/McGraw-Hill.
Dlabay, L. R., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason, OH:
South-Western Cengage Learning.
Identify methods for evaluating vendor performance.
The criteria for selecting and evaluating vendors include production capabilities, past
experience, product quality, the availability of special buying arrangements or services, and
pricing. When dealing with a vendor for the first time, buyers might solicit references to
determine the vendor’s reputation. Many businesses maintain resource files and journals that
document past experience with vendors. Such a journal may include an evaluation of product
quality, delivery performance, and customer service. Returns relating to the quality of
products may cause a vendor to be dropped.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Evaluate quality and source of information.
To evaluate source data, consider the following: Is the subject matter consistent with the
defined problem or issue? Do the data apply to the population and/or time period of interest?
Do the data appear in the correct units of measurement? Do the data cover the subject in
adequate detail? Is the data accurate and timely? Can the accuracy of the data be verified?
Is/are the data source(s) reputable? Is the cost of data acquisition worth it? Is there a
possibility of bias?
Source: Zikmund, W. G. (1991). Exploring Marketing Research. (4th ed.) Orlando, FL: The
Dryden Press.
Explain legal issues associated with information management.
The government has regulations regarding protecting the privacy of consumers. Businesses
of all types offer detailed privacy policies to their customers that ensure the protection of
their customers’ personal information. Businesses must not share personal information they
collect with anyone unless you give them permission to do so, according to law.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Describe the nature of business records.
Technology has made it easier and more efficient to maintain business records through
management information systems (MIS). The functions of an MIS are to gather, analyze,
store, and report on data. Records are kept regarding financial information, production and
inventory, marketing and sales, and human resources. Data sources may be external, such as
from financial institutions or government agencies; or they may be internal, including data
from accounting, inventory, and sales figures. Business record keeping requires one to:
identify the information needs of the organization, obtain the data, process and analyze the
data, organize the data in a useful manner, distribute information to those who need it to
make decisions, and update the data and records as needed.
Source: Dlabay, L. R., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.).
Mason, OH: South-Western Cengage Learning.
Explain how to maintain customer records.
Data about customers and their buying habits is kept in a computer program called a
database. Data can be about customers’ contact or other personal information, or it can be
about their purchase/account history. This data can be developed from face-to-face sales,
direct mail responses, phone or e-mail purchases, service requests, website visits, customer
comment cards, or they can be purchased from a third party. Database programs act like
filing cabinets that allow you to sort, find, choose, and organize information.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Describe current business trends.
Assessing current business trends is important to both business and professional growth.
Business owners and entrepreneurs should keep up-to-date through a variety of means.
Classes are offered at vocational/technical schools, two- and four-year colleges, and online.
Joining a professional association or club is an excellent way to stay current with trends and
knowledge relevant to an industry. Another way to stay up-to-date is by reading journals,
professional trade publications, news sources, websites, and blogs. Attend professional
conferences, meetings, seminars, and speakers. These activities also provide the opportunity
for networking, wherein you can learn from colleagues by sharing insight and experience.
Source: Bailey, L. J. (2003). Working: Career Success for the 21st Century (3rd ed.). Mason,
OH: South-Western.
Describe how to monitor internal records for business information.
The functions of an information system are to gather, analyze, store, and report on data.
Records are kept regarding financial information, production and inventory, marketing and
sales, and human resources. Internal data includes accounting records, inventory information,
company sales figures, and more.
A company’s balance sheet, cash flow statement, and income statement are records that are
monitored during a specific period of time. They are used to calculate revenue, evaluate
costs and expenses, and measure profit/loss.
Sources:
Dlabay, L. R., Burrow, J. L., & Kleindl, B. (2009). Intro to Business (7th ed.). Mason, OH:
South-Western Cengage Learning.
Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials. Woodland Hills,
CA: Glencoe/McGraw-Hill.
Explain how to conduct an environmental scan to obtain business information.
An environmental scan is an analysis of outside influences that may have an impact on an
organization. It is a methodical look at the world that includes political, economic,
sociocultural, and technological areas. It is important to understand how each of these areas
may be changing in order to determine the potential for opportunity or threat to a business.
Political factors include the stability of a government and its laws and regulations that affect
business. Economic factors include infrastructure, quality and cost of labor, employee wages
and benefits, taxes, the standard of living, and possibly foreign exchange rates. In
international business, socio-cultural factors include understanding another country’s
language, values, traditions, and social/business etiquette. Keeping up to date with
technology and using it properly are other factors of an environmental scan.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.
Describe how to interpret statistical findings.
Statistics are used to describe and summarize data in order to make the date more meaningful
and easier to understand. Commonly used statistics in business include distribution, central
tendency, and dispersion.
Distribution is a summary of the frequency of values for a variable. The central tendency is
an estimate of the center of a distribution of values, including mean, median, and mode.
Dispersion is the spread of values around the central tendency, measured with the range.
Source: Farese, L. S., Kimbrell, G. & Wolosyk, C. A. (2009). Marketing Essentials.
Woodland Hills, CA: Glencoe/McGraw-Hill.