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RSM100 ((Chapter 6)) Management: the process of planning, organizing, leading, and controlling an enterprise’s financial, physical, human, and information resources to achieve the organization’s goals of supplying products and services. - The planning, organizing, leading, and controlling aspects of a manager’s job are interrelated. - Make the distinction between management effectiveness (doing the right things) and t efficiency (doing things right) effectiveefficient, efficient effective or not. ① Planning: the process of determining the firm’s goals and developing a strategy for achieving them. Goals = what results are desired / plans = how these goals are to be achieved - Goals are established for the organization managers identify whether a gap exists between the company’s desire and actual position managers develop plans to achieve the desired goalthe plans that have been decided upon are implemented. = thinking is converted into action the effectiveness of the plan is assessed - Prediction markets: helps managers assess future possibilities / creating a market where people can buy “shares” in various answers to important questions that need to be answered. I. Strategic plans: set by top management, decisions about resource allocations, company priorities, and the steps needed to meet strategic goals. II. Tactical plans: shorter range plans concerned with implementing specific aspects of the company’s strategic plans. Upper and middle management III. Operational plans: developed by middle and lower-level managers, set shortterm targets for daily, weekly, or monthly performance. ② Organizing: mobilizing the resources that are required to complete a particular task. ③ Leading(or directing): the interactions between managers and their subordinates as they both work to meet the firm’s objectives - Managers have the power to give orders and demand results. / to guide and motivate employees to work in the best interests of the organization ④ Controlling: the process of monitoring a firm’s performance to make sure that it is meeting its goals. Managers ① Top managers: the small number of executives who guide the fortunes of companies, president, vice-president, chief operating officer, chief executive officer, and chief financial officer. - Responsible for a firm’s overall performance and effectiveness and for developing long-range plans for the company. ② Middle managers: between top and first-line managers. Plant manager, operations manager, and division manager ③ Responsible for implementing the decisions made by top managers First-line managers: spend most of their time working with and supervising the employees who report to them. Supervisor, office manager, and group leader I. Human resource managers: provide assistance to other managers when they are hiring employees, training them, evaluating their performance, and determining their compensation level II. Operations managers: responsible for the production systems that create goods and services. Production control, inventory control, and quality control. III. Information managers: responsible for designing and implementing systems that gather, process, and disseminate information. IV. Marketing managers: responsible for getting products and services to buyers V. Financial Managers: to plan and oversee its financial resources Management skills ① - Technical skills: performing specialized tasks within a company Important for first-line managers who spend considerable time helping employees solve work-related problems, monitoring their performance, and training them in more efficient work procedures. ② Human relations skills: understanding and getting along with other people. Important for middle managers ③ Conceptual skills: a person’s ability to think in the abstract, to diagnose and analyze different situations, and to see beyond the present situation. Important for top managers ④ ⑤ - Time management skills: the productive use that managers make of their time. Paperwork, the telephone, meeting, email Decision-making skills: choosing one alternative from among several options. Recognizing and defining the decision situation: problem decision (necessary when actual results do not conform to those expected), opportunity decision (taking new initiatives or doing a current activity more effectively even if no problem exists.) Identifying alternatives Evaluating alternatives Selecting the best alternative Implementing the chose alternative Following up and evaluating the results Behavioral aspects of decision making - Organizational politics: actions that people take as they try to get what they want - Intuition: based on years of experience and practice in making decisions - Escalation of commitment: when a manager makes a decision and then remains committed to its implementation in spite of clear evidence that it was a bad decision Risk propensity: how much a manager is willing to gamble when making decisions Strategic management: the process of aligning the organization with its external environment / strategic goals: the overall objectives that a business wants to achieve / strategy: the broad set of organizational plans for implementing the decisions mad for achieving organizational goals. ① Setting goals: performance targets, the manes by which organizations and their managers measure success or failure at every level - provides direction, guidance, and motivation for all managers - Helps to firms allocate resources - Helps to define corporate culture - Helps managers assess performance I. Mission statement: a statement of how an organization will achieve its purpose Long-term goals: extended periods of time- typically five years or more into the future. / Intermediate goals: set for a period of one to five years into the future / short-term goals: set for one year or less II. SMART goals: goals that are specific, measurable, achievable, relevant, and timeframed ② Formulating Strategy : creating of a broad program for defining and meeting an organization’s goals I. Setting strategic goals: long-term goals derived from the firm’s mission statement II. Analyzing the organization and its environment :SWOT analysis (Strengths, weaknesses, opportunities, threats) Organizational analysis: strengths and weaknesses Environmental analysis: opportunities and threats Matching the Organization and its environment ① Corporate-level strategies: identifies the various businesses that a company will be in and how these businesses will relate to each other - Concentration strategy: focusing the company on one product or product line - Growth: focusing on internal activities will result in growth, market penetration (boosting sales of present products by more aggressive selling in the firm’s current markets), product development(developing improved products for current markets), geographic expansion(expanding operations in new geographic areas or countries) - Integration : focus on external activities that will result in growth, horizontal integration(acquiring control of competitors in the same or similar markets with the same or similar products), vertical integration(owning or controlling the inputs to the firm’s processes and/or the channels through which the products or services are distributed) - Diversification: expanding into related or unrelated products or market segments, related diversification(adding new, but related, products or services to an existing business), conglomerate diversification(diversifying into products or markets that are not related to the firm’s present businesses) - Investment Reduction: reducing the company’s investment in one or more of its lines of business = retrenchment, which means the reduction of activity or operations. Divestment(selling or liquidating one or more of a firm’s business) ② Business-level strategies: identifies the ways a business will compete in its chosen line of products or services, to establish a profitable and sustainable competitive position - Cost leadership: the low-cost leader in an industry - Differentiation strategy: unique in its industry along some dimension that is valued by buyers - Focus strategy: selecting a market segment and serving the customers in that market niche better than competitors ③ Functional strategies: identify the basic courses of action that each department in the firm will pursue so that it contributes to the attainment of the business’s overall goals. Contingency Planning: identifying aspects of a business or its environment that might entail changes in strategy. / Crisis management: an organization’s plan for dealing with emergencies that require an immediate response Corporate culture: the shared experiences, stories, beliefs, norms and ethical stance that characterize an organization. - A strong corporate culture guides everyone to work toward the same goals and helps newcomers learn accepted behaviours. ((Chapter 7)) Organizational structure: the specification of the jobs to be done within a business and how those jobs relate to one another / organization chart: illustrates the company’s structure and show employees where they fit into the firm’s operations / chain of command: the reporting relationships within the company Developing the structure ① Specialization: the process of identifying the specific jobs that need to be done and designating the people who will perform them ② - A natural part of organizational growth Departmentalization: the process of grouping jobs into logical units Treat a department as a profit centre- a separate company unit responsible for its own costs and profits I. Functional departmentalization: according to functions or activities – marketing and sales, human resource, and accounting and finance departments II. Customer departmentalization: according to the types of customers likely to buy a given product - make shopping easier by providing identifiable store segments. III. Product departmentalization: according to the specific product or service being created. IV. Geographic departmentalization: according to the area of the country they serve V. Process departmentalization: according to the production processes that are used to make the product. Establishing the decision-making hierarchy ① Assigning tasks: determining who can make decisions and specifying how they should be made – responsibility(the duty to perform an assigned task) , authority (the power to make the decisions) ② Performing Tasks: implementing decisions that have been made – delegation(assignment of a task, a responsibility, or authority by a manager to a subordinate), accountability(liability of subordinates for accomplishing tasks assigned by managers) - When delegating: decide on the nature of the work to be done, match the job with the skills of subordinates, make sure the person chosen understands the objectives he or she is supposed to achieve, make sure subordinates have the time and training necessary to do the task. ③ Distributing authority: delegation involves a specific relationship between managers and subordinates. Determine whether the organization is to be centralized or decentralized - Centralized organizations: top managers retain most decision making rights for themselves - Decentralized organization: lower- and middle-level managers are allowed to make significant decisions, to make a company more responsive to its environment by breaking the company into more manageable units and giving those units more autonomy. - Tall and flat organizations : flat (=an organization with relatively few layers of management-typical law firm), tall(= an organization people managed with many layers of management-Canadian forces) - Span of control: the number of by one manager, flat organization=relatively wide span of control, tall organization=relatively narrow span of control at upper levels. At lower levels, where tasks are similar and simpler, span of control widens. Downsizing: the planned reduction in the scope of an organization’s activity - Three forms of authority I. Line authority: authority that flows up and down the chain of command / line departments: departments directly linked to the production and sales of specific products. II. Staff authority: based on technical expertise and involves advising line managers about decisions staff members help line departments in making decisions but do not have the authority to make final decisions III. Committee and Team authority: authority granted to committees or work teams that play central roles in the firm’s daily operations Basic organizational structures ① Functional structure: the various units in the organization are formed based on the functions that must be carried out to reach organizational goals ② Divisional Structure: divides the organization into several divisions, each of which operates as a semi-autonomous unit and profit center–products, customers, or geography ③ Project organization: involves forming a tea of specialists from different functional areas of the organization to work on a specific project – Procter & Gamble - Matrix organization: a variation of project structure in which the project manager and the regular line managers share authority ④ International organization: organizational structures that are designed to help a company succeed in international markets. International departments, international divisions, or an integrated global organization are all variations of the international organizational structure. ⑤ Organizational design for the Twenty-first Century I. Boundaryless organization: traditional boundaries and structures are minimized or eliminated altogether. II. Team organization: exclusively on project-type teams, with little or no underlying functional hierarchy III. Virtual organization: a company with little or no formal structure, which exists only in response to its own needs. IV. Learning organization: works to integrate continuous improvement with continuous employee learning and development. Informal groups: groups of people who decide to interact among themselves even though they may not be required to do so by the formal organization. Organizational grapevine: the informal communication network that runs through the entire organization(=grapevine), passes information orally, messages often become distorted in the process ((Chapter 8)) Human resource management: the set of organizational activities directed at attracting, developing, and maintaining an effective workforce. HR planning ① - Job analysis: analyzing the nature of jobs Job description: the duties of a job, its working conditions, and the tools, materials, and equipment used to perform it ② - Job specification: the skills, abilities, and other credentials needed to do the job Forecasting HR demand and supply Forecasting internal supply: the number and type of employees who will be in the firm at some future date - Forecasting external supply: the number and type of people who will be available for hiring from the labour market at large. Replacement charts: an HR technique that lists each important managerial position, who occupies it, how long he or she will probably stay in it before moving on, and who is now qualified or soon will be qualified to move into it. Skills inventories: computerized systems that contain information on each employee’s education, skills, work experience, and career aspirations Matching HR supply and Demand Recruiting Human Resources: the process of attracting qualified persons to apply for the jobs that are open. ① Internal recruiting: considering present employees as candidates for openings. ② External recruiting: attracting people outside the organization to apply for jobs Internships: short-term paid positions where students focus on a specific project Selecting Human Resources : determining the predictive value of information (validation) - Application forms Tests: assessment centre (a series of exercise in which candidates perform realistic management tasks under the watchful eye of expert appraisers) , video assessment (potential hires are shown videos of realistic work situations and are then asked to choose a course of action to deal with the situation) Interviews: curveball questions(unexpected), behavior-based interviewingother techniques(drug test) Developing Human Resources - New employee orientation: orientation (the process of introducing new employees to the company’s policies and programs, the co-workers and supervisors they will interact with, and the nature of their job) - Training and Development: I. Work-based programs: a technique that ties training and development activities directly to task performance = on the job training, informal / Systematic job rotations and transfers: a technique in which an employee is systematically rotated or transferred from one job to another. II. Instructional-based programs(off the job training) : Management development programs: try to enhance conceptual, analytical, and problemsolving skills = lecture or discussion approach, / Networking: informal interactions among managers for the purpose of discussing mutual problems, solutions, and opportunities / Mentoring: having a more experienced manager sponsor and teach a less experienced manager / vestibule training: a work simulation in which the job is performed under conditions closely simulating the actual work environment III. Team building and group-based training Evaluating Employee performance: the specific and formal evaluation of employees to determine the degree to which they are performing effectively. ① - Performance appraisal process 360-degree feedback: gathering information from a manager’s subordinates, peers, and superiors when assessing the manager’s performance - Performance appraisal: the specific and formal evaluation of employees to determine the degree to which they are performing effectively. ② Providing performance feedback Methods for appraising performance - Ranking Methods Simple ranking method: requires a manager to rank-order from top to bottom or from best to worst each member of a particular work group or department - Forced distribution method: involves grouping employees into predefined frequencies of performance ratings. - Rating Methods Graphic rating scale: a method of performance appraisal that involves a statement or question about some aspect of an individual’s job performance for which the rater must select the response that fits best -critical incident method: a technique of performance appraisal in which raters recall examples of especially good or poor performance by an employee and then describe what the employee did that led to success or failure – providing information for feedback and defining performance in clear behavioural terms. Providing compensation and benefits - Compensation: the set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization. - Determining Basic compensation: the base level of wages or salary , merit pay plans(compensation plans that formally base some portion of compensation on merit) 더 공헌한 사람은 페이를 더 많이 받는다 Pay surveys in compensation: pay surveys provide the information that an organization needs to avoid an imbalance between its own pay scale and those of comparable organizations Job evaluation: a method for determining the relative value or worth of a job to the organization so that individuals who perform it can be appropriately compensated Establishing a pay structure: Performance-based compensation - Incentive programs: special pay programs designed to motivate high performance. Individual incentives I. Individual incentive plans: a compensation systems in which an employer gives an individual a salary increase or some other financial reward for outstanding performance immediately or shortly after the performance occurs II. Piece-rate incentive plan: a compensation system in which an organization pays an employee a certain amount of money for every unit produced – under an individual’s control, the individual employee does a single task continuously during the course of time III. Sales commission: payment to salespeople based on the number of units they sell or the dollar value of sales they generate for the company – cash payment IV. Pay-for–knowledge: systems that encourage individual workers to learn new skills and to become proficient at different jobs V. Pay-for-performance: rewards paid to managers for especially productive output- for producing earnings that significantly exceed the cost of bonuses Team and Group Incentives I. Profit-sharing: system whereby some portion of the company’s profit is paid into a profit-sharing pool that is then distributed to all employees II. Gain-sharing plans: distribute bonuses to employees when a company’s costs are reduced through greater work efficiency Benefits: what a firm offers its workers other than wages and salaries in return for their labour -Mandated protection plans: protect employees when their income is threatened or reduced by illness, disability, death, unemployment, or retirement Employment insurance: provides a basic subsistence payment to employees who are between jobs Canada Pension Plan: provides income to retired individuals to help them supplement personal savings, private pensions, part-time work, and so forth Workers’ compensation: mandated insurance that covers individuals who suffer a job-related illness or accident. - Paid time off: take time off from work and continue to be paid. - Cafeteria-style benefit plans: a flexible approach to providing benefits in which employees are allocated a certain sum to cover benefits and can “spend” this allocation on the specific benefits they prefer. The legal context of HRM ① Equal employment opportunity: regulations to protect people from unfair on inappropriate discrimination in the workplace. - Bona fide occupational requirement: when an employer may choose one applicant over another based on overriding characteristics of the job. ② Comparable worth: a legal concept that aims to pay equal wages for work of equal value. ③ Sexual harassment: requests for sexual favors, unwelcome sexual advances, or verbal or physical conduct of a sexual nature that creates an intimidating or hostile environment for a given employee. - Quid pro quo harassment: form of sexual harassment in which sexual favors are requested in return for job-related benefits - Hostile work environment: form of sexual harassment deriving from off-color jokes, lewd comments, and so forth. ④ Employee Safety and health: don’t have to work in dangerous conditions ⑤ Retirement New challenges in the changing workplace ① Managing workforce diversity: the range of workers’ attitudes, values, beliefs, and behaviours that differ by gender, race, age, ethnicity, physical ability, and other relevant characteristics. - Bring a wider array of information to bear on problems and can provide insights on marketing products to a wider range of consumers ② Managing knowledge workers: workers who are experts in specific fields like computer technology and engineering and who add value because of what they know, rather than how long they have worked or the job they do. ③ Managing contingent workers: works for an organization on something other than a permanent or full-time basis. ((Chapter 9)) Labour union: a group of individuals working together to achieve shared job-related goals, such as higher pay, shorter working hours, more job security, greater benefits, or better working conditions. - labour relations: the overall process of dealing with employees who are represented by a union / collective bargaining: the process by which union leaders and managers negotiate specific terms and conditions of employment for workers who are represented by unions Industrial Disputes Investigation Act: provided for compulsory investigation of labour disputes by a government-appointed board before a strike was allowed - Privy Council Order 1003: recognized the right of employees to bargain collectively - Constitution Act: Divded authority over labour regulations between the federal and provincial governments Federal Legislation: the Canada Labour Code - The labour practices of firms operating under the legislative authority of parliament. ① Industrial Relations: deals with all matters related to collective bargaining Occupational Health and Saftey:in maintaining a safe workplace ③ Standard Hours, Wages, Vacations, and holidays Provincial labour Legislation - ② The Ontario laboour relations act Certifying a union: an example - Bargaining unit: individuals grouped together for purposes of collective bargaining - Certification vote: a vote supervised by a government representative to determine whether a union will be certified as the sole bargaining agent for the unit - Decertification: the process by which employees legally terminate their union’s right to represent them Type of unions - Craft unions: organized by trades; usually composed of skilled workers - Industrial unions: organized according to industries; usually composed of semi-skilled and unskilled workers. - Local union: the basic unit of union organization / National union: with members across Canada / International union: with members in more than one country Independent local union: one not formally affiliated with any labour organization. Union security: the means of ensuring the union’s continued existence and the maintenance of its membership so that it can continue to meet the criteria for certification - Closed shop: an employer can hire only union members / union shop: an employer can hire non-unionized workers, but they must join the within a certain period / agency shop: all employees for whom the union bargains must pay dues, but they are not required to join the union / open shop: an employer may hire union or nonunion workers Reaching agreement on the contract’ terms : bargaining zone Union’s demand ㅣ Union’s expectation ㅣ Employer’s maximum limit ㅣ Union’s Minimum Limit ㅣ Employer’s expectation ㅣ * Employer’s desired result Contract issues - Compensation: cost-of-living adjustment (a contract clause specifying that wages will increase automatically with the rate of inflation) / wage reopener clauses: a contract clause that allows wage rates to be renegotiated at preset times during the life of the contract / Benefits, Job security When Bargaining Fails - Impasse: occurs when, after a series of bargaining sessions, management and labour are unable to agree on a first-time contract or a contract to replace an agreement that is about to expire ① - Union tactics Strike: employees temporarily walk off the job and refuse to work. Triggered by impasses over mandatory bargaining items are called economic strikes, even if they occur over non-economic issues such as working hours. sympathy strikes(initiated by another labour organization), wildcat strikes(not authorized by the union and that occur during the life of a contract) - Picketing: members march at the entrance to the company with signs explaining their reasons for striking. - Boycott: union members agree not to buy the product of the firm that employs them - Work slowdown: workers perform their jobs at a much slower pace than normal ② - Management Tactics Lockout: a tactic of management in which the firm physically denies employees access to the workplace to pressure workers to agree to the company’s latest contract offer - Strikebreaker: an individual hired by a firm to replace a worker on strike - Plant closure / contracting out - Employers’ associations: groups of companies that get together to plan strategies and exchange information about how to manage their relations with unions Mediation and arbitration - Mediation: a method of settling a contract dispute in which a neutral third party is asked to hear arguments from both the union and management and offer a suggested resolution - Voluntary arbitration: a method of settling a contract dispute in which the union and management ask a neutral third party to hear their arguments and issue a binding resolution / Compulsory arbitration: a method of settling a contract dispute in which the union and management are forced to explain their positions to a neutral third party who issues a binding resolution Administering a labour agreement - When such differences of opinion arise, the union member takes the complaint to the shop steward(a regular employee who acts as a liaison between union members and supervisors) - Grievance: a complaint by a worker that a manager is violating the terms of the collective agreement. ((Chapter 10)) Forms of Employee behavior Employee behavior: the pattern of actions by the members of an organization that directly or indirectly influence the organization’s effectiveness - Performance behaviors: the behaviors directly targeted at peroforming a job - Organizational citizenship: provide positive benefits to the organization but in more indirect ways - Counterproductive behaviors: behaviors that detract from organizational performance = theft and sabotage, sexual and racial harassment, workplace aggression and violence - Absenteeism: occurs when an employee doesn’t show up for work - Turnover: the percentage of an organization’s workforce that leaves and must be replaced. Individual Differences among employees - Physical, psychological, and emotional attributes that vary from one person to another. ① Personality: the relatively stable set of psychological attributes that distinguishes one person from another. - Agreeableness: to get along with others / conscientiousness: the number of things a person tries to accomplish / emotionality: the degree to which people tend to be positive or negative in their outlook and behaviors toward others. / extroversion: person’s comfort level with relationships / openness: how open or rigid a person is in terms of his or her beliefs. - Emotional intelligence (EQ): the extent to which people possess social skills, are selfaware, can manage their emotions, can motivate themselves, and can express empathy for others. ② - Attitudes: our beliefs and feelings about specific ideas, situations, or other people. Job satisfaction: the degree of enjoyment that people derive from performing their jobs. (high levels of job satisfaction do not automatically lead to higher levels of productivity) - Organizational commitment: an individual’s identification with the organization and its mission Matching people and jobs - Psychological contract: the set of expectations held by an employee concerning what he or she will contribute to an organization(contributions) and what the organization will provide the employee in return(inducements). - The person-job fit: the extent to which a person’s contributions and the organization’s inducements match one another. Motivation: the set of forces that cause, focus, and sustain workers’ behavior. ① Classical theory and scientific management: workers are motivated solely by money. -Taylor’s approach: scientific management (analyzing jobs in order to find better, more efficient ways to perform them) ② - Early behavioral theory Hawthorne effect: the tendency for workers’ productivity to increase when they feel they are receiving special attention from management. - Human relations: the interactions between employers and employees and their attitudes toward one another. I. - The human-resources model: theories X and Y Theory X: a management approach based on the belief that people must be forced to be productive because they are naturally lazy, irresponsible, and uncooperative / Theory Y: a management approach based on the belief that people want to be productive because they are naturally energetic, responsible, and co-operative. II. Maslow’s hierarchy of needs model: five levels of human needs and arguing that basic needs must be fulfilled before pole will work to satisfy higher-level needs. - Physiological needs: providing both comfortable working environments and salaries sufficient to buy food and shelter - Security needs: the needs for stability and protection from the unknown(pension plans and job security) - Social needs: the needs for friendship and companionship - Esteem needs: the need for status and recognition as well as the need for selfrespect( job titles) - Self-actualization needs: self-fulfillment. III. Two-Factor(Motivation-Hygiene) Theory - Identifies factors that must be present for employees to be satisfied with their jobs and factors that, if increased, lead employees to work harder. - Motivation factors are directly related to the work that employees actually perform, while hygiene factors refer to the environment in which they perform it. ③ Contemporary motivation theory I. Expectancy theory: people are motivated to work toward rewards that they want and that they believe they have a reasonable chance of obtaining. II. Equity Theory: the theory that people compare what they contribute to their job with what they get in return, and their input/output ratio with that of other employees Strategies for enhancing motivation ① - Reinforcement/ behavior modification theory Reinforcement: controlling and modifying employee behavior through the use of systematic rewards and punishments for specific behaviours = positive reinforcement, punishment, omission, negative reinforcement ② Goal setting theory: people perform better when they set specific, quantified, timeframed goals SMART goals(specific, measurable, agreed upon, realistic, and time framed) - Management by objectives(MBO): a system of collaborative goal setting that extends from the top of an organization to its bottom ③ Participative management and empowerment: a method of increasing employees’ job satisfaction by giving them a voice in how they do their jobs and how the company is managed. - To encourage participative management = quality circle(whereby a group of employees meet regularly to consider solutions for problems in their work area) ④ Team management: to enhance employee motivation and company performance ⑤ Job Enrichment and Job Redesign - Job enrichment: a method of increasing employees’ job satisfaction by extending or adding motivating factors such as responsibility or growth - Job redesign: increasing employee’s job satisfaction by improving the worker-job fit through combining tasks, creating natural work groups, and/or establishing client relationships I. Combining tasks: enlarging jobs and increasing their variety to make employees feel that their work is more meaningful II. Forming Natural work groups: formed to help employees see the place and importance of their jobs in the total structure of the firm. III. Establishing client relationships: to establish client relationships by letting employees interact with customers ⑥ Modified work schedules I. Flextime: people to pick their working hours II. Compressed workweek: employees work fewer days per week, but more hours on the days they do work III. Telecommuting: allowing employees to do all or some of their work away from the office IV. Worksharing: a method of increasing employee job satisfaction by allowing two people to share on job Leadership and motivation -leadership: the processes and behaviours used by managers to motivate, inspire, and influence subordinates to work toward certain goals. Necessary to create and direct change and to help the organization get through times (management is necessary to achieve coordination and to complete administrative activities during times of stability and predictability) Approaches to leadership - Trait approach: focuses on identifying the traits that would differentiate leaders from non-leaders Emotional intelligence: self-awareness(to understand your mood), self-regulation(to control disruptive impulses), motivation(a person for work), empathy(to understand the emotional makeup of others), social skill(proficiency in managing relationships) - Behavioural approach” how the behaviours of effective leaders differ from the behaviours of less effective leaders Task-oriented: the manager focuses on how tasks should be performed to achieve goals / employee-oriented: the manager focuses on the satisfaction, motivation, and well-being of employees Autocratic style: the manager issues orders and expects them to be obeyed without question / democratic style: the manager requests input from subordinates before making decisions but retains final decision-making power) / free-rein style: the manager serves as an adviser to subordinates who are given a lot of discretion when making decisions - Situational approach: varied from one situation to another Recent trends in leadership ① Transformational leadership: the set of abilities that allows a leader to recognize the need for change, to create a vision to guide that change, and to execute the change effectively / transactional leadership: routine, regimented activities that focus on maintaining stability of operations ② Charismatic leadership: a type of influence based on the leader’s personal charisma, high level of self-confidence and a strong need to influence others, some leaders will inspire such blind faith in their followers that the followers may engage in inappropriate, unethical, or illegal behaviours simply because the leader instructs them to do so. ③ Leaders as coaches ④ Gender and leadership: women do seem to have a tendency to be more democratic when making decisions, whereas men have a tendency to be somewhat more autocratic. ⑤ - Cross-cultural leadership Canadian managers are more subtle and subdued than American managers. Also more committed to their companies, less willing to mindlessly follow the latest management fad, and more open to different cultures ⑥ Strategic leadership: a leader’s ability to understand the complexities of both the organization and its environment to lead change in the organization, which will enhance its competitiveness. (스티븐잡스 mp3 시장) ⑦ Ethical leadership: reflect high ethical standards ⑧ Virtual leadership: the carrying out of leadership activities when the leader does not have regular personal contact with followers. ((Chapter 11)) Service operations: production activities that yield tangible and intangible service products / goods production: yield tangible products Utility: the power of a product to satisfy a human want; something of value / time utility: that quality of a product satisfying a human want because of the time at which it is made available / place utility: that quality of a product satisfying a human want because of where it is made available / form utility: that quality of a product satisfying a human want because of its form; requires raw materials to be transformed into a finished product - Operations management: the systematic direction and control of the processes that transform resources into finished goods Operations process: set of methods and technologies used in the production of a good or a service - Goods-producing processes Analytic process: any production process in which resources are broken down / synthetic process: any production process in which resources are combined - Service-producing processes High-contact system: the service cannot be provided without the customer being physically in the system / low-contact processes: the service can be provided without the customer being physically in the system. Business strategy as the driver of operations - Business strategy determines operations capabilities: operations capability(the activity or process that production must do especially well, with high proficiency) Expanding into additional capabilities: Differences between service and manufacturing operations - Focus on performance / on process and outcome - Focus on service characteristics : Intangibility(customer pleasure or satisfaction with the service), customization, unstorability (the service can’t be produced ahead of time) - Focus on the customer-service link: Ecommerce=the “virtual presence” of the customer Focus on service quality considerations: Operations planning: Business plan and forecasts Long-range operations plan operations schedules operations control output to customers (information results 첨 으로) ① Capacity planning : capacity: the amount of a good that a firm can produce under normal working conditions - For producing Goods: ensuring that a manufacturing firm’s capacity slightly exceeds the normal demand for its product. - For producing services: in low-contact processes, maintaining inventory allows managers to set capacity at the level of average demand. In high-contact processes, managers must plan capacity to meet peak demand. ② - Location planning For producing goods: influenced by proximity to raw materials and markets, availability of labour, energy, and transportation costs, local and provincial regulations and taxes, and community living conditions. - For producing services: in low-contact services, companies have some options, but in high-contact services are more restricted because they must locate near the customers who are a part of the system. ③ Layout planning: determines whether a company can respond quickly and efficiently to customer requests for more and different products or finds itself unable to match competitors’ production speed or convenience of service - For producing goods: productive facilities, non-productive facilities, support facilities I. Process layout: a way of organizing production activities such that equipment and people are grouped together according to their function II. Cellular layout: a layout used to produce goods when families of products can follow similar flow pathsless machine adjustment, equipment set-up time in the cell is reduced as compared with set-up times in process layouts, less material handling and transit time, inventories of goods in progress are lower and paperwork is simpler / the duplication of equipment. III. Product layout: a way of organizing production activities such that equipment and people are set up to produce only one type of good = assembly line(partially finished product moves through a plant on a conveyor belt or other equipment) Efficient-work skill is built in to the equipment, inflexible because of heavy investment in specialized equipment = boredom lean manufacturing: manufacturing that involves getting rid of traditional assembly lines altogether. Suppliers pre-assemble many specific parts into modules, and production workers combine the various modules to make the finished product. IV. U-shaped production lines: production layout in which machines are placed in a narrow U shape rather than a straight line V. Flexible manufacturing system: a production system that allows a single factory to produce small batches of different goods on the same production line / soft manufacturing: reducing huge FMS operations to smaller, more manageable groups of machines. Quality planning: meet the firm’s quality standards Methods planning ① Improvement in goods: process flow chart is helpful for organizing and recording all information. ② Improvement in services I. Service flow analysis: show the process flows that are necessary to provide a service to customers; it allows managers to determine which processes are necessary II. Designing to control employee discretion in services: be careful planning and sometimes even by automating to control human discretion managers can make services more customer-oriented because they can ensure product consistency. (맥도날드) III. Design for customer contact in services: managers must develop procedures that spell out the ways in which workers interact with customers. Operations scheduling ① Scheduling goods operations: master production schedule: showing which products will be produced, when production will take place, and what resources will be used ② Scheduling service operations: consider efficiency and costs (overrapping) Tools for scheduling I. Gantt charts: step to be performed and specifies the time required to complete each step II. PERT charts: specifying the sequence and critical path for performing the steps in a project Operations control: managers monitor production performance by comparing results with plans and schedules = follow-up: checking to ensure that production decisions are being implemented ① Materials management: planning, organizing, and controlling the flow of materials from purchase through distribution of finished goods – transportation, warehousing, inventory control, purchasing Purchasing processes: must balance the need for adequate inventory with the need to avoid excess supplies, which drive up holding costs-the costs of keeping extra supplies or inventory on hand.(costs of storage, handling, insurance and opportunity costs) / lead times: the gaps between the customer’s order placement and the seller’s shipment and delivery reliability ② Tools for operations process control I. Worker training II. Just-in-Time Production Systems: materials and parts at the precise moment they are required for each production stage, not before. III. Material requirements planning: a method of inventory control in which a computerized bill of materials is used to estimate production needs so that resources are acquired and put into production only as needed, most popular among companies whose products require complicated assembly and fabrication activities / MRP2 : an advanced version of MRP that ties together all parts of the organization into the company’s production activities ③ Quality control: the management of the production process to manufacture goods or supply services that meet specific quality standards. ((Chapter 12)) Productivity: a measure of economic performance that measures how much is produced relative to the resources used to produce it / quality: a product’s fitness for use in terms of offering the features that consumers want - As quality-improvement practices are implemented, more and more firms will receive payoffs from these efforts. Four factors interact in this process: customers, quality, productivity, and profits ① Measuring productivity -labour productivity of a country= GDP/total number of workers ② Productivity among global competitors -technologies, human skills, economic policies, natural resources, and even in traditions = differences from nation to nation ③ Domestic productivity: a country that improves its ability to make something out of its existing resources can increase the wealth of all its inhabitants. A decline in productivity shrinks a nation’s total wealth. ④ Manufacturing vs. Service productivity -“Baumol’s disease” = since the service sector focused more on hands-on activity that machines couldn’t replace, it would be more difficult to increase productivity in services (하지만 이 이론은 깨짐) ⑤ Industry productivity: the productivity of specific industries concerns many people for different reasons. Labour unions need to take it into account in negotiating contracts since highly productive industries can give raises more easily than can less productive industries. Investors and suppliers consider industry productivity when making loans, buying securities, and planning their own future production Total quality management - Quality trilogy: quality planning, quality control, and quality improvement ① Managing for quality: total quality management(all the activities necessary for getting high-quality goods and services into the marketplace) I. Planning for quality: performance quality(the features of a product and how well it performs ) quality reliability( the consistency or repeatability of performance) II. Organizing for quality III. Leading for quality: managers must inspire and motivate employees throughout the company to achieve quality goals. / quality ownership: the idea that quality belongs to each person who creates or destroys it while performing a job IV. Controlling for quality: managers must establish specific quality standards and measurements Tools for Total quality management - Competitive product analysis: process by which a company analyzes a competitor’s products to identify desirable improvements ① Value-added analysis: the evaluation of all work activities, material flows, and papaerwork to determine the value that they add for customers ② Statistical Process Control: statistical analysis techniques that allow managers to analyze variations in production data and to detect when adjustments are needed to create products with high-quality reliability -Process variation: any change in employees, materials, work methods, or equipment that affects output quality -Control Charts: results of test sampling of a product are plotted on a diagram that reveals when the process is beginning to depart from normal operating conditions. ③ Quality/cost studies: assessing a firm’s current quality-related costs and identifying areas with the greatest cost-saving potential / internal failures: expenses incurred during production and before bad product leaves the plant, external failures: expenses incurred when defective products are allowed to leave the factory and get into consumers’ hands ④ Quality improvement Teams: groups of employees from various work areas who meet regularly to define, analyze, and solve common production problems. ⑤ Benchmarking: comparing the quality of the firm’s output with the quality of the output of the industry’s leaders – internal benchmarking, external benchmarking ⑥ Getting closer to the customer: closing monitoring ⑦ ISO9000:2000 and ISO14000: to ensure that a manufacturer’s product is exactly the same today as it was yesterday and as it will be tomorrow. /14000: environmental impact ⑧ Process re-enginerring: improving both the productivity and quality of business processes- rethinking each step of an organization’s operations by starting from scratch. -identify the business activity that will be changed evaluate information and human resources to see if they can meet the requirements for change Diagnose the current process to identify its strengths and weaknesses create the new process designimplement the new design ⑨ Adding value through supply chains: supply chain is the flow of information, materials, and services that starts with raw-materials suppliers and continues through other stages in the operations process until the product reaches the end customer. –supply chain management can improve performance and provide higher quality at lower prices. = Principle of looking at the chain as a whole to improve the overall flow through the system. Improve the service sector: reliability, responsiveness, assurance, empathy, tangibles ((Chapter 14)) Accounting: a comprehensive information system for collecting, analyzing, and communicating financial information / bookkeeping: recording accounting transactions -Accounting information system: an organized procedure for identifying, measuring, recording, and retaining financial information so that it can be used in accounting statements and management reports Financial and managerial accounting -financial accounting system: the process whereby interested groups are kept informed about the financial condition of a firm. -managerial accounting: internal procedures that alert managers to problems and aid them in planning and decision making = forward-looking Professional accountants -chartered accountant: an individual who has met certain experience and education requirements and has passed a licensing examination; acts as an outside accountant for other firms -certified general accountant: an individual who has completed an education program and passed a national exam; works in private industry or a CGA firm -Certified management accountant: an individual who has completed a university degree, passed a national examination, and completed a strategic leadership program; works in industry and focuses on internal management accounting Accounting services -Auditing: an accountant’s exam of a company’s financial records to determine whether it used proper procedures to prepare its financial reports / forensic accountant (an accountant who tracks down hidden funds in business firms, usually as part of a criminal investigation), to ensure that the client’s accounting system adheres to generally accepted accounting principles -Tax services: preparing tax returns and tax planning -Management consulting services: specialized accounting services to help managers resolve a variety of problems in finance, production scheduling, and other areas. Private accountants: an accountant hired as a salaried employee to deal with a company’s day to day accounting needs The accounting equation: assets = liabilities + owner’s equity -asset: any economic resource that is expected to benefit a firm or an individual who owns it / liability: a debt that the firm owes to an outside party / owner’s equity: the amount of money that owners would receive if they sold all of a company’s assets and paid all of its liabilities = the amount that the owners originally invested, profits earned by and reinvested in the company Financial statements: every transaction affects two accounts. Use a double-entry accounting system to record the dual effects of financial transactions (how it affects assets and how it affects liabilities and owners’ equity- so that the accounting equation is always in balance) financial statement: any of several types of broad reports regarding acompany’s financial status; most often sued in reference to balance sheets, income statements, and/or statements of cash flows. ① Balance sheets: supply detailed information about the accounting equation factors: assets, liabilities, and owners’ equity I. Current assets: cash and other assets that can be converted into cash within a year. Listed in order of liquidity(the ease with which assets can be converted into cash) non-liquid assets = accounts receivable(amounts due from customers who have purchased goods on credit), merchandise inventory(the cost of merchandise that has been acquired for sale to customers and is still on hand), prepaid expenses(include supplies on hand and rent paid for the period to come) II. Fixed assets: have long-term use or value to the firm, such as land, buildings, and machinery. Use depreciation(distributing the cost of a major asset over the years in which it produces revenues; calculated by each year subtracting the asset’s original value divided by the number of years in its productive life) to spread the cost of an asset over the years of its useful life III. Intangible assets: non-physical assets, such as patents, trademakrs, copyrights, and franchise fees, that have economic value but the precise value of which is difficult to calculate. / goodwill- the amount paid for an existing business beyond the value of its other assets. IV. Current liabilities: debts that must be paid within one year, accounts payable: unpaid bills to suppliers for materials, as well as wages and taxes that must be paid in the coming year. Long-term liabilities: debts that are not due for at least one year. V. Owner’s equity: paid-in capital(additional money invested in the firm by its owners) retained earnings(net profits minus dividend payments to stockholders) ② Income statement= profit and loss statement revenues- expenses =profit(or loss) I. Revenues: the funds that flow into a business from the sale of goods or services. II. Cost of goods sold: any expenses directly involved in producing or selling a good or service during a given time period. III. Gross profit : revenue – its cost of goods sold IV. Operating expenses: resources that must flow out of a company for it to earn revenues V. Operating income and net income: compares the gross profit from business operations against operating expenses /net income: a firm’s gross profit less its operating expenses and income taxes ③ Statement of cash flows: a financial statement that describes a firm’s generation and use of cash during a given period / from operations, investing and financing ④ The budget: a detailed financial plan for estimated receipts and expenditures for a period of time in the future, one year - Revenue recognition: the formal recording and reporting of revenues in the financial statements. (The sale is complete and the product has been delivered & the sale price to the customer has been collected or is collectible) - Matching: expenses will be matched with revenues to determine net income for an accounting period. Revenue recognition is matched with expense recognition to determine net income when the earnings cycle is competed. - Full disclosure means that financial statements should include not just numbers but also interpretations and explanations by management so that external users can better understand information contained in the statements. Analyzing financial statements -Solvency ratios (estimate the financial risk that is evident in a company), profitability ratios (measure potential earnings), and activity ratios (reflect management’s use of assets) ① Solvency ratios -short-term solvency ratios measure a company’s liquidity and tis ability to pay immediate debts (used current ratio) the higher a firm’s current ratio, the lower the risk to investors. = current assets / current liabilities -long-term solvency: debt/owner’s equity, the lower a firm’s debt, the lower the risk to investors and creditors. Borrowing funds gives a firm leverage-the ability to make otherwise unaffordable investments. In leveraged buyouts, firms have sometimes taken on huge debt to get the money to buy out other companies. ② Profitability ratios -return on equity: Net income/ Total owner’s’ equity -return on sales: Net income/ sales revenue -Earning per share: determines the size of the dividend a company can pay to its shareholders = Net income/ number of common shares outstanding. ③ Activity ratios -inventory turnover ratio: measures the average number of times inventory is sold and restocked during the year = cost of goods sold/ average inventory, high inventory turnover ratio means efficient operations. Because a smaller amount of investment is tied up in inventory, the company’s funds can be put to work elsewhere to earn greater returns. International accounting - Foreign currency exchange rates: what buyers are willing to pay for a given currency ((Chapter 15)) Marketing: planning and executing the development, pricing, promotion, and distribution of ideas, gods, and services to create exchanges that satisfy both buyers’ and sellers’ objectives. / marketing concept: the idea that the whole firm is directed toward serving present and potential customers at a profit. ① Providing value and satisfaction -value: relative comparison of a product’s benefits vs. its costs. = benefits/costs -utility: ability of a product to satisfy a human want or need, determining the timing, place, terms of sale, and product features that provide utility and add value for customers. ② Goods, services, and ideas -consumer goods: products purchased by individuals for their personal use / industrial goods: products purchased by companies to use directly or indirectly to product other products / services: intangible products, such as time, expertise, or an activity that can be purchased - Relationship marketing: emphasizes lasting relationships with customers and suppliers ③ The marketing environment -political and legal environment, social and cultural environment, technological environment, economic environment, competitive environment. substitute products(dissimilar from those of competitors but that can fulfill the same need), brand competition(competitive marketing that appeals to consumer perceptions of similar products), international competition(competitive marketing of domestic against foreign products) ④ Strategy: the marketing mix -marketing plan: a detailed strategy for gearing the marketing mix to meet consumer needs and wants / marketing mix: the combination of product, pricing, promotion, and distribution strategies used in marketing a product. I. Product: a good, a service, or an idea designed to fill a consumer need or want / product differentiation / determine basic design of the product offered to consumers II. Price: that part of the marketing mix concerned with choosing the appropriate price for a product to meet the firm’s profit objectives and buyers’ purchasing objectives / determine how much consumers pay for the product III. Place: distribution,/ determine where and when the product is available to consumers IV. Promotion: techniques for communicating information about products / determine the visibility and image of the product to consumers -customer solution (product), customer cost(price), customer convenience(place), and customer communication(promotion) Target market: any group of people who have similar wants and needs and may be expected to show interest in the same product / market segmentation: dividing a market into categories according to traits customers have in common. ① Identifying market segments: -Geographic variables, demographic variables(populations by age, income etc)= ethnicity, psychographic variables(motives, attitudes, interests, opinions, and activities), product-use variables(the ways in which consumers use a product, the benefits they expect from it, their reasons for purchasing it, and their loyalty to it) Market research: the systematic study of what buyers need and how best to meet those needs ① The research process :study the current situation select a research method collect data(secondary data-information already available as a result of previous research by the firm or other agencies / primary data-new research by the firm or its agents-must be obtained)analyze the data prepare a report ② Research Methods: -Observation: viewing or otherwise monitoring consumer buying patterns -Surveys: questioning a representative sample of consumers about purchasing attitudes and practices -Focus groups: a small group of people brought together and allowed to discuss selected issues in depth -experimentation: the reactions of similar people are compared under different circumstances. Data warehousing: process of collecting, storing, and retrieving data in electronic form / data mining: application of electronic technologies for searching, sifting, and reorganizing data to collect marketing information and target products in the market place Understanding consumer behavior: consumer behavior(the study of the process by which customers come to purchase and consume a product or service) -psychological, personal, social, cultural influences (culture= the way of living , subculture = smaller groups such as ethnic groups with shared values, social class= the cultural ranking of groups) The consumer buying process: problem/need recognition information seekingevaluation of alternatives purchase decisions (rational motives: logical evaluation of product attributes such as cost, quality, and usefulness / emotional motives: non-objective factors) Post-purchase evaluations (Word-of-mouth marketing: opinions about the value of products, passed among consumers in informal discussions.) Organizational markets ① Industrial market: businesses that buy goods to be converted into other products that will be sold to ultimate consumers ② Reseller market: intermediaries like wholesalers and retailers who buy finished products and resell them ③ Government and institutional market (non-government organizations such as hospitals, churches, and schools.) - Organizational buyers are professional, specialized, and expert. As professionals, organizational buyers are trained in methods for negotiating purchase terms. As a rule, industrial buyers are company specialists in a line of items. Industrial buyers are experts about the products they buy. - Form a design team to create products of benefit to both. ((Chapter 16)) Product features: qualities- tangible and intangible- that a company builds in to its products / value package: product marketed as a bundle of value- adding attributes, including reasonable cost. Classifying Consumer goods and services ① Convenience goods/services: relatively inexpensive consumer goods or services that are bought and used rapidly and regularly, causing consumers to spend little time looking for them or comparing their prices ② Shopping goods/ services: moderately expensive consumer goods or services that are purchased infrequently, causing consumers to spend some time comparing their prices ③ Specialty goods/ services: very expensive consumer goods or services that are purchased rarely, causing consumers to spend a great deal of time locating the exact item desired. Classifying industrial products ① Expense items: relatively inexpensive industrial goods that are consumed rapidly and regularly ② Capital items: expensive, long-lasting industrial goods that are used in producing other goods or services and have a long life ③ Capital services: services for which long-term commitments are made. The product mix: the group of products company has available for sale / product line: a group of similar products intended for a similar group of buyers who will use them in a similar fashion / speed to market: strategy of introducing new products to respond quickly to customer and/or market changes The seven-step development process - Product ideas(service package: identification of the tangible and intangible features that define the service) screeningconcept testingbusiness analysis prototype development(service process design: selecting the process, identifying worker requirements, and determining facilities requirements so that the service can be effectively provided) product testing and test marketingcommercialization The product life cycle: the concept that the profit- producing life of any product goes through a cycle of introduction, growth, maturity, and decline. - introductiongrowthmaturity decline : although the early stages of the PLC show negative cash flows, successful products recover those losses and, continue to generate profits until the decline stage. - extending product life: product extension (the process of marketing an existing, unmodified product globally), product adaptation (the process of modifying a product to have greater appeal in foreign markets), reintroduction (the process of reviving for new markets products that are obsolete in older ones.) Branding : the use of symbols to communicate the qualities of a particular product made by a particular producer ① Adding value through brand equity(degree of consumers’ loyalty to and awareness of a brand and its resultant market share) ② Ebusiness and international branding ③ Types of brand names: national brands(products distributed by and carrying a name associated with the manufacturer), licensed brands (products for which the right to use a brand name, a celebrity’s name, or some other well-known identification mark was sold to another company to use on a product), private brands(products promoted by and carrying a name associated with the retailer or wholesaler, not the manufacturer) ④ Brand loyalty: customers’ recognition of, preference for, and insistence on buying a product with a certain brand name. = brand awareness, brand preference, and brand insistence(trust) ⑤ Trademark(The exclusive legal right to use a brand name), Patent(Exclusive legal right to use and license a manufactured item or substance, manufacturing process, or object design), copyright(exclusive ownership rights belonging to the creators of books, articles, designs, illustrations, photos, films, and music) Packaging products: physical container in which a product is sold, advertised, or protected / Label: that part of a product’s packaging that identifies the product’s name and contents and sometimes its benefits – consumer packaging and labeling act: a federal law that provides comprehensive rules for packaging and labeling of consumer products. Promotion: any technique designed to sell a product, part of the communication mix: the total message a company sends to consumers about its product. ① Information and exchange values: make them aware of products, make them knowledgeable about products, persuade them to like products, persuade them to purchase products ② Promotional objectives -communicating information in writing, verbally, or visually -positioning products: the establishment of an easily identifiable image of a product in the minds of consumers -Adding value: customers gain benefits when the promotional mix is shifted so that it communicates value-added benefits in its products -Controlling sales volume: ③ Promotional strategies: push strategy (a company aggressively pushes its product through wholesalers and retailers, who persuade customers to buy it), pull strategy(a company directly to customers, who demand the product from retailers, who demand the product from wholesalers) ④ The promotional mix: that portion of marketing concerned with choosing the best combination of advertising, personal selling, sales promotions, and publicity to sell a product Advertising: a promotional tool consisting of paid, non-personal communication used by an identified sponsor to inform an audience about a product. ① Advertising strategies: informative advertising, persuasive advertising, comparative advertising, reminder advertising ② Advertising media: the specific communication devices / media mix: the combination of media through which a company chooses to advertise its products. -Newspapaers, television, Direct mail(printed ad such as flyers), radio, magazines, outdoor advertising, word – of- mouth-advertising(opinions about the value of products passed among consumers in informal discussions) buzz, viral, product seeding, and cause marketing , the internet, virtual advertising(uses digital implants of brands or products onto live or taped programming, giving the illusion that the product is part of the show) Types of advertising - Brand advertising (promotes a specific brand-name product), product advertising (promotes a general type of product or service), advocacy advertising(promotes a particular viewpoint or candidate), institutional advertising(promotes a firm’s longterm image, not a specific product), retail advertising(by retailers designed to reach end-users of a consumer product), co-operative advertising(in which a manufacturer together with a retailer or wholesaler advertise to reach customers), trade advertising(by manufacturers designed to reach potential wholesalers and retailers, industrial advertising(by manufacturers designed to reach other manufacturers’ professional purchasing agents and managers of firms buying raw materials or components) Preparing an advertising campaign: the arrangement of ads in selected media to reach target audiences = identifying the target audience defining the objectives of the advertising messages establishing the advertising budget creating the advertising messages selecting the appropriate media evaluating advertising effectiveness Personal selling: promotion tool in which a salesperson communicates one-on-one with potential customers - Sales force management: setting goals at top levels of the organization, setting specific objectives for individual salespeople, organizing the sales force to meet those objectives, and implementing and evaluating the success of the overall sales plan. Personal selling situations: retail selling(selling a consumer product for the buyer’s personal or household use), industrial selling(selling products to other businesses, either for the purpose of manufacturing other products or resale) Personal selling tasks: order processing, creative selling, missionary selling(long term) Personal selling process: prospecting and qualifying, approaching, presenting and demonstrating, handling objections, closing, following up Sales promotions: short-term promotional activities designed to stimulate consumer buying or co-operation from distributors and other members of the trade -coupon, point-of-purchase displays (a product display is so located in a retail store as to encourage consumers to buy the product), free samples, premium (some item is offered free or at a bargain price to customers in return for buying a specified product), trade shows (members of a particular industry gather for displays and product demonstrations designed to sell products to customers) Publicity: information about a company that is made available to consumers by the news media; it is not controlled by the company, but it does not cost the company any money. / public relations: a company influenced activity that attempts to establish a sense of goodwill between the company and its customers through public-service announcements that enhance the company’s image The movement toward global advertising: product variations, language differences, cultural receptiveness, image differences. ((Chapter 17)) Pricing: deciding what the company will receive in exchange for its product / pricing objectives: goals that producers hope to attain in pricing products for sale. ① Profit-maximizing objectives: based on market conditions, calculate profits by comparing revenues against costs for materials and labour to create the product ② Market share objectives: market share(a company’s percentage of the total market sales for a specific product) Price-setting tools ① Cost-oriented pricing: markup percentage= markup/ sales price ② Break-even analysis: Cost-volume-profit relationships: variable costs, fixed costs, an assessment of how many units must be sold at a given price before the company begins to make a profit = Total fixed costs / price- variable cost Profit= total revenue-(total fixed costs + total variable costs) zero profit Price leadership: the dominant firm in the industry establishes product prices and other companies follow suit / price skimming: the decision to price a new product as high as possible to earn the maximum profit on each unit sold / penetration pricing: the decision to price a new product very low to sell the most units possible and to build customer loyalty Price lining: the practice of offering all items in certain categories at a limited number of predetermined price points / psychological pricing: to take advantage of the nonlogical reactions of consumers to certain types of prices (odd-even pricing) / discount: any price reduction offered by the seller to persuade customers to purchase a product(cash, seasonal, trade, quantity) Distribution mix:: the combination of distribution channels a firm uses to get a product to end-users. / intermdeiareis: the individuals and frims who help distribute a producer ’s goods / wholesalers: sell products to other businesses which resell them to final consumers / ① retailers: sell products directly to consumers Distribution channel: the path a product follows from the producer to the enduser -channel 1: direct distribution of consumer products: product travels from the producer to the consumer directly / channel 2: Retail distribution of consumer products: products through retailers / channel 3: wholesale distribution of consumer products: producer agent/brokerusers / channel 4: distribution through sales agents or brokers: they receive commissions based on the prices of the goods they sell -channel 5: distribution by agents to consumers and businesses: an agent functions as the sole intermediary, and the agent distributes to both consumers and business customers, producer agent/brokerconsumer/business user Industrial distribution: the network of channel members involved in the flow of manufactured goods to business customers -Channel 6: direct distribution of business products: sales offices (maintained by sellers of industrial goods to provide points of contact with their customers) / channel 7: Wholesale distribution of industrial products: accessory equipment, producer wholesaler business user / channel 8: wholesale distribution to business retailers: producer wholesalerretailer ② B user Distribution strategies I. Intensive distribution: distributing a product through as many channels and channel members as possible, used for low-cost consumer goods (candy, magazines) II. Exclusive distribution: when a manufacturer grants the exclusive right to distribute or sell a product to one wholesaler or retailer in a given geographic area III. Selective distribution: selects only wholesalers and retailers who will give special attention to the product in terms of sales efforts, display position ③ Channel conflict: conflict arising when the members of a distribution channel disagree over the roles they should play or the rewards they should receive -To overcome problems posed by channel conflict and issues of channel leadership, the vertical marketing system has emerged (a system in which there is a high degree of coordination among all the units in the distribution channel so that a product moves efficiently from manufacturer to consumer) = corporate, contractual, administered VMS Merchant wholesalers: buys and takes legal possession of goods before selling them to customers, provide storage and a means of delivery / full-service merchant wholesaler: provide storage and delivery in addition to wholesaling services / limited-function merchant wholesaler: an independent wholesaler that provides only wholesaling-not warehousing or transportation-services /drop shipper: receive orders from customers, negotiates with producers to supply goods, takes title to them, and arranges for shipment to customers / rack jobbers: a limited-function merchant wholesaler specializing in non-food merchandise that sets up and maintains display racks of some products in retail stores. Agents and brokers maintain product saleability by removing open, torn, or dirty packages; arranging products neatly; and generally keeping them attractively displayed. Retailing ① Product line retailers: department stores: large retail stores that offer a wide variety of high-quality items divided into specialized departments / supermarkets: large retail stores that offer a variety of food and food-related items divided into specialized departments / specialty stores: small retail stores that carry one line of related products – category killers(home depot) ② Bargain retailers: emphasize low prices as a means of attracting consumers, discount houses, catalogue showroom, factory outlets, warehouse club, convenience stores Non-store retailing : direct-response retailing, mail order, telemarketing, direct selling, eintermediaries(internet-based distribution-channel members that collect information about sellers and present it in convenient form to consumers and/or help deliver internet products to consumers -syndicated selling (when a website offers other websites a commission for referring customers), shopping agent (help internet consumer by gathering and sorting information they need to make purchases), electronic retailing (allows consumers to shop from home using the internet), ecatalouges (non-store retailing that uses the internet to display products and services for both retail shoppers and business customers), electronic storefront (a seller’s website in which consumers collect information about products and buying opportunities, place sales orders, and pay for their purchases), cybermalls(collections of virtual storefronts representing diverse products), multilevel marketing, interactive marketing - video marketing(home shopping) Physical distribution: those activities needed to move a product from the manufacturer to the end-consumer ① Warehousing: that part of the distribution process concerned with storing goods -public and private warehouses / storage warehouses and distribution centres Warehousing costs: inventory control(the part of warehouse operations that keeps track of what is on hand and ensures adequate supplies of products are in stock at all times), materials handling(the transportation and arrangement of goods within a warehouse and orderly retrieval of goods from inventory), unitization(standardizing the weight and form of materials) ② Transportation operations: trucks, planes, railroads, water carriers, pipelines -intermodal transportation (the combined use of different modes of transportation), containerization (the use of standardized heavy-duty containers in which many items are sealed at the point of shipment; they are opened only at the final destination),order fulfillment(all activities involved in completing a sales transaction, beginning with making the sale and ending with on-time delivery to the customer) ③ Companies specializing in transportation -common carriers(Transportation companies that transport goods for any firm or individual wishing to make a shipment), freight forwarders(common carriers that lease bulk space from other carriers and resell that space to firms making small shipment), contract carriers(independent transporters who contract to serve as transporters for industrial customers only), private carriers (transportation systems owned by the shipper) ④ Distribution as a marketing strategy -the use of hubs: central distribution outlets that control all or most of a firm’s distribution activities supply-side and “pre-staging” and distribution-side hubs ((Chapter 19)) Secutiries: stocks and bonds (which represent a secured-asset-based claim on the part of investors) that can be bought and sold) Primary securities market: the sale and purchase of newly issued stocks and bonds by firms or governments /secondary securities market: the sale and purchase of previously issued stocks and bonds -investment banker: any financial institution engaged in purchasing and reselling new stocks and bonds they advise the company on the timing and financial terms for the new issue, by underwriting the new securities, investment bankers bear some of the risk of issuing the new security, they create the distribution network that moves the new securities through groups of other banks and brokers into the hands of individual investors. Common Stock ① Per value: the arbitrary value of a stock set by the issuing company’s board of directors and stated on stock certificates; used by accountants but of little significance to investors. ② Market value: the current price of one share of a stock in the secondary securities market; the real value of a stock, influenced by objective factors and subjective factors(rumours), investor relations, stockbroker recommendations ③ Book value: value of a common stock expressed as total stock holders equity divided by the number of shares of stock ④ Investment traits of common stock: riskiest, change a given stock’s value, ⑤ Blue-chip stocks: from well-established, financially sound firms – market capitalization: the dollar value of stocks listed on a stock exchange Preferred stock: stock that pays dividends that are expressed as a percentage of par value, cumulative preferred stock: preferred stock on which dividends not paid in the past must first be paid up before the firm may pay dividends to common shareholders Stock exchange: an organization of individuals formed to provide an institutional setting in which shares of stock can be bought and sold -to become a member, an individual must purchase one of a limited number of memberships “seats” on the exchange. Only members are allowed to trade on the exchange. 회사(완전모회사)가 다른회사(완전자회사)의 발행한 주식 전부와 자기회사의 주식을 교환함 으로써 완전자회사의 주식은 완전모회사로 된 회사에 이전하고, 완전자회사로 된 회사의 주 주는 완전모회사로 된 회사가 발행한 신주를 배정받아 그 회사의 주주로 되는 것을 말한다 (상법 제360조의2 ②) 즉, 주식교환은 기존의 복수의 회사가 일정한 절차에 의하여 완전자회 사가 되는 회사의 주주가 갖는 그 회사의 주식전부를 완전모회사가 되는 회사에 이전하고 완전자회사가 되는 회사의 주주는 완전모회사가 되는 회사가 발행하는 신주를 배정받음으 로써 완전모자회사관계를 맺는 제도 -broker: an individual licensed to buy and sell securities for customers in the secondary market; provide other financial services, / discount brokers offer automated online services, such as stock research, industry analysis, and screening for specific types of stocks. /fullservice brokers offer clients suggestions on investments that clients might overlook when trying to sift through an avalanche of online financial data. -The New York Stock Exchange(NYSE), The American Stock Exchange(AMEX), U.S. Regional Stock Exchange, The Over-the-counter Market()organization of securities dealers formed to trade stock outside the formal institutional setting of the organized stock exchanges, National Association of Securities Dealers Automated Quotation(NASDAQ), National association of Securities Dealers Inc.(NASD) Bond: a written promise that the borrower will pay the lender, at a stated future date, the principal plus a state rate of interest. Stock certificates represent ownership, while bond certificates represent indebtdeness -기업이나 정부가 투자자에게서 돈을 빌리면서 금액, 금리, 만기 등을 표시하여 발행한 증서를 채 권이라고 한다. 1만원짜리 채권에는 기업이 1만원을 언제까지 갚는다는 것, 얼마만큼의 이자를 언 제 어떻게 지급한다는 것 등이 적혀 있다.즉, 채권은 정부, 공공단체와 주식회사 등이 일반인으로부 터 비교적 거액의 자금을 일시에 조달하기 위하여 발행하는 차용증서(借用證書)이며 유가증권이다. 주식을 갖고 있는 사람은 그 기업의 일부를 소유한 투자자로서 기업의 영업성과에 따라 배당을 받 게 되지만, 채권을 갖고 있는 사람은 그 기업에 돈을 빌려준 채권자이기 때문에 기업의 영업성과에 관계없이 일정한 이자를 받는다는 점이 다르다. ① Corporate bonds: issued by a company as a source of long-term funding, according to methods of interest payment, and according to whether they are secured or unsecured -interest payment: registered bonds (where the names of holders are registered with the company), bearer (or coupon) bonds (require bondholders to clip coupons from certificates and send them to the issuer to receive interest payments) -secured bonds (bonds issued by borrowers who pledge assets as collateral in the event of non-payment), unsecured bonds (debentures) ② The retirement of bonds -callable bonds (may be paid off by the issuer before the maturity date), sinking fund provision(a clause in the bond contract that requires the issuing company to put enough money into a special bank account each year to cover the retirement of the bond issue on schedule) 차입자가 매년 일정의 부채비율을 감소시킬 것을 채권계약서에 약정으 로 규정하고 있는 것을 말한다. 이는 이자율이 하락할 때는 투자자로부터의 채권을 수의 상환 (call)함으로서 이자율이 상승할 때는 유통시장에서 채권을 구입함으로서 행해진다. 이 규정은 채권 소지자에게 유동성을 증가시킨다는 이점이 있으나 이자율 하락기간에는 대개 액면인 중도 상환가 격 (Call Price) 에 고수익 채권을 강제로 상환 받게 되는 불리한 점도 채권소지자들에게 제공한다. -Serial bonds (the firm retires portions of the bond issue in a series of different preset dates) / Convertible bonds (offer bondholders the option of accepting common stock instead of cash in repayment) ③ Government bonds: issued by the federal government. / municipal bonds: issued by provincial or local government Investments ① Mutual funds: any company that pools the resources of many investors and uses those funds to purchase various types of financial securities, depending on the fund’s financial goals 뮤츄얼펀드는 유가증권 투자를 목적으로 설립된 법인회사로 서 주식발행을 통해 투자자(주주)를 모집하고, 모집된 투자자산 을 전문적인 운용회 사에 맡겨 그 운용 수익을 투자자(주주)에게 이익을 배당금의 형태로 되돌려 주는 투자회사임, 뮤추얼펀드는 본질적으로 소액자금을 모아 거대 자금화하여 유가증권 에 투자한다는 것과 전문가에 의해 자산이 대행운용 된다는 것, 분산투자로 투자위 험을 감소할 수 있다 --no-load fund (a mutual fund in which investors are not charged a sales commission when they buy in to or sell out of the fund), load fund (a mutual fund in which investors are charged a sales commission when they buy in to or sell out of the fund), ethical funds (mutual funds that focus on investing in companies that produce safe and useful products and do good in terms of employee relations, environmental practices, and human rights) exchange-traded fund (a bundle of stocks or bonds that are in an index that tracks the overall movement of a market) ② Hedge funds: private pools of money that try to give investors a positive return regardless of stock market performance, short-selling, leveraging, '위험을 상쇄하는 베팅이나 투자등을 통해 손실을 피하거나 줄이려고 노력하는것'으로 주식을 빌려 높은 차익을 고수하는 방법이다. 대신 빌려주는 사람에게는 내가 돈을 갚을수 있다 는 보증이나 증거를 보여줌으로써 헤지펀드로인해 막대한 손실을 입는다 해도 빌 려준 사람은 손해는 보지 않는다 ③ Commodities: futures contracts (agreements to purchase specified amounts of commodities at given prices on set dates can be bought and sold in the commodities market) -margin: the percentage of the total sales price that a buyer must put up to place an order for stock or a futures contract ④ Stock option(the purchased right to buy or sell a stock) : call option(the purchased right to buy a particular stock at a certain price until a specified date), put option(the purchased right to sell a particular stock at a certain price until a specified date) ⑤ Making choices for diversification, asset allocation, and risk reduction I. Diversification: purchase of several different kinds of investments rather than just one. II. Asset allocation: the relative amount of funds invested in each of several investment alternatives Using financial information services ① - Company ② - Stock quotations volume high low close change Bond quotations The market value of a bond at any given time depends on its stated interest rate, the “going rate” of interest in the market, and its redemption or maturity date - Issuer coupon maturity price yield(dividing the annual interest paid by price) ③ - Mutual funds quotations Fund’s net asset value, the current market value of one share, is perhaps the key term for understanding the quotations. = net assets - securities it owns, plus cash and any accumulated earnings, minus liabilities- and dividing the remainder by the number of shares outstanding ④ Market index: a measure of the market value of stocks; provides a summary of price trends in a specific industry or of the stock market as a whole / bull market: a period of rising stock prices; a period in which investors act on a belief that stock prices will rise / bear market: a period of falling stock prices; a period in which investors act on a belief that stock prices will fall I. The Dow jones Industrial average: based on the prices of 30 of the largest firms listed on NYSE and NASDAQ II. The S&P 500 :based on the performance of 400 industrial firms, 40 utilities, 40 financial institutions, and 20 transportation companies, the index average is weighted according to market capitalization of each stock, the more highly valued companies exercise a greater influence on the index III. The S&P/ TSX index: an average computed from 225 different large Canadian stocks from various industry groups IV. The NASDAQ composite Index: value-weighted market index that includes all NASDAQ-listed companies, both domestic and foreign Buying and selling stocks - market order: to a broker to buy or sell a certain security at the current market price / limit buy order: to a broker to buy a certain security only if its price is less than or equal to a given limit / limit sell order: to a broker to sell a certain security only if its price is equal to or greater than a given limit / stop order: to a broker to sell a certain security if its price falls to a certain level or below / round lot: the purchase or sale of stock in units of 100 shares / odd lots: the purchase or sale of stock in units other than 100 shares trading odd lots is usually more expensive than trading round lots because an intermediary called an odd-lot broker is often involved, which increases brokerage fees. - margin trading / short sale: selling borrowed shares of stock in the expectation that their price will fall before they must be replace, so that replacement shares can be bought for less than the original shares were sold for. Securities regulation - Blue-sky laws: regulating how corporations must back up securities / The Ontario Securities Act contains disclosure provisions for new and existing issues, prevention of fraud, regulation of the Toronto Stock Exchange, and takeover bids. Also it prohibits insider trading. - Prospectus: a detailed registration statement about a new stock filed with a provincial securities exchange; must include any data helpful to a potential buyer (사업설명서) / program trading: large purchase or sale of a group of stocks, often triggered by computerized trading programs that can be launched without human supervision or control / circuit breakers- trading rules for reducing excessive market volatility and promoting investor confidence ((Chapter 20)) Financial managers: responsible for planning and overseeing the financial resources of a firm, objective is to increase a firm’s value and thus stockholders’ wealth - Finance(or corporate finance): the business function involving decisions about a firm’s long-term investments and obtaining the funds to pay for those investments ① Cash flow management: managing the pattern in which cash flows in to the firm in the form of revenues and out of the firm in the form of debt payments, require careful planning ② Financial control: the process of checking actual performance against plans to ensure that the desired financial status is achieved. ③ Financial planning: a description of how a business will reach some financial position it seeks for the future; includes projections for sources and uses of funds Why do businesses need funds? - Short-term operating expenditures ① Accounts payable: unpaid bills owed to suppliers plus wages and taxes due within the upcoming year. To plan for funding flows, financial managers want to know in advance the amounts of new accounts payable as well as when they must be repaid. ② Accounts Receivable: consist of funds due from customers who have bought on credit. / credit policy(rules governing a firm’s extension of credit to customers) ③ Inventories: materials and goods currently held by the company that will be sold within the year, raw materials, work-in-process, finished goods ④ Working capital: the difference between a firm’s current assets and current liabilities, reducing working capital means saving money - Long-term capital expenditures: fixed assets (items that have a lasting use or value) / not normally sold or converted into cash, their acquisition requires a very large investment, a binding commitment of company funds that continues long into the future. Sources of short-term funds ① Trade credit: the granting of credit by a selling firm to a buying firm - open-book credit: sellers ship merchandise on faith that payment will be forthcoming - promissory note: form of trade credit in which buyers sign promise-세-pay agreements before merchandise is shipped - trade draft: form of trade credit in which buyers must sign statements of payment terms attached to merchandise by sellers / trade acceptance: trade draft that has been signed by the buyer – useful forms of credit in international transactions ② secured short-term loans: for which the borrower is required to put up collateral(any asset that a lender has the right to seize if a borrower does not repay a loan) -inventory a s collateral: if the inventory can be readily converted into cash, it is more valuable as collateral -when accounts receivable as collateral, the process is called pledging accounts receivable ③ Unsecured short-term loans: in which the borrower is not required to put up collateral- the banks requires the borrower to maintain a compensating balance, that is, the borrower must keep a portion of the loan amount on deposit with the bank in a non-interest-bearing account. -lines of credit: a standing agreement between a bank and a firm in which the bank specifies the maximum amount if will make available to the borrower for a shortterm unsecured loan; the borrower can then draw on those funds, when available -revolving credit agreements: guaranteed line of credit for which the firm pays the bank interest on funds borrowed as well as a fee for extending the line of credit -commercial paper: a method of short-run fundraising in which a firm sells unsecured notes for less than the face value and then repurchases them at the face value within 270 days; buyers’ profits are the difference between the original price paid and the face value ④ Factoring accounts receivable: factoring(selling the firm’s accounts receivable) Sources of long-term funds ① Debt financing: raising money to meet long-term expenditures by borrowing from outside the company; usually takes the form of long-term loans or the sale of corporate bonds -long-term loans: arranged very quickly, the firm need not make public disclosure of its business plans or the purpose for which it is acquiring the loan, the duration of the loan can be matched to the borrower’s needs, if the firm’s needs change, the terms of the loan can usually be changed. / Interest rates are negotiated between borrower and lender ② Corporate bonds: a contract- a promise by the issuing company or organization to pay the holder a certain amount of money on a specified date, attractive when companies need large amounts of funds for long periods of time, bond indenture(statement of the terms of a corporate bond) ③ Equity financing: raising money to meet long-term expenditures by issuing common stock or by retaining earnings ④ Hybrid Financing; preferred stock ⑤ Choosing between debt and equity financing: capital structure(relative mix of a firm’s debt and equity financing) ⑥ The risk-return relationship: shows the amount of risk and the likely rate of return on various financial instruments Financial management for small businesses -establishing bank credit and trade credit, venture capital (outside equity financing provided in return for part ownership of the borrowing firm, planning for cash flow requirements Risk management: risk(uncertainty about future event -speculative risk: an event that offers the chance for either a gain or a loss Pure risk: an event that offers no possibility of gain; it offers only the chance of a loss Risk management: conserving a firm’s financial power or assets by minimizing the financial effect of accidental losses ① Identify risks and potential losses ② Measure the frequency and severity of losses and their impact ③ Evaluate alternatives and choose the techniques that will best handle the losses I. Risk avoidance: stopping participation in or refusing to participate in ventures that carry any risk II. Risk control: techniques to prevent, minimize, or reduce losses or the consequences of losses III. Risk retention: the covering of a firm’s unavoidable losses with its own funds IV. Risk transfer: the transfer of risk to another individual or firm, often by contract ④ Implement the risk-management program ⑤ Monitor results Insurance as Risk Management: insurance companies are willing to accept theses risks for other companies because they make profits by taking in more premiums than they pay out to cover policyholders losses ① - Insurable risks predictability, casualty, unconnectedness, verifiability ② - The insurance product Liability insurance(covers losses resulting from damage to people or property when the insured party is judged liable) / workers’ compensation coverage: compensation for medical expenses, loss of wages, and rehabilitation services for injuries arising from activities related to occupation - Property insurance: covers injuries to firms resulting from physical damage to or loss of real estate or personal property - Life insurance: insurance that pays benefits to survivors of a policyholder / group life insurance: life insurance underwritten for a group as a whole rather than for each individual member ③ - Special forms of business insurance Key person insurance: insurance that protects a company against loss of the talents and skills of key employees - Business continuation agreements: an agreement in which owners of a business make plans to buy the ownership interest of a deceased associate from his or her heirs.