Business Management Concepts Quiz

Final Exam Study Guide

• Exam date: Monday, December 16th
• Exam time: 12:30 PM - 3:30 PM
• Course: (unspecified)
• University: Alfaisal University

Chapter 1: The Concept of Business and Profit

• Business is an organization that provides goods or services to earn profits.
• Profit is the difference between a business's revenues and its expenses.
• Profit is the amount of money gained after selling goods and services minus expenses.

Chapter 1: Dimensions of the External Environment

• 1. Domestic Business Environment: The environment in which a firm operates and derives revenue. Includes customers, suppliers, and competitors.
• 2. Global Business Environment: International forces affecting a business; includes international suppliers, cultures, and currencies.
• 3. Technological Environment: All the ways firms create value for constituents; includes human knowledge, work processes, physical equipment, electronics, and telecommunications.
  • Example: mobile apps for online shopping.
• 4. Political-Legal Environment: Relationship between business and government, usually through government regulation.
  • Example: employment laws, tax policies, and safety/health standards.
• 5. Sociocultural Environment: Customs, mores, values, and demographic characteristics of the society in which an organization functions.
  • Example: Acceptable social norms and traditions, or recycling.
• 6. Economic Environment: Relevant conditions existing in a company's economic system.
  • Example: economic system, consumer spending power, inflation, and unemployment.

Chapter ??: Five Factors of Production

• Factors used by a country's businesses to produce goods and services. -Labor: Human resource element, including physical and intellectual contributions. -Capital: Financial resources needed for business. -Entrepreneurs: Individuals who accept risks and opportunities related to business creation. -Physical Resources: Tangible goods utilized in business operations. -Information Resources: Resources like market forecasts and specialized knowledge.

Chapter ??: Types of Economic Systems

• Planned Economy: A system where a centralized government controls production and allocation decisions.
  • Example: Communism.
• Market Economy: A system where private individuals own factors of production and businesses. Individuals are free to choose what to buy/sell.
  • Example: Capitalism.

Chapter ??: Measures of Economic Output

• Shortage: Quantity demanded exceeds quantity supplied.
• Surplus: Quantity supplied exceeds quantity demanded.
• Gross Domestic Product (GDP): Total value of goods and services produced within a nation during a period, produced by domestic factors of production. It measures aggregate output.

Chapter ??: Ethics and Business

• Ethics: People's beliefs about what is right, wrong, or bad in actions that affect others.
• Ethical Behavior: Actions that align with individual beliefs and social norms about goodness and rightness.
• Unethical Behavior: Behaviors that go against societal norms regarding rightness.

Chapter ??: Stakeholder Model of Responsibility

• Companies often prioritize five stakeholder groups in their social responsibility efforts: Employees, Customers, Investors, Suppliers, and Local/International Communities.

Chapter ??: Company Practices and Business Ethics

• Two common ways to formalize top management commitment to ethical business practices are:
  • Adopting written codes.
  • Instituting ethics programs.

Chapter ??: Government and Social Responsibility

• Direct Regulation: Implementing legislation and creating agencies to monitor/control aspects of business operations.
• Indirect Regulation: Tax codes can influence business activity, to promote/discourage certain actions.

Chapter ??: Importance of Small Business

• Small businesses are a significant source of job creation and innovation.
• Small businesses provide services and raw materials to large businesses.

Chapter ??: Entrepreneurship

• Entrepreneurship is the process of seeking business opportunities amid risks.
• A Venture Capital Company is a group of investors who provide funding to companies with growth potential.

Chapter ??: Understanding Distinctive Competencies

• Distinctive competencies are aspects of business where a company performs better than competitors.
• Small businesses often develop unique competencies by:
  • Identifying niches in existing markets.
  • Identifying entirely new product or service markets.
  • Creating entirely new industries with first-mover advantages.

Chapter ??: Forms of Legal Ownership

• Sole Proprietorship: Owned and operated by one person.
• General Partnership: Owned by two or more people, with shared operation and financial responsibility for business debts.
• Corporation: Owned by shareholders. A separate legal entity; shareholders' liability is limited to investment amount.

Chapter ??: The Global Economy

• Globalization: The world economy becoming increasingly interconnected.
• Balance of Trade: Total value of exports minus total value of imports; positive balance indicates more exports than imports.

Chapter ??: Legal and Political Differences

• Local Content Law: Requirements for products sold in a country to be at least partially produced domestically.
• Business Practice Laws: Host countries regulate business practices within their jurisdictions.
• Quota: Restrictions on the number of certain products that can be imported.
• Embargo: Government bans on exporting or importing specific products to a particular country.
• Tariff: Tax on imported products.
• Subsidy: Government payment to assist domestic businesses compete with foreign firms.

Chapter ??: The Management Process

• Management encompasses planning, organizing, leading, and controlling organizational resources to achieve goals.
  • Planning: Determining what to do and how best to do it.
  • Organizing: Arranging resources and activities into a structured system.
  • Leading: Guiding and motivating individuals to achieve objectives.
  • Controlling: Tracking organizational performance to ensure goals are met.

Chapter ??: Five Basic Management Skills

• Technical Skills: Skills required to perform specialized tasks.
• Human Relations Skills: Skills in understanding and interacting effectively with people.
• Conceptual Skills: Abilities to think abstractly and analyze situations.
• Decision-making Skills: Defining problems and choosing the best solutions.
• Time Management Skills: Effectively utilizing time.

Chapter ??: Organizational Structure

• Organizational structure defines hierarchy and relationships within companies.
• Structures encompass job roles and responsibilities and communication channels.
• Structure is influenced by company size, industry, culture.
• Structure determines how tasks are divided, coordinated, and how employees interact.
• Organizational structure details work division, coordination, employee interaction, and managing relationships.

Chapter ??: Distributing Authority: Centralization and Decentralization

• Centralized Organization: Decision-making authority is primarily held by top management.
• Decentralized Organization: Decision-making authority is dispersed among lower levels of management.

Chapter ??: Differences Between Goods and Services

• Goods: Tangible, durable or perishable, produced and sold separately from customer interaction
• Services: Intangible, often produced and consumed simultaneously, often relying on the customer, and employee interactions

Chapter ??: Business Strategies That Win Customers

• Companies tailor operational procedures based on their chosen market strategies.
• Various strategies include:
  • Quality (Toyota)
  • Low Cost (Save-a-Lot)
  • Flexibility (3M)
  • Dependability (FedEx)

Chapter ??: Operations Planning

• Operations managers begin by planning how to transform resources into efficiently produced goods.
  • Capacity Planning: Determining the firm's productive capacity.
  • Location Planning: Deciding the best locations for production.
  • Layout Planning: Organizing the layout of equipment, machinery, and supplies for effective operations.
  • Quality Planning: Ensuring that products meet quality standards.
  • Methods Planning: Implementing procedures to optimize resources and efficiency.

Chapter ??: Lean Production System

• Lean Production Systems aim for smooth production processes, eliminating unnecessary inventories, and promoting continuous improvement. It was pioneered by Toyota.

Chapter ??: Supply Chain Management

• Supply chain management (SCM) examines and improves the flow of resources through companies and activities that work together to produce a product for the consumer or end user. A supply chain flow includes steps like raw materials, information flow, and company or organization inputs that ensure resources and materials add value until the final product reaches the end customer.

Chapter ??: Forms of Employee Behavior

• Employee behavior includes patterns of actions directly or indirectly influencing organizational effectiveness.
  • Performance Behavior: Work-related actions expected by the organization.
  • Organizational Citizenship: Going beyond expectations and making a positive overall contribution to the organization.
  • Counterproductive Behavior: Actions against organizational goals (e.g., absenteeism, theft, poor quality of work.)

Chapter ??: Basic Motivation Concepts and Theories

• Motivation: Set of forces inducing behaviors.
  • Classical Theory: Money is the primary motivator.
  • Hawthorne Effect: Productivity increases when workers feel recognized.
  • Theory X: Workers are inherently lazy and uncooperative; management must control them.
  • Theory Y: Workers are energetic and self-motivated with intrinsic motivation.
  • Hierarchy of Needs (Maslow): Lower-level needs (physiological, safety) must be satisfied before higher-level needs (esteem, self-actualization)

Chapter ??: Techniques for Enhancing Motivation

• Techniques for enhancing employee motivation include:
  • Positive Reinforcement: Rewarding desired behaviors.
  • Punishment: Applying negative consequences to undesirable behaviors.
  • Social Learning: Learning by observing others.
  • Participative Management/Empowerment: Involving employees in decision-making to enhance job satisfaction.

Chapter ??: Early Approaches to Leadership

• Task-Focused Leader Behavior: Leader focuses on methods necessary for achieving desired performance standards and certain goals.
• Employee-Focused Leader Behavior: Leader prioritizes employee wellbeing, motivation, satisfaction.

Chapter ??: Leadership

• Transformational Leadership: Creating a vision for change, enacting the vision, and successfully implementing the change.
• Transactional Leadership: Routine actions, such as assigning work or evaluating the completion of task.
• Charismatic Leadership: Leaders who inspire support and acceptance due to strong, personal characteristics.
• Cross-Cultural Leadership: The impact of culture on leadership methods and approaches in different countries.
• Strategic Leadership: Understanding challenges and opportunities within and outside the organization, and guiding organizational change to achieve competitiveness.
• Ethical Leadership: High ethical standards for leaders and followers.
• Virtual Leadership: Leadership of employees in geographically diverse locations with remote access.

Chapter ??: Decision-Making Conditions

• State of Certainty: Decision-maker fully understands the consequences of available choices.
• State of Risk: Decision-maker knows probable outcomes of different decisions.
• State of Uncertainty: Decision-maker has insufficient knowledge of available decisions or outcomes.

Chapter ??: Behavioral Aspects of Decision Making

• Risk Propensity: The degree to which a decision-maker is willing to gamble in decision-making processes.
• High Risk-Taking Managers: Make decisions quickly, requiring less information, seen in smaller, entrepreneurial environments.
• Low Risk-Taking Managers: Slower decision-making, needing more information before decisions; often seen in large, stable organizations.

Chapter ??: HR Planning

• Job Analysis:
  • Job Description: Duties, responsibilities, working conditions, and resources of a job.
  • Job Specification: Skills, abilities, and credentials required to successfully execute a job.

Chapter ??: Staffing the Organization

• Recruitment: Attracting qualified candidates for job openings.
  • Internal Recruitment: Considering existing employees for job openings.
  • External Recruitment: Seeking candidates from outside the organization.

Chapter ??: Incentive Programs

• Bonus: Performance-based incentives that go above an employee's current salary amount.
• Merit Salary System: Linking pay raises to performance levels in jobs not typically sales-related.
• Pay For Performance (Variable Pay): Rewarding individuals for productive output, particularly for middle managers.

Chapter ??: Marketing

• Utility: A product's ability to satisfy a customer's needs or wants.
• Consumer Behavior: The process people use when making decisions about purchasing and using products.
• Data Warehousing: Storing/retrieving customer data.
• Data Mining: Using technologies to uncover information in datasets.

Chapter ??: Competitive Environment

• Brand Competition: Businesses offering similar products in the same market and targeting the same customer base; trying to achieve superior share, profits, and growth.
• International Competition: Competition between domestic and foreign producers and marketers targeting consumers.

Chapter ??: Components of the Marketing Plan

• Marketing Strategy: All marketing programs/activities to achieve marketing goals, including Products, Place, Promotion, and Pricing elements.

Chapter ??: Promotion

• Advertising: Paid, non-personal communication to inform/persuade.
• Personal Selling: Face-to-face communication to persuade.
• Sales Promotion: Direct inducements to increase sales (coupons, premiums, etc).
• Public Relations: Efforts to establish goodwill/favorable attitudes towards organizations.

Chapter ??: Business Communication Technologies Using the Internet

• Intranet: Private network for company use- internal, limited access to company personnel.
• Extranet: Network access authorized limited access outside the firm to internal networks for business functions.
• Internet: Global network connecting computers around the world.

Chapter ??: Internet Technologies for Business Communication

• Electronic Conferencing: Real-time communication through various platforms (mail, phone, videoconferencing, such as Zoom) and geographically-dispersed individuals.
• VSAT Communications: Networks of geographically dispersed transmitter/receivers that send and receive signals from satellite for communications and data transmissions.

Chapter ??: IT Risks and Threats

• Hackers: Gaining unauthorized access to computer via malicious activities.
• Identity Theft: Unauthorized use of personal information for financial gain.

Chapter ??: IT Protection Measures

• Firewalls: Security systems that prevent unauthorized access to network systems.
• Software (anti-virus): Scanning and removing malware.

Chapter ??: Accounting

• Accounting: Financial information system that enables information collection, communication, and analysis.
• Accounting Users: Includes business managers (goal/plan development and evaluation), employees and unions (compensation planning, and benefits), investors and creditors (returns, growth prospects, creditworthiness), tax authorities (tax liability), government entities(public duties.)

Financial versus Managerial Accounting

• Financial Accounting: Data prepared for external use, including stakeholders, focus on overall company activities.
• Managerial Accounting: Internal use by managers for internal decision-making, focus on divisional performance information.

Chapter ??: CPA Firms' Services

• Audit: Systematic assessment of a firm's accounting systems and financial reports to see if accurately reflect operations.
• Tax Services: Advising and guiding businesses on tax planning, preparation.
• Management Advisory Services: Including assistance in areas like financial planning, information systems.

Chapter ??: Financial Statements

• Balance Sheet: Comprehensive summary of a firm's assets, liabilities and owner's equity.
• Income Statement: Summary data of company revenues and expenses, reporting annual profit or loss.
• Statement of Cash Flows: Summary data on actual cash activities of company operations, investment, financing activities.

Chapter ??: What is Money?

• Money: Portable, divisible, durable, and stable object serving as exchange medium, value storage, and measure of value.
  • Portability: Easy to carry.
  • Divisibility: Break into smaller units.
  • Durability: Lasts for a prolonged time.
  • Stability: Consistent value over time.

Chapter ??: The Spendable Money Supply

• M-1: All of the readily available money supply, in cash, checks, and checking accounts.
  • Currency: Physical money.
  • Checks: Orders to banks to transfer funds.
  • Checking Accounts: Accounts for withdrawals and funds transfer by checks or cash.

Chapter ??: M-2: M-1 Plus the Convertible Money Supply

• M-2: Includes the M-1 components and other easily convertible assets to spendable forms, like short-term investments.
  • Time Deposits: Fixed-term accounts that are withdrawn before maturity or transferred. -Money Market Mutual Funds: Pools of investments shared among investors, using short-term, low-risk financial securities.
  • Savings Accounts: Interest-bearing accounts in banks or other financial institutions for savings.

Chapter ??: Financial Institutions

• Commercial Banks: Accepting deposits, making loans, earning profits, and paying interest/dividends. Examples include SABB, Arab National Bank, and Alrajhi Bank.
• Savings Institutions: Institutions encouraging saving.
• Credit Unions: Non-profit, member-owned financial institutions. Providing reasonable interest rates for savings while granting loans to members.
• Non-Deposit Institutions: Institutions using funds for non-interest generating activities for specific reasons. Includes:
  • Pension Funds: Manage retirement savings.
  • Insurance companies: Manage risk.
  • Finance Companies: Provide financial services.
  • Securities Investment Dealers: Handle the purchasing and selling of securities.

Test your knowledge on key business management concepts with this quiz. It covers various aspects such as organizational structure, human relations skills, and the business environment. Perfect for students and professionals looking to enhance their understanding of management processes.