Personal Finance and Financial Security

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Questions and Answers

What percent of retirement income may Social Security account for?

10%

25% (correct)

50%

75%

Which plan typically has a repayment period of 10 years?

Extended plan

Income contingent plan

Standard plan (correct)

Graduated plan

Which of the following is NOT considered a type of life insurance?

Term

Universal (correct)

Variable

Permanent

What type of financial help should be sought early in your career?

A supportive professional team Signup and view all the answers

Which action is recommended under the principle of 'Pay yourself first'?

Prioritize savings over other expenses Signup and view all the answers

What is a primary characteristic of effective customer intimacy?

Focus on individual customer needs Signup and view all the answers

Which aspect of customer intimacy involves decision-making?

Empowerment of employees to make decisions Signup and view all the answers

What is a key focus of management systems in customer intimacy?

Creating results for selected and nurtured clients Signup and view all the answers

What best describes the approach to relationship building in customer intimacy?

Deep and lasting client relationships Signup and view all the answers

Which of the following is NOT a feature of customer intimacy?

Encouraging loyalty among a diverse customer base Signup and view all the answers

What is the main advantage of using FIFO inventory management?

It allows for a higher income figure during periods of rising prices. Signup and view all the answers

Which inventory tracking method combines both perpetual and physical counts?

Combination of Systems Signup and view all the answers

What was the average increase in the cost of the 30 most prescribed brand name drugs from January 2003 to January 2004?

6.5 percent Signup and view all the answers

What factor is NOT typically considered when ordering inventory?

Inventory shrinkage Signup and view all the answers

What is the key characteristic of vendor managed inventory (VMI)?

It relies on suppliers to manage inventory levels. Signup and view all the answers

What is a key element of performance appraisal planning?

Identifying and addressing developmental needs Signup and view all the answers

Which aspect contributes to successful performance?

Clarification of competency key behaviors Signup and view all the answers

What is an effective method for recognizing and rewarding performance?

Providing specific and timely recognition Signup and view all the answers

How should feedback be approached during the performance period?

It should be ongoing and dialogue-focused Signup and view all the answers

What gap commonly exists in performance appraisal practices?

Belief in the importance of feedback versus actual practice Signup and view all the answers

What factor is linked to the favorable impact of recognition?

Personal interaction and communication Signup and view all the answers

What type of management occurs most frequently and involves personal decisions?

Individual Management Signup and view all the answers

Which type of management primarily involves interactions between the manager and one other person?

Interpersonal Management Signup and view all the answers

Which of the following is not a recommended practice during performance appraisal?

Focusing solely on monetary rewards Signup and view all the answers

What does effective performance appraisal contribute to?

High probability of success Signup and view all the answers

What is the primary purpose of strategic planning within an organization?

To ensure the organization is effectively working towards its goals Signup and view all the answers

Which statement best describes organizational management?

It deals with actions that affect groups of people. Signup and view all the answers

What is a common misconception about strategic planning?

It solely involves short-term objectives. Signup and view all the answers

What key element is emphasized in strategic planning according to Steiner, Miner, and Gray?

Selecting the organization's goals and methods for implementation Signup and view all the answers

In the context of strategic planning, why is it important for an organization to consider its environment?

To ensure adaptability and relevance in its operations Signup and view all the answers

What underlying question must be answered for effective strategic planning in a community pharmacy?

What business does the pharmacy consider itself to be? Signup and view all the answers

Study Notes

Financial Security

Social security may account for 25% of retirement income
Equity in your home, personal savings, pension plans, and retirement savings from 401k plans and IRAs can contribute to retirement income

Blueprint for Financial Security

Spend less than you earn
Pay yourself first
Take advantage of free money
Keep investment expenses low
Owe as little as possible
Diversify investments
Trust the power of average

Other Personal Finance Issues

Student loans:
- Standard plan: 10 years
- Extended plan: longer term
- Other plans: Graduated and Income contingent
Planning for college:
- 529 plans: tax advantage savings plans
Life insurance:
- Term: temporary coverage
- Permanent: lifetime coverage

Getting Financial Help

Put together a professional team early in your career:
- Lawyer: for legal guidance
- Accountant: for tax and financial advice
- Financial advisor: for investment advice
- Insurance agent: for insurance needs
- Doctor: for health care

Principles of Management and Organization

Pharmacists are primarily information providers
Levels of management:
- Individual management: self-management
- Interpersonal management: interactions between two people
- Organizational management: decisions affecting large groups

Strategic Planning

A goal without a plan is just a wish
Strategic planning: the process of selecting organizational goals, determining policies to achieve them, and establishing methods for implementation
Long term strategic planning: ensuring an organization's future success
Strategic planning: involves interacting with the organization's environment

Strategic Planning for a Community Pharmacy

Core Process:
- Organization: Ad-hoc, organic, cellular
- Management: Decisive, risk-oriented
- High skills in a loose-knit structure
- Disjoint work procedures
- Information technology
- Person-to-person communications systems
- Technologies enabling cooperation and knowledge management

Customer Intimacy

Focus on building customer loyalty:
- Thrive on customer loyalty
- Cultivate customer relationships
- Consider customer lifetime value
- Obsession with core processes of solution development
Delegates decision making to employees to close customer contacts
Management systems:
- Creating results for carefully selected and nurtured clients
Culture:
- Embraces specific solutions
- Deep and lasting client relationships

Customer Intimacy (cont'd)

Customer intimacy is based on marketing the individual needs of a particular customer

The Operating Model of Customer Intimacy

Expert at their customer's business & creating solutions
Unmatched value
Evolutionary improvement, not revolutionary

Job Responsibilities

Fulfillment of assigned duties:
- Job analysis, description, other documents
Achievement against goals and objectives:
- Campus, department, and team goals
Key behaviors contributing to successful performance:
- Leadership competencies and key behaviors

Performance Appraisal

Feedback
Recognition
Reward

Performance Appraisal: Planning

Goal setting
Clarification of competency key behaviors
Assignment and clarification of job responsibilities
Identify and address developmental needs

Performance Appraisal: Planning (cont'd)

Ongoing throughout the performance period
Practice as opposed to an event
Dialogue as opposed to forms and ratings
Information that enables maintenance of a high probability of success
Largest gap between belief and practice
Lack of planning exacerbates poor feedback

Performance Appraisal: Recognition & Reward

Favorable impact linked with personal interaction
Specific and timely
Monetary and non-monetary
Annual pay increases not clearly connected to any particular accomplishment.

Tracking Inventory

Perpetual: running count of items used
Physical: manually counting items
Combination of both: most used method

Vendor Managed Inventory

Wholesalers or vendors manage your inventory
Works through electronic data interchange (EDI)

Price Updates

Prices of drugs frequently used by elderly rose by 4.3 times the rate of inflation in 2003
Prices of drugs from 2001-2004 increased by 3.6 times the rate of inflation

Price Updates (cont'd)

Not only did the prices of drugs increase rapidly, but also more often.

Accounting

FIFO: First In First Out - Higher income figure than LIFO (during rising prices)
LIFO: Last In First Out - Tax advantage during periods of rising prices

Ordering Inventory

Order factors:
- Season
- One-of-a-kind items/cost of storing
- Death
- 3-month supply/mail order

Facts and Future Trends

Worldwide sales of generic drugs grew by more than 20% a year and reached $80B by 2008.
Sales of generics have helped to reduce overall drug costs.

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Description

Test your knowledge on essential personal finance strategies, retirement income sources, and the importance of financial planning. This quiz covers topics like student loans, life insurance, and building a professional financial team.