Principles of Management

• Management is the process of achieving organizational goals through planning, organizing, leading, and controlling resources.

Core Functions of Management

• Planning anticipates trends and determines strategies to achieve organizational goals.
• Organizing designs the organizational structure and systems for goal achievement.
• Leading creates a vision and motivates others to achieve organizational objectives.
• Controlling establishes standards, rewards performance, and takes corrective actions.

Vision and Mission

• A vision is an explanation of why an organization exists and its future direction.
• A mission statement outlines the organization's fundamental purpose.

Goals and Objectives

• Goals are broad, long-term accomplishments the organization aims to achieve.
• Objectives are specific, short-term statements detailing how to achieve goals.

SWOT Analysis and Planning Types

• SWOT analysis identifies an organization's Strengths, Weaknesses, Opportunities, and Threats.
• Strategic planning determines major goals and resource strategies.
• Tactical planning involves detailed, short-term action plans.
• Operational planning sets work standards and schedules to implement tactical objectives.
• Contingency planning prepares alternative actions if primary plans fail.

Decision Making and Problem Solving

• Decision making involves choosing among alternatives.
• Problem solving addresses everyday issues and requires quicker action.
• Brainstorming generates numerous solutions quickly without censoring.
• PMI (Pluses, Minuses, Implications) is a method for evaluating solutions.

Organizational Structure

• An organization chart visually represents relationships and work division.

Levels of Management

• Top management develops strategic plans.
• Middle management is responsible for tactical planning and control.
• Supervisory management oversees workers and their daily performance.

Managerial Skills

• Technical skills enable specific task performance.
• Human relations skills involve communication and motivation.
• Conceptual skills provide a holistic view of the organization.

Staffing and Leadership

• Staffing involves hiring, motivating, and retaining skilled employees.
• Autocratic leadership involves making decisions without consulting others.
• Participative (democratic) leadership includes employees in decision-making.
• Free-rein leadership allows employees autonomy in achieving objectives.
• Knowledge management involves finding, storing, and sharing information within the firm.

Customers

• External customers include dealers and end-users.
• Internal customers are individuals or units within the firm receiving services.

Finance and Accounting Terms

• Funds are amounts of money.
• Profit is the difference between revenue and expenses.
• Ledgers are books for recording financial transactions.
• A trial balance summarizes financial data to ensure accuracy.
• An annual report provides a yearly overview of an organization's financial condition.

Profit and Loss (P&L) Account

• The P&L account shows revenue, expenditure, and profit over a period.
• It begins with total sales (revenue) and ends with earnings (profit).
• Cost of Goods Sold (COGS) includes manufacturing costs and wages.
• Operating expenses include salaries, marketing costs, and rent.
• Non-operating income includes profits from investments.
• EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization.
• Depreciation is the loss in value of a tangible asset.
• Amortization is the loss in value of an intangible asset.

Balance Sheet

• The balance sheet reports assets, liabilities, and owner's equity.
• The basic equation is: Assets = Liabilities + Shareholders’ Equity.
• An asset is anything of value owned by a business.
• A liability is any amount owed to a creditor.
• Shareholders’ equity represents shareholder claims on assets.

Assets

• Current (short-term) assets can be converted to cash within a year.
• Securities include shares (stocks) and bonds.
• Fixed (long-term) assets are relatively permanent items like land and buildings.
• Intangible assets lack physical form but have value (e.g., patents).
• Goodwill represents customer approval and support of a business.

Liabilities

• Current (short-term) liabilities must be repaid within 12 months.
• Long-term liabilities take more than one year to repay.
• Working capital is the difference between current assets and current liabilities.
• Bank debt includes loans and overdrafts.
• Accounts payable is money owed to vendors and suppliers.
• Accrued taxes are unpaid taxes.
• Accrued salaries are salaries paid after service performance.
• Inventory is the value of raw materials and stock.
• Fixtures are parts of a building that cannot be moved.
• A mortgage is a long-term loan for real estate.
• A bond is a fixed-term loan with a fixed interest rate.
• Provisions are funds set aside for anticipated one-time payments.
• Retained profit is profit kept for future investment.

Cash Flow Statement and Problems

• A cash flow statement shows money flow in and out of the business.
• Causes of cash flow problems include late payments, unforeseen costs, and over-borrowing.
• Solutions include credit control, stock control, and expenditure control.
• Factoring involves using an outside company to recover debts.

Financing

• Debt financing involves borrowing funds that must be repaid.
• Equity financing raises money from within the firm or through ownership sales.

Financial Management

• Issues in financial management include cost centers, profit centers, variance analysis, and costing methods.
• Liquidity ratios measure the ability to pay short-term debts.
• Profitability ratios measure the ability to generate profits.
• Leverage ratios measure reliance on borrowed funds.
• Activity ratios measure the effectiveness of resource use.

Finance and Organizational Structure

• The CFO is on the Board.
• Senior managers reporting to the CFO include the Financial Controller (FC), Treasurer (T), and Chief Accounting Officer (CAO).
• The Financial Controller is responsible for financial planning, monitoring, and data production.
• The Treasurer manages cash flow and raises new funds.
• The Chief Accounting Officer keeps books, prepares statements, and minimizes taxes.

Accounting

• Accounting identifies, records, and communicates economic events.
• Financial accounting provides information to external stakeholders.
• Bookkeeping records business transactions.

Marketing

• Marketing involves promoting, selling, and distributing products or services.
• Retailers sell directly to consumers.
• Wholesalers obtain goods from manufacturers and resell to retailers.
• Buying involves paying for something.
• Selling involves exchanging goods for money.
• Transporting involves moving goods.
• Storing involves holding goods for availability.
• Financing involves budgeting, funding, and providing financial assistance.
• Researching involves studying buyer behavior and testing products.
• Risk taking involves bearing uncertainties.
• Grading and valuing involve grouping goods and determining prices.

Marketing Orientations

• Product-oriented focuses on creating better products at lower prices.
• Sales-oriented emphasizes widespread distribution and promotion.
• Customer-oriented makes decisions based on consumer awareness.
• The marketing concept satisfies customer needs while meeting organizational objectives.

Market and Target Market

• A market is where goods and services are bought and sold.
• Market research gathers information on moving goods from producer to consumer.
• Target markets are segments a business wants as customers.

Marketing Mix (The 4 P's)

• The marketing mix includes product, price, distribution (place), and promotion.
• Product is an artifact created through a process.
• Price is the value of something.
• Distribution involves shipping and delivery.
• Promotion encourages growth or acceptance.

Marketing Plan and Product Life Cycle

• A marketing plan guides marketing activities.
• The product life cycle includes introduction, growth, maturity, and decline stages.
• The introduction stage involves the initial distribution of a product.
• The growth stage involves a rapid sales increase.
• The maturity stage entails sales peaking and then slowing.
• The decline stage involves a decline in sales.

Types of Goods

• Industrial goods are used to produce other products.
• Consumer goods are for direct use or consumption.
• Convenience goods are inexpensive products purchased regularly.
• Shopping goods are compared by price and feature.
• Specialty goods are not mass-produced.
• Unsought goods are unknown or unwanted by the consumer.

Profit and Risk

• Profit is money earned beyond expenses.
• Risk is the chance of losing time and money.

Stakeholders

• Stakeholders include customers, employees, stockholders, and suppliers.

Entrepreneurship

• Advantages of entrepreneurship include freedom, opportunity, and wealth.
• Disadvantages include risk of time and money.

Government's Role in Reducing Risk

• Governments allow private ownership, enforce contracts, establish trade currency, lessen corruption, and minimize taxes/regulations.

Technology

• Technology benefits workers, businesses, and consumers by improving effectiveness and productivity.

Economics

• Economics studies resource allocation and distribution.

Branches of Economics

• Macroeconomics studies a nation's economy as a whole.
• Microeconomics studies individual behavior in a market.
• Resource Development studies how to increase resources.

Capitalism and Free Market

• Capitalism promotes economic growth through self-interest.
• The "Invisible Hand" suggests the economy grows through individual efforts.
• Capitalism is based on private ownership and operation for profit.
• Under capitalism, businesses decide what to produce.
• Basic rights include private property, business ownership, competition, and choice.
• A free market is where buyers and sellers negotiate prices.

Socialism and Mixed Economy

• Socialism is based on government ownership of some businesses.
• Advantages of socialism may be more social equity, education, and health care.
• Disadvantages of socialism include lower incentives and slower growth.
• Under communism, the government owns most production facilities.
• A mixed economy blends capitalism and socialism.

Economic Indicators

• Gross Domestic Product (GDP) is the total value of goods and services produced.
• The unemployment rate is the percentage of unemployed individuals seeking work.
• The Consumer Price Index (CPI) measures price changes of consumer goods.

Business Cycles and Economic Policy

• Four phases of business cycles are economic boom, recession, depression, and recovery.
• A recession occurs with two or more quarters of GDP decline.
• During a recession prices fall, purchases decrease, and businesses fail.
• Keynesian economics involves increased government spending and tax cuts during a recession.
• Fiscal policy involves government efforts to stabilize the economy.
• Monetary policy manages the money supply and interest rates.

International Trade

• Nations trade due to self-sufficiency limitations, resource distribution, and skills.
• Comparative advantage suggests specializing in efficient production.
• Absolute advantage is when a country has a monopoly on a product.
• Exporting involves selling products to other countries.
• Importing involves buying products from other countries.

Trade and Global Engagement

• The balance of trade relates exports to imports.
• The balance of payments is the balance of trade plus other money flows.
• Dumping involves selling products cheaper in a foreign country.
• Global business engagement includes licensing, exporting, and franchising.
• Multinational corporations have facilities abroad.
• Forces discouraging global business include sociocultural, economic, legal, and environmental factors.

Trade Protectionism

• Trade Protectionism limits imports through government regulations.
• Tariffs are taxes on foreign products.
• Embargos prohibit importing or exporting certain products.
• Offshoring is purchasing goods from outside the firm.

Ethics in Business

• Legality refers to laws protecting people from fraud and violence.
• Ethics involves adhering to moral standards.
• Ethical decisions should be legal, balanced, and conscientious.
• Management's role in ethics influences employees.
• Compliance-based ethics avoids legal punishments.
• Integrity-based codes define organizational values.

Corporate Social Responsibility

• Corporate social responsibility is a business's concern for society.
• Businesses demonstrate responsibility by satisfying customers and creating jobs.
• Actions includes adding the organizations positive actions and then subtracting the negative effects to get a net social benefit.
• Ethical behavior in global markets ensures suppliers uphold human rights and environmental standards.

Marketing Defined

• Marketing is a management orientation stressing customer satisfaction.
• Exchange involves parties giving up something for something of value.
• Conditions for an exchange include at least two parties, value, communication, and freedom to accept or reject.
• Customer satisfaction is evaluating whether a service has met expectations.
• Customer value is the relationship between benefits and sacrifices.
• Empowerment involves delegating authority to subordinates.
• Market orientation operates on a customer’s decision to purchase a product.

Marketing Concepts and Orientations

• Marketing Concept is satisfying customers' needs while meeting organizational objectives.
• Production orientation focuses on internal capabilities.
• Relationship marketing maintains relationships with current customers.
• Sales orientation uses aggressive techniques to increase sales.
• Social marketing considers long-term interests of individuals and society.
• A Cash Cow is a business unit that generates more cash than it needs.
• Sustainable competitive advantage occurs when it cannot be copied by the competition.

Strategic Planning Tools

• Competitive advantage is a company's features perceived as superior.
• Cost competitive advantage means being the low-cost competitor.
• Diversification involves new products in new markets.
• Environmental scanning searches for events affecting organization.
• Experience curves show cost declines with increased experience.
• Implementation turns marketing plans into action.
• Market development attracts new customers to existing products.
• Market opportunity analysis evaluates market segments.

Marketing Mix and Goal Setting

• Market Penetration increases market share among current customers.
• A Marketing Audit evaluates marketing objectives and performance.
• The marketing mix includes product, price, place, and promotion.
• Marketing Myopia is focusing too much on products.
• A marketing objective sets what to accomplish through activities.
• A marketing plan guides activities.
• Marketing Strategy outlines how to achieve goals.
• Niche Competitive Advantage focuses on a small segment.
• SWOT analysis assesses strengths, weaknesses, opportunities, and threats.

Ethical and Social Responsibility

• A code of ethics guides decision-making.
• Corporate social responsibility concerns business's welfare.
• The Foreign Corrupt Practices Act regulates international business.
• Green marketing promotes environmentally sensitive products.
• The pyramid of corporate social responsibility includes economic, legal, ethical, and philanthropic responsibilities.
• Cause-related marketing partners businesses with charities.

Research and External Factors

• Applied research solves practical problems, while basic research increases knowledge.
• Component lifestyle chooses goods meeting diverse needs.
• The Consumer Product Safety Commission (CPSC) researches product safety.
• Marketing demography uses information to segment the market.
• Environmental management shapes the external environment.
• Generation X followed the baby boom.
• Generation Y were born between 1979 and 1994.
• Inflation is an increase in overall prices.
• Purchasing power compares income versus costs of goods.
• Recession is an economic slowdown.
• A target market is a group with similar wants and needs.

International Business

• A buyer for export sells globally for its own account.
• Capital Intensive uses more capital than labor.
• CAFTA is the Central American Free Trade Agreement.
• Contract manufacturing is private-label manufacturing.
• Countertrade uses barter instead of money.
• Direct foreign investment builds or buys a business in a foreign country.
• Dumping sells goods below domestic market prices.
• An export agent acts as the manufacturer's agent.
• An export broker brings buyers and sellers together.
• GATT is the General Agreement on Tariffs and Trade.
• Global marketing standardization sells uniform products.
• The Group of Twenty discusses global economic stability.
• The International Monetary Fund promotes trade stability.
• Job outsourcing sends jobs abroad.
• A joint venture shares a business project.
• Mercosur is a Latin American trade agreement.
• A multinational corporation operates in many countries.
• NAFTA is the North American Free Trade Agreement.
• The Uruguay Round lowered trade barriers and created the WTO.
• The World Bank assists developing nations with loans.
• The WTO is the World Trade Organization.