Definitions and Equations Comm 101 PDF

Chapter 1 ### **Business and Economics Basics** - **Business**: Organizations involved in producing goods or services for profit. - **Goods**: Physical, tangible products sold by businesses. - **Services**: Intangible activities provided for a fee. - **Revenue**: Money earned from p...

Chapter 1 ### **Business and Economics Basics** - **Business**: Organizations involved in producing goods or services for profit. - **Goods**: Physical, tangible products sold by businesses. - **Services**: Intangible activities provided for a fee. - **Revenue**: Money earned from providing services or selling goods. - **Costs**: Expenses incurred in creating and selling goods/services, such as salaries, rent, and supplies. - **Profit**: Revenue minus costs. - **Not-for-Profit Organization**: Organizations that aim to achieve social goals instead of financial profit. ### **Economic and Social Concepts** - **Standard of Living**: The wealth, comfort, and material goods available to individuals or societies. - **Quality of Life**: The overall well-being and happiness of individuals, including access to healthcare, education, and food. - **Risk**: The chance that an investment's actual return will differ from expectations, potentially causing loss of resources or failure to achieve goals. ### **Business Environment** - **Environmental Scan**: Gathering information about the external environment to assess its impact on business operations. - **Competition**: Rivalry among businesses to attract customers. - **Economic System**: A combination of policies, laws, and choices that determine ownership and control of production factors. ### **Political and Regulatory Framework** - **Patent**: Exclusive right to manufacture, use, and sell an invention for 20 years. - **Trademark**: A distinctive mark, design, or name used to identify products. - **Consumer Protection**: Laws and movements that protect buyer rights, such as warranties and liability laws. - **Bankruptcy**: A legal process for relieving individuals or businesses of debt they cannot repay. - **Deregulation**: The removal of rules governing business competition. ### **Economic Systems and Competition** - **Market Economy/Capitalism**: Businesses and individuals decide what to produce and buy; the market determines prices and quantities. - **Command Economy**: The government controls production, distribution, and ownership. - **Socialism**: Major infrastructure is government-controlled; smaller businesses are privately owned. - **Mixed Economy**: A blend of private ownership and government involvement. - **Perfect Competition**: Many buyers and sellers with similar products; low barriers to entry - **Monopolistic Competition**: Many firms offering differentiated products. - **Oligopoly**: Few firms dominate a market; high barriers to entry. - **Monopoly**: A single firm controls an industry, with no competition. ### **Economic Indicators** - **Gross Domestic Product (GDP)**: Total dollar value of all goods and services produced within a country's borders in a year. - **Unemployment Rate**: The percentage of unemployed people in the labor force. - **Inflation**: Increase in the general price levels of goods and services over time. - **Deflation**: Decrease in general price levels of goods and services. - **Consumer Price Index (CPI)**: Measures changes in prices of a fixed basket of goods typically purchased by urban consumers. ### **Supply and Demand** - **Supply**: The quantity of a product producers are willing to sell at various prices. - **Demand**: The quantity of a product buyers are willing to purchase at various prices. - **Equilibrium Price**: The price at which supply equals demand. ### **Factors of Production** - **Natural Resources**: Useful commodities in their natural state. - **Labour**: The economic contributions of people. - **Entrepreneurs**: Individuals who combine resources to produce goods and services. - **Knowledge**: The combined talents and skills of a workforce. - **Capital**: Inputs used to produce and deliver goods and services. ### **Economic Conditions** - **Recession**: Two or more consecutive quarters of GDP decline. - **Depression**: A prolonged period of economic downturn. - **Expansion/Recovery**: A phase where economic activity rises after a downturn. - **Peak/Boom**: The height of economic prosperity. ### **Trends and Future Focus** - **Clean Technology Projects**: Investments aimed at environmentally friendly solutions. - **Corporate Social Responsibility (CSR)**: Business practices emphasizing social accountability. - **Public-Private Partnerships (P3s)**: Collaborations between government and private sector for innovation and infrastructure. **Chapter 2** ### **Definitions** 1. **Critical Success Factors** a. Metrics defining a successful business: financial performance, customer satisfaction, creativity, innovation, and employee commitment. 2. **Organizational Life Cycle Framework** b. A graphical representation of an organization's life cycle categorized into stages. Highlights challenges and opportunities at different stages. 3. **Case Study Method** c. A structured approach for investigating business problems, including situation analysis and recommendations. 4. **SWOT Analysis** d. Internal and external analysis of Strengths, Weaknesses, Opportunities, and Threats of an organization. 5. **PESTEL Analysis** e. A framework to analyze macro-environmental factors: i. **Political**: Government stability, regulations, taxation. ii. **Economic**: Inflation, employment, GDP. iii. **Social**: Demographics, lifestyle trends. iv. **Technological**: Advancements, funding. v. **Environmental**: Protection laws, issues. vi. **Legal**: Consumer laws, regulatory involvement. 6. **Porter's Five Forces** f. Competitive forces impacting industry dynamics: vii. Risk of new entry, rivalry, buyer/supplier bargaining power, substitute products. 7. **Competitive Advantage** g. Unique company/product features perceived as valuable by the market. 8. **Stakeholder Analysis** h. Analyzing key stakeholders (owners, employees, customers, community) for their responses to business changes. 9. **Corporate-Level Strategy** i. **Vision**: Future direction and purpose. j. **Mission**: How the vision will be achieved uniquely. k. **Business-Level Strategy**: Describes competitive positioning. 10. **Financial Analysis Tools** l. **Pro Forma Financial Statements**: Project future financial values. m. **Ratio Analysis**: Assess liquidity, ROI, and cash flows. n. **Cost-Benefit Analysis**: Compare costs and benefits of decisions. ### **Equations/Frameworks** 1. **SWOT Analysis Framework** SWOT=(Internal: Strengths, Weaknesses)+(External: Opportunities, Threats) 2. **PESTEL Analysis Structure** 3. **Porter's Five Forces Model** Forces influencing costs (C) and prices (P): Impact= f (Supplier Power,Buyer Power,Threat of Entry,Threat of Substitutes,Rivalry) 4. **Ratio Analysis Categories** Ratios=(Liquidity,Profitability,Efficiency) 5. **Cost-Benefit Analysis Formula** **Chapter 3** ### Definitions 1. **Free Trade** The movement of goods and services among nations without political or economic trade barriers 2. **Absolute Advantage** The ability to produce a specific product more efficiently than any other nation, **OR** a country is the only provider of a product 3. **Comparative advantage** The ability to produce a specific product more efficiently than any other product. The concept that a country should specialize in the products that it can produce most readily and cheaply, and trade these for goods that foreign countries can produce most readily and cheaply. 4. **Exports** Goods and services made in one country and sold to others 5. **Imports** Goods and services that are bought from other countries 6. **Balance of Trade** The difference b/w the value of a country's exports and the value of its import during a certain time 7. **Trade surplus** A favorable balance of trade that occurs when a country exports more than it imports 8. **Trade deficit** An unfavorable balance of trade that occurs when a country imports more than it exports 9. **Balance of Payments** The difference between money coming into the country and money leaving the country 10. **Currency exchange rate** Value of another currency in relation to another 11. **Contractual Agreements:** - **Licensing-** One company permits another to produce and market its product and use its brand name in return for royalties or other compensation - **Franchising**- Agreement includes provisions for how the business is to be operated - **Subcontracting**- Agreement specifies the duties of the partnering company **More Control, More Risk** 12. **International Direct Investment:** - **International direct investment-** active ownership of a foreign company/ manufacturing/ marketing facility - **Strategic alliance-** Partnership formed to create competitive global advantage on a worldwide basis - **Joint venture**- two or more businesses combine for a specific project or business venture - **Aquisition**- purchase of an existing company **Most control, most risk** 13. **Global trade promotion organizations-** World Trade Organization (WTO), World Bank, International Money Fund 14. **Economic Community-** Organization of countries formed to promote free trade 15. **Tarrif-** tax imposed on imported goods 16. **Protective tarrifs**- make imports less attractive to buyers than domestic products 17. **Import quota**- limit on the quantity of a certain good that can be imported 18. **Embargo**- a complete ban on imports or exports of a product 19. **Exchange controls**- laws that require a company earning foreign exchange from its exports to sell the foreign exchance to a control agency 20. **Customs regulations**- regualtions on products that are different from generally accepted international standards 21. **Chapter 4** **There is no slide for chapter 4** **Chapter 5** **Key Terms and Definitions** 1. **Entrepreneur: Individuals with vision, drive, and creativity, willing to take risks to start and manage a new business to make a profit or challenge an existing company's direction.** 2. **Classic Entrepreneur: Someone who accepts the risks of starting their own company based on innovative ideas.** 3. **Multipreneur: An individual who starts a series of companies.** 4. **Intrapreneur: Someone who applies entrepreneurial skills within a large corporation rather than starting a company of their own.** 5. **Entrepreneurial Characteristics: Traits commonly found in successful entrepreneurs, such as being self-directed, confident, action-oriented, energetic, visionary, and tolerant of uncertainty.** 6. **Small Business: Enterprises with 1--99 employees. They represent over 98% of all companies with employees in Canada and contribute 42% of Canada\'s GDP.** 7. **Business Plan: A written document outlining the opportunity, goals, and plans for a business. It serves as a communication, management, and planning tool.** 8. **Business Model: Describes how a business makes money.** 9. **Debt Financing: Borrowed funds that must be repaid with interest over a stated period.** 10. **Equity Financing: Funds raised through the sale of shares in the business.** 11. **Angel Investors: Private individuals or groups providing early-stage financing to start-ups in exchange for ownership stakes.** 12. **Venture Capital: Money invested in high-growth companies with significant potential, often granting investors a share in ownership and management influence.** 13. **Crowdfunding: Raising money for a business or project through contributions from many individuals via online platforms, offering rewards instead of ownership.** 14. **Franchise: A business model where a franchisor provides a product or concept to franchisees, who sell goods or services in a designated area.** 15. **Franchisor: The individual or organization granting the franchise.** 16. **Franchisee: The person or organization purchasing the franchise.** **Important Concepts** 1. **Culture of Entrepreneurship: A societal mindset that respects and supports entrepreneurship, with organizations and government providing resources for start-ups.** 2. **Checklist for Starting a Business:** - **Identify reasons for starting a business.** - **Self-analysis of personal skills and experience.** - **Finding a niche and conducting market analysis.** - **Planning the start-up and arranging finances.** 3. **Causes of Business Closures:** - **Economic factors (e.g., downturns, high interest rates).** - **Financial issues (e.g., inadequate capital, high expenses).** - **Lack of experience (e.g., poor management skills).** - **Personal reasons (e.g., desire to sell or explore new opportunities).** 4. **Small Business Advantages:** - **Flexibility, job creation, and localized economic contributions.** - **Easier to adapt to market needs compared to larger corporations.** 5. **Challenges for Small Businesses:** - **Financial difficulties.** - **High failure rates for easier-to-start ventures.** - **Intense competition in the market.** 6. **Future Trends in Entrepreneurship:** - **Growth of web-driven businesses.** - **Changing demographics encouraging diversity.** - **Increasing use of technology and government support.** **Chapter 6** ### **Choosing a Form of Business Ownership** #### **Learning Outcomes** - Identify various forms of business ownership and their advantages and disadvantages. - Explore other business organization options besides sole proprietorships, partnerships, and corporations. - Address challenges and opportunities from mergers and acquisitions. - Examine trends affecting business organizations in the future. ### **Basic Forms of Ownership** 1. **Sole Proprietorship** a. **Definition**: Owned, operated, and often financed by one person. b. **Advantages**: i. Simple to start and manage ii. Complete control of business iii. Retain all profits iv. Tax advantages (profits taxed as personal income) c. **Disadvantages**: v. Unlimited liability vi. Limited financial resources vii. Management difficulties viii. Time commitment ix. Limited growth and lifespan 2. **Partnership** d. **Types**: x. General Partnership: Shared management and profits; all partners have unlimited liability. xi. Limited Partnership: Includes limited partners who have restricted liability based on their investment. xii. Limited Liability Partnership (LLP): Liability is limited to each partner\'s actions. e. **Advantages**: xiii. Shared resources and responsibilities xiv. Easier access to capital f. **Disadvantages**: xv. Unlimited liability (general partners) xvi. Profit division xvii. Potential conflicts among partners xviii. Difficult to exit or dissolve 3. **Corporation** g. **Definition**: A separate legal entity with liability separate from its owners. h. **Types**: xix. Public Corporation: Shares available on stock markets. xx. Private Corporation: Restricted share transfers. xxi. Crown Corporation: Government-owned. i. **Advantages**: xxii. Limited liability xxiii. Easier financing and resource accumulation xxiv. Unlimited life xxv. Ease of transferring ownership j. **Disadvantages**: xxvi. Cost and complexity of setup xxvii. Double taxation of profits xxviii. Governance and regulatory complexities **Chapter 7** 1. **Management-** coordinating ppl and other resources to achieve the goals of an org 2. **Leadership**- the relationship b/w a leader and the followers who want real changes, resulting in outcomes that reflect their shared purposes 3. **Vision statement**- a clear and concise outline of an orgs values and goals that it would like to achieve 4. **Mission statement-** a clear and concise articulation of how the company intends to achieve its vision, how it is different from its competition 5. **Strategic planning process**- establishing an orgs major goals and objectives 6. **Strategic planning**- creating a long term plan (1-5 years) with broad goals for the organization. 7. **Tactical planning**- process of beginning to implement a strategic plan by addressing issues of the coordination and allocation of resources to diff parts of the org. 8. **Operational planning**- the process of creating specific standards, methods, policies etc that are used in special functional parts of the org 9. **Contingency planning-** plans that identify alternative courses of action 10. **Finance manager-** primarily responsible for an orgs financial resources 11. **Operations manager-** managers the system that converts resources into goods and services 12. **Marketing manager-** responsible for facilitating the exchange of products b/w an org and its customers 13. **HR manager-** Charged w/ managing an orgs HR programs 14. **Administrative manager-** A manager who is not associated with any specific functional area, but who provides overall admin guidance and leadership 15. **Leadership styles:** A. Autocratic- leader makes decisions that employees are expected to execute exactly as directed B. Participative- share decision making and encourage discussion of alternatives C. Laissez-faire- leader gives basic vison, the necessary resources for the team and acts as an advisor 16. **Power**- ability to influence others to behave a certain way 17. **Legitimate Power ("The Position"):** the process of directing, guiding, an\ motivating others toward the achievement of organizational goals.\ **Reward Power ("The Goods"):** power that is derived from an individual's\ control over rewards.\ **Coercive Power ("The Bad"):** power that is derived from an individual's\ ability to threaten negative outcomes.\ **Expert Power ("The Skills"):** power that is derived from an individual\'s\ extensive knowledge in one or more areas**.**\ **Referent Power ("The Respect"):** power that is derived from an individual\'s 18. Other Business Structures 1. **Cooperatives** a. Owned by members with similar interests. b. Focus on common needs of members. c. Profits distributed proportionally to contributions. 2. **Joint Ventures** d. Alliance between two or more companies to collaborate on a specific project. 3. **Franchises** e. Agreement to use a company\'s name, trademark, or business model. ### **Mergers and Acquisitions** 1. **Types of Mergers**: a. Horizontal: Between firms in the same industry. b. Vertical: Between firms at different stages of the same industry. c. Conglomerate: Between firms in unrelated industries. 2. **Acquisitions**: d. One company purchasing another. 3. **Challenges**: e. Cultural clashes, poor integration, and unexpected costs. ### **Life Cycle Framework** Phases of business: 1. Start-Up 2. Growth 3. Maturity 4. Revitalization or Decline Each phase aligns with different forms of business ownership, such as sole proprietorships at start-up or corporations during growth and maturity. ### **Future Trends** - Increased mergers and acquisitions. - Baby boomers redefining retirement roles. - Innovations in franchise operations. - Greater scrutiny of corporations. ### **Chapter 8** #### **Organizational Structure Basics** 1. **Employee Empowerment**: The process of giving employees increased autonomy, discretion, and control over resources to make decisions. 2. **Division of Labor**: Determining work activities and dividing them into specific tasks. 3. **Departmentalization**: Grouping jobs and employees based on function, product, geography, customer, or process. 4. **Centralization**: The concentration of decision-making authority at a single point in the organization. 5. **Decentralization**: The delegation of decision-making authority to lower levels in the organizational hierarchy. #### **Job Design** 6. **Job Design**: Structuring tasks and activities to achieve a business's objectives and ensure employee satisfaction. 7. **Job Specialization**: Breaking down tasks into specific activities assigned to different people. 8. **Job Rotation**: Systematically shifting employees from one task to another for variety and skill enhancement. #### **Work Scheduling Options** 9. **Compressed Workweek**: Fitting 40 hours into fewer than five days. 10. **Flextime**: Allowing employees to choose their work hours within a set range. 11. **Job Sharing**: Splitting the tasks and hours of one job between two people. 12. **Telecommuting**: Working remotely using technology to stay connected. #### **Span of Management (Control)** 13. **Span of Management**: The number of employees a manager directly supervises. 14. **Organizational Height**: The levels of management in an organization. #### **Organizational Structures** 15. **Line Structure**: A structure where the chain of command moves directly from person to person without supporting staff positions. 16. **Line-and-Staff Structure**: Combines line positions (direct authority) with staff positions (advisory roles). 17. **Matrix Structure**: Combines functional and divisional structures, involving multiple reporting lines. #### **Teams** 18. **Teams**: Groups working together towards common goals to improve motivation and performance. 19. **Cross-Functional Team**: A team composed of individuals with varying expertise working on a shared objective. #### **The Informal Organization** 20. **Informal Organization**: The network of relationships and communications based on informal interactions among employees. 21. **Grapevine (Rumor Mill)**: The informal transmission of information through non-official channels. #### **Other Trends** 22. **Virtual Corporation**: A temporary network of companies coming together to exploit a particular opportunity. 23. **Re-Engineering**: Redesigning organizational structures for greater efficiency. 24. **Virtual Teams**: Groups of employees working together remotely. #### **Advantages and Disadvantages** 25. **Narrow Span of Control**: Fewer subordinates per manager, leading to closer supervision and familiarity with individual employees. 26. **Wide Span of Control**: More subordinates per manager, leading to cost savings and increased autonomy but reduced supervision. 27. **Centralization Advantages**: Uniformity, efficiency, maximum control, and strong corporate image. 28. **Centralization Disadvantages**: Slower decision-making, less responsiveness, and reduced empowerment. 29. **Decentralization Advantages**: Faster decisions, responsiveness, worker responsibility, and innovation. 30. **Decentralization Disadvantages**: Loss of control, duplication, and reduced efficiency **Chapter 9** **Human Resource Management (HRM)** - **Definition: Managing all activities related to acquiring, maintaining, and developing an organization's workforce.** - **Three Phases:** 1. **Acquisition: Planning, recruiting, hiring, orientation.** 2. **Maintenance: Compensation, benefits, employee relations.** 3. **Development: Training, performance appraisals, career growth.** **Workplace Diversity** - **Definition: Embracing differences in ethnicity, gender, age, religion, abilities, and sexual orientation in the workforce.** - **Key Components:** - **Equity: Fairness in opportunities.** - **Diversity: Valuing differences.** - **Inclusion: Respecting and involving everyone.** **Planning and Forecasting in HR** - **Replacement Chart: Identifies key employees and potential successors.** - **Skills Inventory: Tracks current employees\' skills and qualifications.** - **Job Analysis: Examines job duties and requirements.** - **Job Description: Tasks and responsibilities.** - **Job Specification: Skills and qualifications needed.** **Recruitment and Selection** - **Recruitment Types:** - **Internal: Promotions or job transfers within the company.** - **External: Hiring from outside the organization.** - **Selection Process:** - **Attract candidates.** - **Screen resumes and cover letters.** - **Conduct interviews.** - **Compare shortlisted candidates.** - **Check references.** - **Make an offer.** **Compensation and Benefits** - **Compensation: Pay and rewards for work, including monetary and non-monetary benefits.** - **Types:** - **Hourly Wages: Pay per hour worked.** - **Salaries: Fixed annual income.** - **Piecework/Commission: Pay based on output or sales.** - **Profit Sharing: Distributing company profits.** - **Bonuses: Additional financial incentives.** - **Fringe Benefits: Health insurance, pensions, vacation, etc.** - **Key Points: Compensation should be competitive, fair, and sustainable.** **Training and Development** - **Orientation: Introduces new employees to the workplace culture and expectations.** - **Training: Improves skills and prepares employees for job requirements.** - **Development: Focuses on long-term career growth.** **Performance Planning and Evaluation** - **Steps:** 1. **Set performance standards.** 2. **Employee works toward goals.** 3. **Supervisor evaluates performance (quality, knowledge, attendance).** 4. **Decide rewards (raises/promotions) or necessary changes.** 5. **Provide feedback to improve future performance.** **Legal Environment in HR** - **Worker Protections: Various laws to ensure safety, fairness, and equal opportunities in the workplace.** **Future Trends in HRM** 1. **Outsourcing HR: Using external providers for HR tasks.** 2. **Aging Workforce: Adapting to older employees\' needs.** 3. **Diversity as a Strength: Leveraging diverse teams for better outcomes.** 4. **Culture Focus: Building engagement, inclusivity, and growth opportunities.** **Chapters 10 and 11** 1. **Motivation**: The internal drive to satisfy needs or wants, influencing behavior. a. **Intrinsic Motivation**: Personal satisfaction from achievements. b. **Extrinsic Motivation**: External rewards like recognition or financial incentives. 2. **Scientific Management** (Frederick Taylor): A method to enhance productivity by studying efficient work processes and incentivizing workers financially. 3. **Hawthorne Effect**: Improved employee performance due to receiving attention and feeling valued by management. 4. **Maslow's Hierarchy of Needs**: A motivational theory stating that humans prioritize fulfilling needs in a specific order (e.g., physiological, safety, social, esteem, self-actualization). 5. **Herzberg's Two-Factor Theory**: c. **Motivators**: Factors that lead to job satisfaction. d. **Hygiene Factors**: Elements that prevent dissatisfaction but do not motivate directly. 6. **Reinforcement Theory**: Behavior modification through rewards (positive or negative). 7. **Equity Theory**: Motivation influenced by perceptions of fair treatment compared to others. 8. **Expectancy Theory**: Effort depends on expected outcomes and their desirability. 9. **Goal-Setting Theory**: Motivation increases with specific, challenging, and feedback-supported goals. ### **Motivational Job Design Techniques** - **Job Enlargement**: Adding similar tasks to enhance the role. - **Job Enrichment**: Increasing responsibility and variety for motivation. - **Job Rotation**: Alternating roles to build skills and reduce monotony. - **Job Redesign**: Assigning new tasks to align with employee strengths or business needs. - **Labour Union**: An organization formed by workers to advocate for their rights, improve working conditions, and negotiate contracts with management. - **Labour Contract**: A written agreement between labour (union) and management, detailing the terms and conditions of employment, usually in effect for a set period. - **Grievance Procedure**: A formal process for employees to raise and resolve complaints or disputes with management. - **Canada Industrial Relations Board (CIRB)**: A federal agency responsible for interpreting and administering labour laws to promote effective labour-management relations in Canada. - **Collective Bargaining**: The process through which representatives of a labour union and management negotiate the terms of a labour contract, including wages, hours, and working conditions. - **Conciliation**: A communication-focused process aimed at helping both parties understand each other's goals and encouraging them to reach an agreement during stalled negotiations. - **Mediation**: A negotiation process involving a neutral third party who facilitates discussions and promotes compromise between labour and management but does not impose a binding decision. - **Arbitration**: The use of a neutral third party to formally resolve disputes. Arbitration can be binding (both parties must adhere to the decision) or non-binding. - **Unionization Process**: Employees express interest in being represented by a union. Certification application is filed with a provincial labour relations board. Upon approval, the union establishes its structure and elects representatives. The union engages in collective bargaining with management. - **Union Tactics in Negotiation**: Strikes: Work stoppages by union members to press demands. Picketing: Public demonstrations to raise awareness or gain support. - **Management Tactics in Negotiation**: Lockouts: Management prevents workers from entering the workplace. Replacement Workers: Hiring temporary workers to maintain operations during disputes. - **Reasonable Accommodation**: Employers\' obligation to adjust workplace policies or practices to meet the needs of employees with disabilities, such as modifying schedules or making buildings accessible. **Chapter 12** **Key Concepts and Definitions** 1. Marketing - The process of building customer relationships by offering goods, services, or experiences that meet customer needs and provide value. - Production Orientation: A focus on increasing output and production efficiency. - Customer Orientation: A focus on identifying and fulfilling customer needs effectively. 2. Customer Value, Satisfaction, and Relationships - Customer Value: The ratio of benefits (e.g., quality, satisfaction) to sacrifices (e.g., cost, time, effort). - Customer Satisfaction: A product meeting or exceeding customer expectations. - Relationship Marketing: Building long-term customer partnerships to ensure satisfaction and loyalty. - Customer Relationship Management (CRM): Organizing and tracking customer information to create strategies for sustained relationships (e.g., loyalty programs). 3. Consumer Decision Process - Steps include defining criteria, identifying influencing factors, and branding. Branding builds trust and facilitates buying decisions. 4. Creating a Marketing Strategy - Steps: 1. Analyze the External Environment (social, economic, technological, political, and competitive forces). 2. Define the Target Market (specific consumer group). 3. Establish a Competitive Advantage (cost, differentiation, or niche focus). 4. Develop a Marketing Mix (Product, Price, Place, Promotion). 5. Market Segmentation - Dividing the market into subgroups based on: 1. Demographics: Age, gender, income, etc. 2. Geographics: Region, climate, market density, etc. 3. Psychographics: Personality and lifestyle. 4. Benefits: What the product offers. 5. Behavioral: Based on product usage or consumption. 6. Marketing Mix (Four Ps) - Product: What the product is (goods, services, ideas). - Price: Monetary value exchanged. - Place: Distribution channels to deliver the product. - Promotion: Techniques to motivate customers (e.g., advertising, PR, sales). 7. Business-to-Business (B2B) Marketing - Focuses on purchase volume, buyer location, fewer customers, and direct distribution. 8. Marketing Research - Collecting and analyzing information to make informed decisions. - Primary Data: Directly collected data (e.g., surveys, focus groups). - Secondary Data: Data previously collected by others. Definitions - Marketing Concept: An approach focused on meeting customer wants and distinguishing products to achieve organizational goals. - Competitive Advantage: Features of a company or product that are superior to competitors'. Types include cost, differentiation, and niche advantages. - Market Segmentation: Dividing a market into specific groups to tailor marketing strategies. - Branding: Building trust through a relationship between a company and its customers. **Chapter 13** **Key Terms and Concepts** **Product and Marketing Mix** 1. **Product**: Anything offered by a company to satisfy customer needs and wants. - **Good**: Tangible, physical items (e.g., clothing, electronics). - **Service**: Intangible offerings experienced or used (e.g., spa treatments). 2. **Consumer Product Classifications**: - **Convenience Products**: Low-cost, frequently purchased items needing minimal effort. - **Shopping Products**: Higher involvement purchases requiring effort and comparison. - **Specialty Products**: Unique items for which buyers are willing to invest significant effort. - **Unsought Products**: Not actively sought until a need arises (e.g., insurance). 3. **Business Product Classifications**: - **Raw Material**: Basic material transformed into products. - **Major Equipment**: Large tools/machines for production. - **Component Part**: Becomes part of a physical product (e.g., car tires). - **Process Material**: Used directly in production but not identifiable in the final product. - **Supply**: Items facilitating production (e.g., office supplies). - **Business Service**: Intangible services used in operations (e.g., IT services). **Phases of Product Development** 1. **Idea Generation**: Collecting new ideas based on customer needs, competitive actions, and market changes. 2. **Product Analysis**: Filtering ideas by customer feedback, costs, and profitability estimates. 3. **Development and Testing**: Creating prototypes, testing features, and conducting small-scale launches. 4. **Commercialization**: Full-scale manufacturing, distribution, and marketing. **Product Life Cycle (PLC) Stages** 1. **Introduction**: High costs, low sales, and heavy promotion efforts. 2. **Growth**: Increasing sales and profits, brand advertising, and market share growth. 3. **Maturity**: Slower sales growth, saturated markets, and product variations. 4. **Decline**: Falling sales, reduced promotions, and product phase-outs. **Product Line and Mix** - **Product Line**: A group of related products marketed together. - **Product Mix**: The total collection of product lines offered by a company. **Branding** 1. **Brand**: A unique name, symbol, or design distinguishing a product. 2. **Trademark**: Legal protection for a brand. 3. **Brand Loyalty**: Customers consistently preferring a specific brand. 4. **Brand Awareness**: The extent to which customers recognize a brand. **Pricing and Strategies** 1. **Factors Influencing Prices**: - Economic conditions. - Product life cycle stage. - Competitors' prices. 2. **Common Pricing Objectives**: - Profit maximization. - Market share increase. - Building customer loyalty. - Furthering social objectives. 3. **New-Product Pricing Strategies**: - **Price Skimming**: High initial price, lowered over time. - **Penetration Pricing**: Low initial price to gain market share. 4. **Psychological Pricing**: - **Odd-Number Pricing**: Prices ending in odd numbers (e.g., \$9.99). - **Bundle Pricing**: Selling multiple products together for one price. 5. **Break-Even Analysis**: - Formula: Break-Even Point=Total Fixed CostsPrice−Variable Costs\\text{Break-Even Point} = \\frac{\\text{Total Fixed Costs}}{\\text{Price} - \\text{Variable Costs}}Break-Even Point=Price−Variable CostsTotal Fixed Costs​ - **Fixed Costs**: Do not vary with output (e.g., rent). - **Variable Costs**: Change with output levels (e.g., raw materials). **Product Differentiation** - **Real or Perceived Differences**: Highlighting unique aspects to stand out from competitors. - **Packaging**: Enhancing attractiveness, visibility, and functionality. **Chapter 14** Key Concepts and Definitions 1. Promotion Mix - Promotion: Efforts by marketers to inform, persuade, or remind consumers about their products or services. - Promotion Mix: The combination of promotional methods used to reach a target market, including: - Advertising: Paid, non-personal promotion (e.g., TV, print, online). - Personal Selling: Face-to-face sales presentations. - Sales Promotions: Short-term incentives (e.g., coupons, contests, discounts). - Public Relations (PR): Activities aimed at building goodwill or a positive company image. 2. Integrated Marketing Communications (IMC) - Coordinating all promotional activities to deliver a consistent message focused on customer needs. 3. Promotional Goals - Creating awareness. - Encouraging product trials. - Providing product information. - Retaining loyal customers. - Increasing usage frequency. - Identifying target customers. 4. Push vs. Pull Strategies - Push Strategy: Promoting products to intermediaries (e.g., wholesalers, retailers). - Pull Strategy: Directly targeting customers to create demand. 5. Sales Promotion Methods - Examples include: - Coupons, samples, and premiums. - Frequent-user incentives. - Point-of-purchase displays. - Contests and sweepstakes. 6. Public Relations Tools - Press Releases: Informing media about news or updates. - Press Conferences: Inviting media to hear announcements. - Event Sponsorships: Building goodwill through sponsored events. Distribution (Place) 1. Channels of Distribution - The path products take from producers to consumers. Options include direct distribution (producers to customers) or through intermediaries (e.g., wholesalers, retailers). 2. Marketing Intermediaries - Roles of intermediaries include: - Reducing transactions. - Providing efficiency, assortment, and bulk-breaking. - Delivering valuable market insights. 3. Types of Intermediaries - Wholesalers: Sell to businesses (e.g., merchant wholesalers, brokers, agents). - Retailers: Sell directly to end users. Retailers vary in product categories, pricing, size, and distribution intensity. 4. Distribution Intensity - Exclusive: Few dealers in a specific area. - Selective: Limited number of outlets. - Intensive: Products sold in as many locations as possible. 5. Non-Store Retailing - Selling outside traditional store locations, including: - Direct Selling: Home or workplace visits. - Direct Marketing: Online or catalog sales. - Vending Machines: Automated product dispensing. 6. Managing Physical Distribution - Inventory Management: Determining stock levels and tracking. - Warehousing: Storing goods for shipment. - Transportation: Shipping goods through distribution channels. Definitions - Promotion Mix: The set of advertising, personal selling, sales promotions, and public relations activities used in marketing. - Distribution Channel: The series of intermediaries or partners involved in moving a product from producer to consumer. - Disintermediation: Reducing or removing intermediaries to lower costs or increase profits. **Chapter 15** **Key Concepts and Definitions** 1. **Production and Operations Management** - **Production**: Transforming inputs (e.g., raw materials, labor) into outputs (goods/services) to satisfy customer needs. - **Operations Management**: Overseeing the production process to ensure efficiency and effectiveness. - Importance: Adapting to changing consumer expectations, technology, and competition. 2. **Manufacturing in Canada** - Key industries: Automotive, aerospace, food, telecommunications, mining, forestry, oil, and agriculture. - Contributions: \$174 billion to GDP, 68% of exports, and spin-off benefits for related businesses. 3. **Goods vs. Services** - **Goods**: Tangible products (can be seen and touched). - **Services**: Intangible products (experience-based). - Differences in resources, inventory management, and quality measurement. 4. **Production Planning** - **Design Planning**: Converting ideas into products/services, estimating capacity, setting timelines, evaluating technology, and ensuring sustainability. - **Facility Layout**: Organizing resources in production: - **Process Layout**: Separate stations for specific tasks (e.g., hospitals). - **Product Layout**: Sequential production (e.g., airport check-in). - **Fixed-Position Layout**: Product remains stationary (e.g., shipbuilding). 5. **Supply Chain and Resource Planning** - **Supply Chain**: Managing the flow of inputs to production and final delivery to customers. - **Computerized Resource Planning**: - **MRP**: Materials requirement planning for inventory control. - **ERP**: Integrating production, sales, and quality data for streamlined operations. 6. **Scheduling** - Organizing production steps to ensure timely resource availability. - Tools: - **Gantt Chart**: Visual representation of tasks and timelines. - **Critical Path Method (CPM)**: Identifying the longest sequence of dependent tasks to ensure no delays. 7. **Improving Production and Operations** - **Quality Management**: Ensuring products meet customer expectations through reliable performance. - **Total Quality Management (TQM)**: Incorporating quality principles across the organization. - **Six Sigma**: Statistical methods for eliminating defects. - **Lean Manufacturing**: Eliminating non-value-adding steps in production to reduce waste. - **Just-in-Time (JIT)**: Receiving materials only when needed to minimize inventory costs. 8. **Modern Production Techniques** - **Robotics**: Machines performing tasks independently. - **Flexible Manufacturing**: Systems that adapt quickly to changing product demands. - **Mass Customization**: Tailoring products to individual customer preferences. **Definitions** 1. **Operations Management**: Managing production processes to optimize efficiency and output. 2. **Design Planning**: Developing strategies to turn ideas into actual products or services. 3. **Facility Layout**: Arranging equipment, machinery, and staff in a production facility. 4. **Supply Chain Management**: Coordinating supply chain members to reduce inefficiencies and costs. 5. **Lean Manufacturing**: Streamlined production with fewer resources and reduced waste. 6. **Six Sigma**: A data-driven approach to minimize defects and enhance quality. 7. **Just-in-Time (JIT)**: Inventory strategy where materials arrive as needed to reduce storage costs. 8. **Critical Path**: The sequence of tasks that determines the minimum time required for project completion. **Chapter 16: Integrating Sustainability into Operations** Key Terms and Definitions: 1. Sustainable Business: A business that conducts operations without negatively impacting the environment, community, or society, focusing on practices like product design improvements, reduced energy consumption, and environmental cleanup. 2. Three Pillars of Sustainability: - Social Sustainability: Managing operations to positively impact employees, customers, the community, and society. - Environmental Sustainability: Managing operations to minimize negative environmental impacts. - Economic Sustainability: Promoting long-term growth and profitability through efficient use of resources. 3. Linear Economy: A traditional economy following the \"take, make, waste\" model, where raw materials are used to create products that are eventually discarded as waste. 4. Circular Economy: An economic system designed to eliminate waste and pollution, keep products in use, and regenerate natural systems. 5. Cradle-to-Grave: A design approach considering a product\'s impact from production to disposal. 6. Cradle-to-Cradle: A framework emphasizing recycling, upcycling, and reusing products with the goal of achieving zero waste. 7. Biological Cycle: A system where materials can be absorbed back into nature, such as food and natural fibers. 8. Technical Cycle: A system for non-toxic, human-made materials to be reused, repaired, or transformed without losing quality. 9. Upcycling: Transforming waste into materials or products of higher quality. 10. Biomimicry: Learning from and emulating nature's forms and processes to create sustainable designs and solve business challenges. 11. Life Cycle Assessment (LCA): A tool to assess the environmental impact of a product, process, or service across its entire life cycle. Includes stages: - Goal Definition and Scoping - Inventory Analysis - Impact Assessment - Interpretation 12. Supply Chain Sustainability: Considering environmental, social, and economic impacts throughout a product's supply chain, focusing on procurement, operations, waste management, and data communication. 13. Product Stewardship: Minimizing a product's human, environmental, and social impacts across its life cycle, shared by all supply chain actors. 14. Extended Producer Responsibility (EPR): An environmental policy holding producers responsible for the entire lifecycle of their products, including post-consumer stages. 15. Green Marketing: Developing and promoting products based on their sustainability contributions. 16. Greenwashing: Providing misleading or exaggerated claims about a product's sustainability to mislead **consumers.** **Chapter 17: Accounting** Definitions 1\. **Accounting** - Systematically collecting, recording, classifying, reporting, and analyzing financial activities. 2\. **Financial Accounting** - Preparing standardized financial statements for external stakeholders. 3\. **Managerial Accounting** - Providing internal financial information for managers to make decisions. 4\. **Current Assets** - Assets that will be converted to cash within the next 12 months. 5\. **Fixed Assets** - Assets that will generate revenue for more than one year. 6**. Intangible Assets** - Non-physical assets of value, such as patents and goodwill. 7\. **Liquidity** - The ease with which an asset can be converted to cash. 8\. **Goodwill** - An intangible asset that arises when one company acquires another at a price higher than the fair market value of its identifiable net assets. 9\. **Current Liabilities** - Obligations to be paid off within the next 12 months. 10\. **Long-Term Liabilities** - Obligations that take longer than one year to pay off. 11\. **Owner\'s Equity** - Net worth of a business after debts are paid. 12\. **Revenue** - Total dollar value of a company's sales. 13\. **Cost of Goods Sold (COGS)** - Total expense of buying or producing goods/services sold. 14\. **Operating Expenses** - Costs of running a business not directly related to producing goods/services. 15\. **Net Income/Loss** - Revenue minus expenses. 16\. **Cash Flow Statement** - Tracks the inflow and outflow of cash. 17\. **Ratio Analysis** - Assessing a firm\'s financial condition through ratios derived from financial statements. **Equations** 1\. **Balance Sheet Equation**: Assets = Liabilities + Owner\'s Equity 2\. **Goodwill Calculation**: Goodwill =Purchase Price -- (Fair Market Value of Assets - Liabilities) 3\. **Current Ratio (Liquidity Ratio)**: Current Ratio = Current Assets / Current Liabilities 4\. **Quick Ratio (Acid Test Ratio)**: Quick Ratio = (Cash + Accounts Receivable + Marketable Securities) / Current Liabilities 5\. **Net Working Capital**: Net Working Capital = Total Current Assets - Total Current Liabilities 6\. **Earnings Per Share**: Earnings Per Share = Net Income / Number of Common Shares 7\. **Net Profit Margin (Return on Sales)**: Net Profit Margin = Net Income / Revenue 8\. **Return on Equity**: Return on Equity = Net Income / Total Owner\'s Equity 9\. **Inventory Turnover (Activity Ratio)**: Inventory Turnover = Cost of Goods Sold / Average Inventory 10\. **Debt to Equity Ratio (Debt/Leverage Ratio)**: Debt to Equity Ratio = Total Liabilities / Owner\'s Equity \*\*\*Will not need to solve ratios on exam but need to know how they work **Chapter 18: Understanding Money, Banking, and Credit** **Money** - **Definition: Anything a society uses to purchase products or resources.** - **Currency: Metal coins and paper bills.** **Functions of Money** 1. **Medium of Exchange: Facilitates trade.** 2. **Measure of Value: Serves as a standard for valuing goods and services.** 3. **Store of Value: Maintains value over time.** **Characteristics of Money** - **Scarcity: Must be valuable but not overly scarce.** - **Durability: Needs to withstand use over time.** - **Portability: Easy to transport.** - **Divisibility: Can be divided into smaller units.** **The Canadian Money Supply** - **Definition: The total amount of money made available by the Bank of Canada.** - **Components:** 1. **Currency: Banknotes and coins.** 2. **Demand Deposits: Withdrawable funds.** 3. **Term Deposits: Interest-earning but non-withdrawable funds.** **Economic Effects** - **Inflation: General price increase caused by a rise in money supply.** - **Deflation: General price decrease caused by shrinking money supply.** **The Bank of Canada** - **Functions:** - **Conducts monetary policy.** - **Supplies quality banknotes.** - **Promotes safety and efficiency.** - **Manages government funds.** - **Communicates monetary objectives.** - **Interest Rates:** - **Target Overnight Rate: Influences bank interest rates.** - **Prime Rate: The interest rate banks charge their most creditworthy customers.** **Financial Institutions** - **Depository Institutions:** - **Chartered Banks: Profit-making organizations offering deposits and loans.** - **Trust Companies: Administer trusts and manage estates.** - **Credit Unions: Serve members by offering deposits and loans.** - **Non-depository Institutions:** - **Insurance Companies.** - **Pension Funds.** - **Brokerage Firms.** - **Finance Companies.** **Services Provided by Banks** - **Secure storage for money and valuables.** - **Loans and business services.** - **Regulation by the Office of the Superintendent of Financial Institutions (OFSI).** **Securities** - **Definition: Financial instruments representing ownership (shares) or debt (bonds).** - **Types:** - **Common Shares: Voting rights, potential dividends, tradable.** - **Preferred Shares: Fixed dividends, no voting rights.** - **Bonds: Long-term debt repaid at maturity with interest.** **Bond Types** 1. **Corporate Bonds: May be secured or unsecured.** 2. **Government Securities: Includes treasury bills and federal/provincial debentures.** **Investment Markets** - **Primary Market: For new securities.** - **Secondary Market: For trading existing securities.** **Alternate Investments** - **Real estate, venture capital, antiques, precious metals, and collectibles like stamps.** **Chapter** **19: Mastering Financial Management** 1\. **Cash flow-** movement of money into and out of business 2\. **Positive cash flow**- more money is coming in than going out 3\. **Negative cash flow**- more money is going out than coming in 4\. **Risk and return factors:** - Changing patterns of market demand - Interest rate - General economic conditions - Marketing conditions - Social issues 6. **Short- term forecasts**- Operating plans for one year, project revenues, costs of goods, op expenses 7. **Long- term forecasts**- Strategic plans for longer than a one year period, broader view of financial activities 8. **Financial planning process-** Forecast cash flow -\> budget cash needs -\> control differences -\> compare results 9. **Cash budgets-** Forecast cash inflows and outflows 10. **Capital Budgets-** Forecast outlays for fixed assets, more for long term 11. **Operating budgets-** Forecast profits and expenses 12. **Means of obtaining financing-** Borrowing money (debt), sell ownership shares (equity), and retaining earnings (profits) 13. **Retained earnings-** profits 14. **Trade credit-** extending credit to buyer 15. **Factoring-** selling accounts receivable for cash 16. **Commercial paper-** Unsecured promissory notes 17. **Unsecured loan-** no collateral 18. **Secured loan-** Backed by collateral 19. **Line of credit-** a given amount of unsecured funds. Speeds up the borrowing process 20. **Commercial finance companies-** 21. **Term loan-** long-term debt from a lending institution such as banks. Repaid in instalments, often require collateral. 22. **Bonds-** Long-term debt issued by corps and governments. 23. **Mortgage loan-** Long-term loan with real estate as collateral 24. **The five C's of credit-** Character, capacity, capital, collateral, and conditions 25. **Stocks-** Shares of ownership in a company 26. **Common shares-** ownership with voting rights 27. **Preferred shares-** preference of dividends 28. **IPO-** The first public offering of a corps stock (initial public offering) 29. **Par value-** \$ amount of each stock 30. **Stock certificate-** proof of ownership 31. **Dividends-** Amount paid per share to owner 32. **Venture capital-** money invested in new companies or ideas that have immense profit potential. 33. **Crowdfunding-** the practice of funding a project or venture by raising many small ammouints of money from a large number of people, typicaly online. 34. **Micro finance-** providing access to small amounts of financing to those whom would otherwise not have access to funds 1. **Ethics**: A set of moral standards for judging whether something is right or wrong. Ethics go beyond legality and are fundamental to individual and business behavior. 2. **Business Ethics**: The application of moral standards to business situations, guided by questions like: - Is it legal? - Is it balanced (win-win)? - How will it make me feel about myself? 3. **Transparency**: The free flow of information inside and outside a company, promoting honesty and openness. 4. **Whistle-Blower**: An employee, former employee, or other stakeholder who reports misconduct, harmful, or illegal acts within an organization. 5. **Ethical Relativism**: The idea that ethical behavior is determined by historical periods, societal traditions, circumstances, or personal opinions, lacking universal ethical standards. 6. **Ethical Dilemma**: A decision where every alternative impacts stakeholders negatively in some way. 7. **Utilitarianism**: A philosophy that evaluates actions based on their consequences, aiming to maximize benefits and minimize harms. 8. **Individual Rights**: Personal freedoms and rights, such as freedom of thought, expression, and association. 9. **Justice**: The fair distribution of benefits and harms. 10. **Corporate Social Responsibility (CSR)**: The concern businesses have for the welfare of society, often categorized into: - **Corporate Philanthropy**: Charitable acts to benefit society. - **Corporate Social Initiatives**: Enhanced philanthropic efforts, e.g., providing disaster relief. - **Corporate Responsibility**: Acting responsibly, e.g., hiring minorities and minimizing pollution. 11. **Stakeholders**: Individuals, groups, or organizations impacted by or influencing a business's actions. 12. **Consumer Rights**: - **Right to Safety**: Products must be safe for use. - **Right to Be Informed**: Consumers must receive sufficient product information. - **Right to Choose**: Consumers should have diverse product options. - **Right to Be Heard**: Companies should address consumer complaints. 13. **Pyramid of Corporate Social Responsibility**: A model that outlines businesses' responsibilities to different stakeholders, including investors, governments, communities, suppliers, customers, and employees. 14. **Environmental Issues**: Challenges like climate change, waste disposal, deforestation, overpopulation, and biodiversity loss. 15. **Compliance-Based Approach**: An ethics strategy focusing on rules, laws, and preventing misconduct. 16. **Integrity-Based Approach**: An ethics strategy emphasizing values, principles, and enabling responsible behavior.