BBAC101 Introduction to Business Final Exam Revision Session (American University of Beirut Mediterraneo) - December 12, 2024 PDF

BBAC101 – INTRODUCTION TO BUSINESS SESSION 13 - FINAL EXAM REVISION SESSION Professor Elena P. Antonacopoulou Thursday, December 12, 2024 American University of Beirut Mediterraneo 1  COURSE MATERIALS T...

BBAC101 – INTRODUCTION TO BUSINESS SESSION 13 - FINAL EXAM REVISION SESSION Professor Elena P. Antonacopoulou Thursday, December 12, 2024 American University of Beirut Mediterraneo 1  COURSE MATERIALS Topic Covered The Dynamic Business Environment The Economy and its Impact on Business Corporate Social Responsibility and Ethical Behaviour Management and Leadership Forming a Business Mid-term Production and Operation Management Human Resource Management Marketing: Helping Buyers Buy Accounting and Financial Crisis Management Final Exam 2  PRODUCTION AND OPERATIONS MANAGEMENT Production The creation of finished goods and services using the factors of production: Land, labor, capital, entrepreneurship, and knowledge. Production management — Describes all the activities managers do to help firms create goods. 3  08. PRODUCTION AND OPERATIONS MANAGEMENT Operations Management A specialized area in management that converts or transforms resources (including human resources) into goods and services. Includes: Inventory management. Quality control. Production scheduling. Follow-up services. 4  08. PRODUCTION AND OPERATIONS MANAGEMENT Production adds value, or utility, to materials or processes. Form utility — The value producers add to materials in the creation of finished goods and services. Process manufacturing — The part of the production process that physically or chemically changes materials. Assembly process — The part of the production process that puts together components. 5  08. PRODUCTION AND OPERATIONS MANAGEMENT INPUTS PRODUCTION OUTPUTS CONTROL Land Goods Planning Labor Services Routing Capital Ideas Scheduling Entrepreneurship Dispatching Knowledge Follow-up The production process consists of taking the factors of production (land, etc.) and using those inputs to produce goods, services, and ideas. Planning, routing, scheduling, and the other activities are the means to accomplish the objective—output. 6  08. PRODUCTION AND OPERATIONS MANAGEMENT Lean Manufacturing The production of goods using less of everything compared to mass production. Compared to others, lean companies: Take less human effort. Take less manufacturing space. Require less investment in tools. Require less engineering time to develop a new product. 7  08. PRODUCTION AND OPERATIONS MANAGEMENT Just-in-Time (JIT) Inventory Control A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line. To work effectively, the process requires excellent coordination with suppliers. 8 ANY QUESTIONS? 9  09. HUMAN RESOURCE MANAGEMENT Human Resource Management (HRM) The process of determining human resource needs and then: recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees ………….to achieve organizational goals. 10  09. HUMAN RESOURCE MANAGEMENT Service and high-tech manufacturing requires employees with highly technical job skills. Such workers are scarce, making recruiting and retention more important and more difficult. 11  09. HUMAN RESOURCE MANAGEMENT The Human Resource Challenge Increased demand for temporary or part- time work. Multigenerational workforce. Increased benefit demands and low costs. Shortages of trained workers in growth areas and construction trades. Concern over child and elder care, health Growing percentage of undereducated and mental well-being, workplace and unprepared new workers. violence. Increasing number of single-parent and Changing health care regulations two-income families. A decreased sense of employee loyalty. Change in attitude towards work. Automated HRM systems. 12  09. HUMAN RESOURCE MANAGEMENT Human Resource Planning Process 1. Preparing a human resource inventory of employees. 2. Preparing a job analysis. 3. Assessing future human resource demand. 4. Assessing future labor supply. 5. Establishing a strategic plan. 13  09. HUMAN RESOURCE MANAGEMENT Job analysis A study of what is done by employees who hold various job titles. It Includes: Job description: A summary of the objectives of a job, the type of work to be done, the responsibilities and duties, the working conditions, and the relationship of the job to other functions. Job specifications: A written summary of the minimum qualifications required of workers to do a particular job. https://www.ergodotisi.com/en/ 14 Internal sources are often given first consideration, so it’s useful to get a recommendation from a current employee of the firm for which you want to work. University placement offices are also an important source. 15  09. HUMAN RESOURCE MANAGEMENT Selection The process of gathering information and deciding who should be hired, under legal guidelines, for the best interests of the individual and the organization. Steps in the selection process: 1. Obtaining complete application forms. 2. Conducting initial and follow-up interviews. 3. Giving employment tests. 4. Conducting background investigations. 5. Obtaining results from physical exams. 6. Establishing trial (probationary) periods. 16  09. HUMAN RESOURCE MANAGEMENT Training and Development All attempts to improve productivity by increasing an employee’s ability to perform. Training focuses on short-term skills, where as development focuses on long-term abilities. Three steps: 1. Assessing organizational needs and employee skills to determine training needs (Gap). 2. Designing training activities to meet identified needs. 3. Evaluating the training’s effectiveness. 17  09. HUMAN RESOURCE MANAGEMENT Management Development The process of training and educating employees to become good managers and then monitoring the progress of their managerial skills over time. Management training includes: On-the-job coaching. Understudy positions. Job rotation. Off-the-job courses and training. 18  09. HUMAN RESOURCE MANAGEMENT Mentor An experienced employee who supervises, coaches, and guides lower-level employees by introducing them to the right people and generally being their organizational ‘buddy’. 19  09. HUMAN RESOURCE MANAGEMENT Six Steps of Performance Appraisals 1. Establishing performance standards that are understandable, measurable, and reasonable. 2. Clearly communicating those standards. 3. Evaluating performance against the standards. 4. Discussing the results with employees. 5. Taking corrective action. 6. Using the results to make decisions. 20  09. HUMAN RESOURCE MANAGEMENT Compensation A main tool companies use to attract qualified employees, and one of their largest operating costs. A managed and competitive compensation program helps: Attract the kinds of employees the business needs. Build employee incentive to work efficiently and productively. Keep valued employees from going to competitors or starting their own firm. Provide employee financial security through wages and fringe benefits. 21  09. HUMAN RESOURCE MANAGEMENT Fringe Benefits Fringe benefits include incentives like company cars, paid and unpaid sabbaticals, day care and elder care services, student loan debt payment, etc. Soft benefits include on-site haircuts, free meals at work, concierge services, etc. Cafeteria-style fringe benefits — Fringe benefit plan that allows employees to choose the benefits they want up to a certain dollar amount. 22  09. HUMAN RESOURCE MANAGEMENT Flextime Plans Gives employees some freedom to choose which hours to work. Most flextime plans require core time. Core Time: The period when all employees are expected to be at their job stations. Communication among employees can be difficult under flextime, and managers must be alert to any system abuses. 23  09. HUMAN RESOURCE MANAGEMENT At this company, employees can start work anytime between 6:30 and 9:30 a.m. They take a half hour for lunch anytime between 11:00 a.m. and 1:30 p.m. and can leave between 3:00 and 6:30 p.m. Everyone works an eight-hour day. The blue arrows show a typical employee’s flextime day. 24  09. HUMAN RESOURCE MANAGEMENT Work From Home Employers benefit because it can limit absences, increase productivity, and save money. Companies also offer “hot-desking,” or sharing a desk with other employees who work at different times. 25  09. HUMAN RESOURCE MANAGEMENT Optional. Think about the Benefits and Challenges of WFH https://freakonomics.com/podcast/the-unintended-consequences-of- working-from-home/ 26  09. HUMAN RESOURCE MANAGEMENT Work From Home Benefits Challenges Increases productivity due to Makes it more difficult to appraise fewer sick days, fewer job performance. absences, higher job Can negatively affect the social satisfaction, and higher work network of the workplace and can To performance ratings. make it difficult to promote team Organization Broadens available talent pool. cohesiveness. Reduces costs of providing on- Complicates distribution of tasks site office space. (should office files, contact lists, and such be allowed to leave the office?) 27  09. HUMAN RESOURCE MANAGEMENT Work From Home Benefits Challenges Makes more time available for Can cause feeling of isolation from work and family by reducing or social network. eliminating commute time. Can raise concerns regarding Reduces expenses of buying and promotions and other rewards due to maintaining office clothes. being out of sight, out of mind. To Individual Avoids office politics. May diminish individual’s influence Helps balance work and family. within company due to limited opportunity to learn the corporate Expands employment culture. opportunities for individuals with disabilities. 28  09. HUMAN RESOURCE MANAGEMENT Work From Home Benefits Challenges Decreases traffic congestion. Increases need to resolve zoning regulations forbidding business Discourages community crime deliveries in residential that might otherwise occur in To Society neighborhoods. bedroom communities. May reduce ability to interact with Increases time available to build other people in a personal, intimate community ties. manner. 29  09. HUMAN RESOURCE MANAGEMENT Mandatory. Think about the job promotion process https://freakonomics.com/podcast/why-are-there-so-many-bad- bosses/#:~:text=Laurence%20PETER%3A%20The%20Peter%20principle ,to%20his%20level%20of%20incompetence. 30  09. HUMAN RESOURCE MANAGEMENT Terminating Employees Uncertain economic conditions lead to layoffs and firings. Even when the economy is booming, employers are hesitant to hire full-time workers because of the cost of termination. Firing employees is more difficult for employers because of laws preventing termination for certain acts. 31  09. HUMAN RESOURCE MANAGEMENT Retiring Employees Downsizing with early retirement. Can include one-time cash payments, known in some companies as golden handshakes. Increases morale of surviving employees. 32  09. HUMAN RESOURCE MANAGEMENT Losing Valued Employees Conducting exit interviews lets the company know the reasons for the employee leaving. Offboarding is the process surrounding employee exits. 33 ANY QUESTIONS? 34  10. MARKETING Marketing The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings with value for customers, clients, partners, and society at large. 35  10. MARKETING 1. Transactional Exchanges Occur independently of any previous or subsequent exchanges Short-term orientation primarily motivated by self-interest. 2. Relational exchanges Long-term orientation Develop between parties who wish to build and maintain long- term relationships 36  10. MARKETING Relationships become stronger as the frequency of exchanges increases. As exchanges become more frequent so the intensity of the relationship strengthens, so that the focus is no longer on the product or price within the exchange but on the relationship itself. 37  10. MARKETING Recently there has been a substantial movement towards establishing Relational Exchanges. Customer relationship marketing or loyalty marketing programmes. 38 10. MARKETING 39 10. MARKETING 40  10. MARKETING Product What should we develop and why? Any physical good, service, or idea that satisfies a want or need plus anything that would enhance the product in the eyes of consumers. Price What is an appropriate price that consumers are willing and able to pay? Competitors’ prices? Production costs? Distribution? Promotion? 41  10. MARKETING Place Where should we place our products? Intermediaries are important because getting a product to consumers when and where they want is critical. Promotion How should we inform people about our product? Advertising, Personal selling, Public relations, Publicity, Word of mouth, Sales promotions. 42  10. MARKETING Brand name: A word, letter, or group of words or letters that differentiates one seller’s goods and services from those of competitors. 43  10. MARKETING Marketing Research The analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions. Research is used to identify products consumers have used in the past and what they want in the future. Research uncovers business trends, the ecological impact of decisions, global trends, and more. 44  10. MARKETING The Marketing Research Process Defining the Question and Determining the Present Situation: What’s the present situation? What are the problems or opportunities? What are the alternatives? What information is needed? How should the information be gathered? 45  10. MARKETING Collecting Data Secondary data Information that has already been compiled by others and published in journals and books or made available online. Incurs no expense and is usually easily accessible. Doesn’t always provide all the needed information for marketers. Primary data Data that you gather yourself (not from secondary sources). Telephone, online and mail surveys, personal interviews, and focus groups. *Focus group A small group of people who meet under the direction of a discussion leader to communicate opinions. 46  10. MARKETING Analyzing the Research Data. Marketers must turn data into useful information through careful, honest interpretation. Choosing the Best Solution and Implementing It. Marketers use their analysis to plan strategies and make recommendations. Finally, marketers must evaluate their actions and determine if further research is needed. 47  10. MARKETING Market Segmentation Consumer market (B2C) All the individuals or households that want goods and services for personal consumption or use. Business-to-business (B2B) market All the individuals and organizations that want goods and services to use in producing other goods and services or to sell, rent, or supply goods to others. 48  10. MARKETING Consumer Markets The size and diversity of the consumer market forces marketers to decide which groups they want to serve. Market segmentation — Dividing the total market into groups whose members have similar characteristics. Target marketing — Marketing directed toward those groups an organization decides it can serve profitably. 49  10. MARKETING Segmenting the Consumer Market Geographic segmentation — Dividing the market by cities, counties, states, or regions. Demographic segmentation — Dividing the market by age, income, and education level. Psychographic segmentation — Dividing the market using the group’s values, attitudes, and interests. Benefit segmentation — Dividing the market by determining which benefits of the product to talk about. Volume (or usage) segmentation — Dividing the market usage (volume of use). 50  10. MARKETING The best segmentation strategy is to use all the variables to come up with a consumer profile that represents a sizable, reachable, and profitable target market. Niche marketing: Finding small but profitable market segments and designing or finding products for them. 51  10. MARKETING Building Marketing Relationships Mass marketing: Developing products and promotions to please large groups of people. *Uses little market segmentation. Relationship marketing: Keeping individual customers over time by offering them products that exactly meet their requirements. *Tends to lead away from mass production and toward custom-made goods and services. 52  10. MARKETING The Consumer Decision-Making Process 1. Problem recognition. 2. Information search. 3. Evaluate alternatives. 4. Purchase decision. 5. Postpurchase evaluation. Factors that affect consumer behavior: Learning. Reference group. Culture. Subculture. Cognitive dissonance. 53  10. MARKETING Business-to-Business Markets: Manufacturers. Retailers. Hospitals, schools, and nonprofits. Government. Products are often sold and resold several times before reaching final consumers. 54  Both Mandatory. Think about Market Segmentation and Effectiveness https://freakonomics.com/podcast/does-advertising-actually-work-part-1-tv- https://freakonomics.com/podcast/does-advertising-actually-work-part-2- ep-440/ digital-ep-441/ 55 ANY QUESTIONS? 56  11. ACCOUNTING AND FINANCE What Is Accounting? The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other stakeholders the information they need to make informed decisions. 57  11. ACCOUNTING AND FINANCE The Accounting System 58  11. ACCOUNTING AND FINANCE Users of Accounting Information and Required Reports Users Type of Report Government taxing authorities (for example, the Tax returns Internal Revenue Service) Government regulatory agencies Required reports People interested in the organization’s income and Financial statements found in annual reports (for financial position (for example, owners, creditors, example, income statement, balance sheet, financial analysts, suppliers) statement of cash flows) Financial statements and various internally Managers of the firm distributed financial reports 59  11. ACCOUNTING AND FINANCE Accounting Cycle A six-step procedure that results in the preparation and analysis of the major financial statements. Bookkeeper’s Role Bookkeeping: The recording of business transactions. *Bookkeepers divide a firm’s transactions into meaningful categories and post them into a record book or computer program called a journal. Double-entry bookkeeping — The practice of writing every business transaction in two places; done so they can check one list of transactions against the other for accuracy. 60  11. ACCOUNTING AND FINANCE The Six-Steps in the Accounting Cycle 61  11. ACCOUNTING AND FINANCE The Balance Sheet Balance sheet Financial statement that reports a firm’s financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners’ equity. The assets are equal to, or balanced with, the liabilities and owners’ (or stockholders’) equity 62  11. ACCOUNTING AND FINANCE Classifying Assets Assets - Economic resources (things of value) owned by a firm; items can be tangible or intangible. Liquidity - The ease with which an asset can be converted into cash. Three categories of assets: 1. Current assets — Items that can or will be converted into cash within one year. 2. Fixed assets — Assets that are relatively permanent, such as land, buildings, and equipment. 3. Intangible assets — Long-term assets (for example, patents, trademarks, copyrights) that have no physical form but do have value. 63  11. ACCOUNTING AND FINANCE Liabilities and Owners’ Equity Accounts Liabilities - What the business owes to others (debts). Common liability accounts: Accounts payable: Current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for. Notes payable: Short-term or long-term liabilities that a business promises to pay by a certain date. Bonds payable: Long-term liabilities that represent money lent to the firm that must be paid back. 64  11. ACCOUNTING AND FINANCE Liabilities and Owners’ Equity Accounts Owners’ equity The amount of the business that belongs to the owners minus any liabilities owed by the business. The formula is assets minus liabilities. Retained earnings The accumulated earnings from a firm’s profitable operations that were reinvested in the business and not paid out to stockholders in dividends. 65  11. ACCOUNTING AND FINANCE The Income Statement Income statement The financial statement that shows a firm’s profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm, expenses, and the resulting net income or net loss. Net income or net loss Revenue left over after all costs and expenses, including taxes, are paid. 66  11. ACCOUNTING AND FINANCE The formula for the income statement is: Revenue − Cost of goods sold = Gross profit (gross margin) − Operating expenses = Net income before taxes − Taxes = Net income or loss 67  11. ACCOUNTING AND FINANCE Revenue Revenue is the monetary value a firm received for goods sold, services rendered, or other payments. Cost of Goods Sold A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale. Gross profit (or gross margin) How much a firm earned by buying (or making) and selling merchandise. 68  11. ACCOUNTING AND FINANCE Operating Expenses Costs involved in operating a business, such as rent, utilities, and salaries. Depreciation The systematic write-off of the cost of a tangible asset over its estimated useful life. Selling expenses are related to the marketing and distribution of the firm’s goods or services, such as advertising, salespeople’s salaries, and supplies. General expenses are administrative expenses of the firm such as office salaries, insurance, and rent. 69  11. ACCOUNTING AND FINANCE The Statement of Cash Flows Statement of cash flows Financial statement that reports cash receipts and disbursements related to a firm’s three major activities Three major activities of a firm: Operations. Investments. Financing. 70  11. ACCOUNTING AND FINANCE Cash flow The difference between cash coming in and cash going out of a business. Managing cash flow is a key consideration of a business. Buying goods on credit can be a problem. 71  11. ACCOUNTING AND FINANCE Financial Management The job of managing a firm’s resources to meet its goals and objectives. Financial managers Examine financial data and recommend strategies for improving financial performance. They are responsible for: Obtaining funds. Effectively controlling use of funds. 72  11. ACCOUNTING AND FINANCE What Financial Managers Do 73  11. ACCOUNTING AND FINANCE What Worries Financial Managers Market unpredictability. Interest rates. Cyberthreats. Financial regulations from the government. Volatility of the dollar. Foreign competition. Environmental regulations. 74  11. ACCOUNTING AND FINANCE Financial Planning Involves analyzing short-term and long-term money flows to and from the company. Three key steps: 1. Forecasting the firm’s short-term and long-term financial needs. 2. Developing budgets to meet those needs. 3. Establishing financial controls to see if the company is achieving its goals. 75 11. ACCOUNTING AND FINANCE 76  11. ACCOUNTING AND FINANCE Forecasting Financial Needs Short-term forecast predicts revenues, costs, and expenses for a period of one year or less. Long-term forecast predicts revenues, costs, and expenses for a period longer than one year and sometimes as long as five or ten years. 77  11. ACCOUNTING AND FINANCE Working with Budgets Budget Sets forth management’s expectations and allocates the use of specific resources throughout the firm. Budgets depend heavily on the balance sheet, income statement, statement of cash flows, and short-term and long-term financial forecasts. The budget is the guide for financial operations and expected financial needs. 78  11. ACCOUNTING AND FINANCE Working with Budgets Capital budget Highlights a firm’s spending plans for major asset purchases that often require large sums of money. Cash budget Estimates cash inflows and outflows during a particular period like a month or quarter. Operating (or master) budget Ties together all the firm’s other budgets and summarizes its proposed financial activities. 79  11. ACCOUNTING AND FINANCE Establishing Financial Controls Financial control A process in which a firm periodically compares its actual revenues, costs, and expenses with its budget. Most companies hold at least monthly financial reviews. Identifies variances to the financial plan and allows the firm to take corrective action. 80 ANY QUESTIONS? 81 FREE MINDS FLOURISH THANK YOU 82