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87 terms

MGT 11 Final Exam

STUDY
PLAY
New Management Approaches
Focus on global competition, technology, customer expectations, better educated employees, and team-building
Management Skills
Technical; Human relations; conceptual skills
Four Classic Management Functions
Plan, Organize, Control, Direct
Plans
starts with a statement of vision and mission
Organizes
within micro (individual) or macro (corporate) level
Controls
auditing performance
Directs
communicating, promoting ethics, embracing change
Leadership Styles
Autocratic; Laissez-Faire; Democratic
Autocratic Leadership
"Do as I say"
Laissez-Faire Leadership
"Come to me only if there's a problem"
Democratic Leadership
"What does everybody think?"
Fayol's Principles of Organization
(a.k.a. Unity of Command) employees should be given non-conflicting orders from superiors; no one should have more than one supervisor; frustration and conflict will occur if this principle is not followed
Chain of Command Principle
organizations should have a well-defined chain of command; problems should be resolved at lowest level; "jumping" the chain is disruptive and ill-advised
Span of Control Principle
number of workers depends on capabilities of subordinates and manager; depends on complexity of job, geography, functional similarity, need for coordination, and planning demands
Bureaucracy
Max Weber believes the elements are regulations, promotions based on qualifications, and job descriptions; turns bad when rules and regulations override common sense
Tall Organization Definition
Centralized-decision making; strict adherence to principles of management; narrow span of control; unity of command is strictly followed; well defined chain of command
Tall Organization Pros & Cons
Pros: increased uniformity; stronger brand image; maximum managerial control; worked well during era of mass production
Cons: over-reliant on rules; many decision making layers= slow response; costly; benefits managers not customers
Flat Organization Definition
Few layers of management; decentralized decision making (teams and workers); less rigid in following classic principles
W. Edwards Deming
Pioneered Total Quality revolution in the 1950s; sent to help rebuild Japan's economy post WWII; recognized that identifying defecting end product only was ineffective way to achieve quality products
Total Quality Principles
emphasize teamwork
empower employees
strive for constant improvement
drive out fear of authority
END RESULT: flatter more efficient organizations
Maslow's Hierarchy of Needs
Physiological/biological needs --> safety/security needs --> social needs --> esteem needs --> self-actualization
Frederick Herzberg
Noted that there is a difference between just being satisfied and being motivated (between liking your job and loving it); theory of Motivation-Hygiene
Motivation-Hygiene Theory
Motivators: comes from nature of work itself of job content (sense of achievement, challenge of work, responsibility, potential for growth)
Potential Dis-satisfiers: (Hygiene factors) work environment, salary, benefits, supervisors, co-workers
Job Enrichment Theory
1. re-design the job itself for the employee (job rotation, job enlargement)
2. bestow significance to the job
3. provide employees more autonomy
4. give and get better feedback
Equity Theory
equity= ownership & fairness
perception is based on comparison to others; actuality is secondary; employer must be able to explain disparities
Market
noun: a group of consumers with an identified need
verb: to market a product is to find and fill a need using a combination of the right product, price, placement, and promotion
Qualification for a Market
1. desire
2. financial ability
3. authority to purchase the product
Business to Business Market
purchases are characterized by more rational decision-making; not swayed by advertising and sales
Business to Consumer Market
purchase often driven by combination of reason and emotion; advertising is very important
Four P's of Marketing
1. Product
2. Price
3. Place
4. Promote
Approaches of Marketing
1. Undifferentiated Approach- single product
2. Market Segmentation- demographics, psychographic (attitude & lifestyle), geographic, benefit (comfort, safety, health), frequent buyer
Pure risk
potential for loss with no potential for gain
Exposure to Risk
1. accidental death or injury
2. losses to natural disasters
3. risk of being sued for negligence
4. risk of being robbed
Four Ways to Manage Risk
1. Avoid exposure
2. Reduce the risk to minimize loss through education, regulation, technology, etc.
3. Transfer the risk to others (buying insurance)
4. Self-insure (deductible)
Criteria to be Insurable
1. You must have an insurable interest
2. The loss must have a $ value
3. Loss must be accidental
4. Risk must be geographically dispersed
5. Chance of loss must be measurable/predictable
The Law of Large Numbers
If a large # of people are exposed the same risk, a predictable # of losses will occur during a given period of time; allows insurers to calculate chances that a loss will occur
Rule of Indemnity
Cannot collect more than the actual loss
Net worth
Assets-liabilities
401k
an employer-provided savings/investment program, i.e., a benefit; up to 15% of salary; should diversify portfolio
Individual Retirement Account (IRA)
a way for someone to build a nest egg for retirement; can put in as much as $5k/year; taxes can be deferred until withdrawal
Roth IRA
money grows and can be withdrawn tax-free; recommended for new investors
Credit Card Advantages
1. Convenient
2. Can be used in financial emergencies
3. Required to rent car, book flight, etc.
Credit Card Disadvantages
1. Temptation to overspend
2. Will pay forever
3. Potential for poor credit ratings
4. High interest rates & annual fees
Considerations When Choosing a Credit Card
1. Low interest rates
2. Compare yearly charges
3. Penalties
4. Benefits
5. Interest is on "balance due" not "average daily balance"
6. Grace Period
Pyramid of Wealth
Bottom: savings, CDs, money market funds, term life insurance (emergency funds accessible only when needed)
Middle: growth stocks and mutual funds that accumulate during earning years
Top: blue chip stocks; corporate and government bonds for income/distribution during retirement years
Mutual Funds
can start with a small amount; secret is to invest the same amount each month; growth stock for investors in their 20s
Common vs. Preferred Stock
Common: has voting rights
Preferred: guarantees a dividend
Owner's Equity
consists of both stock and retained earnings
Debt Financing
borrowing and paying interest
When it's smart to borrow...
invest borrowed $ for a greater return on your investment
When it's not smart to borrow...
when the return is less than the amount borrowed
Secured Loans
secured by collateral; results in lower interest rates
Unsecured Loans
"signature loans," higher interest rates
Long-Term Debt Financing
comes from banks or bonds
Bonds
investors loan money when they buy them; collect regular interest payments; issuer pays investor annual interest rate and the entire amount upon maturity; interest is tax-deductible
Equity Financing Pros & Cons
capital is obtained from firm's own money or other investors
Pros: Don't have to pay back; don't have to pay interest
Cons: Weakens cash position; give up control
Factoring
Selling accounts receivable
Blue Chip vs. Penny Stock
Blue Chip: stock in one of the company's listed at the top of the DOW
Penny: share in a company with low trade price
Buying stock "on margin"
buying stock with borrowed money
Fundamental Balance Equation
Assets = Liabilities + owner's equity
Current Assets
-cash
-accounts receivable
-short term notes
-ending inventory
(can be converted to cash quickly)
Fixed Assets
$ of buildings
$ value of vehicles, equipment, etc.
$ land
Intangible Assets
-goodwill
-patents
-copyrights
Current Liabilities
-accounts payable
-short term notes
-accrued salaries
-accrued taxes
Long-term Liabilities
-long term notes (loans)
-corporate bonds
Income Statement Formula
1) Revenue - COGS = gross profit
2) Gross profit - expenses = net profit before taxes
3) NPBT - taxes = net profit
Revenue
what you received for what you sold
Liquidity Ratios
how quickly a firm can convert assets into cash
Current Ratio
Current Assets/ Current Liabilities
Acid Test
(cash + accts receivable + securities) / current liabilities
Leverage (Debt) Ratios
Total Liabilities / Owner's Equity
Profitability Ratios
EPS, Return on Sales, P/E ratio
Activity Ratios
COGS / Average Inventory Value
Bond Ratings
AAA to BBB = investment grade
rating based on credit worthiness
low rating = higher risk = higher interest rate
Capitalism
Unequal set of results; underlying assumption: wealth can be created; "invisible hand"
Command Economies
Where government largely determines what goods and services are produced, who gets them, and how the economy will grow
Democratic Socialism
Emphasizes social equality but results in very high taxation, less incentive to innovate, brain drain
Free-Market System
When the market largely determines what goods and services are produced, who gets them, and how the economy will grow
Federal Government Economic Goals
1. Economic growth
2. Full employment
3. Stable prices
Economic Indicators
1. GDP
2. Employment figures
3. Price stability
Federal Government Approach
1. monetary policy- control US money supply
2. fiscal- taxing and spending
Supply & Demand
As supply increase, price decreases.
As demand increases, price increase.
SMART Goals
Specific, Measurable, Attainable, Reasonable, Timeline
Workers Comp
State/Employer- provided insurance
Term Life Insurance
simple death protection
Whole Life Insurance
combination savings and insurance
Retained Earnings
money kept by a company (what is left after dividends, etc.)