BA 101 CH 1-4

free market/capitalism
all aspects are based on supply and demand in market, government encourages free and fair competition
requirements for free market
private property, freedom of choice, fair competition, and right to keep benefits
factors of production
raw materials, tools/equipment, and labor
two types of cost
economic cost and opportunity cost
marketing
provide goods/services that satisfy customers, creating customer value
accounting
tracks, summarizes, and analyzes financial position
production
making products
finance
funding and using resource efficiently
a market
group of people who have similar needs, similar buying characteristics, and the ability to purchase
four P’s
product, price, placement, and promotion
results of competition between suppliers
lower prices, newer/better products, and more efficient processes
manager’s four functions
planning, organizing, leading/directing, and controlling
market research
determine needs of customer by gathering, recording, and analyzing data about consumers’ likes, dislikes, and behaviors
market mix
determine how to satisfy those needs (4 P’s+service)
market strategy
analyze its competitive advantages, plans, and actions to find the target market
target marketing
select specific markets to serve
law of diminishing returns
after a certain point spending money will result in a lower return per dollar
consumer behavior
process in choosing a product and how they use/dispose of it
research and development
invents new products and changes existing ones (repositions on perceptual map)
R&D addresses…
positioning of product in market segment on the perceptual map, # of products in each segment, age of products, and MTBF rating
Customer Survey Score criteria
product positing (performance/size), MTBF, price, age, awareness, accessibility, and accounts receivable policy
product revisions/changes affect on age
divide age by 2
promotion budget creates
awareness
sales budget creates
accessibility
market growth estimate
– for entire market = # of units sold x (1+growth rate)
– for your product = # of yours units sold x (1+growth rate)
seller market
demand > sales, raise prices above range
buyers market
demand <= sales, lower prices to attract
market share estimate
calculate demand for next year –> multiply demand by actual/potential % share
counting products method
# of products in segment/ # of competitors = amount for each competitor to sell
December customer survey score method
add up DCS scores for all products –> divide your DCS by the total to get % –> multiply DCS share by next years total demand
management accounting
provide info that enables inside managers to make more informed and effective decisions on planning, operating, and controlling a company’s activities
financial accounting
identifying, measuring, recording, accumulating, and communicating economic info about company for external users to analyze
three key management accounting reports
budgets, cost analysis, and manufacturing cost reports
balance sheet
“snap shot” on a given date, assets=liabilities+equity
income statement
results of operating activities over a period of time, tracks revenues and expenses
cash flow statement
do we have enough cash to answer financial obligations when due?
retained earnings
re-invested by owners
common stock
initial “paid in” by owners
economies of scale
when the cost of each good produced decreases as the volume produced increases
just-in-time inventory
reduces carrying costs
supply chain management
plan (manage resources needed), source (selection of suppliers), make (manufacturing steps), deliver (getting products/services through channel), return (return policy for customers)
how to estimate production
the most you should produce: take lowest forecast and add 2 months worth of sales
the least you should produce: take highest forecast and add one unit
-find number between range
-subtract units already in inventory
inventory requirements
minimum = one unit
maximum = 2 months of production
as size of the product increases…
material costs decrease
# of total units able to produce =
2 x capacity
adding capacity formula
(units x $6)+($4 x automation level x units)
to calculate the value of a company
# of outstanding shares x stock price
Total Quality Management (TQM)
improve product and production techniques
TQM objectives
– educate/train employees
– encourage increased responsibility
– discover production improvements
complement
# of workers
– needed complement is the # of workers required to fill first shift without overtime
caliber
talent of workforce
– more $ spent, the better quality workers
training
investment of time
– each hour costs $20 and takes people off of the job
Q: Sales forecasting is often challenging due to
A: many unpredictable variables that influence decisions of your market customers
Q: Primary focus of a business
A: create wealth for owners
Q: One attribute in competing in a private enterprise is that competitors are motivated to offer customers
A: value
Q: ____ determines what the organization needs to do and how to get it done.
A: planning
Q: Organizing may be described as
A: arranging the organization’s resources and activities in a way so that it is possible to accomplish the plan
Q: Which business activity requires funding the business and using its resources effectively?
A: finance
Q: A free market system is also known as
A: private enterprise/capitalism
Q: Individual’s self-interest promotes
A: value, competition, and innovation
Q: A change in mean time before failure MTBF has what effect on the age of the product?
A: it has no effect on the age of the product
Q: Price, place, promotion, and product are all aspects of what?
A: marketing
Q: Efficient means
A: doing the things right
Q: Distribution is best described as
A: getting product to a place where customers can get it
Q: Marketing strategy is most successful when it has
A: customer orientation
Q: In a capitalist market, individual citizens own and operate the majority of businesses and the ____ determines the distribution resources.
A: market
Q: The principal elements of economics include
A: price, supply, and demand
Q: What process allows managers to manage in an uncertain and risky environment?
A: managing
Q: How would you describe the concept of scarcity?
A: our wants are greater than the resources available to satisfy them
Q: What is the 5th aspect of marketing strategy?
A: service
Q: Debts of the business that will be repaid within one year are
A: current liabilities
Q: The ____ statement that includes assets, liabilities, and equity
A: balance sheet
Q: In Foundation variable costs are
A: costs involving in producing the product
Q: Adam Smith’s invisible hand is
A: a driving force that causes competition due to self interest and includes moral empathy towards others
Q: What is a market?
A: any mechanism that facilitates exchange of goods and services between buyers and sellers.
Q: Primary market research is
A: Conducting direct research with existing and potential customers
Q: The private enterprise system requires the existence of four conditions including
A: private property, freedom of choice, fair competition, and right to keep profits
Q: Market segmentation identifies customers on the basis of their needs regarding
A: geography, demographics, and psychographics
Q: What is market segmentation?
A: identifying and grouping potential customers by geographic, demographic, and psychographic attributes according to common characteristics and needs
Q: In a command economy the governments job is to
A: control what goods/services are produced , their quantity, and the prices (gov controls economy)
Q: Measuring performance, comparing outcomes to the established plan, and adjusting for future success is
A: controlling
Q: The perceptual map evaluates and compares
A: the position of products
Q: What will change a products’ position on the perceptual map?
A: a change in size and performance
Q: In Foundation which market segment is more sensitive to product position and less sensitive to price?
A: high tech
Q: The information presented in the income statement could be presented by this equation
A: sales (revenue) = price per unit x units sold
Q: Which of the following best describes the term retained earnings?
A: profits reinvested in the business
Q: The accounting system generates info about
A: operating the business
Q: What is the difference between contribution margin and gross margin?
A: gross margin includes depreciation expense
Q: What are examples of current assets?
A: cash, accounts receivable, and invetory
Q: What helps managers plan, operate, and manage a company’s activities?
A: management accounting
Q: Financial document that shows revenues, expenses, and profits over a period of time is
A: income statement
Q: The two major classifications of those who have claims against affirms assets are
A: The stockholders and those associated with the company’s liabilities.
Q: Contribution margin is calculated by
A: total revenue – variable costs
Q: The terms of a loan state that this debt must be paid back within the next 10 months. Therefore it is a
A: current liability
Q: Owner’s equity account includes owners’ investment and
A: retained earnings
Q: Capacity involves
A: the ability of your machinery to produce a specified quantity of product each year
Q: The collection of production partners such as manufactures,whole -salers, distributers, retailers, and online sales sites is referred to as
A: the supply chain
Q: The cost associated with the remaining number of products in inventory (stored in the warehouse) at the end of the year are
A: carrying costs
Q: In foundation what decisions can you make to improve your contribution margin without having a negative impact on the number of units you sell
A: increase automation
Q: In foundation what decisions can you make to increase your contribution margin?
A: all of the above
Q: Raw materials involve
A: cost of goods to create produce
Q: TQM expenditures beyond ____ over 2 or 3 years on a particular initiative push well into _____.
A: 2 million dollars and diminishing returns
Q: Investing in benchmarking will reduce
A: Administration overhead
Q: If you spend too much or too little ($) the returns in TQM may be modest
A: True
Q: The number of workers in the workforce is referred to as
A: complement
Q: In the broadest sense, TQM enables companies to improve
A: efficiently and productivity
Q: How is increasing the Account Receivable lag an investment in your company?
A: form of promotion and will attract customers because they may have longer time frame before they need to pay you compared to your competitors