Intro Bus 9 & 14

Finance
The activities required to decide how to invest a company’s capital so it generates additional cash, profit and capital in the future and increase profitability
Highest returns
Investments that generate
do so because their payoff is uncertain and highly risky
operating cycle begins
when a company purchases an inventory of raw materials and components inventory
longer the operating cycle
the longer a company’s working capital is tied up in its business.
least risky strategy for investors
to preserve the value of their capital is to find an investment that allows them to lock up their capital for the shortest possible period of time.
Riskier
when investors tie up their funds for a long period of time
breakeven point
The sales level that just covers all costs and expenses associated with a product
loss
all sales levels below the break even point result
cash reserves, secured loans and unsecured loans.
Short-term financing methods include
valuable assets
are pledged to guarantee that a loan will be repaid.
Unsecured loan
a loan that isn’t backed by collateral or valuable assets
Spending retained earnings, Issuing debt securities, and Selling equity securities
Long-Term Financing Methods include
Debt securities
the most common type are bonds.
Bonds
A certificate of a loan to a corporation that is repaid with interest at a future time.
the U.S. government
The biggest bond issuer of all
Equity Securities
– Stock certificates a company issues giving their owners legal rights to a company’s assets.
Blue chip stocks
– stocks of the most prestigious companies
Growth stocks
– stocks perceived to have the potential to generate high cash flows and profits
Management
achievement of the goals of an organization through planning, organizing, leading, and controlling organizational resources.
Planning
determining organizational goals and action plans for how to achieve those goals. In other words, it means figuring out where the business wants to go, and how to get there.
Organizing
determining a structure for both individual jobs and the overall organization.
Leading
directing, inspiring, and motivating individuals to achieve organizational goals.
top, middle, 1st line.
There are three basic levels of management
Middle Management
manages persons in supervisory roles.
Middle management must
communicate up and down the pyramid to coordinate programs and projects to accomplish organizational goals
First line management
people who train, motivate and evaluate nonmanagement employees.
First Line managers must
have a high degree of technical skills to carry out their main responsibilities.
Middle-level managers
must have a high degree of human skills, because they act as the bridge between departments, coordinating people and projects.
physiological needs
are met when individuals have what is required for basic survival—food, water, clothing, and shelter.
safety needs
are met when individuals feel secure and free from harm or fear.
social needs are met
when individuals feel connected to others in a positive corporate culture.
esteem needs are met
at work when employees are acknowledged for hard work and recognized with pay raises and promotions.
self-actualization needs are met
when employees realize their full potential by having challenging jobs and feeling as if their work helps achieve a greater good.
Expectancy theory
based on the key concept that workers will be motivated if they believe that their effort will lead to good performance, and good performance will lead to a meaningful reward.
attributed to victor vroom
expectancy theory
Equity theory
perceptions of fairness directly impact worker motivation.
Strategic planning
focuses on establishing an organization’s long-term objectives, determining broad action steps, and allocating resources.
The mission defines
the organization’s purpose, values, and core goals, providing the framework for all other plans.
Organization chart
– the visual representation of the company’s formal structure.
A line organization
typically has a clear, simple chain of command from top to bottom.
A matrix organization
creates flexibility as it brings together specialists from different areas of the company to work temporarily on individual projects.
Autocratic leaders
hoard decision-making power for themselves and typically issue orders without consulting their followers.
Initial public offering (IPO)
is the first time the company owners offer their stocks for sale to the public.