EXAM 2 REVIEW Chapters 9- 18 EXAM 2 REVIEW McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved

Operations Management -- A specialized area in management that converts or transforms resources into goods and services. Used in both manufacturing and service industries. Operations management includes: Inventory management Quality control Production scheduling Follow-up services OPERATIONS MANAGEMENT LG2 From Production to Operations Management 9-3

All about creating a good experience for those who use the service. OPERATIONS MANAGEMENT in the SERVICE SECTOR LG2 Operations Management in the Service Sector In hotels, like Ritz- Carlton, operation management includes fine dining, fresh flowers, and training for every employee. 9-4

Form Utility -- The value producers add to materials in the creation of finished goods and services. When firms successfully produce products, they create form utility FORM UTILITY LG3 Production Processes 9-5

Process Manufacturing -- The part of production that physically or chemically changes materials. (boiling the egg) Assembly Process -- The part of the production process that puts together components. (egg, coffee, toast = breakfast) PROCESS and ASSEMBLY in PRODUCTION LG3 Production Processes 9-6

Production processes are either continuous or intermittent. Continuous Process -- Long production runs turn out finished goods over time. (exp: long conveyor belt with eggs that continuously are dropped into water continuous stream of 3 minute eggs) Intermittent Process -- Production runs are short and the producer adjusts machines frequently to make different products.(exp: a toaster in a diner or oven in a bakery) KEY PRODUCTION PROCESSES LG3 Production Processes 9-7

Quality Control Quality -- Consistently producing what the customer wants while reducing errors before and after delivery. Which is a never ending process lead to industry adoption of Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities. Detects problems early in the process QUALITY CONTROL LG4 Photo Courtesy of: Argonne National Laboratory 9-8

Materials Requirement Planning Materials Requirement Planning (MRP) -- A computer-based operations management system that uses sales forecasts to make sure parts and materials are available when needed. Enterprise Resource Planning (ERP) -- A newer version of MRP, is a computer application that enables a firm to combine computerized functions of all divisions and subsidiaries of the firm into a single, integrated software program that uses a single database. (including all functions like finance, HR, sales) MRP and ERP LG4 9-9

Purchasing Purchasing -- Is the operations management planning function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services. PURCHASING LG4 9-10

Just-in-Time Inventory Control Just-in-Time (JIT) Inventory Control -- The production process in which a minimum of inventory is kept 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. Problems can arise when suppliers are far awayenvironmental factors INVENTORY CONTROL LG4 9-11

INTRINSIC REWARDS Intrinsic Rewards -- Personal satisfaction you feel when you perform well and complete goals. Examples of Intrinsic Rewards: The Value of Motivation Pride in your performance Sense of achievement 10- 13

FREDRICK TAYLOR is known as the father of SCIENTIFIC MANAGEMENT Scientific Management -- Studying workers to find the most efficient ways of doing things and then teaching people those techniques. This was the dominant strategy for improving productivity during the early 1900s. Frederick Taylor: The Father of Scientific Management LG1 10- 14

MOTIVATING ACROSS the GENERATIONS The workplace is now 4 generations deep When reflecting upon the newer generation, each older generation says the same thing that the newer generation "breaks the rules. When unhappy employees leave a company, the firm normally ends up losing moneykeeping employees motivated is important for all businesses. Motivating Employees Across Generations LG8 10-15

MOTIVATING ACROSS the GENERATIONS Traditionalists (1925 - 1945) Lived through the Great Depression and World War II Baby Boomers (1946 1964) Experienced great economic prosperity, job security, optimism about their future Generation X (1965 1980) Raised in dual-career families, attended day care, feeling of insecurity about jobs Generation Y or Millennials (1980 2000) Raised by indulgent parents, used to many comforts like computers and cell phones Motivating Employees Across Generations LG8 10-16

Traditionalists and Baby Boomers in the WORKPLACE Traditionalists: prefer to communicate face-to-face. Their second choice of communication is by phone recordings often (like voicemail and automated answering systems) often frustrate them. Baby Boomers: Are the idealistic generation that were raised during a time of prosperity; Very focused on work; Do not embrace work-life balance as much as more recent generations LG8 Motivating Employees Across Generations 10-17

GENERATION X in the WORKPLACE -were raised by parents who placed a lot of focus on work; - they're parents' layoffs added to their insecurity, as well as the fact that they spent a lot of time in daycare situations; motivated by flexibility in the workplace - they are better than former generations at providing employee feedback; - they believe in work-life balance; - past lessons make them advocates of career security more than job security; - they are good at collaboration and consensus building - they are more free reign or democratic style of managers. LG8 Motivating Employees Across Generations 10-18

MILLENNIALS and the WORKPLACE - were raised by indulgent parents; - motivated by flexibility in the workplace - are very tech savvy; - are not rushing to find a job; more focused on choosing a career; - want employers who can adapt to them; - place importance on work-life balance and want managers who understand this; - are blunt, expressive, and image-driven; - they seem to multi-task better than previous generations LG8 Motivating Employees Across Generations 10-19

HUMAN RESOURCE MANAGEMENT (HRM) Human Resource Management -- The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating and scheduling employees to achieve organizational goals. HRMs role has grown because of: 1. Increased recognition of employees as a resource. 2. Changes in law that rewrote old workplace practices. LG1 Working with People is Just the Beginning 11- 21

DEVELOPING the FIRMS ULTIMATE RESOURCE The human resource job is now the job of all managers in an organization...harder job today as compared to previous decades. Developing the Firms Ultimate Resource Service and high-tech manufacturing requires employees with highly technical job skillsUS is facing a shortage in skilled employees Such workers are scarce, making recruiting and retention more important and more difficult LG1 11-22

CHALLENGES in FINDING HIGH-LEVEL WORKERS A shortage of trained workers in key areas Worker shortage in skilled trades An increasing number of baby boomers who delay retirement A declining economy with fewer full-time jobs Increasing benefit demands and benefit costs A decreased sense of employee loyalty higher turn over A shift in employee attitudes toward work. Leisure time has become a much higher priority, as have flextime and a shorter workweek. The Human Resource Challenge LG1 11-23

HIRING CONTINGENT WORKERS Hiring Contingent Workers Contingent Workers -- Include part-time and temporary workers, seasonal workers, independent contractors, interns and co-op students. There are about 5.7 million contingent workers in the U.S. Majority of contingent workers are under 25; no health care; benefits. LG5 11-24

WHY HIRE CONTINGENT WORKERS? Companies hire contingent workers: When full-time workers are on leave During periods of peak demand In uncertain economic times To save on employee benefits To screen candidates for future employment LG5 Hiring Contingent Workers 11-25

MOST COMMONLY USED TRAINING and DEVELOPMENT ACTIVITIES Orientation On-the-Job Training Apprenticeships Off-the-Job Training -- higher education Online Training Vestibule Training near by classroom setting Job Simulation real conditions LG6 Training and Developing Employees for Optimum Performance 11-26 Note: Be sure you can identify and describe these!!!

USING NETWORKS and MENTORING Networking Networking -- Establishing and maintaining contacts with key managers in and out of the organization and using those contacts to develop relationships. Mentors -- Managers who supervise, coach and guide selected lower-level employees by acting as corporate sponsors. LG6 11-27

ORGANIZED LABOR LG1 Employee - Management Issues 12-29 Unions -- Employee organizations whose main goal is to represent members in employee- management negotiations of job-related issues. Historically, managers were more concerned with productivity and less concerned with safety, friendly relations with coworkers, fair wages, etc. Labor unions were responsible for: Minimum wage laws Overtime rules Workers compensation Job-safety regulations

TACTICS USED in CONFLICTS Tactics used by management include: Lockouts Injunctions Strikebreakers LG4 Management Tactics 12-30

LOCKOUTS, INJUNCTIONS and STRIKEBREAKERS Lockout -- An attempt by management to put pressure on workers by closing the business, thus cutting off workers pay. Injunction -- A court order directing someone to do something or refrain from doing something. Strikebreakers -- Workers hired to do the work of striking workers until the labor dispute is resolved; called scabs by unions. (Unions call them Scabs) Management Tactics LG4 12-31

TACTICS USED in CONFLICTS when collective bargaining/negotiations fail Tactics used by labor unions include: Strikes Boycotts Work Slowdowns Pickets Tactics Used in Labor- Management Conflicts LG4 12-32

STRIKES and BOYCOTTS Strikes -- A strategy in which workers refuse to go to work. Primary Boycott -- When a union encourages both its members and the general public not to buy the products of a firm in a labor dispute. Secondary Boycott -- An attempt by labor to convince others to stop doing business with a firm that is the subject of a primary boycotthurts other businesses not directly involved. Prohibited by Taft-Hartley Union Tactics LG4 12-33

LABOR UNIONS in the FUTURE Union membership will include more white- collar, female and foreign-born workers than in the past. Unions will take on a greater role in training workers, redesigning jobs and assimilating the changing workforce. Unions will seek more job security, profit sharing and increased wages. LG4 Future of Unions and Labor- Management Relations 12-34

Marketing today involves helping the buyer buy through: Websites that help buyers find the best price, identify product features, and question sellers. Blogs and social networking sites that cultivate consumer relationships. Helps identify the best way to get products to the consumer FOCUS of CONTEMPORARY MARKETING LG1 What is Marketing? 13- 36

Customer Relationship Management (CRM) -- Learning as much as you can about customers and doing what you can to satisfy or exceed their expectations over time. Organizations seek to enhance customer satisfaction building long-term relationships. Today firms like Priceline and Travelocity use CRM that allow customers to build a relationship with the suppliers.PricelineTravelocity The CUSTOMER RELATIONSHIP ERA LG1 The Evolution of Marketing 13-37

Developing an Effective Promotional Strategy Promotion -- All the techniques sellers use to inform people about their products and motivate them to purchase those products. INCLUDES Advertising! Promotion includes: Advertising Personal selling Public relations Word of mouth Sales promotions Relationships listening and responding to customer feedback PROMOTING the PRODUCT LG2 13-38

Designing a Product to Meet Consumer Needs Product -- A good, service, or idea that satisfies a consumers want or need. DEVELOPING a PRODUCT LG2 Test Marketing -- Testing product concepts among potential product users. 13-39

Providing Marketers with Information Marketing Research -- Analyzing markets to determine challenges and opportunities, and finding the information needed to make good decisions. Research used to determine what customers have purchased in the past, what situational changes have occurred to change consumer preferences, and what consumers are likely to want in the future. SEARCHING for INFORMATION LG3 13-40

The Business- to-Business Market B2B marketers include: Manufacturers Wholesalers and retailers Hospitals, schools and charities Government Products are often sold and resold several times before reaching final consumers. B2B market involves the marketing of goods and services to institutions that sell, rent, produce or supply goods to others BUSINESS-to-BUSINESS MARKET (B2B) LG6 13-41

1) To attract buyers attention 2) Protect the goods inside and be tamperproof 3) Be easy to open 4) Describe and give information about the product 5) Explain the products benefits 6) Provide warranty information and warnings 7) Give an indication of price, value, and uses SOME KEY FUNCTIONS of PACKAGING LG3 Packaging Changes the Product 14-43

Branding and Brand Equity Brand -- Name, symbol, or design that identifies the goods or services and distinguishes them from competitors offerings. UNDERSTANDING BRANDING Trademark -- A brand that has exclusive legal protection for both its brand name and design. LG4 14-44

Generic Goods -- Nonbranded products that sell at a discount compared to manufacturers or dealers brands. KEY BRAND CATEGORIES LG4 Branding and Brand Equity 14-45

The New Product Development Process The NEW PRODUCT DEVELOPMENT PROCESS LG5 14-46 New product failure is common due to the fact that companies fail to properly manage the new product development process. 80% of all new products introduced in a year fail to meet their business objective New product failure is common due to the fact that companies fail to properly manage the new product development process. 80% of all new products introduced in a year fail to meet their business objective

Concept Testing -- Takes a product idea to consumers to test reactions. BRINGING NEW PRODUCTS to the MARKET LG5 Product Development and Testing 14-47

The Product Life Cycle Once a product has been developed and testedit goes to market.. Product Life Cycle -- A theoretical model of what happens to sales and profits for a product over time. Product Life Cycle Stages: 1. Introduction 2. Growth 3. Maturity 4. Decline The FOUR STAGES of a PRODUCT LIFE CYCLE LG6 14-48

The Emergence of Marketing Intermediaries Marketing Intermediaries -- Organizations that assist in moving goods and services from businesses to businesses (B2B) and from businesses to consumers (B2C). Some economists would say that intermediaries add costs to the channel of distribution and need to be eliminated. HOWEVER. Intermediaries usually create enough value to justify their inclusion in the distribution process WHAT are MARKETING INTERMEDIARIES? LG1 15- 50

Agents and Brokers -- Intermediaries who bring buyers and sellers together and assist in negotiating an exchange but do not take title to the goods. Wholesaler -- An intermediary that sells products to other organizations such as retailers, manufacturers, and hospitals. Retailer -- An organization that sells products to ultimate customers. TYPES of MARKETING INTERMEDIARIES LG1 The Emergence of Marketing Intermediaries 15- 51

Logistics: Getting Goods to Consumers Efficiently Logistics - Concerned with flows of materials, finished products, and information. Materials Handling - movement of goods within a warehouse (aka manufacturing firm). Most concerned with the flow of goods as well as work in process within the manufacturing firm. USING LOGISTICS LG7 15-52

Freight Forwarder -- Puts many small shipments together to create a single large shipment that can be transported cost-effectively by truck or train. Useful to a small manufacturer that has shipments that are too small to fill a truck or railcar LOGISTICS SPECIALISTS LG7 Logistics: Getting Goods to Consumers Efficiently 15-53

Integrated Marketing Communication (IMC) a technique that combines all the promotional tools into one comprehensive unified promotional strategy. Promotion mix: advertising, publicity, personal selling, promotion INTEGRATED MARKETING COMMUNICATION (IMC) LG1 Promotion and the Promotion Mix 16-55

1. Identify a target market 2. Define objectives 3. Determine a promotional budget 4. Develop a unifying message 5. Implement the plan 6. Evaluate effectiveness STEPS in a PROMOTIONAL CAMPAIGN LG1 Promotion and the Promotion Mix 16-56

Personal Selling: Providing Personal Attention Personal Selling -- The face-to-face presentation and promotion of a product, including the salespersons search for new prospects and follow-up service. PERSONAL SELLING LG3 16-57

1. Prospect and qualify 2. Pre-approach research info gathering 3. Approach making the call 4. Make a presentation 5. Answer objections 6. Close the sale Trial Close -- A statement or question that moves the selling process toward the purchase. 7. Follow up FINAL BUT IMPORTANT STEP!! STEPS in the SELLING PROCESS LG3 Steps in the Selling Process 16-58

Sales Promotion -- The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities. SALES PROMOTIONS Sales Promotion: Giving Buyers Incentives LG5 16-59

Accounting -- Recording, classifying, summarizing and interpreting of financial events and transactions in an organization to provide interested parties needed financial information. An important difference between accounting and other business functions, such as marketing and management, is that Accounting offers us insight into whether the business is financially sound WHATS ACCOUNTING? What is Accounting? LG1 17-61

Managerial Accounting -- Provides information and analysis to managers inside the organization to assist them in decision making. Managerial accounting is involved with: Costs of production Costs of marketing Preparation and control of budgets Minimizing tax liabilities MANAGERIAL ACCOUNTING Managerial Accounting LG2 17-62

Financial Accounting -- Financial information and analyses are generated for people primarily outside the organization. Outside users are interested in these questions: Is the organization profitable? Is it able to pay its bills? How much debt does it owe? Annual Report -- A yearly statement of the financial condition, progress, and expectations of the firm. FINANCIAL ACCOUNTING Financial Accounting LG2 17-63

Financial Statement -- A summary of all the financial transactions that have occurred over a particular period. Helps to assess the financial health of a business FINANCIAL STATEMENTS Understanding Key Financial Statements Key financial statements of business are: Balance sheet Income statement Statement of cash flows LG3 17-64

Auditing -- Reviewing and evaluating the information used to prepare a companys financial statements. Independent Audit -- An evaluation and unbiased opinion about the accuracy of a companys financial statements. Done by someone outside the organization. Certified Internal Auditors (CIAs) -- Accountants who have a bachelors degree and two years of experience in internal auditing and pass an exam administered by the Institute of Internal Auditors.Institute of Internal Auditors AUDITING CHECKS ACCURACY Auditing LG2 17-65

Bookkeeping -- The recording of business transactions. Bookkeepers divide a firms transactions into meaningful categories and post them into a record book or computer program called a journal. Bookkeeping is part of the accounting cycle, but accounting goes far beyond the activities involved in bookkeeping Double-Entry Bookkeeping -- Bookkeepers record all transactions in two places so they can check one list of transactions against the other for accuracy. BOOKKEEPERS ROLE LG3 The Accounting Cycle 17-66

Ledger -- A specialized accounting book that provides all the information about a single account in one place is called the ledger. BOOKKEEPERS TOOLS LG3 The Accounting Cycle 17-67

Current Assets -- Items that can or will be converted to cash within one year such as cash, accounts receivable and inventory Fixed Assets -- Long-term assets that are relatively permanent such as land, buildings, or equipment. Intangible Assets -- Long-term assets that have no physical form but do have value such as patents, trademarks, and goodwill. CLASSIFYING ASSETS Listed in this order on a balance sheet based on liquidityor how quickly they can be turned into cash essay question! LG4 Classifying Assets 17-68

Financial Managers -- Examine financial data and recommend strategies for improving financial performance. FINANCIAL MANAGERS LG1 The Role of Finance and Financial Managers Financial managers are responsible for: Paying company bills Collecting payments Staying abreast of market changes Assuring accounting accuracy 18-70

Finance -- The function in a business that acquires funds for a firm and manages them within the firm. Finance activities include: Preparing budgets Creating cash flow analyses Planning for expenditures WHATS FINANCE? The Role of Finance and Financial Managers LG1 18-71

1) Undercapitalization insufficient funds to start the business 2) Poor control over cash flow 3) Inadequate expense control WHY DO FIRMS FAIL FINANCIALLY? The Value of Understanding Finance LG1 18-72

Budget -- Sets forth managements expectations for revenues and allocates the use of specific resources throughout the firm. In order to assist in revenue realization, a budget allocates resources throughout the firm. The budget is the guide for financial operations and expected financial needs in the futurenot the past BUDGETING Working with the Budget Process LG2 18-73

Capital Budget -- Highlights a firms spending plans for major asset purchases that often require large sums of money (property, buildings and equipment). Cash Budget -- Estimates cash inflows and outflows during a particular period like a month or quarter. Helps managers anticipate borrowing, debt repayment, operating expenses, and short- term investment opportunities Operating (Master) Budget -- Ties together all the firms other budgets and summarizes its proposed financial activities. TYPES of BUDGETS LG2 Working with the Budget Process 18-74

Financial Control -- A process in which a firm periodically compares its actual revenues, costs and expenses with its budget. The main objective of financial control is to identify variances to the financial plan and take corrective action if necessary. ESTABLISHING FINANCIAL CONTROL Establishing Financial Control LG2 18-75

EXAM 1 73 questions total - 60 minutes to complete MUST HAVE RED/PINK LARGE SCANTRON 35 multiple choice x 4 pts each 35 T/F x 2 pts each 3 written x 30pts each*** 300 points totals Chap 9 : 4 x T/F and 4 x multiple choice Chapter 10: 3x T/F and 3 x multiple choice Chapter 11: 4x T/F and 4x multiple choice Chap 12: 4x T/F and 4 x multiple choice Chap 13: 3x T/F and 3 x multiple choice Chap 14: 3x T/F and 3 x multiple choice Chap 15: 3x T/F and 3 x multiple choice Chap 16: 3x T/F and 3 x multiple choice Chap 17: 4x T/F and 4 x multiple choice Chap 18: 4x T/F and 4 x multiple choice EXAM 2 Structure 5-76

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EXAM 2 REVIEW Chapters 9- 18 EXAM 2 REVIEW McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved