Business and Economic System
Business is broadly defined as all the work involved in producing people with goods and service for a profit. Profit is the money left over from all sums received from sales after expenses have been deducted. The free market system allow you to charge any price and to sell to anyone willing to pay that price, working with two forces of competition, supply and demand. Supply refers to the quantities of a good or service that producers are willing to provide at various prices; demand refers to the amount of a good or service that consumers are willing to buy at that time, at different prices. In this way competition keeps prices down, encourages efficiency, promotes equality, and encourages innovation.
Management is process of coordinating resources to meet an objective. An organization is a group of people who have a common objective. The four basic functions of management: planning, organizing, directing, and controlling. Planning establishes objectives for the organization and tries to determine the best ways to accomplish them: short range, long range, management by objective, management information systems.
Management: Process of management
Organizing is the process of arranging resources, primarily people, to carry out the organizations plans. The staff can have a division of labor by tasks or authority.
Directing is a complex management function whose primary goal is getting people to work effectively and willingly.
Three types of leaders:
- Autocratic: uses authority in a straightforward manner by simply issuing orders
- Democratic or participative: encourages a free flow of communication while making clear that he or she has the final say
- Consultant style: Provides encouragement for employee ideas, offering insights or opinions when asked.
- Top or Upper management: CEO, President, Vice president, Chairman (long range planning)
- Middle managers: Chief Financial Officer, Chief Technology Office, Chief Information Officer, Legal Department (medium range planning)
- Supervisory or operating managers: Supervisor, Market Research Manager, Sales Manger, Accounting Manager, Operations Manager, Production Manager (short range planning)
- Give a man a fish feed him for a day, teach him to fish and feed him for a lifetime.
- Be Proactive - personal vision
- Begin with the end in mind - personal leadership
- Put first things first - personal management
- Think win/win - interpersonal
- Seek first to understand, then be understood - emphatic communication
- Synergize - creative cooperation
- Sharpen the saw - balanced self renewal
Controlling is the process of ensuring that organizational objectives are actually being attained and correcting deviations if they are not. The cycle of controlling to establish standards, check performance, compare to standards, check for deviations, take corrective actions, reevaluate standards.
Management: Internal Organization
Internal organization is the aspect of management which deals with the inner structure of authority and responsibility in a company. A structured organization is a group of people working together in a carefully planned manner to achieve a certain goal. An organizational chart is a diagram that shows how work is divided and where authority is and the structure must fit the situation. Departments are a group or section of people working together in a specific area. Departmentation can be by territory, product, or responsibility.
Production and Operations Management: Tools of Business
Three technological advances in mass production and automation
- Mechanization: the use of machines to do the work by people
- Standardization: the production of uniform goods
- Assembly line: the manufacturing technique in which an item being put together moves along a conveyor belt, where each worker performs a certain tasks
- Automation: the process of performing a mechanical operation with either a minimum of human intervention or automatic control
Small Business Software
- Small Business Advantage: Software Suite
- Square Reader (iPhone/At&t) - Mobile Credit Card Processor: Square.com
- Kudos Mobile Credit Card Processor (Google/Verizon)
Project management and automation
- Production and inventory control: MS Project, PERT, CPM, MRP
- Critical Path method, materials requirement planning
- Analytical process, Synthetic process, Timing of production
- Computer Aided design, Computer Aided Manufacturing
Five steps in production control
- Follow up and control
Management and Unions
Labor unions are an organization of workers formed to advance their members interests.
- ALF-CIO – American Federation of Labor, Congress of Industrial Organizations
- Management Disputes and confrontations: strike breakers, lockout, injuctions
- Union Disputes and confrontations: strike, boycott, financial influence, publicity battle
- National Labor Relations Act
- Taft Hartley Act
- Landrum Griffin Act
- Civil Rights Act
Union Security Agreements
- Union security and management rights
- Job Security and Promotion
- Changing work rules for greater productivity
- Safety and Health
Management: Human Resources
Human resources managers are the people in business organizations who forecast personnel needs, hire new workers, help train and educate personnel, and administer wages, salaries, and employee benefits and services.
Human resource planning:
- Job analysis
- Recruiting and hiring new workers
- Training and development
- Employment at will: firing, severance packages
- Benefits: insurance, pension, health and safety, employee valuations
Marketing is finding out what buyers want or need and then getting it to them, to the profit and benefit of everyone involved in the transaction. The market is a group of people who need or desire a specific product or service and have the money to buy it, consisting of the consumer and business market.
- What product or services the consumer wants
- What forms, color, packaging, price ranges, and retail outlets the consumer prefers
- What types of advertising, public relations, and selling practices are most likely to appeal to consumers
- Market research
- Produce product to appeal to consumer
- Plan advertising and sales methods to appeal to consumer
- Develop sales force
- Take orders
- Ship goods
Eight major functions of marketing
- Risk bearing
- Standardization and grading
- Securing information
Marketing Mix the Four P’s
- Product: What product will appeal to the market
- Price: How high a price should we charge
- Promotion: What the most effective promotion
- Placement: What the best strategy for placement
The Environment of Business: Business Law and Ethics
Small Business Administration: Types of Business
- General construction
Small Business: Financing
- Loans guarantees
- Small Business Investment Companies (SBIC and venture companies)
- Courses in managing small business
- Procurement assistance
- Special programs for minority owned small business
The Environment of Business: Government and Business
Regulation: Threats to free competition: monopoly or oligopoly where one or few players dominate an industry.
Deregulation: The removal or relaxing of some of the rules and restrictions affecting business.
The Environment of Business: Government
Major Federal Legislation
- Air pollution
- Solid waste pollution
- Water pollution
- Other pollutants
- Food and Drug
- Protection against misbranding and false or harmful advertising
- Product safety
- Credit Protection