Foundations of Business Chap 1 - Teamwork in Business

Team

A group of people with complementary skills who work together to achieve a specific goal

• Function interdependently → share accountability and coordinate actions

Groups

Function independently → share accountability but compete/work alone

Key Characteristics of Teams:

1. Share accountability for achieving specific common goals

2. Function interdependently

3. Require stability

4. Hold authority and decision-making power

5. Operate in a social context

Manager-led Teams

Traditionally, the leader defines the team’s goals and activities and is responsible for it achieving its assigned goals

Self-managing Team

The leader may determine overall goals, but employees control the activities needed to meet them and have considerable autonomy. the team members absorb the activity of traditional supervisors.

Cross-functional Team

Designed to take advantage of the special expertise of members drawn from different functional areas of the company

Virtual team

Geographically dispersed members interact electronically in the process of pursuing a common goal

What makes teams effective?

Members depend on each other, trust one another, work better together than individually, are boosters, enjoy being on the team

Team Cohesiveness

size, similarity, success, exclusiveness, competition

Groupthink

Tendency to conform to group pressure in making decisions, while failing to think critically or to consider outside influences

Motivation and Frustration

all team members have personal and professional ups and downs. members must notice and find ways to avoid.

Obstacles to success

• Unwillingness to cooperate

• Lack of managerial support

• Failure of managers to delegate authority

Skill sets that teams need

technical skills, decision-making and problem-solving skills, interpersonal skills

Technical skills

Skills needed to perform specific tasks

Decision-making and problem-solving skills

Skills needed to identify problem, evaluate alternative solutions, and decide on the best options

Interpersonal skills

Skills in listening, providing feedback, and resolving conflict

Task-facilitating roles

Addresses challenge number one—accomplishing the team goals. it is especially valuable when assignments aren’t clear or when progress is too slow

ex: information seeking, reality testing

Relationship-building roles

Challenging unmotivated behavior or help other team members understand their roles and addressing challenge number two—maintaining or improving group cohesiveness

ex: energizing, consensus building

Blocking roles

Consist of behavior that inhibits either team performance or that of individual members. every member of the team should know how to recognize this behavior → if teams don’t confront dysfunctional members, they can destroy morale, hamper consensus building, create conflict, and hinder progress

ex: stalling, deflecting, presenting opinions as if they were facts

Entrepreneurs

Those with a vision who take the risks and reap the rewards associated with starting a new business enterprise

Successful CEOs and Managers:

Learn, Adjust, and Improvise

Business

Any activity that seeks to provide goods and services to others while operating at a profit

Goods

Tangible products

Services

Intangible products

Revenue (sales)

Represents the funds an enterprise receives in exchange for its goods and services

Profit

What is left after all the bills are paid or the COST of doing business

Nonprofit organization

An organization whose goals are for the betterment of the community, not financial gains

Stakeholders

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the businesses need to address

Examples of Stakeholders

Customers, employees, shareholders, suppliers, dealers, community members, banks, media, elected official, environmentalists

Management

Managers are responsible for the work performance of other people

ex: purchasing, human resources, engineering, administration

Mnagement involves:

Planning for, organizing, and controlling a company’s resources so that it can achieve its goals

Operations manager

The person who designs and oversees the transformation of resources into goods or services

career ex: operations, manufacturing, quality, project manager

Marketing

Consists of everything that a company does to identify customers’ needs and design products to meet those needs. they manage relationships with customers and make them aware of the organization’s desire and ability to satisfy their needs.

career ex: brand, digital, product, research, communications, channel, sales

Price, Product, Promotion, Place

marketing establishes the four p’s:

Accounting

Managers need accurate, relevant and timely financial information

Accountants

Measure, summarize, and communicate financial and managerial information and advise other managers on financial matters

financial accountants

Prepare financial statements to help users, both inside and outside the organization, assess the financial strength of the company

Managerial accountants

Prepare information, such as reports on the cost of materials used in the production process, for internal use only

Finance involves:

Planning for, obtaining, and managing a company’s funds

career ex: audit, planning, analyst, buget, consultant

Political, Economic, Sociocultural, Technological, Environmental, Legal

External factors that influence business: PESTEL

External factors: Political

The impact of government including taxes, tariffs, trade agreements, and labor regulations

External factors: Economic

Includes inflation, employment rates, exchange rates, oil prices, GDP growth and others

External factors: Sociocultural

Includes cultural altitudes and demographic factors such as age, race, and income

External factors: Technological

Includes the impact of the internet, smart devices, and automation on businesses and society

External factors: Environmental

Includes availability and care for natural resources, pollution levels, and carbon footprints

External factors: Legal

Requirements related to labor and consumer protection, equality, and product safety

Ethics

To know right from wrong and to know when you’re practicing one instead of the other.

Ethical issues

are the difficult social questions that involved some level of controversy over what is the right thing to do.

Ethical dilemmas

are situations in which it is difficult for an individual to make decisions either because the right course of action is unclear or carries some potential negative consequences for the person or people involved.

Conflict of Interest

Individuals must choose between taking actions that promote their personal interests over the interests of other or taking actions that don’t.

Whistleblowers

People who report illegal or unethical behavior.

• involve outsiders (other stakeholders) such as suppliers, subcontractors, distributors and customers

Corporate social responsibility

Refers to the approach that an organization takes in balancing its responsibilities toward different stakeholders when making legal, economic, ethical, and social decisions.

4 Consumer Rights

The right to safe products, to be informed about a product, to choose what to buy, and to be heard.

Corporate Philanthropy

Includes charitable donations

Corporate Social Initiatives

Includes enhanced forms of corporate philanthropy.

Economics

The study of the production, distribution, and consumption of goods and services.

Resources

are the inputs used to produce outputs

ex: land, labor, capital, entrepreneurship, knowledge

Adam Smith

The Father of Economics, he believed that freedom was vital to any economy’s survival, freedom to own land or property and the right to keep the profits of a business is essential, & ppl will work hard if they believe they will be rewarded.

Capitalism

All or most of the land, factories, and stores are owned by individuals, not the government, and operated for profit.

ex: United States, England, Australia, Canada

3 Economic Systems

Capitalism, Socialism, Communism

The right to own private property, the right to own a business and keep all that business’ profits, the right to freedom of competition, the right of freedom of choice

Capitalism’s Four Basic Rights

Free Market

Decisions about what and how much to produce are made by the market

• Consumers send signals about what they like and how they like it

• Price tells companies how much of a product they should produce. If a good or service is wanted but hard to get, the price will rise until more products are available.

Socialism

An economic system based on the premise that some basic business, like utilities, should be owned by the government in order to more evenly distribute profits among the people.

Socialism Benefits

Social equality, free education, free healthcare, free childcare, longer vacations, shorter work weeks, generous sick leave

Negatives of Socialism

Brian Drain and fewer inventions and innovations because the reward-based motivation is not as great as in capitalistic countries

Brain Drain

Some of a countries best and brightest workers move to capitalistic countries.

Communism

An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.

• prices don’t reflect demand which may lead to shortages of items, including food and clothing.

• some countries today suffer severe economic depression and citizens fear the government.

Free-Market Economies

The market largely determines what goods and services are produced, who gets them, and how the economy grows.

Command Economies

The government largely determines what goods and services are produced, who gets them, and how the economy will grow.

Mixed Economies

Some allocation of resources is made by the market and some by the government.

Perfect Competition

Many small companies sell identical. The price is determined by supply and demand. A good

ex: corn and soybeans

Demand

is the quantity of a product that buyers are willing to purchase at various prices.

• prices rise - people buy less

• prices fall - people buy more

Supply

is the quantity of a product that sellers are willing to sell at various prices. The quantity of a product that a business is willing to sell depends on its prices.

• sell more - prices rise

• sell less - prices fall

Equilibrium Price

The point at which the two curves intersect

Oligopoly

A few sellers supply a sizable portion of products in the market. They exert some control over price, but because their products are similar, when one company lowers prices, the others follow.

Monopoly

There is one seller in the market. The “market” could be a specific geographical arena, such as a city. A single seller is able to control prices.

Monopolistic Competition

Exists when many companies offer competing products or services that are similar, but not perfect, substitutes.

Gross Domestic Product (GDP)

The market value of all goods and services produced by the economy each year. It includes only those goods and services produced domestically; goods produced outside the country are excluded.

Recession

The slowdown in economic activity (GDP goes down for two consecutive quarters)

Consumer Price Index (CPI)

The most widely publicized measure of inflation

ex: US government aims to main a 2% inflation rate

Economic Indicators

To get a sense of where the economy is headed in the future, we use these statistics

Lagging Indicators

Indicators that report the status of the economy a few months in the past.

Leading Indicators

Those that predict the status of the economy 3 to 12 months in the future.

Growth, high employment, price stability

The world’s economies share three main goals:

Fiscal Policy

The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending.

tools: taxation, government spending

Monetary Policy

The management of the money supply and interest rates by the Federal Reserve Board

tools: interest rates, money supply

Globalization

The spread of products, technology, information, and jobs across national borders and cultures. In economic terms, it describes an interdependence of our nations around the globe fostered through free trade.

Why do countries trade?

No nation produces all the products and services their citizens want to buy

Exporters

Sell goods and services to other nations

Importers

Buy goods and services from others

Absolute Advantage

(1) its the only source of a particular product or (2) it can make more of a product using fewer resources than other countries

Comparative Advantage

Exists when a country can produce a product at a lower opportunity cost compared to another nation.

Opportunity Cost

The products that a country must forego making in order to produce something else. When country decides to specialize in a particular product, it must sacrifice the production of another product.

Licensing Agreements

allows a foreign company to sell the products of a producer or to use its intellectual property in exchange for what is known as royalty fees.

Franchising

A company grants a foreign company the right to use its brand name and to sell its products or services. The franchisee is responsible for all operations but agrees to operate according to a business model established by the franchiser.

Contract Manufacturing - a form out outsourcing

Because of high domestic labor costs, many U.S. companies manufacture their products in countries where labor costs are lower.

Joint Venture

Typically resulting in the formation of a new company jointly owned by the companies involved

Strategic Alliance

Involves two companies pooling limited resources to work on a given opportunity.

Foreign Direct Investment (FDI)

The formal establishment of business operations on foreign soil—the building of factories, sales offices, and distribution networks to serve local markets in a nation other than the company’s home country.

Offshoring

Occurs when the facilities set up in the foreign country replace U.S. manufacturing facilities and used to produce goods that will be sent back to the United States for sale.