FBE Test 3

What is the difference between primary and secondary data? What are examples of primary and secondary data that might be used when conducting market research for a new dog-themed clothing line?

Primary data is a set of data that is information that is obtained straight from the source that research is being done on. Secondary data is information that is from another source. For the example of primary and secondary data in regards to market research a new dog-themed clothing line, primary data would include customer opinions and surveys for their proposed product, potentially in the form of a sample group. Secondary data may be released by various news or research groups about what kind of consumers are interested in the fashion or dog industry.

Nicola is considering adding a rack of greeting cards to her product offerings at Bountiful Bookstore. Her fixed costs associated with adding the greeting cards would be $400. Variable costs per card are $1 each. The greeting cards will sell for $3 each.

What is her break-even point? Please give your answer, and explain what it means.

Your Answer:
Nicola's break-even point is when she sells 200 cards. This means that she will start making a profit, because her revenue is greater than her costs.

Pros and cons of franchises

Advantages: proven business model, name recognition, buying power

Disadvantages: need to pay royalties, have to follow their standard operating procedures (even if you disagree), cannot innovate

What does DBA stand for?

Doing Business As

Country with highest entrepenurial activity?

Angola

What advantage(s) does the S-corporation give to the small business owner that the C-corporation does not give to the small business owner?

more favorable tax treatment

The monthly fee that a franchisee must pay to keep the company's trade name is called a(n)

royalty fee

stakeholder vs. shareholder

shareholder holds equity owning shares, stockholder is anyone affected by decisons has stock

Which of the following statements describes an advantage of capitalism?

The profit motive encourages owners to run their companies efficiently.

When it distributes a portion of its income to shareholders in the form of cash payments, a corporation pays out

dividends

Entrepreneurs are generally considered to be

moderate risk takers

critical thinking vs creative thinking

logical vs. coming up with ideas

Creativity is bringing into existence something that has value. Critical thinking is "the disciplined art of ensuring that you use the best thinking you are capable of in any set of circumstances.”

Potential examples: Creative thinking - coming up with a wide range of unique possibilities; Critical thinking - researching the options, evaluating the options, and selecting the best choice.

falling market vs. rising stock market

falling - bear; rising - bull

Three important functions of money

medium of exchange, measure of value, store of value

angel investor vs. venture capitalist

Angel: If a business seeks funding from private investors, one option is a wealthy individual interested in supporting start-ups; venture capitalist: who pools funds from private and institutional sources and invests in existing businesses with strong growth potential.

What are the two kinds of accounting?

financial and managerial

What are the three kinds CPA roles?

external audit, tax services, consulting

Three careers in accounting?

CPA, private accountants, controller (CAO)

With who do accountants need to communicate results?

owners and managers, government agencies, investors and creditors

Three ways to increase net income

increase quantity of units sold, reduce cost of goods sold, reduce operating costs

What is on an Income statement

Sales - Cost of Goods Sold = Gross Profit - Operating Expenses = Net Income (Loss)

What is on a Balance Sheet

Assets = Liabilities + Equity

What are Assets and what kinds are there?

Liabilities + Equity; current assets, long term assets

What are Liabilities and what kinds are there?

Assets-Equity; current liabilities, long term liabilities

Current assets

intend to convert into cash within a year ex. cash, inventory, accounts recievable

long term/fixed assets

intend to hold onto for more than a year ex. furniture, building, equiptment

current liabilities

intend to pay off within a year (accounts payable)

long term liabilities

dont become due for more than a year

Statement of Owner's Equity

A summary of the changes in owner's equity that have occurred during a specific period of time, such as a month or a year. owners equity (date 1) + net income = owners equity (date 2)

Statement of cash flows

operations, investing, financing

On what financial document can sales be found?

income statement

On what financial document can how much I have invested be found?

Cash flows

On what financial document can debts be found?

Balance sheet

How much cash has company brought in?

cash flow

On what financial document can expenses be found?

income statement

On what financial document can total assets be found?

balance sheet

On what financial document can where cash comes from and goes be found?

cash flow

On what financial document can profit be found?

Income statement

What are the profit margin ratios

gross profit margin, net profit margin

What does the management efficiency ratios mean

inventory turnover

What formula measures management effectiveness ratios

return on assets

What formulas show financial condition

current ratio, debt-to-equity ratio, interest coverage ratio

Net profit margin - formula, decime/percent, what it means, high/low

net profit/sales revenue; percent; money a company earns after paying all expenses; high, varies by industry

Inventory turnover - formula, decime/percent, what it means, high/low

sales/inventory; decimal; how many times the entire inventory is sold in a year; high (varies by industry)

Return on Assets - formula, decime/percent, what it means, high/low

net profit/total assets; percent; how profitable a company is in relation to its assets; high

Current Ratio - formula, decime/percent, what it means, high/low

current assets/current liabilities; decimal; how easily you can pay off short term debt; high, but not too high

Debt to Equity - formula, decime/percent, what it means, high/low

total liabilities/total equity; decimal; measure of riskiness, how much debt for dollar invested; low, varies by industry

Sales Growth - formula, decime/percent, what it means, high/low

(current sales-previous sales)/previous sales; percent; allows you to see sales growth trend over time; percent

What are the four most critical functions a manager should preform, and what are four examples of each?

Planning - SWOT, core values Organizing - divisonal vs functional, hiring, Directing - different types of management, assigning tasks Controlling - measuring, performance assessment

SWOT Analysis Dog Grooming Business

S - many return customers W - do not have much of a marketing budget O - dogs are becoming more popular T - other business runs radio and newspaper ads weekly

How would a small/medium vs larger company be structured?

Small medium - functional, groups with similar skills and responsibilities in one unit led by manager ex. accounting, finance. Large - divisional, separated into self-contained units, product, process, geographical

What is the difference between efficiency and effectiveness and how do they lead to managerial success?

effectiveness: necessary work gets done in the best manner possible - ends and goals; efficiency: have all aspects of the project be completed correctly, using the fewest resources possible - means and resources LEADS TO MANAGERIAL SUCCESS

Three types of management and what are the differences?

autocratic - manager makes decisions and announces, democratic - asks group for suggestions, free-reign (laissez faire) - manager lets employees function within limits of superior

How does one measure whether or not goals are being met?

1. set standards 2. measure performance 3. compare performance to standards, identify deviations 4. determine reason for deviations 5. take corrective action

What is a purple cow?

Scott Godin - truly remarkable product

Types of product development and examples

new to company - mobile order ahead services; improvement of existing product - strawless lid; extension of product line - pumpkin spice latte; new to market - ???

Creation of utility and the four kinds

time utility: having a product available at a convenient time, place utility: having a product available in a convenient location, ownership utility: value given to owner from owning it, form utility: value to consumers from changing the composition of product ex. yarn vs scarf

Difference between market, market segment, and niche

M - college students MS - college students who are gradating N - graduating students who want to celebrate by taking hot air balloons

Value proposition

identify pains, what people gain, jobs of product - think of the pie

What is the focus of the design team?

3. make sure product appeals to costumers, 4. design fro manufacturing, 5. build+test prototypes, 6. ramp up production and run market tests

break even point

When total sales revenue equals all expenses

Protecting your idea

Patents - up to 20 years, new, not obvious, has utility, (design, plant, utility); Trademarks - protect name, slogan, logo, renew indefinitely

What are the three positions on conflict and their definitions

traditional - conflict is bad, human relations - conflict is always present whether functional or dysfunctional, interactionist view - conflict can be helpful

What are some of the ways of dealing with conflict and where do they fall on the scale?

Cooperativeness x axis, assertiveness y axis: avoidance, accomodation, compromise, competetive, collaborative

Fixed costs vs variable costs

No matter how much you sell, fixed costs stay the same, variable costs will change

Product development process

1. evaluate opportunities and select the best product idea 2. get feedback to refine the product concept 3. make sure the product performs and appeals to customers 4. design with manufacturing in mind 5. build and test prototypes 6. ramp up production and run market tests 7. launch the product

What is operations management

all the activities required to produce goods and services

What are the three main responsibilities of operations management

production planning, production control, quality control

Four decisions within planning

methods, site selection, capacity, layouts

Decison 1, Methods types

make to order - goods made to customer specifications ex. Culvers hamburgers, wedding cakes; mass production - high volumes of goods made and held in inventory for later sale ex. McDonalds hamburgers, automobiles; mass customization - fairly high volumes of customized goods ex. MnMs, Nikes

Decision 2, Site Selection

factors: proximity to customers and supplies, availability of skilled workers, business climate (tax breaks), resource costs (land, labor, construction, utilities, etc.), quality of life in area

Decision 3, Capacity

forecast demand for product... produce too many=wasted money in storage... too little=can't meet demand

Decision 4, Layouts

process layout: groups of workers perform similar tasks; product layout: goods are moved while workers stay in place (assembly line); cellular layout: small groups of workers do all or segment of production; fixed-position: goods stay in place and workers move

Production control

all things supply chain, purchasing and supplier selection, inventory control - materials required, work scheduling

Quality control

customer satisfaction (measured through surveys, reviews, returns), employee involvement (have no product if there are no employees), continuous improvement

Outsourcing

using outside vendors to manufacture part/all company products pros: reduce costs, managers focus on core activities (what they do best), expand capacity without moving to a bigger building

What is the process that takes the longest time and what is an example?

critical path, cutting/stuffing/dressing/packaging/shipping path

Equipment that can be changed and reprogrammed to adapt to produce different products is part of a

Flexible manufacturing system

Management Operating a service industry

- contact with customers, demand varies (have to predict), schedule workers, inventory control

By incorporating mass customization...

By incorporating mass customization into their operations, businesses can talk to customers and manufacture a product that better fits their needs.

When deciding what to outsource, most companies will

select a(n) noncore function, rather than something that is vital to the company.

Why do nations trade?

Because no national economy can produce all the goods it needs

Deciding what to import/export (the two advantages)

Absolute advantage (compared to other countries) - only source of product, can make product with the same or less resources than other countries Comparative Advantage (compared to other products) - produce product at lower opputunity costs

Modes of internationalization

importing, exporting, international licensing agreement, foreign direct investment, international contract manufacturing (outsourcing), offshoring, strategic agreement, joint ventures

importing

buying overseas and reselling ex. Cacao for Ivory Coast and Ghana

exporting

selling domestic products to foreign customers ex. Hershey products to the world

international licensing agreement

low risk - allows foreign company to sell (and sometimes produce) a domestic company's product in exchange for royalty ex. Hershey licensed to make Cadbury and KitKat (owned by Nestle in Switzerland)

foreign direct investment

high risk - formal establishment of business operations (such as the building of factories or sale offices) on foreign soil

international contract manufacturing

Practice by which a company produces goods through an independent contractor in a foreign country.

offshoring

Setting up facilities in a foreign country that replace U.S. manufacturing facilities to produce goods that will be sent back to the United States for sale.

strategic alliance

Agreement between two companies to pool resources in order to achieve business goals that benefit both partners.

joint ventures

an alliance in which partners fund a seperate entity

3 factors of global business

Economic, cultural, legal and regulatory

Economic enviroment in global business

Income levels, emerging economies=opportunity, goal: countries move up the economic development ladder, currency valuations, and exchange rates

Legal and regulatory in global business

countries vary in laws and regulations

Culture in global business

language, being on time, sociability, intercultural communication (animation and distance)

Developing countries can reach out for financial assistance to which of these two organizations?

World Bank and International Monetary Fund

The law that prevents American firms from giving favors and bribes internationally is the

Foreign Corrupt Practices Act

Tariffs

Governments place taxes on foreign-made goods less competitive with goods in home country

Trade deficit, trade surplus,

If a country buys more from other nations than it sells, it has a trade deficit. If it sells more items than it buys, it has a trade surplus . Together these are called the country's balance of trade.