The U.S. economy is dominated by the
Service Sector
production management
how to use resources to produce goods (manufacturing)
Operations Management
how to use resources to produce goods and provide services GOAL: satisfy customers
Form Utility
the value producers add to materials in the creation of finished goods and services
Process Manufacturing
that part of the production process that physically or chemically changes materials
Assembly Process
that part of the production process that puts together components
continuous process
a production process in which long production runs turn out finished goods over time
intermittent process
a production process in which the production run is short and the machines are changed frequently to make different products
computer-aided design (CAD)
the use of computers in the design of products
computer-aided manufacturing (CAM)
the use of computers in the manufacturing of products
computer-integrated manufacturing (CIM)
The uniting of computer-aided design with computer-aided manufacturing.
flexible manufacturing
designing machines to do multiple tasks so that they can produce a variety of products
lean manufacturing
the production of goods using less of everything compared to mass production.
Less workers
less resources
decrease in defects
lower inventory
mass production
Process of making large quantities of a limited number of products quickly and cheaply
mass customization
The ability of an organization to tailor its products or services to the customers' specifications
Advantages of Robots in Manufacturing
Ideal for repetitive tasks that require precision. - Can perform hazardous tasks.
Do not tire or suffer from lack of concentration. - - Cost effective as can operate 24/7.
Important factors for location
availability of qualified labor force
transportation
quality of life
infrastructure
Technological impacts on location
workforce can telecommute
lessens significance of facility location
internet makes it possible for companies to collaborate easier
facility layout
the physical arrangement of resources (including people) in the production process
Materials Requirement Planning (MRP)
getting necessary material and resources in the quantity when needed
Enterprise Resource Planning (ERP)
Enterprise wide database and software system that integrates all business functions
leading ERP system: SAP
Purchasing
the function in a firm that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for goods and services
Inventory
finished or semi-finished products
raw materials and components
tradeoff between storing cost and shortage cost
Just-In-Time Inventory Control
holds inventory to a minimum
relies on close relationship with suppliers
Quality Control
getting quality products is a continuous process
started with statistical process control(SPC)
moved to modern statistical quality control(SQC) --> monitors all phases of production
Six Sigma
Sets a benchmark of 3.4 defects per million
Program Evaluation and Review Technique (PERT)
Divides a project into individual tasks and their relationships
estimates project duration and critical path
Gantt Chart
monitors different phases of a project over time
The usefulness of information depends on
Quality
Completeness
Timeliness
Relevance
Big Data
amount of information and variety of information
Data Analytics
collecting, organizing, storing and analyzing information to create competitive advantages
Types of Networks
Internet (public)
Intranet (private)
Extranet (semi-private)
Virtual Private Networks(VPN)
Net Neutrality
data on the internet should be treated equally
Development of the Web
Web 1.0 - Static Web 2.0 - Social Web 3.0 - Personal
Smart
Mobile
Immersive
IOT
Marketing Mix (4 P's)
Product
Price
Place
Promotion
Production Era
Focus on increasing productivity, virtually unlimited demand
Selling Era
With mass production, focus shifted to advertising and selling
Marketing Concept Era
During the prosperous post-war years, modern marketing was born to focus on customers, service, and profit
Customer Relationship Marketing
develop long-term relationships with customers
Mobile/on-demand Era
Creatively use mobile technology and social media
Primary Data
data collected for the first time and specific purpose
Secondary Data
data previously collected and being reused
the internet has revolutionized access to this data
Consumer Marker(B2C)
goods and services are bought for personal consumption and use
Business-to-business (B2B)
goods and services are bought for business use
Market Segmentation
dividing potential customers into groups of similar people, or segments. Can be based on:
demographic
geographic
benefit
volume
Target Marketing
focus on most profitable customer group
Mass Marketing
using a single marketing strategy to reach all customers
Niche Marketing
focuses on small, but very profitable market segments
One-to-one marketing
an individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer
Relationship Marketing
a strategy that focuses on keeping and improving relationships with current customers
How does the B2B market differ from the consumer market?
fewer but larger customers
buyers are more rational and less emtional
more reliance on personal selling than advertising
Total Product Offer
Everything consumers evaluate when deciding whether to buy something, both intangible and tangible
Value Enhancers
add to the core product and make it into an augmented product.
branding
packaging
advertising
Product Line
a group of closely related product items
Ex: the iPod shuffle, nano, classic, touch
Product Mix
consists of all of the product lines offered by an organization
Product Differentiation
a positioning strategy that some firms use to distinguish their products from those of competitors.
can be real or perceived differences through:
Branding
Pricing
Advertising
Packaging
Convenience products
products bought frequently without much deliberation
Shopping products
products bought less frequently, consumers "shop" around
Specialty products
unique products with virtually no substitutes
Unsought products
products that potential customers don't yet want or know they can buy. Unexpected expenses.
Ex: car towing
Industrial products
used by businesses mostly, but can be both consumer and business products
more personalized, direct selling
Functions of packaging
contain and protect
attract attention
facilitate storage, use, and convenience
provide information
Types of Brands
Manufacturers brand Ex: Sony
Dealer brands Ex: Kirkland
Generic brands
Knockoff brands
brand equity
the value of a brand name
Developing brand equity
Brand awareness
Brand association Ex: celebrities
Brand Preference
Brand loyalty
Brand Managers
aka product managers
manage all the elements of marketing a brand
Product Life Cycle
Phases:
Introduction
Growth
Maturity
Decline
Cost-based pricing
setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk
Target costing
pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
competition-based pricing
setting prices based on competitors' strategies, prices, costs, and market offerings
break-even analysis
a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
high/low pricing
a pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases
channel of distribution
sequence of market intermediaries
Types of market intermediaries
Agents and Brokers - facilitate deals between sellers and buyers without taking ownership of the product
Wholesalers - sell to other businesses
Retailers - sell to customers
Forms of Utility
form
time
place
possession
information
service
Agents tend to have ________ with clients
long-term relationships
_______ usually hired on a temporary basis
brokers
Intensive Distribution Strategy
designed to get products into as many outlets as possible.
mostly convenience products
Selective Distribution Strategy
provide high quality sales service in selected locations
mostly shopping goods
Exclusive Distribution Strategy
one retailer often has exclusive rights in a region
mostly for specialty goods
Supply Chain
all parties and activities involved between raw materials and consumers
Value Chain
Effective and sufficient supply chains
promotion mix
the various techniques businesses use to sell their products
Advertising
paid for by an identified sponsor
non-personal
informs consumer
can be costly
What is the dominant medium for advertising?
TV
Direct Selling
face-to-face promotion of product
especially important in B2B
Accounting is often referred to as the
language of business
Managerial Accounting
Internal focus
support managerial decision making
Financial Accounting
mainly external focus
provide accurate and relevant info
Auditing
Reviewing and evaluation accounting info
Private Accountants
work for one particular organization
Public Accountants
provide account services to other businesses
Annual Report
provides comprehensive information about organization
financial info often "certified" by unbiased auditor
Sarbanes-Oxley Act
A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate.
established public-company accounting oversight board
protects whistleblowers
Generally Accepted Accounting Principles (GAAP)
Sets standards defined by the Financial Accounting Standards Board (FASB)
Double-Entry Bookkeeping
Bookkeepers record all transactions in two places so they can check one list of transactions against the other for accuracy.
the 3 main financial statements
balance sheet, income statement, statement of cash flows
Fundamental Accounting Equation
Assets = Liabilities + Owner's Equity
order of assets on balance sheet
in order of liquidity
current assets --> can be turned into cash within a year
fixed assets --> long-term assets
intangible assets --> Ex: patents
Income Statement
reports the profitability of a firm over a period of time
Revenues
Gross profit = Revenues - cost of goods sold
net income before taxes = gross profit - operating expenses
net income/loss = net income before taxes - taxes