Business 101 FINAL

Traditional purpose of a business

“to maximize the value of the firm to its owners”

• maximize shareholder’s wealth

• best method is to increase profit

Shareholder

owns a share of a company’s stock

• individual, company, or institution

Stakeholder

anyone involved with or affect by an organization

• shareholders, customers, employees, community members

Functional areas of business

accounting, finance, management, management information systems, marketing, supply chain management

Information systems

systems that allow users to leverage technology, information, and people to further organizational goals

Information technology

the equipment and techniques used to manage and process information

Data vs. Information

Data: raw, unorganized facts that can be moved and stored

Information: data that has been processed, interpreted, organized, structured in a way its useful

Enterprise Resource Planning (ERP) Systems

A computerized resource-planning system that incorporates information about the firm’s suppliers and customers with its internally generated data

• “central nervous system” for a business 

• integrates all the core business functions into one unified data base 

Cloud computing

delivering computing services over the internet for flexibility and speed

Network segmentation

architectural design of a computer network to manage security and access of information

Supply Chain Management: Operations

the design, execution, and control of operations that turn resources → desired goods/services 

Supply Chain Management: Logistics

coordination across the supply chain involving flow of goods, services, people, facilities, supplies 

• behind the scenes process

Supply chain entire sequence

1. raw materials 

2. supplier 

3. manufacturer 

4. distributor 

5. retailer 

6. customer

Procurement

action of getting equipment/supplied for a business

Just-in-time inventory management

an inventory management system that receives goods from suppliers at the EXACT time they are needed, reducing storage costs

Financial accounting

preparing external financial reports for outsiders to assess financial strength of a business

Managerial accounting

providing financial information that managers inside the organization can use to evaluate decisions about current/future operations

Auditing

reviewing the records used to prepare the financial statements to ensure the statements were prepared with accepted accounting rules

• accuracy, compliance, and effectiveness

Tax accounting

strategizing reductions in tax obligations aligned with IRS regulations and prepping required documents

Certified public accountant (CPA)

an accountant with completed and approved bachelor’s degree program, passed a test made by the American Institute of CPAs, and met state requirements 

• Only a CPA can issue an auditor’s opinion!

Balance sheet

a financial statement that summarizes a firm’s financial position at a specific point in time

• accounting equation: Assets = Liabilities + Owner’s Equity

• Assets: things of values owned by a firm

• Liabilities: what a firm owes; debts

• Owners’ equity: the total amount of investment in the firm (ownership) - liabilities (net worth)

• “=”: “balance with”

Income statement

a financial statement that summarizes a firms revenues and expenses and shows total profit or loss over a period of time

• Profit: revenue - expenses

• Gross profit: revenue - cost of goods sold 

• Net Income (Profit): gross profit - other expenses

• Earnings per share (EPS): the ratio of net profit to the number of shares of common stock outstanding 

  • measures the number of dollars earned by each share of stock

Finance

deals with allocation of assets and liabilities over time under conditions of certainty/uncertainty

Financing (raising money)

obtaining funding for the firms operations and seeking the best balance between debt and equity

Investment banking

helps companies raise long-term financing

• firms that act as intermediaries, buying securities from corporations and governments and reselling to the public

Real estate

a specialized branch of finance that deals with managing money for real estate

• financing/investment structures used by developers, investors, and owners, to acquire, develop, and retain real estate properties 

• in commercial/residential sector

Equity

ownership; value of stock in a business

Dividends

payments to stockholders from a corporation’s profits

Public vs. Private company

shares of stocks open to the public vs. hidden to the public

Initial public offering (IPO)

A company’s first sale of stock to the public

Ticker symbol

a short, unique alphabetical code that identifies a publicly traded company or security on a stock exchange, allowing traders and investors to quickly locate and trade it

Bonds

long-term debt obligation (liabilities) issues by corporations and governments

Marketing mix (4 Ps)

1. Product

2. Price: something given in exchange for a product (can be non-monetary) 

3. Place: transportation, location, supply chain management, online presence, inventory, atmospherics

4. Promotion: to inform and influence customers to buy the product 

• traditional advertising, sales promotion, PR, personal selling, social media, e-commerce)

Management

process of guiding the development, maintenance, and allocation of resources to attain organizational goals

Human resource management

coordinating and managing human capital/employees

Marketing

creating, communicating, and delivering value

Management consulting

helping organization operate effectively through an outside perspective on problem-solving, strategy to help companies optimize performance

Four primary functions of managers: Planning

The process of deciding what needs to be done to achieve organizational objectives

• how it will be done and who should do it

Four primary functions of managers: Organizing

The process of coordinating and allocating resources to carry out an organization's plans

Four primary functions of managers: Leading

The process of guiding and motivating others toward the achievement of organizational goals

Four primary functions of managers: Controlling

The process of assessing the organization’s progress toward accomplishing its goals

• monitoring the implementation of a plan and correcting deviations from the plan

Corporate culture

The set of attitudes, values, and standards that distinguishes one organization from another

Vision statement

Short description of an organization’s aspirations and the wider impact it aims to create

• A vision statement focuses more on the “why” or meaning behind the company’s actions

Mission statement

Used by a company to explain, in simple and concise terms, its purpose(s) for being. A mission statement typically focuses more on the “what” and “how” of the company. 

Effectiveness

The ability to produce the desired result or good

Efficiency

Using the least amount of resources to accomplish the organization’s goals

Critical thinking skill #1

Organize the information

Critical thinking skill #2

Define the problem

Critical thinking skill #3

Analyze the data

Critical thinking skill #4

Construct argument that address the problem

Critical thinking skill #5

Critique the arguments

Critical thinking skill #6

Communicate your conclusions

Johnson’s 6 questions (1-3)

1. Did I read the instructions?

2. Could I explain these rules to a peer?

3. Does my final work actually fulfill the requirements?

(competing to a standard)

Johnson’s 6 questions (4-6)

4. What would my peers likely do?

5. What unique am I doing?

6. Am I doing anything extra?

(Relative to competition/others, not just rules)

7 core confidences

1. problem solving

2. communication

3. teamwork

4. leadership

5. integrity

6. managing people & projects

7. entrepreneurship

The basic mental processes

Perceiving: taking in information

• sensing & intuition (functions)

Judging: making decisions about information

• thinking & feeling (functions)

Management information system

study of people, technology, organization, and the relationships among them

• leveraging systems that we use to organize (manage) information

• two buckets: systems & security

spreadsheets

crunching numbers (numerical data, calculations, formulas)

“Enterprise” in MIS world

trying to cover the whole process (one place, everything gets done)

Segmentation

dividing levels of access security-wise

• edit only, view only on google sheets

“Are we measuring what we value or valuing what we measure?”

start paying attention to the things that ACTUALLY matter

• just because we measure/count something does NOT correlate to importance

Accounting

process of tracking, recording, and reporting a company's financial transactions to understand its financial health and make informed decisions

Accounts payable

money a company owes to its suppliers/creditors (debt)

Accounts receivable

money owed to a company for its goods/services (assets)

Management

development, maintenance, and allocation of resources

Types of planning: Operational

very specific procedure; doing the thing; day-to-day activities

Types of planning: Logistics

having the resources to do the thing; the movement, storage, flow of goods, materials, information

Types of planning: Strategic

long-term, broad goals

• “where are we going?”

Types of planning: Tactic

short-term, more specific goals

• action-oriented goals

Contingency

back-up plan

• unexpected events, emergencies, disruptions

• “what do we do if things go wrong?”

Planning at different levels: First-level manager

• shift leaders, team supervisors, assistant managers

• operational planning

• “front-line” temporarily in charge

• day-to-day activities: employee schedules, daily tasks, workflow plans

Planning at different levels: Middle-level manager

• department managers, regional managers, division heads

• tactical planning

• assigned budget to meet specific departmental plans/goals

Planning at different levels: Top Executives

• “C-suite”: CEO, CTO, CFO, President, VP

• strategic & contingency planning

• major goals, mission, and overall vision

Leading sources of power: Legitimate

hierarchical position

Leading sources of power: Expert

expertise/credibility

Leading sources of power: Reward

incentives

Leading sources of power: Coercive

threats

Referent

interpersonal relationships built

#1 Tuckman’s Stage of Group Development: Forming

excitement, polite, forgiving, welcoming, optimistic

#2 Tuckman’s Stage of Group Development: Storming

a little bit of tension, unmet expectations, lack of communication

#3 Tuckman’s Stage of Group Development: Norming

solidify the roles, pinnacle of the team (people think), everyone is doing their job

#4 Tuckman’s Stage of Group Development: Performing

Tuckman’s pinnacle → focus is on the teams duties NOT the individuals

#5 Tuckman’s Stage of Group Development: Adjourning

plan for ending and parting ways

Blooms Taxonomy

1. knowledge: low-level questions, vocabulary, memorization

• flashcards, pneumonic devices

2. comprehension: understanding what’s going on

• putting it into your own words or explaining to someone else

3. application: take tests and write questions

4. analysis: matrices/tables → study it vertically, NOT horizontally

5. synthesis: putting pieces together to create something new

• designing, planning, creating

6. evaluation: making judgements based on criteria

• critiquing, comparing

Information processing

1. stimulus (input)

2. short-term memory (5-7 minutes) → encode with rehearsal

3. long-term memory → retrieval path

4. output (accurately + quickly)

Marketing + Economics = ?

Value

• doesn’t have to be monetary

• opportunity cost

Debt financing

borrowed money that must be paid back over time with interest

Equity financing

raising money by selling ownership shares of the business

• one-time deal and money isn’t repaid

Valuation

assessment of how valuable a business, asset, or company is

• most involved with the finance sector

Private → public company

a private company sells shares to the public for the first time (IPO)

Public → private company

a public company buys back its shares (or is bought out) and is no longer traded on the stock market

Market segmentation

process of dividing a large market of customers into smaller groups based on shared characteristics

• demographics, geographic, psychographic, behavioral

Sustainability (supply-chain context)

environmental, social, and economic factors

• future, long-term success

Hire Aggies

Texas A&M University’s official career platform where students can

• search for jobs and internships

• schedule career advising appointments

• register for career fairs & connect with employers