General Management Exam Review - NOCTI

management

the process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources

planning

a management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives

organizing

a management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organizations goals and objectives

leading

creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organizations goals and objectives

controlling

a management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not

vision

an encompassing explanation of why the organization exists and where it's trying to head

mission statement

an outline of the fundamental purpose of an organization

goals

the broad, long term accomplishments an organization wishes to attain

objectives

specific, short term statements detailing how to achieve the organizations goals

SWOT analysis

SWOT = Strengths, Weaknesses, Opportunities and Threats; a planning tool used to analyze an organizations strengths, weakness, opportunities and threats

strategic planning

the process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals

tactical planning

the process of developing detailed, short term statements about what is to be done, who is to do it, and how it is to be done

operational planning

the process of setting work standards and schedules necessary to implement the company's tactical objectives

contingency planning

the process of preparing alternative courses of action that may be used if the primary plans don't achieve the organizations objectives

decision making

choosing among two or more alternatives

problem solving

the process of solving the everyday problems that occur. problem solving is less formal than decision making and usually calls for quicker action

brainstorming

coming up with as many solutions to a problem as possible in a short period of time with no censoring of ideas

PMI

PMI = Pluses, Minuses, Implications; listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third column

organization chart

a visual device that shows relationships among people and divides the organizatins work; it shows who is accountable for the completion of specific work and who reports to whom

top management

highest level of management, consisting of the president and other key company executives who develop strategic plans

middle management

the level of management that includes general managers, dividsion managers, and branch and plant managers who are responsible for tactical planning and controlling

supervisory management

managers who are directly responsible for supervising workers and evaluating their daily performance

technical skills

skills that involve the ability to perform tasks in a specific discipline or department

human relations skills

skills that involve communication and motivation; they enable managers to work through and with people

conceptual skills

skills that involve the ability to picture the organization as a whole and the relationship among its various parts

staffing

a management function that includes hiring, motivating, and retaining the best people available to accomplish the company's objectives

autocratic leadership

leadership style that involves making managerial decisions without consulting others

participative (democratic) leadership

leadership style that consists of managers and employees working together to make decisions

free-rein leadership

leadership style that invovles managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives

knowledge management

finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm

external customers

dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use

internal customers

individuals and units within the firm that receive services from other individuals or units

funds

amounts of money

profit

the difference between revenue and expenses

ledgers

books in which financial records are written

trial balance

a summary of all the financial data in the account ledgers that ensures the figures are correct and balanced

annual report

a yearly statement of the financial condition, progress, and expectations of an organization.

profit and loss account

a financial statement showing revenue, expenditure and profit during a given period

the P&L account begins with...

total sales (=revenue) generated during a month, quarter or year

the P&L account ends with...

earnings (= profit / the bottom line)

cost of goods sold (COGS)

manufacturing costs, wages of blue-collar workers, transport costs etc.

operating expenses

salaries of sales and office staff, marketing costs, rent etc.= overheads

non-operating income

profits from investments in other companies

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortization

depreciation

the loss in value of a tangable asset (e.g. a vehicle)

amortization

the loss in value of an intangible asset (e.g. the purchase of a licence or trademark)

balance sheet

a financial statement that reports assets, liabilities, and owner's equity on a specific date

the basic equation that has to balance is:

Assets = Liabilities + Shareholders´ equity

asset

anything of value owned by a business

liability

any amount owed to a creditor

shareholders´ equity

the shareolder's claims on a company's assets after all of its creditors have been paid

current assets or short-term assets

items that can or will be converted into cash within one year; may also include marketable securities

securities

shares (stocks) and bonds

fixed assets or long-term assets

items that are relatively permanent, such as land, buildings, and equipment

intangible assets

long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value

goodwill

customers´ approval and support of a business (reputation, contacts and expertise of companies that have been bought)

current liabilities or short-term liabilities

borrowed money (bank debt, money owed to suppliers, unpaid salaries and bills) that must be repaid within 12 months

long-term liabilities

financial obligations that will take the business more than one year to repay.

working capital

the difference between current assets and current liabilities

bank debt

loan capital including also any overdraft (temporary negative balance)

accounts payable

money an organization owes to its vendors and suppliers.

accrued taxes

taxes built up over time, unpaid taxes

accrued salaries

salaries paid for after the service has been performed, typically includes future bonuses

inventory

the value of raw materials and stock

fixtures

part of a building that cannot be moved, such as lights; personal property so securely attached to real estate that it becomes part of the real estate

mortgage

a long-term bank loan to purchase a home or other real estate

bond

a loan for fixed period of time with fixed interest rate

provisions

amounts set aside for anticipated one-time payments that are not part of regular operations - perhaps a lawsuit, or a compensationpackage for employees being laid off

retained profit

reserves, the amount of profit which is kept back by a business for future investment

cash flow statement

a financial statement that shows the flow of money in and out of the business; it shows the real cash that is available to keep the business running

causes of cash flow problems

late payments and non-payments, unforeseen costs, unexpected changes in demand, over-borrowing from the bank to finance expansion plans

solutions for managing cash flow

credit control, stock control, expenditure control, marketing initiatives, using an outside company to recover a debt

factoring

using an outside company to recover debts, obtaining funding by selling account receivable

debt financing

funds raised through various forms of borrowing that must be repaid (e.g. trade credit, bank loan, issuing bonds)

equity financing

money raised from within the firm, from operations or through the sale of ownership in the firm (e.g. reinvested earnings, sale of assets, issue of new shares)

issues in financial management

cost centres, profit centres, variance analysis, costing methods (standard versus marginal costing), valuing assets

liquidity ratios

measure the ability to turn assets into cash to pay short-term depts

profitability ratios

measure the company's ability to generate profits

leverage (debt) ratios

measure the degree to which a firm relies on borrowed funds in its operations

activity ratios

measure the effectiveness of the use of resources from an operational point of view

finance and organizational structure

CFO (.........................................................) is on the Board. 3 senior managers below report to CFO:

FC (...................................................),

T (..........................) and CAO (...................................)

financial controller (is responsible for)

planning, monitoring (comparing planned spending with actual spending), producing financial data for the senior management team, analysing major financial decisions

treasurer is (responsible for)

managing cash flow and raising new funds

chief accounting officer (is responsible for)

keeping the company´s books, preparing financial statements, preparing tax returns, developing strategies to minimize taxes

accounting

the information system that identifies, records, and communicates the economic events of an organization to interested users (majandusarvestus)

financial accounting

the phase of accounting concerned with providing information to stockholders, creditors, and others outside the organization (finantsarvestus)

bookkeeping

the activity of recording business transactions (raamatupidamine)

Marketing

the commercial processes involved in promoting and selling and distributing a product or service

retailers

channel of distribution that buys goods from wholesalers or directly from manufacturers and resells them to the final consumer.

wholesalers

Obtain goods from manufacturers and resell them to industrial users, other wholesalers and retailers.

buying

pay for something

selling

the exchange of goods for an agreed sum of money

transporting

the marketing function of moving goods

storing

marketing function of holding goods so they're available when they're needed

financing

Budgeting for marketing activities,obtaining the necessary funds needed for operations,and providing financial assistance to customers so they can purchase the business products and service.

researching

Studying buyer interests and needs, testing products, and gathering facts needed to make good marketing decisions

risk taking

bearing the uncertainties that are part of the marketing process

grading and valuing

grouping goods according to size, quality, or other characteristics, and determining appropriate price for products and services

product oriented

An approach to business that centers on capturing business by focusing on creating and manufacturing better products at lower prices.

sales oriented

Companies emphasized widespread distribution and promotion in order to sell products and services