MGT 1101 Chapter 6 Understanding the Management Process
MANAGEMENT – coordinating an organization’s resources to achieve the goals of the
organization.
ORGANIZATIONAL GOALS




Material Resources
Human Resources
Financial Resources
Informational Resources
4 BASIC MANAGEMENT FUNCTIONS
1.
2.
3.
4.
Planning
Organizing
Leading / Motivating
Controlling
PLANNING
-
To set up organizational goals and deciding how to accomplish them.
VISION
o Outlines what the organization wants to be
o Long-term view and concentrates on the future
MISSION
o The purpose of an organization
o Describing why the organization exists and what it does to achieve its vision
STRATEGIC PLANNING
o Create goals, objectives and strategy of an organization
GOALS
-
An end result that an organization is expected to achieve over a one-to-ten year period.
OBJECTIVE
-
A specific statement detailing what an organization intends to accomplish over a shorter
period of time.
Creating Effective Strategy Using SWOT Analysis
ORGANIZING
-
Group of resources and activities to accomplish some end result in an efficient and
effective manner.
Human Resources
Material Resources
Informational Resources
Financial Resources
BUSINESS
LEADING
-
Influencing people to work toward a common goal
Styles of Leadership:



Autocratic
Participative
Delegative
AUTOCRATIC
-
Workers are told how to do their work
There is no role in the decision making process of the workers
PARTICIPATIVE
-
All members of the team are involved in decision making process
DELEGATIVE
-
Leaders allow group members to make decisions by themselves
CONTROLLING
-
Evaluating and regulating ongoing activities to make sure that goals are achieved.
3. Taking
corrective
action
1. Setting
Standards
2. Measuring
actual
performance
Chapter 5 Using Accounting Information
PART 1
ACCOUNTING The process of systematically collecting, analyzing, and report financial
information
Examples of Financial Information
1. How much profit did a business earn last year?
2. How much tax did a business pay?
3. How much cash does a business have to pay lenders?
Who Use Accounting Information.
The Users:
1. Management and Employees
2. Lenders and Suppliers
3. Stockholders and Investors
4. Government Agencies
-Confirm tax liabilities
-Approve new issues of stocks and bonds
Different Types of Accounting
1. Managerial Accounting
Management and Employees
-To provides managers and employees within the organization with information needed
-To make decisions about a firm’s financing, investing, marketing, and operating
activities
2. Financial Accounting
Lenders and Suppliers, Stockholders and Investors and Government Agencies
-Generates financial statements and reports for interested people outside an
organization
ACCOUNTING (FINANCIAL) REPORTS
Financial Statements
1. Balance Sheet
A summary of the dollar amounts of a firm’s assets, liabilities, and owners’ equity
2. Income Statement
A summary of a firm’s revenues and expenses during a specified accounting period
3. Cash Flow Statement
A report of the cash generated and used during the specified time interval
Accounting Equation:
1. Balance sheet
Asset = Liabilities + Equity
The used of fund (money) and the sources of fund (money)
2. Income Statement
-Gross Profit: Consider only direct cost or cost directly related to production process
-Operating Expenses: cost related to selling and operating activities
-Interest Expenses: Consider cost of debts or liabilities
3. Statement of Cash Flow
1. Cash flows from operating activities
- providing goods and services how much cash is paid to producing and generated from
selling a company's products
2. Cash flows from investment activities
- purchase and sale of land, equipment, and other assets and investments
3. Cash flows from financing activities
- changes in debt obligation and owners’ equity accounts)
PART 2
Evaluating Firm’s Financial Performance by Using Financial Ratios
Financial Ratio-is used to measure a firm’s financial performance. Fraction of two values from
financial reports
Two Types of Analysis

Trend Analysis (compared with the firm’s own past)

Cross-sectional Analysis (compared with competitors or industry)
4 Groups of Financial Ratios:
1. Liquidity Ratios- ability to repay short-term debt
(Example: Current Ratio)
2. Profitability Ratios- ability to make profit
(Example: Net Profit Margin)
3. Asset Management Ratios- ability to use assets
(Example: Total Asset Turnover)
4. Debt Management Ratios- the degree of using debt
(Example: Debt to Equity Ratio)
Chapter 12 Mastering Financial Management
Financial Management is one of resources to succeed a company’s goal; therefore, it is all the
activities involving obtaining money and using money effectively.
Financial Planning has 3 steps:
1. Establishing Goal- An ultimate result that a firm expects to succeed
2. Determining money needed- by using cash budget or capital budget
3. Identifying sources of funds- identify between debt and equity financing
SOURCES OF FUNDS
1. Short-term debt
1.1 Unsecured Debt
1.2 Secured Debt
2. Long-term debt
2.1 Term-loan agreement
2.2 Corporate bonds
3. Selling stock
3.1 The primary market
3.2 The second market
4. Retained Earnings- The portion of a corporation’s profits not distributed to stockholders
5. Venture Capital- Money invested in small firms
6. Private Placement- Stock and other corporate securities are sold directly to large
institutional investors
Chapter 3: Business in Global Setting
Trade - to sell to (export)
Means selling raw materials or goods to other nations
- to buy from (import)
Means buying raw materials or goods from other nations
BOT = Export value – Import value
Trade Restrictions: An artificial restriction on the trade of goods and/or services between two
countries.
Reasons for Trade Restrictions
1. To protect new or weak industries and national security
2. To protect the citizen health
3. To retaliate for another country’s trade restriction
4. To protect domestic jobs
Against Trade Restrictions
1. Higher price for customers
2. Restriction of customers’ choices
3. Misallocation of international resources
4. Loss of jobs
Types of Trade Restriction
1. Tariff Barrier
1.1 Import duty (tariff) is a tax on a particular foreign good entering a country.
1.2 Revenue tariffs are imposed to generate income for the government.
1.3 Protective tariffs are imposed to protect domestic country
2. Nontariff Barrier
2.1 Import quota is a limit amount of a good that may be imported during a given time.
2.2 Embargo is the partial or complete prohibition of commerce and trade with a particular country
or a group of countries.
2.3 Foreign exchange control is a global decentralized market for the trading of currencies.
2.4 Currency devaluation is the reduction of the value of a nation’s currency.
2.5 Bureaucratic red tape is imposed unnecessarily burdensome and complex standards and
requirements for imported goods.
Methods of Entering International Business
1. Licensing – involves selling copyrights, patents, trademarks, or trade names or legal rights in exchange
for fees known as royalties.
2. Exporting – selling and shipping raw materials or goods to other nations.
3. Joint Venture – an agreement between two or more firms that involves creating a separate entity.
4. Totally Owned Facilities – are a direct investment provides complete control over operations.
5. Strategic Alliances – a relationship between two or more parties to pursue a set of agreed upon goals
or to meet a critical business need while remaining independent organications.
6. Trade Companies – provide a link between sellers and buyers in different countries
7. Multination Company - a firm that operate on a worldwide scale without ties to any specific nations.