EXAM 2
REVIEW
EXAM 2
REVIEW
Chapters 918
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 09
Production
and
Operations
Management
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
From Production
to Operations
Management
OPERATIONS MANAGEMENT
LG2
• Operations Management -- A specialized area in
management that converts or transforms resources
into goods and services. Used in both manufacturing
and service industries.
• Operations management includes:
-
Inventory management
Quality control
Production scheduling
Follow-up services
9-3
Operations
Management in
the Service Sector
LG2
OPERATIONS MANAGEMENT
in the SERVICE SECTOR
• All about creating a good experience for those
who use the service.
• In hotels, like RitzCarlton, operation
management
includes fine dining,
fresh flowers, and
training for every
employee.
9-4
Production
Processes
FORM UTILITY
LG3
• Form Utility -- The
value producers add
to materials in the
creation of finished
goods and services.
• When firms
successfully produce
products, they create
form utility
9-5
Production
Processes
LG3
PROCESS and ASSEMBLY in
PRODUCTION
• Process
Manufacturing -- The
part of production that
physically or chemically
changes materials.
(boiling the egg)
• Assembly Process -The part of the
production process that
puts together
components. (egg,
coffee, toast = breakfast)
9-6
Production
Processes
KEY PRODUCTION PROCESSES
LG3
• Production processes are either continuous or
intermittent.
• Continuous Process -- Long production runs turn
out finished goods over time. (exp: long conveyor belt
with eggs that continuously are dropped into water –
continuous stream of 3 minute eggs)
• Intermittent Process -- Production runs are short
and the producer adjusts machines frequently to
make different products.(exp: a toaster in a diner or
oven in a bakery)
9-7
Quality Control
QUALITY CONTROL
LG4
• Quality -- Consistently
producing what the customer
wants while reducing errors
before and after delivery.
Which is a never ending
process lead to industry
adoption of…
• Six Sigma Quality -- A
Photo Courtesy of: Argonne National Laboratory
quality measure that allows
only 3.4 defects per million
opportunities. Detects
problems early in the process
9-8
Materials
Requirement
Planning
MRP and ERP
LG4
• Materials Requirement Planning (MRP) -- A
computer-based operations management system that
uses sales forecasts to make sure parts and
materials are available when needed.
• Enterprise Resource Planning (ERP) -- A newer
version of MRP, is a computer application that
enables a firm to combine computerized
functions of all divisions and subsidiaries of the
firm into a single, integrated software program
that uses a single database. (including all
functions like finance, HR, sales)
9-9
Purchasing
PURCHASING
LG4
• Purchasing -- Is the
operations management
planning function that
searches for high-quality
material resources, finds the
best suppliers and
negotiates the best price for
goods and services.
9-10
Just-in-Time
Inventory Control
INVENTORY CONTROL
LG4
• Just-in-Time (JIT) Inventory Control -- The
production process in which a minimum of inventory
is kept and parts, supplies and other needs are
delivered just in time to go on the assembly line.
• To work effectively, the process requires excellent
coordination with suppliers.
• Problems can arise when suppliers are far
away…environmental factors
9-11
Chapter 10
Motivating
Employees
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The Value of
Motivation
INTRINSIC REWARDS
• Intrinsic Rewards -- Personal satisfaction you feel
when you perform well and complete goals.
• Examples of Intrinsic Rewards:
- Pride in your
performance
- Sense of
achievement
10-
Frederick Taylor:
The Father of
Scientific
Management
LG1
FREDRICK TAYLOR is
known as the father of
SCIENTIFIC MANAGEMENT
• Scientific Management -- Studying workers to find
the most efficient ways of doing things and then
teaching people those techniques.
• This was the dominant strategy for improving
productivity during the early 1900s.
10-
Motivating
Employees
Across
Generations
LG8
MOTIVATING ACROSS the
GENERATIONS
• The workplace is now 4 generations deep
• When reflecting upon the newer generation,
each older generation says the same thing that
the newer generation "breaks the rules.“
• When unhappy employees leave a company,
the firm normally ends up losing
money…keeping employees motivated is
important for all businesses.
10-15
Motivating
Employees
Across
Generations
LG8
MOTIVATING ACROSS the
GENERATIONS
• Traditionalists (1925 - 1945)
•
Lived through the Great Depression and World
War II
• Baby Boomers (1946 – 1964)
•
Experienced great economic prosperity, job
security, optimism about their future
• Generation X (1965 – 1980)
•
Raised in dual-career families, attended day
care, feeling of insecurity about jobs
• Generation Y or Millennials (1980 – 2000)
•
Raised by indulgent parents, used to many
comforts like computers and cell phones
10-16
Motivating
Employees
Across
Generations
LG8
Traditionalists and Baby Boomers
in the WORKPLACE
Traditionalists:
•
prefer to communicate face-to-face. Their second
choice of communication is by phone
•
recordings often (like voicemail and automated
answering systems) often frustrate them.
Baby Boomers:
•
Are the idealistic generation that were raised during
a time of prosperity;
•
Very focused on work; Do not embrace work-life
balance as much as more recent generations
10-17
Motivating
Employees
Across
Generations
LG8
GENERATION X in the
WORKPLACE
-were raised by parents who placed a lot of focus on work;
- they're parents' layoffs added to their insecurity, as well
as the fact that they spent a lot of time in daycare
situations; motivated by flexibility in the workplace
- they are better than former generations at providing
employee feedback;
- they believe in work-life balance;
- past lessons make them advocates of career security
more than job security;
- they are good at collaboration and consensus building
- they are more free reign or democratic style of
managers.
10-18
Motivating
Employees
Across
Generations
LG8
MILLENNIALS and the
WORKPLACE
- were raised by indulgent parents;
- motivated by flexibility in the workplace
- are very tech savvy;
- are not rushing to find a job; more focused on
choosing a career;
- want employers who can adapt to them;
- place importance on work-life balance and
want managers who understand this;
- are blunt, expressive, and image-driven;
- they seem to multi-task better than previous
generations
10-19
Chapter 11
Human
Resource
Management:
Finding and
Keeping the
Best
Employees
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Working with
People is Just
the Beginning
LG1
HUMAN RESOURCE
MANAGEMENT (HRM)
• Human Resource Management -- The process
of determining human resource needs and then
recruiting, selecting, developing, motivating,
evaluating, compensating and scheduling employees
to achieve organizational goals.
• HRM’s role has grown because of:
1. Increased recognition of employees as a
resource.
2. Changes in law that rewrote old workplace
practices.
11-
Developing the
Firm’s
Ultimate
Resource
LG1
DEVELOPING the FIRM’S
ULTIMATE RESOURCE
• The human resource job is now the job of all
managers in an organization...harder job today as
compared to previous decades.
• Service and high-tech manufacturing
requires employees with highly
technical job skills…US is facing a
shortage in skilled employees
• Such workers are scarce, making
recruiting and retention more important
and more difficult
11-22
The Human
Resource
Challenge
LG1
CHALLENGES in FINDING
HIGH-LEVEL WORKERS
• A shortage of trained workers in key areas
• Worker shortage in skilled trades
• An increasing number of baby boomers who delay
retirement
• A declining economy with fewer full-time jobs
• Increasing benefit demands and benefit costs
• A decreased sense of employee loyalty – higher turn
over
• A shift in employee attitudes toward work. Leisure time has
become a much higher priority, as have flextime and a
shorter workweek.
11-23
Hiring
Contingent
Workers
HIRING CONTINGENT WORKERS
LG5
• Contingent Workers -- Include part-time and
temporary workers, seasonal workers, independent
contractors, interns and co-op students.
• There are about 5.7
million contingent
workers in the U.S.
• Majority of contingent
workers are under 25; no
health care; benefits.
11-24
Hiring
Contingent
Workers
LG5
WHY HIRE
CONTINGENT WORKERS?
• Companies hire contingent workers:
- When full-time workers are on leave
- During periods of peak demand
- In uncertain economic times
- To save on employee benefits
- To screen candidates for future employment
11-25
Training and
Developing
Employees for
Optimum
Performance
LG6
MOST COMMONLY USED TRAINING
and DEVELOPMENT ACTIVITIES
• Orientation
• On-the-Job Training
• Apprenticeships
• Off-the-Job Training -higher education
• Online Training
• Vestibule Training – near
by classroom setting
• Job Simulation – real
conditions
Note: Be sure you can
identify and describe
these!!!
11-26
Networking
LG6
USING NETWORKS and
MENTORING
• Networking -- Establishing and maintaining
contacts with key managers in and out of the
organization and using those contacts to develop
relationships.
• Mentors -- Managers who supervise, coach and
guide selected lower-level employees by acting as
corporate sponsors.
11-27
Chapter 12
Dealing with
Union and
EmployeeManagement
Issues
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Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Employee Management
Issues
ORGANIZED LABOR
LG1
• Unions -- Employee organizations whose main
goal is to represent members in employeemanagement negotiations of job-related issues.
• Historically, managers were more concerned with
productivity and less concerned with safety,
friendly relations with coworkers, fair wages, etc.
• Labor unions were responsible for:
- Minimum wage laws
- Overtime rules
- Workers’ compensation
- Job-safety regulations
12-29
Management
Tactics
TACTICS USED in CONFLICTS
LG4
• Tactics used by management include:
- Lockouts
- Injunctions
- Strikebreakers
12-30
Management
Tactics
LG4
LOCKOUTS, INJUNCTIONS and
STRIKEBREAKERS
• Lockout -- An attempt by
management to put pressure on
workers by closing the business,
thus cutting off workers’ pay.
• Injunction -- A court order
directing someone to do something
or refrain from doing something.
• Strikebreakers -- Workers hired
to do the work of striking workers
until the labor dispute is resolved;
called scabs by unions. (Unions
call them Scabs)
12-31
Tactics Used in
LaborManagement
Conflicts
LG4
TACTICS USED in CONFLICTS
when collective
bargaining/negotiations fail
• Tactics used by labor unions include:
- Strikes
- Boycotts
- Work Slowdowns
- Pickets
12-32
Union Tactics
STRIKES and BOYCOTTS
LG4
• Strikes -- A strategy in which workers refuse to go to
work.
• Primary Boycott -- When a union encourages both its
members and the general public not to buy the products
of a firm in a labor dispute.
• Secondary Boycott -- An attempt by labor to
convince others to stop doing business with a firm that is
the subject of a primary boycott…hurts other businesses
not directly involved. Prohibited by Taft-Hartley
12-33
Future of Unions
and LaborManagement
Relations
LABOR UNIONS in the FUTURE
LG4
• Union membership will include more whitecollar, female and foreign-born workers than in
the past.
• Unions will take on a greater
role in training workers,
redesigning jobs and
assimilating the changing
workforce.
• Unions will seek more job
security, profit sharing and
increased wages.
12-34
Chapter 13
Marketing:
Helping
Buyers Buy
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Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
What is
Marketing?
LG1
FOCUS of CONTEMPORARY
MARKETING
• Marketing today involves helping the buyer buy
through:
- Websites that help buyers find the best price,
identify product features, and question sellers.
- Blogs and social networking sites that cultivate
consumer relationships.
- Helps identify the best way to get products to
the consumer
13-
The Evolution
of Marketing
LG1
The CUSTOMER
RELATIONSHIP ERA
• Customer Relationship Management (CRM) -Learning as much as you can about customers and
doing what you can to satisfy or exceed their
expectations over time.
• Organizations seek to enhance customer
satisfaction building long-term relationships.
• Today firms like Priceline and Travelocity use
CRM that allow customers to build a relationship
with the suppliers.
13-37
Developing an
Effective
Promotional
Strategy
PROMOTING the PRODUCT
LG2
• Promotion -- All the techniques sellers use to
inform people about their products and motivate them
to purchase those products. INCLUDES Advertising!
• Promotion includes:
- Advertising
- Personal selling
- Public relations
- Word of mouth
- Sales promotions
- Relationships – listening and responding to
customer feedback
13-38
Designing a
Product to Meet
Consumer
Needs
DEVELOPING a PRODUCT
LG2
• Product -- A good, service, or idea that satisfies a
consumer’s want or need.
• Test Marketing -- Testing
product concepts among
potential product users.
13-39
Providing
Marketers with
Information
SEARCHING for INFORMATION
LG3
• Marketing Research -- Analyzing markets to
determine challenges and opportunities, and finding
the information needed to make good decisions.
• Research used to determine what customers
have purchased in the past, what situational
changes have occurred to change consumer
preferences, and what consumers are likely to
want in the future.
13-40
The Businessto-Business
Market
LG6
BUSINESS-to-BUSINESS
MARKET (B2B)
• B2B marketers include:
- Manufacturers
- Wholesalers and retailers
- Hospitals, schools and charities
- Government
• Products are often sold and resold several times before
reaching final consumers.
• B2B market involves the marketing of goods and
services to institutions that sell, rent, produce or supply
goods to others
13-41
Chapter 14
Developing
and Pricing
Goods and
Services
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Packaging
Changes the
Product
LG3
SOME KEY FUNCTIONS of
PACKAGING
1) To attract buyers’ attention
2) Protect the goods inside and be tamperproof
3) Be easy to open
4) Describe and give information about the product
5) Explain the product’s benefits
6) Provide warranty information and warnings
7) Give an indication of price, value, and uses
14-43
Branding and
Brand Equity
UNDERSTANDING BRANDING
LG4
• Brand -- Name, symbol, or design that identifies the
goods or services and distinguishes them from
competitors’ offerings.
• Trademark -- A brand
that has exclusive legal
protection for both its
brand name and design.
14-44
Branding and
Brand Equity
KEY BRAND CATEGORIES
LG4
• Generic Goods -- Nonbranded products that sell at
a discount compared to manufacturers’ or dealers’
brands.
14-45
The New
Product
Development
Process
LG5
The NEW PRODUCT
DEVELOPMENT PROCESS
New product
failure is common
due to the fact
that companies
fail to properly
manage the new
product
development
process.
80% of all new
products
introduced in a
year fail to meet
their business
objective
14-46
Product
Development
and Testing
LG5
BRINGING NEW PRODUCTS
to the MARKET
• Concept Testing -- Takes a product idea to
consumers to test reactions.
14-47
The Product
Life Cycle
LG6
The FOUR STAGES of a
PRODUCT LIFE CYCLE
Once a product has been developed and tested…it
goes to market..
• Product Life Cycle -- A theoretical model of what
happens to sales and profits for a product over time.
• Product Life Cycle Stages:
1. Introduction
2. Growth
3. Maturity
4. Decline
14-48
Chapter 15
Distributing
Products
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Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
The Emergence
of Marketing
Intermediaries
LG1
WHAT are MARKETING
INTERMEDIARIES?
• Marketing Intermediaries -- Organizations that assist
in moving goods and services from businesses to
businesses (B2B) and from businesses to consumers
(B2C).
• Some economists would say that intermediaries add
costs to the channel of distribution and need to be
eliminated. HOWEVER….
• Intermediaries usually create enough value to justify
their inclusion in the distribution process
15-
The Emergence
of Marketing
Intermediaries
LG1
TYPES of MARKETING
INTERMEDIARIES
• Agents and Brokers -- Intermediaries who bring
buyers and sellers together and assist in negotiating
an exchange but do not take title to the goods.
• Wholesaler -- An intermediary that sells products
to other organizations such as retailers,
manufacturers, and hospitals.
• Retailer -- An organization that sells products to
ultimate customers.
15-
Logistics:
Getting Goods
to Consumers
Efficiently
USING LOGISTICS
LG7
Logistics - Concerned with flows of materials,
finished products, and information.
Materials Handling - movement of goods within a
warehouse (aka manufacturing firm). Most
concerned with the flow of goods as well as work in
process within the manufacturing firm.
15-52
Logistics:
Getting Goods
to Consumers
Efficiently
LOGISTICS SPECIALISTS
LG7
• Freight Forwarder -- Puts many small shipments
together to create a single large shipment that can be
transported cost-effectively by truck or train. Useful to
a small manufacturer that has shipments that are too
small to fill a truck or railcar
15-53
Chapter 16
Using
Effective
Promotions
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Promotion and
the Promotion
Mix
LG1
INTEGRATED MARKETING
COMMUNICATION (IMC)
• Integrated Marketing Communication (IMC) –
a technique that combines all the promotional tools
into one comprehensive unified promotional
strategy.
• Promotion mix: advertising, publicity, personal
selling, promotion
16-55
Promotion and
the Promotion
Mix
LG1
STEPS in a
PROMOTIONAL CAMPAIGN
1. Identify a target market
2. Define objectives
3. Determine a promotional budget
4. Develop a unifying message
5. Implement the plan
6. Evaluate effectiveness
16-56
Personal Selling:
Providing
Personal Attention
PERSONAL SELLING
LG3
• Personal Selling -- The face-to-face presentation
and promotion of a product, including the
salesperson’s search for new prospects and followup service.
16-57
Steps in the
Selling
Process
STEPS in the SELLING PROCESS
LG3
1. Prospect and qualify
2. Pre-approach – research info gathering
3. Approach – making the call
4. Make a presentation
5. Answer objections
6. Close the sale
• Trial Close -- A statement or question that
moves the selling process toward the purchase.
7. Follow up – FINAL BUT IMPORTANT STEP!!
16-58
Sales Promotion:
Giving Buyers
Incentives
SALES PROMOTIONS
LG5
• Sales Promotion -- The promotional tool that
stimulates consumer purchasing and dealer interest
by means of short-term activities.
16-59
Chapter 17
Understanding
Accounting
and Financial
Information
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
What is
Accounting?
WHAT’S ACCOUNTING?
LG1
• Accounting -- Recording, classifying, summarizing
and interpreting of financial events and transactions
in an organization to provide interested parties
needed financial information.
An important difference between accounting and
other business functions, such as marketing and
management, is that Accounting offers us insight into
whether the business is financially sound
17-61
Managerial
Accounting
MANAGERIAL ACCOUNTING
LG2
• Managerial Accounting -- Provides information
and analysis to managers inside the organization to
assist them in decision making.
• Managerial accounting is involved with:
- Costs of production
- Costs of marketing
- Preparation and control of budgets
- Minimizing tax liabilities
17-62
Financial
Accounting
FINANCIAL ACCOUNTING
LG2
• Financial Accounting -- Financial information and
analyses are generated for people primarily outside
the organization. Outside users are interested in
these questions:
- Is the organization profitable?
- Is it able to pay its bills?
- How much debt does it owe?
• Annual Report -- A yearly statement of the financial
condition, progress, and expectations of the firm.
17-63
Understanding
Key Financial
Statements
FINANCIAL STATEMENTS
LG3
• Financial Statement -- A summary of all the
financial transactions that have occurred over a
particular period. Helps to assess the financial health
of a business
• Key financial statements of
business are:
- Balance sheet
- Income statement
- Statement of cash flows
17-64
Auditing
AUDITING CHECKS ACCURACY
LG2
• Auditing -- Reviewing and evaluating the
information used to prepare a company’s financial
statements.
• Independent Audit -- An evaluation and unbiased
opinion about the accuracy of a company’s financial
statements. Done by someone outside the organization.
• Certified Internal Auditors (CIAs) -- Accountants
who have a bachelor’s degree and two years of
experience in internal auditing and pass an exam
administered by the Institute of Internal Auditors.
17-65
The
Accounting
Cycle
BOOKKEEPER’S ROLE
LG3
• Bookkeeping -- The recording of business
transactions. Bookkeepers divide a firm’s
transactions into meaningful categories and post
them into a record book or computer program called
a journal. Bookkeeping is part of the accounting
cycle, but accounting goes far beyond the activities
involved in bookkeeping
• Double-Entry Bookkeeping -- Bookkeepers
record all transactions in two places so they can
check one list of transactions against the other for
accuracy.
17-66
The
Accounting
Cycle
BOOKKEEPER’S TOOLS
LG3
• Ledger -- A specialized
accounting book that
provides all the
information about a single
account in one place is
called the ledger.
17-67
Classifying
Assets
LG4
CLASSIFYING ASSETS
Listed in this order on a balance sheet based
on liquidity…or how quickly they can be
turned into cash… essay question!
• Current Assets -- Items that can or will be
converted to cash within one year such as cash,
accounts receivable and inventory
• Fixed Assets -- Long-term assets that are relatively
permanent such as land, buildings, or equipment.
• Intangible Assets -- Long-term assets that have no
physical form but do have value such as patents,
trademarks, and goodwill.
17-68
Chapter 18
Financial
Management
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
The Role of
Finance and
Financial
Managers
FINANCIAL MANAGERS
LG1
• Financial Managers -- Examine financial data and
recommend strategies for improving financial
performance.
• Financial managers are
responsible for:
- Paying company bills
- Collecting payments
- Staying abreast of market
changes
- Assuring accounting
accuracy
18-70
The Role of
Finance and
Financial
Managers
WHAT’S FINANCE?
LG1
• Finance -- The function in a business that acquires
funds for a firm and manages them within the firm.
• Finance activities include:
- Preparing budgets
- Creating cash flow analyses
- Planning for expenditures
18-71
The Value of
Understanding
Finance
LG1
WHY DO FIRMS
FAIL FINANCIALLY?
1) Undercapitalization –
insufficient funds to
start the business
2) Poor control over
cash flow
3) Inadequate expense
control
18-72
Working with
the Budget
Process
BUDGETING
LG2
• Budget -- Sets forth management’s expectations
for revenues and allocates the use of specific
resources throughout the firm.
• In order to assist in revenue realization, a
budget allocates resources throughout the firm.
• The budget is the guide for financial operations
and expected financial needs in the future…not
the past
18-73
Working with
the Budget
Process
LG2
TYPES of BUDGETS
• Capital Budget -- Highlights a firm’s spending
plans for major asset purchases that often
require large sums of money (property, buildings
and equipment).
• Cash Budget -- Estimates cash inflows and
outflows during a particular period like a month or
quarter. Helps managers anticipate borrowing,
debt repayment, operating expenses, and shortterm investment opportunities
• Operating (Master) Budget -- Ties together
all the firm’s other budgets and summarizes its
proposed financial activities.
18-74
Establishing
Financial
Control
LG2
ESTABLISHING
FINANCIAL CONTROL
• Financial Control -- A process
in which a firm periodically
compares its actual revenues,
costs and expenses with its
budget.
• The main objective of financial
control is to identify variances to
the financial plan and take
corrective action if necessary.
18-75
EXAM 1
EXAM 2 Structure
73 questions total - 60 minutes to complete
MUST HAVE RED/PINK LARGE SCANTRON
35 multiple choice x 4 pts each
35 T/F x 2 pts each
3 written x 30pts each***
300 points totals
Chap 9 : 4 x T/F and 4 x multiple choice
Chapter 10: 3x T/F and 3 x multiple choice
Chapter 11: 4x T/F and 4x multiple choice
Chap 12: 4x T/F and 4 x multiple choice
Chap 13: 3x T/F and 3 x multiple choice
Chap 14: 3x T/F and 3 x multiple choice
Chap 15: 3x T/F and 3 x multiple choice
Chap 16: 3x T/F and 3 x multiple choice
Chap 17: 4x T/F and 4 x multiple choice
Chap 18: 4x T/F and 4 x multiple choice
5-76