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BA 101 Midterm #1 - Bauer
Text: Chpt.1 - Chpt.4; TMG: 1-4, 6-7, 10
84
Business
Undergraduate 1
10/22/2012

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Term
Three Factors of Production
Definition
1) Raw materials or natural resources
2) Tools and machinery, and;
3) Labor or human resources
Term
Economics
Definition
A study of distributing resources for the production of goods and services within a social system
Term
Capitalist or Private Enterprise System
Definition
Individual citizens own and operate the majority of businesses and the market determines the distribution of resources
Term
Demand
Definition
The quantity of goods and services that consumers are willing to buy at different prices
Term
Supply
Definition
The quantity of goods and services that businesses are willing to provide at those prices
Term
Private enterprise system requires the existence of four conditons
Definition
1) Private property;
2) Freedom of choice;
3) The right to keep profits, and;
4) An environment where fair competition can occur.
Term
Markets
Definition
Any mechanism that facilitates the exchange of goods and services between buyers and sellers
Term
Specialization
Definition
A measure of how broadly or narrowly defined the range of included activites are; Creates an opportunity for greater efficiency and increased productivity.
Term
Market Uncertainty
Definition
Having a lack of knowledge of what will happen--the unpredicatability about the consequences of your choice--in a decision situation
Term
Economic Cost
Definition
The money spent implementing the decision
Term
Opportunity Cost
Definition
The cost of what you gave up doing when you committed to the course of action you chose
Term
A Business
Definition
An organization or individual that seeks a profit by providing products that satisfy people's needs (or wants)
Term
Product
Definition
A good, service, or idea that has both tangible and intangible characteristics that provide the satisfaction or benefits
Term
Profit
Definition
The basic goal of business and is the difference between what it costs to make and sell a product and what the customer pays for it
Term
Stakeholders
Definition
Groups of people who have a vested interest ("stake") in the actions a business takes; Four major groups: owners, employees, customers, and citizens
Term
Marketing
Definition
The activities designed to provide goods and services that satisfy customers; Include market research, development of products, pricing, promotion, & distribution
Term
Accounting
Definition
The process that tracks, summarizes, and analyzes a firm's financial postition
Term
Production
Definition
The activities and processes used in making products; Involve designing the production process and the efficient management and operation of those processes
Term
Finance
Definition
The activites concerned with funding a business and using resources effectively
Term
Planning
Definition
Determining what the organization needs to do and how to get it done
Term
Organizing
Definition
Arranging the organiztion's resources and activites in such a way as to make it possible to accomplish the plan
Term
Operating
Definition
Enacting the plan, including guiding and motivating employees to work toward accomplishing the necessary tasks
Term
Controlling
Definition
Measuring and comparing performance to expectations established in the planning process, and adjusting either the performance or the plan
Term
Research & Development (R&D)
Definition
Designs your product line; the department needs to invent and revise products that appeal to your customers' changing needs
Term
Marketing Department
Definition
Department prices and promotes your products; interacts with your customers via its sales force and distribution system; also responsible for sales forecasts
Term
Production Department
Definition
Department determines how many unites will be manufactured during the year. Is also responsible for buying and selling production lines
Term
Finance Department
Definition
Department makes sure your company has the financial resources it needs to run throught the year. The department can raise money via one-year bank notes, 10-year bonds or stock issues
Term
R&D and Marketing
Definition
R&D works with Marketing to make sure products meet customer expectations
Term
R&D and Production
Definition
R&D works with Production to ensure assembly lines are purchased for new products. If Production discontinues a product, it should notify R&D.
Term
Marketing and Production
Definition
Works with Production to make sure manufacturing quantities are in line with forecasts; market growth projections also help Production determine appropriate levels of capacity. If Marketing wants to discontinue a product, it tells Production to sell the product's production line.
Term
Marketing and Finance
Definition
Works with Finance to project revenues for each product and to set the Accounts Receivable policy, which is the amount of time customers can take to pay for their purchases
Term
Finance and Production
Definition
Production tells Finance if it needs money for additional equipment.
If Finance cannot raise enough money, it can tell Production to scale
back its requests or perhaps sell idle capacity
Term
Finance and All Departments
Definition
The Finance Department acts as a watchdog over company
expenditures. Finance should review Marketing and Production
decisions. Finance should cross-check Marketing’s forecasts and
pricing. Are forecasts too high or too low? Will customers be willing
to pay the prices Marketing has set? Is Production manufacturing
too many or too few units? Does Production need additional
capacity? Has Production considered lowering labor costs by
purchasing automation?
Term
Market Research
Definition
To determine the needs of its customers
Term
Market Mix
Definition
To determine how to satisfy those needs through addressing product, price, place, promotion, and service
Term
Market Strategy
Definition
To analyze its competitive advantages, plans, and actions
Term
Target Marketing
Definition
To select specific markets to serve
Term
Geographic Segmentation
Definition
Focusing on understanding the needs of customers in a particular geographic area
Term
Demographic Segmentation
Definition
Focusing on the attributes of the market based upon gender, age, income, education, or other measurable factors
Term
Psychographic Segmentation
Definition
Identifying and promoting to groups of people based on lifestyle and behaviors that are most likely to buy the product. This may be based on interests, fears, behaviors, or actions that can be categorized into groups
Term
Diminishing Return/Rate of Diminishing Return
Definition
States that adding additional investment beyond a certain threshold will not add proportional returns
Term
Management Accounting
Definition
Helps managers plan, operate, and control a company's activities; provides vital information about a company to internal users
Term
Financial Accounting
Definition
Provide a source of information about the company's performance; Gives information about a company to external users
Term
Balance Sheet
Definition
Summarizes its financial position on a given date; lists the company's assets, liabilities, and owner's equity; like a snapshot or where the company's wealth is at a given point in time; also called a statement of financial position
Term
Assets
Definition
The economic resources that a company owns and that it expects will provide future benefits to the company; Anything owned or under the direct control of a company is an asset
Term
Liabilities
Definition
The company's economic obligations (debts) to its creditors, including people outside the company, such as banks and suppliers, as well as the employees within the company. Anything that is owed by a firm is a liability
Term
Owner's Equity
Definition
The owner's current investment in the assets of the company includes the owner's original contribution to the company and any earnings (net income) that the owner leaves in the company; also called the stockholders' equity
Term
Basic accounting equation/Balance sheet identity
Definition
Assets = Liabilities + Owner's Equity
Term
Current Assets
Definition
Assets that can (will be) converted to cash within the year
Term
Accounts Receivable
Definition
The amount your customers owe because they purchased from you on credit
Term
Fixed Assets
Definition
Assets that have a long-term use or value, including land, building, and equipment
Term
Accumulated Depreciation
Definition
How much of the value of your plant and equipment you have used up while operating your business over time
Term
Current Liabilities
Definition
The loans that have to be paid back within a year
Term
Accounts Payable
Definition
The amount that you owe your suppliers for materials (inventory) that you purchased on credit
Term
Current Debt
Definition
The loans (part of a long-term loan) to be paid back this year
Term
Long-term Liabilites
Definition
The loans (or debt contracts) that you have to be paid back at some point in the future (in more than a year's time)
Term
Raw Materials Inventory
Definition
Purchased materials or component parts to create the product you make
Term
Work-in-process inventory
Definition
When you are in the middle of producing or assembling a product for sale at any point in time, materials and labor committed to creating that product
Term
Finished Goods Inventory
Definition
These are the finished products you have on hand, ready for sale
Term
Retained Earnings
Definition
Amount that owners reinvest back into the company
Term
Dividend
Definition
Make payments out of profits
Term
Book Value
Definition
The value of that asset on the balance sheet or the "books" of the company; Book Value = Owner's Equity / Number of Shares Outstanding
Term
Revenues
Definition
The total of the prices charged to a company's customers for the goods or services the company provides to them
Term
Expenses
Definition
The costs of providing the goods or services
Term
Net Income
Definition
The excess of revenues over expenses, or the company's profit; a net loss arises when expenses are greater than revenues
Term
Income Statement
Definition
Description of the activity in transactions that affect the retained earnings account; tells a story about the activity of a company over a period of time
Term
Revenue
Definition
Funds that come into the company from the sale of goods or services; can be sales that are in cash or on-account
Term
Variable Costs
Definition
Costs that vary with the level of activity--the more products you make, the greater the total cost; made up of material costs, labor costs, & inventory carrying costs
Term
Material Costs
Definition
The cost of the materials (raw material & component parts) that are used in the products you sold
Term
Labor Costs
Definition
The cost of the labor (human resources) used to produce the products sold
Term
Contribution Margin
Definition
The difference between the revenue brought in by sales and the cost of making the products for sale; the difference is what is left over to operate your business and as profit
Term
Period Costs
Definition
Costs that are fixed over a period of time; do not vary with the level of activity
Term
Net Income
Definition
Revenues minus variable costs minus period costs minus interest expenses and taxes; synonymous with profit, earnings, "return", and "bottom line"
Term
Three Basic Aspects to the Production Process
Definition
1) Quantity of the commodity produced;
2) Form of the good produced'
3) Temporal and spatial distribution of the commodity produced
Term
Human Resources
Definition
Employees and their skills involved in the production process
Term
Capacity
Definition
The annual production capabilities of the facilities, technology, machinery, and equipment
Term
Economies of Scale
Definition
Occurs when the cost of each good produced decreases as the volume produced increases
Term
Total Quality Management
Definition
The act of monitoring and improving the quality of products and services produced
Term
Benchmarking
Definition
Another quality-improvement technique; describes a method of evaluating performance by comparison with another specified level achieved by another entity
Term
Promotion
Definition
Each product’s promotion budget determines its level of awareness. A
product’s awareness percentage reflects the number of customers
who know about the product. An awareness of 50% indicates half of
the potential customers know it exists. From one year to the next, a
third (33%) of those who knew about a product forget about it.
Last Year’s Awareness - (33% × Last Year’s Awareness) =
Starting Awareness
Term
Capacity
Definition
First-shift capacity is defined as the number of units that can be
produced on an assembly line in a single year with a daily eight-hour
shift. An assembly line can produce up to twice its first-shift capacity
with a second shift.
Term
Automation
Definition
As automation levels increase, the number of labor hours required to
produce each unit falls. The lowest automation rating is 1.0; the
highest rating is 10.0.
At an automation rating of 1.0, labor costs are highest. Each
additional point of automation decreases labor costs approximately
10%. At a rating of 10.0, labor costs fall about 90%.
Term
Customer Awareness
Definition
Is determined by the Marketing Department's promotion budget--the higher the budget, the higher the awareness.
Term
December Customer Survey Score
Definition
Indicates how customers in the segment perceived the products. The survey evaluates the product against the buying criteria
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