PART I Organization of a Business 1
PART I Organization of a Business 1
Chapter 1 Planning a Business 2
CHAPTER 1 Planning a Business 2
Creditors 4
Owners 4
Key Participants in a Business 4
Employees 5
Customers 6
Summary of Key Participants 7
Interaction among Business Functions 8
Key Functions of Business 8
How Some Business Functions Enhance Decision Making 9
Creating a Business Idea 10
Examples of Successful Business Ideas 10
SMALL BUSINESS SURVEY: Charactarittics of Business Entrsperenears 12
Steps for Creating a Business Iden 12
Developing the Business Plan 13
Management Plan 13
Marketing Plan 14
Financial Plan 15
Summary of a Business Plan 16
SPOTLIGHT ON TECHNOLOGY: Business Planning Suftrars 16
Assessing a Business Plan 17
BUSINESS DILEMMA: Dentaping a New Wa?lth Ch? Business 18
Kcy Terms 21
Review Questions 21
Investing in the Stock of a Business 22
Discussion Questins 22
Running Your Own Business 22
Case 1: Starting a New Business 23
Case 2: Organizing a Business 23
Video Case: Creating a Successful Business 24
The Coca-Cola Company Annual Report Project 24
In-Text Study, Guide 25
APPENDIX 1 Business Addresses 28
CHAPTER 2 Selecting a Form of Business Ownership 36
Chapter 2 Selecting a Form of Business Ownership 36
Possible Forms of Business Ownership 38
Scle Proprietorship 38
Partnership 39
Corporation 41
Comparing Forms of Business Ownership 46
SMALL BUSINESS SURVEY: Key Concerns about Business Owership 47
Methods of Owning Existing Businesses 47
Purchasing an Existing Business 47
Franchising 47
Assuming Ownership of a Family Business 47
SPOTLIGHT ON TECHNOLOGY: Organizing Your Bosiness by Dsing the Intarnet 50
Receiving Assistance as a New Business 51
How Owners Measure Business Performance 51
Return on Investment 51
Risk 51
SELF-SCORING EXERCISE: Do You N?ve the M?c?ssary Skills to Swccead in Business? 54
CROSS-FUNCTIONAL TEAMWORK: Sources of Risk Aeross Businass Functions 55
GLOBAL BUSINESS: O?narship of Forsign Businessat 56
BUSINESS DILEMMA: Owdership Decision at College Nsalth Clwb 56
Summary 57
Discussion Questions 58
Key Terms 58
Review Questions 58
Running Your Own Business 59
Investing in the Stock of a Business 59
Case 1: Decidmg the Type of Business Ownership 59
Case 2: The Franchising Decision 60
Video Case: A Business Ownership Dilemma 60
The Coca-Cola Company Annual Report Project 61
In-Text Study Guide 61
Surfing the Net: What Is the World Wide Web? 63
CHAPTER 3 Business Ethics and Social Responsibility 66
Chapter 3 Business Ethics and Soeial Responsibility 66
Responsibility to Customers 68
Responsible Production Practices 68
How Firms Ensure Responsibility toward Customers 68
Responsible Sales Practices 68
How Consumerism Ensures Responsibility toward Custoniers 69
How the Government Ensures Responsibility toward Customers 69
Responsibility to Emplovees 71
Employee Safety 71
Proper Treatment by Other Employees 71
Equal Oppornmty 73
Conflict with Employee Layoffs 74
GLOBAL BUSINESS: Global Ethics 74
How Firms Ensure Responsibility 75
How Stockholders Ensure Responsibility 75
Responsibility to Stockholders 75
Conther with Excessive Exeeutive Campensation 76
Responsibility to Creditors 77
Responsibility to the Environment 78
Air Pollution 78
Land Pollution 79
Contlict with Fnvironmerital Responsilhility 80
Responsibility to the Community 81
Couflict with Vaxinnizing Social Responsibility 81
SPOTLIGHT ON TECHNOLOGY: When Does Tough Competitlon Become Unethieal? 82
Summary of Business Responsibilities 83
SELF-SCORING EXERCISE: Assessing The Ethical Standards of the Firm Where You Work 83
SELF-SCORING EXERCISE: Assessing Whether Specific Situations Are Ethieal 84
CROSS-FUNCTIONAL TEAMWORK: Ethical Responsibilities Across Businass Functions 85
The Cost of Ensuring Social Responsibilities 85
Cost of Lawsuits 86
BUSINESS DILEMMA: Social Responsibility at College Health Club 87
Summary 89
Review Questions 89
Key Terms 89
Discussion Questions 90
Running Your Own Business 90
Investing in the Stock of a Business 90
Case 1: E-mail and Ethics 90
Case 2: Social Responsibilities to Employees 91
Video Case: Payback for Social Responsibility 91
The Coca-Cola Company Annual Report Project 92
In-Text Study Guide 92
Surfing the Net: Finding Information About Firms on the Internet 94
Summary of Part I 99
PART II Business Environment 101
PART II Business Environment 101
Chapter 4 Economic Environment 102
CHAPTER 4 Economic Environment 102
Macroeconomic Factors that Affect Business Performance 104
Economic Growth 104
Inflation 107
Interest Rates 108
Summary of Macroeconomic Factors that Affect a Firm s Performance 109
GLOBAL BUSINESS: Capitalizing on Global Economic Conditions 110
How Market Prices Are Determined 111
Demand Schedule for the Product 111
Supply Schedule for a Product 112
Interaction of Demand and Supply 112
Effect of a Change in the Demand Schedule 113
Effect of a Change in the Supply Schedule 114
Effect of Demand and Supply on the General Price Level 116
Factors that Influence Market Prices 116
Consumer Income 116
Consumer Preferences 116
Production Expenses 117
Government Influence on Economic Conditions 117
Monetary Policy 117
Fiscal Policy 118
SPOTLIGHT ON TECHNOLOGY: Manitoring the Economic Emvirsnmest 119
Summary of Government Influence on Economic Factors 119
Dilemma of the Federal Government 120
CROSS-FUNCTIONAL TEAMWORK: Econ??mic Effects Aerass Busimess Fumctions 121
BUSINESS DILEMMA: Ec?nomic Effects on College Nealth Club 122
Summary 123
Key Terms 124
Review Questions 124
Discussion Questions 124
Running Your Own Business 124
Investing in the Stock of a Business 125
Case 1: How Economic Conditions Influence Business Decisions 125
Case 2: Supply and Demand for GM Automobiles 125
Video Case: Exposure to Weak Economic Conditions 126
The Coca-Cola Company Annual Report Project 126
In-Text Study Guide 126
Surfing the Net: Access to Economic Information on the World Wide Web 129
Combining Demand and Supply 130
Effect of a Change in the Supply Schedule 130
Effect of a Change in the Demand Schedule 130
APPENDIX 4 How Interest Rates Are Determined 130
How Interest Rates Change 130
Demand for Loanable Funds 130
Supply for Loanable Funds 130
Factors that Can Affect Interest Rates 133
Monetary Policy 133
Economic Grawth 133
Expected Inflation 134
Summary of Factors that Affect Intcrest Rates 135
Savings Behavior 135
CHAPTER 5 Industry Environment 136
Chapter 5 Industry Environment 136
Industry Characteristics that Influence Business Performance 138
Industry Demand 138
Industry Competition 139
Labor Environment 140
Regulatory Environment 140
SMALL BUSINESS SURVEY: Are Flms Affectod by Ind?slry Ragulations? 141
Summary of Industry Characteristics 141
Industry Sources 142
Exposure to Industry Conditions 143
Firm s Market Share 143
Firm s Focus on Its Main Industry 144
Competing Within an Industry 146
Identify the Competitors 147
SPOTLIGHT ON TECHNOLOGY: How Information Techmology Can Cr?ate A Compotitive Mhcantage 149
Develop a Competitive Advantage 149
CROSS-FUNCTIONAL TEAMWORK: Indnstry Effacts Aeress Buslness Funetions 150
GLOBAL BUSINESS: Assessing the Indestry Envirsa??at from a Glohal Parspctim 151
BUSINESS DILEMMA: Iadustry Effacts on College Mealth Club 151
Summary 153
Key Terms 154
Review Questions 154
Discussion Questions 154
Running Your Own Business 154
Investing in the Stock of a Business 154
Case 1: Exposure of Software Firms to Industry Conditions 155
Case 2: Impact of Industry Conditions on Pharmaceutical Firms 155
The Coca-Cola Company Annual Report Project 156
Video Case: Exposure to Weak Industry Conditions 156
In-Text Study Guide 157
Surfing the Net: Access to Industry Information on the World Wide Web 159
CHAPTER 6 Global Environment 160
Chapter 6 Global Environment 160
Why Firms Engage in International Business 162
Attract Foreign Demand 162
Capitalize on Technology 164
Use Inexpensive Resources 164
Diversify Internationally 164
Combination of Motives 164
Foreign Expansion in the U.S. 167
Foreign Competition 167
How Firms Engage in International Business 168
Importing 168
Exporting 169
Direct Foreign Investment (DFI) 169
Strategic Alliances 170
GLOBAL BUSINESS: Nerverbal Comm??ication in Diffarent Cult?res 171
Culture 172
Economic System 172
How Foreign Characterisics Influence International Business 172
Economic Conditions 175
SMALL BUSINESS SURVEY: De Small Firms Conduet International Busiuess? 177
Exchange Rates 177
CROSS-FUNCTIONAL TEAMWORK: Managing Inturnational Busimess Aeress Business Functions 178
How Exchange Rate Movements Can Affect Performance 179
Impact of a Weak Dollar on U.S. Importers 179
SPOTLIGHT ON TECHNOLOGY: Mering Taeh??l?gy Aeress Bardars 180
Impact of a Strong Dollar on U.S. Importers 180
Actual Effects of Exchange Rate Movements on U.S. Importers 181
Impact of a Weak Dollar on U.S. Exporters 181
Impact of a Strong Dollar on U.S. Exporters 183
Hedging Against Exchange Rate Movements 183
How Exchange Rates Affect Foreign Competition 184
BUSINESS DILEMMA: Exchange Rate Effects at Callgea Mealth Clab 185
Summary 187
Key Terms 187
Review Questions 187
Discussion Questions 188
Running Your Own Business 188
Investing in the Stock of a Business 188
Case 1: Global Expansion by ABC Records 188
Case 2: Exposure to Foreign Competition 189
Video Case: Exposure to Global Conditions 189
In-Text Study Guide 190
The Coca-Cola Company Annual Report Project 190
Surfing the Net: International Business on the World Wide Web 193
APPENDIX 6 The Forign Exchange Market 194
Exchange Rate Quotations 194
Factors that Affect Exchange Rate Movements 194
Differential Inflation Rates 194
Differential Interest Rates 196
Covernment Intervention 196
Summary of Part II 197
PART III Management 199
PART III Management 199
CHAPTER 7 Fundamentals of Effective Management 200
Chapter 7 Fundamentals of Effective Management 200
Levels of Management 202
Functions of Managers 203
Planning 203
Lcading 208
CROSS-FUNCTIONAL TEAMWORK: Interaction of functions to Achi?v? the Stratagie Plan 208
Organizing 208
Controlling 211
Integration of Management Functions 212
GLOBAL BUSINESS: Leadaership Styles for Global Business 214
Managerial Skills 215
Conceptual Skills 215
Interpersonal Skills 215
Technical Skills 216
Decision-Making Skills 216
How Managers Manage Time 217
Summary of Management Skills 217
SPOTLIGHT ON TECHNOLOGY: Software to Improve Management 218
Set Proper Priorities 218
Schedule Long Time intervals for Large Tasks 219
Minimize Interruptions 219
Set Short-Term Goals 219
SMALL BUSINESS SURVEY: Now Managers Run Msslings Effieiently 220
Delegate Some Tasks to Employees 220
BUSINESS DILEMMA: Planning at Coll?ge Health Club 221
Summary 222
Key Terms 222
Review Questions 223
Discussion Questions 223
Running Your Own Busmess 223
Investing in the Stock of a Business 223
Case 1: Applying Management Skills 224
Case 2: Developing a Plan for the Official All-Star Cafe 224
The Coca-Cola Company Annual Report Project 225
Video Case: How Effective Management Can Be the Key to Success 225
In-Text Study Guide 226
Surfing the Net: Management Training on the World Wide Web 228
CHAPTER 8 Organizational Structure 230
Chapter 8 Organizational Structure 230
How a Firm s Organizational Structure Achieves its Strategic Plan 232
Chain of Command 232
Authority of the Board of Directors 233
SMALL BUSINESS SURVEY: Who Are the Board Members of Small Firms? 234
Monitoring by Institutional Investors 235
Span of Control 235
Organizational Height 235
Centralization 235
Decentralization 236
SELF-SCORING EXERCISE: How Decentralized Is Your Company? 237
Line Versus Staff Positions 239
Creating a Stri?cture that Allows More Employee Input 241
SPOTLIGHT ON TECHNOLOGY: Now Information Systoems Enhance Organizational Stroctures 243
Informal Organizational Structure 243
Methods of Departmentalizing Tasks 244
Departmentalize by Product 245
Departmentalize by Function 245
Departmentalize by Location 246
Departmentalize by Customer 246
Departmentalize by Various Characteristics 246
CROSS-FUNCTIONAL TEAMWORK: Interaetion Among Departments 247
GLOBAL BUSINESS: Drganizational Structure of a Mnltinational Carperation 247
BUSINESS DILEMMA: Drganizational Structure of College Nealth Club 248
Summary 249
Key Terms 250
Review Questions 250
Discussion Questions 250
Running Your Own Business 250
Case 1: Creating An Organizational Structure 251
Investing in the Stock of a Business 251
Case 2: Restructuring at Apple Computer 251
The Coca-Cola Company Annual Report Project 252
In-Text Study Guide 252
Video Case: Reorganizing to Achieve Business Success 252
Surfing the Net: Managing by Telecommuting 255
Chapter 9 Production Management 256
CHAPTER 9 Production Management 256
Resources Used for the Production Process 258
Human Resources 258
Other Resources 259
Combining the Resources for Production 259
Materials 259
Factors Affecting the Site Decision 260
Selecting a Site 260
Evaluating Possible Sites 262
GLOBAL BUSINESS: Seleeting a Fereign Pr?duction Site 263
Selecting the Design and Layout 264
Factors Affecting Design and Layout 264
Reducing the Layout Space 265
Production Control 266
Purchasing Materials 267
Inventory Control 268
SMALL BUSINESS SURVEY: Why De Frms Outsa?rea Rather Thea Pr??ea Than Produca Seme Pr??ets Thems?hes? 268
Routing 270
Scheduling 271
SPOTLIGHT ON TECHNOLOGY: Agila Mannfact?ring 273
Quality Control 274
BUSINESS DILEMMA: Production at Cotlage Mealth Club 274
Review Questions 276
Key Terms 276
Summary 276
Running Your Own Business 277
Investing in the Stock of a Business 277
Case 1: Selecting the Best Plant Site 277
Discussion Questions 277
Case 2: Improving the Production Process 278
Video Case: How Production Can Be a Key to Success 278
The Coca-Cola Company Annual Report Project 279
In-Text Study Guide 279
Surfing the Net: Manufacturing Information on the World Wide Web 282
CHAPTER 10 Improving Production Quality and Efficiency 284
Chapter 10 lmproving Production Quality and Efficiency 284
Improving Production Quality with TQM 286
Specify the Desired Quality Level 288
Control the Quality Level 289
Achieve the Desired Quality Level 289
SELF-SCORING EXERCISE: Are You Mighly Satlsfied As a Castemer? 291
GLOBAL BUSINESS: Global Quality Standards 292
Methods to lmprove Production Efficiency 293
Technology 294
Economies of Scale 295
Restructuring 298
SPOTLIGHT ON TECHNOLOGY: Using Intermation Tnchmslegy to ?mprom Prodmet ?ualty 299
CROSS-FUNCTIONAL TEAMWORK: Interaetion of Fmmetions Levelrad in Tetal ??alty Menagement 301
SMALL BUSINESS DILEMMA: T?tal Quality Management at Collega Neslth Club 302
Summary 304
Key Terms 304
Review Questions 304
Discussion Questions 304
Running Your Own Business 305
Investing in the Stock of a Business 305
Case 1: Using TQM to Assess Employee Quality 305
Case 2: Applying TQM to Education 305
Video Case: How the Focus on Quality Can Lead to Success 306
The Coca-Cola Company Annual Report Project 307
In-Text Study Cuide 307
Surfing the Net: Quality Information on the World Wide Web 308
Summary of Part III 310
PART IV Managing Employees 311
PART IV Managing Employees 311
CHAPTER 11 Motivating Employees 312
Chapter 11 Motivating Employees 312
Hawthorne Studies 314
Maslow s Hierarchy of Needs 314
Theories on Motivation 314
Herzberg s Job Satisfaction Study 316
McGregor s Theory X and Theory Y 317
Theory Z 318
Expectancy Theory 318
Equity Theory 319
Reinforcement Theory 320
Motivational Guidelines Offered by Theories 321
How Firms Can Enhance Job Satisfaction and Motivation 322
Adequate Compensation Program 322
Job Security 324
CROSS-FUNCTIONAL TEAMWORK: Sproading Motivation Aerass Besiness Fanctions 325
Elexible Work Schedule 325
SPOTLIGHT ON TECHNOLOGY: Using Competars to Motivate Emplayess 326
Employee Involvement Programs 326
SELF-SCORING EXERCISE: Are You an Empowared Emplayse? 327
SMALL BUSINESS SURVEY: Do Emplayess Want Mera Inflnenea in Busimess ?? 328
Comparison of Methods Used to Enhance Job Satisfaction 330
GLOBAL BUSINESS: Metivaling Empleyess Aerass Co?ntries 331
BUSINESS DILEMMA: Mativation at College Nealth Club 331
Summary 332
Key Terms 333
Review Questions 333
Discussion Questions 334
Running Your Own Business 334
Investing in the Stock of a Business 334
Case 1: Using Motivation to Enhance Performance 334
Case 2: Notivating Young Employees 335
Video Case: Motivating Emplovees as a Means of Survival 335
The Coca-Cola Company Annual Report Project 336
In-Text Study Guide 336
Surfing the Net: Employee Ownership Information on the World Wide Web 339
CHAPTER 12 Hiring, Training, and Evaluating Employees 340
Chapter 12 Hiring、 Training、 and Evaluating Employees 340
Human Resource Planning 342
Forecasting Employee Needs 342
Job Analysis 342
Recruiting 343
Compensation Packages That Firms Offer 347
SMALL BUSINESS SURVEY: Do Firms Reward Employees far Customer Satisfaction? 348
Salary 348
Commissions 348
Bonuses 348
Profit Sharing 349
Emplovee Benefits 349
Perquisites 349
Comparison Across Jobs 349
GLOBAL BUSINESS: Compensating Employees Aerass Countries 350
Developing Skills of Employees 350
Technical Skills 350
SMALL BUSINESS SURVEY: How Do CEOs Allocate Their Time Whan Managing Empleyess? 351
Decision-Making Skills 351
Customer Service Skills 351
Safety Skills 352
Human Relations Skills 352
Evaluation of Employee Performance 352
Segmenting the Evahnation into Different Criteria 352
SPOTLIGHT ON TECHNOLOGY: Using Computers to Manage and Train Empleyees 353
Using a Performance Evaluation Form 354
Assigning Weights to the Criteria 354
Steps for Proper Performance Evaluation 356
Dealing With Lawsuits by Fired Employees 357
Action Due to Performance Evaluations 357
BUSINESS DILEMMA: Performance Evalmation at Cellage Nealth Club 359
Employee Evaluation of Supervisors 359
CROSS-FUNCTIONAL TEAMWORK: How Job Responsibilities Acress Businesa Functions Can Complieats Parformance Evaluations 359
Summary 360
Discussion Questions 361
Review Questions 361
Key Terms 361
Case 1: Filling Job Positions 362
Investing in the Stock of a Business 362
Running Your Own Business 362
Case 2: Training on the Job 362
Video Case: Managing Employees in a Volatile Business 363
In-Text Study Guide 364
The Coca-Cola Company Annual Report Project 364
APPENDIX 12 Labor Unions 367
Background on Unions 367
History of Union Activities 367
Surfing the Net: Information on Human Resource Management 368
Trends in Union Popularity 368
Negotiations between Unions and Management 368
Salaries 368
SELF-SCORING EXERCISE: The Frazzle Facter 369
Job Security 369
Management Rights 370
Grievance Procedures 370
Conflicts between Unions and Management 370
Management s Criticism of Unions 372
How Firms Reduce the Employee s Desire for a Union 372
Summary of Part IV 374
PART V Marketing 375
PART V Marketing 375
Chapter 13 Product and Pricing Strategies 376
CHAPTER 13 Product and Pricing Strategies 376
Background on Products 378
Product Line 379
Product Mix 380
Identifying a Target Market 380
Factors That Affect the Size of a Target Market 381
GLOBAL BUSINESS: Targating Farelgn Ca?tries 383
Creating New Products 383
Use of Marketing Research to Greate New Products 384
Use of Research and Development to Create Products 384
SMALL BUSINESS SURVEY: What Are the Kays to Crazting Successful Preducta? 385
Steps Necessary to Create a New Product 386
CROSS-FUNCTIONAL TEAMWORK: Interaction Among Prodaet Dacisines and ? 388
Product Differentiation 389
Unique Design 389
Unique Packaging 390
Unique Branding 390
Summary of Methods to Differentiate Products 392
Produet Life Cycle 392
Introduction 392
Growth 392
Maturity 392
Decline 393
Pricing Strategies 393
Pricing According to the Cost of Production 394
Pricing According to the Supply of Inventory 394
Pricing According to Competitors Prices 394
SPOTLIGHT ON TECHNOLOGY: Prieing Laformation-Based Preducts 395
Example of Setting A Product s Price 396
Break-Even Point 397
Additional Pricing Decisions 398
Discounting 398
Sales Prices 399
Gredit Terms 399
BUSINESS DILEMMA: Product Differantiation at Collage Nealth Club 400
Summary 402
Key Terms 402
Review Questions 403
Disussion Questions 403
Running Your Own Business 403
Investing in the Stock of a Business 404
Case 1: Marketing T-Shirts 404
Case 2: Marketing for“Big Bertha” Golf Clubs 404
Video Case: Developing a New Product 405
The Coca-Cola Company Annual Report Project 405
In-Text Study Guide 406
Surfing the Net: Price Information on the World Wide Web 408
Chapter 14 Distribution Strategies 410
CHAPTER 14 Distribution Strategies 410
Channels of Distribution 412
Direct Channel 412
One-Level Channel 413
Two-Level Channel 414
Summary of Distribution Systems 414
Factors That Determine the Optimal Channel of Distribution 415
Seiecting the Degree of Market Coverage 415
Selective Distribution 416
Exclusive Distribution 416
Intensive Distribution 416
SMALL BUSINESS SURVEY: Are Catalegs Using International Distribntion? 417
Selecting the Optimal Type of Market Coverage 417
Selecting the Transportation Used to Distribute Products 418
Truck 418
Rail 418
Air 418
Water 419
Pipeline 419
Additional Transportation Decisions 419
How to Accelerate the Distribution Process 420
Streamline the Channels of Distribution 420
Integrate the Production and Distribution Processes 421
Background on Retailers 422
Number of Outlets 422
CROSS-FUNCTIONAL TEAMWORK: Interaction betwoon Distribution Decisions and Other Business Decisions 423
Quality of Service 423
Variety of Products Offered 423
Store versus Nonstore 424
Background on Wholesalers 425
How Wholesalers Serve Manufacturers 425
How Wholesalers Serve Retailers 425
Vertical Channel Integration 426
Vertical Channel Integration by Manufacturers 426
Vertical Channel Integration by Retailers 427
GLOBAL BUSINESS: Global Distribotion 428
SPOTLIGHT ON TECHNOLOGY: Using Techm?logy to lmpreve Distribation 428
BUSINESS DILEMMA: Ratailing Decision at College Health Club 429
Summary 430
Key Terms 431
Review Questions 431
Discussion Questions 431
Running Your Own Business 432
Investing in the Stock of a Business 432
Case 1: Distribution of Comic Books 432
Case 2: Distribution Decisions by Transtar 433
Video Case: Using Distribution to Achieve Success 433
The Coca-Cola Company Annual Report Project 434
In-Text Study Guide 434
Surfing the Net: Distribution Information on the World Wide Web 436
Ghapter 15 Promotion Strategies 438
CHAPTER 15 Promotion Strategies 438
Background on Promotion 440
Promotion Mix 440
Advertising 441
Reasons for Advertising 443
Forms of Advertising 443
SPOTLIGHT ON TECHNOLOGY: Electromic Shopping Offered by Firms 444
Summary of Forms of Advertising 447
Personal Selling 447
Identify the Target Market 448
Contact Potential Customers 448
Make Sales Presentation 448
Answer Questions 449
Close the Sale 449
Follow Up 449
SMALL BUSINESS SURVEY: What Skills Are N?oded to Ba Successful in Salas? 450
Sales Promotion 450
Rebates 451
Coupons 451
Sampling 451
Displays 452
Premiums 452
Summary of Sales Promotion Strategies 452
GLOBAL BUSINESS: Promoting Products Across Comntries 452
Public Relations 453
Special Events 454
News Releases 454
Press Conferences 454
Determining the Optimal Promotion Mix 455
Target Market 455
Promotion Budget 456
Managing Salespeople 458
Evaluating the Effects of Promotion 458
CROSS-FUNCTIONAL TEAMWORK: Interaction betw??n Pronotion Decisiems and Other Business Decisions 459
BUSINESS DILEMMA: Promotlon Strategy at Collage Nealth Club 459
Summary 460
Key Terms 461
Review Questions 461
Discussion Questions 461
Running Your Own Business 462
Investing in the Stock of a Business 462
Case 1: Miller Beer s New Promotion Strategy 462
Case 2: Using Michael Jordan to Promote Nike Shoes 462
Video Case: How Promotion Saved a Business 463
The Coca-Cola Company Annual Report Project 463
In-Text Study Guide 464
Surfing the Net: Promotions on the World Wide Web 466
Summary of Part V 467
PART VI Financial Management 469
PART VI Financial Management 469
Chapter 16 Accounting and Financial Management 470
CHAPTER 16 Accounting and Financial Analysis 470
How Firms Use Accounting 472
Reporting 472
Decision Support 473
Control 473
Interpreting Financial Statements 473
Income Statement 474
Balance Sheet 475
Ratio Analysis 476
Measures of Liquidity 477
Measures of Efficiency 478
Measures of Financial Leverage 479
Measures of Profitability 480
SPOTLIGHT ON TECHNOLOGY: Databsse Acceunting Systems 481
Comparison of Ratios with Those of Other Firms 482
Limitations of Ratio Analysis 485
Sources of Information for Ratio Analysis 485
GLOBAL BUSINESS: Effect of Exehange hate Mersments of Earmings 485
BUSINESS DILEMMA: Financial Analysis of College Health Club 486
Summary 487
Review Questions 488
Discussion Questions 488
Key Terms 488
Running Your Own Business 489
Investing in the Stock of a Business 489
Case 1: Using an Accounting System 489
Case 2: Achieving Internal Control 489
Video Case: Responding to Problems Detected by Financial Analysis 490
The Coca-Cola Company Annual Report Project 490
In-Text Study Guide 491
Surfing the Net: Accounting Information on the Internet 493
Chapter 17 Financing 494
CHAPTER 17 Financing 494
Methods of Debt Financing 496
Borrowing from Financial Institutions 496
Issumg Bonds 499
Issuing Commerical Paper 501
Impact of the Debt Financing Level on Interest Expenses 501
Common Greditors that Provide Debt Financing 501
Methods of Equity Financing 502
Retaining Earnings 502
Issuing Stock 502
SPOTLIGHT ON TECHNOLOGY: Using the Internet for Stock Offerings 504
Comparison of Equity Financing with Debt Financing 505
How Firms Issue Securities 506
Origination 506
Underwriting 506
Distribution 506
Other Methods of Obtaining Funds 507
Financing from Suppliers 507
Leasing 507
Deciding the Capital Structure 508
Revising the Capital Structure 509
How the Capital Structure Affects the Return on Equity 510
SMALL BUSINESS SURVEY: Finaneing Cboiees of Small Firms 511
GLOBAL BUSINESS: Global Financing 512
Dividend Policy 513
Factors that Affect a Firm s Dividend Policy 513
CROSS-FUNCTIONAL TEAMWORK: Interaction between Finaneing Deci?ons and Other Business Decisions 514
BUSINESS DILEMMA: Finaneing at Cellage Health Club 514
Summary 516
Key Terms 516
Review Questions 516
Discussion Questions 517
Running Your Own Business 517
Investing in the Stock of a Business 517
Case 1: Financing a New Business 517
Case 2: The IPO Decision 518
Video Case: Determining the Proper Amount of Equity 518
The Coca-Cola Company Annual Report Project 519
In-Text Study Guide 519
Surfing the Net: Financing Information on the Internet 521
Chapter 18 Business Investment 522
CHAPTER 18 Business Investment 522
Investment Decisions 524
How Interest Rates Affect Investment Decisions 526
Capital Budget 526
Classification of Capital Expenditures 527
Summary of Capital Budgeting Tasks 528
Capital Budgeting Tasks 528
Capital Budgeting Analysis 530
Background on Present Value 530
SPOTLIGHT ON TECHNOLOGY: Texas Instrumonts Assessment of Prepesed Capital Erpondit?res 534
GLOBAL BUSINESS: Global Investing 534
Mergers 535
CROSS-FUNCTIONAL TEAMWORK: Cross-Funclional Relationships Invelved in Basiness Investment Decisions 536
Corporate Motives for Mergers 536
Leveraged Buyouts 538
Divestiturds 539
Short-Term Investment Decisions 539
Liquidity Management 540
SMALL BUSINESS SURVEY: Investment Decisions by Small Businesses 541
Accounts Receivable Management 541
Inventory Management 542
BUSINESS DILEMMA: Capital Budgeting at College Health Club 542
Summary 543
Key Terms 544
Review Questions 544
Discussion Questions 544
Running Your Own Business 545
Investing in the Stock of a Business 545
Case 1: Benefits of an Acquisition 545
Case 2: Ford s Merger Decision 545
Video Case: How Business Investment Decisions Determine Success 546
The Coca-Cola Company Annual Report Project 546
In-Text Study Guide 547
Surfing the Net: Investment Information on the Internet 549
APPENDIX 18 The Merger Process 550
Merger Analysis 550
Identify Potential Merger Prspects 550
Evaluate Potential Merger Proospects 550
Make the Merger Decision 550
Merger Procedures 551
Financing the Merger 551
Tender Offer 551
Integrating the Businesses 551
Postmerger Evaluation 552
Defense Against Takeover Attempts 553
Summary of Part VI 554
PART VII Special Topics 555
PART VII Special Topics 555
Chapter 19 Management Information Systems 556
CHAPTER 19 Management Information Systems 556
What is a Computer? 558
Computer Hardware 558
Computer Software 560
What Are Computers Used For? 560
Computational Models 560
Internal Information Systems 562
Data Processing Systems 562
End User Productivity Tools 563
Interorganizational Systems 563
Managing Today s Information Technologies 565
Managing the Firm s Information System Architecture 566
Acquiring Software 568
Managing the Development of Information Systems 570
Managing the Implementation of Information Systems 571
Mananging the Security of Information Systems 572
SPOTLIGHT ON TECHNOLOGY: Tbe Futmre of the Internet 574
Emerging Technologies and Their Implications 575
The Worldwide Network 575
Truly Intelligent Systems 576
BUSINESS DILEMMA: Infermation Systems at College Nealth Club 577
Summary 578
Key Terms 579
Review Questions 579
Discussion Questions 579
Running Your Own Business 580
Investing in the Stock of a Business 580
Case 1: Applying Information Systems in Business 580
Case 2: Will Computers Replace Good Managers? 580
Video Case: Reliance on Computers for Success 581
The Coca-Cola Company Annual Report Project 581
In-Text Study Guide 582
Surfing the Net: Internet Resources on the World Wide Web 584
Chapter 20 Risk Management 586
CHAPTER 20 Risk Management 586
Tasks Involved in Managing Risk 588
Identifying Exposure to Risk 588
Protecting against Risk 588
Exposure to the Economic Environment 590
Exposure to Industry Conditions 590
Exposure to Economic Conditions 590
Exposure to Global Conditions 591
GLOBAL BUSINESS: Risk of Coodvcting Business in Lass-Devsleped Countries 591
Summary of Exposure to Economic Environment 592
Hedging Risk from Economic Conditions 593
Limited Funding 594
Reliance on One Product 594
Reliance on One Customer 594
Exposure to Firm-Specific Characteristics 594
Reliance on One Supplier 595
Reliance on a Key Employee 595
Exposure to Property Losses 596
Exposure to Liability Losses 597
Exposure to Employee Compensation Claims 597
SMALL BUSINESS SURVEY: What is the Cost of Empley?? Injuries? 598
Summary of Exposure to Firm-Specific Characteristics 599
Exposure to Lawsuits 600
How the Threat of Lawsuits Can Affect Business Strategies 601
SPOTLIGHT ON TECHNOLOGY: Potontial Liability From Using Information Technelegy 602
Concern about Arbitrary Judgements 602
Conclusion for Risk Managers 603
Remedies for Business Failures 603
Extension 603
Composition 604
Private Liquidation 604
Formal Remedies 604
BUSINESS DILEMMA: Mzazging Risk at Collage Health Club 605
Key Terms 606
Review Questions 606
Summary 606
Discussion Questions 607
Running Your Own Business 607
Investing in the Stock of a Business 607
Case 1: Selecting the Proper Insurance Coverage for a Business 607
Case 2: The Decision to Insure a Business 608
Video Case: Protecting Against Properly Damage 608
The Coca-Cola Company Annual Report Project 609
In-Text Study Guide 609
Surfing the Net: Risk Management Information on the World Wide Web 611
Chapter 21 Synthesis of Business Functions 612
CHAPTER 21 Synthesis of Business Functions 612
Valuation of a Business 614
How Business Decisions Affect the Firm s Value 614
Management Decisions 614
Marketing Decisions 617
SMALL BUSINESS SURVEY: What Are the Majer Concerns of Small B?siness? 619
Finance Dccisions 619
Summary of Business Strategies 620
Relationship between Organizational Structure and Production 621
Relationship between Pricing and Production Strategies 621
Relationship between Pricing and Distribution Strategies 621
Relationships among Business Strategies 621
Relationship between Pricing and Promotion Strategies 621
Relationship between Pricing and Financing Strategies 621
GLOBAL BUSINESS: Intagrating Business Functiens on a Glehal Basis 622
SPOTLIGHT ON TECHNOLOGY: Software that Integrates Business Activities 623
Summary of Relationships Among Business Strategies 623
Business Strategies Implemented by IBM 625
Mission and Strategir Plan of IBM 625
IBM s Social Responsibilities 625
IBM s Assessment of Its Industry 625
IBM s Management Strategies 626
IBM s Penetration in Foreign Markets 626
IBM s Marketing Strategies 627
IBM s Finance Strategies 628
Conchusion about IBM s Strategies 629
BUSINESS DILEMMA: Integrating Business Daeision? at Collegs Nealth Club 630
Summary 632
Review Questions 633
Discussion Questions 633
Running Your Own Business 633
Investing in the Stock of a Business 633
Case 1: Integrated Decisions at Chrysler 634
Case 2: Impact of Marketing Policies on Other Business Decisions 634
Video Case: Integrated Solutions to a Firm s Problems 635
In-Text Study Guide 636
The Coca-Cola Company Annual Report Project 636
Surfing the Net: Directory of Business Information on the World Wide Web 638
APPENDIX A How to Invest in Stocks 639
How the Firm s Stock Price and Value are Related 639
Appendix A How to Invest in Stocks 639
Understanding Stock Quotations 639
Fifty-Two-Week Price Range 640
Symbol 640
Dividend 640
Price-Earnings Ratio 641
Volume 641
Stock Index Quotations 642
Measuring the Return on Stocks 642
Previous Day s Price Quotations 642
Return-Risk Trade-Off for Small Stocks 643
Economic Effects 644
Factors that Influence Stock Price Movements 644
Market Effects 645
Industry Effects 645
Characteristics of the Firm 645
How Stock Prices Respond to New Information 646
Identifying Undervalued Firms 646
Stock Market Efficiency 647
SELF-SCORING EXERCISE: New Much Risk Can You Take? 648
Stock Transactions 649
Market Orders Versus Limit Oredrs 649
Types of Brokers 650
Commissions on Stock Transactions 650
Purchasing Stocks on Margin 650
Stock Exchanges 650
Over-the Counter Market 651
Regulation of Stock Exchanges 651
Investing in Foreign Stocks 651
Investing in Mutual Funds 651
Types of Mutual Funds 652
Load versus No-Load Mutual Funds 652
Investing in the Stock of a Business 653
The Coca-Cola Company Annual Report Project 653
Key Terms 653
Surfing the Net: Stock Exchanges on the Internet 654
Choosing a Career 657
Type of Job 657
APPENDIX B Careers 657
Size of Company 657
Appendix B Careers 657
Career Versus Additional Degree 660
Pursuing a Career and Degree 660
Pursuing a Career 661
Choosing a College 661
Applying for a Position 661
Internships 661
Creating a Resume 662
Interviewing 663
SELF-SCORING EXERCISE: Cbeckllst for Building or Evaleating Your Rasume 665
Planning a Career Path 666
Where the Jobs Are 666
Survey of Knowledge and Abilities Needed 666
Working for a Firm Versus Owning a Firm 667
Surfing the Net: Career Services on the World Wide Web 669
SELF-SCORING EXERCISE: The Studaut Conter Career Dectar 670
APPENDIX C Answers to In-Text Study Guide 671
Appendix C Answers to In-Text Study Guide 671
How Firms Ensure Responsibility toward Employees 774