...I. The Environment of Business 1. What Is Business? © The McGraw−Hill Companies, 2007 C H A P T E R 1 What Is Business? Learning Objectives After studying this chapter you should be able to: 1. Differentiate between the three meanings of business as commerce, business as an occupation, and business as an organization, and identify the four main kinds of productive resources. 2. Understand how the forces of supply and demand determine fair, or market, prices. 3. Appreciate how a company’s business model is the source of its competitive advantage and can mean the difference between merely making a profit and profitability. 4. Recognize the way specialization and the division of labor lead to increasing profits and wealth via the market’s “invisible hand.” 5. List the reasons why business organizations are created and how they facilitate commerce and lower transaction costs. WHY IS THIS IMPORTANT ? What if you went to your supermarket and found only one brand of toothpaste? Suppose there was only one pizza shop in your town and it charged $25 for a small pie. Economic principles such as the laws of supply and demand create the selection and prices we find when we buy, whether it’s gasoline or hamburger. This chapter will help you understand how business principles work and why companies try to add value to products and services that will appeal to customers and create a competitive advantage. The products we select compete with others for our attention and dollars...
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...Porters Five Forces of the food Retail Industry 1. Supplier Power bargaining power of Suppliers is low. There is a high competition between suppliers which means that their ability to raise prices or reduce quantity is very low. Suppliers include both domestic and international manufacturers and because many retail products are standardized, retailers have low switching costs which make the supplier power low. Larger retailers have power over their suppliers because they can threaten suppliers to change to different suppliers which would significantly hurt the suppliers because of their great market share. Furthermore larger retailers can vertically integrate with suppliers they are having trouble cooperating with. 2. Bargaining Power of Buyers bargaining power of buyers is relatively low. This is because since there are so many customers, no one customer will have bargaining leverage. If consumers choose not to shop at a retail outlet they most likely miss out on value or price as well as convenience of shopping retail. 3. Competitive Rivalry Competitive rivalry is medium to high. There are numerous competitors as well as many retailers that are entering the market rapidly. Several Rivals are highly dedicated to being industry leaders. Furthermore there are diverse approaches and differing goals between competitors. Therefore weak firms are more likely to leave the market which in turn, increases profits for remaining firms which weakens the power of competitive...
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...16 17 18 19 20 21 Concept: Business Systems Concepts Business Systems Mastery 100% Questions 1 2 3 1.What are the three components that make up a business system? A. Business commerce, business organization, business occupation B. Business organization, business management, business exchange C. Business commerce, business organization, business market D. Business market, business management, business organization Correct! The three components that make up a business system are as follows: business commerce, business occupation, and business organization. 2.Which term refers to the total money or assets of a business? A. Competitive advantage B. Sales revenue C. Capital D. Wealth Correct! “Profit that is kept in a company and invested in its business increases its capital, the total monetary value of its financial assets such as cash, property, land, stock, patents, and brand name” (Jones, 2007, p. 8). . 3.Information technology, e-commerce, human resource management, and procurement are included in what type of value chain function in a business? A. Tertiary function B. Complimentary function C. Primary value function D. Secondary value function Correct! There are primary and secondary value chain functions in business. Information technology, e-commerce, human resource management, and procurement are considered secondary functions because they are not directly responsible for getting products to customers (Jones, 2007, p. 27). Concept: Productive...
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...The goal of the merchandise plan is to provide a plan broken down to the lowest levels of the merchandise hierarchy to build a receipt budget by week that is used for open-to-buy purposes. KPIs include, but are not limited to, markdowns, reductions, and inventory and above/below the line adjustments to gross margin, receipts and inventory. Plans are usually developed in value with average unit retail prices for inventory, receipt and sales added to understand unit volumes at a high level. The sales flavors regular, markdown, promotional and clearance sales KPIs are planned individually including the average retail price of the sales type. In-season plan updates recalculate open-to-buy budgets based on trend. With that the analysis of business trends to identify variances to plan are possible on a weekly basis and allow stakeholders to take action. Merchandise Planning – OTB and Unit Flow Plan The merchandise Planning includes several workbooks for the different levels of the article hierarchy. The workbooks look very similar, but addressing different roles in the organization, like VP of Planning, Planning manager, merchandise manager, or however your organization is set up. One very nice feature is, that the solution provides you flexibility depending on your set-up, if you have planners for all the different levels (you remember: division, department, class and subclass), or if you just want to plan for example on division and break it down from there to class and...
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...1 BUSINESS MODELS Jessica Crespo Business 210/Foundations of Business July 26 2013/University of Phoenix Professor Linda Lockhart 2 BUSINESS MODELS There is a local salon that I visit frequently. I am in there either getting my pedicures or eye brows done at least once a week. Every business has a model regardless of what industry you are in. All business have models that have three main components. Those are (1) business commerce (2) business occupation and (3) business organization. Business commerce is the process where the good and services are produced. The nail technician does my pedicure and I pay her for her services and for doing such a good job would be considered business commerce. Business occupation is a skill or a service done to provide value to their customers. Nail technician is a very skilled and patient acquired job so you have to pay to get your services from a nail technician. Its not a job everyone can do so sometimes you have to go to the next person to make them look fabulous. Business organization is the last component of the business systems. This particular nail salon is very small since they only have one salon in town. I advertising in the local papers and around town. They definitely stick out when you drive by them. They also only have a few employees maybe 5 so they are very small. Since the business organization is the systems of task the relationship between the nail...
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...RUNNING HEAD: ORIENTATION FOR NEW HIRES Orientation for New Hires MGT210 May 6, 2012 Wayne Lambeth In the hiring of new employees for the position of sales clerk there will be a mandatory three day group orientation to understand their duties. The first day will consist of welcoming the new employees to the company as well as allowing them to get feel of the goals of the company. Also on the first day the rules and regulations in addition to the consequences for not adhering to the policies of the company will be explained in the orientation. Sales clerk is associated with customer service, so professionalism is needed at all times. The second day is computer and math skills exam in order to understand our cash register system. Employees must pass this exam with at least a grade of 75 or better and must possess basic computer skills. Then they will be assigned an experienced trainer that will assist them in providing the necessary skills and tools that needs to be achieved in order for them to succeed in this company. On the final day of orientation the new hire and their assigned trainer will perform day to day operations in the store. Day one: Introduction to the company, customer service training, company policies, and description of duties Welcome to the Lucky Bargain Company founded by George Green in 2003. Mr. Green was out shopping with his family one day and noticed that some their prices were considerably high. He also noticed that the other...
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...Case Summary We are Chris and Pat Smith, entrepreneurs with five years of experience investing in small businesses. Eighteen months ago we decided to invest in a catering venture with two chefs, J. P. Martin and L. L. Miller, who have culinary science degrees and five years of work experience, which includes winning a prestigious prize in a gourmet food competition. Following some extended discussions, the four of us decided to set up a business catering to parties and weddings under the name of At Your Service. Unfortunately the business did not generate the expected profits therefore we are in the process of dissolving the business. How will we split the $15,000 left in the investment? It is unfortunate that we did not make a formal agreement that outlines an exit strategy. There is always risk in business and the best way to handle the unexpected is to plan for it ahead of time. If we think about the capital distribution at the beginning of the partnership, we put $25000 and the chefs put $10,000 plus $10,000 adding up to $45,000 for 100% of the shares. Each share is worth $450 , therefore we own 55.5% of the company while chefs own $45.5%. Now we have $15,000 left to be split. If we split this capital according to the ownership percentage, we should receive $8,325 and the chefs should receive $6,675. But we do not think the chefs deserve this as they caused the business to fail. Also we will need capital for our new venture, therefore we should only give them $3,000...
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...Montrez Fox Lawanda Robertson Introduction To Business 10/26/2010 1. Identify at least three challenges when setting up a business. Explain why they are challenges. The first challenge I see with setting up a business is deciding what type of business to start. Choosing the wrong business can ultimately cause your business to fail. The second challenge I see with setting up a business is targeting potential customers. You have to figure out who your going to sell your product to and how to reach these individuals. The third challenge I see with setting up a business is coming up with the capital to start the business. It takes money to make money. Unless you have a nice savings account, you will probably have to get a business loan or find people who are willing to invest in your company. 2. Define what a “niche” product is. Give at least three examples of niche products. A niche product is something designed to appeal to specialized interests. Not for everyone, but a specific customer. Examples; speakers at the Bose store, Starbucks Coffee, a restaurant that sells Chinese food. 3. Explain why a niche company might have an advantage in a market. Would price necessarily be an advantage? Explain why or why not. A niche company has an advantage in the market because the customers are coming to the store specifically for a product that the company sells. If a woman walks into Victoria’s Secret, she’s shopping for women’s underclothes...
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...REACTION PAPER In the introduction of conscious capitalism, John Mackey gives us a brief history on how he established Safer Way which is now known as Whole Foods Market with no prior business education background. His intention was to create a business that was ethical and purpose driven. His insight on free enterprise capitalism is much focused throughout the introduction and first chapter, its importance and how it has changed the world. I agree with the findings because, it free enterprise capitalism has led to innovations and social cooperation that any other system. It has freed millions of individuals from extreme poverty and enabled businesses to open up around the world that have contributed to the welfare of humanity. Raj Sisodia, the co-author of the book together with Mackey, have pursued to change the way business is thought about, taught and practiced through their movement. This is both noble and I believe it’s our human responsibility to find solutions to the world and innovations that can take us to the next phase of how business is done. Capitalism has been misunderstood and has been tagged with bad titles such as crony capitalism, profit maximization for investors as top priority and unethical business activities as inferred by products from its activity. Crony capitalism is one of the most tagged names of big corporations because they have the financial resources to corrupt and bribe the government and inturn use this power for their own enrichment. Although...
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...There is always something new coming out now days, something new that always is going to affect any career that you are taking. My major right now is Business Management and I think technology is changing everybody around the world. There are some technology that can have a big impact in your career because you never know what is up there waiting for you after you are done career in college. Technology has come a long way since it was first made. It has improved in many different ways. It has help thousands of business launch and have a big impact on the community. We need technology, and yet every new technology places new demands upon us and creates new forms of stress. We can't live with it but at the same time we can't live without it. There is no turning back to some pre technical era. They help them in many ways, some were good and some were bad. But for the most part the help of been able to launch off has had a big impact. There are some technology’s that benefits a lot career. Since technology was invented many business have a lot benefits from it and as information travels faster and faster and more reliably, barriers of distance disappear, and businesses are realizing how easy it is to outsource jobs overseas again the Radio frequency identification technology is infiltrating and changing business significantly in a few ways, one begin to tighten security at their organization place. Technology has great effects in businesses. Like using a computer, you can access the...
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...Kodak M22 Instamatic – Old Video Cameras Technology has changed greatly over the years. Specifically video cameras, they have decreased in the products size but increased in the quality over time. When video cameras were introduced back in the 1970’s, they were using an old film format as compared to digital in today’s era. As these video cameras were being developed and launched into the market for the first time, it reflected the way retailers could examine buyer behaviour. Even back when the first sets of video cameras were released, retail stores were mounting them on the ceilings not only for security purposes, but to track consumers shopping habits. This helps these stores better understand how consumers are shopping so they can predict the next move. As the format back in the 70’s was film, retailers had to manually view the cameras to predict popular areas in the store, for example. This helped retailers effectively manage their stores as they would place the newest, popular products in areas that attracted the highest number of consumers. Another way video cameras have impacted buyer behaviour is through the product mix. By retailers using cameras to evaluate their retail stores, they are able to evaluate their product density (too high or too low); amount of signage and even the labelling within the store that could’ve been confusing. A retail stores product mix is important to upper management, as they want to ensure the best possible consumer experience. In order...
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...International Business Risks Tatiana Irala MGM336-1301A-05 Instructor: Anna Goodloe Even though there are many opportunities available when conducting business internationally, the amount of risks that arise can also be limitless. However, this should not be discouraging when the managers that work abroad are well-trained and informed about the host country’s political, cultural, environmental, and economic risks and differences. These different environmental factors are constantly changing, often drastically; making it challenging to manage. For instance, the political environment in another country may be quite unstable due to a recent election. Furthermore, violence and revolutions complicate when traveling through the host country. Another risk that presents itself is in the form of culture shock. Even if the managers are familiar with the host country’s cultural differences, cultures also evolve throughout time. Environmentally, managers must respond to the future forecasts to determine the probable impact, and to ensure the survival and growth of the organization as it interacts with its dynamic environment (Phatak, Bhagat, and Kashlak, 2009). The host country in question here is Brazil with its booming economy and market for growth. Although, Brazil is known for its many negative connotations regarding bribery, corruption, and organized crime; the conditions in the labor market however remain favorable. Unemployment is at the lowest it has been in years and the...
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...To: Tax File Date: 10/30/12 Facts: Walter Hodges wants to begin a business involving real estate. In spring of 2010, Walter began marketing his business. In October, Walter paid $25,000 for training classes. In November 2010, he obtained a loan of $145,000. Also, in November he obtained an employer ID number from the IRS. In December 2010, Walter opened necessary banking accounts for his business. Walter was able to acquire his first property on December 30 2010. He listed the property and began renting it successfully in March of 2011. Walter prepared a schedule C and listed a business loss of $29,000, which includes the cost of the training classes, automobile expenses, meals and entertainment, computer and software expenses, and supplies. The IRS has disallowed the deduction of $ 29,000. Issue: Is Walter allowed to deduct the business loss of $29,000 in 2010? Conclusion: The $29,000 loss is not considered as business expense; therefore, no deduction is allowed. Analysis: The loss of $29,000 is not deductible, because Walter was not “engaged in the active conduct of trade or business” in 2010. Under 26 U.S.C.S. § 162, it generally allows deduction for all the ordinary and necessary expense incurred during the taxable year. However, the taxpayer in Woody v. Comm’r, T.C. Memo 2009-93, attempted to deduct his business expense incurred during the taxable year, which he was preparing for starting business. Court considered that “A taxpayer is not carrying on...
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...Performance attributable to industry attractiveness Retailers purchase merchandise from manufacturers in large quantities for resale to consumers at a profit. The domestic Retail Store industry is mature and highly competitive. We can use the Porter’s five forces analysis to assess the attractiveness of Retail industry and its profitability in long run: Threat of New Entrants The number of independent retailers has been decreasing over the years; most of the retailers are chain stores nowadays. The vertical structure and centralized buying of the existing chain retailer established a competitive advantage that stops independent retailer to enter the industry. Also the difficulties for independent retailer to find favorable suppliers, rents and be competitive block the road for new entrants. Bargaining Power of Suppliers Suppliers have very little bargaining power in retail industry. Big retailer such as Wal-Mart have always been exploiting suppliers, a contract with WM can either make or break a small supplier. As a result, strict control by client and razor thin margin are normally what suppliers get. Bargaining Power of Buyers Individual customer has little bargaining power against retailers. Retailers won’t react accordingly unless customers all together demand a better quality at bargain price. Substitutes Retail is about dealing in a wide range of products and services. Instead of providing a substitute, retailers offering broader range and unique products are...
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...Merchandising Mathematics for Retailing Chapter 7 - Inventory Valuation Spreadsheet: Retail Method of Inventory Valuation with Physical Inventory Summary Problem 2 AT COST: Opening Inventory Gross Purchases Returns to Vendors Net Purchases Transfers In Transfers Out Net Transfers Freight Total Merchandise Handled AT RETAIL: Opening Inventory Gross Purchases Returns to Vendors Net Purchases Transfers In Transfers Out Net Transfers Additional Markup Additional Markup Cancellation Net Price Revisions Total Merchandise Handled COST PERCENT CUMULATIVE MARKUP PERCENT Gross Sales Customer Returns Net Sales $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $89,760.00 $43,620.00 $860.00 $0.00 $0.00 $89,760.00 $42,760.00 $0.00 $760.00 $0.00 $760.00 $133,280.00 0.00% 100.00% $49,318.00 $2,945.00 $46,373.00 Markdowns Markdown Cancellations Net Markdowns Employee Discounts Total Deductions CLOSING BOOK INVENTORY AT RETAIL CLOSING BOOK INVENTORY AT COST PHYSICAL INVENTORY AT RETAIL PHYSICAL INVENTORY AT COST SHORTAGE OR OVERAGE SHORTAGE OR OVERAGE PERCENT Gross Cost of Merchandise Sold Maintained Markup Maintained Markup Percent Cash Discounts Alterations/Workroom Costs Total Cost of Merchandise Sold GROSS MARGIN GROSS MARGIN PERCENT $5,246.00 $318.00 $784.00 $4,928.00 $784.00 $52,085.00 $ 81,195.00 $ $ 53,672.00 $ $ 27,523.00 59.35% $0.00 $46,373.00 100.00% $320.00 $0.00 $320.00 $0.00 -$320.00 $46,693.00 100.69% $ 53,672.00 - 1 2 3 4 5...
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