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  1. 1.       What do you mean by ethics?
  3. The system of moral and ethical beliefs that guides the values, behaviors and decisions of a business organization and the individuals within that organization is known as business ethics.
  6. Business ethics, also called corporate ethics, is a form of applied ethics or professional ethics that examines the ethical and moral principles and problems that arise in a business environment.
  7. social responsibility approach - corporations have societal obligations that go beyond
  8. maximizing profits.
  10. Example:
  11. Environmental issues—pollution, toxic waste dumping, animal rights
  12. Corporate restructuring—layoffs
  13. Employee privacy issues—AIDS, drug testing
  14. “Diversity” issues—race, ethnicity, gender, and sexual orientation
  15. Sexual harassment
  16. Conduct of multinational corporations (MNCs)—bribery
  17. Other—antitrust actions, predatory pricing, insider trading
  19. 2.       What is x&y theory? When do you use them? An example
  20. Theory X -
  21. Theory X adherents, like Taylor, take a more “pessimistic” view of human
  22. behavior. They believe that people are inherently lazy and need to be pushed
  23. to produce with rewards and punishments. Workers lack creativity and
  24. ambition and have little to offer management other than their labor.
  25. This style of management assumes that workers:
  26. ·       Dislike their work.
  27. ·       Avoid responsibility and need constant direction.
  28. ·       Have to be controlled, forced and threatened to deliver work.
  29. ·       Need to be supervised at every step.
  30. ·       Have no incentive to work or ambition, and therefore need to be enticed by rewards to achieve goals.
  31. It is used when - . Better for repeating tasks, so there is opportunity to train and do things efficiently. You may use a Theory X style of management for new starters who will likely need a lot of guidance, or in a situation that requires you to take control such as a crisis
  32. Ex - . Late 1800s, manufacturing saw some people take less time than others. So they recorded the best steps to do a job, and dictated that to everyone to improve quality. Mcdonalds – French fries, taste same everywhere. Ford – cars made by expert craftsmen. So they started using assembly lines. They paid good salaries so workers can also afford those cars.
  33. Theory Y –
  34. Theory Y managers have an optimistic, positive opinion of their people, and they use a decentralized, participative management style. This encourages a more collaborative  , trust-based   relationship between managers and their team members. Theory Y adherents, like Mayo, believe that workers are self-motivated given a supportive work environment. Workers are inventive and should
  35. be consulted for ideas to improve productivity. They are also capable of assuming
  36. more responsibility for their work.
  37. This style of management assumes that workers are:
  38. ·       Happy to work on their own initiative.
  39. ·       More involved in decision making.
  40. ·       Self-motivated to complete their tasks.
  41. ·       Enjoy taking ownership  of their work.
  42. ·       Seek and accept responsibility, and need little direction.
  43. ·       View work as fulfilling and challenging.
  44. ·       Solve problems creatively and imaginatively.
  45. When to use - Things are not repeating, people tell you what they want and workers use their own skill to make it. you use it when managing a team of experts , who are used to working under their own initiative, and need little direction.
  47. Eg - Stockton laboratory (research labs)
  49. 3.       Marginal cost, marginal revenue, opportunity cost
  50. Opportunity costs – Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another.
  51. they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you cannot spend the money on something else. If your next-best alternative to seeing the movie is reading the book, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not reading the book
  53. Marginal Revenue -  marginal revenue (R') is the additional revenue that will be generated by increasing product sales by one unit. For a company, increase in production till the cost meets selling price. Eg – water bottle companies
  55. Marginal Costs - The marginal cost of production is the change in total cost that comes from making or producing one additional item. The purpose of analyzing marginal cost is to determine at what point an organization can achieve economies of scale.
  57. 4.       2 ways of calculating GNP –
  58. GNP = C+I+G+X
  59. l  C=Personal consumption
  60. l  I-Private investment
  61. l  G=Government purchases
  62. l  X=Net of exports over imports
  64. Money x Velocity = Price Level x Real GNP
  65. Money Supply = Nominal GNP
  66. M1 – cash, money in checking act, travelers cheque
  67. M2 – M1+ saving plus money market funds
  69. 5. APCFB Psychology Theory
  70. The APCFB Model: The APCFB model is a form of Rational-Emotive- Behavior (REB) model and attempts to explain the cognitive process of linking external events to one's behavior . Assumptions affect perceptions people have. Those perceptions affect the conclusions. And those conclusions prompt feelings. Ultimately, those feelings drive behaviors that managers observe.
  71. To complicate things further, we all see through filters that prevent us from perceiving events accurately. Filters also prevent us from acting out our true desires. Indeed, we also have internal defense mechanisms that act as additional filters to protect us from psychological damage.
  74. 6. Porter’s 5 forces -
  75. Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths.
  76. Competition in the Industry
  77. The importance of this force is the number of competitors and their ability to threaten a company. The larger the number of competitors, along with the number of equivalent products and services they offer, the lesser the power of a company. Suppliers and buyers seek out a company's competition if they are unable to receive a suitable deal. When competitive rivalry is low, a company has greater power to do what it wants to do to achieve higher sales and profits.
  78. b. Potential of New Entrants Into an Industry
  79. A company's power is also affected by the force of new entrants into its market. The less time and money it costs for a competitor to enter a company's market and be an effective competitor, the more a company's position may be significantly weakened. An industry with strong barriers to entry is an attractive feature for companies that would prefer to operate in a space with fewer
  80. competitors.
  81. c. Power of Suppliers
  82. This force addresses how easily suppliers can drive up the price of goods and services. It is affected by the number of suppliers of key aspects of a good or service, how unique these aspects are, and how much it would cost a company to switch from one supplier to another. The fewer the number of suppliers, and the more a company depends upon a supplier, the more power a supplier holds.
  83. d. Power of Customers
  84. This specifically deals with the ability customers have to drive prices down. It is affected by how many buyers or customers a company has, how significant each customer is, and how much it would cost a customer to switch from one company to another. The smaller and more powerful a client base, the more power it holds.
  85. e. Threat of Substitutes
  86. Competitor substitutes that can be used in place of a company's products or services pose a threat. For example, if customers rely on a company to provide a tool or service that can be substituted with another tool or service or by performing the task manually, and if this substitution is fairly easy and of low cost, a company's power can be weakened.
  89. 7. Value chain
  90. A value chain is a high-level model developed by Michael Porter used to describe the process by which businesses receive raw materials, add value to the raw materials through various processes to create a finished product, and then sell the finished product to customers. Companies conduct value-chain analysis by looking at every production step required to create a product and identifying ways to increase the efficiency of the chain. The overall goal is to deliver maximum value for the least possible total cost and create a competitive advantage.
  91. Value chain – where does a company adds value to its products
  92. Apple does good design but not manufacturing – Foxconn. You should know so you can divert resources in what you are good at.
  95. 8.  Behavioural economics
  97. Behavioral Economics is the study of psychology as it relates to the economic decision-making processes of individuals and institutions.
  98. a method of economic analysis that applies psychological insights into human behavior to explain economic decision-making.
  99. It affects macro and micro both.
  101. 9. What is Monopoly? Give an example how is it different from the monopolistic competition?
  103.   Monopoly vs monopolistic competition
  104. A monopoly is a kind of structure that exists when one company or supplier produces and sells a product. If there is a monopoly in a single market with no other substitutes, it becomes a “pure monopoly.” When there are multiple sellers in an industry and there are many similar substitutes for the goods being produced, and companies keep some power in the market, then it is called monopolistic competition.
  105. Characteristics of a Monopoly
  106. High or no barriers to entry: Other competitors are not able to enter the market
  107. Single seller: There is only one seller in the market. In this instance, the company becomes the same as the industry it serves.
  108. Price maker: The company that operates the monopoly decides the price of the product that it will sell.
  109. Price discrimination: The firm can change the price or quantity of the product at any time.
  110. Monopoly – electric and gas in US are monopolies. Less competitive market. Provider has agreement with govt, and govt sets the price
  111. Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.
  112.  Monopolistic Competition – Eg – compare fedex with local copy shops. Product Is pretty much the same but other attributes can drive the prices
  113. Monopolistic competition is a middle ground between monopoly and perfect competition (a purely theoretical state), and combines elements of each. All firms in monopolistic competition have the same, relatively low degree of market power; they are all price makers. In the long run, demand is highly elastic, meaning that it is sensitive to price changes.
  116. 10.  Explain any two organization models? State the difference
  117. Different organizational models:
  118. 1.       Functional – organized on different functions – finance, marketing, manufacturing etc.
  119. 2.       Product – organized on different products you have.
  120. 3.       Customer – focused on specific customers. Eg – GE makes jet engines. Some people focusses on AIRBUS and what they need in their engines.
  121. 4.       Geographic – mostly sales and support are organized based in different geographic locations.
  122. 5.       Divisional – divided in coherent groups which focusses on similar type of products. Take benefit of company’s finances and process/procedures but cater to a specific industry or division. Eg – GE has power, lighting, aviation etc.
  123. 6.       Matrix – an individual can be a part of multiple organizational models. Lets say , part of marketing and he is assigned to a product organization. Multiple bosses can also be a problem if they don’t play along.
  124. 7.       Amorphous – startup, small number of people. You cant have focused people coz at one time maybe someone is working too much and others are not.  All people make all decisions together
  128. 11. 6Ms of capacity:
  130. Methods—Have you chosen the best method of accomplishing the operational
  131. task? Are the machines placed in the most efficient factory floor
  132. configuration?
  133. Materials—Are the materials you need available and of good quality?
  134. Do you have the capability to purchase efficiently, store, and distribute
  135. the materials when needed by the production process?
  136. Manpower—Do you have well-trained and productive workers and
  137. managers to accomplish your production goals? Are your workers sufficiently
  138. trained to operate any new technology that you may acquire?
  139. Machinery—Do you have the right tools for the job? Do your machines
  140. meet your needs: capabilities, speed, reliability, technology?
  141. Money—Is the cash to fund production available as needed? Is the investment
  142. in factories, equipment, and inventories justified in light of the
  143. entire organization’s priorities, capabilities, and other opportunities? Does
  144. the projected cash flow justify the investment? (a finance question)
  145. Messages—Do you have a system for sharing accurate and timely information
  146. among all members of the production team—people and machines?
  147. A machine needs to electronically share information about output
  148. and quality on an assembly line with its operator, as well as with other
  149. machines.
  151. 12. What is a Discounted Cash Flow (DCF)
  152. Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its future cash flows. DCF analysis finds the present value of expected future cash flows using a discount rate. A present value estimate is then used to evaluate a potential investment. If the value calculated through DCF is higher than the current cost of the investment, the opportunity should be considered.
  154. 13.  Gate Process
  155. 1.    A structured way to:
  156. Solicit many ideas
  157. Select the best ideas to take to market
  158. 2.    A method to be sure all required parts of the organization are working together for success- from beginning-to-end
  159. Stages:
  160. Concept:  Request funding to develop an idea
  161. Plan:  Present detailed, complete plan; Request sponsor commitment
  162. Availability:  Review and approval to take into market
  163. End-of-life:  Time to remove or replace product
  167. 14. Accounting
  168. Accounting is the recording of financial transactions of a business or organization. It also includes the process of summarizing, analyzing and reporting these transactions in financial statements. Because proper accounting is vital to many people and businesses, it is formalized and regulated.
  169. 1.       See how company is doing
  170. 2.       For investors, a standard way of putting information
  171. 3.       For govt and tax regulatory industries
  173. It answers:
  174. What does a company own?
  175. How much does a company owe others?
  176. How well did a company’s operations perform?
  177. How does the company get the cash to fund itself?
  179. Putting wrong numbers can affect the decision for investors - where to put money. A company can show it has good cash flow and making profits.
  182. 15.
  183. Balance Sheet - A balance sheet reports a company's assets, liabilities and shareholders' equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure. It is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders.
  184. The balance sheet adheres to the following equation, where assets on one side, and liabilities plus shareholders' equity on the other, balance out:
  185. Assets = Liabilities + Shareholders' Equity
  186. Income Statement - An income statement is one of the three important financial statements used for reporting a company's financial performance over a specific accounting period. Also known as the profit and loss statement or the statement of revenue and expense, the income statement primarily focuses on company’s revenues and expenses during a particular period.
  187. The income statement focuses on the four key items - revenue, expenses, gains and losses.
  188. Net Income = (Revenue + Gains) – (Expenses + Losses)
  189. Cash Flow Statement - A cash flow statement is a financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.
  190. The cash flow statement is focused on cash accounting, whereas there are two forms of accounting, accrual and cash. Most public companies use accrual accounting, which means the income statement is not the same as the company's cash position.
  195. 16. Purpose of law
  196. The law serves many purposes and functions in society. Four principal purposes and functions are establishing standards, maintaining order, resolving disputes, and protecting liberties and rights.
  197. 3.1     Establishing Standards
  198. The law is a guidepost for minimally acceptable behavior in society. Some activities, for instance, are crimes because society (through a legislative body) has determined that it will not tolerate certain behaviors that injure or damage persons or their property. For example, under a typical state law, it is a crime to cause physical injury to another person without justification—doing so generally constitutes the crime of assault.
  199.  3.2    Maintaining Order
  200. This is an offshoot of establishing standards. Some semblance of order is necessary in a civil society and is therefore reflected in the law. The law—when enforced—provides order consistent with society’s guidelines.
  201.  3.3    Resolving Disputes
  202.  Disputes are unavoidable in a society made of persons with different needs, wants, values, and views. The law provides a formal means for resolving disputes—the court system. There is a federal court system and each state has its own separate court system. There are also various less formal means for resolving disputes—collectively called alternative dispute resolution (ADR). We will learn about the federal and state court systems in chapters 6 and 7, respectively, and about ADR in chapter 9.
  203.  3.4    Protecting Liberties and Rights
  204. The constitutions and statutes of the United States and its constituent states (see chapter 5) provide for various liberties and rights. A purpose and function of the law is to protect these various liberties and rights from violations or unreasonable intrusions by persons, organizations, or government. For example, subject to certain exceptions, the First Amendment to the Constitution prohibits the government from making a law that prohibits the freedom of speech. Someone who believes that his free speech rights have been prohibited by the government may pursue a remedy by bringing a case in the courts.
  206. 17. Marketing Myopia
  207. a nearsighted focus on selling products and services, rather than seeing the “big picture” of what consumers really want.
  208. companies are too focused on producing goods or services and don’t spend enough time understanding what customers want or need.
  209. Organizations invest so much time, energy, and money in what they currently do that they’re often blind to the future.
  210. the most famous example is the railroad lines, which Levitt argues fell into steep decline because they thought they were in the train business rather than the transportation business. If those leaders had seen themselves as helping customers get from one place to another, they might’ve expanded the business into other forms of transportation like cars, trucks, or airplanes.
  211. Levitt suggests that leaders ask themselves: What business are we really in?
  217. 18.
  218. The PLC concept is important because the process of diffusion or adoption
  219. by the population has major implications for how a product is marketed.
  220. Each product develops its own unique PLC as it matures.
  221. Introduction - The level of initial prices and profits has great implications regarding the outcome of future battles with competitors as well as your ability to perform additional research and development
  222. Growth - At this stage it is important to boost your sales volume ahead of the competition in order to reduce costs through production and advertising efficiencies. This helps a company gain the competitive advantage in the next stage of the PLC
  223. Maturity - Because there is less differentiation on product attributes, advertising is used as a vehicle to differentiate products.
  224. Decline - At this stage many companies focus their efforts on reducing price if competition remains, or slowly increasing prices if the competitive field thins.
  226. 19. Keynesian vs monetarist
  227. the difference between these theories is that monetarist economics involves the control of money in the economy, while Keynesian economics involves government expenditures. Monetarists believe in controlling the supply of money that flows into the economy, while allowing the rest of the market to fix itself. In contrast, Keynesian economists believe that a troubled economy continues in a downward spiral unless an intervention drives consumers to buy more goods and services.
  228. Keynesian economists believe the economy is best controlled by manipulating the demand for goods and services. Keynesian economists believe in consumption, government expenditures and net exports to change the state of the economy.
  229. Monetarists are certain the money supply is what controls the economy, as their name implies. They believe that controlling the supply of money directly influences inflation and that by fighting inflation with the supply of money, they can influence interest rates in the future.
  231. 20. Ethical Dilemma faced by company
  232. EquiPro - Bribery is an ethical dilemma we can face as we are heavily dependent on local field agents for promotion and sign vendors and they might take advantage of it by taking on bad vendors for a bribe.
  236. 21. Investor - Project
  237. What kind of investment for your company... Name 3 things those investors look for
  239. We want venture capitalist as strategic partners only invest in companies where the services offered aligns with their products or services.
  240. VCs look for -
  241. –10X return in 5 yrs
  242. –Believable management team
  243. –Great IP
  244. –Proof-of-Concept (POC) completed
  245. –Funding needs commensurate with expected returns
  246. –Clear exit strategy
  248. 22. Whats important in your project to get funding?
  249. Same as above mostly.
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