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Contents PART 1 Business Trends: Cultivating a Business in Diverse, Global Environments CHAPTER 1 Managing within the Dynamic Business Environment: Taking Risks and Making Profits 2 PROFILE: Getting to Know Meg Whitman from eBay 3 Business and Entrepreneurship: Revenues, Profits, and Losses 4 Matching Risk with Profit 4 Businesses Add to the Standard of Living and Quality of Life 5 Spotlight Stakeholders 6 Using Business Principles in Nonprofit Organizations 7 Entrepreneurship versus Working for Others 9 Opportunities for Entrepreneurs 9 The Importance of Entrepreneurs to the Creation of Wealth 10 Reaching Beyond Our Borders: Freedom and Protective Laws Equal Prosperity 12 The Business Environment 12 The Economic and Legal Environment 12 The Technological Environment 14 Reaching Beyond Our Borders: Ethical Lapses Are Global 15 Making Ethical Decisions: Ethics Begin with You 16 Dealing with Change: Adjusting to the E-Commerce Era 19 The Competitive Environment 18 The Social Environment 21 The Global Environment 24 The Evolution of American Business 25 Progress in the Agricultural and Manufacturing Industries 25 Progress in Service Industries 24 Your Future in Business 26 CASING THE WEB: Moving Up the Corporate Ladder www.mhhe.com/ub7e VIDEO CASE: Toying with Success: The McFarlane Companies 31 CHAPTER 2 How Economics Affects Business: The Creation and Distribution of Wealth 34 PROFILE: Getting to Know Milton Hershey of Hershey?s Chocolate 35 How Economic Conditions Affect Businesses 36 What Is Economics? 36 Reaching Beyond Our Borders: Entrepreneurs in El Salvador and Brazil 37 Dealing with Change: Some Good Macroeconomic News 38 Why Economics Was Known as ?the Dismal Science? 37 Growth Economics and Adam Smith 39 How Businesses Benefit the Community 39 Understanding Free-Market Capitalism 40 The Foundations of Capitalism 41 Spotlight on Small Business: Starting a Small Business in the United States versus Elsewhere 42 How Free Markets Work 42 How Prices Are Determined 43 The Economic Concept of Supply 43 The Economic Concept of Demand 43 The Equilibrium Point or Market Price 44 Competition within Free Markets 45 Benefits and Limitations of the Free Markets 46 Understanding Socialism 47 The Benefits of Socialism 48 The Negative Consequences of Socialism 48 Understanding Communism 49 The Trend toward Mixed Economies 49 Dealing with Change: The Internet Integrates World Markets 52 Understanding the Economic System of the United States 52 Key Economic Indicators 53 Productivity in the United States 55 Productivity in the Service Sector 55 The Business Cycle 56 Stabilizing the Economy through Fiscal Policy 56 Using Monetary Policy to Keep the Economy Growing 58 Making Ethical Decisions: Exploring the Tax Laws 59 CASING THE WEB: The Rule of 72 www.mhhe.com/ub7e VIDEO CASE: LaBaguette 64 on Small Business: The Environment for Small Businesses 6 Responding to the Various Business A college degree typically increases your earning power by 60 percent to 70 percent when compared to a high school diploma, and business is one of the most dynamic and practical areas of study. PREFACE xvii PROLOGUE: GETTING READY FOR PRIME TIME P-1 VIDEO CASE: HOTJOBS.COM P-41 CHAPTER 3 Competing in Global Markets 66 PROFILE: Getting to Know Li Yifei of MTV Networks-China 67 The Dynamic Global Market 68 Why Trade with Other Nations? 69 The Theories of Comparative and Absolute Advantage 69 Getting Involved in Global Trade 70 Importing Goods and Services 70 Exporting Goods and Services 71 Measuring Global Trade 72 Reaching Beyond Our Borders: McDonaldizing the World 73 Trading in Global Markets: The U.S. Experience 74 Strategies for Reaching Global Markets 75 Licensing 76 Dealing with Change: Like Money in the Bank 77 Exporting 77 Franchising 78 Contract Manufacturing 78 International Joint Ventures and Strategic Alliances 79 Foreign Subsidiaries 80 Forces Affecting Trading in Global Markets 81 Sociocultural Forces 81 Economic and Financial Forces 83 Legal and Regulatory Forces 85 Physical and Environmental Forces 86 Making Ethical Decisions: Doing Bad by Trying to Do Good 87 Trade Protectionism 87 Legal Briefcase: When Is a Fish Not a Fish? 88 The General Agreement on Tariffs and Trade, and the World Trade Organization 89 Common Markets 90 The North American Free Trade Agreement (NAFTA) 92 The Future of Global Trade: Global E-Commerce 92 Globalization and You 93 CASING THE WEB: Cooling Off the Sweatshops www.mhhe.com/ub7e VIDEO CASE: Six Billion Customers and Counting: IBM 98 CHAPTER 4 Demonstrating Ethical Behavior and Social Responsibility 100 PROFILE: Getting to Know Dean Jernigan, CEO of Storage USA and Founder of the Memphis Redbirds 101 Ethics Is More Than Legality 102 Ethical Standards Are Fundamental 102 Making Ethical Decisions: Did Napster Catch the Music Industry Napping? 103 Ethics Begins with Each of Us 104 vi Contents A clash of economic philosophies? Perhaps. When the reunification of Germany took place residents of Chemnitz, formerly known as Karl Marx City and located in what was once East Germany, opted to retain this statue of Karl Marx while at the same time embracing one of capitalism?s best known symbols, the Golden Arches of McDonald?s. Contents vii CASING THE WEB: Keeping the Air in Blimpie www.mhhe.com/ub7e VIDEO CASE: Making Profits with a Twist: Auntie Anne?s Pretzels 170 CHAPTER 6 Entrepreneurship and Starting a Small Business 172 PROFILE: Getting to Know Renee Amoore, Founder of The Amoore Group 173 The Age of the Entrepreneur 174 The Job-Creating Power of Entrepreneurs in the United States 174 Why People Take the Entrepreneurial Challenge 175 What Does It Take to Be an Entrepreneur? 176 Entrepreneurial Teams 177 Micropreneurs and Home-Based Businesses 178 Web-Based Businesses 180 Entrepreneurship within Firms 181 Encouraging Entrepreneurship?What Government Can Do 183 Getting Started in Small Business 183 Small versus Big Business 184 Importance of Small Business 184 Small-Business Success and Failure 185 Joining and giving to New York City?s Learning Leaders organization is one way the Big Apple?s movers and shakers are giving business a good name. Managing Businesses Ethically and Responsibly 105 Setting Corporate Ethical Standards 107 Dealing with Change: Enron: From Ethics Poster Child to Wanted Poster 109 Corporate Social Responsibility 110 Spotlight on Small Business: Myths about Small-Business Philanthropy 111 Responsibility to Customers 111 Responsibility to Investors 112 Responsibility to Employees 114 Responsibility to Society and the Environment 114 Social Auditing 116 International Ethics and Social Responsibility 117 Reaching Beyond Our Borders: Ethical Culture Clash 119 CASING THE WEB: Got a Deadline? Click Here www.mhhe.com/ub7e VIDEO CASE: Doing unto Others: Abbott Laboratories 123 APPENDIX: Working within the Legal Environment of Business 124 PART 2 Business Ownership: Starting a Small Business CHAPTER 5 Choosing a Form of Business Ownership 140 PROFILE: Getting to Know Anne Beiler of Auntie Anne?s Pretzels 141 Basic Forms of Business Ownership 142 Sole Proprietorships 143 Advantages of Sole Proprietorships 143 Disadvantages of Sole Proprietorships 143 Partnerships 145 Disadvantages of Partnerships 145 Dealing with Change: Testing the Limits of Limited Liability Partnerships 146 Advantages of Partnerships 146 Spotlight on Small Business: Choose Your Partner 147 Corporations 148 Advantages of Corporations 149 Disadvantages of Corporations 151 Individuals Can Incorporate 152 S Corporations 152 Limited Liability Companies 153 Corporate Expansion: Mergers and Acquisitions 155 Dealing with Change: Falling Giants 156 Special Forms of Ownership 157 Franchises 158 Advantages of Franchises 158 Disadvantages of Franchises 160 Legal Briefcase: Franchising Fraud 161 Diversity in Franchising 161 Home-Based Franchises 163 E-Commerce in Franchising 163 Using Technology in Franchising 164 Franchising in International Markets 164 Cooperatives 165 Which Form of Ownership Is for You? 166 Managerial Challenges 212 Managers? Roles Are Changing 212 Functions of Management 213 Planning: Creating a Vision Based on Values 214 Spotlight on Small Business: Taking a SWOT at the Competition 217 Decision Making: Finding the Best Alternative 218 Organizing: Creating a Unified System 219 Tasks and Skills at Different Levels of Management 220 The Trend toward Self-Managed Teams 222 The Stakeholder-Oriented Organization 222 Dealing with Change: Is Target on Target for the Future? 223 Staffing: Getting and Keeping the Right People 223 Managing Diversity 224 Leading: Providing Continuous Vision and Values 225 Leadership Styles 225 Making Ethical Decisions: Leading by Example 226 Dealing with Change: John Chambers Uses Participative Management at Cisco 228 Empowering Workers 228 Reaching Beyond Our Borders: Strong as Steel 230 Managing Knowledge 230 Controlling: Making Sure It Works 231 A New Criterion for Measurement: Customer Satisfaction 232 The Corporate Scorecard 233 CASING THE WEB: Leading in a Leaderless Company www.mhhe.com/ub7e VIDEO CASE: Leading America?s Team: Delta Force 237 CHAPTER 8 Adapting Organizations to Today?s Markets 238 PROFILE: Getting to Know Carly Fiorina of Hewlett-Packard 239 Building an Organization from the Bottom Up 240 The Changing Organization 240 Making Ethical Decisions: Safety versus Profit 241 The Historical Development of Organizational Design 241 Turning Principles into Organizational Design 243 Issues Involved in Structuring Organizations 245 Centralization versus Decentralization of Authority 245 Reaching Beyond Our Borders: The Internet Makes the World Smaller 246 Choosing the Appropriate Span of Control 246 Tall versus Flat Organization Structures 247 Advantages and Disadvantages of Departmentalization 248 Organization Models 251 Line Organizations 251 Line-and-Staff Organizations 251 Matrix-Style Organizations 252 Cross- Functional Self-Managed Teams 254 Managing the Interactions among Firms 255 Benchmarking and Outsourcing 256 Adapting to Change 257 Restructuring for Empowerment 257 Radical Reorganization 258 Creating a Change-Oriented Learning about Small-Business Operations 187 Learn from Others 187 Spotlight on Small Business: Making the Grade in Business 188 Get Some Experience 187 Take Over a Successful Firm 187 Managing a Small Business 189 Begin with Planning 189 Writing a Business Plan 190 Getting Money to Fund a Small Business 190 The Small Business Administration 192 Knowing Your Customers 194 Managing Employees 194 Keeping Records 195 Looking for Help 195 Going International: Small-Business Prospects 197 Reaching Beyond Our Borders: Sparkling Success in Cyberspace 198 CASING THE WEB: BMOC: Starting a Small Business at School www.mhhe.com/ub7e VIDEO CASE: It?s In the Bag: Joe-To-Go 201 APPENDIX: Entrepreneur Readiness Questionnaire 203 PART 2 CAREER PORTFOLIO 207 PART 3 Business Management: Empowering Employees to Satisfy Customers CHAPTER 7 Management, Leadership, and Employee Empowerment 210 PROFILE: Getting to Know Oprah Winfrey: Businesswoman and TV Personality 211 Operating out of one of their bedrooms Ronald and June Stein, owners of Principal Technical Services of Lake Forest, California, have fashioned a home-based business with $14 million in annual sales! They specialize in technical staffing and currently have over 200 employees, only a small percentage of whom have ever set foot in Lake Forest. PROFILE: Getting to Know Herb Kelleher and Colleen Barrett of Southwest Airlines 299 The Importance of Motivation 300 Frederick Taylor: The Father of Scientific Management 300 Elton Mayo and the Hawthorne Studies 301 Legal Briefcase: Scientific Management Is Alive and Well at UPS 302 Motivation and Maslow?s Hierarchy of Needs 303 Applying Maslow?s Theory 305 Herzberg?s Motivating Factors 305 Applying Herzberg?s Theories 307 Job Enrichment 307 Spotlight on Small Business: Motivating Employees in a Small Business 309 McGregor?s Theory X and Theory Y 309 Theory X 310 Theory Y 310 Ouchi?s Theory Z 311 Goal-Setting Theory and Management by Objectives 313 Meeting Employee Expectations: Expectancy Theory 314 Reinforcing Employee Performance: Reinforcement Theory 315 Treating Employees Fairly: Equity Theory 315 Building Teamwork through Open Communication 316 Applying Open Communication in Self-Managed Teams 317 Making Ethical Decisions: Motivating Temporary Employees 319 Models of Employee Empowerment 318 Motivation in the Future 320 Reaching Beyond Our Borders: Global Teamwork 321 CASING THE WEB: Making Teams Work in a Changing Market www.mhhe.com/ub7e VIDEO CASE: Working for the Best: The Container Store 326 Organizational Culture 259 Spotlight on Small Business: All This and Ice Cream Too 260 The Informal Organization 260 CASING THE WEB: IBM Is Both an Outsourcer and a Major Outsource for Others www.mhhe.com/ub7e VIDEO CASE: One Smooth Stone 265 CHAPTER 9 Producing World-Class Goods and Services 266 PROFILE: Getting to Know Dain Hancock of Lockheed Martin 267 America?s Evolving Manufacturing and Services Base 268 From Production to Operations Management 268 Operations Management in Action 269 Manufacturers Turn to a Customer Orientation and Services for Profit 270 Operations Management Functions 270 Facility Location 270 Making Ethical Decisions: Stay or Leave? 272 Reaching Beyond Our Borders: Why Not Live in Hawaii and Do Business Globally? 274 Facility Layout 273 Quality Control 275 Spotlight on Small Business: Meeting the Six Sigma Standard 277 Dealing with Change: Why Is Service Still So Bad? 278 Operations Management in the Service Sector 279 Measuring Quality in the Service Sector 280 Services Go Interactive 281 Operations Management in the Manufacturing Sector 281 Manufacturing Processes 282 Materials Requirement Planning 283 Modern Production Techniques 284 Just-in-Time Inventory Control 284 Internet Purchasing 285 Flexible Manufacturing 285 Lean Manufacturing 286 Mass Customization 286 Competing in Time 287 Computer-Aided Design and Manufacturing 287 Control Procedures: PERT and Gantt Charts 288 Preparing for the Future 289 CASING THE WEB: Griffin Hospital www.mhhe.com/ub7e VIDEO CASE: Reality on Request: Digital Domain 294 PART 3 CAREER PORTFOLIO 295 PART 4 Management of Human Resources: Motivating Employees to Produce Quality Goods and Services CHAPTER 10 Motivating Employees and Building Self-Managed Teams 298 Is the goal of personalized, responsive customer service too often sacrificed to cost containment or reduction in many of today?s businesses? Moving Employees Up, Over, and Out 351 Promoting and Reassigning Employees 351 Terminating Employees 352 Retiring Employees 352 Losing Employees 353 Laws Affecting Human Resource Management 353 Legal Briefcase: Government Legislation 354 Laws Protecting the Disabled and Older Employees 355 Effects of Legislation 356 CASING THE WEB: Dual-Career Planning www.mhhe.com/ub7e VIDEO CASE: SAS 361 CHAPTER 12 Dealing with Employee?Management Issues and Relationships 362 PROFILE: Getting to Know Paul Tagliabue, Commissioner of the National Football League 362 Employee?Management Issues 364 Labor Unions from Different Perspectives 365 The Early History of Organized Labor 365 Labor Legislation and Collective Bargaining 366 Objectives of Organized Labor 368 Resolving Labor?Management Disagreements 370 Reaching Beyond Our Borders: The Euro Strikes Out with the Unions 371 Mediation and Arbitration 372 Tactics Used in Labor?Management Conflicts 373 Union Tactics 373 Dealing with Change: Sitting on the Docks 375 Management Tactics 376 The Future of Unions and Labor?Management Relations 376 Making Ethical Decisions: Crossing the Line or Double Crossing 377 Spotlight on Small Business: The ER Meets the Teamsters 378 Controversial Employee?Management Issues 379 Executive Compensation 379 Legal Briefcase: Getting the Golden Boot 381 Comparable Worth 381 Sexual Harassment 382 Child Care 384 Elder Care 385 AIDS Testing, Drug Testing, and Violence in the Workplace 386 Employee Stock Ownership Plans (ESOPs) 387 CASING THE WEB: Do Right-to-Work Laws Help States? www.mhhe.com/ub7e VIDEO CASE: LUV in the Workplace: Southwest Airlines 391 PART 4 CAREER PORTFOLIO 393 PART 5 Marketing: Developing and Implementing Customer-Oriented Marketing Plans CHAPTER 13 Marketing: Building Customer and Stakeholder Relationships 396 CHAPTER 11 Human Resource Management: Finding and Keeping the Best Employees 328 PROFILE: Getting to Know Karen Oman of Certes Financial Pros 329 Working with People Is Just the Beginning 330 Developing the Ultimate Resource 330 The Human Resource Challenge 331 Dealing with Change: Who Will Replace the Graying Workers? 332 Determining Your Human Resource Needs 333 Recruiting Employees from a Diverse Population 334 Spotlight on Small Business: Competing for Qualified Workers 335 Selecting Employees Who Will Be Productive 338 Hiring Contingent Workers 337 Training and Developing Employees for Optimum Performance 338 Management Development 341 Networking 341 Diversity in Management Development 342 Appraising Employee Performance to Get Optimum Results 342 Compensating Employees: Attracting and Keeping the Best 344 Pay Systems 344 Compensating Teams 344 Fringe Benefits 346 Reaching Beyond Our Borders: Managing a Global Workforce 348 Scheduling Employees to Meet Organizational and Employee Needs 348 Flextime Plans 348 Home-Based and Other Mobile Work 349 Job-Sharing Plans 350 One of the key elements in today?s global competition is labor cost. These white-collar workers at Wipro Spectramind in New Delhi, India, are 60 percent cheaper than their counterparts in the United States. How will U.S. workers meet this challenge? CASING THE WEB: Customer-Oriented Marketing Concepts at Thermos www.mhhe.com/ub7e VIDEO CASE: Racing to Market 427 CHAPTER 14 Developing and Pricing Products and Services 428 PROFILE: Getting to Know Alan G. Lafley of Procter & Gamble 429 Product Development and the Total Product Offer 430 Developing a Total Product Offer 431 Product Lines and the Product Mix 432 Dealing with Change: Using the Web to Provide More Information 433 Product Differentiation 434 Marketing Different Classes of Consumer Goods and Services 434 Marketing Industrial Goods and Services 435 Packaging Changes the Product 437 The Growing Importance of Packaging 437 Branding and Brand Equity 438 Brand Categories 438 Generating Brand Equity and Loyalty 439 Creating Brand Associations 440 Making Ethical Decisions: Are We Too Star Struck? 440 Brand Management 440 The New-Product Development Process 441 Generating New-Product Ideas 441 Product Screening 441 Product Analysis 441 Product Development and Testing 442 Commercialization 442 The International Challenge 442 Reaching Beyond Our Borders: Designing Products for the Poor 443 The Product Life Cycle 443 Example of the Product Life Cycle 444 The Importance of the Product Life Cycle 444 Competitive Pricing 446 Pricing Objectives 446 Cost-Based Pricing 447 Demand-Based Pricing 448 Competition-Based Pricing 448 Pricing in the Service Sector 448 Spotlight on Small Business: Going from Low-End to Upscale Restaurants 449 Break-Even Analysis 449 Other Pricing Strategies 450 How Market Forces Affect Pricing 451 Nonprice Competition 451 Nonprice Strategies 451 CASING THE WEB: Everyday Low Pricing www.mhhe.com/ub7e VIDEO CASE: Search for Youth: CBS and CNN 457 CHAPTER 15 Distributing Products Quickly and Efficiently 458 PROFILE: Getting to Know Gus Pagonis of Sears 459 The Emergence of Marketing Intermediaries 460 Why Marketing Needs Intermediaries 460 How Intermediaries Create Exchange Efficiency 460 The Value versus the Cost of Intermediaries 461 PROFILE: Getting to Know Marco Sorani of SSB Technologies 397 What Is Marketing? 398 The Evolution of Marketing 398 Nonprofit Organizations Prosper from Marketing 400 The Marketing Mix 400 Dealing with Change: Applying the Four Ps 401 Applying the Marketing Process 402 Designing a Product to Meet Needs 402 Setting an Appropriate Price 403 Reaching Beyond Our Borders: Problems and Solutions 404 Getting the Product to the Right Place 404 Developing an Effective Promotional Strategy 404 Providing Marketers with Information 405 The Marketing Research Process 406 The Marketing Environment 408 Making Ethical Decisions: No Kidding 408 Two Different Markets: Consumer and Business-to-Business (B2B) 411 The Consumer Market 411 Segmenting the Consumer Market 412 Reaching Smaller Market Segments 412 Moving toward Relationship Marketing 413 Dealing with Change: Finding New Market Opportunities 414 Spotlight on Small Business: Relationship Marketing of Bicycles 415 Forming Communities of Buyers 415 The Consumer Decision-Making Process 416 The Business-to-Business Market 418 Updating the Marketing Concept 419 From Providing Customer Satisfaction to Exceeding Expectations 420 Benchmarking and Uniting Organizations 420 Maintaining a Profit Orientation 420 Establishing Relationships with All Stakeholders 421 Customer Relationship Management (CRM) Goes High Tech 421 Your Prospects in Marketing 422 With a population in excess of 1 billion, China is predicted by some experts to vault to the world?s third largest car market by 2010, behind only the United States and Japan. What does this forecast mean to U.S. car manufacturers, U.S. oil companies, and potentially the world?s environment? Sales Promotion: Getting a Good Deal 504 Sampling Is a Powerful Sales Promotion Tool 505 Word of Mouth 506 Viral Marketing and Other Word-of-Mouth Strategies 506 How New Technologies Are Affecting Promotion 507 Managing the Promotion Mix: Putting It All Together 507 Promotional Strategies 508 Creating an Integrated Marketing Communication (IMC) System 508 Building Interactive Marketing Programs 509 CASING THE WEB: Developing a Promotional Strategy for Biltmore Estate www.mhhe.com/ub7e VIDEO CASE: Art of Motoring: MiniUSA 514 PART 5 CAREER PORTFOLIO 515 PART 6 Decision Making: Managing Information CHAPTER 17 Using Technology to Manage Information 518 PROFILE: Getting to Know W. Roy Dunbar of Eli Lilly 519 The Role of Information Technology 520 How Information Technology Changes Business 520 Moving from Information Technology toward Knowledge Technology 521 Dealing with Change: The Next Best Thing to Being There 523 Managing Information 523 Storing and Mining Data 525 The Road to Knowledge: The Internet, Intranets, Extranets, and Virtual Private Networks 525 The Utilities Created by Intermediaries 463 Form Utility 463 Time Utility 464 Place Utility 464 Possession Utility 464 Information Utility 464 Making Ethical Decisions: Look One Place, Buy Another 465 Service Utility 465 Dealing with Change: How Technology Helped Change the Way Intermediaries Create Utility 466 Wholesale Intermediaries 466 Merchant Wholesalers 467 Agents and Brokers 468 Retail Intermediaries 468 How Retailers Compete 469 Retail Distribution Strategy 471 Nonstore Retailing 472 Electronic Retailing 472 Reaching Beyond Our Borders: What You Want, When You Want It 473 Telemarketing 473 Vending Machines, Kiosks, and Carts 473 Direct Selling 474 Multilevel Marketing 474 Direct Marketing 474 Building Cooperation in Channel Systems 475 Corporate Distribution Systems 475 Contractual Distribution Systems 476 Administered Distribution Systems 476 Supply Chains 476 The Emergence of Logistics 477 Getting Goods from Producer to Consumer Efficiently 479 Choosing the Right Transportation Mode 480 The Storage Function 482 What All This Means to You 482 CASING THE WEB: Multilevel Marketing www.mhhe.com/ub7e VIDEO CASE: Bricks-and-Clicks: Mall of America and Amazon.com 487 CHAPTER 16 Today?s Promotional Techniques 488 PROFILE: Getting to Know Dan Wieden of Wieden and Kennedy 489 Promotion and the Promotion Mix 490 Advertising: Persuasive Communication 491 Dealing with Change: Product Placement Challenges Advertising 494 The Growing Use of Infomercials 494 Advertising and Promotion on the Internet 494 Spotlight on Small Business: Using Testimonials to Build Business 495 Global Advertising 496 Reaching Beyond Our Borders: Can There Be a Starbucks Inside a Starbucks? 496 Personal Selling: Providing Personal Attention 498 Steps in the Selling Process 498 Using Technology to Practice Consultative Selling 500 The Business-to- Consumer (B2C) Sales Process 501 Public Relations: Building Relationships 502 Publicity: The Talking Arm of PR 503 Does advertising really sell? In a word, yes! And firms such as Hauling Ads Inc. are always searching for new ways to bring you their clients? messages. Areas of Accounting 549 Managerial Accounting 549 Financial Accounting 550 Dealing with Change: Elementary, Mr. Auditor, Elementary! 551 Auditing 551 Tax Accounting 552 Government and Not-for-Profit Accounting 552 Accounting versus Bookkeeping 553 The Six-Step Accounting Cycle 553 The Impact of Computers on Accounting 554 Understanding Key Financial Statements 555 The Fundamental Accounting Equation 555 The Balance Sheet 556 Assets 556 Liabilities and Owners? Equity Accounts 558 Spotlight on Small Business: You, Incorporated 559 The Income Statement 560 Revenue 560 Cost of Goods Sold (Cost of Goods Manufactured) 561 Operating Expenses and Net Profit or Loss 562 The Statement of Cash Flows 562 The Importance of Cash Flow Analysis 563 Making Ethical Decisions: On the Accounting Hot Seat 564 Applying Accounting Knowledge in the Business 565 Legal Briefcase: Auditing the Accounting Profession 567 Analyzing Financial Statements: Ratio Analysis 567 Liquidity Ratios 567 Leverage (Debt) Ratios 569 Profitability (Performance Ratios) 569 Activity Ratios 570 CASING THE WEB: Getting Through the Hard Times at Hard Rock www.mhhe.com/ub7e VIDEO CASE: Talking the Language of Business: AON 576 PART 6 CAREER PORTFOLIO 577 PART 7 Managing Financial Resources CHAPTER 19 Financial Management 580 PROFILE: Getting to Know Randy Casstevens, CFO of Krispy Kreme Doughnuts 581 The Role of Finance and Financial Managers 582 The Importance of Understanding Finance 583 What Is Financial Management? 584 Financial Planning 584 Forecasting Financial Needs 584 Working with the Budgeting Process 585 Establishing Financial Controls 587 Spotlight on Small Business: You, Incorporated, Monthly Budget 588 Making Ethical Decisions: Playing It Safe 589 The Need for Operating Funds 589 Managing Day-by-Day Needs of the Business 589 Controlling Credit Operations 590 Acquiring Needed Inventory 590 Making Capital Expenditures 591 Alternative Sources of Funds 591 Dealing with Change: Financial Crisis in the Classrooms 592 Dealing with Change: IT May Change Everything, but It Doesn?t Cure All Ills 526 The Front Door: Enterprise Portals 528 Broadband Technology 528 The Enabling Technology: Hardware 529 Cutting the Cord: Wireless Information Appliances 530 Computer Networks 530 Software 532 Effects of Information Technology on Management 534 Human Resource Issues 534 Security Issues 536 Legal Briefcase: Fear Factor: Leaky Cybersecurity 537 Privacy Issues 537 Stability Issues 539 Technology and You 539 CASING THE WEB: The Super Bowl of Networks www.mhhe.com/ub7e VIDEO CASE: As Easy as Riding a Bike??Hoffman Sports Association 545 CHAPTER 18 Understanding Financial Information and Accounting 546 PROFILE: Getting to Know Michael Miller of Goodwill Industries 547 The Importance of Financial Information 548 What Is Accounting? 548 As large as four tennis courts, the Earth Simulator is now the world?s fastest computer. Built by NEC of Japan, it can process raw data approximately five times faster than IBM?s ASCI, the previous speed champion. Equity Financing by Selling Stock 615 Learning the Language of Stock 615 Advantages and Disadvantages of Issuing Stock 615 Issuing Shares of Preferred Stock 616 Special Features of Preferred Stock 616 Issuing Shares of Common Stock 617 Stock Exchanges 617 U.S. Exchanges 617 Securities Regulations and the Securities and Exchange Commission 619 Legal Briefcase: Getting the ?Inside? Story 620 Making Ethical Decisions: What Will It Be: Your Bark or Your Bite? 621 Global Stock Exchanges 620 How to Invest in Securities 621 Reaching Beyond Our Borders: It Really Is a Small World 622 Investing Online 623 Spotlight on Small Business: Getting Your Money?s Worth 623 Choosing the Right Investment Strategy 624 Investing in Bonds 625 Investing in Stocks 625 Stock Splits 626 Investing in Mutual Funds 627 Diversifying Investments 628 Investing in High-Risk Investments 629 Investing in High-Risk (Junk) Bonds 629 Buying Stock on Margin 629 Investing in Commodities 629 Understanding Information from Securities Markets 631 Understanding Bond Quotations 631 Understanding Stock Quotations 631 Understanding Mutual Fund Quotations 633 Stock Market Indicators 633 The Market?s Roller-Coaster Ride 634 Investing Challenges in the 21st-Century Market 635 CASING THE WEB: Making Dreams Come True www.mhhe.com/ub7e VIDEO CASE: A Fool and His Money: Motley Fool 641 CHAPTER 21 Understanding Money and Financial Institutions 642 PROFILE: Getting to Know Alan Greenspan, Chairman of the Federal Reserve 643 Why Money Is Important 644 What Is Money? 644 Changing the Currency in Europe 645 What Is the Money Supply? 645 Why Does the Money Supply Need to Be Controlled? 646 The Global Exchange of Money 646 Control of the Money Supply 647 Basics about the Federal Reserve 647 The Reserve Requirement 648 Open-Market Operations 649 The Discount Rate 649 The Federal Reserve?s Check- Clearing Role 649 Obtaining Short-Term Financing 593 Trade Credit 593 Promissory Notes 593 Family and Friends 593 Commercial Banks and Other Financial Institutions 593 Different Forms of Short- Term Loans 595 Factoring 596 Commercial Paper 596 Reaching Beyond Our Borders: Making Sure the Check?s in the Mail 597 Obtaining Long-Term Financing 597 Debt Financing 598 Equity Financing 599 Making Decisions on Using Financial Leverage 602 CASING THE WEB: Survival of the Financially Fittest www.mhhe.com/ub7e VIDEO CASE: Financial Management 607 CHAPTER 20 Securities Markets: Financing and Investing Opportunities 608 PROFILE: Getting to Know David and Tom Gardner of the Motley Fool 609 The Function of Securities Markets 610 The Role of Investment Bankers 610 Dealing with Change: Maintaining the Integrity of Securities Markets 611 Debt Financing by Selling Bonds 611 Learning the Language of Bonds 612 Advantages and Disadvantages of Issuing Bonds 613 Different Classes of Bonds 613 Special Bond Features 614 Want to start a cyberbank? According to many of those who have, such as Walter Tillman of Earthstar Bank in Southampton, Pennsylvania, you may need to offer traditional brick-and-mortar branches as well in order to be profitable. For now, many customers are still uncomfortable with Internet banking. Planning Your Retirement 682 Social Security 682 Individual Retirement Accounts (IRAs) 683 401(k) Plans 684 Keogh Plans 686 Financial Planners 687 Estate Planning 687 CASING THE WEB: Becoming Financially Secure www.mhhe.com/ub7e The History of Banking and the Need for the Fed 650 Banking and the Great Depression 657 The Federal Reserve and the Banking Industry 652 The American Banking System 652 Commercial Banks 652 Making Ethical Decisions: To Tell the Teller or Not 654 Savings and Loan Associations (S&Ls) 654 Spotlight on Small Business: Where Can Entrepreneurs Go to Get Financing? 655 Credit Unions 655 Other Financial Institutions (Nonbanks) 655 How the Government Protects Your Funds 657 The Federal Deposit Insurance Corporation (FDIC) 657 The Savings Association Insurance Fund (SAIF) 657 The National Credit Union Administration (NCUA) 657 The Future of Banking 658 Ethical Issues Hurt Banking Deeply 658 Electronic Banking on the Internet 658 Dealing with Change: The Internet and Global Banking 659 Using Technology to Make Banking More Efficient 659 International Banking and Banking Services 661 Leaders in International Banking 661 The World Bank and the International Monetary Fund (IMF) 662 Reaching Beyond Our Borders: The ?Bank of Crooks and Criminals, Incorporated? 663 CASING THE WEB: Learning about the Federal Reserve System www.mhhe.com/ub7e VIDEO CASE: A Reputation You Can Bank On: Bank One 667 CHAPTER 22 Managing Personal Finances to Achieve Financial Security 668 PROFILE: Getting to Know Today?s Billionaires 669 The Need for Personal Financial Planning 670 Financial Planning Begins with Making Money 670 Six Steps in Learning to Control Your Assets 670 Building Your Financial Base 674 Real Estate: A Relatively Secure Investment 675 Spotlight on Small Business: Financing for Tom, Dick, but Not Mary 675 Where to Put Your Savings 677 Learning to Manage Credit 678 Dealing with Change: Give Me Credit or Give Me Death 679 Making Ethical Decisions: Giving Credit Cards to Students 680 Protecting Your Financial Base: Buying Insurance 680 Health Insurance 681 Homeowners or Renter?s Insurance 682 Other Insurance 682 Obtaining a credit card is frequently much easier than managing it. Financial independence depends on consistently sound decision making?both in terms of your choice of investments and career. VIDEO CASE: So You Want to be a Millionaire: Edward Jones 692 APPENDIX: Managing Risk 693 PART 7 CAREER PORTFOLIO 705 Chapter Notes Glossary Photo Credits Name Index Organization Index Subject Index
Library of Congress Subject Headings for this publication:
Business -- Vocational guidance.