Table of contents for Understanding business / William G. Nickels, James M. McHugh, Susan M. McHugh.

Bibliographic record and links to related information available from the Library of Congress catalog.

Note: Contents data are machine generated based on pre-publication provided by the publisher. Contents may have variations from the printed book or be incomplete or contain other coding.

Business Trends: Cultivating a Business in
Diverse, Global Environments
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
VIDEO CASE: Toying with Success: The McFarlane Companies 31
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
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.
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
VIDEO CASE: Six Billion Customers and Counting: IBM 98
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
Contents vii
CASING THE WEB: Keeping the Air in Blimpie
VIDEO CASE: Making Profits with a Twist: Auntie Anne?s
Pretzels 170
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
VIDEO CASE: Doing unto Others: Abbott Laboratories 123
APPENDIX: Working within the Legal Environment of
Business 124
Business Ownership: Starting a Small Business
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
VIDEO CASE: Leading America?s Team: Delta Force 237
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
VIDEO CASE: It?s In the Bag: Joe-To-Go 201
APPENDIX: Entrepreneur Readiness Questionnaire 203
Business Management: Empowering
Employees to Satisfy Customers
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
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
VIDEO CASE: One Smooth Stone 265
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
VIDEO CASE: Reality on Request: Digital Domain 294
Management of Human Resources:
Motivating Employees to Produce Quality
Goods and Services
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
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?
VIDEO CASE: LUV in the Workplace: Southwest Airlines 391
Marketing: Developing and Implementing
Customer-Oriented Marketing Plans
Marketing: Building Customer and Stakeholder
Relationships 396
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
VIDEO CASE: Racing to Market 427
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
VIDEO CASE: Search for Youth: CBS and CNN 457
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
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
VIDEO CASE: Art of Motoring: MiniUSA 514
Decision Making: Managing Information
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
VIDEO CASE: Bricks-and-Clicks: Mall of America and 487
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
VIDEO CASE: Talking the Language of Business: AON 576
Managing Financial Resources
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
VIDEO CASE: As Easy as Riding a Bike??Hoffman Sports
Association 545
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
VIDEO CASE: A Fool and His Money: Motley Fool 641
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
VIDEO CASE: Financial Management 607
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
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
VIDEO CASE: A Reputation You Can Bank On: Bank One 667
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
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
APPENDIX: Managing Risk 693
Chapter Notes
Photo Credits
Name Index
Organization Index
Subject Index

Library of Congress Subject Headings for this publication:

Industrial management.
Business -- Vocational guidance.