Multiple-Choice Questions Flashcards
1
Q
What is Marketing Research?
A
Marketing Research is the “systemic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.”
2
Q
How does Marketing Research differ from Competitive or Marketing Intelligence?
A
Market research deals specifically with your company, marketing strategy, and product line.
Market intelligence is information about the market itself, not your specific positioning necessarily.
3
Q
Marketing intelligence (MI) -
A
is the everyday information relevant to a company’s markets, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining market opportunity, market penetration strategy, and market development metrics.
4
Q
Market oriented company -
A
telling customers what they want
- when company’s culture is systematically and entirely committed to the continuous creation of superior customer value (slogans of the firms, ex. I’m loving it Mc)
5
Q
Many salespeople earn a commission, which is a percentage paid on every:
a Sales Call
b Sale
c Profit
A
Many salespeople earn a commission, which is a percentage paid on every:
b Sale
6
Q
The essence of selling is:
a Complaining
b Teaching.
c Being charming
A
The essence of selling is:
b Teaching.
7
Q
Which of the following is not a good strategy for becoming an effective salesperson?
a Not focusing on customer complaints; they will just get you down.
b Assuming every person you sell to knows at least 250 other people.
c Making sure you experience a call from one of your competitor’s salespeople.
d Knowing ahead of time how you want to present your product or service.
A
Which of the following is not a good strategy for becoming an effective salesperson?
a Not focusing on customer complaints; they will just get you down.
8
Q
During each sales call you make, focus on this:
a Is this customer someone who would buy this product?
b How can I make this sale?
c What does the customer need?
A
During each sales call you make, focus on this:
c What does the customer need?
9
Q
What should you do during a sales call right after briefly telling the customer about your product/service?
a Sit back and listen to the customer’s response, in order to learn what the customer needs.
b Ask questions to keep the customer engaged in the sales call.
c Keep talking so the customer doesn’t lose interest.
A
What should you do during a sales call right after briefly telling the customer about your product/service?
a Sit back and listen to the customer’s response, in order to learn what the customer needs.
10
Q
How should you deal with a customer’s objections during a sales call?
a Always acknowledge objections and respond to them.
b Take objections as a sign that the customer is not likely to buy from you.
c Ignore objections so the customer will forget about them.
A
How should you deal with a customer’s objections during a sales call?
a Always acknowledge objections and respond to them.
11
Q
The rule of thumb is that if a customer says “No” this many times, he/she means it:
a four times
b once
c three times
A
The rule of thumb is that if a customer says “No” this many times, he/she means it:
a four times
12
Q
Successful businesses are built on:
a repeat business.
b huge sales.
v frequent sales.
A
Successful businesses are built on:
a repeat business.
13
Q
Which of the following is not an example of customer service?
a keeping a customer on hold longer than necessary
b delivering a product on time providing a toll-free
c customer assistance phone line
d suggesting a less expensive product that will meet the customer’s need
A
Which of the following is not an example of customer service?
a keeping a customer on hold longer than necessary
14
Q
When responding to customer complaints you should do all of these except:
a limit the time for criticism.
b do not take negative comments personally.
c acknowledge and deal with them.
A
When responding to customer complaints you should do all of these except:
a limit the time for criticism.
15
Q
Which of the following is best described as a market-oriented business definition?
a. Tallinn Railroad: We run a railroad.
b. Xerox: We make copying equipment.
c. Olerex Oil: We sell gasoline.
d. Encyclopedia Britannica: We distribute information.
e. Netflix: We make movies.
A
Which of the following is best described as a market-oriented business definition?
d. Encyclopedia Britannica: We distribute information.
16
Q
Which of the following involves adapting a firm to take advantage of opportunities in its constantly changing environment?
a Team planning b Short-term planning c Media planning d Strategic planning e Annual planning
A
Which of the following involves adapting a firm to take advantage of opportunities in its constantly changing environment?
d Strategic planning
17
Q
_______ is the worth in monetary terms of the economic, technical, service and social benefits a customer receives in exchange for the price it pays for a market offering.
a. Marketing efforts
b. Planning
c. Value
d. Marketing intelligence
e. Product
A
_______ is the worth in monetary terms of the economic, technical, service and social benefits a customer receives in exchange for the price it pays for a market offering.
c. Value
18
Q
Sales of products in introductory stage are recorded by a company as
a. Low sales
b. Rapidly rising
c. Peak sales
d. Gradually declining
e. None of the above mentioned
A
Sales of products in introductory stage are recorded by a company as
a. Low sales
19
Q
Marketing ________ is the aggregating of prospective buyers into groups that have common needs and will respond similarly to a marketing action.
a. Segmentation
b. Persuasion
c. Modifying the offer
d. Evaluation
e. Neither of the abov
A
Marketing ________ is the aggregating of prospective buyers into groups that have common needs and will respond similarly to a marketing action.
a. Segmentation
20
Q
In which case should the project be accepted?
a. when NPV < 0
b. when NPV > 0
A
In which case should the project be accepted?
a. NPV < 0 : Reject Project
b. NPV > 0 : Accept Project
21
Q
Ranges of Price Elasticity of Demand?
a. |εD| = 0
b. 0 < |εD| < 1
c. |εD| = 1
d. 1 < |εD| < ∞
e. |εD| -> ∞
A
Ranges of Price Elasticity of Demand?
a. |εD| = 0: Perfectly Inelastic
b. 0 < |εD| < 1: Inelastic
c. |εD| = 1: Unit elastic
d. 1 < |εD| < ∞: Elastic
e. |εD| -> ∞: Perfectly elastic
22
Q
The opportunity cost of a given activity is
a. The value of material used
b. The value of the next best activity
c. The cost of input used
d. None of the above
A
The opportunity cost of a given activity is
b. The value of the next best activity
23
Q
The competitive firm’s long run supply curve is the portion of it’s ____ curve that lies above average total cost
a. Fixed cost
b. Variable cost
c. Marginal cost
d. All of the above
A
The competitive firm’s long run supply curve is the portion of it’s ____ curve that lies above average total cost
c. Marginal cost
24
Q
In a perfectly competitive market, individual firm
a. Cannot influence the price of its products
b. Can influence the price of its products
c. Can fix the price of its products
d. Can influence the market force
A
In a perfectly competitive market, individual firm
a. Cannot influence the price of its products
25
The market with a single producer is called:
a. Perfect competition
b. Monopolistic competition
c. Oligopoly
d. Monopoly
The market with a single producer is called:
d. Monopoly
26
In the case of ______ a small change in price leads to very big change in quantity demanded (think negatively).
a. Perfectly elastic demand
b. Perfectly inelastic demand
c. Elastic demand
d. Unit elastic demand
In the case of ______ a small change in price leads to very big change in quantity demanded.
c. Elastic demand
27
The distinction between variable cost and fixed cost is relevant only in
a. Sales period
b. Short run
c. Long run
d. Fiscal year
The distinction between variable cost and fixed cost is relevant only in
b. Short run
28
The proportionate change in the quantity demanded of a commodity in response to change in the price of another related commodity is called
a. Substitutes elasticity
b. Price elasticity
c. Income elasticity
d. Cross elasticity
The proportionate change in the quantity demanded of a commodity in response to change in the price of another related commodity is called
d. Cross elasticity
29
Product differentiation is the important feature of:
a. Monopoly
b. Perfect competition
c. Monopolistic competition
d. Monopsony
Product differentiation is the important feature of:
c. Monopolistic competition
30
Oligopoly is a type of
a. Perfect, few firms
b. Imperfect, few firms
c. Perfect, many firms
d. Imperfect, many firms
Oligopoly is a type of
b. Imperfect, few firms
31
In the long run all input become
a. Fixed
b. Variable
c. Partially variable
d. Depreciated
In the long run all input become
b. Variable
32
What item is not on the list of basic human capabilities by Martha Nussbaum (1999)?
a) Wealth
b) Emotions
c) Play
What item is not on the list of basic human capabilities by Martha Nussbaum (1999)?
a) Wealth
33
What element is not part of the classical liberal system of division of moral labor?
a) Strict boundaries between business and politics
b) Private sector of society focusing on fairness in distribution of wealth and incomes in a society
c) Public sector of society focusing on protecting the private property rights and freedom of contracts
What element is not part of the Classical Liberal System of Division of Moral Labor?
b) Private sector of society focusing on fairness in the distribution of wealth and incomes in a society
34
What is the major policy solution that classical liberal PCSR would not necessarily suggest when controlling the Big Tech powers?
a) Anti-trust policies
b) Deliberative democratic discussions among Big Tech firms and NGOs needed to create legitimate industry level self-regulation system
c) Defining rights of use of personal information in data capitalism
What is the major policy solution that classical liberal PCSR would not necessarily suggest when controlling the Big Tech powers?
b) Deliberative democratic discussions among Big Tech firms and NGOs needed to create legitimate industry level self-regulation system
35
In total institution according to Goffman (1961, 17) people do not necessarily:
a) Sleep together
b) Eat together
c) Vote together about the rules of the institution
In total institution according to Goffman (1961, 17) people do not necessarily:
c) Vote together about the rules of the institution
36
In “privatized society”
a) Democratic logics cover all aspects of society
b) Boundaries between business and politics are robust
c) There are no real boundaries between business and politics
In “privatized society”
c) There are no real boundaries between business and politics
37
Amazon in US is not yet providing or starting to provide by itself
a) Private Army
b) Private Health Care System
c) Private Communication and Transit Systems
Amazon in US is not yet providing or starting to provide by itself
a) Private Army
38
What are the characteristics of Democratic Market Economy?
Democratic Market Economy aka Classic Liberal System:
- Public sector: democratically governed
- Private sector: non-democratically governed, i.e. managerially run business firms operating in competitive markets
- Structure of Society: boundaries between spheres of society, diversity of operating logics
- CSR: economic/instrumental perspective dominant
- Deliberative aspects: in the public sector deliberate democratic processes
- Political philosophy: liberal democracy
39
Which of the following categories is not used to differentiate operations and processes?
a. Variety
b. Visibility
c. Velocity
d. Volume
Which of the following categories is not used to differentiate operations and processes?
c. Velocity
40
Which of the following levels is not one to measure operations performance?
a. Individual
b. Societal
c. Strategic
d. Operational
Which of the following levels is not one to measure operations performance?
d. Operational
41
Which can't be measured by Little's Law?
a. The average time a product spends in the whole system(throughput)
b. The average number of things in the system (Work-in-progress)
c. The average rate at which one product leaves the system (cycle time)
d. The average resource input to the system (resource input)
Which can't be measured by Little's Law?
c. The average rate at which one product leaves the system (cycle time)
42
Which of the following is a principle of Business Process Re-Engineering?
a. Have those who use the output of the process drive the process
b. Capture information multiple times at every output
c. Treat geographically dispersed resources as they are, decentralized
d. Put the decision point central and hierarchically at the top
Which of the following is a principle of Business Process Re-Engineering?
d. Put the decision point central and hierarchically at the top
43
Which of the following is a well-known sequencing technique?
a. Shortest operation time (SOT)
b. Last in. last out (LILO)
c. Average operation time (AOT)
d. Free queue selection (FQS)
Which of the following is a well-known sequencing technique?
a. Shortest operation time (SOT)
44
Which one is NOT a key problem when implementing an ERP?
a. The level of outside expertise required is always estimated appropriately.
b. The total cost is likely to be underestimated.
c. There will never be enough training.
d. The time and effort to implement it is likely to be underestimated.
Which one is NOT a key problem when implementing an ERP?
c. There will never be enough training.
45
Which of the following is NOT a key element of improvement
a. Evidence-based problem-solving
b. Customer centricity
c. End-to-End Processes
d. Improving based on Gut Feeling
Which of the following is NOT a key element of improvement
d. Improving based on Gut Feeling (?)
46
According to ISO 9001, which one is a quality management principle
a. Continuous improvement
b. Free-float approach
c. Strong focus on internal expertise
d. Decision making based on gut feeling
According to ISO 9001, which one is a quality management principle
a. Continuous improvement
47
Which of the following steps is not part of operations design?
a. Process design
b. People in organizations
c. Inventory management
d. Process technology
Which of the following steps is not part of operations design?
c. Inventory management
48
Which of the following levels is the highest level of operation analysis?
a. Flow between processes
b. Flow between people
c. Flow between resources
d. Flow between operations
Which of the following levels is the highest level of operation analysis?
d. Flow between operations
49
Which implication indicates a low variety of operations?
a. Complexity
b. Flexibility
c. Standardized
d. High units cost
Which implication indicates a low variety of operations?
c. Standardized
50
Which one is not an objective group of operation performance?
a. Dependability
b. Cost
c. Speed
d. Risk
Which one is not an objective group of operation performance?
d. Risk
51
What could quality mean in relation to operation management?
a. All assembly is to specification
b. Products and services on-time delivery
c. Volume flexibility – the ability to adjust
d. Bought-in materials and services
What could quality mean in relation to operation management?
a. All assembly is to specification
52
Which of the following measures belongs to the strategic level of operations management?
a. Speed
b. Economic (profit)
c. Risk and resilience
d. Flexibility
Which of the following measures belongs to the strategic level of operations management?
c. Risk and resilience
53
The project sponsor...:
a ...drives project tasks in the closing phase
b ...approves major milestones
c ...has to run project marketing activities
d ...needs to define the project team
The project sponsor...:
b ...approves major milestones
54
What are key duties of the project manager during the “performing” phase (according to Tuckman Model)
a Communication, Risk Management, Coordination
b Structuring, Communication, Delegation, Coordination
c Stakeholder Management, Delegation, Planning, Quality Management
d Structuring, Risk Management, Controlling
What are key duties of the project manager during the “performing” phase (according to Tuckman Model)
b Structuring, Communication, Delegation, Coordination
55
Agile projects...
a ...increase the ability to react to changes
b ...aim to reduce communication to a minimum
c ...are only relevant for IT/ Digitalization topics
d ...focus on a lessons learned session at the very end of the project
Agile projects...
a ...increase the ability to react to changes
56
The communication plan...
a ...ideally considers the single best communication path to stakeholders
b ...is based on the team charter
c ...needs to cover at least recipient, frequency, medium and content of communication measures
d ...is owned by the project sponsor
The communication plan...
c ...needs to cover at least recipient, frequency, medium and content of communication measures
57
Project planning requires the following steps and sequence
a Defining the work, specifying duration and effort, determining dependencies and resources, clarifying activity ownership
b Defining the work, determining dependencies and resources, specifying duration and effort, assigning budget positions
c Defining the work, assigning responsibilities, determining dependencies and resources, assigning budget positions
d Defining the work, assigning budget positions, specifying duration and effort, clarifying activity ownership
Project planning requires the following steps and sequence
a Defining the work, specifying duration and effort, determining dependencies and resources, clarifying activity ownership
58
Project risks...
a ...need to be avoided as good as possible
b ...are owned by the project manager
c ...should be evaluated by impact and probability
d ...shall we closed after planning stage
Project risks...
c ...should be evaluated by impact and probability
59
Definition of a PROJECT?
a UNIQUE endeavor with a clear GOAL that needs to be achieved by INTERRELATED TASKS in a FIXED PERIODS OF TIME with LIMITED COST and RESOURCES and influenced by RISKS
60
Is this a PROJECT? True of False.
My project is running a company to…
False, project is to set up a company, lacking target
61
Is this a PROJECT? True of False.
We improve online education for students
False, too broad
62
Is this a PROJECT? True of False.
Our project is to build a cafe that creates a comfortable environment, provides food and drinks while producing our own culture
False, personal ambition, lacking measurement
63
Is this a PROJECT? True of False.
We want to create an NGO
False, lacking target
64
Is this a PROJECT? True of False.
We will deliver food in time to your place
False
65
Is this a PROJECT? True of False.
Our project ends by reaching 100K revenue
False
66
What do I do during the performing phase?
What do I do during the performing phase?
Structuring, Communication, Delegation and Coordination
67
What are the key characteristics of the project?
What are the key characteristics of the project?
Goal, interrelated tasks, fixed timeline, limited cost, resources, risks
68
Core phases of the project according to PMI?
Core phases of the project according to PMI?
Initiating, Planning, Executing & Controlling & Monitoring, Closing
69
Classic (Waterfall) vs Agile?
Classic (Waterfall) vs Agile?
Agile: iterations, result over documentation, changing reqs, fixed resources and time, flexible scope
Waterfall: fixed scope, flexible time and resources
70
What is a PROGRAM?
What is a PROGRAM?
a set of projects focusing on the SAME, overarching GOAL
71
What is a PORTFOLIO?
What is a PORTFOLIO?
is a set of projects with similar CHARACTERISTICS
72
5 phases of Tucman?
5 phases of Tucman?
Forming, Storming, Norming, Performing and Transforming
73
Is this a SMART target?
Construct a residential house with 3 bedrooms on 2 floors in the outskirts of Tallinn by end of September 2021
Not SMART
74
Is this a SMART target?
Achieve profit with our product by end of the year
Not SMART, what product?
75
Is this a SMART target?
Sell 1000 items of our new shoe model EBS Master by end of Aug 2021 to Tallinn customers
Somewhat SMART
76
Is this a SMART target?
Implement a new innovation process based on SBE Software Suite in our company by Jan 30th 2021 for all managers
Not SMART, why?
77
Is this a SMART target?
Run a leaflet-based marketing campaign with 1000 participants in February 2021
Not SMART, the reason for campaign is missing
78
Is this a SMART target?
Offer waterski sports with 2 boats at the seaside close to Tallinn during June and Sep 2021
Not SMART, not a target
79
Is this a SMART target?
Develop a mobile app for Android and iOS that helps managing private insurance contracts and policies, release first version to limited users in Austria five months after development starts
SMART
80
What does SMART stand for?
What does SMART stand for?
Specific, Measurable, Attainable, Relevant, Time-bound
81
Which of the following technologies has been in greater demand in the past year?
1. Electric and Autonomous Vehicles
2. Digital Health
3. Natural Language Processing
4. Last mile delivery technology
5. AI/ML democratisation
Which of the following technologies has been in greater demand in the past year?
3. Natural Language Processing
82
Select one of the following which is NOT a class of ML algorithms?
1. Classification
2. Regression
3. Grouping (Clustering)
4. Anomaly detection
5. Population Growth
Select one of the following which is NOT a class of ML algorithms?
5. Population Growth
83
Which one of the following is not included in the framework for blockchain adoption in article ‘The Truth About Blockchain’:
1. Single use
2. Localisation
3. Computational logic
4. Substitution
5. Transformation
Which one of the following is not included in the framework for blockchain adoption in article ‘The Truth About Blockchain’:
3. Computational logic
84
Which one of the following is NOT one of the 5 research streams of Smart Cities?
1. Built environment
2. Energy
3. Mobility
4. Data
5. Tourism
Which one of the following is NOT one of the 5 research streams of Smart Cities?
5. Tourism
85
Select one of the following which is related to decentralised computing
1. Cloud computing
2. Fog computing
3. Edge computing
4. Virtual reality
5. Quantum computing
Select one of the following which is related to decentralised computing
3. Edge computing
86
Which of the following is not one of the challenges and gaps to reach 5G?
1. Latency
2. Remote controlling
3. Throughput
4. Connections
5. Mobility
6. Network Architecture
Which of the following is not one of the challenges and gaps to reach 5G?
2. Remote controlling
87
True of False?
Financial accounting focuses on providing information to internal users
Financial accounting focuses on providing information to internal users
False, external users
88
True of False?
Preparation of budgets is part of financial accounting
Preparation of budgets is part of financial accounting
False, managerial accounting
89
True of False?
Managerial accounting applies only to merchandising and manufacturing companies
Managerial accounting applies only to merchandising and manufacturing companies
False, all companies
90
True of False?
Both managerial account and financial account deal with many of the same economic events
Both managerial account and financial account deal with many of the same economic events
True
91
True of False?
Managerial account reports are prepared only quarterly and annually
Managerial account reports are prepared only quarterly and annually
False, whenever needed
92
True of False?
Financial account reports are general-purpose reports
Financial account reports are general-purpose reports
True
93
True of False?
Managerial account reports pertain to subunits of the business
Managerial account reports pertain to subunits of the business
True
94
True of False?
Managerial account reports must comply with accounting standards
Managerial account reports must comply with accounting standards
False, any format is used in an org
95
True of False?
Managerial accountants have a single role within an organization, collecting and reporting costs to management
Managerial accountants have a single role within an organization, collecting and reporting costs to management
False, Managerial accountants determine product costs. In addition, managerial accountants are now held responsible for evaluating how well the company is employ- ing its resources. As a result, when the company makes critical strategic decisions, managerial accountants serve as team members alongside personnel from production, marketing, and engineering.
96
True of False?
Financial accounting reports are general-purpose and intended for external users
Financial accounting reports are general-purpose and intended for external users
True
97
True of False?
Managers’ activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control
Managers’ activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control
False, this is financial manager
98
True of False?
Managerial accounting reports must now comply with generally accepted accounting principles (GAAP)
Managerial accounting reports must now comply with generally accepted accounting principles (GAAP)
False, not audited
99
What is "All activities associated with providing a product or performing service"?
All activities associated with providing a product or performing service is a ...
Value Chain
100
What is "A method of allocating overhead based on each product’s use of activities in making the product"?
A method of allocating overhead based on each product’s use of activities in making the product is a ....
Activity-based costing
101
What is "Systems implemented to reduce defects in finished products with the goal of achieving zero defects"?
Systems implemented to reduce defects in finished products with the goal of achieving zero defects is a ....
Total Quality Management (TQM)
102
What is "A performance-measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company’s operations in an integrated fashion"?
A performance-measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company’s operations in an integrated fashion is a ...
Balanced Scorecard
103
What is "Inventory system in which goods are manufactured or purchased just as they are needed for use"?
Inventory system in which goods are manufactured or purchased just as they are needed for use is a ...
Just-in-Time (JIT) inventory
104
What is "A company’s efforts to employ sustainable business practices with regards to its employees, society, and the environment"?
A company’s efforts to employ sustainable business practices with regards to its employees, society, and the environment is a ...
Corporate Social Responsibility (SCR)
105
What is "Inventory system in which goods are manufactured or purchased just as they are needed for use"?
Inventory system in which goods are manufactured or purchased just as they are needed for use is a ...
Statement of Ethical Professional Practice
106
What are the Marketing Principles?
Marketing Principles:
1. Focus on the customer
2. Only compete in markets where you can establish a
competitive advantage
3. Customers do not buyproducts
4. Marketing is too important to leave to the marketing department (even if there still isone)
5. Markets are heterogeneous
6. Marketsand customers are constantly changing
107
What is a Competitive Advantage?
Competitive Advantage is...
the attribute that allows an organization to outperform its competitors
108
What is Value to customers?
Value = price paid
Value is...
the worth in monetary terms of the economic, technical, service and social
benefits a customer firm receives in
exchange for the price it pays for a market offering.
109
What is the Goal of Advertising?
Goal of Advertising is ...
```
Connecting with consumers’ unconscious minds
TO: Build MEMORY STRUCTURES
BY: Being DISTINCTIVE
This is what...
...BUILDS DISTINCTIVE ASSETS OVER TIME
```
110
What are DISTINCTIVE ASSETS?
Distinctive Assets are ...
distinctive memory structures created by advertising/marketing
111
What is Marketing Value to customers?
Value = price paid
Value is...
the worth in monetary terms of the economic, technical, service and social benefits a customer firm receives in exchange for the price it pays for a market offering.
112
What is the difference between Sales and Marketing?
Sales is about getting people to exchange their cash for the company's offering.
While Marketing is about satisfying the needs of customer, by means of a product or a service.
113
What are the different Marketing Approaches?
Marketing Approaches:
- Product Push
- Customer-led
- Resource-based
114
What is the definition of Business Market, aka B2B?
Business market is
All the organizations that buy goods and services to use in the production of other products and services, and identify, evaluate and choose among alternative brands
and suppliers.It also includes retailing and whole saling firms that acquire goods for the purpose of reselling or renting them to others at a profit
115
What are the characteristics of B2C?
B2C:
- many customers
- smaller value transactions
- mass-produced products
- fixed price
- brief, the retail-focused selling process
- multiple factors influence value
- individual buying decision-maker
- media-stimulated demand
- standardized form, service important but less than for business products
- emphasis on advertising
- product passes a number of intermediate links en route to the consumer
- relationship of relatively short duration
- individual or a household makes a buying decision
116
What are the characteristics of B2B?
B2B:
- fewer customers
- larger0value transactions
- customized products
- negotiated price
- lengthy, complex selling process
- usage determines the value
- multiple buying decision-makers
- derived demand
- emphasis on personal selling
- relatively short distribution, direct channels to market
- relatively enduring and complex customer relations
- relatively technical product, exact form often variable, accompanying services very important
117
What are the strategic approaches of Marketing?
Strategic approaches of Marketing:
(top down)
- Corporate strategy
- Business strategy (translated into Marketing Goals)
- Functional strategy (translated into tactics and actions)
- Tactical plans & actions (incl Marlketing Mix 4 P's)
118
What does 4 P's (aka Marketing Mix) in Marketing stand for?
4 P's in Marketing:
- Product
- Price
- Promotion
- Place
119
What is Marketing Segmentation?
Marketing Segmentation is ...
Aggregatingprospectivebuyersinto groups, or segments, that
(1) have common needs and
(2) will respond similarly to a marketing action
(3) articulates who we should not sell to
120
Which of the following statements concerning financial management are correct?
1. It is concerned with investment decisions, financing decisions and dividend decisions
2. It is concerned with financial planning and financial control
3. It considers the management of risk
a) 1 & 2 only
b) 1, 2 & 3
c) 2 & 3 only
d) 1 & 3 only
Which of the following statements concerning financial management are correct?
1. It is concerned with investment decisions, financing decisions and dividend decisions
2. It is concerned with financial planning and financial control
3. It considers the management of risk
b) 1, 2 & 3
Financial management concerns the management of cash flow and wealth generation. This encompasses investment, financial and dividend decisions (financial strategy), financial planning and control and risk management. The latter is safeguarding future cash flows and lower risk should result in lower cost of capital, increasing the value of the business for the shareholders.
121
With regard to capital market efficiency, to which form of efficiency does low transaction costs and few barriers to trading apply?
a) Pricing efficiency
b) Operational efficiency
c) Informational efficiency
d) Allocational efficiency
With regard to capital market efficiency, to which form of efficiency does low transaction costs and few barriers to trading apply?
b) Operational efficiency
122
Markets are efficient based on all publicly available information is a test that describes which form of efficiency?
a) Very strong
b) Strong
c) Weak
d) Semi-strong
Markets are efficient based on all publicly available information is a test that describes which form of efficiency?
d) Semi-strong
123
Which of the following are thought to be problems with using ratios to report on performance?
1. Creative accounting
2. They ask more questions than they answer
3. Difference in accounting policies
4. Financial position statement relates to one day only
A. None of them
B. 1 and 2
C. All of them
D. 3 and 4
Which of the following are thought to be problems with using ratios to report on performance?
1. Creative accounting
2. They ask more questions than they answer
3. Difference in accounting policies
4. Financial position statement relates to one day only
C. All of them
124
What is a bond?
a) simply long-term loan
b) units of equity ownership interest in a corporation
c) a transaction in which delivery of the securities must take place on non-specified day
What is a bond?
a) simply long-term loan
125
What is value of bond?
a) present value of all cash flows (NPV)
b) coupon rate
c) real interest rate
What is value of bond?
a) present value of all cash flows (NPV)
126
What is yield to maturity?
a) IRR that equates the bond's discounted cash flows with its price
b) coupon rate
c) real interest rate
What is yield to maturity?
a) IRR that equates the bond's discounted cash flows with its price
127
If the bond yield is greater than the coupon, is the price of the bond greater or less than 100?
a) less
b) more
c) equal
If the bond yield is greater than the coupon, is the price of the bond greater or less than 100?
a) less
128
Which (if any) of these statements are true? Stock values appear to behave as though successive values:
a) Are random numbers;
b) Follow regular cycles;
c) Differ by a random number.
Which (if any) of these statements are true? Stock values appear to behave as though successive values:
c) Differ by a random number.
129
True or false?
The efficient market hypothesis assumes that:
There are no taxes;
True or false?
The efficient market hypothesis assumes that:
There are no taxes;
FALSE, there are, but low
130
True or false?
The efficient market hypothesis assumes that:
Successive price changes are independent;
TRUE
131
True or false?
The efficient market hypothesis assumes that:
Investors are irrational;
FALSE
132
True or false?
The efficient market hypothesis assumes that:
There are no transaction costs;
FALSE, there are, but low
133
True or false?
The efficient market hypothesis assumes that:
Forecasts are unbiased.
TRUE, because info is publicly available and free
134
Rank the following from 1 to 5 where 1 represents the lowest risk and highest cost and 5 represents the highest risk and highest cost
```
Unsecured creditors -
Preference shareholders -
Ordinary shareholders -
Creditors with floating charge -
Creditors with fixed charge -
```
Rank the following from 1 to 5 where 1 represents the lowest risk and highest cost and 5 represents the highest risk and highest cost
```
Unsecured creditors - 3
Preference shareholders - 4
Ordinary shareholders - 5
Creditors with floating charge - 2
Creditors with fixed charge - 1
```
135
What is the assumed objective of financial management?
What is the assumed objective of financial management?
Maximise shareholder wealth
136
How does the objective of financial management manifest itself?
How does the objective of financial management manifest itself?
Dividends and increase in market value
137
To achieve the assumed objective of financial management, Finance manager has to make decisions relating to:
To achieve the assumed objective of financial management, Finance manager has to make decisions relating to:
- Investment
- Financing
- Dividends
138
What could be an example of investment decision?
What could be an example of investment decision?
Machinery, vehicles, non-current assets
139
What could be an example of financing decision?
What could be an example of financing decision?
Loans, shares, retained earnings?
140
What could be an example of Interaction with investing/dividends?
What could be an example of Interaction with investing/dividends?
Enough return to cover cost? Reduce dividend?
141
What could be an example of dividend decision?
What could be an example of dividend decision?
Where does the money come from? Borrowing?
142
What could be an example of Interaction with financing/investing?
What could be an example of Interaction with financing/investing?
Financing needed? Reduce investment?
143
What is an Agency Problem?
Agency Problem is ...
Managers make decisions that are not consistent with the objective of shareholder wealth maximisation
144
Can Agency Theory affect other stakeholder groups?
Can Agency Theory affect other stakeholder groups?
Yes, can also affect creditors (banks, suppliers, bondholders) and customers
145
Which of the following are likely to be relevant costs for investment appraisal?
```
Feasibility study cost:
Building cost:
Depreciation:
Net Sales Income:
Head Office Costs:
Machinery costs:
Machinery sale:
```
Which of the following are likely to be relevant costs for investment appraisal?
```
Feasibility study cost: NO
Building cost: YES
Depreciation: NO
Net Sales Income: YES
Head Office Costs: NO
Machinery costs: YES
Machinery sale: YES
```
146
Payback method of investment appraisal. What are the advantages?
Payback method of investment appraisal. What are the advantages?
- Simple to calculate and to understand.
- Uses cash flows rather than more easily manipulated accounting profits.
- Can be used as a screening device
- Being biased in favour of short-term projects means that it tends to minimise both financial and business risk.
- Useful when there is capital rationing to identify projects which generate additional cash for investment quickly.
147
Ranges of Income Elasticity and the types of goods associated with them?
a. εy > 0
b. εy < 0
Ranges of Income Elasticity and the types of goods associated with them?
a. εy > 0 Superior
b. εy < 0 Inferior
148
Ranges of Cross-price Elasticity and the types of goods associated with them?
a. εcross > 0
b. εcross < 0
Cross-price Elasticity formula?
Ranges of Cross-price Elasticity and the types of goods associated with them?
a. εcross > 0 Substitutes
b. εcross < 0 Complementary
Formula:
△Qx/△Py * Py/Qx
149
What is the relationship between Price and Demand, and Price and Quantity?
Higher Price - Lower Demand
| Higher Price - Lower Quantity
150
How to interpret the variables in the Demand Function?
Demand Function: a function that describes how much of a good will be purchased at alternative values of the variables that affect demand
aka
This function describes how much of the good X will be purchased at alternative prices of X and related goods, alternative levels of income, and alternative values of other variables that affect demand
FORMULA:
QXD =f(PX,PY,M,H)
Qx = λ0 + λxPx + λyPy + λmM + λhH, where:
Qx - Quantity of the good X
Px - Price of the good X
λx < 0 - when the Price of X increases, the Quantity of X decreases
Py - Price of the good Y
λy > 0 - when the Price of Y increases, the Quantity of X increases (= complements)
λy < 0 - when the Price of Y increases, the Quantity of X decreases (= substitutes)
M - the type of Good
λm > 0 -> normal good
λm < 0 -> inferior good
H - other variables impacting demand
151
What does a NEGATIVE λx mean in the Demand Function (Qx = λ0 + λxPx + λyPy + λmM + λhH)?
What does a NEGATIVE λx mean in the Demand Function?
when the Price of X increases, the Quantity of X decreases
aka elastic demand
152
What does a POSITIVE and NEGATIVE λy mean in the Demand Function (Qx = λ0 + λxPx + λyPy + λmM + λhH)?
a. λy > 0
b. λy < 0
What does a POSITIVE λy mean in the Demand Function?
a. POSITIVE: λy > 0 - when the Price of Y increases, the Quantity of X increases (= complements)
b. NEGATIVE: λy < 0 - when the Price of Y increases, the Quantity of X decreases (= substitutes)
153
What does a POSITIVE and NEGATIVE λm mean in the Demand Function (Qx = λ0 + λxPx + λyPy + λmM + λhH)?
a. λm > 0
b. λm < 0
What does a POSITIVE and NEGATIVE λm mean in the Demand Function?
a. λm > 0 -> normal good
b. λm < 0 -> inferior good
154
What happens to Normal Good when there is a Recession?
What happens to Normal Good when there is a Recession?
Decrease in Demand
155
What happens to Inferior Good when there is a Recession?
What happens to Inferior Good when there is a Recession?
Increase in Demand
156
What does Elasticity mean?
how the Demand changes when one of the variables from the Demand Function changes. It is a percental change: % of Demand changes up/down when 1% of one variable changes.
The more precise the demand is, the more inelastic it becomes. Ex. cigarettes and potato chips are very inelastic because the customer has a specific preference.
157
Which part of the graph of the Demand is Elastic and which is Inelastic?
Which part of the graph of the Demand is Elastic and which is Inelastic?
If Demand is a linear function going from the top of the Price ax, all the way to the righthand side of the Quantity, then:
- the top part of the Demand line is > 1, therefor it is ELASTIC
- the bottom part of the Demand line is < 1, therefore it is INELASTIC
158
Which Demand graph is more inelastic - the more horizontal or the more vertical Demand function?
Which Demand graph is more inelastic - the more horizontal or the more vertical Demand function?
The more vertical the Demand line on the graph is, the more Inelastic the demand is.
Ex. medicine is normally inelastic (vertical Deman function) because regardless of the price, I will consume it anyway.
159
How does the Quality buy change with Price?
How does the Quality bought changes with Price?
Consumer is willing to buy more for a lower price, and pay more for lower quantities. Ex. buying in bulk for cheap.
160
How does Revenue change with Price increase in case of a very Elastic demand?
How does Revenue change with Price increase in case of a very Elastic demand?
With the Price increase, the Quantity consumed decreases, and because R=PxQ, the Revenue will likely shrink significantly. Need to be careful with pricing in case of elastic demand.
161
How does Revenue change with Price increase in case of a very Inelastic demand?
How does Revenue change with Price increase in case of a very Inelastic demand?
Revenue is likely to increase in case of inelastic demand when the Price increases.
162
In which case, elastic or inelastic demand, it makes sense to increase Price for goods?
In which case, elastic or inelastic demand, it makes sense to increase Price for goods?
Elastic demand - decrease Price
Inelastic demand - increase Price
163
Is gasoline elastic or inelastic in:
a. short-run?
b. long-run?
Is gasoline elastic or inelastic in:
a. short-run: inelastic
b. long-run: more elastic (will likely change the car)
164
Which goods are more elastic?
a. those that take bigger chunk of the income
b. those that take smaller chunk of the income
Which goods are more elastic?
a. those that take bigger chunk of the income
165
What is the Income Elasticity of Demand?
The change in Demand when the income changes by 1%.
166
What is the Cross-price Elasticity of Demand?
The change in Demand when the Price of the 2nd good changes by 1%.
167
In which case, elastic or inelastic demand, it makes sense to increase Price for goods?
The relationship between price elasticity and revenue?
In which case, elastic or inelastic demand, it makes sense to increase Price for goods?
Elastic demand - decrease Price
Inelastic demand - increase Price
168
In Economics we care about...?
a. efficiency
b. fairness
In Economics we care about...?
a. efficiency (consumer surplus -> satisfied customer)
169
Production Function?
Shows how output changes depending on input.
Production Function
Q = F(K,L), where:
- (K,L) are Inputs = Factors of Production (L labor + K capital)
- Q is Output = Ready-made Good
170
The goal of Production?
Produce the maximum feasible Quantity given the amount of Inputs.
171
The most famous Production Function?
The most famous Production Function?
Cobb-Douglas production function:
Q = λLβ1*Kβ2, where:
β1 and β2 - tell how much of input is being put into the production function
172
Is Capital (K) or Labor (L) is higher in the Production Function in Developing (3rd word) countries?
Is Capital (K) or Labor (L) is higher in the Production Function in Developing (3rd word) countries?
Labor (L) because it is cheaper in Developing countries
173
Leontief Production Function (aka min function)?
Q = min {bK,cL}
this fucntion assumes that inputs are used in fixed proportions.
```
Ex. Q=min{3K,4L}
labor 2 units
capital 5 units
3 x 5 = 15
4 x 2 = 8
Q is min of the two, so 8.
```
174
How does Short-run effect Production?
Short-Run in Economics is...
the period of time in which one (or more) of the resources employed in a production process is fixed or incapable of being varied.
When at least one of the inputs is FIXED, it is SHORT-RUN.
175
How does Long-run affect Production?
Long-run is..
the period of time in which all the resources employed in a production process can be varied.
Once there are no longer any fixed inputs, it is a LONG-RUN.
176
What is Fixed Input in Production?
Inputs in production that does not change regardless of the quantities produced. Ex. it always requires 1h of oven time when producing cookies.
177
What is Variable Input in Production?
Inputs that change depending on the output produced. Ex. sugar when making cookies.
178
What is Marginal Product in Economics?
Marginal Product...
It is the change in total output attributable to the last unit of input.
In other words, how the quantity produced changes if labor or capital is increased by 1.
179
What is Total Product in Economics?
Total Product ...
The maximum level of output that can be produced with a given amount of inputs.
180
What is Average Product in Economics?
Average Product...
a measure of the output produced per unit of input.
181
What is Marginal Analysis?
Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximize their potential profits.
182
At which point is production at its maximum?
When Marginal Productivity of Labor = 0
183
What is the role of the manager in respect to production?
role of the manager in respect to production:
1. maximize production (by controlling the inputs)
2. minimize cost (by controlling the inputs)
184
What is the breaking point when it comes to output and wage?
At the point when wage is equal to the output s/he produces is the breaking point.
Ex. 1 cookie produced in an hour that costs 2EUR, the wage per h is 2 EUR.
W == Marginal Product of Labor (MPL)
185
Real vs Nominal Salary?
Nominal Salary - the actual salary a person gets
Real Salary - what you can get with that money; i.e. translated into goods and services
186
What is production Isoquant?
Isoquant is a representation of the production function. Shows the output (Q) depending on the inputs (K and L).
187
What is Isocost Line?
Isocost line is..
a line that represents the combinations of inputs that will cost the producer the same amount of money.
188
What is an Opportunity Cost?
Opportunity Cost is
the value of a resource in its next-best alternative
= lost revenue when this business direction is not taken, something else was chosen instead. Relevant cost.
189
What is Accounting Profit?
Accounting profit the net income for a company
Accounting Profit = Total Revenue - Explicit Costs
190
What is Economic Profit?
An economic profit or loss is the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs. In calculating economic profit, opportunity costs and explicit costs are deducted from revenues earned.
Economic Profit = Total Revenues - Explicit Costs - Implicit Costs
Ex. Economic Cost = Total Accounting Costs + Total Opportunity Costs
Positive earnings do not guarantee increasing shareholders welth.
191
What is Fixed Cost (FC)?
The costs of inputs to the production process that are constant over the short-run.
- cost that won't change regardless of which opportunity was perceived, ex. rent. Normally does not change (irrelevant cost), if not specified otherwise.
Cost Function: TC = FC + VC
192
What is Variable Cost (VC)?
The costs of the variable inputs to the production process
TC = FC + VC
193
What is Sunk Cost?
Sunk Cost...
is a cost that has already been incurred and cannot be recovered. Past cost that cannot be returned
194
What is an Organizational Behavior?
Organizational behavior...
... can be defined as the understanding, prediction, and management of human behavior in organizations
or
... is the study of human behavior in organizational settings, the interface between human behavior and organization and the organization itself
195
Based on a conceptual model for the study of organizational behavior, what is not belonging into the list below as dynamics of organizational behavior?
a) groups & teams
b) communication & decision making
c) leadership process
d) power & politics
e) stress & conflicts
Based on a conceptual model for the study of organizational behavior, what is not belonging into the list below as dynamics of organizational behavior?
c) leadership process
196
What does Managing & Leading for High Performance include as per the Conceptual Model of Org Behavior?
Managing & Leading for High Performance includes as per the Conceptual Model of Org Behavior:
- Behavioral Management
- Leadership Processes
- Great Leaders
197
What does Social Cognitive Theory include as per the Conceptual Model of Org Behavior?
Social Cognitive Theory includes as per the Conceptual Model of Org Behavior:
- Environmental Context: Globalisation, Diversity, Ethics
- Organizational Context: Design & Culture, Reward System
- Cognitive Processes: Personality, Perception, Attitudes, Motivational Processes & Application, Positive Org Behavior & Psychological Capital
198
What makes managers and organizations effective?
What makes managers and organizations effective?
* Enhancing performance behavior
* Enhancing commitment and engagement
* Promoting citizenship behavior
* Minimizing dysfunctional behavior
199
Definition of Employees?
Employees - ..
... an organization's competitive advantage
200
What is Human Resource Management?
Human Resource Management - ...
... the set of organizational activities directed at attracting, developing, and maintaining an effective
workforce
201
What is Cultural Competence?
Cultural Competence - ...
... the ability to interact effectively with people of different cultures.
Components:
1. Awareness of our own cultural worldview, and of our reactions to people who are different
2. Our attitude toward cultural differences
3. Knowledge of different worldviews and cultural practices
4. Cross-cultural skills
202
What is Diversity in an Org?
Diversity - ...
... the variety of observable and unobservable similarities and differences among people
203
What are the reasons for increasing diversity?
reasons for increasing diversity:
- Competitive pressures
- recognition and desire for diverse viewpoints
- changing workforce demographics (age, gender, ethnicity, and education)
- legislations and lawsuits
- rapidly growing increase in international business (aka globalisation)
204
What are the 5 types of diversity?
5 types of diversity:
1. Surface level diversity: observable differences in people, including gender, race, age, ethnicity, and physical abilities
2. Deep level diversity: individual differences that cannot be seen directly, including goals, values, personalities, decision making styles, knowledge, and attitudes
3. Separation: differences in position or opinion among group members reflecting disagreement or opposition, especially with regard to group goals or processes
4. Variety: differences in a certain type or category, including group members’ expertise, knowledge, or functional background
5. Disparity: differences in the concentration of valuable social assets or resources – including dissimilarity in rank, pay, decision making authority or status
205
What are the diversity benefits for orgs?
diversity benefits for orgs:
* Diverse teams has increased performance
* Diversity contributes to company’s competitive advantage
* Culturally diverse teams make better decision over time than homogeneous teams
* Diverse groups can develop a more comprehensive view of a problem and a broader list of possible solutions
* More women in top management affects the performance of companies pursuing an innovation strategy
* Law and regulations
206
How can diversity be managed?
Managing diversity through:
* Learning
* Empathy
* Testing
* Training
* Mentoring
207
What determine ethical behavior?
What determines ethical behavior?
* Cultural influences: Family, friends, education, religion, media
* Organizational influences: Ethical codes, role models, policies, practices, reward and punishment systems
* External forces: Political, legal, economic, and international developments
208
Quick-test that helps ethical decision making costs of the following questions:
Quick-test that helps ethical decision making costs of the following questions:
1. Is the action legal?
2. Is it right?
3. Who will be affected?
4. Does it fit the company’s values?
5. How would I feel afterwards?
6. How would it look in the newspaper?
7. Will it reflect poorly on the company?
209
How organizations prevent unethical behavior?
How organizations prevent unethical behavior?
* Code of conduct
* Ethical guidelines
* Ethics programs
* Ethical culture
* Ethics officer position
* CSR
210
What is Corporate Governance?
Corporate Governance - ...
... Board of directors acting in the best interests of shareholders and other stakeholders.
211
What is a Learning Organization?
Learning Organization - ...
... is characterized by human-oriented cultural values, ie:
1. everyone can be a source of useful ideas;
2. the people closest to the problem usually have the best ideas regarding how to solve it (empowerment should be promoted throughout the structure);
3. learning flows up and down, so managers as well as employees can benefit from it;
4. new ideas are important and should be encouraged and rewarded;
5. mistakes should be viewed as learning opportunities;
6. learning from failures is an especially important cultural value for people in the learning organization.
212
What are the types of organizational structures?
Types of organizational structures:
- Functional structure
- Divisional structure
- Matrix structure
- Team-based structure
- Network organization
213
What is a Horizontal Org?
Horizontal Org...
revolves around the process, not the task, where:
• The hierarchy is flattened;
• Teams are used to manage everything;
• Customers drive performance;
• Team performance is rewarded;
• Supplier and customer contact is maximized;
• All employees need to be fully informed and trained
214
What are the Guidelines for Change of Culture in an Org?
Guidelines for Change of Culture in an Org:
* Assess the current culture
* Set realistic goals that impact the bottom line
* Recruit outside personnel with industry experience
* Make changes from the top down
* Include employees in the cultural change process
* Take out all trapping that remind personnel of the previous culture • Expect to have some problem, find ambassadors
* Move quickly and decisively to build momentum • Be persistent
215
Types of rewards?
Rewards:
- Compensation
- Promotion
- Recognition
216
What are the levels of human mental programming?
Levels of human mental programming:
- human nature (inherited)
- culture (learned)
- personality (inherited & learned)
217
What is self-esteem?
self-esteem - ...
... Self perceived competencies and self-image
218
What is Social Cognitive Theory is composed of?
The Social Cognitive Theory is composed of:
1. self-observation,
2. self-evaluation,
3. self-regulation
4. self-efficacy
219
What is self-observation?
self-observation
... The cognitive process of a person observing and monitoring themselves as
they work towards their goal
220
What is self-evaluation?
self-evaluation -
...The process of a person cognitively comparing their performance needed to achieve their goal
221
What is self-regulation?
self-regulation - ...
... Ability to manage your energy states, emotions, behaviors and attentions
222
What is self-efficacy?
self-efficacy - ...
.... An individual’s belief in his/her capacity to execute behaviors necessary to produce specific performance attainments
223
What is the difference between Personality Types and Personality Traits?
Personality type refers to different types of individuals. Introverts and extraverts are two fundamentally different categories of people. Also, ambivert.
Personality traits (aka attitutes) refers to behavioral tendencies. Introversion and extraversion are part of a continuous dimension, with many people in the middle.
224
What is the value of team-role theory?
The value of team-role theory...
... it enables individuals or teams to benefit from self-knowledge and the power to adjust to demands placed upon them.
225
What is Halo effect?
Halo effect -
... Judging person total personality based on one trait
226
What are the job dimensions that affect job satisfaction?
job dimensions that affect job satisfaction:
1. The work itself;
2. Pay;
3. Promotion opportunities;
4. Supervision;
5. Coworkers
227
What are the possible outcomes of Job Satisfaction?
Outcomes of Job Satisfaction:
1. Satistfaction & performance
2. Satisfaction & turnover
3. Satisfaction & absenteeism
4. Satisfaction & better health
228
How to enhance job satisfaction?
How to enhance job satisfaction?
* Make jobs more fun;
* Have fair pay, benefits; and promotion oportunities;
* Match people with jobs that fit their interests and skills;
* Design jobs to make them excisting and satisfying.
229
Three-component model (Meyer and Allen) of Organizational Committment?
Three-component model (Meyer and Allen) of Organizational Committment?
1. Affective commitment – employees’ emotional attachment to; identification with; and involment in the organization.
2. Continuance commitment – the costs that an employee associates with leving the organization;
3. Normative commitment – employees’ feelings of obligation to stay (it’s the right thing to do)
230
How to enhance organizational commitment?
How to enhance organizational commitment?
1. Commit to people-first values;
2. Clarify and communicate your mission;
3. Guarantee organizational justice;
4. Create a sense of community;
5. Support employee development.
231
What is the difference between group and team?
A group is a collection of individuals who coordinate their individual efforts.
On the other hand, at team is a group of people who share a common team purpose and a number of challenging goals.
232
What is the Five step process for setting team goals?
Five step process for setting team goals
1. Goal-setting process
2. Choose the goal setting framework (ex SMART)
3. Make goals visible
4. Plan regular check-ins
5. Adjust the goals as needed
233
What is the WWWW (or 4W's) framework delegation of tasks is about?
WWWW (or 4W's) framework delegation of tasks :
1. What: ...tasks need to be completed or are delayed?
2. When: ...is the deadline?
3. Who: ...is the best fit for the task?
4. Why: ...the work is important to your team?
234
What does Employee Satisfaction Index (ESI) measure?
Employee Satisfaction Index (ESI) measures...
... to what extent are employees happy on their job
235
What does Employee Engagement Level (EEL) measure?
Employee Engagement Level (EEL) measures...
... to what extent are employees ready to devote themselves to the mission and the vision of the company
236
What does Employee Advocacy score (EAS) measure (aka NPS)?
Employee Advocacy score (EAS) measures...
... Would you recommend this company as an employer to a friend
237
What does Observing team-member performance consist of?
Observing team-member performance consists of:
1. Attendance
2. Helpfullness
3. Efficiency
4. Initiative
5. Quality
238
SBI - framework for feedback?
SBI - framework:
Situation
Behavior
Impact
239
What are Self-managed teams?
Self-managed teams - ...
... a group of employees who are responsible for managing and performing technical tasks that result in a product or service being delivered to an internal or external customer
240
What are the best practices when managing teams?
Best practices managing teams:
- Creating a learning culture within your team
- Manager as entrepreneur
- Manager as a coach, mentor or/and sponsor
241
What are the different theoretical views for job motivation?
Different theoretical views for job motivation:
* Scientific management - Assumption that employees are motivated by money
* Human relations approach: employees’ inclusion in decision making will result in positive employee attitudes and motivation to work hard
* Human resource approach: Assumes that people want to contribute and management task is to encourage participation and to create an environment that makes full use of human resource available
242
What does Two-factor (dual-structure) theory costs of?
Two-factor (dual-structure) theory - ...
... consist of:
- Motivation factors: Achievement, recognition, the work itself, responsibility, growth
- Hygiene factors: Supervision, working conditions, interpersonal relationships, pay and job security, company policies
243
What does the Acquired Needs Framework (McClelland) consist of?
Acquired Needs Framework (McClelland) consists of:
1. Needs for achievement,
2. affiliation
3. power.
244
What is Existence, relatedness and growth (ERG) theory about?
Existence, relatedness and growth (ERG) theory:
* Existence – necessary for basic human survival (basic and security needs in Maslow’s theory)
* Relatedness – involving the need to relate (Maslow social and esteem needs)
* Growth – analogous to Maslow’s self-esteem and self-actualization
245
What is Equity Theory about?
Equity Theory -
... people desire to be treated fairly. Comparison of Self with Other.
246
What is Expectancy Theory about?
Expectancy Theory - ...
... People are motivated by how much they want something and the likelihood they perceive of getting it
247
New paradigm of satisfaction?
New paradigm of satisfaction?
* Autonomy-the desire to direct our own lives;
* Mastery-the urge to get better and better at something that matters;
* Purpose-the yearning to do what we do in the service of something larger than ourselves.
248
What are the types of job design?
What are the types of job design?
* Job rotation
* Job enlargement
* Job enrichment
249
What does the basic motivation process consist of?
What does the basic motivation process consist of?
Needs -> Drives -> Incentives
250
What is the difference between Monetary Rewards and Non-monetary Rewards?
Monetary: involve direct money to the employees; normally given to employees who are extremely performing. Can work as a negative force.
Non-monetary: do not involve direct money to the employees, but cost company money; normally given to all the employees of a certain level. Always works as a positive force.
251
What does Wellbeing Theory (PERMA model) consist of?
Wellbeing Theory (PERMA model):
* Positive emotions: emotional intelligence (Goleman);
* Engagement: Flow theory (Csikszentmihalyi)
* Positive Relationships: Social capital (Baker / Dutton)
* Meaning: PURE model (Wong); Values
* Accomplishment: Goal setting theory; Hope theory (Snyder); Growth mindset (Dweck); Self Determination Theory (Ryan)
252
What does 6-step Communications Model consist of?
6-step Communication Model consists of:
1. Set Objectives
2. Know your audience
3. Develop a message
4. Choose medium
5. Communicate
6. Measure results
253
Type A and Type B personalities when it comes to stress?
Type A (60% managers):
- fast
- multitasking
- competitive
Type B:
- not concerned about time
- mild-mannered
254
What does Employee Stress consist of?
Employee Stress consists of:
- Personal stress
- Org stress
255
What are the conflict management techniques?
conflict management techniques:
- Collaboration
- Compromise
- Competition
- Accommodation
- Avoidance
256
What are the 5 types of Power?
5 types of Power:
* Charismatic power (personal power) – based on personal attractivity and characteristics.
* Position-based power (legitimate, position power) – aligned both with reward and coercive power.
* Expert power (expert power) - related knowledge; expertise and experience.
* Fee-based power (reward power) - the ability to control and organize certain activities (to recognize, increase wages).
* Penalty-based power (coercive power) – based on fear. The ability to intimidate others, punish them
257
What is the Classic law of effect?
Classic law of effect - ...
... of several responses made to the same situation, those which are followed by satisfaction (reinforcement) will be more likely to recur; those which are followed by discomfort (punishment) will be less likely to occur
258
What is the Extinction principle of law?
Extinction principle of law - ..
.. If the behavior is followed by no consequence, the behavior will extinguish over time.
259
What is The rule of thumb in Org People?
The rule of thumb -
... Regardless of employee’s infraction, managers must strive to maintain a positive working relationship by remaining open to dialogue and ensuring that the worker understands why he’s being reprimanded
260
What are the stages of Behavioral Performance Management?
Stages of Behavioral Performance Management:
1. Identify
2. Measure
3. Analyze
4. Intervene
5. Evaluate
261
What is the difference between Transactional and Transformational leadership?
What is the difference between Transactional and Transformational leadership?
Transactional leadership helps organizations achieve their current objectives more efficiently, such as by linking job performance to valued rewards and ensuring that employees have the resources needed to get the job done. Is considered by some writers as “managing” or “doing things right” because leaders concentrate on improving employee performance and well-being.
In contrast, transformational leadership is about “leading”—changing the organization’s strategies and culture so that they have a better fit with the surrounding environment. Transformational leaders are change agents who energize and direct employees to a new set of corporate values and behaviors.
262
What could be the substitutes for Leadership in an org?
substitutes for Leadership in an org:
- co-workers stepping into leadership
- self-leadership
263
What are the leadership styles?
leadership styles:
* The AUTHORITATIVE (Visionary) leader sets the vision for the team;
* The AFFILIATIVE leader takes time helping the team to bond;
* The PARTICIPATIVE (Democratic) leader starts by asking all the team members what they would like to do, then voting on the options;
* The PACESETTING leader sets a cracking pace from the beginning. The team operates with high energy, engagement, and motivation;
* The COACHING leader focuses on the learning experience.
264
What should you do right after criticizing or praising someone's actions or behavior?
a) Publicly announce the behavior.
b) Demand a detailed written account of the behavior.
c) Punish or reward the behavior.
d) Explain the broad effects of that behavior.
What should you do right after criticizing or praising someone's actions or behavior?
d) Explain the broad effects of that behavior.
265
How can you gain influence over members of a cross-functional team who are not under your direct supervision?
a) by filing reports on team performance to your manager
b) by having weekly team evaluations of the team members
c) by threatening to have them expelled from the team
d) by communicating with their supervisor regarding their performance
How can you gain influence over members of a cross-functional team who are not under your direct supervision?
d) by communicating with their supervisor regarding their performance
266
Why should a manager spend time organizing venues for casual or informal contact among virtual team members?
a) to resolve disputes
b) to improve overall communication within the team
c) to encourage collaboration
d) to foster outside interactions
Why should a manager spend time organizing venues for casual or informal contact among virtual team members?
b) to improve overall communication within the team
267
What is the most critical stage (team members positioning themselves and it’s the most common stage where crisis can arise) in the team-development cycle?
a) forming
b) storming
c) norming
d) performing
e) adjourning
What is the most critical stage (team members positioning themselves and it’s the most common stage where crisis can arise) in the team-development cycle?
b) storming
268
Based on a conceptual model for the study of organizational behavior, what is not belonging into the list below as dynamics of organizational behavior?
a) groups & teams
b) communication & decision making
c) leadership process
d) power & politics
e) stress & conflicts
Based on a conceptual model for the study of organizational behavior, what is not belonging into the list below as dynamics of organizational behavior?
c) leadership process
269
Which action should you take after overcoming a setback?
a) review the process to determine key positive and negative features
b) move on immediately to the next obstacle
c) codify the successful process for future repetition
d) seek out causes of the setback and reprimand those responsible
Which action should you take after overcoming a setback?
a) review the process to determine key positive and negative features
270
What is Economy of Scale?
Economy of Scale - ...
... a proportionate saving in costs gained by an increased level of production
271
Describe the characteristics of an attractive industry according to Porter's 5 Forces.
characteristics of an attractive industry according to Porter's 5 Forces:
* High barriers to entry (low threats from new entrants)
* Suppliers and buyers with weak bargaining power
* Low threats from substitute products
* Low rivalry among competitors
272
What are the 5 Forces according to Porter's Model?
Porter's 5 Forces:
1. Threat of new entrants (ex barriers: high capital cost, brand loyalty, distribution channels, product differentiation)
2. Industry Rivals
3. Threat of Substitutes (ex. generic vs branded good); the more brand loyalty - the less threat
4. Bargaining power of Consumers
5. Bargaining power of Suppliers
2 factors are critical to keeping in mind:
1) Apply the underlying mechanisms of each force (ex. slow industry growth leads to an increased level of competition)
2) Have a dynamic perspective by understanding that each force is evolving (ex. traditional suppliers have become competitors, like in the case of Hulu).
273
What does VRIN(O) stand for when it comes to analyzing a company's competitiveness?
VRIN(O):
- Valuable - source of great value
- Rare - resources or capabilities are not possessed by many competitors
- Inimitable (aka unique) - difficult to imitate
- Non-Substitutable - no strategically equivalent valuable resource or capabilities
274
What are the 3 pillars of Competitive Strategy in Managerial Economics?
3 pillars of Competitive Strategy:
1. RESOURCE-based capabilities
2. Business PROCESSES
3. Adaptive INNOVATION
275
Definition of RESOURCE-based capabilities when it comes to competitive strategy
RESOURCE-based capabilities - ...
... secure access to key resources (like patents or distribution channels) that cannot be replicated easily by competitors
Ex. Amazon: books -> other goods
276
Definition of Business PROCESSES when it comes to competitive strategy
Business PROCESSES - ...
... competitive strategy analyzes business processes that are difficult to initiate and capable of creating unique value for the target customers
Ex. Dell vs Kompact
277
Definition of Adaptive INNOVATION when it comes to competitive strategy
Adaptive INNOVATION - ...
... competitive strategy provides a road map for sustaining a firm's profitability, principally through innovation
Ex. Polaroid: instant cameras -> digital cameras
278
What are the Types of Strategies?
Types of Strategies:
- Product Differentiation
- Cost-based = cheapest (most popular)
- IT
279
What is Product Differentiation?
Product Differentiation - ...
... a business strategy that relies upon differences in products or processes affecting perceived customer value
Ex. Coca-Cola, Gillette
280
What is a Cost-based Strategy?
Cost-based - ...
... business strategy that relies upon low-cost operations, marketing, or distribution
Ex. Lidl with its boxes
281
What is an Informational Technology Strategy?
Informational Technology Strategy - ...
... a business strategy that relies on IT capabilities (smth that the firm already has)
Ex. Insurance Car Companies based on GPS
282
What is Relevant Market?
Relevant Market - ...
... a group of firms belonging to the same strategic group of competitors (based on 3 main business strategies)
283
What is a Concentrated Market?
Concentrated Market - ...
... a relevant market with a majority of total sales occurring in the largest 4 firms
284
What is a Fragmented Market?
Fragmented Market -
... a relevant market whose market shares are uniformly SMALL; no one company that can exert enough influence to move the industry in a particular direction
285
What is a Consolidated Market?
Consolidated Market - ...
... a relevant market whose number of firms has declined through acquisitions, mergers, and buyouts
286
What is the incumbent?
incumbent -
... is the current holder of a position
287
What does Sustainable Profitability focus on?
| see also Sustainable income
Sustainable Profitability focuses on...
non-price rather than price competition
288
What is the Myth of the Market Share about?
the Myth of the Market Share :
the key to profitability is to design a strategy that reduces the THREAT OF SUBSTITUTES, the POWER of BUYERS and SUPPLIERS, and the THREAT of ENTRY
Discounting prices won't work in long-term.
289
What are the Causes of Perfect Competition?
Causes of Perfect Competition:
(don't care about the brand)
- very large of relatively small firms
- standardized products
- very easy entry and exit
- non-price competition: impossible
- no collusion (illegal) among firms
- price takers; firm decides how much Q to produce
- cross-price elasticity higher than in Monopolistic Comp; perfect susbstitutes
Ex. Foreign exchange markets, Internet related industries, etc
290
What are the Causes of Monopolistic Competition?
Causes of Monopolistic Competition:
(certain degree of market power due to product differentiation)
- large number of relatively small firms
- differentiated products
- easy entry and exit
- non-price competition: possible
- cross-price elasticity lower than in Perfect Comp; substitutes, but not perfect
Ex. Restaurants, Hairdressers, Clothing, TV programmes
291
What are the Causes of Oligopoly/Duopoly?
Causes of Oligopoly/Duopoly:
- small number of relatively large firms
- both standardized and differentiated products
- difficult entry and exit
- non-price competition: possible/difficult
Ex.
Oligopoly: Smartphones, high-tech TVs, auto industry, cable television, and commercial air travel
Duopoly: Visa and Mastercard, Coca-Cola & Pepsi
292
What are the Causes of Monopoly?
Causes of Monopoly:
(firm's demand = industry's demand)
- barriers to entry and exit (ex. high capital cost, economies of scale, brand loyalty, distribution channels, product differentiation)
- one big company
- unique product
- non-price competition: not necessary
- price setter (maker), but has logic
Ex. Microsoft and Windows, DeBeers and diamonds
293
What is Collusion?
Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right
294
What does Price Takers mean?
Price Takers -
... are companies that have no power over price, and set prices based on what market dictates
295
What is Normal Profit?
Normal Profit -
Normal profit is a situation where a firm makes sufficient revenue to cover its total costs and remain competitive in an industry; with exclusion for one-time gains and losses
296
Which one - Accounting Profit or Economic Profit indicate that the firm made money?
Which one - Accounting Profit or Economic Profit indicate that the firm made money?
Accounting Profit is positive means the firm made money
!!!Having a negative Economic Profit (or zero) does not eliminate the possibility to having a positive Accounting Profit.
297
What is Marginal Revenue?
Marginal Revenue -
... is the price from selling the additional unit
Ex. notebook costs 8, the additional notebook's MR will be 8
298
What is the difference between Firm's Demand and Industry's Demand?
In the case of Perfect Competition, Industry's demand is all individual firms demands together
In the case of Monopoly, they are equal
299
What, P or Q, can the firm manipulate in order to adjust Profit?
What, P or Q, can the firm manipulate in order to adjust Profit?
Q. Even in the case of Monopoly, which is a Price maker, the P cannot be manipulated endlessly, but the quantity can.
300
Which Monopoly has more power - the one with very elastic or the one with very inelastic demand?
Which Monopoly has more power - the one with very elastic or the one with very inelastic demand?
Monopoly with inelastic demand is more powerful.
Both Demand and Marginal Revenue are more vertical. In case of elastic demand, the D and MR are more horizontal.
301
What is the difference between Profit Margin and Profit Markup?
What is the difference between Profit Margin and Profit Markup?
They both are profits on goods, but Markup is higher in relation to Marginal Cost than Margin.
The bigger is elasticity, the bigger is Markup. Ex. beers at stadiums.
302
What is the Deadweight Loss?
Deadweight Loss -
.. is the inefficiency of the Monopoly. It consists of a part of what supposed to belong to Customer Surplus and Producer Surplus but was left put due to Monopoly being able to ask for a higher price and produce less.
303
What is the proportion between Methodology, Experience and Intuition in Project management?
What is the proportion between Methodology, Experience and Intuition in Project management?
- methodology (20%)
- experience (50%)
- intuition (30%)
304
What is a PROJECT?
a UNIQUE endeavor with a clear GOAL that needs to be achieved by INTERRELATED TASKS in a FIXED PERIODS OF TIME with LIMITED COST and RESOURCES and influenced by RISKS
305
What is a PORTFOLIO?
is a set of projects with similar characteristics
306
What is a PROGRAM?
a set of projects focusing on the SAME, overarching GOAL
307
What is the difference between PROJECT and PRODUCT?
Project has a clear goal, product is evolving in an agile way
308
What are the responsibilities of a Project Manager?
responsibilities of a Project Manager:
- integrates the team in order to succeed;
- solves issues that limit teams' capabilities;
- balances PM's triangle (time, quality/scope, budget/resources);
- responsible for success
309
What does PM's Triangle consist of?
PM's Triangle consists of
time,
quality/scope,
budget/resources
310
What are the responsibilities of a Sponsor?
Responsibilities of a Sponsor:
- approves milestones,
- holds the budget,
- is the primary escalation at client side,
- takes decisions when PM is not enough
311
What is the definition of a Team?
Team- ...
a pool of people grouped to solve a problem or to reach a common target by INTERDISCIPLINARY COLLABORATION; min 2 members, max ideally 5; with a team identity (different from the identity of individuals)
312
What are the 5 phases of the team development according to Tucman?
5 phases of team development:
1. forming
2. storming
3. norming
4. performing
5. transforming
313
What does Forming stage consist of?
Forming:
- gather impressions
- acting independently
- observe
- no conflicts
- get to know one another
314
What does Storming stage consist of?
Storming:
- sharing opinions
- expressing disagreement
- challenging
- emphasizing differences
- focusing on not losing motivation
find topics that are agnostic, ex weather
315
What does Norming stage consist of?
Norming:
- moving toward one goal
- giving up individual positions, agreeing with others
- sharing controversial ideas as long as they are in line with the goal
316
What does Performing stage consist of?
Performing:
- functions as one
- handling decision-making process
- reacting to changes
- returning to previous phases when required
- remain motivated
317
What does Transforming stage consist of?
Transforming:
- completing tasks
- delivering results
- recap experiences and LL (lessons learned)
- breaking up the team
318
What are the characteristics of a Leader?
Leader:
Leader:
- coaches
- goodwill
- enthusiasm
- "we""
- fixes the breakdown
- shows by example
- develops people
- gives credit
- asks
- "let's go"
Switching to boss may be required in critical situations
319
How to ensure that team reaches the performing phase?
How to ensure that team reaches the performing phase?
- know the phases, actively observe
- accept that you need to pass the first 3 phases
- inform the team wisely - information is key for delegation and motivation
- ensure that team is involved early in, and include them in the marketing activities
- be ready for change
320
What do I do during the performing phase?
What do I do during the performing phase?
Structuring, Communication, Delegation and Coordination
- split projects into logical tasks (WBS Work Breakdown Structure)
- facilitate progress and interaction/comms
- explain decisions to the team and who are affected by the decision
- delegate tasks
- help the team to feel responsibility
- coordinate the project in every dimension (according to project charter)
321
What does MECEness stand for?
Mutually Exclusive Collectively Exhaustive - no overlaps and no left-outs; all categories are of similar size
322
What does the communication by the Project Management look like?
What does the communication by the Project Management look like?
- structure and clear guidelines
- always between sender and receiver, two-way
- every stakeholder requires individual considerations for comms
- establish several ways of communication for one target group
323
What is the definition of Feedback?
Feedback - ...
form of comms during the project; comments, activities, statements, judgement, assessment, influence; focuses on improvement and allows for structured reflection
324
What does Delegation consist of?
Delegation:
- honor expert support
- agree on how to deal with delegated activities
- forget the line org hierarchy
- everyone is welcomed to contribute
- hand over not only the task, but also responsibility
- clarity on the target, and freedom
325
How are Project Coordination and PM's Triangle related?
How are Project Coordination and PM's Triangle related?
Project Coordination = keeping the triangle in balance
326
What is "coordination of the project in every dimension through ..."?
Coordination of the project in every dimension is done through...
... Project Charter
327
What are the Project Management Lifecycle phases?
Project Management Lifecycle phases:
1. Initiating
2. Planning
3. Executing & Monitoring & Controlling
4. Closing
328
What does Project's Initiating phase consist of?
Project's Initiating phase consists of:
- define scope
- define financial resources
- identify stakeholders
- setup project team
- agree on targets and milestones
- obtain authorization
329
What does Project's Planning phase consist of?
Project's Planning phase consists of:
- define requirements
- determine budget
- develop schedule & project plan
- prepare quality management
- prepare risk management
330
What does Project's Executing, Controlling & Monitoring phase consist of?
Project's Executing, Controlling & Monitoring phase consists of:
- execute projects
- manage team & stakeholders
- control scope, schedule, budget, and quality
- report performance
- develop deliverables
331
What does Project's Closing phase consist of?
Project's Closing phase consists of:
- submit deliverables
- request approval
- discuss lessons learned
- document results
332
What are the Deliverables at each lifecycle phase?
Deliverables at each lifecycle phase:
1. Initiating: Project Charter
2. Planning: Project Management Plan
3. Executing & Controlling: Work results & updated plans
4. Closing: Approved deliverables & documented results
333
What are the 10 elements of the Project Charter?
10 elements of the Project Charter:
1. Description & Targets
2. Scope & non-scope
3. Stakeholder Map
4. Team structure & Resource Requirements (skills, snr)
5. Communication Plan
6. Milestones & High-lvl Timeline
7. Budget (Capex, Opex)
8. Key Risks & Mitigation Strategy
9. Quality & Performance metricx - DoD
10. High-lvl work breakdown structure (tasks)
334
Does an Agile Project require a Project Charter?
Does an Agile Project require a Project Charter?
Yes, the same project charter is needed, but does not have to describe the entire project at once.
Target still needs to be very clear.
Charter being updated after every sprint.
335
What are the Agile Principles?
Agile Principles:
- focus on satisfaction and collaboration of the client
- ability to react to changes
- first execution/realization, then documentation
- strong focus on daily communicatin
- environment needs to support productivity
- complexity is broken down
- focus on lessons learnt
- Scrum Master - for the process
336
Examples of Agile and Waterfall projects?
Waterfall:
- building a house
- running a wedding celebration
Typically smth you know well.
Agile:
- developing a mobile app
Typically smth you know little about.
In the middle:
- shooting a short movie (ex. ad)
- rucksack (waterfall + agile)
337
How do Agile and Waterfall impact the PM's Triangle?
Tranditional(Waterfall):
- fixed scope
- flexible effort, time
Agile:
- fixed effort, time
- flexible scope
338
What are the Challenges of Agile and Waterfall?
Challenges of Agile and Waterfall:
Agile:
- uncertainty about final result
- expectation for delivering quick-wins
- risk of managing a fixed budget
- overhead effort
- keeping the final target in focus is hard
Waterfall:
- longer planning
- longer period until anything is delivered
- difficulty to adapt to new insights
- requirement for stable environment and team
339
What is a Project Charter?
Project Charter -
... a starting point for the entire project, is a key doc for authorizing the project (signoff by the sponsor), outlines main aspects, facilitaets orientation for the team and stakeholders, used for Project Plan
However:
- most things will change throughout the project
- reduces the risk of forgetting and, as a result, risk of failure
- main elements to be kept visible to keep on the target
- contract with the sponsor
340
What does "10 Project elements: 1) Project description & targets" consist of?
10 Project elements: 1) Project description & targets:
- key elements for sponsor and other stakeholders
- use SMART rule for targets
- define non-targets
341
What does "10 Project elements: 2) Scope and non-scope"?
10 Project elements: 2) Scope and non-scope:
- scope includes: assumptions, constraints, acceptance criteria, etc
- describe what will be done, and what will NOT be done in scope of the project
342
What does "10 Project elements: 3) Reqs"?
10 Project elements: 3) Reqs:
- specify stakeholders' needs:
- - ex results
- - ex resources
- - ex timing
- - ex quality
343
What does "10 Project elements: 4) Milestones and time constraints"?
10 Project elements: 4) Milestones and time constraints:
- key time elements defined before the project execution starts
- milestones are fixed points, have no duration; activities != milestones
- milestones usually have deliverables
- time constraints cannot be changes (ex. regulations)
- milestones are closely connected to project targets (last milestone = project target)
344
What does "10 Project elements: 5) Budget & Financial data"?
10 Project elements: 5) Budget & Financial data:
- pre-defined negotiated, and agreed
- the nr 1 limiting factor
- used in business case = Return-of-Investment
- types of financial key data (opex/capex)
345
What does "10 Project elements: 5) Budget & Financial data"?
10 Project elements: 5) Budget & Financial data:
- pre-defined negotiated, and agreed
- the nr 1 limiting factor
- used in business case = Return-of-Investment
- types of financial key data (opex/capex)
- broken down by activities and resources
346
What does "10 Project elements: 6) Risks"?
10 Project elements: 6) Risks:
- no project without risks
- evaluated by probability and impact
- ways to deal with risks: acceptance, avoidance, transfer, mitigation
- risks need to be monitored
- Risk Management Plan shared with sponsor
347
What does "10 Project elements: 7) Stakeholder Map"?
10 Project elements: 7) Stakeholder Map:
- individual or a group
- interest could be positive or negative
- map illustrates all stakeholders, their attitude toward the project, interests, special reqs, etc
348
What does "10 Project elements: 8) Team structure and resource reqs"?
10 Project elements: 8) Team structure and resource reqs:
- define skillsets
- dependent on individual strengths and weaknesses
- team rules
- not set in stone, should be thought through in case of risks
349
What does "10 Project elements: 9) Comms Plan (aka Governance Chart)" consist of?
10 Project elements: 9) Comms Plan (aka Governance Chart):
- every stakeholder requires individual consideration for comms
- defines recipient, medium, frequency and content of comms
- meetings/decision boards
- several ways for one target groups (ex. daily, quarterly)
- based on stakeholder map
350
What does "10 Project elements: 10) Quality and Performance Metrics" consists of?
10 Project elements: 10) Quality and Performance Metrics:
- sponsor signs off the quality
- quality depends on individual perception
- quality and success to be defined and agreed during Initiation
- quality to be defined in SMART way
- KPIs
351
Should project or/and product KPIs be set for a Project?
Should project or/and product KPIs be set for a Project?
Both.
Examples:
- financial
- team
- deliverables, milestones
- scope
- schedule
- functional KPIs
352
What are the 5 stages of Project Planning?
What are the 5 stages of Project Planning?
1) Define the work
2) Specify duration & effort
3) Determine dependencies & resources
4) Clarify activity ownership
353
What are the steps for Work breakdown structure (WBS)?
What are the steps for Work breakdown structure (WBS)?
Project -> Work packages -> Tasks -> Activities
354
What is RACI model and what is it used for?
RACI model:
Responsible, Accountable (one person!), Consulted, Informed
Used for delegation.
355
What are the benefits of Project Plan?
Benefits of Project Plan:
- reduction of risks misunderstanding
- setting expectations
- transparency within the team on activities, schedule, status
- verification of initial estimates
- allows for lessons learned to use in the next projects
356
What is Status Report?
Status Report:
a format to communicate progress to stakeholders
- crisp
- neutral
- helps to reduce risks, manage accountability, organize work
357
Types of Stakeholders?
Types of Stakeholders:
- Internal: employees, directors, managers
- Connected: shareholders, customers, suppliers
- External: local communities, government
358
What is the role of Data in business?
What is the role of Data in business?
Empower business leaders to make decisions based on facts
359
What is Time-value of data?
What is Time-value of data?
Value of information drops quickly after it is created. If capturing, analyzing and acting on the information can be made faster, the value to the business increases.
Ingestion latency, analysis latency, decision latency.
360
What does DIKW Model stand for?
DIKW Model:
Data, information, knowledge, wisdom.
The lifecycle of the data in an org. Decision making process is at the top of the pyramid.
361
What is the definition of Big Data?
Big Data -
Large and diverse sets of information from a variety of sources that grows at ever-increasing rates.
The data is so large, fast or complex that it is difficult or impossible to process using traditional methods.
3 V’s: volume, velocity abd variety of data
362
What are the 3V'sin regards to Big Data?
3 V’s: volume, velocity abd variety of data
363
What is Smart Data?
Smart Data -
Digital information that is formatted so that it can be acted upon at the collection point before being sent to downstream analytics platform for further data consolidation and analytics.
364
What is Machine Learning?
Machine Learning -
... Application of artificial intelligence that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. Training is required.
Machine learning is applicable as soon as we have data.
Ex Titanic survival algorithm
365
What is Data Science?
Data Science -
Field of study that combines domain expertise, programming skills, and knowledge of mathematics and statistics to extract meaningful insights and value from data.
366
What are the classes of Machine Learning, and examples for each one of them?
Classes of Machine Learning:
1. Classification
Supervised learning
Output: binary (yes/no) or probability (%)
Ex: Titanic survival
2. Regression
Supervised learning
Output: continuous value (numerical)
Ex: how income affects life expectancy
3. Grouping (clustering)
Unsupervised
Output: objects grouped by similarity
Ex: customer targeting, Netflix
4. Anomaly detection
Unsupervised
Output: data points far from the common majority
Ex: how much customer’s payment behavior deviates form normal pattern
367
What is the difference between Supervised and unsupervised machine learning?
Supervised and unsupervised machine learning:
Supervised - model is trained based on historical data in order to teach the system to act on new data. A supervised is needed who inputs the data. Classification is an example.
Unsupervised - no supervised is needed. Few data points are added in, the system connects the dots by itself, the system learns on the go. We don’t know how many clusters there could be, or we have no historical data to enter.
Clustering (Netflix) is a good example.
368
How long is usually the Machine Learning lifecycle?
Machine Learning Lifecycle is usually...
6-8 months during which the model is being trained
369
What are Classification algorithms in regards to Machine Learning?
Classification algorithms - ...
Predictive modeling based on example data input.
Not ideal for real life use cases. Yes/no doesn’t elaborate what is the % of yes/no.
Examples of classification:
KYC (% of being risky)
Label/Target - what we want to predict in the future
Features - input parameters
Input data, ex. customer data, card data, payment data
Model - function (created automatically by the system based on input data) mapping features to target
Model training - fitting the function to known labels; train 80%, test 20%
Model testing - applying a model on test known data
Prediction - applying the model on new unseen (unlabeled) data
370
How are Train and Test proportionally split?
train 80%, test 20%
371
What is a Decision Tree in regards to Machine Learning?
Decision Tree -
... Humanly understandable model that can be followed to reach a decision (vs neural network that isn't readable). Any neural network in regulated areas (ex. banks) have to be explained in a humanly understandable manner.
372
What is a Black Box Machine Learning?
Black Box ML -
... 3rd party machine learning system
373
What is Model Evaluation in regards to Machine Learning?
Model Evaluation -
... aims to estimate the generalization accuracy of a model on future data = how well the model can predict future results.
Well-known metrics for measuring classification model: Confusion matrix.
374
What does the Confusion Matrix in Machine Learning show?
Confusion Matrix -
... shows how many correct predictions and errors the model has made. Actual = 1 & Predicted = 1 -> System worked.
375
Formula of Machine Learning Accuracy?
Formula of Machine Learning Accuracy?
[Sum of all true positives + sum of all true negatives] / sum of all cases. Max is always at 99%.
376
What cannot be predicted using Machine Learning, and why?
What cannot be predicted using Machine Learning?
Stock market behavior. Because of:
- mass psychological nature of markets
- uncertainty
- too many factors influencing the market
377
Name some of the advantages of the Blockchain.
Advantages of blockchain:
- Store of value
- Low transaction fees
- Lots of use cases
- Accessible to high inflated countries/regions
- Instant transactions
- Money can be sent in small amounts
- Micro-payments are possible
- Can be created by anyone (ex. for loyalty points)
- Cannot undo the transaction
- Don't have to store money in crypto, can exchange immediately (used by shops)
378
Name some of the disadvantages of the Blockchain.
Disadvantages of Blockchain:
- Volatile
- Some cryptocurrencies aren't backed up by anything
- Not sustainable from a climate point of view
- Some cryptocurrencies (ETH) have inflation rooted in the code
- Cannot undo the transaction
379
Name some of the advantages of Smart Cities
Advantages of Smart Cities:
Hitachi's vision:
- Better Quality of life
- Resource wise solution
- Address global market
- Enabling ICT technologies and Data
Inputs:
- urbanization 70% by 2050
- Environment energy-CO2 emissions
- energy consumption (store energy during cheap periods, avoid peak hours ex 7-9am, 5-10pm)
- Infrastructure is under pressure
- Real-estate development (sq m price)
- depreciated buildings
- make urban layout more sustainable and optimal
380
What developments support Smart Cities, examples & use cases?
Examples:
- Strong e-identification
- Smart business solutions (ex. e-residence)
- Data-exchange infrastructure (ex. X-road) that notifies governments and municipalities
- developments in IoT areas
Use-cases:
- e-government
- home readings utility providers (ex. estfeed, loxofon)
- last-mile services
381
Name some of the silos known to surround Smart Cities
Silos:
- open data is limited (ex exclusive deals with local companies in Finland, unable to use the same parking system)
- standalone services that do not communicate to each other (ex. green public transport card; digital signatures are not cross-border-standardized)
382
What is Information & Communication Technology (ICT)?
ICT -
... Information and communications technology; the role of unified communications and the integration of telecommunications (telephone lines and wireless signals) and computers, as well as necessary enterprise software, middleware, storage, and others
383
What is the un/ethical side of Smart Cities?
Un/Ethical side of Smart Cities:
- Surveillance
- Power in hands of big companies providing solutions
- Open network
- Fast transport network required
- Data protection
- Dependency on TelCo operators
384
What are the advantages of Cloud Computing?
Advantages of Cloud Computing:
- No need to data transferring
- Data accessibility from any device
- Remote access, no need in physical data transfers
- Data processing in the Cloud
- Software stored in the cloud
- Infrastructure stored in the cloud (AWS)
385
What is Cloud Computing?
Cloud Computing -
... on-demand(!!!) availability of computer system resources, especially data storage (cloud storage) and computing power, without direct active management by the user
386
What are the disadvantages of Cloud Computing?
Disadvantages of Cloud Computing:
- Needs Internet
- Security, unable to encrypt info stored in the Cloud
- Copyright issues (Spotify, Napster)
- Regulations (Dropbox in China)
387
What is a Cloud Deployment Model?
Cloud Deployment Model -
... defines the nature of the cloud and the ways cloud is located and accessed
388
Types of Cloud service model?
Types of Cloud service model:
- public
- private
- community
- hybrid
389
Describe Public Cloud Model, give examples
Public Cloud Model
made available to the general public, is owned by a 3rd party provider selling cloud services
ex: Dropbox (initially), Gmail,
390
Describe Community Cloud Model, give examples
Community Cloud Model
infrastructure is run in-house, and supports a particular group of people.
ex: common uni space
391
Describe Hybrid Cloud Model, give examples
Hybrid Cloud Model
composition of two or more clouds that are bound together.
ex: Dropbox (Private + Corporate), Gmail (Private + Corporate)
392
Describe Private Cloud Model, give examples
Private Cloud Model
operated within an org. Closed infrastructure. Managed by org or by a 3rd party, and may exist on or off the premises.
ex: EBS, MS Data Center
393
What are the types of Cloud Service Models?
Cloud Service Models:
- SAAS
- PAAS
- IAAS
+ XaaS
394
What is SaaS?
SaaS:
Software as a Service.
Interacted with by end-users.
Everything is the responsibility by Cloud provider.
Ex: Dropbox, Slack, MS Office, etc.
395
What is IaaS?
IaaS:
Infrastructure as a Service.
Interacted with by narrow IT professionals who also build the platform layer. Can configure Operating Systems, build any kind of software.
Ex: AWS, Google Compute Engine.
396
What is XaaS?
XaaS:
Anything as a Service.
Ex. Music as a Service (Spotify). Graphics as a Service. Transportation as a Service (Bolt), Banking as a Service.
397
What are the types of Cloud Technical Architecture?
types of Cloud Technical Architecture:
- heterogeneous cloud
- homogeneous cloud
- composable cloud
- automated cloud
398
Describe Heterogeneous Cloud
Heterogeneous Cloud ...
allows the use of different (multiple) hardware types to work efficiently and cooperatively together
399
Describe Automated cloud
Automated cloud ...
Adds a layer of automation in terms of how resources are allocated to users.
Ex AIOps (Artificial Intellegence for IT Operations).
400
Describe Homogenous Cloud
Homogenous Cloud ...
consists of hardware of one single vendor only (ex IBM)
401
Describe Composable cloud
Composable cloud ...
Concept of virtualisation is introduced.
Middle control software level that connects different resources.
Virtualization - virtual non-physical servers existing through a virtualization platform that all exist on one physical server. Resources allocation.
402
What is the Value of Cloud Computing?
Value of Cloud Computing:
- Costs (hardware, software, maintenance, etc)
- Improved IT flexibility (new business opportunities, business continuity)
- Ability to innovate
- Technical IT capacity
- Improved collaboration (support)
- Greater employee productivity
403
What are the types of Computing?
types of Computing:
- cloud
- fog
- edge
404
Describe Fog Computing
Fog Computing ...
connects Edge to the Cloud.
is an architecture that uses edge devices to carry out a substantial amount of computation, storage, and communication locally(!) and routed over the Internet backbone.
405
Describe Edge computing
Edge Computing ...
5G.
Distributed computing systems that are connected, and move closer to the user. Self-driving cars.
Edge computing is a distributed computing paradigm that brings computation and data storage closer to the location(!) where it is needed to improve response times and save bandwidth
Big Tech in Edge:
- Amazon, ex: predictive maintenance, device management
- Microsoft ex: telecom
- Google, ex`; augmented reality
- Apple, ex: data processing
- Facebook, ex: virtual reality, smart glasses
406
Describe Cloud Computing
Cloud Computing ...
on-demand availability of computer system resources, especially data storage (cloud storage) and computing power, without active management by the user
407
Describe Quantum Computing
Quantum Computing ...
- power increases expontetially in proportion to the number of qubits
- computers have high error rates, and need to be kept ultracold
Characteristics of Quantum gaming:
- randomeness
- renderness, fast
- realistic characters
- optimal complex-enough game
- real-time events
- large downloadable capabilities
- quick db queries
- heavy video streaming
In different industries:
1. Finance: markets and portfolios performance prediction
2. Cybersecurity: break RSA encryption that used ti keep sensitive data secure
3. AI
4. Healthcare: simulation of chemical reactions that was not possible before
408
What is the Difference between 1G all the way to 5G?
Difference between 1G all the way to 5G:
```
Every 10years
1G: Analog Voice
2G: Digital Voice
3G: Mobile Broad Band (Internet)
4G: Better and faster Internet (LTE)
5G: A Connected World
```
409
What is 5G capable of?
5G is capable of:
- less latency (better response), ex. controlling machinery from home, remote controlled surgery
- throughput connection 100x
- connection per km2 - 100x, ex: IoT devices are better connected
- mobility 1,5x, ex: high-speed railway
- network architecture, ex: slicing (one more latent layer for personal devices, mid/high for more critical devices such as self-driving cars)
Remote controlling: mining, medicine, agriculture, drones
Extended reality: gaming, tourism, sport & culture events
Massive IoT network: better coverage indoors and under ground, better battery life, more than 1mln devices per km2
410
Give examples of Industries, companies and devices relying heavily on older G
Industries, companies and devices relying heavily on older G:
(2G & 3G)
- Fleet
- Home meter readers
- Car devices (monitors)
- Smart watches and other IoT do not need 5G to provide service because technically not feasible to switch them early
411
What is IoT?
IoT:
Internet of Things, connected to each other through the network
Examples of first IoTs: space shuttle, atm, telegraph, fax, etc
412
What are the 3 business layers surrounding IoT?
3 business layers surrounding IoT:
3. IoT Applications (Content)
2. IoT Interconnectivity (Platform)
1. Connected Devices (=IoT Nodes = Devices)
413
What is Narrow-Band (NB) IoT?
Narrow-Band (NB) IoT - ...
...meant for devices that only send data occasionally, ex once a day/week
414
What are the levels of Smart City?
Smart City Levels:
- Environment (ex air)
- Movable objects
- Buildings
- Apartments
- Individual
415
What is Value for the customer?
Value for the customer - ...
answers question why I buy something
416
What is Marketing about?
Marketing is about:
- bringing value
- build a competitive advantage, make product outstanding
- telling the continuous(!) story
Value = price
417
Who is Marketer?
Marketer -
... Someone who seeks a response (attention, purchase, vote) from another party, called the prospect.
418
Types of Marketing?
Types of Marketing:
- Accidental
- Intentional
419
What is a Market oriented company?
Market oriented company -
telling customers what they want
- when company's culture is systematically and entirely committed to the continuous creation of superior customer value (slogans of the firms, ex. I'm loving it Mc)
420
What are the 3 Marketing Approaches?
3 Marketing Approaches:
- Product push (ex. solar-powered lighting)
- Customer-led (taxi services)
- Resource-based (desease detection)
421
Definition of B2B?
B2B -
... orgs that buy goods or services to use in the production of other products and services; or resell and rent those services and goods to others at a profit
422
How is B2B different from B2C?
B2B:
B2B Market:
- less customers
- larger-value transactions
- customized products
- negotiated products
- lengthy, complex selling process
- usage determines value
- multiple buying decision-makers
- derived demand
B2B Marketing:
- complex relationship
- emphasis on personal selling (dinners, conferences, etc)
- competitive bidding for unique items
Ex. providers, re-sellers, shopping centres, grocery stores, etc
423
What are Fast Moving goods?
Fast-moving consumer goods (FMCG), also known as consumer packaged goods (CPG), are products that are sold quickly and at a relatively low cost. Ex. tooth paste, toilet paper, toothbrush, etc
424
What is ATL Marketing?
'ATL Marketing' stands for 'Above The Line Marketing'. This kind of marketing is the kind of marketing that has a very broad reach and is largely untargeted.
EX:
- billboards
- newspaper
425
What is BTL Marketing?
'BTL Marketing' stands for 'Below The Line Marketing'. This kind of marketing is the kind of marketing that targets specific groups of people with focus.
426
What is TTL Marketing?
'TTL Marketing' stands for 'Through The Line Marketing'. This kind of marketing is really an integrated approach, where a company would use both BTL and ATL marketing methods to reach their customer base and generate conversions.
427
Describe the Product Journey in B2B?
Product Journey in B2B:
0. Producer
1. Seller
2. Reseller
3. Distributor
4. Store
Important to keep good relationship with resellers to get the best positioning.
428
What is the goal of the Sales Department?
Sales' goal:
- convince to buy
- sell more
429
What is the goal of the Marketing Department?
Marketing Dep's Goal:
- create demand
- support sales
430
Role of Marketing?
Role of Marketing is to ...
explain the value of product
1. identify customer reqs
2. decide on competitive positioning to be adopted; what is it you are doing differently
3. focus efforts of all members of the org to satisfy customers
431
What is Marketing Mix (4P)?
Marketing Mix:
The four Ps of marketing are the key factors that are involved in the marketing of a good or service.
```
They are:
- product
- price
- place
- promotion
of a good or service.
```
432
What are Customer 4C's?
Customer 4C's:
- cost
- customer solution (focus on prospects, not those who are already hooked to the product)
- convenience
- communication
433
What is GOST model (Goals, Objectives, Strategic Initiatives, and Tactics)?
GOST model (Goals, Objectives, Strategic Initiatives, and Tactics):
Primary objectives + Secondary objective translated into strategic initiatives, and therefore, to tactics
434
What is the Primary objective of any company?
| What is the Secondary objective of any company?
Primary objective of any company: more customers to be hooked up to my product (that will translate into profit)
Secondary objective of any company: identify the battle (ex. market/region)
435
Name the Marketing Principles
Marketing Principles:
- focus on customer
- only compete in markets where you can establish a competitive advantage
- customers do not buy products, they buy a story
- marketing should be rooted in the company, not left to the marketing dep only; know the focus of the company (m&m ex)
- markets are heterogeneous
- markets and customers are constantly changing
436
What does Total customer value consist of?
Total customer value =
economic benefit + technical benefit + service benefit + social benefit
437
What does Market Offer consist of?
Market Offer =
Total customer value - monetary cost
438
How can market offer be improved?
how can market offer be improved?
- speed of delivery
- ordering procedures
- condition of the product upon delivery
- after-sales support
- support costs and complexity
- credit procedures
- product guides and doc
439
The purpose of Customer Value Model?
customer value models:
- understand different values for different consumer groups
- predict provided value by customer segments
- find value elements that differentiate value for dif groups
- choose clients for whom the company provides the highest added value
440
What is the greatest asset of any company/business?
Its customers
441
Customer Lifetime Value (LTV)
LTV -
value of all current and future profits generated from a customer over the life of his or her business with the firm
442
What does ABC Client Profiles mean?
ABC Client Profiles:
a clients: whales - largest REVENUES
b clients: smaller clients, but LARGER profit margins
c clients: smallest clients
443
What does hub and spoke model mean?
hub and spoke model:
network of consultants supported by staff
444
!!! Which concept involves adapting a firm to take advantage of opportunities in a constantly changing environment?
!!! Which concept involves adapting a firm to take advantage of opportunities in a constantly changing environment?
Strategic Planning
445
!!! What is Marketing Research?
!!! What is Marketing Research?
Marketing Research is the “systemic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.”
446
!!! How does Marketing Research differ from Competitive or Marketing Intelligence?
!!! How does Marketing Research differ from Competitive or Marketing Intelligence?
Market research deals specifically with your company, marketing strategy, and product line.
Market intelligence is information about the market itself, not your specific positioning necessarily.
447
!!! Marketing intelligence (MI) -
!!! Marketing intelligence (MI) -
is the everyday information relevant to a company's markets, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining market opportunity, market penetration strategy, and market development metrics.
448
!!! Competitive intelligence -
!!! Competitive intelligence -
is the result of a company's efforts to gather and analyze information about its industry, business environment, competitors, and competitive products and services
449
!!! Marketing information system (MKIS) -
!!! Marketing information system (MKIS) -
is a management information system (MIS) designed to support marketing decision-making.
aka "system in which marketing data is formally gathered, stored, analyzed and distributed to managers in accordance with their informational needs on a regular basis.”
450
!!! Casual Research -
!!! Casual Research -
can be conducted within the company (convenience sample but bias) or with company partners.
451
What does selling include?
What is selling?
one of many marketing components
```
What does selling include?
personal selling includes:
- personal comms
- persuasion
- helping others with goods and services
```
452
What is Personal selling?
| What is the golder role of personal selling?
Personal selling - personal communications of information
Golder role of personal selling: phylosophy of unselfishly treating others as you would like to be treated; not to be insulted easily
453
What are the Different kinds of salespeople?
Different kinds of salespeople:
- Traditional - do what they can get away with
- Professional - ex. consultancy in Apple stores
- Golden Rule salesperson
454
What are the Salesperson's goals?
Salesperson's goals:
1. themselves - earn a living
2. employees - companies to survive
3. customers- sell
Make products visible, and create the relationship and environment for a successful sell
455
What is the Struggle of salesperson?
Struggle of salesperson:
Bonuses are distributed between different products, when you are asked to sell worse performing product, it is harder to sell
456
What is the Relationship between Sales and Marketing?
Relationship between Sales and Marketing:
Marketing can do all the work to promote a product/service, but if Sales do not feel the same way, they wont sell it
457
What are the Sales essentials?
Sales essentials:
- relationship
- listening
- mutually beneficial solutions
- overcome objectives
- leverage resources for execution
- close sale
- evaluate sale
458
What are the focuses of Sales and Marketing?
focuses of Sales and Marketing:
Marketing focuses on consumers and brands
Sales - shopping experience
459
Agency Problem?
Agency Problem -
... when a conflict of interests arises between the shareholders (aka principals) and managers (aka agents). Agents generally work in the interests of their principals, but when they don't - it is an agency problem.
460
Managers are monitored through:
Managers are monitored through:
- financial statements
- audits
- annual general meetings
- removal of directors
- corporate governance regulations
461
Agency costs?
Agency costs -
.. are any costs associated with controlling that agents continue to work in the interests of their principals.
Ex.:
- legal costs
- incentives and fees
- opportunity costs
- reports and audits costs
462
Ways to measure a company's performance:
Ways to measure company's performance:
1. rations
463
Asymmetry of Information?
Asymmetry of Information -
... manipulated information about company's performance.
Exists between agent and principal. The root cause is due to the fact that Managers have daily access to financial information, while Shareholders - annual data to accounting data.
464
Reasons for Asymmetry of Information?
Reasons for Asymmetry of Information
Occurs when Managers are focused on:
- reducing risk for the company
- growth & maximizing the size of a company
- increasing managerial power
- creating personal job security
- increasing pay & rewards
- pursuing social or side projects
465
How to eliminate Agency Problem?
How to eliminate Agency Problem?
```
Shareholders to:
1) monitor managers'activities
- through audits
- reporting
- corporate governance
2) compensate & incentivise managers
- performance-related pay
- share options schemes (only in public firms)
ESOPs - executive share option plans
```
466
Describe Agency Relationship
Agency Relationship =
shareholders OWN the company + agents RUN it
467
What is Goal Congruence?
Goal Congruence -
... the ultimate goal at which managerial actions are directed toward maximizing shareholders' wealth.
468
What are the Benefits and Problems of linking Rewards to Performance?
Benefits of linking Rewards to Performance:
- helps to attract and keep employees valuable
- shows that their performance creates company's success
- motivates employees to act in the long-term interest of the org
Problems:
- dysfunctional behavior, ex creative accounting
- favoring decisions that result in remuneration
- employees only concentrate on what is measured
- personal performance over teamwork
- high outputs at the expense of quality
- long-term goals are too distant, and therefore ignored
- accessibility of bonuses and rewards means lowered standards
469
What is Stewardship Code (UK)?
Stewardship Code (UK) -
... the code that enhances the quality of engagement between Institutional Investors and Companies, in order to help improve long-term returns to Shareholders.
470
Impacts of International and Digitalised Markets on
- investors:
- companies:
Influences of International and Digitalised Markets:
On investors:
- increase of share ownership by investors from overseas
- international mergers
- subsidiaries from overseas
- headquarters in large cities
On companies:
- hard to identify investors one by one
- more objectives
- increases the need in corporate governance
471
Code of Conduct for Corporate Governance?
Code of Conduct for Corporate Governance:
- Board is responsible for major Policy & Strategic Decisions
- Directors performance is assessed regularly
- Chairman and CEO are separated
- Independent Non-Executive Directors (NEDs)
- Directors'pay is set by a committee consisting of NEDs
- Appointments are administrated by NEDs
- NEDs are liaised with external auditors
- Board to maintain a regular dialog with shareholders
472
NEDs?
NEDs -
... Independent Non-Executive Directors
473
IFRS?
IFRS -
... International Financial Reporting Standards
474
Capital Expenditure (aka Capital Cost)?
Capital Expenditure -
...capital occurred to increase the company's value.
Ex.:
- machinery
- R&D
- advertising
- patents
475
Relevant Costs related to Capital Increase?
Relevant Costs related to Capital Increase:
Answers the question "What cash flows are changed by the decision?"
avoidable costs that are incurred only when making specific business decisions
Amounts are RELEVANT if:
- they occur in the future
- incremental (increased in the future)
- cash
- opportunity costs
- cash invested in inventory or receivables
- tax
476
Non-relevant Costs?
Non-relevant Costs:
Answers. the question "What cash flows are NOT changed by the decision"
IRRELEVANT:
- sunk and past costs
- book values = past expenditure or revaluations
- reappointment of existing fixed costs
- depreciation
- committed costs
477
Payback Period?
Payback Period -
... the time it takes for CASH INFLOWS from a capital investment project to EQUAL the CASH OUTFLOWS, usually expressed in years
478
Return on Capital Employed (ROCE) aka Accounting Rate of Return (ARR)?
Return on Capital Employed (ROCE). -
.. another way of calculating if project is worth taking on. Companies compare ACTUAL ROCE to TARGET ROCE.
479
Net Present Value (NPV)?
Net Present Value (NPV) -
... the value of a project obtained by discounting all cash inflows and outflows by a chosen target rate of return or cost of capital, & adding them.
480
The principle of Value of Money?
Principle of The Value of Money -
... core principle of finance holds that provided money can earn interest, any amount of money is worth more the sooner it is received
481
Annuities?
Annuities -
... constant annual amounts, ex. constant rate, constant sales prices and volumes. Occur annually.
482
Perpetuity?
Perpetuity -
... a constant annual amount received FOREVER (±99y)
483
Role of Finance Manager?
Role of Finance Manager:
... to control the flow of cash between financial markets and the firm's operations.
- Sell assets to INVESTORS
- investcash in the firm's operations & use it to purchase real assets (aka invest in the investment projects)
- REINVEST cash
484
Financial management -
Financial management -
... management of the finances of an org in order to achieve the FINANCIAL OBJECTIVES.
Maximize shareholders' wealth by paying dividends & Increasing the market value of the org.
485
Each shareholder wants these 3 things:
Each shareholder wants these 3 things:
1 to get richer
2 transform wealth into borrowed money now or reinvest to spend later
3 manager risks associated with nr 2
486
Corporate Objectives?
Corporate Objectives:
- maximization of profits (aka cash)
- maximization of sales (may lead to overtraining)
- survival
- social responsibility
487
Levels of Strategy in an Org?
Levels of Strategy in an Org:
(from top to bottom)
- Corporate Strategy - direction of the whole org; relates to: market share, growth, satisfaction
- Business Strategy - how to tackle particular markets
- Operational / Functional Strategy = for different departments
488
Accounting Profit vs Economic Profit?
| How can Account Profit be manipulated?
Accounting Profit vs Economic Profit:
```
Accounting Profit can be manipulated.
3 examples of Acc Profit manipulation:
1) depreciation & anticipated losses
2) capitalization of dev costs
3) adding overhead costs to inventory valuations
```
Economic - the cash received.
Profit does not take into account risks and volumes of investment.
489
Internal sources of finance:
Internal sources of finance:
1) remaining money after TAX and DIVIDENDS = aka RETAINED EARNINGS
2) working capital - what's left after liabilities are covered by assets (ex inventory, receivables)
Only Cash can be reinvested!
```
Advantages of internal financing:
- ready source of cash
- decision on how much to pay
- no issue costs
- no dilution of control
- no restriction on business ops
BUT limited by Cash Flows.
```
490
Cash Conversion Cycle?
Cash Conversion Cycle -
... = inventory days (materials into goods) + trade receivables days (credit customers) - trade payable days (paying suppliers)
Can be reduced via:
1) reduce inventory
- shorten production time
- reduce wastage
- reduce inventory levels
- obtain better prices
2) reduce receivables period
- offer discounts to early payers
- reduce payment terms
3) increase payment period to suppliers
- delay payments
- negotiate better terms
491
External sources of finance:
External sources of finance:
1) debt (short-term, medium-term, long-term): bank LOANS, BONDS
2) equity = ordinary and preference SHARES
492
Capital Market -
Capital Market -
... market where 2 parties can exchange goods & services.
2 main functions:
- primary
- secondary
493
Primary Capital Market -
Primary market -
raise long-term funds from financial institutions & private investors
494
Secondary Capital Market -
Secondary Market -
... investors sell sahres & bonds or buy new ones
495
Types of Securities:
Types of Securities:
- ordinary shares (can vote)
- bonds and loan stocks (secured or unsecured)
- convertible bonds (bonds -> shares)
- preference shares (paid first, don't vote)
- eurobonds (bonds outside of country, less regulated)
- treasury bills & government stock (borrowings by gov)
496
Capital Markets Efficiency :
Capital Markets Efficiency :
1. Operational Efficiency
- low transaction costs
- minimal barriers for trading
2) Allocational efficiency
- primary markets direct funds to their most productive uses
3) Pricing efficiency
- fair pricing on secondary markets
4) International efficiency
- prices reflect all available information
- freely available information
497
Perfect Market aka Efficient Market:
Perfect (Efficient) Market :
- no barriers to buy/sell
- all have the same expectations for pricing
- free entry and exist
- info is available for free
- large number of buyers and sellers, no dominance
498
3 forms of market efficiency:
3 forms of market efficiency:
- weak - markets are efficient based on PAST data
- semi-strong - efficient based on PUBLICALLY available info
- strong - efficient based on ALL PUBLIC and PRIVATE info
Implications of Stock Market Efficiency on Companies and Managers:
- share price fairly reflects the value of the company and market expectations about the future
- financial managers need to increase wealth to increase the share price
- manipulation of accounting information will not mislead the market
- timing of new shares issue is not important
499
Random Walk Hypothesis -
Random Walk Hypothesis -
... if we know share price at the end of one period, we cannot accurately predict the share price at the end of the next period
500
Technical Analysis & Fundamental Analysis of Stock Markets -
Technical Analysis & Fundamental Analysis of Stock Markets -
Technical uses CHARTS to predict the future share prices. Implies that there is a link between past and future.
Fundamental Analysis uses PUBLIC information to calculate fundamental share value, then - compares this value to the current one.
501
Anomalies in Share Price bahavior:
Anomalies in Share PRice bahevior:
1) Calendar Effects
- weekend effect
- share prices rise during thee last 15 min of trading
- some months (April in UK, Jan US) show higher returns
2) Size anomalies
- in long run, investing in smaller companies shows higher returns
3) Value effect - higher returns when investing in value stock (shares with high earnings)
4) Abnormal Returns - when investing in portfolios with poor past returns (ex Google)
502
Behavioral Finance -
Behavioral Finance -
investors are not able to consistently make decisions that maximize their wealth.
503
What to rely on when Assessing Financial Performance:
rely on when Assessing Financial Performance:
- financial statements
- financial databases
- financial press and internet
- ratios (ex ROCE, EPS)
- by comparing to similar companies
504
Risks Categorisation:
Risks Categorisation:
- Strategic = enterprise risk; when unable to achieve strategic objectives
- Operational: ex business processes, missed opportunities, financial risk, overtrading, currency exchange, compliance risk, tax problems
- Credit risk = credit default risk; ex credit policy, customer quality, credit vetting; Liquidity Risk = difficulty meeting obligations
- Country risk / Market risk = aka systemic risk; ex value of an investment will decrease, interest rate changes, foreign exchange rate
Ex: Common risks: market risk, credit, IT, legal, health, etc
505
Risk Management ages:
Risk Management ages:
- 1st age: non-enterprevenural: fire, fraud, pollution, etc
- 2nd age: when preventive methods are applied to the 1sr age risks
- 3rd age: entrepreneurial: innovation, investments, new & emerging markets
506
Risk Management Process:
Risk Management Process:
Identify -> Analyze -> Review -> Manage
507
Buying rate =
bid price (set by banks)
508
Selling rate =
offer / ask price
509
3 forms of Foreign Currency Risk:
3 forms of Foreign Currency Risk:
1 Transaction exposure aka transaction risk (short-term) - the difference in price between when the price is agreed and the date when the cash is paid
2 Translation exposure aka translation risk (book gains or losses) - org will make losses when the accounting results of its foreign branches or subsidiaries are translated into home currency
2 Economic exposure aka economic risk (effect on present value of longer term assets) - effect on exchange rate movement on the international competitiveness. A country's economy becomes more or less competitive because of depreciation/appreciation of currency
510
Supply and Demand of Currencies influenced by:
Supply and Demand of Curerncies influenced by:
- rate of inflation
- interest rate
- balance of payments in goods and services
- inward and outward foreign investments
- speculation
- government policy
511
Interest rate Parity -
Interest rate Parity -
... method of predicting foreign exchange rates based on hypothesis that the difference between interest rate in 2 countries will offset the difference between the spot rate and forward rate.
512
Purchasing Power Parity -
Purchasing POwer Parity -
exchange rate between 2 currencies is the same in equilibrium when the purchasing power of currency is the same in each country.
513
Foreign Currency Risk Management tactics:
Foreign Currency Risk Management tactics:
- HEDGING
- MATCHING receipts & payments: wherever possible, a company that expects to make payments and have receipts in the same foreign currency should plan to of set it payments against its receipts in that currency.
- INVOICING IN OWN currency
- LEADING & LAGGING the times
- exchange CONTRACTS (for fixed exchange rates)
- NETTING
514
Money market hedging -
Money market hedging -
borrowing in one currency, converting the money to another currency & putting the money on deposit until the time the transaction is completed.
515
Currency Future Contract -
Currency Future Contract -
contract for sale or purchase at a set future date of a set quantity of currency
516
Currency Option -
Currency Option -
protect against adverse exchange rate movements while allowing the investor to take advantage of favorable rates. Pays a premium.
517
Currency Swaps -
Currency Swaps -
- exchange of debt from one currency to the other. Longer periods than Future Rate.
518
Floating Interest rate Debt (Risk) -
Floating Interest rate Debt (Risk) -
... form of interest rate risk faced by non-bank company is the volatility of cash flows associated with high proportion of floating interest rate debt
519
Fixed Interest rate Debt (Risk) -
Fixed Interest rate Debt (Risk) -
... company with fixed interest debt has committed to fixed interest payments. Means loss when rates fall.
520
(Interest Rate) Gap Exposure -
Gap Exposure -
... the degree to which the firm is exposed to interest rate risk.
Negative gap - more liabilities
Positive gap - liabilities are covered.
521
Basis Risk -
Basis Risk -
when floating rates aren't determined using the same basis of benchmark
522
Causes of interest rates fluctuations:
Causes of interest rates fluctuations:
- re-lending
- size of the loan
- different types of financial assets
- duration of the lending
523
Bonds -
Bonds -
alternative to stocks, issued by corporations, governments, states, local municipalities.
They are predetermined promises & fixed amount of interest per year.
Bond cosists of:
- yield - rate of return; aka the % earned if the bons is sold; if bond is purchased cheaper, then yield is higher than coupon rate, and return is higher
- par value - face value returned to the holder at maturity
- price - %of face value
- coupon - interest rate
- price - of the bond; same as par value when bond issued, flactuates after
524
Zero coupon rate -
Zero coupon rate -
bond that is issued at big discount, below the par value.
525
Bond Maturity -
Bond's Maturity -
time until bond issuer returns the par value and redeems the bond
526
Call Provision -
Call Provision -
gives corporation the option to redeem the bond before its maturity date
527
Bond Rating -
Bond Rating - future risk.
AAA -> 0 risk
The lower is the rating, the higher are chances of default. Lower rating -> higher risk -> higher return
528
Defaulting Bond -
Defaulting Bond -
bond that stops paying coupon interest resulting in loss by investors
529
Junk Bonds -
Junk Bonds -
high risk bonds with high return. Rating BB and lower.
530
Corporate vs Junk Bonds:
Corporate vs Junk Bonds:
Corporate pays higher yield, risk varies
Junk: very high yield (10-12%), high default rate
531
Treasury Bonds -
Treasury Bonds -
the safest security.
- exempt from taxes
- issued by gov
- avg return 4% over 50y
- short & long-term bonds (t-bills & t-bonds)
532
T-bills & T-bonds
T-bills & T-bonds:
T-bills:
- does not pay coupons
- only face value at maturity
- sold at discount
- very safe
- sold at auctions
T-bonds:
- pays coupons
- interest rate=coupon rate
- safe
- risk-free
533
Default rate of a Bond -
Default rate of a Bond -
the chances of bonds defaulting. Depends on the rating.
Muni bonds default ± at the same rate as corporate bonds (±0,4)
534
Managerial Economics -
- microeconomics theory that enables managers to select strategic direction, and to respond to tactical issues.
Helps with decisions about:
Shape pricing
Output decisions
Optimize the production process and input mix
Choose product quality
Optimally design internal and external incentives
535
6 steps of decision-making:
6 steps of decision-making:
1. Define the problem
2. Determine the objective → if “you cannot always get what you want”, you need to know at least what you want
3. Explore alternatives
4. Predict the consequences: deterministic, probabilistic models
5. Make a choice: optimal decision
6. Perform sensitivity analysis
536
The value of a firm is determined by:
The value of a firm is determined by:
is defined as the present value (PV) of its expected future profits
537
Value of Money:
- Present Value (PV) of a Future Value (FV) to be received at the end of ”n” periods, when the interest rate is ”i”
FORMULA:
PV = FV / (1+i)^n
EXAMPLE
For example, the present value of $100 in 10 years if the interest rate is at 7 percent is: PV = $100 / (1+0.07)^10=$50.83, This means that if you invested $50.83 today at a 7 percent interest rate, in 10 years your investment would be worth $100
538
Present Value of a Series (PV Annuity)
- present value of a stream of future amounts, FVt, received at the end of each period for ”n” periods
FORMULA:
PV Annuity = FV1/(1+i)^1 +FV2/(1+i)^2 + FV3/(1+i)^3...etc
539
Net Present Value:
Suppose a manager can purchase a stream of future receipts FVt by spending C0 dollars today. The NPV of such a decision is:
FORMULA:
NPV = [FV1/(1+i)^1 +FV2/(1+i)^2 + FV3/(1+i)^3...etc] - C0, where C0 is the initial investment
540
In which case the project should be accepted?
NPV < 0 : Reject Project
| NPV > 0 : Accept Project
541
Present Value of a Perpetuity -
An asset that perpetually (forever) generates a stream of cash flows CF at the end of each period is called a perpetuity
FORMULA:
PVperpetuity = Cash Flow1/(1+i)^1 + CF2/(!+i)^2...etc
OR
PVperpetuity = CF / i
542
Marginal Analysis & Marginal Principle -
Marginal Analysis:
Analyzes the additional benefits derived from a particular decision and compares them with the additional cost incurred
The maximization rule is: MR = MC
Marginal Principle:
To maximize net benefits, the managerial control variable should be increased up to the point where MB = MC
- MB > MC means the last unit of the control variable increased benefits more than it increased costs
- MB < MC means the last unit of the control variable increased costs more than it increased benefits
543
Net Benefits =
Net Benefits = Total Benefits - Total Costs
544
Marginal Benefit (MB) -
- is a change in total benefits arising from a change in the control variable, Q
FORMULA:
MB = △B/△Q
Slope of the total benefit curve
545
Consumer Theory & Demand Shifters:
Consumer Theory:
The demand schedule will give you how much would be purchased at alternative prices → holding everything else constant
Consumer income, advertising, price of other goods are ignored
```
Demand shifters:
- other criteria that influence the decision to buy
Examples:
Tastes and preferences
Income
Normal and inferior goods
Prices of related products
Substitute and complement goods
Expectations about the future
Number of buyers
```
546
Demand Schedule -
The demand schedule allows us to draw the demand curve
547
Market Demand Curve -
The market demand curve indicates the total quantity of a good all consumers are willing and able to purchase at each possible price, holding everything else constant
Gallons of petrol example
548
Law of Demand -
Price and quantity demanded are inversely related
| → As the price of a good rises, and all other things remain constant, the quantity demanded of the good falls
549
What leads to change in demand?
- changes in variables such as income or the price of another good, lead to a change in demand
This results in SHIFT of the entire demand curve
- changes in the price of a good lead to a change in the quantity demanded of THAT good
movement ALONG a given demand curve
550
Purchasing Power Effect (Income Effect) -
Increasing the price of a product will reduce the purchasing power of your money or income. Conversely, a price reduction will increase the purchasing power of your dollar.
551
Substitution Effect -
- is the decrease in sales for a product that can be attributed to consumers switching to cheaper alternatives when its price rises. One product replaced with another (ex Pepsi vs Coca-Cola)
552
Substitutes (goods)-
Substitutes-
are identical, similar, or comparable to another product, in the eyes of the consumer. Substitute goods can either fully or partly satisfy the same needs of the customers.
553
Complements -
Complements-
A complementary good or service is an item used in conjunction with another good or service.
554
Normal good -
Normal good -
a type of a good which experiences an increase in demand due to an increase in income.
Ex. more eating out when wage is higher.
555
Inferior good. -
Inferior -
is a good whose demand decreases when consumer income rises, unlike normal goods.
I.e. bad quality products that could be replaced by better quality goods. Ex. shoes from Ecco vs random unknown brand.
556
Consumer surplus -
Consumer surplus -
is the difference between the price that consumers pay and the price that they are willing to pay.
557
Producer Surplus -
Producer Surplus -
is the total amount that a producer benefits from producing and selling a quantity of a good at the market price. The total revenue that a producer receives from selling their goods minus the total cost of production equals the producer surplus.
Sold Goods - Total Cost of Production = Total Revenue
558
Price Elasticity of Demand -
The ratio of the percentage change in quantity demanded to the percentage change in price, assuming that all other factors influencing demand remain unchanged
FORMULA
εD = %∆Q / %∆P = ∆Q/∆P x P/Q
|εD| > 1 ⇒ Elastic demand
|εD| < 1 ⇒ Inelastic demand
559
What does the price of elasticity tell us?
What does the price of elasticity tell us?
Think about the revenue of the firm: TR = P × Q
The more elastic the demand is, the larger the change in revenue is
560
Marginal Revenue -
Marginal Revenue -
The change in total revenue that results from a one-unit change in quantity demanded
FORMULA:
MR = ∆TR / ∆Q = [P2(Q2-Q1) + (P2-Pq)Q1] / (Q2-Q1)
or
MR = P(1+ 1/εD)
561
Elasticity-Revenue Relationships -
Elasticity-Revenue Relationships -
```
Knowing whether and at what magnitude demand is responsive to:
Changes in price
Advertising
Packaging
Promotional displays
```
562
Factors Affecting the Price Elasticity of Demand:
Factors Affecting the Price Elasticity of Demand:
- The availability and closeness of substitutes
- Percentage of the consumer’s budget
- Durability of the good
- Time period
563
Income Elasticity -
Income Elasticity -
The ratio of the percentage change in quantity demanded to the percentage change in income, assuming that all other factors influencing demand remain unchanged
FORMULA:
εy = %∆QD / %∆Y
εy > 0 Superior
εy < 0 Inferior
564
Superior good -
Superior good -
that typically make up a greater percentage of a person's spending as their income rises. These are generally expensive, scarce and high quality as compared to available alternatives and substitutes
εy > 0 Superior
εy < 0 Inferior
565
Cross-Price Elasticity of Demand -
Cross Elasticity of Demand -
The ratio of the percentage change in quantity demanded of good A to the percentage change in the price of good B, assuming that all other factors influencing demand remain unchanged
FORMULA
εcross = %∆QDA / %∆PB
εcross > 0 Substitutes
εcross < 0 Complementary
566
What is behind the Politicization of the Businesses?
What is behind the Politicization of the Businesses?
Globalization is behind the phenomena. Private firms take over governmental tasks of social regulation and operate as new providers of citizenship rights and public goods.
567
Superior good -
Superior good -
that typically make up a greater percentage of a person's spending as their income rises. These are generally expensive, scarce and high quality as compared to available alternatives and substitutes
εy > 0 Superior
εy < 0 Inferior
Ex. houses
568
Challenging Liberal Democracy
Old idea:
Businesses deal with economics only, isolated from the society
New idea:
Businesses are heavily involved in social areas of life
569
Political goal:
the society uses its resources most efficiently
570
Classic Liberal Democracy: Role of the limited government:
to focus on the protection of people, enforcing voluntary contracts, and minimizing externalities.
Government and state are separated from private interests.
571
Classic Liberal Democracy: Role of corporations:
focus on economic issues.
572
Classic Liberal Democracy
```
business = economics
government = politics
```
Characteristics of Classical Liberal Democracy:
The limited public sector with the provision of:
- monetary system
- constitution and parliament
- independent judiciary
- background institutions for competitive markets
573
Promise of Private Power (aka Businesses)
Promise of Private Power (aka Businesses)
because of the pressure from NGOs, businesses are required to develop codes of conduct for their global brands, that eventually get audited for better working conditions.
Brands, due to globalisation, exit factories.
574
Total Institution -
Total Institution -
- no boundaries between different spheres of life; one single bureaucratic order when a business is rooted in all areas of the life of a person
ex. people are living on-site where they work/study
575
Martha C. Nussbaum
wrote a book about The Threshold Level of Decency
she does not focus on people's satisfaction, but if they can do what they want to do; subjectiveness is ignored
"What each person is able to do and to be"
```
List of Basic Human Capabilities by Martha C. Nussbaum:
1. Life
2. H
Universal standard of decency
ealth
3. Bodily Integrity
4. Senses, Imagination, Thought
5. Emotions
6. Practical Reason
7. Affiliation
8. Other Species
9. Play
10. Contol over one's environment: a) Political, b) Material
```
Human life is a network where you cannot compensate one capability with something, such as money. All 10 human capabilities need to be present in person's life.
Capabilities are better metrics than material resources, preferences and functioning because they are subjective. Ex. what is enough money?
576
Universal standard of decency
identify business practices in global economy that may push people below the decency level; and eliminate them on a global level
577
Deliberative Perceived Corporate Social Responsibility (PCSR)
When social lives are being affected not just by the governments, but also by the businesses with power.
= politicization of the businesses.
578
Which type of democracy supports an effective market economy?
Which type of democracy supports an effective market economy?
Classical Liberal Democracy
579
3 paradigms of CSR:
3 paradigms of CSR:
1. Economic (neutral) = firms are economic players; any CSR needs to be justified from an economic perspective
2. Critical (negative) = all CSR is an extension of the private power in the society; businesses use CSR as a political agenda; there is no democratic justification of the private power in the society
3. Political (poShareholder Primacy (Friedman)
Shareholder Primacy (Friedman)sitive) = no boundaries between politics and economics; if firms want the power, they have to take on the political responsibilities
Is there an integrative version of three?
580
Shareholder Primacy (Friedman)
Shareholder Primacy (Friedman)
the underlying concept of Classical Liberal Democracy, i.e. the firms should be economically oriented, to maximize shareholders' wealth.
581
Total Economic Value of Firm (Jensen)
Total Economic Value of Firm (Jensen):
Limited government. The strict separation between economy and politics. The strict separation is too narrow, the firms should also focus on the long-run total value of firms.
582
Mainstream CSR
Mainstream CSR
The division of responsibility and power is good. There is a business case for CSR.
583
Market Failures Approach (Health)
Market Failures Approach (Health)
Government and market failures should NOT be used in firms' advantage.
584
What is the reason for the shift from Classical Liberal Democracy to Deliberative PCSR?
What is the reason for the shift from Classical Liberal Democracy to Deliberative PCSR?
Globalization
585
Deliberative Paradigm -
Deliberative Paradigm -
- private firms take over governmental tasks of social regulation and operate as new providers of citizenship rights.
586
Rational -> Reasonable
Rational -> Reasonable
Economic rational -> Politics & Social Responsibility
587
Surveillance capitalism -
Surveillance capitalism -
- when our data is being used in various capital areas, ex. marketing
588
Forms of private power:
Forms of private power:
There is no longer federal control, no tenders.
- money over the pure competition
- filling in the gaps that the government is unable to
- using the lack of understanding about technical possibilities in the government to firms' advantage
- being the first in something
589
Traditional vs Novel Relationship between Politics and Business
Traditional vs Novel Relationship between Politics and Business
Novel:
- huge information asymmetries
- lack of expertise by the regulator
- global reach and consumer base
- control over media distribution
- surveillance, lack of privacy, limited freedom of speech
- monopolistic power in some areas (ex over information, personal data)
- self-regulation
- knowledge production that even governments become dependable on
- business models based on personal data usage
590
Ways and means of Classical Liberalism:
Ways and means of Classical Liberalism:
- pro-competition regulation
- merger and antitrust enforcement
- public utility regulation
- other antitrust measures
- defining data ownership
- surveillance as a negative externality
591
Institutional mechanisms to control democracy:
Institutional mechanisms to control democracy:
- addressing market failures
- creating competition in the market
592
Classical Liberalism is not enough because
Classical Liberalism is not enough because
The price of the share is not a good indicator of the efficiency of the firm.
593
Externality Tax on Surveillance
Externality Tax on Surveillance
One way of controlling the firms is through the tax on data that is free today. The firms create enormous firm values out of the free data.
594
Defining Property Rights on Personal Data
Defining Property Rights on Personal Data
Another tool of controlling the firms. Ex: GDPR.
595
Limits of Classical Liberalism:
Limits of Classical Liberalism:
- does not focus to neutralize the economic inequality
- this creates a free space for Big Tech to expand
- economic power is easily transformed via (resources, knowledge, high image) tech lobby into the political power
- the use of money in politics is against the Classical Liberalism
596
Ways and means of Deliberative PCSR:
Ways and means of Deliberative PCSR:
- voluntary self-regulation based on their deliberations with their stakeholders
- industry-level multi-stakeholder initiatives and forums
- internal democratization of firms
597
Flip Side in the US -
Flip Side in the US -
US is no longer the home of free markets due to the political activities of major corporations
598
Integration between Classical Liberal Democracy and Deliberative PCSR possible if:
Integration possible if:
- there is a solution/standard for privacy
- some of the power is given away to private power
599
High Liberalism:
High Liberalism:
The whole idea of Liberalism that there must be a border between private and public sectors.
- concerned with individual liberty, social justice, equality, poverty as well as economic efficiency
- economic contracts need to be regulated more than they are right now
- markets need to have a less extensive role
- the need for the political role of companies is diminished
- public sector should not only be interested in economic value, but also justice
600
High Liberal Integration -
High Liberal Integration -
the solution proposed by politicians to limit power of private firms
601
Democratic Deficit in Political CSR
Democratic Deficit in Political CSR
Democratic Deficit - refers to a perceived lack of accessibility to the ordinary citizen, or lack of representation of the ordinary citizen, and lack of accountability
To give private firms more power, we need to have:
- democratic corporate governance
- stronger separation between private and public
- deliberative forums between firms, NGOs, etc, aka business leads democratization processes on macro and meso levels
602
Deliberative Democracy (Habermann) -
Deliberative Democracy (Habermann) -
- something that goes beyond economic rationality; best ideas count, does not matter who they are coming from
Background justice that is needed for this ideas:
- equal political freedoms
- equality before the law
- economic justice
- procedural fairness
603
Deliberative PCSR
| aka Deliberative Perceived Corporate Social Responsibility
Deliberative PCSR
seeks to address governance gaps where governmental institutions are unwilling or unable to provide a particular public good
604
Democratic Deficit -
Democratic Deficit -
- loss of social acceptance stemming from the firm's ability to allocated or withdraw their resources to public issues at will
Some deliberative processes and structures initiated by the firms can have the opposite effect and nay erode macro-level democracy
605
4 ideal CSR solutions:
1!. democratic market economy: economy and politics are strictly divided
2. fully privatized society: the society can function without a government (except army and police)
3!. fully democratized society (aka democratic socialism) - democratic sector of society is extended, both firms and governments act in the interests of the society; utopia?
4. privatized democracy (a perfect mix): public sector functions in the economic interests, and there are more expectations from the firms for the society
606
Privatization of cities -
Privatization of cities -
when public space is being bought by the firms, ex billboards, advertisements, Velib in Paris, cheating regulators by Volkswagen
Democracy becomes elite.
607
Dynamic Challenges of Deliberative PCSR:
Dynamic Challenges of Deliberative PCSR:
- increasingly privatized liberal democracy (ex. Australian mines)
- democracy only for the stakeholders of the business (ex. Lafarge)
- internal democratization in the privatized welfare states (ex. Velib)
- democratic corporate governance undermining the public good (ex. Volkswagen)
608
Why it is necessary to let the Classic Liberal Democracy go?
Why it is necessary to let the Classic Liberal Democracy go?
Some firms may be interested in focusing purely on economics.
Privatized Democracy (a mix) may be the best solution here.
Everything in society is based on who has the economic power.
609
Ops Management -
Ops Management -
- management of resources that are crucial to deliver a product or a service
Ops Management uses... RESOURCES to APPROPRIATELY CREATE OUTPUTS that FULFIL DEFINED MARKET REQUIREMENTS
610
Ops Function -
| 3 core ops functions:
Ops Function -
the part of org which creates and delivers services and products for the org's external customers
3 core operation functions / operations functions:
1. Marketing (promotes products, creates demand)
2. Product/Service Dev (modifies products)
3. Operations (produces products)
611
Ops Manager -
Ops Manager -
people who have particular responsibility for managing some, or all, of the resources that comprise the ops function
Uses resources to appropriately create outputs
612
Ops Management consists of:
Operation Management / Operations Management consists of:
- Directing
- Developing
- Delivering
- Designing processes
613
Org responses to changes through:
Org responses to changes through:
- adaptation of technology
- adaptation of supply chain
- implementation of societal and environmental policies
614
Operation consists of:
Operation consists of:
Input resources -> Transformation process -> output products and services -> value-added for customer
Types of outputs:
- pure products
- ...
- pure services
Transforming resources:
- facilities
- staff
Transformed resources:
- materials
- information
- customers
615
Process hierarchy -
Process hierarchy -
is a cascade of operations or processes.
Analyzed on these levels:
- supply network
- operation
- process level
616
Who manages operations?
Who manages operations?
All and every department of the business/company
617
Operation and non-operation functions
Operation and non-operation functions
Operations delivers and creates.
Non-operations do not create or deliver external services, BUT deliver internal services (supportive services).
618
4V's
4V's:
1. Volume dimension of the output (Low vs High) - ability to handle a certain volume
2. Variety (Low vs High) = different kinds
3. Variation in demand (Low vs High) = changing demand
4. Visibility (Low vs High) = how the customer perceives
4V's examples:
Low Variety, High Volume: Mass-market
High Variety, Low Volume: Constructions, individual orders
619
Why does operations matter?
Why does ops matter?
- can make or break
- makes business
- helps to create sustainable advantage
- costs reputation
620
How is operation performance measured?
How is ops performance measured?
There are ALWAYS 3 lvls:
1. Societal lvl (CSR): triangle = planet, people, profit
2. Strategic level: risks, learnings, capital, cost, revenue
3. Operational level: quality, speed, cost, flexibility, dependability
```
Societal level:
- all stakeholders are taken into account
- SCR
- impact on social, environmental, economic levels (profitability, return on assets, return on investments)
- etc
KPIs ex.:
- safety (tesla)
- pollution
- economic
```
```
Strategic level:
- utilization of ops capacity
- less waste
- less failure, reduced errors
- process for learning and improvement
- etc
KPIs ex:
- service interruptions
- return on assets
- capacity
- profitability
- revenue from new offerings
-etc
```
Operational level:
- conforms customer needs
- faster delivery
- doing things in time
- deliver what is promised
- every EUR moved from ops costs is an EUR earned
KPIs ex:
- defects
- scrap lvl
- lead time
- throughoutput time
- complaints
- product range
- machine efficiency
- etc
621
Balanced Score Card (BSC) -
Balanced Score Card (BSC) -
- combination of measures for operations, strategy and social
- multi-dimensional performance measurement approach; combines main aspects of business: Financial. Customer. Learning and Growth, Internal process
622
Strategy vs Ops Strategy
Strategy vs Operational Strategy
Strategy - high-level, where we want to be; long-term; detached from day-to-day activities
Ops Strategy - deals with strategic options for the resources that create products and services and how they are best employed in order to contribute to the overall strategy
623
Perspectives on Ops Management:
Perspectives on Ops Management:
- Top-down (boss -> employees)
- Outside-in (dictated by the demand)
- Bottom-up (learn from employees)
- Inside-out (resources dictate)
ex Six-Sigma & TQM
Top-down ops strategy
- corporate (overall company's direction)
- business (business units)
- functional (functions in the business units)
Bottom-up ops strategy:
- mutually reinforcing with top-down approach.
= knowledge-based view of the firm - tacit knowledge needs to be shared inside the company, and made explicit
ex BPM, Lean
Inside-out ops strategy:
- producing products based on key resources that create a competitive advantage.
Rare, valuable, non-imitable, non-substitutable.
624
Business model vs Operating model
Business model vs Operating model
Business model (WHAT):
- value proposition
- target customers
- core capabilities
- revenue streams
Operating model (HOW):
- how the critical work is carried out
- relationships
- processes
- structures
625
Competitive factors
Competitive factors:
- order winners - factors that directly contribute to success
- order qualifiers - factors that need to meet a certain criteria, the level of quality above which won't help to get more customers
- less important factors - do not influence customer decisions in a significant way
626
The impact of Innovation in Operational Management
- strenghtens brand
- reduces cost
- reduces failure rate
- differentiation
627
Innovation structures:
Innovation structures:
1. functional org
2. lightweight project management
3. balanced matrix org
4. heavyweight project management
5. pure project org
628
Innovation structures:
Innovation structures:
Through increasing project orientation.
Kinds:
1. functional org
2. lightweight project management
3. balanced matrix org
4. heavyweight project management
5. pure project org
Innovation approaches: Business Design approach = Agile
Classic approach = Waterfall.
629
Process mapping
Process mapping -
- identifying the types of activities that take place during the process, that shows materials, people, information through the process, in order to identify what could be optimizied
Ex:
- process blueprinting
- process analysis
630
Little's Law:
Little's Law:
Little's Law - is a theorem that determines the average number of items in a stationary queuing system, based on the average waiting time of an item within a system and the average number of items arriving at the system per unit of time.
Throughput-time = WIP (queue) * Cycle Type
shows:
- the avg time that the product spends in the whole system (throughput)
- avg number of things in the system (WIP)
- avg rate at which one product leaves the system (cycle time)
631
Work load -
Workload -
- activities that do not add directly to the end product/service, but are necessary in the process (ex. swicthing machine)
632
Work content -
Work content -
- directly related to the end product or service (ex scanning products in the grocery store)
633
Process Arrangements, kinds:
Process Arrangements, kinds:
- Long-thin (sequential, step-by-step), ex Waterfall
- Short-fat (parallel),ex Agile
Long-thin benefits:
- controlled flow of items
- lower capital reqs (specialists, simple machinery)
- simple handling
- more efficient operation (can predict the entire process)
- if breaks down - out of work
ex. watch
Short-fat benefits:
- higher mix flexibility
- higher robustness
- higher volume flexibility
- less monotonous work
- can move employees around, more interchangeable
- production doesn't stop if one employee is unavailable
ex. sorting trash/packages, packaging
634
Factory/Office Layouts
Factory/Office Layouts:
- fixed-position layout (high-class restaurant, "you" orientation; short-fat)
- functional layout (every function has a dedicated space)
- cell layout (self-service with dedicated areas for different food)
- line (product) layout (one line, self-service, low-cost, long-thin)
635
Process Arrangement and Layout typically come together
Long-thin + Line layout
Short-fat + functional layout
But there could be combinations of different arrangements and layouts
636
Business Process Re-engineering (BPR) -
Business Process Re-engineering (BPR)-
- puts into question the fundamental assumptions of the as-is process; takes the entire line(!) of the process
It is an outcome-driven process. End-to-end process.
Ex. Ford Case:
- do it CHEAPER
- do it FASTER
- do it BETTER
Principles of BPR:
- capture info once and at the source (shared data-store: X-road)
- who uses the process drive the process (record transaction at the moment when it takes place)
- treat resources as centralized even if spread
- put the decision point where the work in performed (vendor-managed inventory)
637
Business Process Management (BPM) -
Business Process Management (BPM) -
- involves combination of modeling, automation, execution, control, measurement and optimization of business activity flows.
ex:
- ISO
- Six Sigma
Key features of BPM:
- about improving (not automation)
- can be supported by software
- can optimize personnel
- repetitive (ongoing improvement)
- ISO 9001 is an example of quality standard that promotes process-oriented approach to managing ops
BPM lifecycle:
- identify the process (prioritize based on strategic importance and feasibility)
- analyse as-is model
- redesign the process
- model the new process
- execute the new process
- monitor and control
- re-iterate
638
Which processes to re-engineer?
Which processes to re-engineer?
- are they standard or ad-hoc
- are they used for training
- are they strategically important and feasible
- do they require a certification
- would it reduce waste
- etc
639
Ways to QUALITATIVELY analyse a process:
Ways to QUALITATIVELY analyse a process:
1. Value-added analysis (Seven Wastes)
2. Root Cause Analysis (RCA): 5 Whys, Affinity Diagram, Fishbone Diagram
3. Pareto Chart
640
Seven Wastes (7 Wastes) Analysis
TIMWOOD (7 topics looked at):
- Transport
- Inventory
- Motion
- Waiting
- OverProcessing
- Over Production
- Defects
* Extra: Unsafe Workplace, Lack of Information, Equiptment Breakdown, Unused Talent, etc
= Lean Manufacturing, Just-in-Time production
641
Value-added analysis methodology
Value-added analysis methodology
1. break down processes into steps
2. classify each step:
2. 1 value adding (VA) = is the customer ready to pay for this step?
2. 2 business value-adding (BVA) = would the business have problems long-term if this step is removed>
2. 3 non-value-adding (NVA) = to be eliminated
642
Root-cause Analysis (RCA)
Root-cause Analysis (RCA)
- issues that:
1) limits efficiency
2) occurs repeatedly
3) problem, not a symptom of the problem
Tools:
- 5 whys: one major cause
- fishbone diagram: numerous major causes
- affinity diagram: several inter-related and detailed causes
643
QUANTITATIVE process analyses:
QUANTITATIVE process analyses:
- flow analysis (what we did in the paper)
- queuing theory
- process simulation models
644
Queuing theory
Queuing theory
Queueing theory - is the mathematical study of waiting lines, or queues. A queueing model is constructed so that queue lengths and waiting time can be predicted.
helps to calculate:
- avg nr of jobs in the queue (queue length)
- avg time one job is in the queue
- avg time one job is in the system (avg cycle time)
- avg nr of jobs in the system (WIP)
645
Process simulation
based on parameters that allows to see the effect immediately (Bizagi)
646
Business Process Modeling Notation (BPMN)
a graphical notation that depicts the steps in a business process
ex. Bizagi
647
Key concepts that Ops aims to improve
Cost, Dependability, Flexibility, Speed, Human Capital, Resources
648
Radical vs Incremental improvements
Radical (ex startups, Uber)
Incremental (corporations)
649
Key elements of improvement
Key elements of improvement:
1. improvement cycles (Plan-Do-Check-Act Model), ex Six-Sigma, Lean
2. end-to-end processes (more radical approaches), ex Business Process Re-engineering (BPR)
3. evidence-based problem-solving, ex. Six-Sigma, Total Quality Management (TQM)
4. Customer centricity (iterative, customer involvement approach), ex Business Design Thinking
650
Total Quality Management (TQM)
Total Quality Management (TQM)
Total quality management - consists of organization-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on demand products and services that customers will find of particular value."
Very spread certification proving that the company is efficient in its ops optimization
651
PDCA and DMAIC approaches
Plan-Do-Check-Act - the original idea of quality management
Newer version Define-Measure-Analyse-Improve-Control - an improved version (used by Six Sigma)
652
Scatter Diagrams -
- quick and simple method of identifying whether there is evidence of a connection between two sets of data
May show a correlation (relationship between things, but not necessarily a cause
653
Cause-effect Diagrams (Cause-and-Effect, Cause and Effect)
aka Fishbone Diagram
654
ISO 9001
- standard signaling the readiness of the company to contimnuously improve its ops, shows quality of the product
- sets out criteria for a quality system; based on 7 quality management principles:
1) strong customer focus
2) motivation and implication of top management (aka leadership)
3) process approach
4) continuous improvement
5) evidence-based decision making
6) & 7) etc
655
Quality -
- consistent conformance to customers' expectations
Quality vs Quality of Service vs Quality of Experience:
- Quality is offering-focused
- Quality of Service is provider-centric
- Quality of Experience is user-centric
656
How views on quality have changed
Inspection first, then Quality Control (quality standards), then Quality Assurance (how much everything costs, quality planning), finally Total Quality Management (TQM; by involving customer supplier, see quality as a strategic asset).
657
Ops Risk Management
- reducing consequences
- recovering afterwards
- predicting
- stopping and preventing
Kinds of risks:
- strategic (someone at the top made a wrong call)
- Financial
- Operational
658
Root causes of failures
- human failure
- supply
- organisational
- technology / equipment
- product or service desing
- customer failure
659
Mitigation and prevention can be done through:
- establishing redundancies (having fall-back options)
- fail-safering (mainly in constructions)
- higher emphasis on maintenance
660
Types of redundancies
- hot standby (all backup systems run at the same time as the main system; used in air traffic, hospitals)
- warm standby (secondary systems run in the background and data exchange happens on regular basis; ex. tech)
- cold standby (secondary system is only used when the main system fails; power generators for non-crucial support systems)
661
Fail-safeing
= inadvertent error prevention
examples of fail-safeing:
- checklists
- paper strips places around clean towels in hotels
- height bars on amusement rides to ensure that customers do not exceed size limitations
662
Improvement needs:
- context
- input
- effort
663
Rollout of a new process requires:
- strategy
- infrastructure
- communication
664
Tracking performance change through:
- measurements (on quality, speed, dependability, flexibility and cost levels)
- target
- benchmarking
665
Planning vs Control -
What are Planning and Control activities?
Planning - formalization of what is intended to happen at some point in the future; long-term
Control - the process of coping with the changes; short-term
What are Planning and Control activities?
- Loading - How much to do?
- Monitoring & Contol - Are activities going to plan?
- Sequencing - In what order to do things?
- Scheduling - When to do things?
666
Long-term planning vs medium-term and short-term
Long:
- aggregated demand forecast
Medium:
- partially disaggregated demand forecast
Short (1y):
- uses totally disaggregated (detailed) demand forecast or actual demand
667
Volume & Variety have a large impact on planning & control
Planning is decided based on Volume and Variety criterias
- Operations which produce a high variety of services or products in relatively low volume will have customers with different requirements
- They use different processes from operations which create standardized services or products in high volume
668
Effects of supply and demand on Planning & Control
Uncertainty in supply and demand OR dependent and independent demand have a direct impact on Planning
Planning & Control systems should be able to cope with uncertainty and dependability of demand.
669
How to respond to uncertainty and dependability?
1. P:D ratios - ratio of “demand”, aka D, time (i.e., the time a customer must wait between asking for a product and receiving it) to the whole operation production cycle, P
2. Sales and Operations Planning (S&OP) - a planning process that attempts to ensure that all tactical plans are aligned across the business's various functions and with the company's longer-term strategic plans.
670
Loading
How much to do?
Loading is the amount of work that is allocated to a work center.
Can be:
- finite only allocates work to a work center up to a set limit; This limit is the estimate of capacity for the work center. Work over and above this capacity is not accepted.
- infinite (ex. consultancy) - approach to loading work which does not limit accepting work, but instead tries to cope with it
```
Takes into account:
• Breakdowns
• Idle or waiting time
• Set-up changes
• Maintenance
• Weekends and statutory holidays
```
671
Sequencing
In what order to do things?
When work arrives, decisions must be taken on the order in which the work will be tackled.
Often a predefined set of rules, ex:
- physical constraints
- customer priority
- due date
- etc
Well-known sequencing techniques:
- Last In, First Out (LIFO)
- First In, First Out (FIFO)
- Longest operation time (LOT)
- Shortest operation time (SOT)
Objectives, ex:
- dependability
- speed
- costs
672
Scheduling
When to start with the whole thing?
- some operations require a detailed timetable showing at what time or date jobs should start and when they should end
Approaches to scheduling:
• Forward scheduling: starting work as soon as it arrives.
• Backward scheduling: starting jobs at the last possible moment to prevent them from being late.
The question is where do you want to have a pileup of work. Where it is cheapest.
Adv of Forward-Scheduling:
- high labor utilization
- flexible
Adv of Backward-Scheduling:
- lower material costs
- less exposed of risk of schedule changing
- focuses on due dates
673
Push vs Pull
Push system of control is where items are moved onto the next stage as soon as they have been processed (conveier)
Pull system - when items are moved only when the next stage wants them
674
Expert Control
when the activity is not repetitive control can be delegated to an expert
675
Tier and Error Control -
when intervention effects are unknown, repetitive activity
often used in startups
- knowledge gain for control through failures
676
Intuitive Control -
when intervention effects are unknown, activities are not repetitive
- control must be based on the management team using its intuition to make control decisions
677
Negotiated Control -
when strategic objectives are ambiguous (= having a double meaning)
- when external consultants or/and experts are brought up
678
Framework for Capacity Management
consists of Supply Side and Demand Side
The aim is to understand the consequences of different capacity management decisions; i.e. supply vs demand
679
How to measure demand? Approaches.
Qualitative Approaches
| Quantitative Approaches
680
Qualitative Approaches:
- Panel Approach - panel focus group comes up with the solution
- Delphi Method - survey of experts where replies are analyzed
- Scenario Planning - avoid scenarios that are least desired
681
Quantitative Approaches:
- Time series analysis
- Moving average forecast
- Exponential smoothing
682
Designed Capacity, Effective Capacity, Actual Output
Designed Capacity - system design
Effective Capacity = Designed Capacity - Planned Loss
Actual Output = Effective Capacity - Unplanned Loss
683
Overall Equipment Effectiveness (OEE) =
OEE = A*P*Q
aka Overall Equipment Effectiveness (OEE) = Availability x Performance x Quality
(Availability of Process)* (Performance/Speed of Process)* (Quality of Products/Services of the Process)
684
Longitudinal capacity management strategies
The learning from managing capacity should be captured and used to refine both demand forecasting and capacity planning.
The balance between short-term outlook for volume and long-term.
685
Planning and Control Systems -
- the information processing, decision support and execution mechanisms that support the operations planning and control activity; the public face of the operation (visibility).
System consists of:
1. customer facing
input: planning and control decisions
transformation: managing customer expectations (ex delivery, feedback, etc)
output: customers' satisfaction
2. supplier facing
input: suppliers
transformation: managing suppliers expectations
output: planning and control decisions
has supply interface (suppliers planning and control) and demand interface (customers)
ex. ASP
The customer interface defines customer experience
686
Hierarchical planning and control -
- different kinds of decisions at different levels in the organization and over different time periods
Strategic objective (business) all the way through Tactical and Operational to Execution plans.
687
Enterprise Resource Planning (ERP) -
- these systems automate and integrate core business processes such as customer demand, scheduling operations, ordering items, keeping inventory records and updating financial data
They help companies ‘forward plan’ these types of decisions and understand all the implications of any changes to the plan.
ERP typically contained of:
Supply side: ops applications, purchasing and supply apps
Customer side: marketing apps, delivery & logistics, service
Internal side: HR, strategic reporting, finance
688
Benefits & problems of ERP:
speaks for hierarchies
Benefits:
- communicates across all functions
- process-based changes
- better sense of control
- sophisticated comms with customer
Problems:
The costs of implementing are ridiculous. Also requires expertise, may need changes to the current ops, complicated systems.
689
Sales -
Sales -
Getting people to exchange their cash for your offering
690
Marketing
Satisfying the needs of customers, by a means of a product or service
691
Market segmentation -
Approaches to segmentation:
Market segment -
Why is market segmentation so important?
Market Segment -
a group of present or potential customers with some common characteristic which is relevant in explaining (and predicting) their response to supplier’s marketing stimuli
Segmentations: one-to-one marketing vs mass-market
Aggregating prospective buyers into groups, or segments, that
(1) have common needs and (2)will respond similarly to a marketing action.
Approaches to segmentation:
1. Start with customer group identifiers. Characteristics of organizations or people
2. Start with customer response profile
• Use situation
• Buyers’ needs and preferences
• Purchase behavior and loyalty
Why is market segmentation so important?
- Segmentation helps marketers to be more efficient in terms of time, money and other resources.
- Market segmentation allows companies to learn about their customers.
- They gain a better understanding of customer’s needs and wants and therefore can tailor campaigns to customer segments most likely to purchase products.
692
Mass customization
is the ability of a company to meet each customer’s requirements – to prepare on a mass basis individually designed products, services, programs and communications
693
One-to-One
* Individual customer
* Customer profile
* Customized market offering
* Customized production
* Economies of scope
* Share of customer
694
Mass-market
* Average customer
* Customer anonymity
* Standard product
* Mass production, distribution, advertising
* One-way message
* Economies of scale
695
Economies of scale
Economies of scale are cost advantages reaped by companies when production becomes efficient
696
Economies of scope
means that the production of one good reduces the cost of producing another related good.
697
Market targeting
- Evaluate attractiveness of each segment
| - Select the target segments
698
Market positioning
- Identify possible positioning concepts for each target segment
- Select, develop, and communicate the chosen positioning concept
699
Bases for Segmenting Consumer Markets
Geographic
• Region, City or Metro Size, Density, Climate, Demographic
• Age, Gender, Family Size and Life Cycle, Race, Occupation,Income, Psychographic
• Lifestyle or Personality, Behavioral
• Benefits, Usage Situations
700
Market developments
1. MARKETS SETTLING DOWN
2. STABLE SITUATION
3. MARKET SOPHISTICATION
701
Macro-segmentation
characteristics of the buying organization and the buying situation (size, geographic location, category, organizational structure).
702
Micro-segmentation
– characteristics of the decision- making units within each macro segment (decision criteria, perceived importance of the purchased, attitudes towards vendors).
703
Needs based segmentation: 4segments
1. Innovative solutions
2. Proven solutions
3. Cost-effective solutions
4. Price seeker
704
Identifying segments: Clustering
Groups or “clusters” respondents together based on how similar their responses were.
• It considers similiarities in response profiles across all questions (not focusing merely on individual questions)
• Does not presume any particular number of clusters.Data guides # of clusters.
• Does not consider any information beyond data provided by questions (for example demographics is not considered)
705
Desirability of potential market segments
1. Measurability – can we measure the buyer characteristics
2. Accessibility – can we reach those buyers
3. Substantiality – is this segment large or profitable enough
4. Compatibility – are our business strengths useful in this market
5. Responsiveness – to which degree this is this segment respond differently to marketing mix
706
Types of marketing
- Undifferentiated (mass) marketing
- Differentiated (segmented) marketing
- Concentrated (niche) marketing
- Micromarketings (local or individual marketing)
707
Niche Marketing
- Targets one or a couple small segments
| - Niches have very specialized interests
708
Micromarketing
Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations.
709
Patterns of Target Market Selection: Product x Market Matrixes
- Single-segment Concentration
- Selective Specialization
- Product Specialization
- Market Specialization
- Full Market Coverage
710
Positioning (in Marketing) -
Positioning Strategy
The place a product occupies in consumers’ minds relative to competing products.
Positioning Strategy:
- Advantages
- Points of Parity
- Points of Difference => Differentiation
Positioning results from differentiation and competitive advantages.
Positioning may change over time.
711
Sources of Differentiation (in Marketing)
- Product Design
- Quality
- Additional Services
- Image
- People (Staff)
- Price
- Other
712
The best advantages are...
- Important
- Distinctive
- Superior
- Communicable
- Pre-emptive (= proactive)
- Affordable (to company and consumer)
- Profitable
713
Prototypical Brands
Brands view prototypical brands as the best examples of a product category
ex. Duracell for batteries
714
Individualism vs. Collectivism
Value themselves as individuals than as a part of a group (Western Cultures) vs emphasize connections to others rather than their own individuality (Eastern Cultures).
715
Horizontal Orientation vs. Vertical Orientation
Value equality vs more emphasis on hierarchy.
| • Important to marketeers of status-symbol products that will appeal to consumers influence by vertical orientation
716
Acculturation
Learning how to adapt to a new culture
717
Multicultural Marketing
Strategies used to appeal to a variety of cultures at the same time.
718
Ethnic Subcultures in Nations
How strongly people identify with their ethnic group.
719
The primary goal of branding
To build memory structures that enable purchasing with low levels of conscious processing
720
To achieve a goal (marketing) the company must:
To achieve a goal (marketing) the company must:
- choose which activities to perform differently than competitors
- choose which activities not to perform
- integrate activities, so they support each other
721
Strategy -
is a guiding theme that provides coherence and focus to the actions and decisions of an individual or an org
722
!!!Competitive advantage
- how a strategic business unit creates value for its users which is both greater than the costs of supplying them and superior to that of rivals
723
Cost leadership strategy (Cost-leadership Strategy)
requires becoming the lowest-cost org in a domain of activity
- production costs must be the lowest
- quality must be acceptable
724
Net export (NX)
(NX) is the difference between the monetary value of a nation's exports and imports over a certain time
725
Winterhalter Gastronom Logic
includes depth (dishwashing capsules, service, etc) and breadth (dishwashers for restaurants, hotels, schools, etc)
726
Logic of niche players
High market risk (focused strategy of the hidden champions) and high competitive risk (typical for large companies)
727
Bowman's strategy clock
shows the relationship of percieved price and percieved benefits of product of service
728
No frills strategy (no-frills strategy)
No frills strategy or no frills service or product is one for which the non-essential features have been removed to keep the price low.
ex. LIDL, Maxima
729
Hybrid direction strategy
The Hybrid position sits between low price and differentiation. It’s around ensuring the price is competitive, ideally with a low perceived price from buyers, while promoting the added value aspects of the product
ex. IKEA
730
Directions of value creation:
Directions of value creation:
- Operational excellence: to be a leader in price or convenience
- Product leadership: offers most advanced products or services
- Customer intimacy: deep understanding of individual customer needs and ability to customize for them
731
How do companies compete?
A. real value innovations
| B. tranditional ways
732
Real value innovations
- seeking to make comeptition irrelevant
- finding fundamentally new market space
- creating new products or servides for which there are no direct competition
Value innovations bring higher profits and revenues
733
Tranditional competition
- head - to head competition to beat rivals
| - largerly based on incremental improvements in cost, quality or both
734
ERRC grid
tells what to Eliminate, Raise, Reduce, and Create
735
!!!Business model
is a process that converts innovation into value; flows of information and resources; a summation of core business decisions and trade-offs employed by a company to earn a profit
736
Essence of business model = value proposition
- WHO is you customer (markets, segments, individuals)
- WHAT do you offer to your customers (products, services, solutions, experiences)
- HOW do you do this (create value, deliver value, capture value)
737
Business model canvas:
Operational effectiveness:
- infrastructure (key partners, key activities, key resources)
- offers (value proposition)
- clients (customer relationships, segments, chains)
- finances (cost structure, revenue streams)
738
multi-sided platforms
such platforms are of value to one group of customers only if the other groups of customer are also present
739
Stages of organisation development (organizational development)
1. Red (Impulsive) - based on fear
2. Amber (Conformist) - based on formal roles & complex processes (bear, army)
3. Orange (Achiever) - most popular, people are pieces of machinery; profit is the most important factor for decisions; all good as long as it is legal
4. Green (pluralistic) - based on empowering people, values - driven culture.
5. Teal (evolutionary) - based on trust to make decisions & self-manage.
Majority of org's move between Orange and Green.
740
Managerial accounting
Managerial accounting:
provides economic and financial information (internal reports) for managers and other internal users; reports are provided in any format at any time when a decision needs to be made; and not audited externally
741
Financial Accounts
for external users, quarterly or annually; general-purpose; audited
742
Management functions
1. Planning - maximizing short-term market share
2. Directing - coordinate diverse activities and human resources, implement objectives
3. Controlling - keeping activities on track, determine whenter goals are met
743
T or F?
| Managerial accountants have a single role within an organization, collecting and reporting costs to management.
False.
Managerial accountants determine product costs. In addition, managerial accountants are now held responsible for evaluating how well the company is employ- ing its resources. As a result, when the company makes critical strategic decisions, managerial accountants serve as team members alongside personnel from production, marketing, and engineering.
744
T or F?
| Financial accounting reports are general-purpose and intended for external users.
T
745
T or F?
| Managerial accounting reports are special-purpose and issued as frequently as needed.
T
746
T or F?
Managers’ activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control.
F, this if financial manager
747
T or F?
| Managerial accounting reports must now comply with generally accepted accounting principles (GAAP).
F, not audited
748
```
Manufacturing Costs -
Product costs (aka manufacturing costs) -
```
Manufacturing Costs -
- costs that are an integral part of producing the product
Manufacturing consists of activities and processes that convert raw materials into finished goods.
Consists of:
- Direct materials
- Direct labor
- Manufacturing overhead
Recorded in “inventory” account.
Not an expense (COGS) until the goods are sold.
749
Direct materials (manufacturing cost)
- Raw materials - arts used in manufacturing
- Direct materials - raw materials that can be physically and directly associated with the finished product during the manufacturing process
750
Indirect materials (considered part of manufacturing overhead)
Not physically part of the finished product or they are an impractival to trace to the finished product because their physical association with the finished product is too small in terms of cost.
751
Direct labor
Work of factory employees that can be physically and directly associated with converting raw materials into finished goods.
752
Indirect Labor
Work of factory employees that has no physical association with the finished product or for which it is impractical to trace costs to the goods produced.
753
Manufacturing Overhead
Costs that are indirectly associated with manufacturing the finished product.
Includes all manufacturing costs except direct materials and direct labor.
Also called factory overhead, indirect manufacturing costs, or burden.
754
Period Costs (aka non-manufacturing costs)
- Charged to expense as incurred.
- Non-manufacturing costs.
- Includes all selling and administrative expenses.
755
Formula for COGS (Cost of Goods Sold)
COGS = Beginning Inventory + Cost of Goods (Purchased/Manufactured) - Ending Inventory
756
Formula for Closing Balance
Closing Balance = Opening Balance + Additions - Used
757
Total Manufacturing Costs
sum of direct material costs, direct labor costs, and manufacturing overhead in the current year.
758
Total Cost of Work in Process (WIP)
Formula for Total Cost of WIP
(1) cost of beginning work in process and
(2) total manufacturing costs for the current period.
Total Cost of WIP = Beginning WIP Inventory + Total Manufacturing Costs
759
Formula for Cost of Goods Manufactured
Cost of Goods Manufactured = Total Cost of WIP - Ending WIP Inventory
760
Balance Sheet for a maniufacturer
Inventory accounts for a manufacturer:
- raw materials
- WIP inventory
- finished Goods inventory
761
Just-In-Time (JIT) Inventory Methods
Inventory system in which goods are manufactured or purchased just in time for sale.
762
Total Quality Management (TQM)
Reduce defects in finished products, with the goal of zero defects.
763
Theory of Constraints
Constraints (“bottlenecks” ) limit the company’s potential profitability.
A specific approach to identify and manage these constraints in order to achieve company goals.
764
Activity-Based Costing (ABC, Activity Based Costing)
Allocates overhead based on use of activities.
| Results in more accurate product costing and scrutiny of all activities in the value chain.
765
Liquidity
What cash i have available when my obligations are due; measures short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
766
Can knowledge be put in a Balance Sheet?
No, Only assets that you can control are shown in Balance Sheet. Today knowledge is employed at your company, tomrorow- at your competitors'.
767
Analyzing financial statements involves:
- Ratios (characteristics): liquidity, profitability, solvency
- Comparison Bases: industry avg
- Tools of analysis: horizontal & vertical
768
Horizontal analysis (trend analysis)
technique for evaluating a series of financial statement data over a period of time; purpose: to determine the increase/decrease
Commonly applied to: balance sheet, income statement, statement of retained earnings
769
Vertical Analysis (common-size analysis)
technique that expresses each financial statement item as a percent of a base amount.
Commonly applied to: balance sheet, income statement
770
Solvency
Measures the ability of the company to survive over a long period of time.
771
Profitability ratios
Measures the income or operating success of a company for a given period of time.
772
Sustainable income
is the most likely level of income to be obtained by a company in the future. It differs from actual net income by the amount of unusual revenues, expenses, gains, and losses included in the current year’s income.
773
Allocated Cost
Overhead, management pay, etc
774
Contribution Margin
"Contribution" represents the portion of sales revenue that is not consumed by variable costs and so contributes to the coverage of fixed costs.
Contribution Margin = Sales - Fixed Costs
775
Which of the following costs would be a fixed cost for Shaun, a knitwear manufacturer?
A. Labour cost: knitting machine operators
D. Purchasing wool
C. Labels and packaging
D. Factory rent
Which of the following costs would be a fixed cost for Shaun, a knitwear manufacturer?
D. Factory rent
776
What is The break-even point?
The break-even point is where total revenue equals total fixed costs plus variable costs.
777
Which of the following definitions of break-even point is correct?
A. The break-even point is where total revenue equals total fixed costs plus variable costs.
B. The break-even point is where total revenue equals total fixed costs less variable costs.
C. The break-even point is where total fixed costs equals total variable costs.
D. The break-even point is where total sales revenue equals total contribution.
Which of the following definitions of break-even point is correct?
A. The break-even point is where total revenue equals total fixed costs plus variable costs.
778
Which of the following most accurately describes a fixed cost?
A. A fixed cost remains the same, regardless of the level of output.
B. A fixed cost involves the purchase of non-current assets.
C. A fixed cost is not affected by inflation.
D. A fixed cost remains the same from year to year.
Which of the following most accurately describes a fixed cost?
A. A fixed cost remains the same, regardless of the level of output.
779
Which of the following is an advantage of using the payback period?
A. It takes no account of the time value of money.
B. It is useful measure of the speed with which a project will pay back its initial costs.
C. It ignores the actual timing of cash flows.
D. It ignores cash inflows after the payback point has been reached.
Which of the following is an advantage of using the payback period?
B. It is useful measure of the speed with which a project will pay back its initial costs.
780
Which of the following statements concerning the IRR is true?
A. The IRR does not take account of the all the project cash flows.
B. The IRR is the discount rate that, when applied to a project's cash flows, gives an NPV of zero.
C. The IRR is the sum of the discounted cash flows of a project.
D. The IRR does not take account of the time value of money.
Which of the following statements concerning the IRR is true?
B. The IRR is the discount rate that, when applied to a project's cash flows, gives an NPV of zero.
781
What does the accounting rate of return measure?
A. The average annual expected profit expressed as a percentage of the initial outlay.
B. The total profits expected from the project, expressed as a percentage of the average annual investment in the project.
C. The total profits expected from the project, expressed as a percentage of the initial outlay.
D. The average annual expected profit expressed as a percentage of the average funds invested in it.
What does the accounting rate of return measure?
D. The average annual expected profit expressed as a percentage of the average funds invested in it.
782
Which of these are all relevant costs?
A. Cash, incremental, allocated
B. Incremental, opportunity, committed
C. Cash, future, incremental
D. Sunk, cash, opportunity
Which of these are all relevant costs?
C. Cash, future, incremental
783
Opportunity cost -
An opportunity cost is the value of the benefit sacrificed in favour of an alternative course of action.
784
Which definition best describes an opportunity cost?
A. A cost that has no effect on the current decision
B. A cost relating to a particular business opportunity
C. A hypothetical cost taken into account to represent a benefit
D. The value of the benefit sacrificed in favour of an alternative course of action
Which definition best describes an opportunity cost?
D. The value of the benefit sacrificed in favour of an alternative course of action
785
Are the sunk and committed costs relevant?
No
Both the sunk and committed costs are not relevant.
786
A bus company is offering cheap fares for special excursions. It has advertised its trips in newspapers and has already paid a quarter of the advertising fee, and has agreed to pay the final installment soon. Which of the following statements is correct?
A. Quarter of the advertising cost is relevant
B. None of the advertising costs are relevant
C. All the advertising costs are relevant
D. Three-quarters of the advertising cost is relevant
A bus company is offering cheap fares for special excursions. It has advertised its trips in newspapers and has already paid a quarter of the advertising fee, and has agreed to pay the final installment soon. Which of the following statements is correct?
B. None of the advertising costs are relevant
787
Managerial accounting information is generally prepared for
A. managers
B. stockholders
C. creditors
D. regulatory agencies
Managerial accounting information is generally prepared for
A. managers
788
The major reporting standard for presenting managerial accounting information is:
A. generally accepted accounting principles
B. the current tax law
C. relevance
D. the cost principle
The major reporting standard for presenting managerial accounting information is:
C. relevance
789
Managerial accounting does not encompass
A. profit planning
B. calculating product cost
C. determining cost behavior
D. calculating earnings per share
Managerial accounting does not encompass
D. calculating earnings per share
790
Which of the following statements about internal reports is not true?
A. Internal reports may discuss prospective events
B. Most internal reports are summarized rather than detailed
C. The content of internal reports may extend beyond the double-entry accounting system
D. Internal reports may show all amounts at market values
Which of the following statements about internal reports is not true?
B. Most internal reports are summarized rather than detailed
791
Financial statements for external users can be described as
A. special-purpose
B. user-specific
C. managerial reports
D. general-purpose
Financial statements for external users can be described as
D. general-purpose
792
A function that indicates the maximum output per unit of time that a firm can produce, for every combination of inputs with a given technology, is called
A. An isoquant
B. A production function
C. A Production possibility curve
D. An isocost function
A function that indicates the maximum output per unit of time that a firm can produce, for every combination of inputs with a given technology, is called
B. A production function
793
Which of the following inputs are variable in the long run?
A. Labor
B. Plant size
C. All of these
D. Capital and equipment
Which of the following inputs are variable in the long run?
C. All of these
794
The short run is:
A. Less than a year
B. Three years
C. A time period in which at least one input is fixed
D. However long it takes to produce the planned output
The short run is:
C. A time period in which at least one input is fixed
795
Anna owns a small bakery, and her production function is q=3KL where q is the total output in cakes per hour, K is the number of ovens (capital), and L is the number of employees hired per hour (labor). If Anna's capital is currently fixed at K=3 ovens, what is her short-run production function?
A. q= 9L
B. q=6KL
C. q=3L
D. q=3K
Anna owns a small bakery, and her production function is q=3KL where q is the total output in cakes per hour, K is the number of ovens (capital), and L is the number of employees hired per hour (labor). If Anna's capital is currently fixed at K=3 ovens, what is her short-run production function?
A. q= 9L
796
According to the law of diminishing returns:
A. The marginal product of an input will eventually be negative
B. The total product of an input will eventually be negative
C. The marginal product of an input will eventually decline
D. The total product of an input will eventually decline
According to the law of diminishing returns:
C. The marginal product of an input will eventually decline
797
In order for a taxicab to be operated in New York City, it must have a medallion on its hood. Medallions are expensive, but can be resold, and are therefore an example of:
A. A fixed cost
B. An opportunity cost
C. A variable cost
D. An implicit cost
In order for a taxicab to be operated in New York City, it must have a medallion on its hood. Medallions are expensive, but can be resold, and are therefore an example of:
A. A fixed cost
798
Which of the following costs always declines as output increases?
A. Fixed cost
B. Average cost
C. Marginal cost
D. Average fixed cost
Which of the following costs always declines as output increases?
D. Average fixed cost
799
The total cost (TC) of producing computer software diskettes (Q) is given as TC= 200 + 5Q. What is the average total cost?
A. 5+(200/Q)
B. 500
C. 5
D. 5Q
The total cost (TC) of producing computer software diskettes (Q) is given as TC= 200 + 5Q. What is the average total cost?
A. 5+(200/Q)
Formulas:
TC = FC + VC
TC = 200 + 5Q
```
ATC = FC/Q + VC/Q
ATC = FC/Q = 200/Q + 5
```
800
Anna knows the average total cost and average variable cost for a given number of cakes. Which of the following costs can she not determine given this information?
A. Total cost
B. Fixed cost
C. Variable cost
D. Anna can determine all of the above costs with the information provided
Anna knows the average total cost and average variable cost for a given number of cakes. Which of the following costs can she not determine given this information?
D. Anna can determine all of the above costs with the information provided
801
We typically think of labor as a variable cost, even in the very short run. However, some labor costs may be fixed. Which of the following items represents an example of a fixed labor cost?
A. None of the above
B. An hourly employee
C. A temporary worker who is paid by the hour
D. A salaried manager who has a three-year employment contract
We typically think of labor as a variable cost, even in the very short run. However, some labor costs may be fixed. Which of the following items represents an example of a fixed labor cost?
D. A salaried manager who has a three-year employment contract
802
A price taker is:
A. A firm that accepts different prices from different customers
B. A firm that is the only producer in the market
C. A consumer who accepts different prices from different firms
D. A firm that cannot influence the market price
A price taker is:
D. A firm that cannot influence the market price
803
A firm maximizes profit by operating at the level of output where
A. Marginal revenue is higher than marginal cost
B. Total costs are minimized
C. Average revenue equals average variable cost
D. Average revenue equals average cost
E. Marginal revenue equals marginal cost
A firm maximizes profit by operating at the level of output where
E. Marginal revenue equals marginal cost
804
The demand curve facing a perfectly competitive firm is:
A. Perfectly horizontal
B. The same as the market demand curve
C. Perfectly vertical
D. Downward-sloping and less flat than the market demand curve
The demand curve facing a perfectly competitive firm is:
A. Perfectly horizontal
805
The supply curve for a competitive firm is
A. Its entire MC curve
B. The upward-sloping portion of its MC curve
C. It is the MR curve
D. Its MC curve above the minimum point of the AVC curve
The supply curve for a competitive firm is
D. Its MC curve above the minimum point of the AVC curve
806
Which of the following is NOT true regarding monopoly?
A. Monopoly demand curve is downward sloping
B. Monopolist can charge as high a price as it likes
C. Monopoly is the sole producer in the market
D. Monopoly price is determined from the demand curve
Which of the following is NOT true regarding monopoly?
B. Monopolist can charge as high a price as it likes
807
Compared to the equilibrium price and quantity sold in a competitive market, a monopolist will charge a ________________ price and sell a ______________ quantity.
```
A. Lower, smaller
B. Higher, larger
C. Lower, larger
D. Higher, smaller
E. None of these
```
Compared to the equilibrium price and quantity sold in a competitive market, a monopolist will charge a ________________ price and sell a ______________ quantity.
D. Higher, smaller
808
As the manager of a firm you calculate the marginal revenue is $152 and marginal cost is $200. You should
A. Expand output
B. Do nothing without information about your fixed costs
C. Reduce output until marginal revenue equals marginal cost
D. Expand output until marginal revenue equals zero
As the manager of a firm you calculate the marginal revenue is $152 and marginal cost is $200. You should
C. Reduce output until marginal revenue equals marginal cost
809
For a monopolist, changes in demand will lead to changes in
A. Any of the above can be true
B. Both price and quantity
C. Price with no change in output
D. Output with no change in price
For a monopolist, changes in demand will lead to changes in
B. Both price and quantity
810
The____________elastic a firm's demand curve, the greater its______________.
A. Less, output
B. More, costs
C. More, monopoly power
D. Less, monopoly power
The____________elastic a firm's demand curve, the greater its______________.
D. Less, monopoly power
811
Which of the following is NOT a determinant of the demand for good X?
A. The cost of labor used to produce good X
B. The price of good Y, a complement of good X
C. The number of buyers of good X
D. The income of consumers who buy good X
Which of the following is NOT a determinant of the demand for good X?
A. The cost of labor used to produce good X
812
Which of the following IS a determinant of the demand for good X?
A. The number of sellers of good X
B. The income of consumers who buy good X
C. The supply of good X
D. The cost of labor used to produce good X
Which of the following IS a determinant of the demand for good X?
B. The income of consumers who buy good X
813
If cookies are a normal good and incomes increase, we would expect:
A. A decrease in equilibrium price and an increase in equilibrium quantity
B. An increase in equilibrium price and a decrease in equilibrium quantity
C. A decrease in equilibrium price and equilibrium quantity
D. An increase in equilibrium price and equilibrium quantity
If cookies are a normal good and incomes increase, we would expect:
D. An increase in equilibrium price and equilibrium quantity
814
Simon is selling his used truck. The minimum amount he needs to be paid for the truck is $5,000. He advertises the truck online for $8,000, and eventually sells the truck for $6,000. His producer surplus is equal to________
A. $1,000
B. $2,000
C. $3,000
D. $6,000
Simon is selling his used truck. The minimum amount he needs to be paid for the truck is $5,000. He advertises the truck online for $8,000, and eventually sells the truck for $6,000. His producer surplus is equal to________
A. $1,000
815
A decrease in supply is, graphically, represented by:
A. A leftward shift in the supply curve
B. A movement up and to the right along a supply curve
C. A rightward shift in the supply curve
D. A movement down and to the left along a supply curve
A decrease in supply is, graphically, represented by:
A. A leftward shift in the supply curve
816
In recent years there have been a couple of high profile cases of contamination of baby formula produced in China. As a result, many Chinese parents buy baby formula that is produced outside China. Which of the following accurately describes the likely effect of this on baby formula prices?
A. An increase in the price of both baby formula produced in China and baby formula produced outside China
B. An increase in the price of baby formula produced in China and a decrease in the price of baby formula produced outside China
C. A decrease in the price of baby formula produced in China and an increase in the price of baby formula produced outside China
D. A decrease in the price of both baby formula produced in China and baby formula produced outside China
In recent years there have been a couple of high profile cases of contamination of baby formula produced in China. As a result, many Chinese parents buy baby formula that is produced outside China. Which of the following accurately describes the likely effect of this on baby formula prices?
B. An increase in the price of baby formula produced in China and a decrease in the price of baby formula produced outside China
817
If pizza is a normal good, then which of the following could be the value of income elasticity of demand?
A. 0,2
B. All of the above
C. 1,4
D. 0,8
If pizza is a normal good, then which of the following could be the value of income elasticity of demand?
B. All of the above
818
Which of the following statements about the relationship between the price elasticity of demand and revenue is TRUE?
A. If demand is perfectly inelastic, then revenue is the same at any price
B. If demand is price inelastic, then increasing price will decrease revenue
C. If demand is price elastic, then decreasing price will increase revenue
D. Elasticity is constant along a linear demand curve and so too is revenue
Which of the following statements about the relationship between the price elasticity of demand and revenue is TRUE?
C. If demand is price elastic, then decreasing price will increase revenue
819
Suppose Tallink Ferries is considering an increase in ferry fares. If doing so results in an increase in revenues raised, which of the following could be the value of the own-price elasticity of demand for ferry rides?
A. 1
B. All of the above
C. 1,5
D. 0,5
Suppose Tallink Ferries is considering an increase in ferry fares. If doing so results in an increase in revenues raised, which of the following could be the value of the own-price elasticity of demand for ferry rides?
D. 0,5
820
Implicit Cost -
An implicit cost is any cost that has already occurred but not necessarily shown or reported as a separate expense. It represents an opportunity cost that arises when a company uses internal resources toward a project without any explicit compensation for the utilization of resources
