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PART I Organization of a Business1

PART I Organization of a Business1

Chapter 1 Planning a Business2

CHAPTER 1 Planning a Business2

Creditors4

Owners4

Key Participants in a Business4

Employees5

Customers6

Summary of Key Participants7

Interaction among Business Functions8

Key Functions of Business8

How Some Business Functions Enhance Decision Making9

Creating a Business Idea10

Examples of Successful Business Ideas10

SMALL BUSINESS SURVEY: Charactarittics of Business Entrsperenears12

Steps for Creating a Business Iden12

Developing the Business Plan13

Management Plan13

Marketing Plan14

Financial Plan15

Summary of a Business Plan16

SPOTLIGHT ON TECHNOLOGY: Business Planning Suftrars16

Assessing a Business Plan17

BUSINESS DILEMMA: Dentaping a New Wa?lth Ch? Business18

Kcy Terms21

Review Questions21

Investing in the Stock of a Business22

Discussion Questins22

Running Your Own Business22

Case 1: Starting a New Business23

Case 2: Organizing a Business23

Video Case: Creating a Successful Business24

The Coca-Cola Company Annual Report Project24

In-Text Study, Guide25

APPENDIX 1 Business Addresses28

CHAPTER 2 Selecting a Form of Business Ownership36

Chapter 2 Selecting a Form of Business Ownership36

Possible Forms of Business Ownership38

Scle Proprietorship38

Partnership39

Corporation41

Comparing Forms of Business Ownership46

SMALL BUSINESS SURVEY: Key Concerns about Business Owership47

Methods of Owning Existing Businesses47

Purchasing an Existing Business47

Franchising47

Assuming Ownership of a Family Business47

SPOTLIGHT ON TECHNOLOGY: Organizing Your Bosiness by Dsing the Intarnet50

Receiving Assistance as a New Business51

How Owners Measure Business Performance51

Return on Investment51

Risk51

SELF-SCORING EXERCISE: Do You N?ve the M?c?ssary Skills to Swccead in Business?54

CROSS-FUNCTIONAL TEAMWORK: Sources of Risk Aeross Businass Functions55

GLOBAL BUSINESS: O?narship of Forsign Businessat56

BUSINESS DILEMMA: Owdership Decision at College Nsalth Clwb56

Summary57

Discussion Questions58

Key Terms58

Review Questions58

Running Your Own Business59

Investing in the Stock of a Business59

Case 1: Decidmg the Type of Business Ownership59

Case 2: The Franchising Decision60

Video Case: A Business Ownership Dilemma60

The Coca-Cola Company Annual Report Project61

In-Text Study Guide61

Surfing the Net: What Is the World Wide Web?63

CHAPTER 3 Business Ethics and Social Responsibility66

Chapter 3 Business Ethics and Soeial Responsibility66

Responsibility to Customers68

Responsible Production Practices68

How Firms Ensure Responsibility toward Customers68

Responsible Sales Practices68

How Consumerism Ensures Responsibility toward Custoniers69

How the Government Ensures Responsibility toward Customers69

Responsibility to Emplovees71

Employee Safety71

Proper Treatment by Other Employees71

Equal Oppornmty73

Conflict with Employee Layoffs74

GLOBAL BUSINESS: Global Ethics74

How Firms Ensure Responsibility75

How Stockholders Ensure Responsibility75

Responsibility to Stockholders75

Conther with Excessive Exeeutive Campensation76

Responsibility to Creditors77

Responsibility to the Environment78

Air Pollution78

Land Pollution79

Contlict with Fnvironmerital Responsilhility80

Responsibility to the Community81

Couflict with Vaxinnizing Social Responsibility81

SPOTLIGHT ON TECHNOLOGY: When Does Tough Competitlon Become Unethieal?82

Summary of Business Responsibilities83

SELF-SCORING EXERCISE: Assessing The Ethical Standards of the Firm Where You Work83

SELF-SCORING EXERCISE: Assessing Whether Specific Situations Are Ethieal84

CROSS-FUNCTIONAL TEAMWORK: Ethical Responsibilities Across Businass Functions85

The Cost of Ensuring Social Responsibilities85

Cost of Lawsuits86

BUSINESS DILEMMA: Social Responsibility at College Health Club87

Summary89

Review Questions89

Key Terms89

Discussion Questions90

Running Your Own Business90

Investing in the Stock of a Business90

Case 1: E-mail and Ethics90

Case 2: Social Responsibilities to Employees91

Video Case: Payback for Social Responsibility91

The Coca-Cola Company Annual Report Project92

In-Text Study Guide92

Surfing the Net: Finding Information About Firms on the Internet94

Summary of Part I99

PART II Business Environment101

PART II Business Environment101

Chapter 4 Economic Environment102

CHAPTER 4 Economic Environment102

Macroeconomic Factors that Affect Business Performance104

Economic Growth104

Inflation107

Interest Rates108

Summary of Macroeconomic Factors that Affect a Firm s Performance109

GLOBAL BUSINESS: Capitalizing on Global Economic Conditions110

How Market Prices Are Determined111

Demand Schedule for the Product111

Supply Schedule for a Product112

Interaction of Demand and Supply112

Effect of a Change in the Demand Schedule113

Effect of a Change in the Supply Schedule114

Effect of Demand and Supply on the General Price Level116

Factors that Influence Market Prices116

Consumer Income116

Consumer Preferences116

Production Expenses117

Government Influence on Economic Conditions117

Monetary Policy117

Fiscal Policy118

SPOTLIGHT ON TECHNOLOGY: Manitoring the Economic Emvirsnmest119

Summary of Government Influence on Economic Factors119

Dilemma of the Federal Government120

CROSS-FUNCTIONAL TEAMWORK: Econ??mic Effects Aerass Busimess Fumctions121

BUSINESS DILEMMA: Ec?nomic Effects on College Nealth Club122

Summary123

Key Terms124

Review Questions124

Discussion Questions124

Running Your Own Business124

Investing in the Stock of a Business125

Case 1: How Economic Conditions Influence Business Decisions125

Case 2: Supply and Demand for GM Automobiles125

Video Case: Exposure to Weak Economic Conditions126

The Coca-Cola Company Annual Report Project126

In-Text Study Guide126

Surfing the Net: Access to Economic Information on the World Wide Web129

Combining Demand and Supply130

Effect of a Change in the Supply Schedule130

Effect of a Change in the Demand Schedule130

APPENDIX 4 How Interest Rates Are Determined130

How Interest Rates Change130

Demand for Loanable Funds130

Supply for Loanable Funds130

Factors that Can Affect Interest Rates133

Monetary Policy133

Economic Grawth133

Expected Inflation134

Summary of Factors that Affect Intcrest Rates135

Savings Behavior135

CHAPTER 5 Industry Environment136

Chapter 5 Industry Environment136

Industry Characteristics that Influence Business Performance138

Industry Demand138

Industry Competition139

Labor Environment140

Regulatory Environment140

SMALL BUSINESS SURVEY: Are Flms Affectod by Ind?slry Ragulations?141

Summary of Industry Characteristics141

Industry Sources142

Exposure to Industry Conditions143

Firm s Market Share143

Firm s Focus on Its Main Industry144

Competing Within an Industry146

Identify the Competitors147

SPOTLIGHT ON TECHNOLOGY: How Information Techmology Can Cr?ate A Compotitive Mhcantage149

Develop a Competitive Advantage149

CROSS-FUNCTIONAL TEAMWORK: Indnstry Effacts Aeress Buslness Funetions150

GLOBAL BUSINESS: Assessing the Indestry Envirsa??at from a Glohal Parspctim151

BUSINESS DILEMMA: Iadustry Effacts on College Mealth Club151

Summary153

Key Terms154

Review Questions154

Discussion Questions154

Running Your Own Business154

Investing in the Stock of a Business154

Case 1: Exposure of Software Firms to Industry Conditions155

Case 2: Impact of Industry Conditions on Pharmaceutical Firms155

The Coca-Cola Company Annual Report Project156

Video Case: Exposure to Weak Industry Conditions156

In-Text Study Guide157

Surfing the Net: Access to Industry Information on the World Wide Web159

CHAPTER 6 Global Environment160

Chapter 6 Global Environment160

Why Firms Engage in International Business162

Attract Foreign Demand162

Capitalize on Technology164

Use Inexpensive Resources164

Diversify Internationally164

Combination of Motives164

Foreign Expansion in the U.S.167

Foreign Competition167

How Firms Engage in International Business168

Importing168

Exporting169

Direct Foreign Investment (DFI)169

Strategic Alliances170

GLOBAL BUSINESS: Nerverbal Comm??ication in Diffarent Cult?res171

Culture172

Economic System172

How Foreign Characterisics Influence International Business172

Economic Conditions175

SMALL BUSINESS SURVEY: De Small Firms Conduet International Busiuess?177

Exchange Rates177

CROSS-FUNCTIONAL TEAMWORK: Managing Inturnational Busimess Aeress Business Functions178

How Exchange Rate Movements Can Affect Performance179

Impact of a Weak Dollar on U.S. Importers179

SPOTLIGHT ON TECHNOLOGY: Mering Taeh??l?gy Aeress Bardars180

Impact of a Strong Dollar on U.S. Importers180

Actual Effects of Exchange Rate Movements on U.S. Importers181

Impact of a Weak Dollar on U.S. Exporters181

Impact of a Strong Dollar on U.S. Exporters183

Hedging Against Exchange Rate Movements183

How Exchange Rates Affect Foreign Competition184

BUSINESS DILEMMA: Exchange Rate Effects at Callgea Mealth Clab185

Summary187

Key Terms187

Review Questions187

Discussion Questions188

Running Your Own Business188

Investing in the Stock of a Business188

Case 1: Global Expansion by ABC Records188

Case 2: Exposure to Foreign Competition189

Video Case: Exposure to Global Conditions189

In-Text Study Guide190

The Coca-Cola Company Annual Report Project190

Surfing the Net: International Business on the World Wide Web193

APPENDIX 6 The Forign Exchange Market194

Exchange Rate Quotations194

Factors that Affect Exchange Rate Movements194

Differential Inflation Rates194

Differential Interest Rates196

Covernment Intervention196

Summary of Part II197

PART III Management199

PART III Management199

CHAPTER 7 Fundamentals of Effective Management200

Chapter 7 Fundamentals of Effective Management200

Levels of Management202

Functions of Managers203

Planning203

Lcading208

CROSS-FUNCTIONAL TEAMWORK: Interaction of functions to Achi?v? the Stratagie Plan208

Organizing208

Controlling211

Integration of Management Functions212

GLOBAL BUSINESS: Leadaership Styles for Global Business214

Managerial Skills215

Conceptual Skills215

Interpersonal Skills215

Technical Skills216

Decision-Making Skills216

How Managers Manage Time217

Summary of Management Skills217

SPOTLIGHT ON TECHNOLOGY: Software to Improve Management218

Set Proper Priorities218

Schedule Long Time intervals for Large Tasks219

Minimize Interruptions219

Set Short-Term Goals219

SMALL BUSINESS SURVEY: Now Managers Run Msslings Effieiently220

Delegate Some Tasks to Employees220

BUSINESS DILEMMA: Planning at Coll?ge Health Club221

Summary222

Key Terms222

Review Questions223

Discussion Questions223

Running Your Own Busmess223

Investing in the Stock of a Business223

Case 1: Applying Management Skills224

Case 2: Developing a Plan for the Official All-Star Cafe224

The Coca-Cola Company Annual Report Project225

Video Case: How Effective Management Can Be the Key to Success225

In-Text Study Guide226

Surfing the Net: Management Training on the World Wide Web228

CHAPTER 8 Organizational Structure230

Chapter 8 Organizational Structure230

How a Firm s Organizational Structure Achieves its Strategic Plan232

Chain of Command232

Authority of the Board of Directors233

SMALL BUSINESS SURVEY: Who Are the Board Members of Small Firms?234

Monitoring by Institutional Investors235

Span of Control235

Organizational Height235

Centralization235

Decentralization236

SELF-SCORING EXERCISE: How Decentralized Is Your Company?237

Line Versus Staff Positions239

Creating a Stri?cture that Allows More Employee Input241

SPOTLIGHT ON TECHNOLOGY: Now Information Systoems Enhance Organizational Stroctures243

Informal Organizational Structure243

Methods of Departmentalizing Tasks244

Departmentalize by Product245

Departmentalize by Function245

Departmentalize by Location246

Departmentalize by Customer246

Departmentalize by Various Characteristics246

CROSS-FUNCTIONAL TEAMWORK: Interaetion Among Departments247

GLOBAL BUSINESS: Drganizational Structure of a Mnltinational Carperation247

BUSINESS DILEMMA: Drganizational Structure of College Nealth Club248

Summary249

Key Terms250

Review Questions250

Discussion Questions250

Running Your Own Business250

Case 1: Creating An Organizational Structure251

Investing in the Stock of a Business251

Case 2: Restructuring at Apple Computer251

The Coca-Cola Company Annual Report Project252

In-Text Study Guide252

Video Case: Reorganizing to Achieve Business Success252

Surfing the Net: Managing by Telecommuting255

Chapter 9 Production Management256

CHAPTER 9 Production Management256

Resources Used for the Production Process258

Human Resources258

Other Resources259

Combining the Resources for Production259

Materials259

Factors Affecting the Site Decision260

Selecting a Site260

Evaluating Possible Sites262

GLOBAL BUSINESS: Seleeting a Fereign Pr?duction Site263

Selecting the Design and Layout264

Factors Affecting Design and Layout264

Reducing the Layout Space265

Production Control266

Purchasing Materials267

Inventory Control268

SMALL BUSINESS SURVEY: Why De Frms Outsa?rea Rather Thea Pr??ea Than Produca Seme Pr??ets Thems?hes?268

Routing270

Scheduling271

SPOTLIGHT ON TECHNOLOGY: Agila Mannfact?ring273

Quality Control274

BUSINESS DILEMMA: Production at Cotlage Mealth Club274

Review Questions276

Key Terms276

Summary276

Running Your Own Business277

Investing in the Stock of a Business277

Case 1: Selecting the Best Plant Site277

Discussion Questions277

Case 2: Improving the Production Process278

Video Case: How Production Can Be a Key to Success278

The Coca-Cola Company Annual Report Project279

In-Text Study Guide279

Surfing the Net: Manufacturing Information on the World Wide Web282

CHAPTER 10 Improving Production Quality and Efficiency284

Chapter 10 lmproving Production Quality and Efficiency284

Improving Production Quality with TQM286

Specify the Desired Quality Level288

Control the Quality Level289

Achieve the Desired Quality Level289

SELF-SCORING EXERCISE: Are You Mighly Satlsfied As a Castemer?291

GLOBAL BUSINESS: Global Quality Standards292

Methods to lmprove Production Efficiency293

Technology294

Economies of Scale295

Restructuring298

SPOTLIGHT ON TECHNOLOGY: Using Intermation Tnchmslegy to ?mprom Prodmet ?ualty299

CROSS-FUNCTIONAL TEAMWORK: Interaetion of Fmmetions Levelrad in Tetal ??alty Menagement301

SMALL BUSINESS DILEMMA: T?tal Quality Management at Collega Neslth Club302

Summary304

Key Terms304

Review Questions304

Discussion Questions304

Running Your Own Business305

Investing in the Stock of a Business305

Case 1: Using TQM to Assess Employee Quality305

Case 2: Applying TQM to Education305

Video Case: How the Focus on Quality Can Lead to Success306

The Coca-Cola Company Annual Report Project307

In-Text Study Cuide307

Surfing the Net: Quality Information on the World Wide Web308

Summary of Part III310

PART IV Managing Employees311

PART IV Managing Employees311

CHAPTER 11 Motivating Employees312

Chapter 11 Motivating Employees312

Hawthorne Studies314

Maslow s Hierarchy of Needs314

Theories on Motivation314

Herzberg s Job Satisfaction Study316

McGregor s Theory X and Theory Y317

Theory Z318

Expectancy Theory318

Equity Theory319

Reinforcement Theory320

Motivational Guidelines Offered by Theories321

How Firms Can Enhance Job Satisfaction and Motivation322

Adequate Compensation Program322

Job Security324

CROSS-FUNCTIONAL TEAMWORK: Sproading Motivation Aerass Besiness Fanctions325

Elexible Work Schedule325

SPOTLIGHT ON TECHNOLOGY: Using Competars to Motivate Emplayess326

Employee Involvement Programs326

SELF-SCORING EXERCISE: Are You an Empowared Emplayse?327

SMALL BUSINESS SURVEY: Do Emplayess Want Mera Inflnenea in Busimess ??328

Comparison of Methods Used to Enhance Job Satisfaction330

GLOBAL BUSINESS: Metivaling Empleyess Aerass Co?ntries331

BUSINESS DILEMMA: Mativation at College Nealth Club331

Summary332

Key Terms333

Review Questions333

Discussion Questions334

Running Your Own Business334

Investing in the Stock of a Business334

Case 1: Using Motivation to Enhance Performance334

Case 2: Notivating Young Employees335

Video Case: Motivating Emplovees as a Means of Survival335

The Coca-Cola Company Annual Report Project336

In-Text Study Guide336

Surfing the Net: Employee Ownership Information on the World Wide Web339

CHAPTER 12 Hiring, Training, and Evaluating Employees340

Chapter 12 Hiring、 Training、 and Evaluating Employees340

Human Resource Planning342

Forecasting Employee Needs342

Job Analysis342

Recruiting343

Compensation Packages That Firms Offer347

SMALL BUSINESS SURVEY: Do Firms Reward Employees far Customer Satisfaction?348

Salary348

Commissions348

Bonuses348

Profit Sharing349

Emplovee Benefits349

Perquisites349

Comparison Across Jobs349

GLOBAL BUSINESS: Compensating Employees Aerass Countries350

Developing Skills of Employees350

Technical Skills350

SMALL BUSINESS SURVEY: How Do CEOs Allocate Their Time Whan Managing Empleyess?351

Decision-Making Skills351

Customer Service Skills351

Safety Skills352

Human Relations Skills352

Evaluation of Employee Performance352

Segmenting the Evahnation into Different Criteria352

SPOTLIGHT ON TECHNOLOGY: Using Computers to Manage and Train Empleyees353

Using a Performance Evaluation Form354

Assigning Weights to the Criteria354

Steps for Proper Performance Evaluation356

Dealing With Lawsuits by Fired Employees357

Action Due to Performance Evaluations357

BUSINESS DILEMMA: Performance Evalmation at Cellage Nealth Club359

Employee Evaluation of Supervisors359

CROSS-FUNCTIONAL TEAMWORK: How Job Responsibilities Acress Businesa Functions Can Complieats Parformance Evaluations359

Summary360

Discussion Questions361

Review Questions361

Key Terms361

Case 1: Filling Job Positions362

Investing in the Stock of a Business362

Running Your Own Business362

Case 2: Training on the Job362

Video Case: Managing Employees in a Volatile Business363

In-Text Study Guide364

The Coca-Cola Company Annual Report Project364

APPENDIX 12 Labor Unions367

Background on Unions367

History of Union Activities367

Surfing the Net: Information on Human Resource Management368

Trends in Union Popularity368

Negotiations between Unions and Management368

Salaries368

SELF-SCORING EXERCISE: The Frazzle Facter369

Job Security369

Management Rights370

Grievance Procedures370

Conflicts between Unions and Management370

Management s Criticism of Unions372

How Firms Reduce the Employee s Desire for a Union372

Summary of Part IV374

PART V Marketing375

PART V Marketing375

Chapter 13 Product and Pricing Strategies376

CHAPTER 13 Product and Pricing Strategies376

Background on Products378

Product Line379

Product Mix380

Identifying a Target Market380

Factors That Affect the Size of a Target Market381

GLOBAL BUSINESS: Targating Farelgn Ca?tries383

Creating New Products383

Use of Marketing Research to Greate New Products384

Use of Research and Development to Create Products384

SMALL BUSINESS SURVEY: What Are the Kays to Crazting Successful Preducta?385

Steps Necessary to Create a New Product386

CROSS-FUNCTIONAL TEAMWORK: Interaction Among Prodaet Dacisines and ?388

Product Differentiation389

Unique Design389

Unique Packaging390

Unique Branding390

Summary of Methods to Differentiate Products392

Produet Life Cycle392

Introduction392

Growth392

Maturity392

Decline393

Pricing Strategies393

Pricing According to the Cost of Production394

Pricing According to the Supply of Inventory394

Pricing According to Competitors Prices394

SPOTLIGHT ON TECHNOLOGY: Prieing Laformation-Based Preducts395

Example of Setting A Product s Price396

Break-Even Point397

Additional Pricing Decisions398

Discounting398

Sales Prices399

Gredit Terms399

BUSINESS DILEMMA: Product Differantiation at Collage Nealth Club400

Summary402

Key Terms402

Review Questions403

Disussion Questions403

Running Your Own Business403

Investing in the Stock of a Business404

Case 1: Marketing T-Shirts404

Case 2: Marketing for“Big Bertha” Golf Clubs404

Video Case: Developing a New Product405

The Coca-Cola Company Annual Report Project405

In-Text Study Guide406

Surfing the Net: Price Information on the World Wide Web408

Chapter 14 Distribution Strategies410

CHAPTER 14 Distribution Strategies410

Channels of Distribution412

Direct Channel412

One-Level Channel413

Two-Level Channel414

Summary of Distribution Systems414

Factors That Determine the Optimal Channel of Distribution415

Seiecting the Degree of Market Coverage415

Selective Distribution416

Exclusive Distribution416

Intensive Distribution416

SMALL BUSINESS SURVEY: Are Catalegs Using International Distribntion?417

Selecting the Optimal Type of Market Coverage417

Selecting the Transportation Used to Distribute Products418

Truck418

Rail418

Air418

Water419

Pipeline419

Additional Transportation Decisions419

How to Accelerate the Distribution Process420

Streamline the Channels of Distribution420

Integrate the Production and Distribution Processes421

Background on Retailers422

Number of Outlets422

CROSS-FUNCTIONAL TEAMWORK: Interaction betwoon Distribution Decisions and Other Business Decisions423

Quality of Service423

Variety of Products Offered423

Store versus Nonstore424

Background on Wholesalers425

How Wholesalers Serve Manufacturers425

How Wholesalers Serve Retailers425

Vertical Channel Integration426

Vertical Channel Integration by Manufacturers426

Vertical Channel Integration by Retailers427

GLOBAL BUSINESS: Global Distribotion428

SPOTLIGHT ON TECHNOLOGY: Using Techm?logy to lmpreve Distribation428

BUSINESS DILEMMA: Ratailing Decision at College Health Club429

Summary430

Key Terms431

Review Questions431

Discussion Questions431

Running Your Own Business432

Investing in the Stock of a Business432

Case 1: Distribution of Comic Books432

Case 2: Distribution Decisions by Transtar433

Video Case: Using Distribution to Achieve Success433

The Coca-Cola Company Annual Report Project434

In-Text Study Guide434

Surfing the Net: Distribution Information on the World Wide Web436

Ghapter 15 Promotion Strategies438

CHAPTER 15 Promotion Strategies438

Background on Promotion440

Promotion Mix440

Advertising441

Reasons for Advertising443

Forms of Advertising443

SPOTLIGHT ON TECHNOLOGY: Electromic Shopping Offered by Firms444

Summary of Forms of Advertising447

Personal Selling447

Identify the Target Market448

Contact Potential Customers448

Make Sales Presentation448

Answer Questions449

Close the Sale449

Follow Up449

SMALL BUSINESS SURVEY: What Skills Are N?oded to Ba Successful in Salas?450

Sales Promotion450

Rebates451

Coupons451

Sampling451

Displays452

Premiums452

Summary of Sales Promotion Strategies452

GLOBAL BUSINESS: Promoting Products Across Comntries452

Public Relations453

Special Events454

News Releases454

Press Conferences454

Determining the Optimal Promotion Mix455

Target Market455

Promotion Budget456

Managing Salespeople458

Evaluating the Effects of Promotion458

CROSS-FUNCTIONAL TEAMWORK: Interaction betw??n Pronotion Decisiems and Other Business Decisions459

BUSINESS DILEMMA: Promotlon Strategy at Collage Nealth Club459

Summary460

Key Terms461

Review Questions461

Discussion Questions461

Running Your Own Business462

Investing in the Stock of a Business462

Case 1: Miller Beer s New Promotion Strategy462

Case 2: Using Michael Jordan to Promote Nike Shoes462

Video Case: How Promotion Saved a Business463

The Coca-Cola Company Annual Report Project463

In-Text Study Guide464

Surfing the Net: Promotions on the World Wide Web466

Summary of Part V467

PART VI Financial Management469

PART VI Financial Management469

Chapter 16 Accounting and Financial Management470

CHAPTER 16 Accounting and Financial Analysis470

How Firms Use Accounting472

Reporting472

Decision Support473

Control473

Interpreting Financial Statements473

Income Statement474

Balance Sheet475

Ratio Analysis476

Measures of Liquidity477

Measures of Efficiency478

Measures of Financial Leverage479

Measures of Profitability480

SPOTLIGHT ON TECHNOLOGY: Databsse Acceunting Systems481

Comparison of Ratios with Those of Other Firms482

Limitations of Ratio Analysis485

Sources of Information for Ratio Analysis485

GLOBAL BUSINESS: Effect of Exehange hate Mersments of Earmings485

BUSINESS DILEMMA: Financial Analysis of College Health Club486

Summary487

Review Questions488

Discussion Questions488

Key Terms488

Running Your Own Business489

Investing in the Stock of a Business489

Case 1: Using an Accounting System489

Case 2: Achieving Internal Control489

Video Case: Responding to Problems Detected by Financial Analysis490

The Coca-Cola Company Annual Report Project490

In-Text Study Guide491

Surfing the Net: Accounting Information on the Internet493

Chapter 17 Financing494

CHAPTER 17 Financing494

Methods of Debt Financing496

Borrowing from Financial Institutions496

Issumg Bonds499

Issuing Commerical Paper501

Impact of the Debt Financing Level on Interest Expenses501

Common Greditors that Provide Debt Financing501

Methods of Equity Financing502

Retaining Earnings502

Issuing Stock502

SPOTLIGHT ON TECHNOLOGY: Using the Internet for Stock Offerings504

Comparison of Equity Financing with Debt Financing505

How Firms Issue Securities506

Origination506

Underwriting506

Distribution506

Other Methods of Obtaining Funds507

Financing from Suppliers507

Leasing507

Deciding the Capital Structure508

Revising the Capital Structure509

How the Capital Structure Affects the Return on Equity510

SMALL BUSINESS SURVEY: Finaneing Cboiees of Small Firms511

GLOBAL BUSINESS: Global Financing512

Dividend Policy513

Factors that Affect a Firm s Dividend Policy513

CROSS-FUNCTIONAL TEAMWORK: Interaction between Finaneing Deci?ons and Other Business Decisions514

BUSINESS DILEMMA: Finaneing at Cellage Health Club514

Summary516

Key Terms516

Review Questions516

Discussion Questions517

Running Your Own Business517

Investing in the Stock of a Business517

Case 1: Financing a New Business517

Case 2: The IPO Decision518

Video Case: Determining the Proper Amount of Equity518

The Coca-Cola Company Annual Report Project519

In-Text Study Guide519

Surfing the Net: Financing Information on the Internet521

Chapter 18 Business Investment522

CHAPTER 18 Business Investment522

Investment Decisions524

How Interest Rates Affect Investment Decisions526

Capital Budget526

Classification of Capital Expenditures527

Summary of Capital Budgeting Tasks528

Capital Budgeting Tasks528

Capital Budgeting Analysis530

Background on Present Value530

SPOTLIGHT ON TECHNOLOGY: Texas Instrumonts Assessment of Prepesed Capital Erpondit?res534

GLOBAL BUSINESS: Global Investing534

Mergers535

CROSS-FUNCTIONAL TEAMWORK: Cross-Funclional Relationships Invelved in Basiness Investment Decisions536

Corporate Motives for Mergers536

Leveraged Buyouts538

Divestiturds539

Short-Term Investment Decisions539

Liquidity Management540

SMALL BUSINESS SURVEY: Investment Decisions by Small Businesses541

Accounts Receivable Management541

Inventory Management542

BUSINESS DILEMMA: Capital Budgeting at College Health Club542

Summary543

Key Terms544

Review Questions544

Discussion Questions544

Running Your Own Business545

Investing in the Stock of a Business545

Case 1: Benefits of an Acquisition545

Case 2: Ford s Merger Decision545

Video Case: How Business Investment Decisions Determine Success546

The Coca-Cola Company Annual Report Project546

In-Text Study Guide547

Surfing the Net: Investment Information on the Internet549

APPENDIX 18 The Merger Process550

Merger Analysis550

Identify Potential Merger Prspects550

Evaluate Potential Merger Proospects550

Make the Merger Decision550

Merger Procedures551

Financing the Merger551

Tender Offer551

Integrating the Businesses551

Postmerger Evaluation552

Defense Against Takeover Attempts553

Summary of Part VI554

PART VII Special Topics555

PART VII Special Topics555

Chapter 19 Management Information Systems556

CHAPTER 19 Management Information Systems556

What is a Computer?558

Computer Hardware558

Computer Software560

What Are Computers Used For?560

Computational Models560

Internal Information Systems562

Data Processing Systems562

End User Productivity Tools563

Interorganizational Systems563

Managing Today s Information Technologies565

Managing the Firm s Information System Architecture566

Acquiring Software568

Managing the Development of Information Systems570

Managing the Implementation of Information Systems571

Mananging the Security of Information Systems572

SPOTLIGHT ON TECHNOLOGY: Tbe Futmre of the Internet574

Emerging Technologies and Their Implications575

The Worldwide Network575

Truly Intelligent Systems576

BUSINESS DILEMMA: Infermation Systems at College Nealth Club577

Summary578

Key Terms579

Review Questions579

Discussion Questions579

Running Your Own Business580

Investing in the Stock of a Business580

Case 1: Applying Information Systems in Business580

Case 2: Will Computers Replace Good Managers?580

Video Case: Reliance on Computers for Success581

The Coca-Cola Company Annual Report Project581

In-Text Study Guide582

Surfing the Net: Internet Resources on the World Wide Web584

Chapter 20 Risk Management586

CHAPTER 20 Risk Management586

Tasks Involved in Managing Risk588

Identifying Exposure to Risk588

Protecting against Risk588

Exposure to the Economic Environment590

Exposure to Industry Conditions590

Exposure to Economic Conditions590

Exposure to Global Conditions591

GLOBAL BUSINESS: Risk of Coodvcting Business in Lass-Devsleped Countries591

Summary of Exposure to Economic Environment592

Hedging Risk from Economic Conditions593

Limited Funding594

Reliance on One Product594

Reliance on One Customer594

Exposure to Firm-Specific Characteristics594

Reliance on One Supplier595

Reliance on a Key Employee595

Exposure to Property Losses596

Exposure to Liability Losses597

Exposure to Employee Compensation Claims597

SMALL BUSINESS SURVEY: What is the Cost of Empley?? Injuries?598

Summary of Exposure to Firm-Specific Characteristics599

Exposure to Lawsuits600

How the Threat of Lawsuits Can Affect Business Strategies601

SPOTLIGHT ON TECHNOLOGY: Potontial Liability From Using Information Technelegy602

Concern about Arbitrary Judgements602

Conclusion for Risk Managers603

Remedies for Business Failures603

Extension603

Composition604

Private Liquidation604

Formal Remedies604

BUSINESS DILEMMA: Mzazging Risk at Collage Health Club605

Key Terms606

Review Questions606

Summary606

Discussion Questions607

Running Your Own Business607

Investing in the Stock of a Business607

Case 1: Selecting the Proper Insurance Coverage for a Business607

Case 2: The Decision to Insure a Business608

Video Case: Protecting Against Properly Damage608

The Coca-Cola Company Annual Report Project609

In-Text Study Guide609

Surfing the Net: Risk Management Information on the World Wide Web611

Chapter 21 Synthesis of Business Functions612

CHAPTER 21 Synthesis of Business Functions612

Valuation of a Business614

How Business Decisions Affect the Firm s Value614

Management Decisions614

Marketing Decisions617

SMALL BUSINESS SURVEY: What Are the Majer Concerns of Small B?siness?619

Finance Dccisions619

Summary of Business Strategies620

Relationship between Organizational Structure and Production621

Relationship between Pricing and Production Strategies621

Relationship between Pricing and Distribution Strategies621

Relationships among Business Strategies621

Relationship between Pricing and Promotion Strategies621

Relationship between Pricing and Financing Strategies621

GLOBAL BUSINESS: Intagrating Business Functiens on a Glehal Basis622

SPOTLIGHT ON TECHNOLOGY: Software that Integrates Business Activities623

Summary of Relationships Among Business Strategies623

Business Strategies Implemented by IBM625

Mission and Strategir Plan of IBM625

IBM s Social Responsibilities625

IBM s Assessment of Its Industry625

IBM s Management Strategies626

IBM s Penetration in Foreign Markets626

IBM s Marketing Strategies627

IBM s Finance Strategies628

Conchusion about IBM s Strategies629

BUSINESS DILEMMA: Integrating Business Daeision? at Collegs Nealth Club630

Summary632

Review Questions633

Discussion Questions633

Running Your Own Business633

Investing in the Stock of a Business633

Case 1: Integrated Decisions at Chrysler634

Case 2: Impact of Marketing Policies on Other Business Decisions634

Video Case: Integrated Solutions to a Firm s Problems635

In-Text Study Guide636

The Coca-Cola Company Annual Report Project636

Surfing the Net: Directory of Business Information on the World Wide Web638

APPENDIX A How to Invest in Stocks639

How the Firm s Stock Price and Value are Related639

Appendix A How to Invest in Stocks639

Understanding Stock Quotations639

Fifty-Two-Week Price Range640

Symbol640

Dividend640

Price-Earnings Ratio641

Volume641

Stock Index Quotations642

Measuring the Return on Stocks642

Previous Day s Price Quotations642

Return-Risk Trade-Off for Small Stocks643

Economic Effects644

Factors that Influence Stock Price Movements644

Market Effects645

Industry Effects645

Characteristics of the Firm645

How Stock Prices Respond to New Information646

Identifying Undervalued Firms646

Stock Market Efficiency647

SELF-SCORING EXERCISE: New Much Risk Can You Take?648

Stock Transactions649

Market Orders Versus Limit Oredrs649

Types of Brokers650

Commissions on Stock Transactions650

Purchasing Stocks on Margin650

Stock Exchanges650

Over-the Counter Market651

Regulation of Stock Exchanges651

Investing in Foreign Stocks651

Investing in Mutual Funds651

Types of Mutual Funds652

Load versus No-Load Mutual Funds652

Investing in the Stock of a Business653

The Coca-Cola Company Annual Report Project653

Key Terms653

Surfing the Net: Stock Exchanges on the Internet654

Choosing a Career657

Type of Job657

APPENDIX B Careers657

Size of Company657

Appendix B Careers657

Career Versus Additional Degree660

Pursuing a Career and Degree660

Pursuing a Career661

Choosing a College661

Applying for a Position661

Internships661

Creating a Resume662

Interviewing663

SELF-SCORING EXERCISE: Cbeckllst for Building or Evaleating Your Rasume665

Planning a Career Path666

Where the Jobs Are666

Survey of Knowledge and Abilities Needed666

Working for a Firm Versus Owning a Firm667

Surfing the Net: Career Services on the World Wide Web669

SELF-SCORING EXERCISE: The Studaut Conter Career Dectar670

APPENDIX C Answers to In-Text Study Guide671

Appendix C Answers to In-Text Study Guide671

How Firms Ensure Responsibility toward Employees774