Business Essentials,12th Edition PDF by Ronald J. Ebert and Ricky W. Griffin

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Business essentials, Twelfth Edition

By Ronald J. Ebert and Ricky W. Griffin

Business Essential, Twelfth Edition

Contents

About the Authors xvii

Preface xix

Acknowledgments xxv

Part 1 The Contemporary Business World

1 The U.S. Business Environment 2

Chapter Opening Case: Doing Business in the Global Marketplace 5

Business, Profit, and the External Environment 7

Business and Profit 7

The External Environments of Business 8

Finding a better way: The B Team 9

Economic Systems 11

Factors of Production 11

Types of Economic Systems 13

Entrepreneurship and new ventures: The Lucrative

Business of App Development 14

The Economics of Market Systems 16

Demand and Supply in a Market Economy 16

Private Enterprise and Competition in a Market Economy 18

Economic Indicators 20

Economic Growth, Aggregate Output, and Standard of Living 21

Economic Stability 25

Managing in turbulent times: Financial Turmoil—Is the Worst Behind Us? 26

Managing the U.S. Economy 27

Developing Skills in Your Career 28

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

2 Understanding Business Ethics and Social Responsibility 36

Chapter Opening Case: Simply Divine 39

Ethics in the Workplace 40

Individual Ethics 40

The Law and the Real World 40

Individual Values and Morals 41

Business and Managerial Ethics 41

Assessing Ethical Behavior 42

Company Practices and Business Ethics 43

Social Responsibility 46

The Stakeholder Model of Responsibility 47

Entrepreneurship and new ventures: Social Capital Is Making the World a Better Place 47

Contemporary Social Consciousness 48

Areas of Social Responsibility 49

Responsibility Toward the Environment 49

Finding a better way: Mission Zero 50

Responsibility Toward Customers 52

Responsibility Toward Employees 54

Responsibility Toward Investors 55

Implementing Social Responsibility Programs 56

Approaches to Social Responsibility 56

Social Responsibility and the Small Business 57

The Government and Social Responsibility 58

How Governments Influence Business 59

How Business Influences Government 60

Managing Social Responsibility 60

Formal Organizational Dimensions 61

Informal Organizational Dimensions 61

Evaluating Social Responsibility 62

Managing in turbulent times: Shredding the Electronic Paper Trail 63

summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

3 Entrepreneurship, New Ventures, and Business Ownership 72

Chapter Opening Case: It All Started With a Late Fee 75

What Is a Small Business? 76

The Importance of Small Business in the U.S. Economy 77

Popular Areas of Small Business Enterprise 78

Finding a better way: The Rise of Services 80

Entrepreneurship 81

Entrepreneurship Goals 81

Entrepreneurial Characteristics 81

Starting and Operating a New Business 82

Understanding Distinctive Competencies 82

Crafting a Business Plan 83

Starting the Small Business 84

Financing the Small Business 85

Trends, Successes, and Failures in New Ventures 87

Trends in Small Business Start-Ups 87

managing in turbulent times: The Wide World of Risk 89

Reasons for Failure 89

Reasons for Success 90

Noncorporate Business Ownership 90

Sole Proprietorships 91

Partnerships 91

Cooperatives 93

Corporations 93

The Corporate Entity 94

Types of Corporations 94

Entrepreneurship and new ventures: More Than Just a Burger and Fries 96

Managing a Corporation 96

Special Issues in Corporate Ownership 97

summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

4 Understanding the Global Context of Business 106

Chapter Opening Case: The Door Opens 109

The Contemporary Global Economy 110

The Major World Marketplaces 111

Finding a better way: Too Much of a Good Thing? China’s Success Creates More Jobs in Mexico 113

Trade Agreements and Alliances 113

International Trade 115

Balance of Trade 116

Balance of Payments 118

Exchange Rates 119

Forms of Competitive Advantage 119

Managing in turbulent times: The Ups and Downs of Globalization 120

International Business Management 121

Going International 121

Entrepreneurship and new ventures: A Better Coconut Water 123

Levels of International Involvement 123

International Organization Structures 124

Understanding the Cultural Environment 126

Values, Symbols, Beliefs, and Language 126

Employee Behavior Across Cultures 127

Barriers to International Trade 129

Economic Differences 129

Legal and Political Differences 129

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • crafting a business plan • endnotes

Part 2 Managing the Business 5 Managing the Business 140

Chapter Opening Case: Alphabet Soup 143

The Management Process 144

Basic Management Functions 144

The Science and the Art of Management 146

Becoming a Manager 147

Types of Managers 149

Levels of Management 149

Areas of Management 150

Entrepreneurship and new ventures: Innovations in

Management 151

Management Roles and Skills 152

Managerial Roles 152

Basic Management Skills 154

Strategic Management: Setting Goals and Formulating Strategy 156

Setting Business Goals 156

Types of Strategy 158

Finding a better way: Standing Firm on Social Consciousness 159

Formulating Strategy 160

A Hierarchy of Plans 161

Contingency Planning and Crisis Management 162

Contingency Planning 162

Managing in turbulent times: When Disaster Strikes 163

Crisis Management 163

Management and the Corporate Culture 164

Building and Communicating Culture 164

Changing Culture 165

summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

6 Organizing the Business 172

Chapter Opening Case: Organizing for Success 175

What Is Organizational Structure? 176

Organization Charts 176

Determinants of Organizational Structure 177

entrepreneurship and new ventures: Organizing for Growth 178

The Building Blocks of Organizational Structure 179

Job Specialization 179

Departmentalization 180

finding a better way: Blending the Old with the New 181

Establishing the Decision-Making Hierarchy 183

Distributing Authority: Centralization and

Decentralization 183

Managing in turbulent times: Keeping the Organizational Tools Sharp 184

The Delegation Process 185

Three Forms of Authority 186

Basic Forms of Organizational Structure 187

Functional Structure 187

Divisional Structure 188

Matrix Structure 189

International Structure 189

New Forms of Organizational Structure 191

Informal Organization 192

Informal Groups 192

Organizational Grapevine 193

Intrapreneuring 194

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

7 Operations Management and Quality 202

Chapter Opening Case: Dessert Is Always a Great Idea 205

What Does Operations Mean Today? 206

Growth in the Services and Goods Sectors 207

Creating Value Through Operations 208

Differences between Service and Goods Manufacturing Operations 210

Operations Processes 211

Business Strategy as the Driver of

Operations 212

The Many Faces of Production Operations 212

Operations Planning 214

Capacity Planning 214

Location Planning 215

Entrepreneurship and new ventures: Nothing Like a Home-Cooked Meal 215

Layout Planning 216

Quality Planning 217

Methods Planning 218

Operations Scheduling 219

The Master Operations Schedule 219

Detailed Schedules 220

Staff Schedules and Computer-Based Scheduling 221

Project Scheduling 221

Operations Control 222

Materials Management 223

Quality Control 224

Quality Improvement and Total Quality Management 225

The Quality-Productivity Connection 225

managing in turbulent times: Leaner Operations

Restore Balance in the Airline Industry 226

Managing for Quality 226

Tools for Total Quality Management 227

Adding Value Through Supply Chains 229

The Supply Chain Strategy 229

Outsourcing and Global Supply Chains 230

Finding a better way: Too Good to Waste 231 summary of learning objectives • key terms • questions

& exercises • building a business: continuing team exercise • team exercise • exercising your

ethics • cases • crafting a business plan • endnotes

Part 3 People in Organizations

8 Employee Behavior and Motivation 242

Chapter Opening Case: A Living Wage 245

Forms of Employee Behavior 246

Performance Behaviors 246

Organizational Citizenship 247

Counterproductive Behaviors 248

Managing in turbulent times: Not Just on the Playground 248

Individual Differences Among Employees 249

Personality at Work 249

Attitudes at Work 252

Matching People and Jobs 254

Psychological Contracts 254

The Person-Job Fit 256

Basic Motivation Concepts and Theories 256

Classical Theory 256

Early Behavioral Theory 257

entrepreneurship and new ventures: The

Opportunity to Begin Again 260

Contemporary Motivation Theory 261

Strategies and Techniques for Enhancing Motivation 263

Reinforcement/Behavior Modification 263

Using Goals to Motivate Behavior 263

Finding a better way: More Than Just a Paycheck 264

Participative Management and Empowerment 265

Work Teams and Team Structures 265

Job Enrichment and Job Redesign 265

Modified Work Schedules and Alternative Workplaces 266

summary of learning objectives • key terms • questions & exercises • building a business: continuing team exercise • team exercise • exercising your ethics • cases • endnotes

9 Leadership and Decision Making 276

Chapter Opening Case: Authentic Leadership 279

The Nature of Leadership 280

Leadership and Management 281

Leadership and Power 281

Early Approaches to Leadership 282

Trait Approaches to Leadership 283

Behavioral Approaches to Leadership 283

The Situational Approach to Leadership 284

Leadership Through the Eyes of Followers 285

Transformational Leadership 286

Charismatic Leadership 286

entrepreneurship and new ventures: “Success Unshared Is Failure” 287

Special Issues in Leadership 288

Leadership Substitutes 288

Leadership Neutralizers 289

The Changing Nature of Leadership 289

Leaders as Coaches 289

Gender and Leadership 290

Finding a better way: Women Leading the Way 290

Cross-Cultural Leadership 291

Emerging Issues in Leadership 291

Strategic Leadership 291

Ethical Leadership 291

Virtual Leadership 292

Managing in turbulent times: The Changing Faces of Leadership 292

Leadership, Management, and Decision Making 293

The Nature of Decision Making 293

Rational Decision Making 295

Behavioral Aspects of Decision Making 297

Summary of learning objectives • key terms • questions & exercises • building a business: continuing team exercise • team exercise • exercising your ethics • cases • endnotes

10 Human Resource Management and Labor Relations 306

Chapter Opening Case: A Unique Partnership Drives Wegmans 309

The Foundations of Human Resource Management 310

The Strategic Importance of HRM 310

HR Planning 311

The Legal Context of HRM 313

Equal Employment Opportunity 313

Compensation and Benefits 314

Labor Relations 315

Health and Safety 315

Other Legal Issues 315

Staffing the Organization 316

Recruiting Employees 317

Selecting Employees 317

Compensation and Benefits 318

Wages and Salaries 318

Incentive Programs 319

Benefits Programs 319

Finding a better way: Holding True at Nucor Steel 320

Developing the Workforce 322

Training and Development 322

Performance Appraisal 323

Entrepreneurship and new ventures: Time to Go 325

New Challenges in the Changing Workplace 326

Managing Workforce Diversity 326

Managing Knowledge Workers 326

Contingent and Temporary Workers 327

managing in turbulent times: The Talent Gap 328

Dealing with Organized Labor 329

Unionism Today 329

Collective Bargaining 330

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • crafting a business plan • endnotes

Part 4 Principles of Marketing: Building Relationships with Customers for Competitive Advantage

11 Marketing Processes and Consumer Behavior 342

Chapter Opening Case: Building a Brand With

Social Media 345

What Is Marketing? 346

Delivering Value 346

Goods, Services, and Ideas 347

Relationship Marketing and Customer Relationship Management 348

The Marketing Environment 349

Developing the Marketing Plan 351

managing in turbulent times: An American Icon 352

Marketing Strategy: Planning the Marketing Mix 353

Marketing Strategy: Target Marketing and Market

Segmentation 357

Identifying Market Segments 357

Geographic Segmentation 357

Demographic Segmentation 358

Geo-Demographic Segmentation 358

Psychographic Segmentation 358

Behavioral Segmentation 359

Marketing Research 359

The Research Process 359

Research Methods 361

Finding a better way: The Truth about Your Online Customer Service 362

Understanding Consumer Behavior 363

Influences on Consumer Behavior 363

The Consumer Buying Process 363

Organizational Marketing and Buying Behavior 365

Business Marketing 365

B2B Buying Behavior 365

Social Media and Marketing 366

The International Marketing Mix 367

Entrepreneurship and new ventures: Farming Your Niche 369

Small Business and the Marketing Mix 369

Small-Business Products 369

Small-Business Pricing 370

Small-Business Distribution 370

Small-Business Promotion 370

summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

12 Developing and Pricing Products 378

Chapter Opening Case: The Price of Free College 381

What Is a Product? 382

The Value Package 382

finding a better way: Snow Wars 383

Classifying Goods and Services 384

The Product Mix 385

Developing New Products 386

entrepreneurship and new ventures 387

The New Product Development Process 387

Product Mortality Rates 388

The Seven-Step Development Process 388

Variations in the Process for Services 389

Product Life Cycle 390

Stages in the PLC 390

Extending Product Life: An Alternative to New Products 391

Identifying Products 392

Determining Prices 395

Pricing to Meet Business Objectives 395

Price-Setting Tools 396

Pricing Strategies and Tactics 398

Pricing Strategies 398

Managing in turbulent times: Fair or Foul? 400

Pricing Tactics 400

International Pricing 401

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

13 Distributing and Promoting Products 410

Chapter Opening Case: The Changing Landscape of

Commerce 413

The Distribution Mix 414

Intermediaries and Distribution Channels 414

Distribution Strategies 416

Channel Conflict and Channel Leadership 416

Wholesaling 417

Merchant Wholesalers 417

Agents and Brokers 417

The E-Intermediary 418

entrepreneurship and new ventures: Dispensing Hope 418

Retailing 419

Types of Brick-and-Mortar Retail Outlets 419

Finding a better way: The Evolving Way We Pay 420

Nonstore Retailing 421

Online Retailing 421

Physical Distribution 423

Warehousing Operations 423

Transportation Operations 423

Distribution Through Supply Chains as a Marketing Strategy 424

The Importance of Promotion 425

Promotional Objectives 425

Promotional Strategies 426

The Promotional Mix 426

Advertising 426

Personal Selling 429

Personal Selling Situations 429

Personal Selling Tasks 429

Managing in turbulent times: The Logic Behind Logistics 430

The Personal Selling Process 431

Sales Promotions 431

Direct (or Interactive) Marketing 433

Publicity and Public Relations 433

summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • crafting a business plan • endnotes

Part 5 Managing Information for Better Business Decisions

14 Information Technology (IT) for Business 442

Chapter Opening Case: Think Before You Click 445

Information Technology Impacts: A Driver of Changes for Business 446

Creating Portable Offices: Providing Remote Access to

Instant Information 447

Enabling Better Service by Coordinating Remote

Deliveries 447

Creating Leaner, More Efficient Organizations 448

Enabling Increased Collaboration 448

Enabling Global Exchange 449

Improving Management Processes 449

Providing Flexibility for Customization 449

Providing New Business Opportunities 450

Improving the World and Our Lives 451

IT Building Blocks: Business Resources 452

The Internet and Other Communication Resources 452

Networks: System Architecture 454

Hardware and Software 456

Entrepreneurship and new ventures: Speaking Loud and Clear: The Future of Voice Technology 457

Information Systems: Harnessing the Competitive Power of It 458

Leveraging Information Resources: Data Warehousing and

Data Mining 459

Managing in turbulent times: Better Care, Lower Costs 460

Types of Information Systems 460

IT Risks and Threats 462

Hackers 463

Identity Theft 463

Intellectual Property Theft 464

Computer Viruses, Worms, and Trojan Horses 464

Spyware 464

Spam 464

IT Protection Measures 465

Preventing Unauthorized Access: Firewalls 465

Preventing Identity Theft 465

Preventing Infectious Intrusions: Anti-Virus

Software 466

Protecting Electronic Communications: Encryption Software 466

Avoiding Spam and Spyware 466

Ethical Concerns in IT 466

Finding a better way: Gleaning Wisdom from the World

Wide Web 467

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

15 The Role of Accountants and Accounting Information 476

Chapter Opening Case: CSI: Wall Street 479

What Is Accounting, and Who Uses Accounting Information? 480

Financial versus Managerial Accounting 481

Certified Public Accountants 481

Private Accountants and Management Accountants 483

Forensic Accountants 484

Managing in turbulent times: Skimming Off the Top 485

Federal Restrictions on CPA Services and Financial

Reporting: Sarbox 486

The Accounting Equation 486

Assets and Liabilities 487

Owners’ Equity 487

Entrepreneurship and new ventures: Working With the Accounting Equation 488

Financial Statements 489

Balance Sheets 489

Income Statements 490

Statements of Cash Flows 492

The Budget: An Internal Financial Statement 493

Reporting Standards and Practices 494

Revenue Recognition and Activity Timing 494

Full Disclosure 494

Analyzing Financial Statements 495

Solvency Ratios: Borrower’s Ability to Repay Debt 495

Profitability Ratios: Earnings Power for Owners 496

Activity Ratios: How Efficiently Is the Firm Using Its Resources? 496

Bringing Ethics into the Accounting Equation 496

AICPA’s Code of Professional Conduct 497

Violations of Accounting Ethics and GAAP 498

Finding a better way: Analytics and the Future of Auditing 498

Internationalizing Accounting 499

International Accounting Standards Board 499

Why One Set of Global Practices? 499

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • crafting a business plan • endnotes

Part 6 The Financial System and Issues in Financial Management

16 Understanding Money and the Role of Banking 510

Chapter Opening Case: Where Did All the Money Go? 513

What Is Money? 514

The Characteristics of Money 514

The Functions of Money 515

M-1: The Spendable Money Supply 516

M-2: M-1 Plus the Convertible Money Supply 517

Credit Cards and Debit Cards: Plastic Money? 517

The U.S. Financial System 517

Financial Institutions 519

The Growth of Financial Services 520

Managing in turbulent times: Getting Serious with Credit Standards 522

How Financial Institutions Create Money and Are Regulated 523

How Money Is Created 523

How Banks Are Regulated 523

The Federal Reserve System 524

Finding a better way: Cultivating a Social Side for

Community Banking 525

The Structure of the Fed 525

The Functions of the Fed 526

The Tools of the Fed 527

The Changing Money and Banking System 528

Government Intervention for Stabilizing the U.S. Financial System 528

Anticrime and Antiterrorism Regulations 529

The Impact of Electronic Technologies 530

Entrepreneurship and new ventures: Risky Business 531

International Banking and Finance 532

Currency Values and Exchange Rates 532

The International Payments Process 534

International Bank Structure 534

Summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • endnotes

17 Managing Business Finances 544

Chapter Opening Case: Fire On the Ground 547

Maximizing Capital Growth 548

The Time Value of Money and Compound Growth 548

Common Stock Investments 550

Investing to Fulfill Financial Objectives 551

Reasons for Investing 551

Most Mutual Funds Don’t Match the Market 552

Exchange-Traded Funds 552

Entrepreneurship and new ventures: Find a Need, Fill a Need 553

The Business of Trading Securities 553

Primary and Secondary Securities Markets 554

Stock Exchanges 554

Nonexchange Trading: Electronic Communication Networks 556

Individual Investor Trading 556

Tracking the Market Using Stock Indexes 557

Finding a better way: Finding a Way to Fund Life After Work 558

The Risk–Return Relationship 560

Investment Dividends (or Interest), Appreciation,

and Total Return 561

Fantasy Stock Markets 562

Managing Risk with Diversification and Asset Allocation 562

Financing the Business Firm 563

Secured Loans for Equipment 564

Working Capital and Unsecured Loans from Banks 564

Angel Investors and Venture Capital 565

Sale of Corporate Bonds 565

Becoming a Public Corporation 567

Going Public Means Selling Part Ownership of the Company 568

Managing in turbulent times: Winners and Losers 568

Stock Valuation 569

Market Capitalization 570

Choosing Equity versus Debt Capital 570

Regulating Securities Markets 572

The Securities and Exchange Commission 572

Regulations Against Insider Trading 572

summary of learning objectives • key terms • questions & exercises • building a business: continuing

team exercise • team exercise • exercising your ethics • cases • crafting a business plan • endnotes

Appendices

Appendix I: Risk Management 585

Coping with Risk 585

Insurance as Risk Management 586

Appendix II: The Legal Context of

Business 589

The U.S. Legal and Judicial Systems 589

Types of Law 589

The U.S. Judicial System 590

Business Law 591

Contract Law 591

Tort Law 591

Property Law 592

Agency Law 593

Commercial Law 593

Bankruptcy Law 593

The International Framework of Business Law 594

Appendix III: Managing Your

Personal Finances 595

Building Your Financial Plan 595

Assessing Your Current Financial Condition 596

Developing Your Financial Goals 597

Making Better Use of the Time Value of Money 598

Planning for the “Golden Years” 598

Time Value as a Financial-Planning Tool 599

Conserving Money by Controlling It 600

Credit Cards: Keys to Satisfaction or Financial Handcuffs? 600

Save Your Money: Lower Interest Rates and Faster Payments 600

Financial Commitments of Home Ownership 601

How Much House Can You Afford? 601

Cashing Out from Tax Avoidance (Legally) 604

The IRA Tax Break 604

Protecting Your Net Worth 604

Why Buy Life Insurance? 605

What Does Life Insurance Do? 605

How Much Should I Buy? 605

Why Consider Term Insurance? 605

How Much Does It Cost? 606

Appendix IV: Unions and Labor Management 607

Why Do Workers Unionize? 607

The Evolution of Unionism in the United States 607

Early Unions 608

The Emergence of the Major Unions 608

Unionism Today 610

Trends in Union Membership 610

Trends in Union-Management Relations 611

Trends in Bargaining Perspectives 611

The Future of Unions 611

Contemporary Union Structure 612

Locals 612

Laws Governing Labor-Management Relations 613

The Major Labor Laws 613

How Unions Are Organized and Certified 616

Collective Bargaining 617

Reaching Agreement on Contract Terms 617

Contract Issues 618

When Bargaining Fails 619

Administering a Labor Agreement 620

Glossary 623

Index 641

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