Sunday, July 31, 2005

Understanding marketing processes and consumer behavior -- terms

business essentials -- part 10 -- terms

Marketing -- the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives
value -- relative comparison of products benefit with its costs
utility -- ability of a product to satisfy human want or need
consumer goods -- product purchased by consumers for personal use
industrial goods -- products purchased by companies to produce other products
services -- intangible products, such as time, expertise, or activity that can be purchased
relationship marketing -- marketing strategy that emphasizes lasting relationships with customers and suppliers
external environment -- outside factors that influence marketing programs by posing opportunities or threats
substitute product -- product that is dissimilar to those of competitors but that can fulfill the same need
brand competition -- competitive marketing that appeals to consumer perceptions of similar products
international competition -- competitive marketing of domestic products against foreign products
marketing manager -- manager who plans and implements the marketing activities that result in the transfer products from producer to consumer
marketing plan -- detailed strategy for focusing marketing efforts on consumer needs and wants
marketing mix -- the combination of product, pricing, promotion, and distribution strategies used to market products
product -- good, service, or idea that is marketed to fill consumer needs and wants
product differentiation -- creation of a product or product image that differs enough from existing products to attract consumers
distribution -- part of the marketing mix concerned with getting products from producers to consumers
target market -- group of people that has similar wants and needs and that can be expected to show interest in the same products
market segmentation -- process of dividing a market into categories of customer types
geographic variables -- geographical units that may be considered in developing a segmentation strategy
demographic variables -- characteristics of populations that may be considered in developing a segmentation strategy
psychographic variables -- consumer characteristics, such as lifestyles, opinions, interest, and attitudes, that may be considered in developing a segmentation strategy
consumer behavior -- various facets of the decision process by which customers come to purchase and consumer products
brand loyalty -- pattern of regular consumer purchasing based on satisfaction with the product
rational motives -- reasons for purchasing a product that are based on logical evaluation of product attributes
emotional motives -- reasons for purchasing a product that are based on nonobjective factors
data warehousing -- process of collecting, storing, and retrieving data in electronic files
data mining -- application of electronic technologies for searching, sifting, and reorganizing data in order to collect marketing information and target products in the marketplace
industrial market -- organizational market consisting of firms that buy goods that are either converted into products or use during production
reseller market -- organizational market consisting of intermediaries that buy and resell finished goods
institutional market -- organizational market consisting of non-governmental buyers of goods and services such as hospitals, churches, museums, and charitable organizations
feature -- tangible quality that a company builds into a product
value package -- product marketed as a bundle of value-adding attributes, including reasonable cost
convenience good/service -- inexpensive product purchased and consumed rapidly and regularly
shopping good/service -- moderately expensive, infrequently purchased product
specialty good/service -- expensive, rarely purchased product
expense item -- industrial products purchased and consumed rapidly and regularly for daily operations
capital item -- expensive, long-lasting, infrequently purchased industrial products such as buildings and equipment
product mix -- group of products that a firm makes available for sale
product line -- group of similar products intended for similar group of buyers who will use them in similar ways
speed to market -- strategy of introducing new products to respond quickly to consumer or market changes
product life cycle (PLC) -- serious of stages in a products profit producing life
branding -- process of using symbols to communicate the qualities of a product made by particular producer
brand awareness -- extent to which a brand name comes in mind when a consumer considers a particular product category
national brand -- brand-name product produced by, widely distributed by, and carrying the name of the manufacture
licensed brand -- brand-name product for whose name the seller has purchased the right from an organization or individual
private brand (or private label) -- brand-name product the wholesaler or retailer has commissioned from a manufacturer
packaging -- physical container in which a product is sold, advertised, or protected

Motivation Theories and Management Styles

The foundation of good human relations -- interactions between employees and employers and their attitudes toward one another -- is a satisfied and motivated work force. Satisfaction and motivation depend on a psychological contract between organizations in employees: (the set of expectations held by employees concerning what they will contribute in what the organization will provide in return). If contracts are managed effectively, workers will probably be satisfied and motivated. If not, they are likely to be dissatisfied and unmotivated.

Job satisfaction is the degree of enjoyment that people get from doing their jobs. Morale reflects the degree to which they perceive that their needs are being met by their jobs. When workers are satisfied the morale is high, the organization benefits in many ways. Satisfied employees are more committed and loyal and more likely to make useful contributions. They tend to have fewer grievances engage in fewer negative behaviors (complaining, deliberately slowing their work pace, and so forth). Satisfying workers tend to come to work everyday and to remain with the organization. By permitting satisfaction and morale, then, management helps to ensure more efficient operations.

Employee motivation theories

Motivation is the several forces that cause people to behave in certain ways.
the three major approaches to human relations in the workplace are:
(1) classical theory
(2) behavior theory
(3) contemporary theory

There are five motivation theories:
(1) Theories X and Y
(2) Maslow's heirarchy of needs
(3)two-factor theory
(4) expectancy theory
(5) equity theory

There are five major programs designed to make jobs more interesting and rewarding:
(1) reinforcement/behavior modification theory
(2) management by objectives and (MBO)
(3) participative management and empowerment
(4) job enrichment and job redesign
(5) modified work schedules
including (a) work sharing
(b) flextime programs
(c) telecommuting

An important component of the managers directing function, leadership is the process of motivating others to work to meet specific objectives. Contemporary theories of leadership focus on managerial styles -- patterns of behavior that manager exhibits in dealing with subordinates. Managers who adopt an autocratic style issue orders and expect them to be followed. This style allows for rapid decision-making. Managers who adopt a democratic style ask for input from subordinates before making decisions, but they retain final decision-making power. Managers who adopt a free-rein style advise subordinates who are allowed to make decisions. Managers have begun to adapt a contingency approach to managerial style: viewing the appropriate managerial behavior in any situation as dependent, or contingent, on the elements unique to that situation. This approach recognizes the complexity of managerial problems and acknowledges that people in different cultures expect different things from their managers.

Motivating, satisfying, and leading employees -- terms

business essentials -- part 9 -- terms

psychological contract -- set of expectations held by an employee concerning what he or she will contribute to organization and (referred to as contributions) and what the organization will in return provide the employee (referred to as inducements)
job satisfaction -- degree of enjoyment that people derive from performing their jobs
morale -- the overall attitude that employees have toward their workplace
turnover -- annual percentage of an organization's workforce that leaves and must be replaced
motivation -- the set of forces that cause people to behave in certain ways
classical theory of motivation -- theory holding that workers are motivated solely by money
Hawthorne effect -- tendency for productivity to increase when workers believe they are receiving special attention from management
Theory X -- theory of motivation holding that people are naturally irresponsible and uncooperative
Theory Y -- theory of motivation holding that people are naturally responsible, growth oriented, self-motivated, and interested in being productive
hierarchy of human needs model -- theory of motivation describing five levels of human needs and arguing that basic needs must be fulfilled before people work to satisfy higher level needs
two-factor theory -- theory of motivation holding that job satisfaction depends on two types of factors, hygiene and motivation
expectancy theory -- theory of motivation holding that people are motivated to work toward rewards that they want and that they believe have a reasonable chance of obtaining
equity theory -- theory of motivation holding that people evaluate their treatment by employers relative to the treatment of others
reinforcement -- theory that behavior can be encouraged or discouraged by means of rewards or punishments
management by objectives (MBO) -- set of procedures involving both managers and subordinates in setting goals and evaluating process
participative management and empowerment -- method of increasing job satisfaction by giving employees a voice in the management of their jobs in the company
job enrichment -- method of increasing job satisfaction by adding one or more motivating factors to job activities
job redesign -- method of increasing job satisfaction by designing a more satisfactory fit between workers and their jobs
work sharing (or job sharing) -- method of increasing job satisfaction by allowing two or more people to share a single full-time job
flextime programs -- method of increasing job satisfaction by allowing workers to adjust work schedules on a daily or weekly basis
telecommuting -- former flextime that allows people to perform some or all of the job away from standard office settings
leadership -- process of motivating others to work to meet specific objectives
managerial style -- pattern of behavior than a manager exhibits in dealing with subordinates
autocratic style -- managerial style in which managers generally issue orders and expect them to be obeyed without question
democratic style -- managerial style and which managers generally ask for input from subordinates but retain final decision taking power
free-rein style -- managerial style in which managers typically serve as advisers to subordinates who are allowed to make decisions
contingency approach to managerial style -- approach to managerial style holding that the appropriate behavior in any situation is dependent (contingent) on the unique elements of that situation

Managing human resources and labor relations

business essentials -- part 8

Human resource management (HRM) is the set a organizational activities directed at attracting, developing, and maintaining an effective workforce. HR planning involves two tasks. Job analysis is a systematic analysis of jobs within an organization. It results in the creation of the job description in the job specification. Managers must plan for future HR needs by assessing past trends, future plans, and general economic trends. Forecasting labor supply is really two tasks -- forecasting internal supply and forecasting external supply. The next step in HR planning is matching HR supply and demand -- dealing with predicted shortfalls or overstaffing. If the shortfall is predicted, new employees can be hired. The external labor forecast helps managers recruit on the bases of which type of workers are available or scarce.

Staffing and organization means recruiting and hiring the right mix of people. Recruiting is the process of attracting qualified persons to apply for open jobs. Internal recruiting means considering present employees as candidates -- a policy that helps build morale and keep high-quality employees. External recruiting involves attracting people from outside the organization. Methods include advertising, campus interviews, employment agencies or executive search firms, union hiring halls, and referrals by present employees. The next step is the selection process -- gathering information that will predict applicants job success and then hiring the most promising candidates. Common selection techniques include application blanks, tests, and interviews. Some organizations also use such selection techniques as polygraphs and drug tests.

New employees must be trained and allowed to develop job skills. On the job training occurs while the employee is at work. Off the job training takes place at off-site locations where controlled environments allow focused study. In larger firms, performance appraisals show how well workers are doing their jobs. Typically, appraisal involves a regular written assessment as part of a multistep process that begins when a manager defines performance standards for employee. The manager then observes the employee, and the process ends when manager and employee meet to discuss the appraisal.


A compensation system is the total package that a firm offers employees in return for their labor. The right combination of compensation elements will make employees feel valued while holding down company costs. Wages are paid for time worked (for example, by the hour). A salary is paid for discharging the responsibilities of the job. Beyond a certain point, money motivates employees only when tied directly to performance. One way to establish this link is the use of incentive programs -- special pay programs designed to motivate high performance. Benefits -- compensation other than wages and salaries -- comprise a large percentage of most compensation budgets. The law requires most companies to provide Social Security retirement benefits and workers compensation insurance (insurance for compensating workers injured on the job). Most companies provide health, life, and disability insurance; retirement plans pay pensions to workers when they retire. Many companies are experimenting with cost-cutting plans, such as the cafeteria benefit plan, in which a certain dollar amount of benefits per employee is set aside so that each employee can choose from a variety of alternatives.

HR management is heavily influenced by the law. One area of HR regulation is equal employment opportunity -- regulation to protect people from unfair or inappropriate discrimination in the workplace. Because illegal discrimination is based on a prejudice about classes of individuals, laws protect various classes. Enforcement of equal opportunity legislation is handled by the Equal Employment Opportunity Commission, or EEOC, which is responsible for federal regulations, and the Office of Federal Contract Compliance Programs, for OFCCP, which is responsible for executive orders applying to companies doing business with the government. Other legislation deals with the emerging legal issues, including employee safety and health.

Workforce diversity

Workforce diversity refers to the range of workers attitudes, values, beliefs, and behaviors that differ by gender, race, ethnicity, age, and physical ability. Today, many U.S. businesses are working to create workforces that reflect the growing diversity of the population as it enters the labor pool. Although many firms see the diverse workforce as a competitive advantage, not all are equally successful in or eager about implementing diversity programs.

Many firms today also face challenges in managing knowledge workers. The recent boom of high technology companies has led to rapidly increasing salaries and high turnover among the workers who are best prepared to work in those companies. Contingent workers are temporary and part-time workers hired to supplement an organization's permanent workforce. Their numbers have grown significantly since the early 1980s and are expected to rise farther. The practice of hiring contingent workers is gaining popularity because it gives managers more flexibility and because temps are usually not covered by employers benefit programs.

Labor unions

A labor union is a group of individuals working together to achieve shared job-related goals. Labor relations describes the process of dealing with employees represented by a union. Their power comes from collective action, such as collective bargaining -- the process by which union leaders and company managers negotiate conditions of employment for unionized workers. Although millions of workers still belong the unions, membership as a percentage of the total workforce has declined at a steady rate since the mid 1950s.

The collective bargaining process begins when a union is recognized as a negotiator for its members. Among issues that are important to union negotiators are (1) compensation, (2) benefits, and (3) job security. An impasse occurs when management and labor fail to agree on a contract. Each side can use several tactics to support its cause until the impasse is resolved. The most important union tactic is the strike, which occurs when employees temporarily walk off the job and refuse to work. Unions may also use picketing, boycotts, and work slowdowns. Management may resort to lockouts -- denying employees access to the workplace. A firm can also hire temporary or permanent replacements called strikebreakers. Rather than use these tactics, labor and management can call in the third party to help resolve the dispute.

Friday, July 29, 2005

Target markets and Segmentation

Marketers know that they cannot appeal to all buyers in their markets, or at least not to all buyers in the same way. Buyers are too numerous, too widely scattered, in their needs and buying practices. Therefore, most companies today are moving away from mass marketing. Instead, they practice target marketing -- identifying market segments, selecting one or more of them, and developing products and marketing mixes tailored to each. In this way, sellers can develop the right products for each target market and adjust their prices, distribution channels, and advertising to reach the target market effectively.

Target marketing involves designing strategies to build the right relationships with the right customers. Market segmentation is that act of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors who might require separate products and marketing mixes. Once the groups have been identified, target marketing evaluates each market segments attractiveness and selects one or more segments to serve. Market positioning consists of deciding how to best serve target customers -- setting the competitive positioning for the product in creating a detailed marketing plan.

There is no single way to segment a market. Therefore, the marketer tries different variables to see which give the best segmentation opportunities. For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioral. In geographical segmentation, the market is divided into different geographical units such as nations, regions, states, cities, or neighborhoods. In demographic segmentation, the market is divided into groups based on demographic variables, including age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. In psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or personality characteristics. In behavioral segmentation, the market is divided into groups based on consumers knowledge, attitudes, uses, or responses to a product.

Business marketers use many of the same variables to segment their markets. But business markets also can be segmented by business consumer demographics at (industry, company size), operating characteristics, purchasing approaches, situational factors, and personal characteristics. The effectiveness of segmentation analysis depends on finding segments that are measurable, accessible, substantial, differentiable, and actionable.

Identifying attractive market segments

To target the best market segments, the company must first evaluate each segments size and growth characteristics, structural attractiveness, and compatibility with company objectives and resources. It then chooses one of four target marketing strategies -- ranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly using undifferentiated (or mass) marketing. This involves mass-producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. Or the seller can adopt differentiated marketing -- developing different markets offers for several segments. Concentrated marketing (or niche marketing) involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing. Which targeting strategy is best depends on company resources, product variability, product lifecycle stage, market variability, and competitive marketing strategies.

Maximum competitive advantage

Once a company has decided which segments to enter, it must decide on its marketing position strategy -- on which positions to occupy in its chosen segments.
The positioning task consists of three steps;
  1. identifying a set of possible competitive advantages on which to build position,
  2. choosing the right competitive advantages, and
  3. selecting an overall positioning strategy

The brands full positioning is called its value proposition -- the full mix of benefits on which the brand is positioned. In general, companies can choose from one of five winning value propositions on which to position their products: more for more, more for the same, the same for less, less for much less, or more for less. Company and brand positioning are summarized in positioning statements that state the target segment in need, positioning concept, and specific points of difference. The company must then effectively communicate and deliver the chosen position to the market.

marketing fundamentals -- part 6 -- terms

market segmentation -- dividing a market into distinct groups with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes
target marketing -- the process of evaluating each market segment's attractiveness and selecting one or more segments to enter
market positioning -- arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
geographic segmentation -- dividing a market into different geographical units such as nations, states, regions, countries, cities, or neighborhoods
demographic segmentation -- and dividing the market into groups based on demographic variables such as each, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality
age and lifecycle segmentation -- dividing a market into different age and lifecycle groups
gender segmentation -- dividing the market into different groups based on gender
income segmentation -- dividing the market into different groups based on income
psychographic segmentation -- dividing a market into different groups based on social class, lifestyle, or personality characteristics
behavioral segmentation -- dividing a market into groups based on consumer knowledge, attitude, use, or response to a product
occasion segmentation -- dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item
benefit segmentation -- dividing the market into groups according to the different benefits that consumers seek from the product
intermarket segmentation -- forming segments of consumers who have similar needs and buying behavior even though they are located in different countries
target market -- a set of buyers sharing common needs or characteristics that the company decides to serve
undifferentiated (mass) marketing -- a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer
differentiated (segmented) marketing -- a marketing covered strategy in which a firm decides to target several market segments and designs separate offers for each
concentrated (niche) marketing -- a market coverage strategy in which a firm goes after a large share of one or a few segments, or niches
micromarketing -- the practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups (includes local marketing and individual marketing)
local marketing -- tailoring brands and promotions to the needs and wants of local customer groups (cities, neighborhoods, and specific stores)
individual marketing -- tailoring products and marketing programs to the needs and preferences of individual customers (also labeled "markets-of-one marketing," "customized marketing," and "one-to-one marketing.")
product position -- the way the product is defined by consumers on important attitudes, the place the product occupies in consumers mind to relative to competing products
competitive advantage -- an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices
value proposition -- the full positioning of a brand, the full mix of benefits on which it is positioned
positioning statement -- a statement that summarizes company or brand positioning -- it takes this form: To (target segment and need) are (brand) is (concept) that (point of difference).

Tuesday, July 26, 2005

Managing human resources and labor relations

business essentials -- part 8 -- terms

Human resource management (HRM) -- set of organizational activities directed at attracting, developing, and maintaining an effective workforce
job analysis -- systematic analysis of jobs within an organization
job description -- outline of the duties of a job, working conditions, and the tools, materials, and equipment used to perform it
job specification -- description of the skills, abilities, and other credentials required by a job
replacement chart -- list of each management position, who occupies it, how long a person will likely stay in the job, and who is qualified as a replacement
employee information system (skills inventory) -- computerized system containing information on each employee's education, skills, work experiences and career aspirations
recruiting -- process of attracting qualified persons to apply for jobs and organization is seeking to fill
internal recruiting -- considering present employees as candidates for openings
external recruiting -- attracting persons outside the organization to apply for jobs
validation -- the process of determining the predictive value of a selection technique
on-the-job training -- training, sometimes informal, conducted while an employee is at work
off-the-job training -- training conducted in a controlled environment away from the worksite
vestibule training -- off the job training conducted in a simulated environment
performance appraisal -- evaluation of employees job performance in order to determine the degree to which the employee is performing effectively
compensation system -- set of rewards that organizations provide to individuals and return for their willingness to perform various jobs and tasks within the organization
wages -- compensation in the form of money paid for time worked
salary -- compensation in the form of money paid for discharging the responsibilities of a job
incentive program -- special compensation program designed to motivate high-performance
bonus -- individual performance incentive in the form of a special payment made over and above the employee's salary
merit salary system -- individual instead of linking compensation to performance in nonsales jobs
pay for performance or variable pay -- individual incentive yhat rewards a manager for especially productive output
profit-sharing plan -- incentive plan for distributing bonuses to employees when company profits rise above a certain level
gainsharing plan -- incentive plan that rewards groups for productive improvements
pay-for-knowledge plan -- incentive plan to encourage employees to learn new skills or become proficient at different jobs
benefits -- compensation and other than wages and salaries
workers compensation insurance -- legally required insurance for compensating workers injured on the job
cafeteria benefit plan -- benefit plan that set limits on benefits per employee, each of whom may choose from a variety of alternative benefits
equal employment opportunity -- legally mandated nondiscrimination in employment on the bases of race, creed, sex, or national origin
protected class -- set of individuals to buy nature of one or more common characteristics are protected under the law from discrimination on the basis of that characteristics
Equal Employment Opportunity Commission (EEOC) -- federal agency and forcing several discrimination related laws
affirmative action plan -- practice of recruiting qualified employees belonging to racial, gender, or ethnic groups you are underrepresented in an organization
Occupational Safety and Health Act of 1970 (OSHA) -- federal law setting in enforcing guidelines for protecting workers from unsafe conditions and potential health hazards in the workplace
sexual harassment -- practice or instance of making unwelcome sexual advances in the workplace
quid pro quo harassment -- form of sexual harassment in which sexual favors are requested in return for job related benefits
hostile work environment -- form of sexual harassment deriding from off-color jokes, lewd comments, and so forth
employment-at-will -- principle, increasingly modified by legislation and judicial decision, the organizations should be able to retain or dismiss employees at their discretion
workforce diversity -- range of workers attitudes, values, and behaviors that differ by gender, race, and ethnicity
knowledge workers -- employees who are of value because of the knowledge they possess
contingent worker -- employee hired on something other than a full-time basis to supplement and organizations permanent workforce
labor union -- group of individuals working together to achieve shared job-related goals, such as higher pay, shorter working hours, more job security, greater benefits, or better working conditions
labor relations -- process of dealing with employees who are represented by union
collective bargaining -- process by which labor and management negotiate conditions of employment for union represented workers
cost-of-living adjustment (COLA) -- labor contract clause tying future raises to changes in consumer purchasing power
wage reopener claus -- clause allowing wage rates to be negotiated during the life of the labor contract
strike -- labor action in which employees temporarily walk off the job and refuse to work
economic strike -- strike usually triggered by stalemate over one or more mandatory bargaining items
sympathy strike -- strike in which one union strikes to support action initiated by another
wildcat strike -- strike that is an authorized by the strikers union
picketing -- labor action in which workers publicize their grievances at the entrance to an employer's facility
boycott -- labor action in which workers refuse to buy the products of a targeted employer
slow down -- labor action in which workers perform jobs at a slower than normal pace
lockout -- management tactic whereby workers are denied access to the employer's workplace
strikebreaker -- worker hired as permanent or temporary replacement for striking employee
mediation -- method of resolving a labor dispute in which a third party suggests, but does not impose, a settlement
voluntary arbitration -- method of resolving a labor dispute in which both parties agree to submit to the judgment of a neutral party
compulsory arbitration -- method of resolving a labor dispute in which both parties are legally required to accept the judgment of a neutral party

Consumer and business buyer behavior -- terms

marketing fundamentals -- part 5 -- terms

Consumer buyer behavior -- the buying behavior of final consumers, individuals and households to buy goods and services for personal consumption
consumer market -- all the individuals and households that buy or acquire goods and services for personal consumption
culture -- the set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions
subculture -- a group of people with shared values systems based on common life experiences in situations
social class -- relatively permanent and ordered divisions and a society whose members share similar values, interests, and behaviors
group -- two or more people who interact to accomplish individual or mutual goals
opinion leader -- person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others
lifestyle -- a person's pattern of living as expressed in his or her activities, interests, and opinions
personality -- the unique psychological characteristics that lead to relatively consistent and lasting responses to ones own environment
motive -- a need that is sufficiently pressing to direct the person to seek satisfaction of the need
perception -- the process by which people select, organize, and interpret information to form a meaningful picture of the world
learning -- changes in an individual's behavior arising from experience
belief -- a descriptive thought that a person holds about something
attitude -- a person's consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea
cognitive dissonance -- buyer discomfort caused by post-purchase conflict
new product -- a good, service, or idea that is perceived by some potential customers as new
adoption process -- the mental process through which an individual passes from first hearing about an innovation to final adoption
business buyer behavior -- the buying behavior of the organization's that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit
derived demand -- business demand will ultimately comes from (derived from) the demand for consumer goods
straight rebuy -- a business buying situation in which the buyer routinely reorders something without any modifications
modified rebuy -- a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers
new task -- a business buying situation in which the buyer purchases of product or service for the first time
systems selling -- buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation
buying center -- all the individuals and units that participate in the business buying decision process
value analysis -- an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized, or made by less costly methods of production
e-procurement -- online purchasing also called e-commerce

How companies analyze and distribute marketing information

Information gathered in internal databases and through marketing intelligence and marketing research usually requires more analysis. This may include advanced statistical analysis for the application of analytical models that will help marketers make better decisions. In recent years, marketers have paid special attention to the analysis of individual customer data. Many companies have now acquired or developed special software and analysis techniques -- called customer relationship management (CRM) -- that integrate, analyze, and apply the mountains of individual customer data contained in their databases.

Marketing information has no value until it is used to make better marketing decisions. Does, the marketing information system must make the information available to the manager's and others who make marketing decisions or deal with customers. In some cases, this means providing regular reports an update; in other cases it means making nonroutine information available for special situations and on the spot decisions. Many firms use company intranets and extranets to facilitate this process. Thanks to modern technology, today's marketing managers can gain direct access to the information system at any time and from virtually any location.

Public policy and ethic issues.

Some marketers pay special marketing research situations, such as those conducting research and small businesses, nonprofit, or international situations. Marketing research can be conducted effectively by small businesses and nonprofit organizations with limited budgets. International marketing researchers follow the same steps as domestic researchers but often face more and different problems. All organizations need to respond responsibly to major public policy and ethical issues surrounding marketing research, including issues of intrusions on consumer privacy and misuse of research findings.

The marketing research process

The first step in the marketing research process involves defining the problem and setting the research objectives, which may be exploratory, descriptive, or casual research. The second step consists of developing a research plan for collecting data from primary and secondary sources. The third step calls for implementing the marketing research plan by gathering, processing, and analyzing the information. The fourth step consists of interpreting and reporting the findings. Additional information analysis helps marketing managers appy the information and provides them with sophisticated statistical procedures and models from which to develop more rigorous findings.

Both internal and external secondary data sources often provide information more quickly at a lower cost the primary data sources, and they can sometimes yield information that a company cannot collect by itself. However, needed information might not exist in secondary sources, and even if data can be found, they might be largely unusable. Researchers must also evaluate secondary information to insure that it is relevant, accurate, current, and impartial. Primary research must also be evaluated for these features. Each primary data collection method -- observational, survey, and experimental -- has its own advantages and disadvantages. Each of the various primary research contact methods -- mail, telephone, personal interview, and online -- also has its own advantages and drawbacks.

Marketing information systems

The marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. A well-designed information system begins and ends with users. The MIS first assesses information needs. The marketing information system primarily serves the company's marketing and other managers. However, it may also provide info such as suppliers are marketing services agencies. Then, the MIS develops information from internal databases, marketing intelligence activities, and marketing research. Internal databases provide information on the companies owned sales, costs, inventories, cash flows, and accounts receivable and payable. Such data can be obtained quickly and cheaply but often needs to be adapted for marketing decisions. Marketing intelligence activities supply everyday information about developments in the external marketing environment. Market research consists of collecting informa relevant to specific marketing problems faced by a company. Lastly, the MIS distributes information gathered from the sources to the r in the right form and that the right time to help to make better marketing decisions.

Understanding the market place and consumers

marketing fundamentals -- part 4 -- summary

In today's complex and rapidly changing marketplace, marketing managers need more and better information to make effective and timely decisions. This greater need for information has been matched by the explosion of information technologies for supplying information. Using today's new technologies, companies can now handle great quantities of information, sometimes even too much. Yet marketers often complain that they lack enough of the right kind of information or have an excess of the wrong kind. In response, many companies are now studying their managers information needs in designing information systems to help managers develope and manage marketing customer information.

Importance of information to the company and its understanding of the marketplace.

The marketing process starts with a complete understanding of the marketplace and consumer needs and wants. Thus, the company needs sound information in order to produce superior value in satisfaction for customers. The company also requires information on competitors, resellers, and other actors and forces in the marketplace. Increasingly, marketers are viewing information only as a input for making better decisions but also has an important strategic asset and marketing tool.

Monday, July 25, 2005

Managing marketing information

marketing fundamentals -- part 4 -- terms

Marketing information system (MIS) -- people, equipment, and procedures to gather, store, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers
internal databases -- electronic collections of information obtained from data sources within the company
marketing intelligence -- the systematic collection and analysis of publicly available information about competitors and developments in the marketing environment
marketing research -- the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
exploratory research -- marketing research to gather preliminary information that will help to find problems and suggest hypotheses
descriptive research -- marketing research to better described marketing problems, situations, or markets, such as the market potential for product or the demographics and attributes of consumers
casual research -- marketing research to test hypotheses about cause and effect relationships
secondary data -- information that already exists somewhere, having been collected for another purpose
primary data -- information collected for the specific purpose at hand
online databases -- computerized collections of information available from online commercial sources or via the net
observational research -- the gathering of primary data by observing relevant people, actions, and situations
survey research -- the gathering of primary data by asking people questions about their knowledge, attitudes, preferences, and buying behavior
single-source data systems -- electronic monitoring systems that link consumers exposure to television advertising and promotion (measured using television meters) with what they buy in stores (measured using stores checkout scanners)
experimental research -- the gathering of primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses
focus group interviewing -- personal interviewing that involves inviting 6 to 10 people to gather for a few hours with a trained interviewer to talk about a product, service, or organization. The interviewer focuses the group discussion on important issues
online (Internet) marketing research -- collecting primary data through Internet surveys and online focus groups
sample -- a segment of the population selected for marketing research to represent the population as a whole
customer relationship management (CRM) -- managing detailed information about individual customers and carefully managing customer "touch points" in order to maximize customer loyalty

Friday, July 22, 2005

Managing operations in improving quality -- summary

business essentials -- part 7 -- summary

production, operations into four kinds of utilitys

Service operations provided intangible a intangible service products, such as entertainment, transportation, education, and food preparation. Firms that make tangible products -- radios, newspapers, buses, textbooks -- are engaged in goods production. Because the term production is associated just with manufacturing, we now use operations to refer to both service and goods production. Operations (or production) management is a systematic direction and control of the processes that transform resources into finished services and goods that create value for and provide benefits to customers. Resources include knowledge, physical materials, equipment, and labor that are systematically combined into production facility to create four kinds of utility for customers: time utility (which makes products available when customers want them), place utility (which makes products available where they are convenient for customers), possession or ownership utility (by which customers benefit from possessing and using the product), and form utility (which results from the creation of the product).

Service operations and goods production.

Both service and manufacturing operations transform raw materials into finished products. In service production, the raw materials are people who have either unsatisfied needs or possessions needing some form of care or alteration. "Finished products" are thus people with needs met and possessions serviced. The focus of service operations differs from that of goods production in four ways: (1) focus on performance: because goods are produced and services performed, customer oriented performance is crucial to a service company. (2) focus on process and outcome: because most service products are combinations of goods and services, services focus on both the transformation process and its outcome. (3) focus on service characteristics: service transactions reflect the three key qualities of service products -- (a) intangibility: because service usually can't be touched, tasted, smelled, or seen, they provide intangible value experienced as pleasure, satisfaction, or a feeling of safety. (b) customization: each customer expects a service to be designed (customized) to his or her specific needs. (c) unstorability: because many services cannot be produced ahead of time and then stored, they have a high degree of unstorability. (4) focus on service quality considerations: service providers know that quality of work and quality of service are not necessarily the same thing (a properly repaired cars one thing, but getting it back when you need it is another).

Operations planning

Operations planning involves the analysis of five key factors. In capacity planning, the firm analyzes how much of a product it must be able to produce. In high contact services, managers must plan capacity to meet key demand. Capacity planning for goods means ensuring that manufacturing capacity slightly exceeds the normal demand for its product. Location planning for goods and for low contact services involves analyzing proposed facility sites in terms of proximity to raw materials and markets, availability of labor, energy, and transportation costs. Location planning for high contact services involves locating the service near customers, who are part of the system. Layout planning involves designing a facility so that customer needs are supplied for high contact services and to enhanced production efficiency. Alternatives include product, process, and cellular layouts. In quality planning, systems are developed to ensure that products meet a firm's quality standards. Finally, in methods planning, specific production steps and methods for performing them are identified. In methods planning, process flowcharts are helpful for identifying all operations activities and eliminating wasteful steps from production.

Total quality management

Total quality management (TQM) includes any activity forgetting quality products to the marketplace. TQM tools include statistical process control (SPC)-- methods whereby employees gather data and analyze variations in production activities. One SPC tool is the control chart, which plots the results of sample measurements from operations to identify when a process is beginning to depart from normal conditions, so that corrections can be made. Quality/cost studies are useful because improvements in products or production processes always entail additional costs. This method helps identify areas in which quality can be maintained with the greatest cost savings from making, finding, repairing, for preventing defective goods and services. Getting closer to the customer involves maintaining contact so that the company knows what the customers want in the products they consume. It involves communicating with customers so that products are designed to meet their needs. Business process reengineering focuses on improving both the productivity and quality of business practices. It involves the fundamental rethinking and radical redesign of business processes to gain dramatic performance improvement. Outsourcing -- paying suppliers and distributors to perform certain business processes or to provide needed materials or services -- often saves time and money, increasing effectiveness in a firm's core business, and results in more value for customers and owners.

Supply chain strategy

The supply chain strategy is based on the idea that members of the supply chain -- the stream of all activities in companies that creates a product -- can gain competitive advantages by working together as a coordinated system of units. In contrast, traditional strategies assume that companies are managed as individual firms, each acting in its own interests. By managing the chain is a whole -- using supply chain management -- companies can more closely coordinate activities in the chain. By sharing information, overall costs and inventories can be reduced, and deliveries to customers can be faster. Provided with better service and at lower prices, the supply chain's products are preferred, was supply chain members gaining an advantage over competitors whose operations are less effective.

Thursday, July 21, 2005

Managing operations and improving quality -- terms

business essentials -- part 7 -- terms

service operations -- activities producing intangible and tangible products, such as entertainment, transportation, and education
goods production -- activities producing tangible products, such as radios, newspapers, buses, and textbooks
utility -- a product's ability to satisfy a human want
operations (or production) management -- systematic direction and control of the processes that transform resources into finished products that create value and provide benefits to customers
operations (or production) managers -- managers responsible for production, inventory, and quality control
operations process -- set of methods and used in the production of a good or service
analytic process -- production process in which resources are broken down into components to create finished products
synthetic process -- production process in which resources are combined to create finished products
high contact system -- level of customer contact in which the customer is part of the system during service delivery
low contact system -- level of customer contact in which the customer need not be a part of the system to receive the service
capacity -- amount of a product that a company can produce under normal working conditions
process layout -- spatial arrangement of production activities that groups equipment and people according to function
cellular layout --spatial arrangement of production facilities designed to families of products through similar flow paths
product layout -- spatial arrangement of production activities designed to move resources through a smooth, fixed sequence of steps
assembly line -- product layout and what a product moves step-by-step through a plant on conveyor belts or other equipment until it is complete
master production schedule -- schedule showing which products will be produced, when production will take place, and what resources will be used
Gantt chart -- production schedule diagramming the steps in a project and specifying the time requirement for each
PERT chart -- production schedule specifying the sequence and critical path for performing the steps in a project
operations control -- process of monitoring production performance by comparing results with plans
follow-up -- production control activity for ensuring that production decisions are being implemented
materials management -- planning, organizing, in controlling the flow of materials from design through distribution of finished goods
standardization -- use of standard and uniform components in the production process
purchasing -- acquisition of the raw materials and services that firm needs to produce its products
supplier selection -- process of finding in selecting suppliers from whom to buy
inventory control -- in materials management, receiving, storing, handling, and counting of raw materials, partly finished goods, and finished goods
lean system -- production system designed for smooth production flows that avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes
just in time (JIT) production -- production method that brings together all materials and parts needed at each production stage at the precise moment they are required
material requirements planning (MRP) -- production method in which a bill of materials is used to ensure that the right amounts of materials are delivered to the right place at the right time
bill of materials -- production control tool that specifies the necessary ingredients of a product, the order in which they should be combined, and how many of each are needed to make one batch
quality control -- management of the production process designed to manufacture goods or supply services that meet specific quality standards
quality -- a products fitness for use; it's success in offering features that consumers want
total quality management (TMQ) also called quality assurance -- the sum of all activities involving getting high-quality products into the marketplace
performance quality -- the performance features offered by a product
quality reliability -- consistency of products quality from unit to unit
quality ownership -- principle of total quality management that holds that quality belongs to each person who creates it while performing a job
competitive product analysis -- process by which a company analyzes a competitor's product to identify desirable improvements
statistical process control (SPC) -- methods for gathering data to analyze variations in production activities to see when adjustments are needed
control chart -- process control method that plots test sample results on a diagram to determine when a process is beginning to depart from normal operating conditions
quality/cost study -- method of improving quality by identifying current costs and areas with the greatest cost savings potential
internal failures -- reducible costs incurred during production and before bad products leave a plant
external failures -- reducible costs incurred after a defective products have left the plant
ISO 9000 -- program certifying that a factory, laboratory, or office has meant quality management standards of the International Organization for Standardization
business process reengineering -- redesigning of business processes to improve quality, performance, and customer service
outsourcing -- strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or resources
supply chain -- flow of information, materials, and services that starts with raw materials suppliers and continues through other stages in the operations process until the product reaches the end consumer
supply chain management (SCM) -- principle of looking at the supply chain as a whole in order to improve the overall flows through the system

Organizing the business enterprise -- summary

business essentials -- part 6 -- summary

Common structural and operating components and all businesses include a series of jobs to be done and a specific overall purpose. Each organization must develop the most appropriate organizational structure -- the specification of the jobs to be done in the ways in which they relate to one another.

Firms prepare organization charts to clarify structure and to show employees were they fit into a firm's operations. Each box represents a job, and solid lines define the chain of command, or reporting relationships. The charts of large firms are complex and include individuals and many levels. Because size prevents them from charting every manager, they may create single organization charts for overall corporate structure and separate charts for divisions.

The building blocks of organizational structure.

Two activities constitute the building blocks of all organizations. the process of identifying specific jobs and designating people to perform them leads to job specialization. After they're specialized, jobs are grouped into logical units -- the process of departmentalization period departmentalization follows one (or any combination) of five forms: (1) customer departmentalization; (2) product departmentalization; (3) process departmentalization; (4) geographic departmentalization; (5) functional departmentalization. Larger companies take advantage of different types of departmentalization for various levels.

The reporting process.

After jobs have been specialized and departmentalized, firms established decision-making hierarchies. They define reporting relationships so everyone will know who has responsibility for various decisions and operations. The development of this hierarchy results from a three-step process: (1) assigning tasks: determining who can make decisions and specifying how they are to be made; (2) performing tasks: implementing decisions that have been made; and (3) distributing authority: deciding whether the organization is to be centralized or decentralized. With fewer management layers, decentralized firms reflect a flat organizational structure.

Popular new forms of organizational design.

Most firms rely on one of four basic forms of organizational structure: (1) functional organization; (2) divisional organization; (3) matrix structure, or (4) international structure. As global competition becomes more complex, companies may experiment with ways to respond. Some adopt truly global structures, acquiring resources and producing and selling products and local markets without consideration of national boundaries. Organizations continue to seek new forms of organization that permits them to compete effectively. Four of the most popular new forms are: (1) the boundaryless organization; (2) the team organization; (3) the virtual organization; and (4) the learning organization.


The formal organization is the part that can be represented in chart form. The informal organization -- everyday social interactions among employees that transcend formal jobs in job interrelationships -- may alter formal structure. There are two important elements and most informal organizations: (1) informal groups and (2) the grapevine. Many firms support intrapreneuring -- creating and maintaining the innovation and flexibility of a small business within the confines of a large bureaucratic one.

organizing the business enterprise -- terms

business essentials -- part 6 -- terms

organizational structure -- specification of the jobs to be done within an organization and the ways in which they relate to one another
organization chart -- diagram depicting a company structure and showing employees where they fit into its operations
chain of command-- reporting relationships within a company
job specialization -- the process of identifying the specific jobs that need to be done and designating the people who will perform them
departmentalization -- process of grouping jobs into logical units
profit center -- separate company unit responsible for its own costs and profit
customer departmentalization -- departmentalization according to types of customers likely to buy a given product
product departmentalization -- departmentalization according to specific products being created
process departmentalization -- departmentalization according to production processes used to create a good or service
geographic departmentalization -- departmentalization according to areas served by a business
functional departmentalization -- departmentalization according to groups functions or activities
responsibility -- duty to perform an assigned task
authority -- power to make the decisions necessary to complete a task
delegation -- an assignment of a task, responsibility, or authority by manager to a subordinate
accountability -- liability of subordinates for accomplishing tasks assigned by managers
centralized organization -- organization in which most decision-making authority is held by upper-level management
decentralized organization -- organization in which a great deal of decision-making authority is delegated to levels of management at points below the top
flat organizational structure -- characteristic of decentralized companies with relatively few layers of management and relatively wide spans of control
tall organizational structure -- characteristic of centralized companies with multiple layers of management and relatively narrow spans of control
span of control -- number of people supervised by one manager
line authority -- organizational structure in which authority flows in a direct chain of command from the top of the company to the bottom
line department -- a department directly linked to the production and sales of a specific product
staff authority -- authority based on expertise that usually involves advising line managers
staff members -- advisers and counselors who aid line departments in making decisions but do not have the authority to make final decisions
committee and team authority -- authority granted to committees or work teams involved in a firm's daily operations
functional organization -- forms of business organization in which authority is determined by the relationships between group functions and activities
divisional organization -- organizational structure in which corporate divisions operate as autonomous businesses under the larger corporate umbrella
division -- the department that resembles a separate business in producing and marketing its own products
matrix structure -- and organizational structure in which teams are formed in team members report to two or more managers
international organizational structures -- approach is to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets
informal organization -- network, unrelated to the firm's formal authority structure, of everyday social interactions among company employees
grapevine -- in formal communication network that runs through an organization
intrapreneuring -- process of creating and maintaining the innovation and flexibility of a small business environment within the confines of a large organization

The starting points of effective management

the starting point in effective management is setting goals -- objectives that a business hopes and plans to achieve. there are four main purposes in organizational goal setting: (1) providing direction and guidance for managers at all levels; (2) helping to allocate resources; (3) helping to define corporate culture; and (4) helping managers access performance. Firms that long-term goals, intermediate goals, and short-term goals.

Planning is often concerned with the nuts and bolts of setting goals, choosing tactics, and establishing schedules. In contrast, strategy outlines how the business intends to meet its goals and it includes the organizations responsiveness to new challenges and new needs. Three types of strategy usually considered by a company are corporate, business (or competitive), and functional strategy. Strategy formulation involves setting strategic goals, analyzing the organization and its environment. The heart of the strategy formulation is matching environmental threats and opportunities against corporate strengths and weaknesses.

Plans can be viewed on three levels that constitute a hierarchy because implementing plans is practical only when there is a logical flow from one level to the next. Strategic plans to reflect decisions about resource allocations, company priorities, and the steps needed to meet strategic goals. Tactical plans, which typically involve upper and middle management, are shorter range plans for implementing specific aspects of the company strategic plans. Operational plans, which are developed by mid level and lower level managers, are short-term targets for daily, weekly, or monthly performance.

Finally, companies often develop alternative commands for dealing with the unknown and unforeseen. A contingency plan is a hedge against changes that might occur. It seeks to identify in advantage important aspects of a business or its market that might change. Crisis management involves an organization's method for dealing with emergencies.

managing the business enterprise -- terms

business essentials -- part 5 -- terms

goal -- objectives that a business hope some plans to achieve
strategy -- broad set of organizational plans for implementing the decisions made for achieving organizational goals
corporate strategy -- strategy for determining the firm's overall attitude toward growth and the way it will manage its businesses or product lines
business (or competitive) strategy -- and strategy, at the business unit or product line level, focusing on the firms competitive position
functional strategy -- strategy by which managers and specific areas decide how best to achieve corporate goals through productivity
mission statement -- organizations statement of how it will achieve its purpose in the environment in which conducts its business
long-term goal -- goal set for extended time, typically five years or more into the future
intermediate goal -- goal set for a period of one to five years into the future
short-term goal -- goal set for the very near future, typically less than one year
strategy formulation -- creation of a broad program for defining a meeting an organizations goals
strategic goal -- long-term goal derived directly from a firm's mission statement
SWOT analysis -- identification and analysis of organizational strengths and weaknesses in environmental opportunities and threats as power of strategy formulation
environmental analysis -- process of scanning the business environment for threats and opportunities
organizational analysis -- process of analyzing a firm strengths and weaknesses
strategic plan -- plant reflecting decisions are about resource allocations, company priorities, and steps needed to meet strategic goals
tactical plan -- generally short-range plan concerned with implementing specific aspects of a company's strategic plan
operational plan -- plan setting short-term targets for daily, weekly, or monthly performance
contingency planning -- identifying aspects of a business or its environment that might entail changes in strategy
crisis management -- organizations method for dealing with emergencies
management -- process of planning, organizing, directing, and controlling an organization's resources to achieve its goals
planning -- management process of determining what organization needs to do and how best to get it done
organizing -- management process of determining how best to arrange an organization's resources and activities into a coherent structure
directing -- management process of guiding and motivating employees to me and organizations objectives
controlling -- management process of monitoring an organization's performance to ensure that its meeting its goals
top manager -- manager responsible to the Board of Directors and stockholders for firms overall performance and effectiveness
middle manager -- managers responsible for implementing the strategies, policies, and decisions made by top managers
first line manager -- manager responsible for supervising the work of employees
technical skills -- skills needed to perform specialized tasks
human relations skills -- skills i understanding and getting along with people
conceptual skills -- abilities to think in the abstract, diagnose and analyze different situations, and see beyond the present situation
decision-making skills -- skills in defining problems and selecting the best courses of action
time management skills -- skills associated with the productive use of time
corporate culture -- the shared experiences, stories, beliefs, and norms that characterize organization

Wednesday, July 20, 2005

Factors of international business

business essentials -- part 4

Several factors enter into the decision to go international. One overriding factor is the business climate and other nations. Even experienced firms have encountered cultural, legal, and economic roadblocks. A company should also consider at least two other issues: (1) is their demand for its products abroad? (2) if so, it must be adapted those products for international consumption?

After deciding to go international, a firm must decide on its level of involvement. Several levels are possible: (1) exporters and importers; (2) international firms; and (3) multinational firms. Different levels of involvement require different kinds of organizational structure. The spectrum of international organizational strategies includes the following: (1) independent agents; (2) licensing arrangements; (3) branch offices; (4) strategic alliances (or joint venturers); and (5) foreign direct investment (FDI).

Some social and cultural differences, like language, are obvious but a wide range of subtle value differences can also affect operations. Economic differences can be fairly pronounced. In dealing with mixed economies, firms must be aware of land -- and to what extent -- the government is involved in a given industry. The impact of economic differences can be even greater in planned economies. Governments can set conditions were doing business and even prohibit it altogether. They can control the flow of capital in use taxes to influence activity in a given industry. They can even confiscate foreign owned property. Common legal and political issues and international business include quotas, tariffs, subsidies, local content laws, and business practice laws.

The global context of business - terms

business essentials -- part 4 -- terms

globalization -- processed by which the world economy is becoming a single interdependent system
import -- product made or growing overall but is sold domestically
export -- product made or growing domestically the shift in sold abroad
general agreement on tariffs and trade (GATT) -- international trade agreement to encourage the multilateral reduction or elimination of trade barriers
North American free trade agreement (NAFTA) -- agreement to gradually eliminate tariffs and other trade barriers among the United States, Canada and Mexico
European Union (EU) -- agreement among major Western European nations to eliminate or make uniform most trade barriers affecting group members
World Trade Organization (WTO) -- organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices
absolute advantage -- the ability to produce something more efficiently than any other country can
comparative advantage -- the ability to produce some products more efficiently than others
national competitive advantage -- international competitive advantage stemming from a combination of factor conditions, demand conditions, related and supporting industries, firm strategies, structures, and rivalries
balance of trade -- economic value of all products a country exports minus the economic value of all products it imports
trade deficit -- situation in which a country's imports exceeds its imports, creating a negative balance of trade
trade surplus -- situation in which a country's exports exceed its imports, creating a positive balance of trade
balance of payment -- flow of all money into or out of a country
exchange rate -- rate at which the currency of one nation can be exchanged for the currency of another country
Euro -- a common courtesy shared among most of the members of the European union (excluding Denmark, Sweden, and the United Kingdom)
exporter -- firm that distributes and sells products to one or more foreign countries
importer -- firm that buys products and foreign markets and then imports them for resale in its own country
international firm -- firm that conducts a significant portion of its business in a foreign country
multinational firm -- firm that designs, produces, and markets products in many nations
independent agent -- for an individual or organization that agrees to represent exporters interests
licensing arrangement -- arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country
branch office -- foreign office set up by an international war multinational firm
strategic alliance -- arrangement or joint venture, in which a company finds a foreign partner to contribute approximately half of the resources needed to establish and operate a new business in the partners country
foreign direct investment (FDI) -- arrangement in which a firm buys or establishes tangible assets and another country
quota -- restriction on the number of products of a certain type that can be imported into a country
embargo -- government order tanning exportation and/or importation of a particular product or all products from a particular country
tariff -- tax levied on imported products
subsidy -- government payment to help a domestic business compete with foreign firms
protectionism -- practice of protecting domestic businesses against foreign competition
local content law -- law requiring that product sold in a particular country be at least partly made there
business practice law -- law or regulation governing business practices in a given country
cartel -- association of producers whose purpose is to control supply and prices
dumping -- practice of selling a product abroad for less than the cost of production

Political and cultural environment changes

The political environment consists of laws, agencies, and groups that influence or limit marketing actions. The political environment has undergone three changes that affect marketing worldwide: increasing legislation regulating business, strong government agency enforcement, and greater emphasis on ethics and socially responsible actions.

The cultural environment is made up of institutions and forces that affect a society's values, perceptions, preferences, and behaviors. The environment shows long-term trends towards a "we society," a lessening of trust of institutions, increasing patriotism, greater appreciation for nature, a new spiritualism, and the search for more meaningful and enduring values.

Natural and technological environment trends

The natural environment shows three major trends: shortages of certain raw materials, higher pollution levels, and more government intervention in natural resource management. Environmental concerns create marketing opportunities for alert companies. The marketer should watch for four major trends in the technological environment: the rapid pace of technological change, high research and development budgets, the concentration by companies on major product improvements, and increased government regulation. companies that failed to keep up with technological change will miss out on new product and marketing opportunities.

Changes in demographic and economic environment affect marketing decisions

Demography is the study of the characteristics of human populations. Today's demographic environment shows a changing age structure, shifting family profiles, geographic population shifts, a better educated and more white-collar population, and increasing diversity. The economic environment consists of factors that affect buying power and patterns.
The economic environment is characterized by more consumer concern for value in shifting consumer spending patterns. Today's squeezed consumers are seeking greater value -- just the right combination of good quality and service at a fair price. The distribution of income also is shifting. The rich have grown richer, the middle class has shrunk, and the poor have remained for, leading to a two-tiered market. Many companies now tailor their marketing offers to two different markets-- the affluent and the less affluent.

environmental forces affect companies ability to serve customers

The company's microenvironment consists of other actors close to the company that combine to form the company's value delivery network or that affect its ability to serve its customers. it includes the company's internal environment -- it several departments and management levels -- as it influences marketing decision-making. Marketing channel firms -- suppliers and marketing intermediaries, including resellers, physical distribution phones, marketing service agencies, and financial intermediaries -- cooperate to create customer value. Five types of customer markets include consumer, business, reseller, government, an international markets. Competitors vie with the company in an effort to serve customers better. Finally, various publics have an actual or potential interest in or impact on the company's ability to meet its objectives.

The macro environment consists of larger societal forces that affect the entire microenvironment. The six forces making of the company's macro environment include demographic, economic, natural, technological, political, and cultural forces. These forces shape opportunities and those threats to the company.

The marketing environment -- part 3 -- terms

marketing environment -- the actors and forces outside marketing that affect marketing managements ability to build to maintain successful relationships with target customers
Microenvironment -- the actors close to the company that affect its ability to serve its customers -- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics
macroenvironment -- to the larger societal forces that affect the Micro environment -- demographic, economic, natural, technological, political, and cultural forces
marketing intermediaries -- firms that helped the company to promote, sell and distribute its goods to final buyers: they include resellers, physical distribution firms, marketing service agencies, and financial intermediaries
public -- any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives
demography -- the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics
baby boomers -- the 78 million people born during the baby boom following World War II and lasting until the early 1960s
generation X -- the 45 million people born between 1965 in 1976 in the "birth dearth" following the baby boom
generation Y -- the 72 million children of the baby boomers, born between 1977 and 1994
economic environment -- factors that affect consumer buying power in spending patterns
Engel's laws -- difference is noted over a century ago by Ernst Engel in how people shift their spending across food, housing, transportation, health care, and other goods and service categories as family income rises
natural environment -- natural resources that are needed as input by marketers or that are affected by marketing activities
technological environment -- forces that create new technologies, creating new products and market opportunities
political environment -- Laws,government agencies, and pressure groups to influence and when it various organizations and individuals in a given society
cultural environment -- institutions and other forces that affect societies pasted values, perceptions, preferences, and behaviors
environmental management perspective -- a management perspective in which the firm takes aggressive actions to affect the publics and forces in its marketing environment rather than simply watching and reacting to them

Tuesday, July 19, 2005

understanding entrepreneurship and business ownership

business essentials -- part 3 -- terms

small-business administration (SBA) -- federal agency charged with assisting small businesses
small-business -- independently owned and managed business that does not dominate its market
entrepreneur - business person who accepts both the risks and opportunities involved in creating an operating a new business venture
business plan -- documents in which the entrepreneur summarizes the business strategy for the proposed new venture and how that strategy will be implemented
venture capital company -- group of small investors to invest money in companies with rapid growth potential
small-business investment company (SBIC) -- government regulated investment company that borrows money from the SBA to invest in lend to small-business
small business development center (SBDC)-- SBA program designed to consolidate information from various disciplines and make available to small-businesses
franchise -- arrangement in which a buyer (franchisee) purchases the right to sell a good or service of the seller (franchiser)
sole proprietorship -- business owned and usually operated by one person who is responsible for all of its debts
unlimited liability -- legal principle holding owners responsible for paying off all debts of a business
general partnership -- business with two or more owners who share in both the operation of the firm in the financial responsibility for its debts
limited partnership -- the type of partnership consisting of limited partners and an active or managing partner
limited partner -- partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment
general (or active) partner -- partner who actively manages the firm into as unlimited liability for its debts
Corporation -- business that is legally considered an entity separate from its owners and is liable for its own debts; owners liability extends to the limits of their investments
limited liability -- legal principle holding investors liable for firms that the only to the limits of their personal investments in it
tender offer -- offer to buy shares made by prospective buyer directly to a target corporations shareholders, who then make individual decisions about whether to sell
double taxation -- situation in which taxes may be payable both by a corporation on its profits and by shareholders on dividend incomes
closely held (or private) corporation -- Corp. whose stock is held by only a few people and is not available for sale to the general public
publicly held (or public) Corp. -- Corp. to stock is widely held and available for sale to the general public
S corporation -- hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes
limited liability corporation (LLC) -- hybrid of a publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability
professional Corporation -- form of ownership allowing professionals to take advantage of corporate benefits while granting them limited business liability and unlimited professional liability
multinational or transnational corporation -- form of corporation spanning national boundaries
corporate governance -- roles of shareholders, directors, and other managers incorporate decision-making
stockholder or shareholder -- owner of shares of stock in a corporation
stock -- share of ownership in a corporation
preferred stock -- stock that offers its holders fixed dividends and priority claims over assets but no corporate voting rights
common stock -- stock that pays dividends and guarantees corporate voting rights but offers last claims over assets
board of directors -- governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets
chief executive officer (CEO) -- top manager hired by the Board of Directors to run a corporation
strategic alliance -- strategy in which two or more organizations collaborate on a project for mutual gain
joint venture -- strategic alliance in which the collaboration involves joint ownership of the new venture
employee stock ownership plan (ESOP) -- arrangement in which the Corporation holds its own stock in trust for its employees, who gradually received ownership of the stock and control its voting rights
institutional investor -- large investor, such as a mutual fund or pension fund, that purchases large blocks of corporate stock
merger -- the union of two corporations to form a new corporation
acquisition -- the purchase of one company by another
divestiture -- strategy whereby a firm sells one or more of its business units
spin-off -- strategy of setting up one or more corporate units as new, independent corporations

conducting business ethically and responsibly

Business essentials -- part 2 -- summary

there are three broad categories of ways in which managerial ethics can affect people's work.
1 -- behavior toward employees
2 -- behavior toward the organization
3 -- behavior toward other economic agents

One model for applying ethical judgments to business solutions recommends the following three items:
(1) gather relevant factual information
(2) analyze the facts to determine the most appropriate moral values
(3) make an ethical judgment based on the rightness or wrongness of the proposed activity or policy.

For other principles may affect any situation:
(1) utility
(2) rights
(3) Justice
(4) caring

Perhaps the single most effective set that a company can take is to demonstrate top management support. In addition to promoting attitudes of honesty and openness, firms can also take specific steps to formalize their commitment by adopting written codes and instituting ethics programs.

social responsibility

ethics affect individuals. The social responsibility refers to the way of firm attempts to balance of its commitments to organizational stakeholders -- those groups, individuals, and organizations that are directly affected by the practices of an organization and, therefore, have a stake in its performance.
Many companies concentrate on five main groups: (1) customers, (2) employees, (3) investors, (4) suppliers, and (5) local communities. Attitudes towards social responsibility have changed. In the late 19th century concern about unbridled business activity was soon translated into laws regulating business practices. Out of the economic turmoil of the 1930s, when greed was blamed for business failures and the loss of jobs, came new laws protecting and enhancing social well-being. During the 1960s and 1970s, activism prompted increased government regulation in many areas of business. Today's attitudes stress a greater social role for business. Perhaps globalization and environmentalism have made businesses more sensitive to their social responsibilities. This view, combined with economic prosperity of the 1980s and 1990s, market return for the laissez-faire philosophy, but the recent academic of corporate scandals threatens to revive the 1930s call for more regulation and oversight.

A firm confronts four areas of concern:
(1) responsibility toward the environment
(2) responsibility toward customers
(3) responsibility toward employees
(4) responsibility toward investors

For small business people, ethical issues are questions of individual ethics. But in questions of social responsibility, they must ask themselves if they can afford a social agenda -- sponsored Little League baseball teams or making donations to the United Way, for example. They should also realize that managers all organizations face issues of ethics and social responsibility