business essentials GLOBAL EDITION This page intentionally left blank business essentials GLOBAL EDITION ELEVENTH EDITION Ronald J Ebert Ricky W Griffin Boston Columbus Indianapolis New York San Francisco Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Vice President, Business Publishing: Donna Battista Editor-in-Chief: Stephanie Wall Acquisitions Editor: Nicole Sam Editorial Assistant: Olivia Vignone Managing Editor, Global Editions: Steven Jackson Associate Project Editor, Global Edition: Amrita Kar Project Manager, Global Editions: Nitin Shankar Manager, Media Production, Global Edition: Vikram Kumar Senior Manufacturing Controller, Production, Global Edition: Trudy Kimber Vice President, Product Marketing: Maggie Moylan Director of Marketing, Digital Services and Products: Jeanette Koskinas Executive Field Marketing Manager: Adam Goldstein Field Marketing Manager: Lenny Ann Raper Product Marketing Assistant: Jessica Quazza Team Lead, Program Management: Ashley Santora Program Manager: Denise Weiss Team Lead, Project Management: Jeff Holcomb Project Manager: Ann Pulido Operations Specialist: Carol Melville Creative Director: Blair Brown Art Director: Janet Slowik Vice President, Director of Digital Strategy and Assessment: Paul Gentile Manager of Learning Applications: Paul DeLuca Digital Editor: Brian Surette Director, Digital Studio: Sacha Laustsen Digital Studio Manager: Diane Lombardo Digital Studio Project Manager: Regina DaSilva Digital Studio Project Manager: Alana Coles Digital Studio Project Manager: Robin Lazrus Full-Service Project Management and Composition: Integra Software Services Interior Designer: Integra Software Services Cover Image: totophotos/Shutterstock Cover Designer: Lumina Datamatics Ltd Printer/Binder: Vivar, Malaysia Cover Printer: Vivar, Malaysia Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsonglobaleditions.com © Pearson Education Limited 2017 The rights of Ronald J Ebert and Ricky W Griffin to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988 Authorized adaptation from the United States edition, entitled Business Essentials, Eleventh Edition, ISBN 978-0-134-12996-9 by Ronald J Ebert and Ricky W Griffin, published by Pearson Education © 2017 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC 1N 8TS All trademarks used herein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners ISBN-10: 1-292-15224-9 ISBN-13: 978-1-292-15224-0 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 10 Typeset in Palatino LT Pro-Roman by Integra Printed and bound by Vivar, Malaysia For Ben Welch—A steadfast friend, an outstanding colleague, and one of the best men that I’ve ever known —R W G This page intentionally left blank brief contents Part 1: The Contemporary Business World The U.S Business Environment 34 Understanding Business Ethics and Social Responsibility 66 Entrepreneurship, New Ventures, and Business Ownership 102 Understanding the Global Context of Business 136 Part 2: Managing the Business Managing the Business 168 Organizing the Business 200 Operations Management and Quality 230 Part 3: People in Organizations Employee Behavior and Motivation 270 Leadership and Decision Making 304 10 Human Resource Management and Labor Relations 334 Part 4: Principles of Marketing: Building Relationships with Customers for Competitive Advantage 11 Marketing Processes and Consumer Behavior 370 12 Developing and Pricing Products 406 13 Distributing and Promoting Products 436 Part 5: Managing Information for Better Business Decisions 14 Information Technology (IT) for Business 468 15 The Role of Accountants and Accounting Information 502 Part 6: The Financial System and Issues in Financial Management 16 Understanding Money and the Role of Banking 538 17 Managing Business Finances 572 Appendices Appendix Appendix Appendix Appendix I: Risk Management 611 II: The Legal Context of Business 615 III: Managing Your Personal Finances 621 IV: Unions and Labor Management 633 Glossary Index 669 649 This page intentionally left blank contents Letter from the Authors 19 About the Authors 21 Special Thanks to Our Super Reviewers 23 Preface 25 Acknowledgments 31 Chapter Opening Case: Simply Divine Ethics in the Workplace 70 69 Individual Ethics 70 The Law and the Real World 70 Individual Values and Morals 71 Business and Managerial Ethics 71 Assessing Ethical Behavior 72 Company Practices and Business Ethics Part 1: The Contemporary Business World The Stakeholder Model of Responsibility 77 entrepreneurship and new ventures: The Electronic Equivalent of Paper Shredding 77 Contemporary Social Consciousness 78 The U.S Business Environment 34 Areas of Social Responsibility finding a better way: Zero Waste Responsibility Toward Employees Responsibility Toward Investors 39 Social Responsibility and the Small Business 87 The Government and Social Responsibility 88 44 entrepreneurship and new ventures: Open Sesame 45 The Economics of Market Systems 47 92 summary of learning objectives • key terms • questions & exercises • building a business: continuing team exercise • team exercise • exercising your ethics • cases • end notes 56 Understanding Business Ethics and Social Responsibility 66 91 managing in turbulent times: Watch Out Before You Blow That Whistle! 93 managing in turbulent times: What Goes Around… 57 89 Evaluating Social Responsibility Economic Growth, Aggregate Output, and Standard of Living 52 summary of learning objectives • key terms • questions & exercises • building a business: continuing team exercise • team exercise • exercising your ethics • cases • end notes How Business Influences Government Informal Organizational Dimensions 91 52 58 89 Formal Organizational Dimensions Private Enterprise and Competition in a Market Economy 50 Managing the U.S Economy How Governments Influence Business Managing Social Responsibility 90 Demand and Supply in a Market Economy 47 Economic Stability 84 85 Approaches to Social Responsibility 86 43 Factors of Production 43 Economic Indicators 80 Implementing Social Responsibility Programs 86 finding a better way: The B Team 40 Types of Economic Systems 79 Responsibility Toward Customers 82 Business and Profit 38 Economic Systems 79 Responsibility Toward the Environment Chapter Opening Case: What Goes Up Can also Come Down! 37 Business, Profit, and the External Environment 38 The External Environments of Business 73 Social Responsibility 76 Entrepreneurship, New Ventures, and Business Ownership 102 Chapter Opening Case: It All Started With a Late Fee 105 What Is a Small Business? 106 The Importance of Small Business in the U.S Economy 107 Popular Areas of Small Business Enterprise 108 682 INDEX Management by objectives (MBO), 291, 293 Management information system (MIS), 488 Manager, 171 areas of, 179–180 financial manager, 179–180 human resource manager, 179 information manager, 179 marketing manager, 179 operations manager, 179 public relations manager, 180 research and development manager, 180 competence, 120 education of, 175–176 experience of, 176–177 incompetence, 119 information systems for, 488 levels of first-line manager, 179 middle manager, 178 top manager, 177–178 roles of, 180–182 decisional, 181–182 informational, 181 interpersonal, 180–181 Managerial (management) accounting, 507 Manhattan Project, 93 Manufacturing operations compared to service operations, 237–238 small businesses in, 109, 110 Market, 46 Marketable securities, 516 Market capitalization (market cap), 596–597 Market economy competition in, 50–52 defined, 45 demand and supply in, 47–50 private enterprise in, 50–52 Market index, 585–588 Marketing, 370–404 See also Marketing mix consumer behavior and, 390–392 CRM in, 376–377 defined, 374 environment, 377–380 competitive, 378, 380 economic, 378 political-legal, 377 sociocultural, 377–378 technological, 378 goods in, 375–376 ideas in, 376 manager, 179, 382 mix (See Marketing mix) objectives, 381 plan (See Marketing plan) relationship, 376–377 research (See Marketing research) services in, 376 social media and, 393–394 strategy (See Marketing strategy) value in, 374–375 Marketing mix, 382–384 defined, 382 international, 394–396 place (distribution) in, 382–383 pricing in, 382 product in, 382 promotion in, 383–384 small business, 396–397 place (distribution) in, 396, 397 pricing in, 396 product in, 396 promotion in, 397 Marketing plan, 380–384 components of, overview of, 381 defined, 381 developing, concept of, 380–381 objectives in, 381 strategy in (See Marketing strategy) Marketing research, 386–390 defined, 386–390 marketing process and, overview of, 386–387 methods of, 388, 389–390 steps in performing, 387–388 Marketing strategy, 381–384 See also Market segmentation distribution through supply chains as, 451 integrated, 384 marketing manager in, 382 marketing mix in, 382–384 product positioning in, 385 target market in, 384 Market price (equilibrium price), 48 Market segmentation, 384–386 behavioral, 386 defined, 384 demographic, 385 geo-demographic, 386 geographic, 385 identifying segments, 385 psychographic, 386 Market share (or market penetration), 422 Market value, 577 Markup, 423 Martha Stewart Living Omnimedia, 217, 218 Maslow, Abraham, 186 Mass customization, 475 Master limited partnership, 122 Master operations schedule, 247–248 Materials management, 250–252 activities for physical goods, 250–251 inventory, 251–252 JIT production, 251 lean production system, 251 quality control, 252 Matrix structure, 217, 218 Maturity, in PLC, 419 Maturity date (due date), 593 INDEX McClelland, David, 287 McGregor, Douglas, 285–286 Media in advertising, 453, 454, 455 Media mix, 454 Mediation, 360, 646 Meetings as time waster, 183 Mentors, 317 Merchandise inventory, 516 Merchant wholesaler, 443 Merger, 127 Mergers and acquisitions (M&As), 127–128 Merit salary system, 347 Methods planning, 246–247 Mexico, 142, 143 Micro-lending, 116, 119 Middle manager, 177, 178 Ministry of Manpower (MOM), 273 Minorities as small business owners, 118 Minority enterprise small business investment companies (MESBICs), 116 Missionary selling, 456 Mission statement, 185 Mixed market economy, 46–47 Monetary policy, 58, 555 Money, 542–569 balance of payments and, 148–149 characteristics of, 542–543 creation of, 550–551 credit cards, 545 debit cards, 545 defined, 542 the Fed, 552–556 functions of, 543–544 international banking and finance, 560–562 M-1, 544–545 M-2, 545 monetary policies and, 58 regulation of, 551–552 supply growth, 546 U.S financial system, 545–550, 556–560 Money market mutual fund, 545 Monitor, manager as, 181 Monopolistic competition, 51 Monopoly, 52 Morale, 282 Morals, ethics and, 71 Mortgage-backed security (MBS), 594 Mortgage loan, 627–628 Motivation, 284–296 concepts and theories, 284–291 classical theory of motivation, 284 contemporary motivation theory, 289–291 early behavioral theory, 284–288 enhancing, strategies and techniques for, 291–296 job enrichment programs, 294 job redesign programs, 294 management by objectives, 291, 293 modified work schedules, 294–296 683 participative management and empowerment, 293 positive reinforcement, 291, 292 punishment, 291, 292 social learning, 291 team structures, 293–294 factors, in two-factor theory, 286–287 self, 279 Multinational firm, 154 Multinational (or transnational) corporation, 125 Municipal bonds, 592 Mutual funds, 578, 579 Mutual savings bank, 547 Myers-Briggs Type Indicator (MBTI), 278–279 N NASDAQ Composite Index, 587 National Association of Securities Dealers Automated Quotation (NASDAQ) system, 583 National brand, 421 National competitive advantage, 151 National Credit Union Administration (NCUA), 554 National debt, 56 National Education Association (NEA), 357 National Labor Relations Act (Wagner Act), 343, 640–641 National Labor Relations Board (NLRB), 343, 640–641 Natural monopoly, 52 Need for achievement, 287–288 Need for affiliation, 288 Need for power, 288 Negative balance of trade, 146 Negligence, 618 Negotiator, manager’s role as, 182 Net income (net profit, net earnings), 518 Networks See Computer networks Net worth, 514, 630 New product development, 413–415 New ventures See Small business start-ups New York Stock Exchange (NYSE), 582–583 Niche, 112–113 No-load fund, 578 Nominal GDP, 53 Noncertified public accountants, 499–509 Nondeposit institutions, 548 Nondirect distribution, 442 Nonprogrammed decision, 322 Nonstore retailing, 446 Norris-LaGuardia Act, 640 North America, 142 North American Free Trade Agreement (NAFTA), 144 O Objections in personal selling process, 456 Objectives in business plan, 114 Observation, 388 Obstructionist stance, 86 684 INDEX Occupational Safety and Health Act (OSHA) of 1970, 343 Occupational Safety and Health Administration (OSHA), 616 Odd-even pricing, 427 Office manager, 177, 179 Officers, 127 Offshoring, 152 Oligopoly, 51–52 Online financing sources, 116 Online investing, 584 Online retailing, 446–449 cybermalls in, 449 defined, 447 e-catalogs in, 447, 448 electronic storefronts in, 448 leading retailers in, 448 video retailing in, 449 On-the-job training, 350 Open Market Committee, 554 Open-market operations, 556 Operating expenses, 518 Operating income, 518 Operational plan, 189 Operations See also Production business strategy as driver of, 240–241 capability, 240–241 control, 250–252 defined, 179, 234 goods, 234, 235–236 management, 237 manager, 177, 178, 179 planning, 242–247 capacity, 242, 243 layout, 244–245 location, 243–244 methods, 246–247 quality, 245–246 process, 238–239 quality in (See Quality) scheduling, 247–250 computer-based, 249 detailed schedule, 248 master operations schedule, 247–248 project, 249–250 staff schedule, 248–249 service, 234, 235–236 value, 236–239 adding, through supply chains, 257–259 in operations process, 238–239 in resource transformation process, 237 in service and manufacturing operations, 237–238 utility provided by, 236 Order processing, 456 Organization, ethical behavior toward, 72 Organizational analysis, 188–189 Organizational citizenship, 275 Organizational commitment, 282 Organizational dimensions of social responsibility formal, 91 ethical compliance, 91 legal compliance, 91 philanthropic giving, 91 informal, 91–92 organization leadership and culture, 91–92 whistle-blowing, 92 Organizational stakeholders, 76–78 See also Stakeholder model of responsibility Organizational structure, 202–227 basic forms of, 215–220 divisional structure, 216–217 functional structure, 216 international organizational structures, 217–219 learning organization, 219, 220 matrix structure, 217, 218 team organization, 219 virtual organization, 219, 220 building blocks of, 207–211 departmentalization, 208, 210–211 job specialization, 207–208 decision-making in (See Decision-making hierarchy) defined, 204 determinants of, 205–206, 207 informal, 220–222 for innovation, 206 organization chart in, 205 Organization chart, 205 Organization of Petroleum Exporting Countries (OPEC), 160 Organized labor, 357–360 collective bargaining, 358–360 unionism, 357–358 Organizing, 173 Outcry market, 582 Outsourcing, 152, 258, 259 Overseas investors, 116 Overseer, 317 Owners’ equity in accounting equation, 513–514 on balance sheet, 516 P Pacific Asia, 142, 143 Packaging, 422 Paid-in capital, 516 Paperwork as time waster, 183 Participative leader behavior, 314 Participative management and empowerment, 293 Partnerships, 121–122 Passive goal behavior, 157, 158 Patent, 618 Path-goal theory, 313 Patriot Act, 344, 557 Pay-for-knowledge plan, 347 Pay for performance (or variable pay), 347 Penetration pricing, 426 INDEX Pension fund, 523, 548 Perfect competition, 50–51 Performance, 246 Performance appraisal, 351–354 compassion in, 353 errors in, 351–352 evaluation form, 351, 352 feedback in, 352, 353–354 methods of, 351 Performance behaviors, 274–275 Permission marketing, 459 Personal contacts, 90 Personal finances, 621–631 conserving money by controlling it, 625–628 credit cards, 626 home ownership, 627–628 interest rates and payments, 626–627 financial plan, 621–623 financial goals, developing, 623 personal net worth, assessing, 622 step-by-step approach to, 621 tax avoidance, 628–631 time value of money, 624–625 as financial planning tool, 625 golden years, planning for, 624–625 Personal influences, 390 Personality, 277–280 authoritarianism, 280 “big five” personality traits, 277–278 emotional intelligence, 279 locus of control, 279 Machiavellianism, 280 Myers-Briggs Type Indicator, 278–279 personality, 277–280 risk propensity, 280 self-efficacy, 279 self-esteem, 280 Personal net worth, 622 Personal selling, 383, 454–459 defined, 383, 454 direct (or interactive) marketing in, 459 process, 456, 457 publicity in, 459 public relations in, 459 sales promotions in, 458–459 situations, 455 tasks, 456 Person-job fit, 284 PERT chart, 249 Pharming, 489 Philanthropic giving, 91 Phishing, 489 Physical distribution, 449–451 defined, 449 through supply chains, 451 transportation operations, 450–451 warehousing operations, 449–450 Physical exams in employee selection, 346 685 Physical goods, activities for, 250–251 Physical resources, 43–44 Picketing, 359, 646 PITI costs, 628 Place, 382–383 See also Distribution mix Place utility, 236, 375 Planned economy, 45–46 Planning, 173 Plant manager, 177, 178, 179 Point-of-sale (POS) displays and terminals, 459, 559 Political action committees (PACs), 90 Political forces in decision making, 326 Political issues in international trade, 159–160 Political-legal environment, 41–42, 377 Polygraph tests in employee selection, 346 Ponzi scheme, 72, 580 Portfolio, 590 Positioning, 452 Positive balance of trade, 146 Positive reinforcement, 291, 292 Possession utility, 375 Power, 309–310 coercive, 310 defined, 309 expert, 310 legitimate, 309 orientation, 157–158 referent, 310 respect, 157, 158 reward, 310 tolerance, 157, 158 Premium, 458 Presentation in personal selling process, 456 President, 127, 177 Price appreciation, 589 Price gouging, 83 Price lining, 426, 427 Price-setting tools, 423–424 breakeven analysis, 424 cost-oriented pricing, 423 Price skimming, 425–426 PricewaterhouseCoopers (PwC), 508 Pricing, 422–428 defined, 382 international, 395, 428 objectives, 422–423 e-business, 423 market share, 422 profit-maximizing, 422 price-setting tools, 423–424 small business, 396 strategies, 425–426 bundling, 426 for e-business, 426 for pricing existing products, 425 for pricing new products, 425–426 tactics, 426, 427 unfair, 83 686 INDEX Primary agents of interest, 72 Primary data, 388 Primary securities market, 581 Prime rate, 547 Principal, 619 The Principles of Scientific Management (Taylor), 284 Print server, 481 Private accountant, 509–510 Private brand (private label), 422 Private cloud services, 481 Private enterprise, 50–52 Private warehouse, 449 Privatization, 46–47 Proactive stance, 87 Process departmentalization, 210 Process layout (custom-product layout), 244 Product, 410–422 adaptation, 419 champion, 222 consumer, 411–412 defined, 382 departmentalization, 210, 211 development of new products, 413–415 seven-step process of, 416–417 successful, 415–416 differentiation, 382 extension, 419 features, 410 ideas, 416 international, 394 layout (same-steps layout), 244–245 liability, 618 life cycle (See Product life cycle (PLC)) line, 413 mix, 413 organizational, 412–413 placement, 421 positioning, 385 seven-step development process, 416–417 small business, 396 testing and test marketing, 416 as value package, 410 Production See also Operations factors of, 43–44 capital, 43 entrepreneurs, 43 information resources, 44 labor, 43 physical resources, 43–44 items, 412 supervisors, 179 Productivity, 54–56, 254 balance of trade, 55–56 defined, 54, 254 national debt, 56 quality-productivity connection, 253–254 Product life cycle (PLC), 418–422 branding in, 419–422 defined, 418 extending, 419 packaging in, 422 stages in, 418–419 decline, 418, 419 growth, 418 introduction, 418 maturity, 418, 419 Professional corporation, 125 Profitability ratio, 521, 522 Profit center, 208 Profit-maximizing objectives, 422 Profits, 38–39 consumer choice and, 39 defined, 38–39 demand and, 39 enterprise and, 39 opportunity and, 39 in private enterprise, 50 Profit-sharing plan, 347 Programmed decision, 321–322 Progressive Wage Model, 273 Project manager, 177, 179 Project scheduling, 249–250 Promotion, 451–454 by advertising, 383, 453–454 defined, 383, 451 importance of, 451–454 international, 395 objectives in, 452 by personal selling, 383, 454–459 by public relations, 383–384 sales, 383 small business, 397 strategies in, 452 Promotional mix, 452–453 consumer buying process and, 452–453 defined, 452 Proper form in contract law, 617 Property, 618 insurance, 613 laws, 618–619 rights in private enterprise, 50 Prospecting, 456 Prospectus, 599 Protectionism, 159–160 Protectionist tariffs, 159 Prototype development, 416 Psychographic segmentation, 386 Psychographic variables, 386 Psychological contract, 282–284 Psychological influences, 390 Psychological pricing, 427 Public cloud services, 480–481 Publicity, 459 Publicly held (or public) corporation, 124, 125 INDEX Public relations, 383–384, 459 Public relations manager, 180 Public warehouse, 449 Pull strategy, 452 Punishment, 291, 292 Punitive damages, 617 Purchasing, 251 Purchasing power parity, 53, 54 Pure risk, 611 Push strategy, 452 Q Qualifying, 456 Quality control, 252 defined, 245–246 improvement team, 255–256 managing (See Total quality management (TQM)) ownership, 255 planning, 245–246 poor, cost of, 254–255 quality-productivity connection, 253–254 taking responsibility for, 255 Quid pro quo harassment, 344 Quota, 159 R Racial harassment, 277 Ranking method of appraisal, 351 Rapid prototyping, 487 Rating method of appraisal, 351, 352 Rational motives, 391 Real GDP, 53, 54 Realistic job preview (RJP), 345 Real-time ad tracking, 453–454 Recency error, 351–352 Recession, 58 Recruiting, 345 Recycling, 81–82 Reference checks in employee selection, 346 Referent power, 310 Regional marketing manager, 179 Regression to the mean, 292 Regulation defined, 89 of money, 551–552 trends in, 616 Regulatory (or administrative) law, 615 Reintroduction, 419 Related diversification, 186 Related industries, 151 Relationship marketing, 376–377 Reorganization, 620 Repayment plan, 620 Replacement chart, 340 Reporting standards and practices, 519–521 full disclosures, 520–521 revenue recognition, 520 Research and development expenses, 518 manager, 180 small businesses in, 111 Reseller market, 392 Reserve banks, 553–554 Reserve requirement, 555 Resource allocator, manager’s role as, 181–182 Responsibility in delegation process, 214 Retailing, 440–441 brick-and-mortar retail outlets, 446 nonstore retailing, 446 online retailing, 446–449 small businesses in, 109 Retail selling, 455 Retained earnings, 516, 598 Retirement plans, 347, 348 Revenue recognition, 520, 527 Revenues, 517 Revenue tariffs, 159 Reward power, 310 Rights, as ethical norm, 73, 74 Right-to-work laws, 641 Risk avoidance, 611 control, 611 defined, 611 IRA, 630 management, 611–613 coping with risk, 611–612 defined, 611 insurance as, 612–613 program, 612 propensity, 280, 326 ratings, 593–594 retention, 611 transfer, 611 Risk-return (risk-reward) relationship, 588–590 asset allocation, 590 defined, 588 diversification, 590 dividends, 589 fantasy stock markets, 589 portfolios, 590 price appreciation, 589 total return, 589 Rivalries, 151 Roth IRA, 630 Router, 491 Rule of 72, 576 Russell 2000 Index, 587 Ryanair, low-cost airline, 233–234 687 688 INDEX S Sabotage, 276 Safety, legal context of, 343 Salary, 346 Sales agent, 442 Sales forecasting in business plan, 114 Sales promotions, 383, 458–459 Sarbanes-Oxley Act of (Sarbox or SOX), 512 Savings and loan association (S&L), 547 Savings institutions, 547 Scientific management, 284 S corporation, 124–125 Screening, 416 Secondary data, 388 Secondary securities market Secured loan (asset-backed loan), 591 Securities, 581–588 defined, 581 ECNs, 583–584 individual investor trading, 584 primary securities market, 581 SEC and, 581, 599–600 stock exchanges, 581–583 stock indexes for tracking, 585–588 Securities and Exchange Commission (SEC), 507, 581, 599–600 Securities investment dealer (broker), 548 Securities market, 599–600 defined, 581 insider trading, regulations against, 599–600 SEC, 581, 599–600 Security policy, 491 Selective distribution, 443 Self-awareness, 279 Self-efficacy, 279 Self-esteem, 280 Sellers, business-to-business, 444, 445 Selling expenses, 518 Sensing versus intuition, in MBTI, 278 Servers, in client-server network, 480 Service Corps of Retired Executives (SCORE), 116 Service factories, 237 Service ideas, 417 Service operations, 234, 235–236 defined, 234 growth in, 235–236 manufacturing operations compared to, 237–238 small businesses in, 109, 110 Service process design, 417 Services defined, 376 development of, 417 marketing, 376 Services companies market, 392 Service value package, 417 7(a) loans programs, 116 Sexual harassment, 277, 344 Shopping agents (e-agents), 444 Shopping goods, 411, 412 Shopping services, 411–412 Shop steward, 639 Shortage, 49 Short-term goal, 185 Short-term outlook, 157, 158 Short-term solvency ratio, 521–522 Silent partner, 121 Singaporean employers, 273–274 Situational approach to leadership, 312–313 decision tree approach, 313 leader-member exchange model, 313 path-goal theory, 313 Skills inventory, 340 Slowdown, 646 Small business, 106–123 See also Entrepreneurship areas of, 108–111 construction, 109 finance and insurance, 109 independent media companies, 111 manufacturing, 109, 110 research-and-development laboratories, 111 retailing, 109 services, 109, 110 transportation, 111 wholesaling, 109 bank credit as source of funds, 591–592 defined, 106 importance of, in U.S economy, 107–108 contributions to big business, 108 innovation, 108 job creation, 107–108 marketing mix and, 396–397 small-business place (distribution) in, 396, 397 small-business pricing in, 396 small-business products in, 396 small-business promotion in, 397 ownership forms, 120–123 cooperatives, 122–123 partnerships, 121–122 sole proprietorship, 120–121 social responsibility and, 87 start-ups (See Small business start-ups) Small Business Administration (SBA), 106 Small Business Development Center (SBDC), 116 Small business investment company (SBIC), 116 Small business start-ups, 112–120 business plan, 113–115 buying existing business, 114 franchising, 114–115 starting from scratch, 115 distinctive competencies in, 112–113 first-mover advantage, 113 identifying new markets, 113 niches in established markets, 112–113 failure in, 119–120 INDEX financing, sources for, 115–116 micro-lending, 119 online, 116 overseas investors, 116 personal resources, 116 SBA financial programs, 116 SBICs, 116 venture capital companies, 116 success in, 120 trends in, 117–118 crossovers from big business, 117–118 e-commerce, 117 global opportunities, 118 minorities and women as owners, 118 survival rates, 118 Smart cards, 559–560 Social consciousness, contemporary, 78–79 Social influences, 390 Socialism, 45, 47 Social learning, 291 Social networking, 393–394 community banking, 559 media, 393 viral marketing and, 393 web-driven revenue with, 394 world and lives improved by, 477–478 Social orientation, 157 Social responsibility, 76–93 approaches to, 86–87 accommodative stance, 87 defensive stance, 87 obstructionist stance, 86 proactive stance, 87 contemporary social consciousness and, 78–79 defined, 76 evaluating, 92 formal organizational dimensions of, 91 ethical compliance, 91 legal compliance, 91 philanthropic giving, 91 government and, 88–90 informal organizational dimensions of, 91–92 organization leadership and culture, 91–92 whistle-blowing, 92 managing, 90–93 organizational stakeholders and, 76–78 programs, implementing, 86–88 small business and, 87 stakeholder model of, 77–78 toward customers, 82–84 toward employees, 84–85 toward environment, 79–82 toward investors, 85–86 Social skills, 279 Sociocultural environment, 42, 377–378 Software, 482, 483–484 Sole proprietorship, 120–121 Solvency ratio, 521–522 current, 521–522 long-term, 522 short-term, 521–522 S&P 500, 587 Spam, 490–491, 492, 493 Span of control, 213–214 S&P Depository Receipts (SPDRS), 587 Special purpose loans, 116 Specialty goods and services, 412 Specialty store, 446 Speculative risk, 611 Speed to market, 416 Spin-off, 128 Spokesperson, manager’s role as, 181 Spoofing, 493 Spyware, 490, 492, 493 Stability, 56–58 defined, 56 inflation and, 56 unemployment and, 56–57, 58 Stabilization policy, 58 Staff authority, 215 Staff members, 215 Staff schedule, 248–249 Stakeholder model of responsibility, 77–78 communities, local and international, 78 customers, 77 employees, 78 investors, 78 suppliers, 78 Standard of living, 52–53 Start-ups See Small business start-ups Statement of cash flows, 518–519 State of certainty, 322 State of risk, 322–323 State of uncertainty, 323 Statutory law, 615 Stock, 126, 577–578 defined, 577 valuation, in IPO, 595–596 Stock broker, 584 Stock exchange, 581–583 Stockholder (or shareholder), 126 Stockholders’ rights, 126 Stock indexes, 585–588 DJIA, 587 index-matching ETFs, 587–588 NASDAQ Composite Index, 587 Russell 2000 Index, 587 S&P 500, 587 Stock investments, 577–578 Stock ownership, 126 Stock split, 596 Stored-value cards, 559–560 Strategic alliances, 127, 155 Strategic goal, 187–188 689 690 INDEX Strategic leadership, 319 Strategic management, 184–189 formulating strategy, 187–189 goals in, 184–185 plans, 189 types of strategies in, 185–186 Strategic plan, 189 Strategy business (or competitive), 186 corporate, 186 defined, 184 formulation, 187–189 goals in, 187–188 matching organization and its environment, 189 SWOT analysis in, 188–189 functional, 186 in national competitive advantage, 151 Strict product liability, 618 Strike, 359–360, 645–646 Strikebreakers, 360, 646 Structures in national competitive advantage, 151 Subprime mortgage lending, 549 Subsidy, 159 Substitute product, 380 Supermarket, 446 Supervisor, 177, 179 “Super Wi-Fi” network, 482 South African Airways (SAA), 203–204 Suppliers information linkages with, 486 in model of social responsibility, 78 Supplier selection, 251 Supply, 48–50 defined, 48 HR forecasting, 339–340 matching, 340–341 laws of, 48–50 in market economy, 47–50 schedule, 48 Supply chain, 257–259 defined, 257 distribution through, 451 management, 258 outsourcing and global, 258, 259 reengineering, for better results, 258 strategy, 257–258 Supply chain management (SCM), 258 Supply curve, 48 Supporting industries, 151 Supportive leader behavior, 314 Surplus, 48 Surveys, 389–390 Sweat equity, 121 SWOT analysis, 188–189 Symbols, cultural, 156 Sympathy (or secondary) strike, 646 Syndicated selling, 444 System software, 482 T Tactical plan, 189 Taft-Hartley Act, 343, 641 enforced resolution, 641 injunctions and cooling-off periods, 641 unfair and illegal union practices, 641 Talent management, 339 Tall organizational structure, 212–213 Tangible personal property, 618 Tangible real property, 618 Target market, 384 See also Market segmentation Tariff, 159 Task-focused leader behavior, 311 Tasks, combining, 294 Tax avoidance, 628–631 IRA tax break, 629–630 life insurance, 630–631 net worth, 630 Tax preparation, 526 Tax services, 508 Taylor, Frederick, 284 Team organization, 219 Teamsters, 357, 638 Team structures, 293–294 Technical skills, 182 Technological environment, 41–42, 378 Technology See Information technology (IT) Telecommuting, 295 Telemarketing, 446 Telephone calls as time waster, 183 Temporary workers, 355–356 Tender offer, 124 Term insurance, 631 Test marketing, 416 Tests in employee selection, 345–346 Theft, 276 Theory X, 285–286 Theory Y, 285–286 Thinking versus feeling, in MBTI, 278 360-degree feedback, 352 Time deposit, 545 Time management skills, 183 Time orientation, 157, 158 Time utility, 236, 375 Time value of money, 576–577, 624–625 Time wasters, 183 Title VII of the Civil Rights Act of 1964, 341–342 Top manager, 178 Tort, 617–618 Total quality management (TQM), 254–257 business process reengineering in, 257 cost of poor quality and, 254–255 customer relations and, 256 defined, 254 INDEX 691 ISO series and, 256 quality improvement teams in, 255–256 quality ownership and, 255 value-added analysis in, 255 Total return, 589 Toxic waste disposal, 81 Trade deficit, 146–148 international (See International trade) show, 459 surplus, 146–148 Trademark, 618 Trading floor, 582 Traditional individual retirement account (IRA), 629–630 Training and development, 350–351 evaluation of training, 350–351 training methods, 350 training needs, assessing, 350 Trait approach to leadership, 310–311 Traits, 310 Transactional leadership, 314 Transformational leadership, 314 Transportation defined, 251 operations, 450–451 small businesses in, 111 Treasurer, 177 Treasury bills (T-bills), 556 Treaty, 143 Trial court, 616 Trojan horses, 490, 493 Troubled Asset Relief Program (TARP), 556–557 Trust services, 548 Turnover, 276 Two-factor theory, 286–287 union membership, trends in, 357, 636–637 anti-unionization activities, 637 workforce composition, 636–637 Union shop, 641 United Auto Workers (UAW), 357, 638 United States (U.S.) business environment, 38–64 economic indicators in, 52–58 economic systems in, 43–47 external environment, 39–43 market systems in, 47–52 price fluctuations in, 37–38 profit and, 38–39 economy managing, 58 small business in, importance of, 107–108 financial system, 545–550 anticrime and antiterrorism regulations, 557 assurances of repayment, 557 electronic technologies in, impact of, 557–560 emergency investment, 556–557 financial institutions in, 545–548 financial services in, 548–550 government intervention for stabilizing, 556–557 judicial system, 616 major trading partners of, 145–146 unionism in, evolution of, 633–635 Unlimited liability, 121 Unrelated diversification, 186 Unsecured loan, 591–592 Upper-middle-income countries, 142 Utility defined, 236 as ethical norm, 73, 74 kinds of, 375 U V Uncertainty acceptance, 157, 158 Uncertainty avoidance, 157, 158 Uncertainty orientation, 157, 158 Unemployment, 56–57, 58 defined, 56 depressions and, 58 problems related to, 57 recessions and, 58 Unethical accounting actions, 525 Unethical behavior, 70 Uniform Commercial Code (UCC), 619 Unionism, 357–358, 633–647 See also Labor unions bargaining perspectives, trends in, 638 collective bargaining, 643–647 evolution of, in U.S., 633–635 labor-management relations, 640–642 reasons for unionizing, 633 today, 357, 636–640 trends in, 636–638 union-management relations, trends in, 637–638 Value-added analysis, 255 Value chain See Supply chain Value package, 410 Values created by marketing, 375–376 cultural, 156 ethics and, 71 in operations, 236–239 adding, through supply chains, 257–259 in operations process, 238–239 in resource transformation process, 237 in service and manufacturing operations, 237–238 utility provided by, 236 Variable cost, 423–424 Venture capital, 592 Venture capital companies, 116 Vestibule training, 350 Vice president, 127, 177, 179 Video conferencing, 479 Video retailing, 449 692 INDEX Vietnam Era Veterans Readjustment Assistance Act, 342 Viral marketing, 393 Virtual leadership, 320–321 Virtual organization, 219, 220 Viruses (computer), 490, 491 Voice technology, 483 Voluntary arbitration, 646 Voluntary bankruptcy, 620 VSAT satellite communications, 480 W Wage reopener clauses, 359, 645 Wages, 346–347 Warehousing, 251, 449–450 Warranty, 619 Water pollution, 81 Web-driven revenue with social networking, 394 West, Ben, 40 Whistle-blower definition of, 85 ethical commitments towards, 85 social responsibility and, 92, 93 Whole-life insurance, 631 Wholesale club, 446 Wholesaling, 440, 441, 443–445 agents, 444 brokers, 444 e-intermediary, 444, 445 merchant, 443–444 full-service, 443 limited-function, 443 small businesses in, 109 Wide area network (WAN), 481 Wi-Fi, 482 Wildcat strike, 646 WiMAX (Worldwide Interoperability for Microwave Access), 482 Wireless local area network (wireless LAN or WLAN), 482 Wireless mooching, 489 Wireless wide area network (WWAN), 481–482 Women as small business owners, 118 Workers’ compensation insurance, 347, 613 Workforce diversity, 354–356 contingent workers, 355–356 defined, 354 knowledge workers, 355 racial and ethnic composition, 354–355 temporary workers, 355–356 in union membership, 636–637 Work groups, forming, 294 Working capital, 591–592 Workplace aggression and violence, 277 Work schedules, modified, 294–296 advantages and disadvantages of, 295–296 alternative workplaces, 295 flextime programs, 295 work-share programs, 294–295 Work sharing (or job sharing), 294–295 Work slowdown, 360 Work team, 215 Workers’ Party (WP), 273 World Bank, 562 World marketplaces, major, 141–143 distinctions based on wealth, 141–142 Europe, 142 North America, 142 Pacific Asia, 142, 143 World Trade Organization (WTO), 145 World Wide Web, 478 Worms (computer), 490 Y Yellow-dog contracts, 640 This page intentionally left blank This page intentionally left blank This page intentionally left blank This page intentionally left blank ... Editor, Global Edition: Amrita Kar Project Manager, Global Editions: Nitin Shankar Manager, Media Production, Global Edition: Vikram Kumar Senior Manufacturing Controller, Production, Global Edition: ... businesses and business opportunities Big and small businesses, established and new businesses, broad-based and niche businesses, successful and unsuccessful businesses, global and domestic businesses—throughout.. .business essentials GLOBAL EDITION This page intentionally left blank business essentials GLOBAL EDITION ELEVENTH EDITION Ronald J Ebert Ricky W Griffin