Chapter 1 Rationalization- evaluate the value of the goods
Business Management Review: Appreciating the Groundwork in Strategic Intrinsic- no actual cash
Business Analysis Extrinsic- complexity of economic issues
Strategic business analysis- thorough evaluation
Human needs and wants, when not satisfied, results to a feeling of
Economic analysis- larger view of local inadequacy or distress
Human resource management- underscores Human needs and wants noneconomic factors:
Production and operations management areas: 1. Political
2. Emotional
1. planning and control 3. Social
2. materials management 4. Technological
3. inventory management 5. Environmental
4. project and supply chain management
Primary needs- essential for one’s survival
Marketing management- movement of goods
Secondary needs
Financial management
- refer to as wants
- valuation of economic activities
- one's hapiness
- costs are accounted
Fixed input- useful until its maximum output
Utility- degree of satisfaction
Lesson 1: ECONOMIC PRINCIPLES
Economics- study of how to manage money Diminishing returns- lower than the amount of energy
Two branches of economics: Economic activities
1. Microeconomics- only deals with individuals - production, distribution and consumption
2. Macroeconomics- deals with the society as whole
- movement of both goods and services
Individual- small unit of society
Tangible- goods with physical identity
Household- on the larger entities
Intangible- refers to services
Scarcity- existence of limited resources
Economic resource- needs and wants may be directly or indirectly satisfied
Shortage- demand is more than the supply
Consumption goods- directly satisfy human needs and wants
Capital goods- indirectly satisfy human needs and wants Job analysis
Scarce- exceeds the availability quantity - outlines human resource management
Free resources- either renewable or nonrenewable plan
Renewable resource- regenerative and sustainable - required in human resource planning
Nonrenewable resource- exhaustive - collecting and studying
Resources according to physical form: Immediate products of job analysis:
1. Natural resources- exists in nature 1. Job description- contains the job title
2. Man-made or capital resources- produced by men 2. Job specification- contains the statement of manpower
3. Human resources- form of labor services
Designing organizational structures- considers efficient work progress
Planning- formulating strategies
Organizing- allocation of task
Directing- activation of people
Lesson 2: Human Resource Management Basics
Staffing
Human resources management- monitoring of the culture
- comes after job analysis
Five functional areas:
- includes recruitment, selection
1. organizational design- employee-job fit for all
2. staffing- recruitment of individuals Recruitment- searching for prospective employees
3. rewards, benefits and compensation system- compliance, rewards
4. training and development- necessary knowledge and skills Selection- determining the qualification
5. performance management and appraisal system- uses performance Placement- giving the selected candidates the most suitable job
evaluation tools
Placement to work performance flow:
Core of human resource management
Screening-> Job matching-> Orientation-> Work performance
1. attraction
2. placing Reward, benefits- wage and salary administration
3. rewarding
4. training Compensation- direct reward for the work done
5. retention
Training and development- process of creating avenues
Training- imparting of technical and operational skills Organizations- designed mainly to produce products or services
Development- conducting suitable programs Production- creation of all goods and services
Performance management and appraisal Operations- process that accepts inputs
- direction and movement of the careers Operation management- focused on administration
New ideas of human resource management: Effectiveness- refers to goal achievement
1. artificial intelligence Efficiency- related to the cost resource utilization
2. big date
3. hybrid work models Layout decisions- make substantial investments
4. healthy organizations
Productivity- aim in production and operations management
Product design- conversion of ideas into reality
Lesson 3: Production and Operations Management Basics
Process design- macroscopic decision-making
Product or service- primary object of consumer
Three categories of production processes:
Production and operations management- transforms raw materials to
finished products 1. flow production- suitable for high demand goods
2. batch production- divides production output
Types of utilities: 3. unit production- customer specifically requires it
1. place utility- place of availability Production planning and control- implementing plans
2. time utility- output is stored
3. form utility- input change in size Project management- evolved from Henry Gantt’s famous Gantt chart
4. service utility- service is rendered to a client
Henri Fayol’s Five Management Functions:
5. knowledge utility - information is imparted
1. planning
2. organizing
Production system- converting inputs to output using processes 3. commanding
4. coordinating
Production process- result in either semi-finished product 5. controlling
Operations process- availability of a complete service Supply chain management- management of a network
Right quality- based upon customer's needs Warehouse management- completes the logistics process
Right quantity- produce the products in a right number Tangible products- created from combining raw materials
Services- rendering of transactions Lesson 5: Financial Management Basics
Financial management covers the following:
Manufactured products- reach its final user Investment decision process-> developing cash flow-> provision of data for
the financing of new projects-> capital budgeting techniques-> traditional
and discounted cash flow methods-> determination of net present value->
determination of internal rate of returns-> approaches for reconciiation
Lesson 4: Marketing Management Basics
under conditions of risk and uncertainty
Marketing management- entire process of product creation
Financial management- involves the planning, organizing, directing
Market- has an existing or potential transaction
Elements of financial management:
Various marketing concepts:
1. Investment decisions- investment in fixed assets
1. production concept of marketing- available and are affordable
2. Financial decisions- raising of funds
2. product concept of marketing- provide the best quality
3. Dividends decision- decision on distribution
3. selling concept of marketing- importance on the sales efforts
4. profit concept of marketing- profitability is the responsibility Financial management in business operation analysis- includes the concept
5. modern marketing concept- puths the customer at the center of cost of capital
6. social marketing concept- need for marketing activities
Financial management functions:
Function of facilitation of exchange:
1. areas of liquidity
1. Advertising 2. raising funds
2. Pricing 3. management of flow of internal funds
3. Financing 4. enterprise profitability
4. Insurance
Financial management operates on the following areas:
Variables under marketing (7ps):
1. Cost control
1. Product- size, color 2. Pricing
2. Price- based on production cost 3. Profit Forecasting
3. Place- cycle of introduction; channel 4. Measuring of Required Returns
4. Promotion- situation about cometitors 5. Managing Assets
5. People- skills and personality of people 6. Managing Fund
6. Process- considers cost efficiency in logistics
7. Physical evidence- includes packaging and design Cash that circulates in this movement from source to user includes:
Customers- value-maximizing entities 1. cash inverted in firm's operations and used to purchase real assets
2. cash that is reinvested to the firm's operations
Quality- totality of features 3. cash that is returned to investors
4. cash generated from the firm's operations
5. cash raised from selling financial assets in financial markets
Role of the financial manager: Cost of goods sold- free incurred
1. perform financing decisions Operating expenses- involves marketing and selling
2. performs investment decisions
3. forecast and plans the firm's financial needs Earnings before interest and taxes (EBIT)- paid as operating income
4. deals with financial markets
5. manage risks Financing costs- amount of interest expense
Sound financial plan- important basis Net income- distributed to the owners
Financial planning- process of estimating the capital Depreciation expense- value diminishes
Various forms of business organization: Income statement- profitability profile
1. Proprietorship- owned by a single individual Balance sheet- picture of a firm’s financial situation
2. Partnership- same realm of advantages
Current assets or gross working capital- converted into cash
3. Corporations- robust financial management system
Cash- currencies, cash equivalents
Statement of financial performance- income statement or profit and loss
statement Accounts Receivable- amount of credit
Statement of financial position- balance sheet Inventory- expected to be on sale.
Assets- valuable factors Fixed assets or noncurrent assets- permanent in nature
Net income- depends on the amount of sales Accumulated depreciation- deducted over the asset’s life
Working capital- current assets, account receivable Liabilities or debts- provide by its creditors
Liquidity- company’s current ratio Current debt
External equity- owner’s original investment - known as short-term liabilities
Financial statements- form of financial reports - short-term notes.
Income statement- revenues and expeses Accounts payable- credits payable
Income- revenue less the expenses Accrued expenses- incurred but not paid
Revenue- sales from the products sold Short-term notes- must be repaid within a short period of time.
Expenses- cost of producing the product Long-term debts- loans that mature beyond a year
Mortgage- guaranteed by a collateral.
Equity- net worth of a business Lesson 6: Introduction to Sustainability Management
Owners’ equity- money invests in the business. Business organizations- stand to benefit
Retained earnings- dividends withdrawn Coined in 1987 by the United Nations, the word sustainable development-
continue to meet the requirements
Financial report- movement of money
Sustainability- compliance actions of business organizations
Statement of cash flow- cash flow
Cash- reflected as income
Corporate Social Responsibility (CSR) -ethical responsibilities to
Net working capital- money invested in current assets shareholders
After-tax cash flow- sum of net income, dept'n expense Shareholders- owners of wealth
Ratios- important tools Customers- drivers of demand
Financial ratio analysis- financial management requirement Shared Value
Liquidity ratio- ability of the business to pay its debts Impossible to create shareholder wealth while pursuing society's welfare.
Two kinds of liquidity ratio: Triple Bottom Line- considers the social, environmental
1. Current ratio Three areas:
2. Liquidity ratio
1. Profitability
Solvency ratios- measure long-term viability 2. Environment
3. Social contributions of enterprises
Profitability ratios- ability of a business to earn profit
Compliance- secondary priority
Return on asset- rate of return on the total asset
Business sustainability- requires leaders
Return on equity- return u=earned by the investment
Efficiency ratio or asset and debt management ratios- right mix
CHAPTER 2
Market value ratio
Lesson1: The core of Strategic management
- also called market prospect ratios
Goal setting- first step in strategic management procedure
- predict the possible amount of earnings
Strategic management includes four basic elements: 4. External Analysis
5. Defining competitive advantage
1. Environmental scanning- comparison of threats 6. Competitor Analysis
2. Strategy formulation- generation of long-term plans 7. Strategy Formulation
3. Strategy implementation- taking action 8. Strategic Action
3. Evaluation and control- fourth and final basic 9. Strategic Control
Environmental Scanning Strategic Planning
At this stage, SWOT (that stands for - methodological form
Strengths,Weaknesses,Opportunities,and Threats)
- structured way
- contrast the internal assets
Drawbacks of Strategic Planning:
Strategy Formulation
1. Strategic Planning is difficult and time consuming
Mission- reason for its survival 2. In strategic planning, immediate results are rarely obtained
3. Strategic planning, quite, often, limits the organization and
Objectives- outcomes of the planned function executives to the more rational and risk-free options
Strategy- broad master plan
Three kinds of strategy:
1. corporate
2. business
3. functional
Policy- comprehensive guideline
Lesson 2: Strategic Management Model
Strategic management model- emphasizes the value and process
Competitive advantage- aggregation of factors
Strategic Management Process:
1. Visioning
2. Positioning
3. Internal Analysis
