the big picture Flashcards
5 functions of business
production marketing human resources information technology finance
production
manufacturing goods and services
- profitability
- respecting budgets
- avoid shortages and surplus
marketing
developing, pricing, promoting and distributing
human resources
recruiting, hiring, training and keeping employees
information technology
tech that helps the company operate the various functions efficiently
finance and accounting
ways to obtain funds, budgets and reports
outside environment (out of control of the company)
economy government policies global competition society and consumers technology
newspaper industry
had to change business model with the free news
- advertising and memberships
individual ownership and partnerships
- owner and the company are one of the same
- revenues added to owners’
- hardly any fiscal advantages
- unlimited liability
corps
- separate entity
- sales of shares
- limited liability
public vs private
public: public can buy shares, details disclosed, results every 3 months
private: few investors, details not disclosed, other legal obligations are the same
boards of directors
to defend the interests of the shareholders
- overseeing operations
- monitoring performance
- recommending and/or approving business strategies
management teams
CEO: chief executive officer
COO, CFO, CMO, CIO
middle managers
franchise
a franchisor sells its business model to a franchisee
- rapid growth for the franchisor
- franchisee: well-known brand, large scale ads, training, economies of scale
- consistency
personal savings
pros: no payments, keep profits, no hassle
cons: miss opportunities not able to compete, takes years to grow
borrowing (debt financing)
leveraging by obtaining financing by placing existing assets as a guarantee
pros: owner remains in control, decisive power, money to expand
cons: reduces profit, monthly payments (capital and interests = overhead)
bonds
loans provided by investors
the power of leveraging
using debt to reach higher initial investments
- using one’s limited resources as collateral
- can multiply the return
- high risk
selling shares (equity financing)
pros: quick growth, no fixed costs
cons: minority situation
venture capitalists
start-ups
crowdfunding
raise funds through donations and/or pre-orders on yet-to-be developed products
