1.Modern Marketing
The terms market and marketing can have several meaning depending upon how they are used.The term stock market refers to the buying and selling of shares in corporations as well as other activities related to stock trading and pricing.The important world stock markets are in London,Geneva,New York,Tokyo,and Singapore.Another type of market is a grocery market,which is a place where people purchase food.When economists use the word market they mean a set of forces or conditions that determine the price of a product,such as the supply available for sale and the demand for it by consumers.The term marketing in business includes all of these meanings,and more.
In the past,the concept of marketing emphasized sales emphasized sales.The producer or manufacturer made a procuct he wanted to
sell.Marketing was the task of figuring out how to sell the
product.Basically,selling the product would be accomplished by sales promotion,which included asvertising and personal selling.In addition to sales promotion,marketing also involved the physical distribution of the product to the places where it was actually sold.Distribution consisted of transportation, storage and related services such as
financing,standardization and grading,and the related risks.
The modern marketing concept encompasses all of the activities mentioned.but it is based on a different set of principles.It subscribes to
the notion that production can be economically justified only by consumption.In other words,goods should be produced only if they can be sold.Therefore,the producer should consider who is going to buy the product or what the marker for the product is -before production begins.This is very different from making a product and then thinking about how to sell it.
Marketing now involves first deciding what the customer wants,and designing and producing a product that satisfies these wants at a profit to the company.Instead of concerntrating solely on production,the company must consider the desires of the consumer,and this is much more
difficult since it involves human behavior.Production on the other hand,is mostly an engineering problem.Thus,demand and market forces are still an important aspect of modern marketing,but they are considered prior to the production process.
Because products are often marketed internationally,distribution has increased in importance.Goods must be at the place where the customer needs them and must brought there.This is known as place utility;it adds value to a product.However,many markets are separated from the place of production,which means that often both raw materials and finished products must be transported to the points where they are needed.
Raw materials requiring little or no special treatment can be transported ba rail,ship,or barge at low https://www.doczj.com/doc/ca3713047.html,rge quantities of raw
materials travel as bulk freight,but finished products that often require special treatment,such as refregeration or carefull handling,are usually transported by truck.This merchandise freight is usually smaller in volume and requires quicker delivery.Merchandise freight is a term for the transportation of manufactured goods.
Along all points of the distribution channel various amounts of storage are required.The time and manner of such storage depends upon the type of product.Inventories of this stored merchancise often need to be financed.
Modern marketing is therefore a coordinated system of many business activities,but basically it involves four things:1)selling the correct product at the proper place,2)selling it at a price determined by
demand,3)satisfying a customer's needs and wants,and 4)producing a profit for the company.
2.Bookkeeping and Accounting
All business enterprises,from the smallest to the largest,must keep finacial records.These records are c alled the company’s accounts.Oweners of small businesses such as stores,restaurants,or gasoline stations may handle all the accounts themselves.A large corporation,on the other hand,will probably have hundreds of employees and use computers to record its accounts.The records of a company's accounts are called its "books'.Each account is kept in a separate book
known as a ledger.Every financial transaction must be posted in the books.
There are two basic bookkeeping systems.In the single-entry system,expenditures and income are recorded to show a cash balance.Most of us are familiar with single-entry bookkeeping from our own bank or household accounts.Only one entry in the books is made for each transaction in this system.
In double-entry bookkeeping,two entries are made for each transacrion.The books of accounts have two columns.The one on the left is called a debit,and the one on the right is called a credit.At one time,a debit showed an item with monetary value going out.The item of value could be cash,but it could also be merchandise and equipment.Today,however,most companies keep several different ledgers,so the same transaction may appear as a debit in one ledger and as a credit in another.When the two columns of each ledger are added,they should be equal.When they are not equal,a mistake has been made.In the modern business world,accounting plays an even more important role than bookkeeping.Bookkeepers simply record the financial transaction,though they must understand which items are credits and debits.Accountants,on the other hand,set up bookkeeping systems,check the records,and help management understand the figures.Many accountans are the expert of taxes,which have become more and more
complicated over the years.The tax laws provide for many different kinds of deductions from taxable income.For example,there is an allowance for the depreciation of fixed assets,such as plant,machinery,and even office furniture."Depreciation" means that these items become less valuable as they wear out over a period of time.One job of a tax accountant is work out a depreciation schedule based on the average life of these items. When a new company is formed,an accountant sets up its bookkeeping system.The accountant must decide what books are necessary for the business.Then he or she must train the bookkeepers in the proper way to post the accounts.The process of checking the books is called an audit.Accountants is preparing financial statements annually.They show the financial condition of the company by listing its assets and liabilities are amounts that are owed or that have been lost.
The accounting and bookkeeping department of a large corporation often has several sections.For example,one section will take care only of accounts payable-the money which the company owes.There may be still other sections to take care of taxes,pensions,and investments. Bookkeeping and accounting are central to modern business.Even when computers are used,the people who work with the accounts must be systematic,methodical and accurate.Many of the men and women who have risen to top management positions have had a background in bookkeeping and a background in bookkeeping and accounting.
3.Insurance
Each of us constantly chances the possibility of finacial loss.Homes may be damaged or destroyed by fire strom and vandalism.Automotive accidents may result in loss of life,large of medical expenses,or damaged property.A wage earner may no longer be able to earn a living because of illness,injury,or old age.Death may result in unexpected expenses and loss of income for the rest of the family.Situation such as these in which you chance the possibility of financial loss are called economic risks.
To avoid financial hardship,many people try to build financial security.They regularly put aside savings to pay for small finacial emergencies or to tide them over in case of temporary loss of income.Most people,however,are not able to build up enough savings to cover large or long-term losses.Therefore,they buy insurance as part of their financial security plan.
Insurance is the protection against economic loss provided by sharing the risk with others.Insurance companies are business that provide insurance services.Because insurance companies are able to insure many people against a specific risk,the pool of people sharing the risk is large.And so the cost to each member of the pool is small.In addition,insurance companies base their costs on the theory of probability;that is ,an estimate of the likehood that a particular event will occur.On the basis of past experience,insurance companies can determine
wiith reasonable accuracy how many accidents of a given type will likely occur within a certain period.The greater the chance,the greater the cost of that type of insurance.
When a person insures something,there is always a written agreement or contract bettween the insurer and the insured.This agreement is called the insurance policy.The company selling the insurance is called the insurer.The insured,or policyholder,is the person on whose life or property an insurance policy is issued.An insurance policy is a legally binding contract.It is important,therefore,that you study it very carefully.You should be familiar with all the benifits as well as well as the restrictions that might affect you coverage.Many insurance policies have been standardized.But you will find there are differences,especially in health and car insurance.
When you buy insurance,you make regular payments for the insurance protection you receive.The amout of money paid for insurance protection is called the premium.Several factors determine the amountof the premium.Two of these factors are the dollar amount (or dollar value) of the object to be insured and the likelihood of loss.For example,the owener of a $35000 home probably would pay more for home insurance than the owener of a $20000 home.This is because the dollar amount of the risk is higher.However,if the $20000 home were located in an area in which forest fires frequently occurred,the premium may be higher than for a
$35000 home in a fire-safe area.This is because the chance of loss by fire is higher.Similarly,life insurance for a 60-year-old person would cost more than for an equal amount of insurance for a 15-year-old.This is because the 15-year-old can expect to live longer than 60-yearp-old. Insurance companies,like other businesses,have operating costs.Some of these costs are office expenses,and margin.Office expenses are the costs of running the insurance company.They include such things as salaries,office equipment,telephones,and office space.Selling expenses are commission and salaries paid to sales personnel.Margin is the amount of money above and beyond all expenses that is set aside to be used in case of unusual losses.These expenses also affect the cost of insurance. Shop carefully for any insurance you purchase.Although many insurance policies have standard coverage,the cost for the same protection may vary among comprties.You should compare the cost and the coverage.For example,if you want to insure a car,check the rates of several companies-don't just settle for the first one.
Some types of insurance can be bought where you work.Most often,however,you will have to rely on the advice of an insurance agent. An insurance agent is a person who sells insurance.Some insurance agents may represent only one company or specialize in only one type of insurance.Other agents may represent several different companies of offer many kinds of insurance.
Choosing a knowledgeable insurance agent is an important part of shopping for insurance.Most people do not know what types of insurance are available or what a specific insurance policy include.A good insurance agent can help you undestand the language of an insurance policy.And he or she can help you decide on the best kind of policy for
your needs.
4.Contracts
As a consumer,you will take part in a great many business transactions throughout your lifetime.For the most part,these transactions will simply involve the buying of goods and https://www.doczj.com/doc/ca3713047.html,ually,you will have little or nodifficulty in handling these transactions.Occasionally,however,things will not go as smoothly as you would like.Perhaps you may feel that you are being treated unfairly.Or you may want to be particularly sure that the terms of an agreement will be met.When this happens,a knowledge of the law that applies to business transactions or of where to seek advice may help you to solve your problems.
A contract is a legally enforceable agreement between two or more parties.Many consumers think that contracts apply only to large purchases such as homes or cars where the buyer makes a written promise to pay over an extended period of time.But this is not true.Even the simplest purchases result in contracts.Ordinarily,any time you give someone money in payment for a good or service,you have entered into a
contract.When you pay for a soft drink and a box of popcorn,you have made a contract.When you get into a taxi cab,and tell the driver where you want to go,you have made a contract.All these transactions,though simple everyday acts,involve contracts.
From these examples,you can see that many contracts are implied contracts.Implied contracts are contracts in which the intent of the contracting parties is understood by their actions rather than stated in either spoken or written words.
It is also clear that most contracts are oral.However,because implied and oral contracts are hard to prove,you should have all important contracts put in writing.
A contract must have certain features in order for a court to uphold it as a valid contract.These features are 1)mutual assent,2)considerations,3)competent parties,and 4)legal purpose.
If a contract is to be binding,there must be mutual assent.Mutual assent is agreement by the parties to all the terms of a contract.Mutual assent exists when there is an offer and complete acceptance of that offer.An offer must meet certain requirements to be legally binding.It must be definite,and it must show genuine intent to enter into an agreement.If a friend jokingly offers you a million dollars for a ride to school,it is obvious that there is no real intent.Similarly,an offer made in anger,fear,or stress is not usually one that is serious in intent.
The party making the offer is the offeror.The party to whom the offer is made is the offeree.Acceptance takes place when the offeree agrees to the offer made by the offeror.The acceptance by the offeree must be without condition.That is ,the offeree cannot change the terms of the offer in any way.For example,suppose you offer to sell your bicycle to a friend for $25 and your friend say,"I'll buy it if you put refledtors.On first."This is not acceptable because your friend has made a condition.
The acceptance must also be stated directly by the offeree to the offeror.If your friend tells someone else that he or she is planning to buy your bicycle,this is not an acceptance.Once the acceptance has been made to the offeror,the agreement is a contract,and both parties are bound by it. Another feature of a contract is that something must be promised,given,or done by each of the parties to bind the agreement.That someting is called condideration.Money,services,and goods most frequently serve as consideration in a contract.Promises may also be regarded as consideration.To be valid,promises must meet certain requirements.A promise cannot be a promise to do someting that one is already required by law to do.Also,a promise cannot be a promise to do something against the law.
A third feature of a binding contract is that the parties who enter into it must have the ability to make a contract.Persons who have the ability to make a contract are called competent https://www.doczj.com/doc/ca3713047.html,petent parties means
those who are able to understand the contract and its consequences.In general,minors are not regarded as being competent parties. Sometimes business firms do make contracts with minors.This is risky because minors are sometimes able to refuse to carry out the terms of the contract.If the contract is for necessaries,a minor is liable for their reasonable value.Necessaries are those things that are needed for life and that are suitable to one's economic and social position.Food,clothing,shelter,medical care,basic education,and tools with which to earn a living are neccessaries by law.
Goods for recreational use,such as motorcycles,sailboats,and stereo sets,are not necessaries.A merchant who makes a contract with a minor for such goods is taking a risk because the minor can refuse to pay for the goods.The minor cannot keep the goods,but sometimes there may be no goods to give back.Suppose a minor madea contract to buy a sailboat and the boat sank before it was paid for.If the minor refused to pay for the boat,there would be no goods to give back.Even if the merchant will have lost money.
A forth feature of a binging contract is that it cannot in any way violate the law.The contract must be for a legal purpose.In addition,many contracts have been judged by the courts to be against the public good or to be harmful to health and morals of the general public.Examples of illegal contracts are those involving gambling,crime,or doing business
without a license is required by law.
5.consumer Decisions
Consumer decisions can be divided into two main types:those that relate to spending for the necessities of life and those that relate to all other needs.Therefore,basic consumer decisions will be discussed first. All consumer decisions that involve the purchase of goods and services to satisfy the basic need for food,clothing,and shelter are called basic consumer decisions.For some people,particularly those with very low incomes,almost all spending may involve basic consumer decisions.The range of their choices may be limited.They may have to be concerned mainly with getting enough food to survive,enough clothing to keep warm,and enough housing to protect them against the elements.
For the people,only a relatively small percentage of spending will involve basic consumer decisions.And their range of choices may be quite wide.Most people,however,fall somewhere between these two extremes.The major part-but not all-of their spending is related to basic consumer decisions.And their choices are fairly wide.
For example,food is a basic need.But although you must eat everyday,your eating habits will have much to do with how much you spend on food.If you like eating in restaurants or only enjoy fine foods,your food bills will be high.If you are a thrifty shopper or prefer plain meals,your food bills will be low.
Clothing is another basic need.However,the kind of clothing you wear often depends on your life-style.A person living in Hawaiii,for example,has different needs from a person living in North Dakota.Working people have different clothing needs from children or retired people.Even the type of work a person does affects that person's clothing needs.A bus driver who wears a uniform each day does not have the same needs as a salesclerk in a department store.Factory workers have different clothing needs from office workers.And individual perferences affect affect clothing bills.Some people will buy only high-cost fashionable clothing ,while others prefer low-cost utility cloting. Shelter,the third basic need,is usually the most costly expense.Most likely,you will spend more of your money on housing than no any other expense.Again,your individual life-style will determine how much you are willing to spend for this particular need.
After you have made your basic consumer decisions.Discretionary consumer decisions are those decisions that involve the buying of goods and services from choice rather than from necessity.The money used in this type of spending is descretionary income-income left after meeting the expenses for all the necessities.
Decision on how to use your descretionary income are made far more often than basic consumer decisions.These decisionso usually involve consumer wants,and they are concerned with pleasure,satisfaction and
comfort.You could use your discretionary income in any number of ways.It could be saved.It could be spent on travel,entertainment,or recreation.Or it could be spent on a car,a boat,or a hobby.Even more than basic consumer decisions,discretionary consumer decisions are determined by personal preferences and goals.Learning to manage your discretionary income is essential to effective consumer decision making.If you can make wise decisions,you will probably be able to satisfy the wantsatisfy that are most important to you.
As you have learned,your basic needs affect your spending decisions.A number of other factorsS also influence consumer decision making.Chief among these factors are income,personal goals,social presures,habit,and advertising.More often than not,a combination of these factors,rather than just one, will determine how you send your money.
Both basic and discretionary consumer decisions are largely dependent ofnumber the amout of disposable income a individual has.Disposable income is the amount of money left all deductions for taxes,insurance,social security,and other similar items have been made.Disposable income is the money available for spending.Disposable income is also called take-home pay.
If you have no disposable income,your spending choices are clearly limited.The greater your income,the wider your spending choices.Generally,the larger the income you have,the smaller the
percentage of it that has to be spent on satisfying basic needs,and thus the larger the percentage of it that is available for discretionary spending.Therefore,an individual with little disposable income has very little discretionary income andiscretionary a small selection of goods and services from which to choose.
Equally important,how much you have to spend often determines the kinds of goods and services you can buy.So,in addition to having a smaller selection to choose from,the individual with little disposable income may have only items of lower quality within that selection.
The consumer decisions of most people are affected by other people in their social group. Social pressuresocial may exert great influence on clothing styles,hair stylesk,the type of housing,and the kind of recreation you choose.Sometimes,social presures can keep people from buying a particular product.A other timeshare they may cause people to purchase goods and services so that they can be "one of the gang".
Consumer decisions are affected by habit.We do many things automatically,including much of our spending.Habit may cause you to do most of your shopping in just a few stores or to buy only certain brands of merchandise.You may have used one good or service for so long that it has almost become a part of your life.You may not be able to remember when or why the habit started.You may see no reason to change and may even not listen to suggestionsee for change.You are happy with your
present habit even though you may not know why.
Advertising influernces consumer decisions.Advertising reaches us in many ways-through newspaper,magazines,radio and television.Advertsing circulars may be placed in your mailbox or left on your windshield of your car.You may find advertising on the pens and pencils you write with.You see it as you look through the classified section of the telephone directory.You see it in your school newspaper. Some advertisers urge us to go out and buy their products immediately.Other advertisers try to make a lasting impression on our minds so that when we need a product,a well-known product name comes to mind.Many advertising methods and techniques are used,but they all try to keep the name of a good or service in front of you,the consumer.When you go into a store to make a purchase,you may see some product that is familiar to you from a television ad.You identify the product with the ad.If you liked the ad,the chances are good that you will try the product.
6.Business Ethics
Ethics is system of "oughts"-a collection of principles and conduct based on beliefs about what is right and wrong.Business ethics are ethics that apply to business behavior.Behavior that conforms to these principles is considered to be ethical business behavior.Otherwise,it is unethical. Firms often create a code of ethics.A code of ethics is formly arranged
collection of rules to upgrade and guide behavior.It sets standards for dealing ethically with the firm's stakeholders.Such codes deal with issues like attempting to influence government regulatory officials,and using company property for personal use.The codes range from one-page general statements to lengthy booklets containing detailed guides and rules to ensure ethical behavior toward the firm's stakeholders.The underlying belief is that adherence to ethical standards is in the best
long-run interest of the firm. But, in order to have any real meaning,the code must be communicated to employees,contain provisions for dealing with violations,and have soild backing by top management.
When businesspeople are consistently unethical,society usually reacts by passing laws that prohibit the unethical behavior.For example,there are laws that make it illegal for firms based in the United States to pay bribes to high-ranking government officals in other countries in order to get business contracts with these governments.
Every employee has his or her own code of ethicslSuch a code is based on the individual's personal value system.That individual's ethics are the standards against which he or she judges a particular action to be "right" or "wrong." Professional associations also have codes of ethics to which their members nust conform.
Suppose a household products manufacturer plans to introduce a new oven cleaner on the market next week.Suppose further,however,that an
employee in the firm's new product development department discovers that the product is potentially harmful to users if they fail to follow precise the instructions printed on the package. This em[loyee feels a strong personal obligation to "do something" and believes the company's code of ethics requires corrective action.The employee discusses the problem with the head of the product development department but is told to "forget about it."What should the employee do in such a situaton?
To do nothing might violate both personal and company ethical codes. On the other hand, bringing the matter to the attention of higher-ups in the firm would anger the employee's department head. Would higher-level manaement support the employee's action? If the employee is unsure of upper management support,should he or she call the Consumer Product Safety Commission in Washington, D.C. And tell them about the situation?
The answers to these questions require serious delibration by the employee.His or her job would be "on the line"If the firm's ethical code is not genuine .Yet the employee cannot easily push the issue aside.One way for firms to deal with such a situation is to set up in-house proedures for reviewing employee claims about wrong-doing,without the need for the employee to make a formal accusation.
As we have seen,an employee may get caught up in an ethical dilemma.Among the actions the employee might take are to keep quiet,to
resign,or to"blow the whistle"on management.Whistleblowing is the action of publicly reporting what are perceived to be the wrongdoings of a business.A whistleblower is one who reports business practices that he or she believes to be wrong or harmful to consumers, employees,or any of the firm's other stakeholders.Whistleblowing may involve simply telling the news media.But it could also mean reporting to and working with government regulatory agences.
Whistleblowing can lead to company reprials such as firings and demotions.Slowly but steadily,however,some states are beginning to protect whitleblowers. A handful of state laws ans a growing number of state court decisions are beginning to curb the longstanding practice some firms have of firing or discipling workers who expose illegal activities.Some states are also extending protection to those who report practices that,while not illlegal, do endanger public health or safety. Meanwhile,attorneys representing whistleblowers are questioning whether federal laws really protect private industry workers. Various nucler,environmental,health,and safety laws include provisions,that allow employees who are fired or disciplioned for reporting violations to seek redress through the U.S. Department of Labor.But the Labor Department procedure is slow, cumbersome, and uncertain.Thus, more and
more,government and private-industry,whistleblowers are turning to the courts.In court a whistleblower can obtain puntive damages rather than