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A series of steps that are followed to carry outsome task in a business.
Chief financial officer (CFO)
The member of the top management tam who isresponsible for providing timely and relevant data to support planning andcontrol activities and for preparing financial statements for external users.
The member of the top management team who isresponsible for providing the relevant and timely data to managers and forpreparing financial statements for external users. The controller reports tothe CFO.
Corporate social responsibility
A concept whereby organizations consider theneeds of all stakeholders when making decisions. It extends beyond legalcompliance to include voluntary actions that satisfy stakeholder expectations.
The delegation of decision-making authoritythroughout an organization by providing managers with the authority to make decisionsrelating to their area of responsibility.
Enterprise risk management
A process used by a company to help identify therisks that it faces and to develop responses to those risks that enable thecompany to be reasonably assured of meeting its goals.
Units of product that have been completed buthave not yet been sold to customers.
A production and inventory control system inwhich materials are purchased and units are produced only as needed to meetactual customer demand.
Lean thinking model
A five step management approach that organizesresources around the flow of business processes and that pulls units throughthese processes in response to customer orders.
A position in an organization that is directly relatedto the achievement of the organization’s basic objectives.
Activities that consume resources but do not addvalue for which customers are willing to pay.
A diagram of a company’s organizational structurethat depicts formal lines of reporting, communication, and responsibilitybetween managers.
Materials that are used to make a product.
Sarbanes-Oxley Act of 2002
A method that relies on customer feedback andobjective data gathering and analysis techniques to drive process improvement.
A position in an organization that is onlyindirectly related to the achievement of the organization’s basic objectives.Such positions provide service or assistance to the line positions or to otherstaff positions.
A “game plan” that enables a company to attractcustomers by distinguishing itself from competitors.
Supply chain management
A management approach that coordinates businessprocesses across companies to better serve end consumers.
Theory of constraints (TOC)
A management approach that emphasizes theimportance of managing constraints.
Work in process
Units of product that are only partiallycomplete and will require further work before they are ready for sale to acustomer.
· A business strategy is a game plan that aparticular business uses to distinguish itself from it’s competitors.
· A company can only succeed if it creates areason for customers to choose it over a competitor These reasons are known ascustomer value propositions
2. Describe the three broad categories of customer value propositions.
Customer intimacy- Companies that understand & respond to your individual needs better than other companies. NORDSTROMS/sr$s
Operational excellence- Deliver products & services faster, moreconveniently, & at a lower price than their competitors. WAL-MART
· Product leadership- Offer higher qualityproducts than their competitors. APPLE
· Line position- these people are in charge of directly involved in achieving the basicobjectives of the organization.
o Ex: Board of directors, President, CEO or COO,Managers of US plants, and internal operations
· Staff position- these people are indirectly involved in achieving thesame basic objectives of the organization.
o Ex: CFO, Treasurer, Accountants, HumanResources, Legal advisors
4. Describe the basic responsibilities of the Chief Financial Officer.
· CFO- Responsible for providing timely andrelevant data to support planning, control activities, and for preparingfinancial statements for external uses. (Staff position)
o The Controlleroften runs the accounting department and reports directly to the CFO.
5. What are the three main categories of inventories in a manufacturingcompany?
· Raw Materials -Materials that are used to make aproduct.
· Work In Process - inventory consisting of unitsof product that are only partially complete or require further work before theyare ready for sale to a customer.
· Finished Goods – Inventories consist of units ofproduct that have been completed but have not yet been sold to customers.
6. What are the five steps in the lean thinking model?
· 1. Identify value in specific products/services
· 2. Identify the business process that deliversvalue
· 3. Organize work arrangements around the flow ofthe business process
· 4. Create a pull system that responds tocustomer orders
· 5. Continuously pursue perfection in thebusiness process
7. What are the major benefits from successful implementation of the leanthinking model?
· Implementation of the lean thinking model keepsinventory levels low. This saves money because products are only made whenthere is a demand for them and most products are made without error.
8. Describe what is meant by a “pull” production system.
· Work is pulledthrough the system (assembly line) as customers demand products.
9. Where does the Theory of Constraints recommend that improvement effortsbe focused?
· A Constraint is anything that prevents you fromgetting more of what you want.
o Ex: Time, Machine capacity, Labor, Beds in ahospital, Gates at an airport
· The theory of constraints recommends focusing onimprovement in the weakest link. Managing the constraint is the key to success.
· Six Sigma- A process of improvement method thatrelies on customer feedback and fact-based gathering and analysis to driveprocess improvement.
· Often associated with the term zero deficits.
o Ex: Motorola, General electric
11. Describe the five stages in the Six Sigma DMAIC Framework.
12. Why is adherence to ethical standards important for the smoothfunctioning of an advanced market economy?
· Ethical behavior is the lubricant that keeps theeconomy running. Without it, the economy would operate much less efficiently-less would be available to consumers, quality would be lower, and prices wouldbe higher.
· Do what is right:
o Legality of an action
o Professionalism and business-like behavior
o Courtesy and respect; civility
o Academic honesty
· Corporate governance is the system by which acompany is directed and controlled. Effective implementation of this systemenhances the stockholders’ confidence that a company is being run in their bestinterests rather than in the interests of top managers.
o Provides incentives for the board of directorsand top management to pursue objectives that are in the interests of thecompany’s owners and it should provide for effective monitoring andperformance.
14. Briefly describe what is meant by enterprise risk management.
· EPR is a process used by a company toproactively identify and manage the risks of running a business.
o Risk: A website malfunctioning
o Control: Thoroughly test the website beforegoing “live” on the internet
15. What are the major stakeholder groups whose interest are ties to acompany’s performance?
· Corporate social responsibility (CSR) is aconcept whereby organizations consider the needs of all stakeholders whenmaking decisions. CSR extends beyond legal compliance to include voluntaryactions that satisfy stakeholder expectations.
o Customers, employees, suppliers, communities,and environmental and human rights advocates.
· Competence- attend training
· Confidentiality- don’t disclose client info
· Integrity- sign a conflict of interest statement
· Credibility- disclose relevant info
Sarbanes-Oxley Act (SOX) of 2002
Congress’ response to financial scandals of the1990s.
o CEO verifies statements
o Public Company Accounting Oversight Board wasestablished to provide additional oversight over the audit profession.
o Audit committees of the board
o Restrictions on non=audit work by audit firms
o Requires internal control reports
Process Management – The Value Chain
Research and development -> product design -> manufacturing -> Marketing -> distribution ->customer service
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