Fall BCOR1010 08 PART ONE: THE CONTEXT OF MODERN BUSINESS
A. The Economic Environment 1. The Role of Profit 2. Factors of Production 3. The Worlds Economic Systems 4. The Market Economy
a. The Laws of Supply and Demand b. Imperfect Competition c. Macro Measures of Economic Health
PART ONE: THE CONTEXT OF MODERN BUSINESS
A. The Economic Environment 1. The Role of Profit 2. Factors of Production 3. The Worlds Economic Systems 4. The Market Economy a. The Laws Of Supply and Demand b. Imperfect Competition c. Macro Measures of Economic Health
B. The Role of Government Channeling Markets Along Competitive Line 2. Equality vs. Efficiency 3. Market Failures: Externalities & Public Goods
1. BCOR1010
PART ONE: THE CONTEXT OF BUSINESS CONTD A. THE ECONOMIC ENVIRONMENT B. THE ROLE OF GOVERNMENT C. CORPORATE SOCIAL RESPONSIBILITY (CSR) 1. TAKING ACCOUNT OF STAKEHOLDERS INTERESTS DEFINING CSR GOOD BUSINESS: ENLIGHTENED SELFINTEREST
EXIT & VOICE MECHANISMS FOR STAKEHOLDERS
2. ETHICS AND THE INDIVIDUAL
BCOR1010
In a 2002 article in Fast Company, Five Half Truths of Business, CEOs of the 200 largest companies in the US viewed their responsibility as: Balancing the shareholders expectations of maximum return against other priorities is one of the fundamental problems confronting corporate management. The shareholder must receive a good return, but the legitimate concerns of other constituents (customers, employees, communities, suppliers, and society, at large) also must have appropriate attention. From an editorial in the New York Times by Thomas Freidman on the subject of addressing the issue of climate change and possible solutions: .power utilities, factories and car owners have to be required to pay the real and full cost to societyof the carbon they put into the atmosphere. And higher costs for fossil fuels make more costly clean alternatives more competitive. and If regulated industries are not required to value carbon reduction then they will under-invest in efficiency and renewable energy.
PART ONE: THE CONTEXT OF BUSINESS contd CORPORATE SOCIAL RESPONSIBILITY Taking Account of Stakeholders Interests:Defining Corporate
Social Responsibility 1. Good Business: Enlightened Self-Interest
2. Exit
& Voice Mechanisms for Stakeholders
3. Should Business Do More Than Maximize Profits?
3
Business Ethics and the Individual:
1. Understanding Ethics.
2. 3. 4.
Law and Ethics As Guides To Behavior. The Origin of Business Values. The Likelihood of Confronting Ethical Dilemmas in the Workplace. An Example of a Clash Between Business Conduct and Individual Values.
5.
PART ONE: THE CONTEXT OF BUSINESS A. The Economic Environment B. The Role of Government C. Corporate Social Responsibility D. Globalization of Markets 1. The growth of global trade and our trading partners. 2. Why do nations (firms) engage in global trade?
No nation can produce all it wants and needs, at least not in a cost-effective manner. Even if a country were self-sufficient, other countries (who are not selfsufficient) would want its imports. Countries differ in their relative of wealth factors of production.
3. The negative effects of global trade and protectionism. 4. Structural options facing firms seeking to go global.
4
5. Challenges faced by firms seeking to go global. 6. Unforeseen effects of globalization
Key Issues in the choice of a form of business ownership include: Taxation Limited Liability Additional issues include: Ease of formation State law treatment Transferability of the business, both during life and upon death Retention of control Franchise NOT a form of ownership. Instead a franchise is a popular way to operate a business. Entrepreneur NOTa form of ownership. An entrepreneur can be defined as a person who risks his or her wealth, time and effort to develop for a profit an innovative product or way of doing something.
Part Three: The Interrelated Functions of Business A. The Accounting Function: Keeping the Scorecard
Accounting is the recording, measurement, and interpretation of financial information.
(Ferrell, Hirt, & Ferrell, Business: A Changing World, 2006, p. 434)
1. Importance
2.
Legal Climate (see pg 253 in text)
5
3.
Uses and Users of Accounting Information: Internal versus External
4. Accountants 5. Generally Accepted Accounting Principles (GAAP) Relevant, Reliable, Consistent, Comparable Basic accounting concepts - GAAP
Measured in dollars Entity-based The business is a going concern Record at cost Dual-aspect (double-entry bookkeeping) Based on an accounting period (usually one year) Conservatism (prudent reporting, skepticism, reasonable certainty) Realization (amount, delivered, collectible) Matching (revenues and expenses in the same period) Consistency (use the same methods) Materiality (disregard insignificant events) Full disclosure and transparency
A. The Accounting Function: Keeping the Scorecard contd
6. Basics of The Accounting Language The accounting equation Double-entry bookkeeping 7. Fundamental Financial Statement 8. Assessing Financial Health: An Intro to Ratio
6
Ratio Analysis WHY? Assessing a Firms Financial Health
Profitability Ratios: What do they measure?
Examples:
Profit Margin = Net Income Sales
Source of Data________________________________________________________ Shows_________________________________________________
Return on Assets = Net Income Assets
Source of Data________________________________________________________ Shows_________________________________________________
Asset Utilization Ratios: What do they measure?
Example:
Inventory Turnover=
____ Sales ____ Inventory
Source of Data________________________________________________________ Shows_________________________________________________
Liquidity Ratios: What do they measure?
Example:
Current Ratio= Current Assets Current Liabilities
Source of Data________________________________________________________ Shows_________________________________________________
Per Share Data: What do they measure?
Example:
Earnings per share = _________Net Income________ Number of shares outstanding
Source of Data_______________________________________________________