Business Test 2 Notes

Ethics

Business Ethics
What is ethical behaviour?
Ethics are rules that distinguish right and wrong, and encourage us to do the right thing.
They are made up of individual beliefs and societal standards. Ethical behaviour is acting in
alignment with ethics.

Values: tell us what is important individually, inform decisions about right and wrong.
Formed by people in their lives, eg. parents, friends, teachers

Morals: rules that inform what is good and bad. Formed by religious sources, media,
environment. Eg. it is bad to steal candy (informed by value of honesty)

Question types: What are the values, morals in a situation?

Views of Ethics
Utilitarian: greatest good to greatest number of people is ethical
Individualist: commitment to your own long term self-interests
Moral-rights: respects the fundamental rights of all people
Justice: fair and impartial treatment of people according to rules

Cultural Relativism vs Ethical Imperialism

CR: ethical behaviour is determined by cultural context
EI: behaviour that’s unacceptable in home environment shouldn’t be acceptable anywhere
else, ie. judging behaviour in other countries by your own ethics

How do these pitfalls affect our ability to view/work with ethics?

It’s hard to judge behaviours that are happening in different cultures, which is sometimes the
case when dealing with multinational companies. Everyone and every culture has their own
idea of ethics, so it is hard to distinguish between right and wrong when ethics can be so
personal. We put our own norms and values onto that situation, so it’s hard to judge.

Ethical Dilemma: a moral problem where a difficult choice must be made between right and
wrong, sometimes unclear
Important to consider…
- Stakeholders: who is helped/hurt by this decision
- Consequences/outcome: What are benefits and problems of this decision? Will it
survive test of time

Common Unethical Behaviour

Fraud: crime of lying/pretending
- Businesses mislead consumers to trick them to buy
- Done by false/misleading advertising
 - “Bait and switch” selling (getting customers to buy something that doesn’t
exist, or is very subpar to expectations)
- Double ticketing (2 prices on a product, selling consumer the higher price)

Embezzlement: accountants/senior execs create false accounts and redirect money to

themselves for personal gain

Insider Trading: buying/selling shares of a company based on confidential information.

Creates unfair advantage for people in inside

Corporate Social Responsibility

What? Concept that companies need to play a positive role in the community they are in,
like the environment, their customers, employees and shareholders. They show CSR
through values, ethics and contributions to communities. Driven by desire to protect
customers and treat company members fairly.

How?
Employees: equal pay, benefits, safe and healthy work environment, being accessible
Stakeholders: honesty when discussing how company is doing
Communities: donating to charity, protecting environment, honesty in advertising

Leadership and Management

4 major functions of management

- Planning: developing objectives and way to achieve them
- Organizing: determining what resources (land, labour, capital) is required to perform
which functions
- Leading: guiding business toward achieving objectives
- Controlling: ensuring objectives are met w/o spending too much money or wasting
resources

What is management?
- Tactical process of executing and achieving objectives
- Manage things
- Managers do things right
- Get things done by directing individuals and teams
- Focuses on day to day tasks instead of greater vision

What makes a good manager?

What is leadership?
- Manage people
- Do right things
- Focuses on vision and relating it to each person
- Goal-oriented
- Functions:
 - Motivation: compensation, effort, enjoyment on the job
- Communication: assigning tasks, detailing goals/plans, follow up
- Encouraging participation: including employees in big decisions and have
them involved in training others

Leadership styles

Laissez-Faire: leader relies on and trusts their employees to do what they want and get work
done. Employees given tasks then are on their own. Pros: relaxed work culture, creative,
more people can lead, do work you like. Cons: anarchy, lack or control, no accountability
Eg. Apple

Democratic: depends on input people to make decisions instead of one dictator. Pros:
worker’s opinions are values, thus high employee agreement, brings more viewpoints. Cons:
hard to make quick decisions
Eg. Google-- employees participate and share ideas

Autocratic: like dictatorship, decisions made by one person. Pros: quick decision making.
Cons: no other viewpoints, if you oppose you might get fired
Eg. McDonalds-- company doesn’t get input from subordinates

Bureaucratic: management is organized into hierarchy, employees follow strict rules set by
superiors. Pros: strict rules maximize efficiency. Cons: no creativity or innovation, morale is
low, workers don’t believe in their work
Eg. military-- no arguing with superiors, tasks and roles are fixed

Compare and contrast different styles

Do amount of answers by how many marks the Q is worth

Production

Production definition: when and individual, business or organization creates a

service/product/idea

What are the factors of production that contribute to the production or delivery of a
good or service? What is needed to produce a product?
1. Natural Resources:
- Supplied by primary industries (take something out of the Earth or
sea/convert it)
- 6 resources are agriculture, fishing and trapping, mining, water, fuel/energy,
logging/forestry
- Land
2. Raw Materials:
- Any goods used in the manufacturing of other goods
- Land
 - Can be either…
1. Ingredients-- raw materials that become part of finished product eg.
wood becomes chair
2. Supplies--don’t become part of finished product, but help to make it.
Eg. machinery, saw
3. Labour:
- Physical and mental work needed to produce goods and services, number of
employees
- Paying someone is expensive most businesses seek ways to save
- Automation: having a machine do tasks quickly instead of a person
who works slower
- Consolidation: shutting down small manufacturing sites and instead
using one big one
- Outsourcing: the hiring of another company to perform tasks for
company, instead of making a new division in their company and
hiring a bunch of new employees
4. Capital:
- Assets that cover expenses
- Monetary: money invested into company
- Liquid: items bought with monetary capital that help to run the
business, eg. new truck
- Non-liquid: part of business operations that cannot be converted into
liquid/money easily, eg. buildings or equipment. Aka capital goods
- Intellectual property: ideas or talent of a business’s workforce, non
tangible
5. Information:
- Needed to produce goods and services in competitive global markets, need
info on customers, competitors, political conditions, sources of supply (looking
for new suppliers, better technology)
- Accurate and usable information reduces businesses risk, helps them make
good decisions, thus enhances its profitability
- Enterprise
6. Management:
- The people who run the business, control and direct factors of production
going into the business
- Allocate company resources, make decisions that affect day to day and long
term business operations
- Profit distribution in large companies made by high level managers and board
of directors, small business managers/owners make all decisions
- Enterprise

NaRa LICaM

The Production Process

Stages
1. Purchasing:
- someone (purchasing department, purchasing agent, buyer or owner) is
responsible for purchasing the raw materials needed to produce the product
 or service. Must consider quality/cost of raw material being purchased,
additional costs. Eg. buying timber
2. Processing:
- Non-service businesses convert raw materials into another item through
processing. Raw materials can be refined to produced semi or finished
products, eg. sugar cane-> sugar, timber-> paper
3. Quality control:
- Standards to ensure produced products conform to prescribed levels of
excellence. Set by company, gov, or organization like the International
Organization for Standards (ISO). Eg. eggs need to be a certain size
4. Grading:
- Physically checking product for size and qual. against fixed standards. Allows
consumers to make informed decisions. Eg. checking all the eggs in a carton
are up to standard
- Some products aren’t formally graded. When they don’t meet manufacturer’s
standards (defects, scratches, dents) are sold at discount

Productivity
Definition: how well input is used to get the most output
Measured: Quant- who has the most sales, Qual- feedback from customers and competitors

Increasing:
- Maintaining quality while increasing speed
- Increasing quality while maintaining speed
- Increasing both at the same time

You can improve/maintain productivity through…

Capital
- Training: programs that develop a person’s knowledge and experience. Gets
employees better at their jobs, thus can do better work faster
- Four types: 1. Initial 2. Ongoing 3. Retraining 4. specialized
- Capital investment: into supplies that get the job done better/faster, like buildings,
machinery, computers
Technology
- Investment in tech: up to date tech, automation, computer controlled machinery to do
repetitive tasks better/faster/cheaper
- Inventory systems: Just-in-time, better coordinate and manage suppliers, warehouse
storage, and production to stay on schedule. Saves money, time, space and waste.
Always have right material at right time/place/amount

Marketing

Definition: activities getting goods from business to consumer. Two main roles: sell what
business makes and manage brand. Includes research, development, advertising, sales
4Ps of marketing
- Product: addresses a need, considers quality (improvements compared to
competitors), design, features (eg. scent, size, materials) and benefits (advantage of
product) to attract customers
- Product/service mix: retail stores w/ a bunch of different products and
services increase sales and attract customers
- Price: how much product cost, businesses must be price sensitive ie. look at
competitors prices
- Place: channels of distribution-- paths of ownership good passes through before
reaching consumer
- Direct channels: producer straight to consumer, eg. baker to eater. Aka
maker-user relationship
- Indirect channels: 1+ intermediaries before product reaches customer. Eg.
importer (foreign product), wholesalers, or retailers
- Specialty channels: indirect channel, no retail store involved. Eg. vending
machine, telemarketing, catalogue, door to door
- Promotion: attempt to sell product, eg. sales promotion, encourages customers to
buy using coupons, sales, events, and samples

2Cs of marketing
- Consumer market: potential customers of product/service. Can be identified by
demographics and lifestyle
- Competitive market: includes all the sellers of a specific product, measured by how
much money is spent annually on the product.
- Market share: % of market that a company/brand has
- Market segment: part of market w/ similar traits
- Competition among products:
- Indirect: products not directly related, eg. AirPods and Bose speaker
- Direct: are similar, eg. AirPods and Google Pixel Buds
Goal of marketing: to get consumers to buy the product companies produce

Target Market

Definition: the people a product/service is aimed at

Importance: helps companies develop effective communication strategies.

Created using…
Demographics: statistical, concrete traits of people, eg. age, ethnicity, income level, gender
Psychographics: how people live their lives, lifestyle, values, interests, personality

Market Research

Definition: systematic collection, analysis and interpretation of info to develop marketing

strat or solve marketing problem
Purpose: helps with identifying consumer needs, reducing risk, forecasting

Primary research: unanalysed, current info collected by researcher for a purpose (private)
 - Qualitative: non-numerical data, tells you why
- Quantitative: numerical data, doesn’t have explanations to back it up
- Collected through questionnaires, focus groups, and customer interviews
Secondary research: marketing research info from someone else for public use, eg. books,
databases, indexes.

Social dilemma key takeaways:

- Social media users are the product, advertisers buy their attention
- Social media sites use positive intermittent reinforcement to keep people scrolling. A
reward (funny video) is guaranteed to be found at some point, but users don’t know
when, so they keep scrolling in the hopes they find it. Same idea in casinos. You
know someone will win at some point, so you keep trying because you think you will.
- Tech companies use content you engage with to determine your traits and interests,
and thus advertise accordingly
- 3 goals: engagement, growth, advertisement

Branding

Definition: creating a distinct identity and personality for a product or service. Goal is to be
recognizable against competitors

Components:
- Brand name: word(s) business uses to distinguish its products from competition.
Should be memorable, stand out and distinctive
- Logo: symbol associated with company/product (Golden arches)
- Trademark: word/symbol/design business uses to distinguish itself. The combo of
everything
- Slogan: short/catchy phrase associated w/ company or product (I’m lovin’ it)
- Brand identification: consistent use of brand components to make brand recognizable
to customer
- Businesses build brand through advertising

Colour: used by brands to make brain associate traits w/ them/products. Communicate on

emotional level.

Blue: calm, masculine, tranquil, refreshing, stability, refreshing, responsibility

- Used by banks (stability and responsibility) and yoga studios (calm, tranquil)
Green: environment, luck, finances, wealth, harmony, calm
- Reminds people of recycling, so good for eco-friendly brand. Spas -- soothing
Purple: royal, mystery, spiritual, wealth, imagination, magic, military honour (purple heart)
- Brands that work w/ veterans
Red: passion, energy, love, anger, danger, confidence
- Food bc boosts metabolism and blood pressure
Orange: affordable, youthful, autumn, humour
- Down to earth beauty brand, trampoline park
Yellow: energy, happy, youth, danger, playful
- Fast food, cheap
Pink: girly, sweet, romantic
- Bakeries bc sweet
Grey: professional, neutral
- Non binary, neutral kids clothing brand
Black: luxury, mystique, power, formal, darkness, sexuality
- Gym, power
White: clean, pure, simple, peace, cold
- Ice cream (cold)
Brown: reliable, old, earthy, masculine, natural
- Family history-- sepia toned photos

Product Life Cycle

Stages:
1. Introduction:
- First launched in marketplace
- Risky, don’t know if will sell
- No comp
- High costs-- research, production, promotion
- Low sales
- Low advertising: just to early adopters or trendsetters
2. Growth:
- Heavy advertising
- Price drops due to competition
- Product proves if it can be successful
- High product awareness
- High costs still
- Growing sales
3. Stabilization/maturity
- Sales peak (no more growth)
- Promotion changes
- Business uses this money to make new products
- Only successful businesses remain
- Extremely profitable, costs recouped
- Less advertising, product is already known
4. Decline/decision point
- No new customers
- Competitors leave market
- Low sales
- Low (shut down) or high costs (rebrand)
- Heavy advertising to save product if rebrand

Push vs. pull: how marketers introduce a product

- Push strat: focus prod placement in retail store. Consignment- retailer returns unsold
stuff. Shelf allowance: business plays for shelf space. Doesn’t build consumer
interest before launch
 - Pull strat: builds consumer interest before product is released, advance orders
placed. Eg. PlayStation 5

Non traditional product life styles

Fads: extremely popular for less than a year in select market, eg. fidget spinners in 2016
Niches: product dominates in small section of market, meets specific need. Few competitors,
few but loyal consumers, eg. prosthetics
Seasonal: products popular during a specific period, then die down, then come back when
period comes again, eg. Christmas decorations

Old Spice is at the decision point in the product life cycle. They are past their peak and
sales were low, and they recently decided the company would rebrand instead of shutting
down. In a recent ad, they shifted their target market to being women instead of men, and
hoped to encourage women to buy this deodorant for their male partners. This new
marketing strategy worked, because they experienced a 107% increase in sales in the year
following the ad.

Human Resources

Functions (MRS CAT)

1. Motivating and managing employees
- Delegate responsibilities, enforce deadlines
- Make sure employees have good work-life balance
- Minimize stress, create positive workplace attitude, thus employee job
satisfaction
- Discipline employees acting out of line (not meeting standards, harassing
others, deal with discrimination)
- Importance to organization: makes sure employees do their best work by
keeping environment healthy, thus work and resources are used effectively
and efficiently
2. Recruitment
3. Selecting employees
4. Compensating employees
5. Assessing employee performance
- Conduct yearly reviews for each employee
- Measure ability to meet standards of job
- Standards should be specific, measurable, clear
- Importance to organization: makes sure organization isn’t paying people who
aren’t doing their work effectively and up to standards. Less waste of money
6. Training and Developing employees

Be able to describe at least two of these functions in detail and be able to explain why they
are important to an organization.