NINTH EDITION
BUSINESS ESSENTIALS GLOBAL EDITION
PEARSON Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
11
Part 1: The Contemporary Business World
Business and Managerial Ethics 55 Assessing Ethical Behavior 57 Company Practices and Business Ethics 58
1
Social Responsibility 24
60
The Stakeholder Model of Responsibility 61 Entrepreneurship and New Ventures: The Electronic Equivalent of Paper Shredding 62
Chapter Opening Case: What Goes Up... Can Go Even Higher! 24
Contemporary Social Consciousness 63
The Concept of Business and the Concept of Profit 26 The External Environments of Business 27
Areas of Social Responsibility
64
Responsibility toward the Environment 64
Domestic Business Environment 28
Responsibility toward Customers 65
Global Business Environment 28
Responsibility toward Employees 68
Technological Environment 28
Responsibility toward Investors 68
Political-Legal Environment 28
Implementing Social Responsibility Programs 69
Sociocultural Environment 29
Approaches to Social Responsibility 70
Economic Environment 29
Managing Social Responsibility Programs 72
Economic Systems 29 Factors of Production 29 Managing in Turbulent Times: What Goes Around... 31 Types of Economic Systems 31 The Economics of Market Systems 33 Demand and Supply in a Market Economy 33 Private Enterprise and Competition in a Market Economy 36 Entrepreneurship and New Ventures: Business... and Pleasure 38
Social Responsibility and the Small Business 72 End-of-Chapter Review: Sinopec's Sustainability 74 Online content www.pearsonglobaleditions.com/mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
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Economic Indicators 38 Economic Growth, Aggregate Output, and Standard of Living 39 Economic Stability 43
ras
80
Chapter Opening Case: Harvard Dropout Turned Billionaire 80
Managing the U.S. Economy 45 End-of-Chapter Review: Hitting the Peak? 46 Online content www.pearsonglobaleditions.com/mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
What Is a "Small" Business? 82 The Importance of Small Business in the U.S. Economy 82 Popular Areas of Small-Business Enterprise 84 Managing in Turbulent Times: The Wide World of Risk 85
Entrepreneurship 86 Entrepreneurial Characteristics 86 Starting and Operating a New Business Chapter Opening Case: China in the Spotlight Ethics in the Workplace
52
54
Starting the Small Business 88
Managing in Turbulent Times: Just When They Need It Most 55
Trends, Successes, and Failures in New Ventures 90
Individual Ethics 54
8
Crafting a Business Plan 87 Financing the Small Business 89
87
CONTENTS Trends in Small-Business Start-Ups Reasons for Failure
90
Part 2: The Business of Managing
92
Reasons for Success 92 Entrepreneurship and New Ventures: Being Savvy and Lucky Make a Great Combination 93
Noncorporate Business Ownership 94 Sole Proprietorships Partnerships Cooperatives
s Mainiagemeot 134 Chapter Opening Case: Google Keeps Growing T h e M a n a g e m e n t Process
94
Planning
95
Leading
Corporations 96 96
Types of Corporations
138
Types of M a n a g e r s 139 Levels of Management 139
98
Managing a Corporation
137
138
Controlling
The Corporate Entity
136
136
Organizing
96
134
99
Areas of Management
Special Issues in Corporate Ownership 100 End-of-Chapter Review: Conjuring Up Profits? 102 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
140
Basic Management Skills 142 Technical Skills
142
Human Relations Skills Conceptual Skills
142
142
Decision-Making Skills
142
Time Management Skills
143
Management Skills for the Twenty-First Century
143
Strategic Management: Setting Goals and Formulating Strategy 144 Setting Business Goals
108 Chapter Opening Case: Cocoa—a Fair-Trade? The Contemporary Global Economy
Entrepreneurship and New Ventures: Samuel
108
Adams Makes Headway
111
The Major World Marketplaces 112 Trade Agreements and Alliances 113 International T r a d e 115 Exchange Rates 118 Forms of Competitive Advantage 119 Entrepreneurship and New Ventures: Rolling in the Worldwide Dough 120
Types of Strategy
121
Formulating Strategy
International Organization Structures
for Gulf Airlines
151
Contingency Planning and Crisis Management 151 Contingency Planning Crisis Management
122
152
152
Communicating the Culture and Managing Change
123
125
125 126
End-of-Chapter Review: The Profitability of Ethical Sourcing 128 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Crafting a Business Plan • Video Exercise • End Notes
153
End-of-Chapter Review: Want to Know-the Future? Just Google It... 154 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
Barriers to International Trade 125
Legal and Political Differences
150
A Hierarchy of Plans
Managing in Turbulent Times: The Ups and Downs of Globalization 124
Economic Differences
148
Management and the Corporate Culture 152
Levels of International Involvement
Social and Cultural Differences
145
147
Managing in Turbulent Times: Challenging Times
International Business Management 121 Going International
144
6
160
Chapter Opening Case: A New Chinese-American Recipe For Success 160
What Is Organizational Structure? 162 Organization Charts
162
Determinants of Organizational Structure
163
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CONTENTS
The Building Blocks of Organizational Structure 164
The Master Production Schedule Detailed Schedules
Specialization 164 Departmentalization 165 Managing in Turbulent Times: Restructuring BlueScope Steel 167
Staff Schedules and Computer-Based Scheduling Project Scheduling
Materials Management
Distributing Authority: Centralization and Decentralization 168
Matrix Structure
Tools for Total Quality Management
172
The Supply Chain Strategy
208
End-of-Chapter Review: Price vs. Quality
International Structure
175
Organizational Design for the Twenty-First Century
176
Informal Organization 177 178
Organizational Grapevine Intrapreneuring
208
Outsourcing and Global Supply Chains
174
Informal Groups
205
Adding Value Through Supply Chains 207
173
Entrepreneurship and New Ventures: Making the Grade
203
Managing in Turbulent Times: Leaner Operations Are Restoring the U.S. Auto Industry 204
172
Divisional Structure
202
Managing for Quality
170
Basic Forms of Organizational Structure 172 Functional Structure
Quality Control
202
Quality Improvement and Total Quality Management 203
170
Three Forms of Authority
199
200
Operations Control 201
Establishing the Decision-Making Hierarchy 167
The Delegation Process
199
199
178
178
End-of-Chapter Review: Tweaking the Recipe 180 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
210
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Part 3: People in Organizations
216 Chapter Opening Case: Pay in Asia Eclipses the West 216
Forms of Employee Behavior 218 Performance Behaviors
Chapter Opening Case: Ryanair Customer Satisfaction—but Who to Believe? 186
What Does Operations Mean Today? 188 Creating Value through Operations 188
Operations Processes
Personality at Work
191
Business Strategy as the Driver of Operations 192 192
Operations Planning 194 Entrepreneurship and New Ventures: A Better Path to Planning Meals (and Better Eating, Too) 195 Capacity Planning 195 Location Planning
196
Layout Planning
196
Quality Planning
197
Methods Planning
198
Operations Scheduling 199
219
Managing in Turbulent Times: Tragedy 220
.
Individual Differences Among Employees 220
190
The Many Faces of Production Operations
219
Counterproductive Behaviors in the Workplace
Differences between Service and Goods Manufacturing Operations
218
Organizational Citizenship
Attitudes at Work
221 222
Matching People and Jobs 223 Psychological Contracts The Person-Job Fit
223
224
Basic Motivation Concepts and Theories 225 Classical Theory 225 Early Behavioral Theory 225 Contemporary Motivation Theory
228
Strategies and Techniques for Enhancing Motivation 229 Reinforcement/Behavior Modification
230
CONTENTS
Entrepreneurship and New Ventures: Extreme Employee Empowerment 231 Using Goals to Motivate Behavior 231 Participative Management and Empowerment 232 Team Structures 232
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Job Enrichment and Job Redesign 233 Modified Work Schedules 233 End-of-Chapter Review: Motivation in China 236 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
264 Chapter Opening Case: Twenty-five Years of Procter & Gamble, Egypt 264
The Foundations of Human Resource Management 267 The Strategic Importance of HRM 267 HR Planning 267
Staffing the Organization 268 Recruiting Human Resources 269 Selecting Human Resources 269 Chapter Opening Case: Middle Eastern Business Leadership 242
The Nature of Leadership 244 Early Approaches to Leadership 245
Developing the Workforce 271 Training 271
Trait Approaches to Leadership 245
Performance Appraisal 271
Behavioral Approaches to Leadership 246 The Situational Approach to Leadership
Compensation and Benefits 246
Leadership Through the Eyes of Followers
247
271
Wages and Salaries 272 Incentive Programs 272 Benefits Programs 273
Transformational Leadership 247
The Legal Context of HRM
Charismatic Leadership 248 Special Issues in Leadership
Entrepreneurship and New Ventures: Moving People to Move Movies 270
249
274
Equal Employment Opportunity 274
Leadership Substitutes 249
Contemporary Legal Issues in HRM 275
Leadership Neutralizers 249
Managing in Turbulent Times: In Good Times and Bad 276
Managing in Turbulent Times: No More Secrets? 250
The Changing Nature of Leadership 251
New Challenges in the Changing Workplace 277 Managing Workforce Diversity 277
Leaders as Coaches 251
Managing Knowledge Workers 278
Gender and Leadership 251
Contingent and Temporary Workers 279 Dealing w i t h Organized Labor
Cross-Cultural Leadership 251 Emerging Issues in Leadership
252
Strategic Leadership 252
279
Unionism Today 279 Collective Bargaining
280
Ethical Leadership 252
Reaching Agreement on Contract Terms 281
Virtual Leadership 252
Contract Issues 281
Entrepreneurship and New Ventures: An Apple a Day 253
When Bargaining Fails 282
Leadership, Management, and Decision Making 253 Rational Decision Making 254 Behavioral Aspects of Decision Making 256 End-of-Chapter Review: What Makes A Good Leader? 258
End-of-Chapter Review: Reaping the Rewards of the "Build Within" Policy 284 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Crafting a Business Plan • Video Exercise • End Notes
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CONTENTS
Part 4: Principles of Marketing
n
C o a s u i m e i r B©
[email protected]
290
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Chapter Opening Case: Starbucks Brews a New Marketing Mix 290 What Is Marketing? 292 S 320
Delivering Value 292 Goods, Services, and Ideas 293 Relationship Marketing and Customer Relationship Management 293 The Marketing Environment 294 Managing in Turbulent Times: Feeling the Pressure for "Green" 296
Strategy: The Marketing Mix 297 Product 297 Pricing 298 Place (Distribution) 298 Promotion 298 Blending It All Together: Integrated Strategy 298
Target Marketing and Market Segmentation 299 Identifying Market Segments 299
Understanding Consumer Behavior 301 Influences on Consumer Behavior 301 The Consumer Buying Process 301
Organizational Marketing and Buying Behavior 303 Business Marketing 303 B2B Buying Behavior 303
What Is a Product? 304 The Value Package 304 Classifying Goods and Services 305 The Product Mix 306
Developing New Products 306 The New Product Development Process 306 Product Mortality Rates 307 Product Life Cycle 307 Identifying Products 309
The International Marketing Mix 311 International Products 311 International Pricing 311 International Distribution 312 International Promotion 312
Small Business and the Marketing Mix 312 Entrepreneurship and New Ventures: Social Networking for Job Opportunities in Tough Times 313 End-of-Chapter Review: Can Starbucks Have the Best of Both Markets—Luxury AND Affordability? 314
Chapter Opening Case: iTunes Is It 320 Determining Prices 322 Pricing to Meet Business Objectives 322 Price-Setting Tools 323
Pricing Strategies and Tactics 325 Pricing Strategies 325 Pricing Tactics 326
The Distribution Mix 327 Intermediaries and Distribution Channels 327
Wholesaling 329 Retailing 329 Types of Brick-and-Mortar Retail Outlets 329 Entrepreneurship and New Ventures: A 'Helping Hand' for Professional Inspiration: wowOwow! 330 Nonstore Retailing 331
The Role of E-Intermediaries 331 Online Shopping Agents 331 Electronic Retailing 331
Physical Distribution 333 Warehousing Operations 333 Transportation Operations 334 Distribution Through Supply Chains as a Marketing Strategy 334 Managing in Turbulent Times: Getting a Stimulus Boost with Pricing and Promotion 335
The Importance of Promotion 336 Promotional Objectives
336
—
The Promotional Mix 337 Advertising Promotions 338 Personal Selling 339 Sales Promotions 340 Direct (or Interactive) Marketing 340 Publicity and Public Relations 341 End-of-Chapter Review: At Apple, iTunes Means Mu$ic 342 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills . • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
13
CONTENTS
Part 5: Managing Information
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13 350 Chapter Opening Case: Online Pirates Feast on Economic Downturn 350
IT Impacts 352
g
Creating Portable Offices: Providing Remote Access to Instant Information 352
Chapter Opening Case: Frenkel's Forensics 378
What Is Accounting, and Who Uses Accounting Information? 380 Who Are Accountants and What Do They Do? 380
Enabling Better Service by Coordinating Remote Deliveries
352
Creating Leaner, More Efficient Organizations Enabling Increased Collaboration Enabling Global Exchange
352
353
Financial versus Managerial Accounting Certified Public Accountants 381 Private Accountants and Management
353
Improving Management Processes
354
Providing Flexibility for Customization
354
Providing New Business Opportunities
354
Improving the World and Our Lives
Accountants
356
359
360
362
364
364
Reporting Standards and Practices 391 Analyzing Financial Statements 392 Managing in Turbulent Times: The "Fairness" Dilemma: What's an Asset's Real Value?
393 -
Profitability Ratios: Earnings Power for Owners Twitter Turn Tweets into Treasure?
367
Intellectual Property Theft
391
394
394
Entrepreneurship and New Ventures: How Will
Hackers 366
395
Activity Ratios: How Efficiently Is the Firm Using Its Resources? 396
367
Computer Viruses, Worms, and Trojan Horses
Bringing Ethics into the Accounting— Equation 396
367
Spyware 368
Why Accounting Ethics? 396
Spam 368
Internationalizing Accounting 398
IT Protection Measures 368 Preventing Unauthorized Access: Firewalls Preventing Identity Theft
368
International Accounting Standards Board
369
Why One Set of Global Practices?
Preventing Infectious Intrusions: Anti-Virus Software
369
Protecting Electronic Communications: Encryption Software
390
The Budget: An Internal Financial Statement
Solvency Ratios: Borrower's Ability to Repay Debt
IT Risks and Threats 366 Identity Theft
388
Statements of Cash Flows
and Data Mining 363 Entrepreneurship and New Ventures: Speaking Loud and Clear: A New Voice Technology
386
Income Statements
Leveraging Information Resources: Data Warehousing
Types of Information Systems
The Accounting Equation 385 Financial Statements 386 Balance Sheets
Information Systems: Harnessing the Competitive Power of IT 361 Managing in Turbulent Times: When Cash Gets Scarce, Businesses Switch to Internet Bartering
383
Federal Restrictions on CPA Services and Financial Reporting: Sarbox 384
The Internet and Other Communication Resources Hardware and Software
380
383
Forensic Accountants
355
IT Building Blocks: Business Resources 356 Networks: System Architecture
378
369
Avoiding Spam and Spyware
370
Ethical Concerns in IT 370 End-of-Chapter Review: Online Piracy Means Tougher Economic Times 372
398
398
End-of-Chapter Review: Investigating Fraud 400 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
14
CONTENTS
Investing to Fulfill Financial Objectives
Part 6: Financial Issues
Reasons for Investing
Exchange-Traded Funds
Chapter Opening Case: A Tale of Two Worlds in Banking 408 410
Networks 411 412
444
Tracking the Market Using Stock Indexes
The U.S. Financial System 412
Entrepreneurship of Evil
412
Investment Dividends (or Interest), Appreciation, and Total Return 449
Financial Institutions Create Money and Are Regulated 417 Regulation of the Banking System
Managing Risk with Diversification and Asset Allocation
418
The Functions of the Fed
420
Secured Loans for Equipment
451
Working Capital and Unsecured Loans from Banks Angel Investors and Venture Capital
420
Sale of Corporate Bonds
The Changing Money and Banking System 421
422
423 424
Market Capitalization
455
Choosing Equity Versus Debt Capital
Regulations Against Insider Trading
426
427
End-of-Chapter Review: Shakeups Bring a Wakeup Call to Banking 428 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
Maximizing Capital Growth 438
Insurance as Risk Management
Common Stock Investments
439
457
Appendices
Coping with Risk
438
457
End-of-Chapter Review: U.S. Cap and Trade Experiment Is Put on Hold 458 Online content www.pearsonglobaleditions.com/ mybizlab: Summary of Learning Objectives • Key Terms • Questions & Exercises • Building Your Business Skills • Exercising Your Ethics: Individual Exercise • Exercising Your Ethics: Team Exercise • Video Exercise • End Notes
Chapter Opening Case: Investing in Green 436
The Rule of 72
456
Appendix I: Risk Maea
436
The Time Value of Money and Compound Growth
454
454
The Securities and Exchange Commission
Currency Values and Exchange Rates 425
16
Going Public Means Selling Off Part of the Company
Regulating Securities Markets 456
International Banking and Finance 425 The International Payments Process
453
Becoming a Public Corporation 454 Stock Valuation
Entrepreneurship and New Ventures: Cultivating a Social Side for Community Banking
452
African Housing Market?
Anti-Crime and Anti-Terrorism Regulations The Impact of Electronic Technologies
451
451
Managing in Turbulent Times: Weakening South
Government Intervention for Stabilizing the U.S. Financial System 422
International Bank Structure
450
Financing the Business Firm 450
The Federal Reserve System 418 418
447
The Risk-Return Relationship 448
415
416
The Structure of the Fed
445
Entrepreneurship and New Ventures: An
Managing in Turbulent Times: Getting Serious
The Tools of the Fed
444
Individual Investor Trading
M-2: M-1 Plus the Convertible Money Supply
The Growth of Financial Services
442
442
Non-Exchange Trading: Electronic Communication
410
with Credit Standards
441
Primary and Secondary Securities Markets Stock Exchanges
M-1: The Spendable Money Supply
Financial Institutions
441
The Business of Trading Securities 442
What Is Money? 410 The Functions of Money
440
Most Mutual Funds Don't Match the Market
408
The Characteristics of Money
440
438
466
466 466
Appendix 11: The Legal Content S
468
CONTENTS
The U.S. Legal and Judicial Systems 468 Types of Law 468 The U.S. Judicial System
Planning for the Golden Years
468
476
Conserving Money by Controlling It 476
Contract Law 469
Credit Cards: Keys to Satisfaction or Financial
469
Handcuffs?
Property Law 470
477
Save Your Money: Lower Interest Rates and Faster
Agency Law 470 Commercial Law
475
Time Value as a Financial-Planning Tool
Business Law 469 fort Law
Making Better Use of the Time Value of Money 475
Payments
471
477
Declining Asset Value: A Borrower's Regret
Bankruptcy Law 471
The International Framework of Business Law 472
How Much House Can You Afford?
S 473
Building Your Financial Plan 473 Develop Your Financial Goals
474
477
Cashing Out from Tax Avoidance (Legally) 480 The IRA Tax Break 480 Protecting Your Net Worth 481
Appendix ill:
Assessing Your Current Financial Condition
477
Financial Commitments of Home Ownership 477
473
Glindex 483
15
