Free Essay

Contemporary Business

In: Business and Management

Submitted By MarqD007
Words 9095
Pages 37
John Wiley & Sons, Inc.

David L. Kurtz
University of Arkansas

Louis E. Boone
University of South Alabama

BUSINESS
14TH EDITION

Contemporary

. . . at the speed of business

“The 14th edition of Contemporary Business is dedicated to Joseph S. Heider, who brought me to John Wiley & Sons. Thank you, Joe.” —Dave

Vice President & Executive Publisher Acquisitions Editor Assistant Editor Production Manager Senior Production Editor Marketing Manager Creative Director Senior Designer Text Designer Cover Designer Production Management Services Senior Illustration Editor Photo Editor Photo Researcher Senior Editorial Assistant Executive Media Editor Media Editor

George Hoffman Franny Kelly Maria Guarascio Dorothy Sinclair Valerie A. Vargas Karolina Zarychta Harry Nolan Madelyn Lesure 4 Design Group Wendy Lai Elm Street Publishing Services Anna Melhorn Hilary Newman Teri Stratford Emily McGee Allison Morris Elena Santa Maria

This book was set in Janson TextLTStd-Roman 10/13 by MPS Limited, a Macmillan Company, Chennai, India and printed and bound by R. R. Donnelley & Sons. The cover was printed by R. R. Donnelley & Sons. This book is printed on acid free paper. ∞ Founded in 1807, John Wiley & Sons, Inc. has been a valued source of knowledge and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Our company is built on a foundation of principles that include responsibility to the communities we serve and where we live and work. In 2008, we launched a Corporate Citizenship Initiative, a global effort to address the environmental, social, economic, and ethical challenges we face in our business. Among the issues we are addressing are carbon impact, paper specifications and procurement, ethical conduct within our business and among our vendors, and community and charitable support. For more information, please visit our website: †www.wiley.com/go/citizenship.† Copyright © 2011, 2010 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc. 222 Rosewood Drive, Danvers, MA 01923, website www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201)748-6011, fax (201)748-6008, website http://www.wiley.com/go/permissions. Evaluation copies are provided to qualified academics and professionals for review purposes only, for use in their courses during the next academic year. †These copies are licensed and may not be sold or transferred to a third party. †Upon completion of the review period, please return the evaluation copy to Wiley. †Return instructions and a free of charge return shipping label are available at www.wiley.com/go/returnlabel. Outside of the United States, please contact your local representative. ISBN-13 978-0-470-53129-7

Printed in the United States of America 10 9 8 7 6 5 4 3 2 1

About the Author
During Dave Kurtz’s high school days, no one in Salisbury, Maryland, would have mistaken him for a scholar. In fact, he was a mediocre student, so bad that his father steered him toward higher education by finding him a succession of backbreaking summer jobs. Thankfully, most of them have been erased from his memory, but a few linger, including picking peaches, loading watermelons on trucks headed for market, and working as a pipefitter’s helper. Unfortunately, these jobs had zero impact on his academic standing. Worse yet for Dave’s ego, he was no better than average as a high school athlete in football and track. But four years at Davis & Elkins College in Elkins, West Virginia, turned him around. Excellent instructors helped get Dave on a sound academic footing. His grade point average soared—enough to get him accepted by the graduate business school at the University of Arkansas, where he met Gene Boone. Gene and Dave became longtime co-authors; together they produced more than 50 books. In addition to writing, Dave and Gene were involved in several entrepreneurial ventures. This long-term partnership ended with Gene’s death in 2005. But, this book will always be Boone & Kurtz’s Contemporary Business. Today, Dave is back teaching at the University of Arkansas, after tours of duty in Ypsilanti, Michigan; Seattle, Washington; and Melbourne, Australia. He is the proud grandfather of six “perfect” kids and a sportsman with a golf handicap too high to mention. Dave, his wife, Diane, and four demanding canine companions (Daisy, Lucy, Molly, and Sally) live in Rogers, Arkansas. Dave holds a distinguished professorship at the Sam M. Walton College of Business in nearby Fayetteville, home of the Arkansas Razorbacks.

About the Author

v

WileyPLUS for Students
WileyPLUS builds students’ confidence because it takes the guesswork out of studying by providing a clear roadmap to academic success. WileyPLUS provides an online environment that integrates relevant resources, including the entire digital textbook, in an easy-to-navigate framework that helps you study more effectively. With WileyPLUS, you receive 24/7 access to resources that promote positive learning outcomes. Throughout each study session, you can assess your progress and gain immediate feedback on your strengths and weaknesses so you can be confident you are spending your time wisely. Powered by proven technology and built on a foundation of cognitive research, WileyPLUS has enriched the education of millions of students, in over 20 countries around the world. WileyPLUS is filled with student resources including:

Business Weekly Updates
Stay up to date on the very latest in business news stories. Each week you will find links to 5 new articles, video clips, business news stories, and so much more.

Audio Chapter Review Summaries
Available in English and Spanish, these reviews provide a quick overview of the main chapter concepts, so you can review them in the car, on foot, at the gym – anywhere!

iPhone Apps
You can now review chapter concepts and key terms on the go with our iPhone flashcard and self-study quiz apps.

Student Study Guide
Review key business concepts and test your knowledge so you’re ready for the next quiz or exam.

The Wiley Business Video Series
Brand new end-of-chapter video cases include companies like Zipcar, Seventh Generation, New Harvest Coffee Roasters, and Comet Skateboards.

vi

WileyPLUS for Students

What are Learning Styles?
Have you ever repeated something to yourself over and over to help remember it? Or does your best friend ask you to draw a map to someplace where the two of you are planning to meet, rather than just tell her the directions? If so, then you already have an intuitive sense that people learn in different ways, Researchers in learning theory have developed various categories of learning styles. Some people, for example, learn best by reading or writing. Others learn best by using various senses—seeing, hearing, feeling, tasting, or even smelling. When you understand how you learn best, you can make use of learning strategies that will optimize the time you spend studying. To find out what your particular learning style is, www.wiley.com/college/boone and take the learning styles quiz you find there. The quiz will help you determine your primary learning style: Visual Learner Print Learner Auditory Learner Interactive Learner Haptic Learner Kinesthetic Learner Olfactory Learner

Then, consult the information below and on the following pages for study tips for each learning style. This information will help you better understand your learning style and how to apply it to the study of business.

Study Tips for Visual Learners
If you are a Visual Learner, you prefer to work with images and diagrams. It is important that you see information.

Visual Learning
• Draw charts/diagrams during lecture. • Examine textbook figures and graphs. • Look at images and videos on WileyPLUS and other Web sites. • Pay close attention to charts, drawings, and handouts your instructor uses. • Underline; use different colors. • Use symbols, flowcharts, graphs, different arrangements on the page, white spaces.

Visual Reinforcement
• Make flashcards by drawing tables/charts on one side and definition or description on the other side. • Use art-based worksheets; cover labels on images in text and then rewrite the labels. • Use colored pencils/markers and colored paper to organize information into types. • Convert your lecture notes into “page pictures.” To do this: – Use the visual learning strategies outlined above.

– Reconstruct images in different ways. – Redraw pages from memory. – Replace words with symbols and initials. – Draw diagrams where appropriate. – Practice turning your visuals back into words. If visual learning is your weakness: If you are not a Visual Learner but want to improve your visual learning, try re-keying tables/charts from the textbook.

Study Tips for Print Learners
If you are a Print Learner, reading will be important but writing will be much more important.

Print Learning
• Write text lecture notes during lecture. • Read relevant topics in textbook, especially textbook tables. • Look at text descriptions in animations and Web sites. • Use lists and headings. • Use dictionaries, glossaries, and definitions. • Read handouts, textbooks, and supplementary library readings. • Use lecture notes.

Print Reinforcement
• Rewrite your notes from class, and copy classroom handouts in your own handwriting. • Make your own flashcards. • Write out essays summarizing lecture notes or textbook topics. • Develop mnemonics. • Identify word relationships. • Create tables with information extracted from textbook or lecture notes. • Use text based worksheets or crossword Puzzles. • Write out words again and again. • Reread notes silently.

• Rewrite ideas and principles into other words. • Turn charts, diagrams, and other illustrations into statements. • Practice writing exam answers. • Practice with multiple choice questions. • Write paragraphs, especially beginnings and endings. • Write your lists in outline form. • Arrange your words into hierarchies and points. If print learning is your weakness: If you are not a Print Learner but want to improve your print learning, try covering labels of figures from the textbook and writing in the labels.

Study Tips for Auditory Learners
If you are an Auditory Learner, then you prefer listening as a way to learn information. Hearing will be very important, and sound helps you focus.

Auditory Learning
• Make audio recordings during lecture. • Do not skip class; hearing the lecture is essential to understanding.

• Play audio files provided by instructor andtextbook. • Listen to narration of animations. • Attend lecture and tutorials.

• Discuss topics with students and instructors. • Explain new ideas to other people. • Leave spaces in your lecture notes for later recall.

Learning Styles

vii

Study Tips for Auditory Learners (continued)
• Describe overheads, pictures, and visuals to somebody who was not in class.

Auditory Reinforcement
• Record yourself reading the notes and listen to the recording • Write out transcripts of the audio files. • Summarize information that you have read, speaking out loud.

• • • •

Use a recorder to create self-tests. Compose “songs” about information. Play music during studying to help focus. Expand your notes by talking with other and with information from your textbook. • Read summarized notes out loud. • Explain your notes to another auditory learner. • Talk with the instructor.

• Spend time in quiet places recalling the ideas. • Say your answers out loud. If auditory teaming is your weakness: If you are not an Auditory Learner but want to improve your auditory learning, try writing out the scripts from pre-recorded lectures.

Study Tips for Interactive Learners
If you are an Interactive Learner, you will want to share your information. A study group will be important.

Interactive Learning
• Ask a lot of questions during lecture or TA review sessions. • Contact other students, via e-mail or discussion forums, and ask them to explain what they learned. they learned.

Interactive Reinforcement
• “Teach” the content to a group of other students. • Talking to an empty room may seem odd, but it wiII be effective for you. • Discuss information with others, making sure that you both ask and answer questions. • Work in small group discussions, making a verbal and written discussion of what others say.

If interactive learning is your weakness: If you are not an Interactive Learner but want to improve prove your interactive learning, try asking your study partner questions and then repeating them to the instructor.

Study Tips for Haptic Learners
If you are a Haptic Learner, you prefer to work with your hands. It is important to physically manipulate material.

Haptic Learning
• Take blank paper to lecture to draw charts/ tables/diagrams. • Using the textbook, run your fingers along the figures and graphs to get a “feel” for shapes and relationships.

Haptic Reinforcement
• Trace words and pictures on flashcards. • Perform electronic exercises that involve drag-and-drop activities. • Alternate between speaking and writing information. • Observe someone performing a task that you would like to learn.

• Make sure you have freedom of movement while studying. If haptic learning is your weakness: If you are not a Haptic Learner but want to improve your haptic learning, try spending more time in class working with graphs and tables while speaking or writing down information.

Study Tips for Kinesthetic Learners
If you are a Kinesthetic Learner, it will be important that you involve your body during studying.

Kinesthetic Learning
• Ask permission to get up and move during Lecture. • Participate in role-playing activities in the classroom. • Use all your senses. • Go to labs; take field trips. • Listen to real-life examples. • Pay attention to applications. • Use trial-and-error methods. • Use hands-on approaches.

Kinesthetic Reinforcement
• Make flashcards; place them on the floor, and move your body around them. • Move while you are teaching the material to others. • Put examples in your summaries. • Use case studies and applications to help with principles and abstract concepts. • Talk about your notes with another Kinesthetic person.

• Use pictures and photographs that illustrate an idea. • Write practice answers. • Role-play the exam situation. If kinesthetic learning is your weakness: If you are not a Kinesthetic Learner but want to improve your kinesthetic learning, try moving flash cards to reconstruct graphs and tables, etc.

Study Tips for Olfactory Learners
If you are an Olfactory Learner, you will prefer to use the senses of smell and taste to reinforce learning. This is a rare learning modality.

Olfactory Learning
• During lecture, use different scented markers to identify different types of information.

Olfactory Reinforcement
• Rewrite notes with scented markers.

• If possible, go back to the computer lab to do your studying. • Burn aromatic candles while studying. • Try to associate the material that you’re studying with a pleasant taste or smell.

If olfactory learning is your weakness: If you are not an Olfactory Learner but want to improve your olfactory learning, try burning an aromatic candle or incense while you study, or eating cookies during study sessions.

viii

Learning Styles

LEARNING STYLES SURVEY CHART
Resources
Hit & Miss Launching Your Career Learning Goals They Said It BusinessEtiquette Solving an Ethical Controversy Assessment Checks Review Questions Cases Project / Teamwork Applications Flashcards Business Terms Interactive Quizzes Student PowerPoints Audio Summary (English / Spanish) Animated Figures Case Study Animations E-lectures Greensburg, KS Continuing Case End-of-Chapter Videos Final Exam Questions Quiz Questions Pre-lecture Questions Post-lecture Questions Video Questions Drop-box Questions

Visual

Print

Auditory

Interactive

Haptic

Kinesthetic

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Learning Styles

ix

Acknowledgements
Contemporary Business has long benefited from the instructors who have offered their time as reviewers. Comprehensive reviews of the 14th edition and ancillary materials were provided by the following colleagues: Nathaniel R. Calloway
University of Maryland University College

Sal Veas
Santa Monica College

Kathy Lorencz
Oakland Community College

Collette Wolfson
Ivy Tech Community College

Levi Richard
Citrus College

Lisa Zingaro
Oakton Community College

Jenny C. Rink
Community College of Philadelphia

Gary Cohen
University of Maryland

Kellie Emrich
Cuyahoga Community College

Gil Feiertag
Columbus State Community College

Janice Feldbauer
Schoolcraft College

Thanks also to all of our colleagues who have assisted us in previous editions in our continuing efforts to make the best business text even better. The new edition continues to reflect so many of their recommendations. Among the hundreds of reviewers and focus group participants who contributed to the book during previous editions, we acknowledge the special contributions of the following people: Brenda Anthony
Tallahassee Community College

Susan Roach
Georgia Southern University

Sandra Robertson
Thomas Nelson Community College

Barbara Rosenthal
Miami Dade College, Kendall Campus

JoDee Salisbury
Baker College

Rieann Spence-Gale
Northern Virginia Community College

Chuck Foley
Columbus State Community College

Bob Urell
Irvine Valley College

Karen Halpern
South Puget Sound Community College

Lorraine P. Bassette
Prince George’s Community College

Ed Becker
Housatonic Community College

Tim Hatten
Mesa State College

Barbara Ching
Los Angeles City College

Cathleen Behan
North Virginia Community College

Linda Hefferin
Elgin Community College

Rachna Condos
American River College

Vicki Bjerke
Northeast Iowa Community College

John Hilston
Brevard Community College

Susan J. Cremins
Westchester Community College

Robert Brinkmeyer
University of Cincinnati

Martin Karamian
Pierce College

Tamara Davis
Davenport University

Ronald Cereola
James Madison University

Cynthia Miree-Coppin
Oakland Unversity

Colleen Dunn
Bucks County Community College

Leo Chiantelli
Shasta College

David Oliver
Edison State College

Joyce Ezrow
Anne Arundel Community College

John Cicero
Shasta College

Sally Proffitt
Tarrant County College

Kathleen K. Ghahramani
Johnson County Community College

Robert M. Clark
Horry-Georgetown Technical College

Jayre Reaves
Rutgers University

Connie Golden
Lakeland Community College

Douglas Crowe
Bradley University

David Robinson
University of California, Berkeley

Susan Greer
Horry-Georgetown Technical College

Charles R. Fenner
State University of New York- Canton

Patricia Setlik
Harper College

James V. Isherwood
Community College of Rhode Island

Susan Greer
Horry-Georgetown Technical College

John Striebich
Monroe Community College

Mary Beth Klinger
College of Southern Maryland

William Harvey
Henry Ford Community College

Rodney Thirion
Pikes Peak Community College

Claudia Levi
Edmonds Community College

David Hollomon
Victor Valley College

x

Acknowledgements

Clark Lambert
Farmingdale State College

Ron Colley
South Suburban College

John S. Leahy
Palomar College

James R. Lashley
Bowie State University

Scott Colvin
Naugatuck Community College

Delores Linton
Tarrant County College-Northwest Campus

Victor Lipe
Trident Technical College

Peter Dawson
Collin County Community College

Stacy Martin
Southwestern Illinois College

Michael Mandel
Housatonic Community College

Dr. Richard L. Drury
Northern Virginia Community College

Theresa Mastrianni
Kingsborough Community College

Gina McConoughey
Illinois Central College

John A. Fawcett
Norwalk Community College

Bob Matthews
Oakton Community College

Dennis R. Murphy
Horry-Georgetown Technical College

Dr. Barry Freeman
Bergen Community College

Hugh McCabe
Westchester Community College

John Muzzo
Harold Washington University

Richard Ghidella
Fullerton College

Tricia McConville
Northeastern University

Jack Partlow
Northern Virginia Community College

Ross Gittell
University of New Hampshire

Rebecca Miles
Delaware Tech

W.J. Patterson
Sullivan University

Clark Hallpike
Elgin Community College

Linda Morable
Richland College

Michael Quinn
James Madison University

Carnella Hardin
Glendale College—Arizona

Linda Mosley
Tarrant County College

Rama Ramaswamy
Minneapolis Community and Technical College

Britt Hastey
Los Angeles City College

Carol Murphy
Quinsigamond Community College

JoAnn Rawley
Reading Area Community College

Dave Hickman
Frederick Community College

Andrew Nelson
Montgomery College

Donna Scarlett
Iowa Western Community College—Clarinda

Nathan Himelstein
Essex County College

Greg Nesty
Humboldt College

Scott Homan
Purdue—West Lafayette

Linda Newell
Saddleback College

Charles Smith
Horry-Georgetown Technical College

Howard L. Irby, Jr.
Bronx Community College

Emmanuel Nkwenti
Pennsylvania College of Technology

Michael Thomas
Henry Ford Community College

Robert Ironside
North Lake College

Paul Okello
Tarrant County College

LaVena Wilkin
Sullivan University

Charlotte Jacobsen
Montgomery College

Lynn D. Pape
Northern Virginia Community College—Alexandria Campus

Jamil Ahmad
Los Angeles Trade—Technical College

Bruce Johnson
College of the Desert

Sylvia Allen
Los Angeles Valley College

Charles Pedersen
Quinsigamond Community College

Judith Jones
Norwalk Community College

Kenneth F. Anderson
Borough of Manhattan Community College

John Pharr
Cedar Valley—Dallas County Community College District

Marce Kelly
Santa Monica College

Andrea Bailey
Moraine Valley Community College

Gregory Kishel
Cypress College—Santa Ana College

Jeff Podoshen
DeVry University

Norman E. Burns
Bergen Community College

Patricia Kishel
Cypress College

Jude A. Rathburn
University of Wisconsin—Milwaukee

Diana Carmel
Golden West College

Andy Klein
DeVry University

Levi Richard
Citrus College

Barbara Ching
Los Angeles City College

Mary Beth Klinger
College of Southern Maryland

Joe Ryan
Valley College

Acknowledgements

xi

Althea Seaborn
Norwalk Community College

David Braun
Pierce College

Bob Urell
Irvine Valley College

John Seilo
Orange Coast Community College

David England
John A. Logan College

Richard Warner
Lehigh-Carbon Community College

Richard Sherer
Los Angeles Trade—Technical College

Barry Freeman
Bergen Community College

David Woolgar
Santa Ana College

Gerald Silver
Purdue University—Calumet

Eric Glohr
Lansing Community College

Chuck Zellerbach
Orange Coast College

Leon Singleton
Santa Monica College

Karen Hawkins
Miami Dade Community College

Alison Adderly-Pitman
Brevard Community College

Malcolm Skeeter
Norwalk Community College

Nate Himelstein
Essex Community College

David Alexander
Angelo State University

Robert Smolin
Citrus College

Kim Hurns
Washtenaw Community College

Kenneth Anderson
Mott Community College

Darrell Thompson
Mountain View College

Dmitriy Kalyagin
Chabot College

Charles Armstrong
Kansas City Kansas Community College

Sandra Toy
Orange Coast College

Elias Konwufine
Keiser College

Donald B. Armstrong
Mesa College

Phil Vardiman
Abilene Christian University

Carl Kovelowski
Mercer Community College

Nathaniel Barber
Winthrop University

Gina Vega
Merrimack College

Pierre Laguerre
Bergen Community College

Alan Bardwick
Community College of Aurora

Michelle Vybiral
Joliet Junior College

Stacy Martin
Southwestern Illinois College

Keith Batman
Cayuga Community College

Rick Weidmann
Prince George’s Community College

Duane Miller
Utah Valley State College

Robb Bay
Community College of Southern Nevada

Ed Mitchell
Hillsborough Community College

S. Martin Welc
Saddleback College

Charles Beem
Bucks County Community College

Steve Wong
Rock Valley College

Frank Novakowski
Davenport University

Carol Bibly
Triton College

Greg Akins
Lansing Community College

Tom Passero
Owens Community College

Daniel Biddlecom
Erie Community College—North Campus

Ken Anderson
Borough of Manhattan Community College

Tom Perkins
Lansing Community College

Joseph Billingere
Oxnard College

Robert Reck
Western Michigan University

Nancy Bailey
Middlesex Community College

Larry Blenke
Sacramento City College

Paul Ricker
Broward Community College

Mary Barnum
Grand Rapids Community College

Paula E. Bobrowski
SUNY Oswego

Jenny Rink
Community College of Philadelphia

Sherry Bell
Ferris State University

Charlane Bomrad Held
Onandaga Community College

Susan Roach
Georgia Southern University

Ellen Benowitz
Mercer Community College

Brenda Bradford
Missouri Baptist College

Edith Strickland
Tallahassee Community College

Mike Bento
Owens Community College

Steven E. Bradley
Austin Community College

Keith Taylor
Lansing Community College

Pat Bernson
County College of Morris

Willie Caldwell
Houston Community College

Joyce Thompson
Lehigh-Carbon Community College

Trudy Borst
Ferris State University

Barney Carlson
Yuba College

xii

Acknowledgements

Bonnie Chavez
Santa Barbara City College

William D. Foster
Fontbonne College

Kathy Irwin
Catawba Valley Community College

Felipe Chia
Harrisburg Area Community College

Blane Franckowiak
Tarrant County Community College

Gloria M. Jackson
San Antonio College

Rowland Chidomere
Winston-Salem State University

Edward Friese
Okaloosa-Walton Community College

Ralph Jagodka
Mount San Antonio College

Marie Comstock
Allan Hancock College

Atlen Gastineau
Valencia Community College—West Campus

Chris Jelepis
Drexel University

Ronald C. Cooley
South Suburban College

Steven R. Jennings
Highland Community College

Milton Glisson
North Carolina A&T State University

Suzanne Counte
Jefferson College

Geraldine Jolly
Barton College

Bob Googins
Shasta Community College

Robert Cox
Salt Lake Community College

Dave Jones
LaSalle University

Robert Gora
Catawba Valley Community College

Pam Crader
Jefferson College

Don Kelley
Francis Marion University

Don Gordon
Illinois Central College

Norman B. Cregger
Central Michigan University

Bill Kindsfather
Tarrant County Community College

Gary Greene
Manatee Community College

Dana D’Angelo
Drexel University

Charles C. Kitzmiller
Indian River Community College

Blaine Greenfield
Bucks County Community College

Dean Danielson
San Joaquin College

B. J. Kohlin
Pasadena City College

Stephen W. Griffin
Tarrant County Community College

Kathy Daruty
Los Angeles Pierce College

Carl Kovelowski
Mercer Community College

Maria Carmen Guerrero-Caldero
Oxnard College

David DeCook
Arapahoe Community College

Ken Lafave
Mount San Jacinto College

Annette L. Halpin
Beaver College

Richard L. Drury
Northern Virginia Area Community College—Annandale

Rex Lambrecht
Northeastern Junior College

Michael Hamberger
Northern Virginia Area Community College—Annandale

Fay D. Lamphear
San Antonio College

Linda Durkin
Delaware County Community College

Neal Hannon
Bryant College

Bruce Leppine
Delta College

Lance J. Edwards
Otero Junior College

Douglas Heeter
Ferris State University

Thomas Lloyd
Westmoreland County Community College

William Ewald
Concordia University

Paul Hegele
Elgin Community College

Jim Locke
Northern Virginia Area Community College—Annandale

Carol Fasso
Jamestown Community College

Chuck Henry
Coastline Community College

Jodson Faurer
Metropolitan State College at Denver

Thomas Herbek
Monroe Community College

Paul Londrigan
Mott Community College

Jan Feldbauer
Austin Community College

Tom Heslin
Indiana University, Bloomington

Kathleen J. Lorencz
Oakland County Community College

Sandie Ferriter
Harford Community College

Joseph Ho
College of Alameda

John Mack
Salem State College

Steven H. Floyd
Manatee Community College

Alice J. Holt
Benedict College

Paul Martin
Aims College

Nancy M. Fortunato
Bryant and Stratton

Vince Howe
University of North Carolina, Wilmington

Lori Martynowicz
Bryant and Stratton

John G. Foster Jr.
Montgomery College—Rockville

Eva M. Hyatt
Appalachian State University

Michael Matukonis
SUNY Oneonta
Acknowledgements

xiii

Virginia Mayes
Montgomery College—Germantown

Alton J. Purdy
Solano Community College

Daryl Taylor
Pasadena City College

Joseph E. McAloon
Fitchburg State College

Surat P. Puri
Barber Scottia College

John H. Teter
St. Petersburg Junior College

James McKee
Champlain College

Angela Rabatin
Prince George’s Community College

Gary Thomas
Anne Arundel Community College

Michael McLane
University of Texas, San Antonio

Linda Reynolds
Sacramento City College

Michael Thomas
Henry Ford Community College

Ina Midkiff
Austin Community College

Brenda Rhodes
Northeastern Junior College

Frank Titlow
St. Petersburg Junior College

Rebecca Mihelcic
Howard Community College

Merle Rhodes
Morgan Community College

Roland Tollefson
Anne Arundel Community College

Richard Miller
Harford Community College

Pollis Robertson
Kellogg Community College

Sheb True
Loyola Marymount University

Joseph Mislivec
Central Michigan University

Robert Ross
Drexel University

Robert Ulbrich
Parkland College

Kimberly K. Montney
Kellogg Community College

Benjamin Sackmary
Buffalo State College

Ariah Ullman
SUNY Binghamton

Gail Moran
Harper College

Catherina A. Sanders
San Antonio College

Sal Veas
Santa Monica College

Linda S. Munilla
Georgia Southern University

Lewis Schlossinger
Community College of Aurora

Steven Wade
Santa Clara University

Kenneth R. Nail
Pasco-Hernando Community College

Gene Schneider
Austin Community College

Dennis Wahler
San Jacinto Evergreen Community College District

Joe Newton
Buffalo State College

Raymond Shea
Monroe Community College

W. J. Walters
Central Piedmont Community College

Janet Nichols
Northeastern University

Nora Jo Sherman
Houston Community College

Frank Nickels
Pasco-Hernando Community College

Leon J. Singleton
Santa Monica College

Timothy Weaver
Moorpark College

Sharon Nickels
St. Petersburg Junior College

Jeff Slater
North Shore Community College

Richard Wertz
Concordia University

Nnamdi I. Osakwe
Livingstone College

Candy Smith
Folsom Lakes College

Darcelle D. White
Eastern Michigan University

Tibor Osatreicher
Baltimore City Community College

Solomon A. Solomon
Community College of Rhode Island

Jean G. Wicks
Bornie State University

George Otto
Truman College

R. Southall
Laney College

Tom Wiener
Iowa Central Community College

Thomas Paczkowski
Cayuga Community College

Martin St. John
Westmoreland County Community College

Dave Wiley
Anne Arundel Community College

Alton Parish
Tarrant County Community College

Richard J. Williams
Santa Clara University

E. George Stook
Anne Arundel Community College

Jack Partlow
Northern Virginia Area Community College—Annandale

Joyce Wood
Northern Virginia Community College

James B. Stull
San Jose State University

Jeff Penley
Catawba Valley Community College

Bill Syverstein
Fresno City College

Gregory Worosz
Schoolcraft College

Robert Pollero
Anne Arundel Community College

Thomas Szezurek
Delaware County Community College

Martha Zennis
Jamestown Community College

xiv

Acknowledgements

In Conclusion
I would like to thank Sue Nodine, Ingrid Benson, Heather Johnson, and the staff at Elm Street Publishing Services. Their unending efforts on behalf of Contemporary Business were truly extraordinary. I would also like to thank Tim Hatten at Mesa State College for his valuable feedback. Let me conclude by noting that this new edition would never have become a reality without the outstanding efforts of the Wiley editorial, production, and marketing teams. Special thanks to George Hoffman, Lisé Johnson, Karolina Zarychta, Franny Kelly, and Maria Guarascio.

Acknowledgements

xv

Brief Contents
PART 1
Business in a Global Environment
Chapter 1 Chapter 2 Chapter 3 Chapter 4 The Changing Face of Business Business Ethics and Social Responsibility Economic Challenges Facing Contemporary Business Competing in World Markets

1
2 34 70 104

PART 2

Starting and Growing Your Business
Chapter 5 Chapter 6 Forms of Business Ownership and Organization Starting Your Own Business: The Entrepreneurship Alternative

143
144 182

PART 3

Management: Empowering People to Achieve Business
Chapter 7 Chapter 8 Chapter 9 Chapter 10 Management, Leadership, and the Internal Organization Human Resource Management: From Recruitment to Labor Relations Top Performance through Empowerment, Teamwork, and Communication Production and Operations Management

215
216 252 284 314

PART 4

Marketing Management
Chapter 11 Chapter 12 Chapter 13 Customer-Driven Marketing Product and Distribution Strategies Promotion and Pricing Strategies

349
350 386 426

PART 5 PART 6

Managing Technology and Information
Chapter 14 Using Technology to Manage Information

465
466

Managing Financial Resources
Chapter 15 Chapter 16 Chapter 17 Appendix A Appendix B Appendix C Appendix D Appendix E Understanding Accounting and Financial Statements The Financial System Financial Management Business Law Insurance and Risk Management Personal Financial Planning Developing a Business Plan Careers in Contemporary Business

497
498 532 566 A-1 A-18 A-31 A-43 A-53

Brief Contents

xvii

Contents
PART 1 Business in a Global Environment
Chapter 1
Opening Vignette Snuggie: The Break-out Blanket Hit Hit & Miss Microsoft and Google Square Off on the Web BusinessEtiquette Social Networking Hit & Miss Google Buzz a Bust? Going Green Exelon Bets on Nuclear Solving an Ethical Controversy SEC Lax on Oversight?

1
2
5 7 9 13

The Changing Face of Business
What Is Business?
Not-for-Profit Organizations 5

Factors of Production The Private Enterprise System
Basic Rights in the Private Enterprise System 10, The Entrepreneurship Alternative 11

Six Eras in the History of Business
The Colonial Period 13, The Industrial Revolution 13, The Age of Industrial Entrepreneurs 14, The Production Era 14, The Marketing Era 15, The Relationship Era 15, Managing Relationships through Technology 16, Strategic Alliances 16, The Green Advantage 17

Today’s Business Workforce
Changes in the Workforce 20

20 23

The 21st-Century Manager
Importance of Vision 23, Importance of Critical Thinking and Creativity 23, Ability to Lead Change 24

What Makes a Company Admired? What’s Ahead
Summary of Learning Objectives 27, Business Terms You Need to Know 28, Review Questions 28, Projects and Teamwork Applications 29, Web Assignments 29

25 25

Case 1.1 SAS Is Still a Great Place to Work Case 1.2 Kayak.com Video Case 1.3 New Harvest Coffee Roasters Brews Up Fresh Business

30 31 32

Chapter 2
Opening Vignette Larry’s Beans Roasts a Greener Cup of Coffee BusinessEtiquette How to Handle Ethical Dilemmas at Work

Business Ethics and Social Responsibility
Concern for Ethical and Societal Issues The Contemporary Ethical Environment
Individuals Make a Difference 40, Development of Individual Ethics 40, On-the-Job Ethical Dilemmas 41

34
36 38

How Organizations Shape Ethical Conduct
Ethical Awareness 45, Ethical Education 45, Ethical Action 46, Ethical Leadership 47

44

xviii

Contents

Going Green Starbucks Introduces a New Store-Design Strategy Solving an Ethical Controversy Are Prescription Drug Advertisements Helpful or Harmful to Consumers? Hit & Miss Pacific Biodiesel Recycles Oil from French Fries to Fuel Hit & Miss Balancing Life and Work with a Cup of Tea

Acting Responsibly to Satisfy Society
Responsibilities to the General Public 49, Responsibilities to Customers 55, Responsibilities to Employees 57, Responsibilities to Investors and the Financial Community 63

47

What’s Ahead
Summary of Learning Goals 64, Business Terms You Need to Know 65, Review Questions 65, Projects and Teamwork Applications 66, Web Assignments 66

64

Case 2.1 Cause-Related Marketing—Give a Day, Get a Disney Day Case 2.2 Greener Shipping—At Sea and in Port Video Case 2.3 Seventh Generation: Beyond Paper and Plastic

67 68 69

Chapter 3
Opening Vignette Samsung’s Remarkable Recovery Hit & Miss Five Guys Burgers and Fries: A Simple Recipe for Success Solving an Ethical Controversy Should Alternative Energy Development Be Relied on to Create New Jobs? Hit & Miss Microloans Aid Women’s Businesses Going Green Tax Credits for an Energy Star BusinessEtiquette Tips for International Travel

Economic Challenges Facing Contemporary Business
Microeconomics: The Forces of Demand and Supply
Factors Driving Demand 73, Factors Driving Supply 76, How Demand and Supply Interact 77

70
73

Macroeconomics: Issues for the Entire Economy
Capitalism: The Private Enterprise System and Competition 79, Planned Economies: Socialism and Communism 82, Mixed Market Economies 83

78

Evaluating Economic Performance
Flattening the Business Cycle 84, Productivity and the Nation’s Gross Domestic Product 86, Price-Level Changes 88

83

Managing the Economy’s Performance
Monetary Policy 91, Fiscal Policy 92

91 94 96

Global Economic Challenges of the 21st Century What’s Ahead
Summary of Learning Objectives 96, Business Terms You Need to Know 98, Review Questions 98, Projects and Teamwork Applications 99, Web Assignments 100

Case 3.1 Nuclear Energy: Making a Comeback? Case 3.2 Smart Phones: Recession Proof and Growing Video Case 3.3 Secret Acres: Selling Comics Is Serious Business

100 101 102

Chapter 4
Opening Vignette Guayaki’s Energized Fans Help Restore the Rainforest BusinessEtiquette Tips for Understanding Japanese Culture Hit & Miss The Tiny Nano—A Potential Hit for Tata Motors

Competing in World Markets
Why Nations Trade
International Sources of Factors of Production 107, Size of the International Marketplace 107, Absolute and Comparative Advantage 109

104
107

Measuring Trade between Nations
Major U.S. Exports and Imports 110, Exchange Rates 111

110 113

Barriers to International Trade
Social and Cultural Differences 113, Economic Differences 115, Political and Legal Differences 116, Types of Trade Restrictions 120

Contents

xix

Solving an Ethical Controversy How Fair Is Fair Trade? Going Green IBM Helps Keep Water Flowing Hit & Miss Toyota’s Recall Woes

Reducing Barriers to International Trade
Organizations Promoting International Trade 122, International Economic Communities 123, NAFTA 123, CAFTA-DR 124, European Union 125

121

Going Global
Levels of Involvement 126, From Multinational Corporation to Global Business 131

125 131 133

Developing a Strategy for International Business
Global Business Strategies 132, Multidomestic Business Strategies 132

What’s Ahead
Summary of Learning Objectives 133, Business Terms You Need to Know 135, Review Questions 135, Projects and Teamwork Applications 136, Web Assignments 136

Case 4.1 Google and Facebook Face Off in India’s Social Networking Wars Case 4.2 TOMS Shoes Takes One Step at a Time Video Case 4.3 Smart Design: Life Is In the Details Part 1 Greensburg, KS: New Ways to Be a Better Town Part 1: Launching Your Global Business and Economics Career

137 137 138 140 141

PART 2 Starting and Growing Your Business
Chapter 5
Opening Vignette S.C. Johnson: A Large Company with Small Beginnings Going Green Green Mama: Small Business with a Big Message BusinessEtiquette How to Use Social Networking in Your Job Search Solving an Ethical Controversy Good Karma or Bad Karma? Hit & Miss Turning Technologies Creates High-Tech Jobs Hit & Miss One Small Franchise Produces One Big Idea

143
144
146 149 152

Forms of Business Ownership and Organization
Most Businesses Are Small Businesses
What Is a Small Business? 147, Typical Small-Business Ventures 147

Contributions of Small Business to the Economy
Creating New Jobs 150, Creating New Industries 150, Innovation 151

Why Small Businesses Fail
Management Shortcomings 153, Inadequate Financing 153, Government Regulation 154

The Business Plan: A Foundation for Success Assistance for Small Businesses
Small Business Administration 157, Local Assistance for Small Businesses 159, Private Investors 160, Small-Business Opportunities for Women and Minorities 160

155 157

Franchising
The Franchising Sector 163, Franchising Agreements 163, Benefits and Problems of Franchising 164

162

xx

Contents

Forms of Private Business Ownership
Sole Proprietorships 166, Partnerships 167, Corporations 168, Employee-Owned Corporations 169, Family-Owned Businesses 169, Not-for-Profit Corporations 170

166

Public and Collective Ownership of Business
Public (Government) Ownership 171, Collective (Cooperative) Ownership 171

171 172

Organizing a Corporation
Types of Corporations 172, Where and How Businesses Incorporate 172, Corporate Management 173

When Businesses Join Forces
Mergers and Acquisitions (M&A) 174, Joint Ventures: Specialized Partnerships 175

174 175

What’s Ahead
Summary of Learning Objectives 176, Key Terms 178, Review Questions 178, Projects and Teamwork Applications 178, Web Assignments 179

Case 5.1 Leslie Blodgett: The Bare Escentuals of Business Case 5.2 Small Meets Big: Patagonia and Walmart Join Forces for the Environment Video Case 5.3 Seventh Generation Cleans Up with Consumer Products

179 180 181

Chapter 6
Opening Vignette Craig Bramscher: Changing the Way the World Rides to Work BusinessEtiquette Communicating By Email, Text Message, or You Don’t Have to Be All Thumbs Hit & Miss Amos Miller Runs His Farm Just Like His Life Hit & Miss Businesses Based at Home Are Booming Solving an Ethical Controversy Entrepreneurs and Ethics: It’s Good Business Going Green Adam Lowry and Eric Ryan: There’s a Method to Their Madness

Starting Your Own Business: The Entrepreneurship Alternative
What Is an Entrepreneur? Categories of Entrepreneurs Reasons to Choose Entrepreneurship as a Career Path
Being Your Own Boss 187, Financial Success 188, Job Security 188, Quality of Life 189

182
184 185 186 189

The Environment for Entrepreneurs
Globalization 190, Education 192, Information Technology 192, Demographic and Economic Trends 193

Characteristics of Entrepreneurs
Vision 194, High Energy Level 195, Need to Achieve 195, Self-Confidence and Optimism 195, Tolerance for Failure 196, Creativity 196, Tolerance for Ambiguity 198, Internal Locus of Control 198

194

Starting a New Venture
Selecting a Business Idea 199, Creating a Business Plan 202, Finding Financing 203, Government Support for New Ventures 205

199

Intrapreneurship What’s Ahead
Summary of Learning Objectives 206, Business Terms You Need to Know 208, Review Questions 208, Projects and Teamwork Applications 208, Web Assignments 209

205 206

Contents

xxi

Case 6.1 Marco Giannini’s Dogswell: A Healthy Company after All Case 6.2 Small Businesses Are Big into Social Networking Video Case 6.3 Comet Skateboards: It’s a Smooth Ride Part 2 Greensburg, KS: Greensburg: A Great Place to Start Part 2: Launching Your Entrepreneurial Career

209 210 210 212 213

PART 3 Management: Empowering People to Achieve Business
Chapter 7
Opening Vignette Indra Nooyi: PepsiCo’s Top Executive Solving an Ethical Controversy Google Stands Alone: When Ethics and Business Don’t Mix Going Green Johnson & Johnson: Caring for the World Hit & Miss Jeff Immelt Tries to Lead GE in a New Direction Hit & Miss Southwest Airlines: “We Love Your Bags” BusinessEtiquette Managing a Multigenerational Workforce

215
216
218

Management, Leadership, and the Internal Organization
What Is Management?
The Management Hierarchy 218, Skills Needed for Managerial Success 220, Managerial Functions 221

Setting a Vision and Ethical Standards for the Firm Importance of Planning
Types of Planning 225, Planning at Different Organizational Levels 226

222 224 227

The Strategic Planning Process
Defining the Organization’s Mission 227, Assessing Your Competitive Position 228, Setting Objectives for the Organization 230, Creating Strategies for Competitive Differentiation 230, Implementing the Strategy 231, Monitoring and Adapting Strategic Plans 231

Managers as Decision Makers
Programmed and Nonprogrammed Decisions 231, How Managers Make Decisions 232

231 233 235 236

Managers as Leaders
Leadership Styles 234, Which Leadership Style Is Best? 235

Corporate Culture Organizational Structures
Departmentalization 238, Delegating Work Assignments 240, Types of Organization Structures 241

What’s Ahead
Summary of Learning Objectives 244, Business Terms You Need to Know 246, Review Questions 246, Projects and Teamwork Applications 247, Web Assignments 247

244

xxii

Contents

Case 7.1 Ford Drives Out of the Financial Mud Case 7.2 Military Leaders in Business Video Case 7.3 Dan Formosa: At the Forefront of Smart Design

248 249 250

Chapter 8
Opening Vignette CClc: Motivating Workers Is Child’s Play Hit & Miss The Good, Bad, and Ugly of Executive Pay Solving an Ethical Controversy Should Paid Sick Leave Be Required by Law? BusinessEtiquette How to Ask for a Raise Hit & Miss AOL Employees Don’t Exit Voluntarily Going Green Labor Unions and Green Construction

Human Resource Management: From Recruitment to Labor Relations
Human Resources: The People Behind the People Recruitment and Selection
Finding Qualified Candidates 255, Selecting and Hiring Employees 256

252
254 255 257 260 265 268

Orientation, Training, and Evaluation
Training Programs 257, Performance Appraisals 259

Compensation
Employee Benefits 261, Flexible Benefits 263, Flexible Work 264

Employee Separation
Voluntary and Involuntary Turnover 265, Downsizing 265, Outsourcing 267

Motivating Employees
Maslow’s Hierarchy of Needs Theory 268, Herzberg’s Two-Factor Model of Motivation 269, Expectancy Theory and Equity Theory 270, Goal-Setting Theory and Management by Objectives 270, Job Design and Motivation 272, Managers’ Attitudes and Motivation 272

Labor–Management Relations
Development of Labor Unions 273, Labor Legislation 274, The Collective Bargaining Process 274, Settling Labor–Management Disputes 274, Competitive Tactics of Unions and Management 275, The Future of Labor Unions 276

273

What’s Ahead
Summary of Learning Objectives 278, Business Terms You Need to Know 279, Review Questions 280, Projects and Teamwork Applications 280, Web Assignments 280

277

Case 8.1 The Coca-Cola Company: Training for the Future Right Now Case 8.2 Strikes: Who Wins, Who Loses? Video Case 8.3 Seventh Generation Promotes Company Ownership

281 282 282

Contents

xxiii

Chapter 9
Opening Vignette Now Playing: Fandango Features Its Employees Solving an Ethical Controversy Employee Empowerment: Is There Ever Too Much? Hit & Miss GM: Putting Workers in the Driver’s Seat Hit & Miss Team Diversity at Ernst & Young BusinessEtiquette Tune Up Your Listening Skills Going Green Clorox Comes Clean— Naturally

Top Performance through Empowerment, Teamwork, and Communication
Empowering Employees
Sharing Information and Decision-Making Authority 286, Linking Rewards to Company Performance 288

284
286

Teams Team Characteristics
Team Size 292, Team Level and Team Diversity 292, Stages of Team Development 293

290 292 294 295 296 298

Team Cohesiveness and Norms Team Conflict The Importance of Effective Communication
The Process of Communication 296

Basic Forms of Communication
Oral Communication 298, Written Communication 300, Formal Communication 300, Informal Communication 302, Nonverbal Communication 303

External Communication and Crisis Management What’s Ahead
Summary of Learning Objectives 306, Business Terms You Need to Know 308, Review Questions 309, Projects and Teamwork Applications 309, Web Assignments 309

304 306

Case 9.1 SeaWorld Faces a Public Relations Crisis Case 9.2 Windy City Fieldhouse: It’s All about Teams Video Case 9.3 Kimpton Hotels: “Our Employees Are Our Brand”

310 311 312

Chapter 10
Opening Vignette The World Cup Gets a Kick Out of Jabulani Going Green Drilling for Natural Gas— Clean Alternatives Hit & Miss The Sun Is Shining Brighter in Senatobia Hit & Miss Goodyear Tire & Genencor: A Sweet Alliance BusinessEtiquette Making the Most of Business Meetings

Production and Operations Management
The Strategic Importance of Production
Mass Production 318, Flexible Production 318, Customer-Driven Production 319

314
317 319 320

Production Processes Technology and the Production Process
Green Manufacturing Processes 320, Robots 321, Computer-Aided Design and Manufacturing 322, Flexible Manufacturing Systems 322, Computer-Integrated Manufacturing 323

The Location Decision The Job of Production Managers
Planning the Production Process 327, Determining the Facility Layout 327, Implementing the Production Plan 329

323 326

Controlling the Production Process
Production Planning 333, Routing 334, Scheduling 334, Dispatching 335, Follow-Up 336

333

xxiv

Contents

Solving an Ethical Controversy Multivitamins Produced in China: Are Stricter Quality Controls Necessary?

Importance of Quality
Quality Control 337, ISO Standards 338

336 339

What’s Ahead
Summary of Learning Objectives 340, Business Terms You Need to Know 341, Review Questions 341, Projects and Teamwork Applications 342, Web Assignments 342

Case 10.1 Macedonia: The New Hub of Apparel Manufacturing? Case 10.2 Zappos: How Not to Get Zapped By Customer Service Video Case 10.3 Kimpton Hotels Puts Green Initiatives to Work Part 3 Greensburg, KS: No Time to Micromanage Part 3: Launching Your Management Career

343 344 344 346 347

PART 4 Marketing Management
Chapter 11
Opening Vignette Handmade Items: Etsy.com Has Them All Hit & Miss The Pepsi Refresh Project: Viral Marketing Going Green The Tap Project Solving an Ethical Controversy When Free Credit Reports Aren’t Free Hit & Miss Disney XD TV: Marketing to Boys BusinessEtiquette Calming the Angry Customer

349
350
352 355 356 360

Customer-Driven Marketing
What Is Marketing?
How Marketing Creates Utility 354

Evolution of the Marketing Concept
Emergence of the Marketing Concept 355

Not-for-Profit and Nontraditional Marketing
Not-for-Profit Marketing 356, Nontraditional Marketing 357

Developing a Marketing Strategy
Selecting a Target Market 361, Developing a Marketing Mix for International Markets 363

Marketing Research
Obtaining Marketing Research Data 364, Applying Marketing Research Data 365, Data Mining 365

364

Market Segmentation
How Market Segmentation Works 367, Segmenting Consumer Markets 367, Segmenting Business Markets 373

366

Consumer Behavior
Determinants of Consumer Behavior 374, Determinants of Business Buying Behavior 374, Steps in the Consumer Behavior Process 375

374

Relationship Marketing
Benefits of Relationship Marketing 376, Tools for Nurturing Customer Relationships 377

375

Contents

xxv

What’s Ahead
Summary of Learning Goals 379, Key Terms 380, Review Questions 381, Projects and Teamwork Applications 381, Web Assignments 382

378

Case 11.1 Advertising on Facebook: Unlimited Potential? Case 11.2 Marketing Gone Wrong: Johnson & Johnson and Risperdal Video Case 11.3 Zipcar and UNH: Customer-Driven Marketing

382 383 384

Chapter 12
Opening Vignette Foiling Car Thieves with OnStar Hit & Miss Buick: Making an Old Brand New Again Hit & Miss SunChips Introduces Greener Packaging Going Green Testa Produce Sells—and Builds—Green Solving an Ethical Controversy Teens at the Mall: Good or Bad for Business? BusinessEtiquette Minding Your Social Media Manners

Product and Distribution Strategies
Product Strategy
Classifying Goods and Services 389, Classifying Consumer Goods and Services 389, Marketing Strategy Implications 391, Product Lines and Product Mix 391

386
388

Product Life Cycle
Stages of the Product Life Cycle 392, Marketing Strategy Implications of the Product Life Cycle 394, Stages in New-Product Development 395

392

Product Identification
Selecting an Effective Brand Name 397, Brand Categories 398, Brand Loyalty and Brand Equity 398, Packages and Labels 400

397

Distribution Strategy
Distribution Channels 402

402 406

Wholesaling
Manufacturer-Owned Wholesaling Intermediaries 406, Independent Wholesaling Intermediaries 406, Retailer-Owned Cooperatives and Buying Offices 407

Retailing
Nonstore Retailers 408, Store Retailers 409, How Retailers Compete 410

407 413

Distribution Channel Decisions and Logistics
Selecting Distribution Channels 414, Selecting Distribution Intensity 415, Logistics and Physical Distribution 416

What’s Ahead
Summary of Learning Goals 419, Business Terms You Need to Know 421, Review Questions 421, Projects and Teamwork Applications 422, Web Assignments 422

419

Case 12.1 Luxury Brands Market to Millennials Case 12.2 The Convergence of TV and the Internet Video Case 12.3 Secret Acres: Getting the Word Out

423 424 425

xxvi

Contents

Chapter 13
Opening Vignette Hotel Indigo Combines Individuality and Value Hit & Miss Heritage Oaks: “Expert Success” Going Green How Much Would You Pay for a Plastic Shopping Bag? BusinessEtiquette How to Negotiate in a Difficult Economy Solving an Ethical Controversy Free E-Books: Good or Bad for Business? Hit & Miss Will Lower Prices Help Nokia Regain Its Edge?

Promotion and Pricing Strategies
Integrated Marketing Communications
The Promotional Mix 430, Objectives of Promotional Strategy 431, Promotional Planning 432

426
429

Advertising
Types of Advertising 434, Advertising and the Product Life Cycle 435, Advertising Media 436

434

Sales Promotion
Consumer-Oriented Promotions 441, Trade-Oriented Promotions 443, Personal Selling 444

441

Pushing and Pulling Strategies Pricing Objectives in the Marketing Mix
Profitability Objectives 450, Volume Objectives 450, Pricing to Meet Competition 450, Prestige Objectives 451

449 449

Pricing Strategies
Price Determination in Practice 452, Breakeven Analysis 452, Alternative Pricing Strategies 454

452

Consumer Perceptions of Prices
Price–Quality Relationships 456, Odd Pricing 456

455 456

What’s Ahead
Summary of Learning Goals 457, Business Terms You Need to Know 458, Review Questions 458, Projects and Teamwork Applications 459, Web Assignments 459

Case 13.1 Brand Names versus Store Brands Case 13.2 Marketing to the Teenage Crowd Video Case 13.3 Pet Airways Handles Pets With Loving Care Part 4 Greensburg, KS: Think Green, Go Green, Save Green Part 4: Launching Your Marketing Career

459 460 461 462 463

PART 5 Managing Technology and Information
Chapter 14
Opening Vignette Google’s New Android Smart Phone: It’s Incredible

465
466
468 469

Using Technology to Manage Information
Data, Information, and Information Systems Components and Types of Information Systems
Databases 470, Types of Information Systems 471

Contents

xxvii

Hit & Miss Wyndham Hotels and Resorts Database Breached BusinessEtiquette Courteous Communications via Wireless Devices Going Green Can Cloud Computing Also Be “Green” Computing? Solving an Ethical Controversy Should Employers Monitor Employees’ Internet Use? Hit & Miss Cisco Systems Tackles Cloud Security

Computer Hardware and Software
Types of Computer Hardware 473, Computer Software 475

473 476

Computer Networks
Local Area Networks and Wide Area Networks 476, Wireless Local Networks 477, Intranets 478, Virtual Private Networks 478, VoIP 479

Security and Ethical Issues Affecting Information Systems
E-Crime 480, Computer Viruses, Worms, Trojan Horses, and Spyware 481, Information Systems and Ethics 482

479

Disaster Recovery and Backup Information System Trends
The Distributed Workforce 484, Application Service Providers 485, On-Demand, Cloud, and Grid Computing 485

483 484

What’s Ahead
Summary of Learning Goals 487, Business Terms You Need to Know 488, Review Questions 489, Projects and Teamwork Applications 489, Web Assignments 489

486

Case 14.1 MICROS Systems Works on a Large Scale Case 14.2 Kaspersky Lab Busts Computer Bugs Video Case 14.3 Zipcar: Technology Fuels Its Business Part 5 Greensburg, KS: The Dog Ate My Laptop Part 5: Launching Your Information Technology and Accounting Career

490 491 492 494 495

PART 6 Managing Financial Resources
Chapter 15
Opening Vignette Goldman Sachs and Shadow Banking Hit & Miss Forensic Accountants: Fraud Busters BusinessEtiquette Tips for Foreign Corrupt Practices Act Compliance Going Green Deloitte Educates Itself—and Others—on Sustainability

497
498
500 502

Understanding Accounting and Financial Statements
Users of Accounting Information
Business Activities Involving Accounting 501

Accounting Professionals
Public Accountants 502, Management Accountants 503, Government and Not-for-Profit Accountants 504

The Foundation of the Accounting System The Accounting Cycle
The Accounting Equation 507, The Impact of Computers and the Internet on the Accounting Process 508

504 506

Financial Statements
The Balance Sheet 511, The Income Statement 512, Statement of Owners’ Equity 514, The Statement of Cash Flows 515 xxviii
Contents

510

Solving an Ethical Controversy Should Whistle-Blowers Be Rewarded? Hit & Miss Accounting: Hong Kong Meets China

Financial Ratio Analysis
Liquidity Ratios 518, Activity Ratios 519, Profitability Ratios 520, Leverage Ratios 520

517 521 523 525

Budgeting International Accounting
Exchange Rates 524, International Accounting Standards 524

What’s Ahead
Summary of Learning Objectives 525, Business Terms You Need to Know 527, Review Questions 528, Projects and Teamwork Applications 528, Web Assignments 528

Case 15.1 Intacct Provides Accounting Software as a Service Case 15.2 BDO Seidman: Growing with the 20th Century and Beyond Video Case 15.3 Pet Airways Is a “Feel-Good” Business

529 530 531

Chapter 16
Opening Vignette Bank of America Weathers the Credit Crisis Going Green TD Bank: “As Green as Our Logo” Hit & Miss Citigroup Spins Off Primerica, Inc. Hit & Miss How News Lifts—or Sinks— World Stocks BusinessEtiquette What to Do When Your Credit Gets Pulled Solving an Ethical Controversy Can Wall Street Regulate Itself?

The Financial System
Understanding the Financial System Types of Securities
Money Market Instruments 536, Bonds 537, Stock 539

532
534 536 541 543

Financial Markets Understanding Stock Markets
The New York Stock Exchange 543, The Nasdaq Stock Market 544, Other U.S. Stock Markets 545, Foreign Stock Markets 545, ECNs and the Future of Stock Markets 545, Investor Participation in the Stock Markets 546

Financial Institutions
Commercial Banks 547, Savings Banks and Credit Unions 549, Nondepository Financial Institutions 550, Mutual Funds 551

546

The Role of the Federal Reserve System
Organization of the Federal Reserve System 551, Check Clearing and the Fed 552, Monetary Policy 552

551

Regulation of the Financial System
Bank Regulation 555, Government Regulation of the Financial Markets 555, Industry Self-Regulation 557

555

The Financial System: A Global Perspective What’s Ahead
Summary of Learning Goals 559, Business Terms You Need to Know 561, Review Questions 561, Projects and Teamwork Applications 562, Web Assignments 562

557 559

Case 16.1 Emerging-Market Stocks: The New Leaders? Case 16.2 Credit Unions Find a Silver Lining in the Financial Crisis Video Case 16.3 New Harvest Coffee Goes Beyond Fair Trade

563 564 565
Contents

xxix

Chapter 17
Opening Vignette The Wooing of Ratiopharm Hit & Miss Apptio Calculates the Cost of Information Technology BusinessEtiquette Tips for Managing Assets Solving an Ethical Controversy Executive Pay: Should Shareholders Decide the Salaries of CEOs? Going Green Intel Invests in U.S. Technology Hit & Miss Harvest Partners Grows Its Investments

Financial Management
The Role of the Financial Manager Financial Planning Managing Assets
Short-Term Assets 573, Capital Investment Analysis 574, Managing International Assets 575

566
568 571 572

Sources of Funds and Capital Structure
Leverage and Capital Structure Decisions 576, Mixing Short-Term and Long-Term Funds 578, Dividend Policy 578

576

Short-Term Funding Options
Trade Credit 579, Short-Term Loans 580, Commercial Paper 581

579 581

Sources of Long-Term Financing
Public Sale of Stocks and Bonds 581, Private Placements 582, Venture Capitalists 582, Private Equity Funds 582, Hedge Funds 585

Mergers, Acquisitions, Buyouts, and Divestitures What’s Ahead
Summary of Learning Goals 587, Business Terms You Need to Know 589, Review Questions 589, Projects and Teamwork Applications 590, Web Assignments 590

585 587

Case 17.1 ConocoPhillips Divests to Return to Its Core Case 17.2 Top Hedge Fund Managers Earn Record Paychecks Video Case 17.3 Comet Skateboards Rides the Triple Bottom Line Part 6 Greensburg, KS: So Much to Do, So Little Cash Part 6: Launching Your Finance Career Greensburg, KS: The Bumpy Road to Recovery Greensburg, KS: What Lies Ahead?

590 591 592 594 595 597 598

APPENDIXES
Appendix A Appendix B Appendix C Appendix D Appendix E GLOSSARY NOTES NAME INDEX SUBJECT INDEX INTERNATIONAL INDEX xxx
Contents

Business Law Insurance and Risk Management Personal Financial Planning Developing a Business Plan Careers in Contemporary Business

A-1 A-18 A-31 A-43 A-53 G-1 N-1 I-1 I-14 I-30

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