JOURNAL FOR Principles of Business

Journal for (BUS103-702) Principles of Business (SL2)
By: Barbara L. Waloven
Instructor: Tom Paczkowski
BUSINESS ESSENTIALS Fifth Edition
ISBN 0-13 144 1582
By Ricky W. Griffin and Ronald Ebert
Prentice Hall Publishing Co.
Introduction
This is the first college course I have taken as well as the first online course. I am very
excited to be taking this new path in my life. Although enrolling in Cayuga Community
College and taking the online SUNY Learning Network courses was primarily based on
my fear of being laid off and facing the unemployment ranks armed only with a high
school education and 20 years of nuclear experience, I am beginning to believe that
learning more and different subjects will help my personal life as well.
I hope to gain the feeling of achievement and satisfaction of having done it all. As a
single mom, full time employee, homeowner, and college student. I just hope the
juggling act that will follow is successful in all aspects of my life.
(BUS103-702) Principles of Business (SL2) Page 1

SUNY Learning Network
My thoughts about taking a course through the SUNY Learning Network are that it is the
easiest way for people like me to further their education. Being a single, full-time
employee, homeowner, and Mom (to very active kids), this is the perfect solution to
continuing my education. I have learned that I have to be extremely organized from the
time the alarm goes off at 4:10 in the morning until my head hits the pillow at 11:00 at
night. But the rewards are great.
I would like to see Cayuga Community College offer more of the online courses that are
offered by the SUNY Learning Network.
Assignments
The assignments after each chapter were thought provoking and wrapped up the materials
of each chapter nicely. Often they prompted me to do further research and made me read
between the lines. I enjoyed reading and commenting on other students answers and
seeing the different opinions that our small group had to offer.
Schedule
Schedule was aggressive and challenging. You have to be disciplined and motivated in
order to be successful in a non-structured, non-classroom setting. Before enrolling in
Cayuga Community College, I took several home study courses from Harcourt Learning
so I had a feel for schedules and self-teaching before taking the online courses.

I set aside 1 hour each evening (after the kids were in bed) to read materials (text,
assignments, mini-lectures, discussions, module summaries, etc). On Friday's (I work a
4-day workweek of 10-hour days) when I was home alone, I set aside 4 hours to prepared
my assignments and complete the exams.
Individual as opposed to group work
Having not worked in a group for class work in nearly 30 years, the individual work was
just fine with me. Discussions with other students on the assignments we posted were
interesting, thought provoking, and often fun.
Assistance provided by SLN
I had to contact the help desk for a few things. Each time they provided fast and effective
help.
Self-evaluation of my performance and learning in the course
I believe I should receive an A for the following reasons:
Assignments and Interaction
I completed the readings as assigned and on time. I submitted each assignment within a
reasonable time after the module opened. This allowed other students to comment and
question my answers. I commented on and/or questioned other student's and the
professor's comments for posted assignments. I was also online daily to participate in
any discussions or assignments that had been posted.

Each assignment I posted used the textbook, interfacing with people in my work,
personal experience, searching the internet, reading the newspapers, and even by asking
my 15 year old for her thoughts on various topics.
Resources
When I found news articles or a website that I thought would be helpful to other students
(or pertained to subjects we had just covered), I added them to the shared references
portion of the website, referred to them in my assignments, or mentioned them in this
journal.
I requested and received a library card and used the online SUNY Library to resource
given assignments and questions as well as learn more on subjects that the text briefly
referred.
Education
I have learned a great deal about the Principals of Business and am better informed on the
economies of the world. When an item appears in the news that discusses business
related, both domestic and world events, I actually understand the basic concepts of what
is happening. There is a lot more involved in that carton of Ben and Jerry's Ice Cream
than grabbing it out of the cooler and buying it at the local gas station/convenience store.

Module 1:
Understanding the
Contemporary
Business
Environment

Module 1 - Understanding the Contemporary Business Environment
October 19-22, 2005
CHAPTER 1: UNDERSTANDING THE U.S. BUSINESS ENVIRONMENT
The Concept of Business and the Concept of Profit
This area discussed Consumer Choice and Demand, Opportunity and Enterprise, and
Quality of Life. All three of these areas are based on gaining profits. Profits are the
difference between a business's revenues and its expenses and why a business is created.
The U.S. Economic System
While reading this section I compared the information I read to my employment.
5 Factors of Production
1. Labor - My Employer plans to reduce the work force (labor) by approximately 400
positions by the end of 2007.
2. Capital - The Company sold off the physical resources that did not fit their plan. This
gave them more capital. All of the changes incorporated into the company facilities,
changing processes, and improving tools as well as labor downsizing are to improve
the market value of corporate stock.
3. Entrepreneurs - The Company I work for started as a small electric producer and
supplier in Maryland. The company's entrepreneurs had the conceptual skills to see
the potential that deregulation had for industry growth. It is now a Fortune 200
company and has one of the strongest, most stable balance sheets. Its combined
revenues now total over $12.5 billion.
4. Physical Resources - Taking advantage of the deregulation of electricity, they began
expanding their production area by buying more facilities throughout the United

States. The company is investing a lot of money (capital) to improve equipment
reliability, upgrade tools, improve processes, and update computer hardware and
software to name a few of their improvements.
5. Information Resources - Although I am not familiar with this aspect of our business, I
am sure there are teams out there who crunch numbers, gather statistics, chart, graph
and predict information needed to gain profits.
Types of Economic Systems
This section discussed two types of economic systems:
• Planned Economy that relies on a centralized government to control all or most
factors of production and to make production and allocation decisions.
• Market Economy in which individuals control production and allocation decisions
through supply and demand.
Both of these seem to have their benefits and faults. That is probably why there is
usually no completely Planned or completely Market Economies. Most are Mixed
Market Economies.
The Economics of a Market System
Demand and Supply in a Market Economy
The Laws of Demand and Supply are what govern our market economy. Every consumer
plays a role in what is produced and how much it will cost. This area also discussed
surpluses and shortages, which are important to the bottom line - profits.

Private Enterprise and Competition in a Market Economy
This requires the following elements: private property, freedom of choice, profits and
competition.
There are also 4 Degrees of Competition:
Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly. The one that
interested me was the field of my employment - power generation - which would
probably fall under a natural monopoly to some degree.
Natural Monopoly
My employer deals in power generation. This includes nuclear, coal, natural gas, oil, and
renewable and alternative fuels (solar, wind, geothermal, hydro, and biomass). Dealing
in these natural resources makes them a Natural Monopoly. It owns or holds ownership
interests in more than 100 electricity-generating units across the United States, all
strategically located in or near competitive markets. They can provide the needed power
to local areas. Although other facilities may be located in their areas and share the
distribution and generation, of power, it is not an industry that is easily entered and it is
or parts of the business are regulated somewhat by the government. They have
considerable control over the price of their products.
Understanding Economic Performance
This area discussed Economic Growth, Economic Stability, Managing the U.S. Economy,
and The Aftermath of 9/11. All of these play a vital role in the U.S. Economy.

SUMMARY
There is a lot more that goes on in the business world than I realized. Competitiveness in
the market place is important to the nation's economy and growth. Whether I choose a
locally made product or a product from overseas, it is all part of supply and demand.
I have been working in the nuclear industry for 20 years and found the opening article on
Enron extremely interesting. Our work culture and environment has changed
dramatically since the deregulation of the power industry. Deregulation was a "buzz
word" that was tossed around at many meetings, it is mentioned in our Business Plan, and
it is the basis for downsizing the workforce, putting into effect many new programs and
processes, and many other drastic changes to our work environment. I did not fully
understand the meaning of the word until reading this chapter. I can now see that even
with deregulation the government has to keep a watchful eye on businesses to keep things
honest and fair.

October 22-24, 2005
CHAPTER 2: CONDUCTING BUSINESS ETHICALLY AND RESPONSIBLY
Ethics in the Workplace
Our employers have sent us to several Workshops regarding ethics. We have very strong
very clear procedures regarding ethics.
During one of the workshops, the instructor said that sometime ethical issues are hard to
put into right or wrong. He suggested we consider our decisions based on the following:
If the local newspaper reported on the issue, would it leave you, the company,
and your family in a good light? Would the article be negative or positive?
When faced with ethical decisions, despite all the methods and suggestions to help you
come to a correct decision, I always fall back on the newspaper method.
Social Responsibility
Ethics affect individual behavior in the workplace. Social responsibility refers to the
overall way in which a business itself tries to balance its commitments to the
organizational stakeholders.
Main groups:
Customers, Employees, Investors, Suppliers, Local Communities. Your decisions should
not hurt any of this group.

Areas of Social Responsibility
Environment - Air, Water, Land Pollution - these are all very important if we are to leave
our children and grandchildren better than or at least as well off as we are. Natural
resources are very important to the future.
Customers - Without them, there would be no supply and demand, no profits. Consumers
have rights. Advertising and pricing should be fair.
Investors - Financial management or the mismanagement of them.
Implementing Social Responsibility Programs
There are four basic approaches to corporate social responsibility. Stances ranging from
low to high they are Obstructionist, Defensive, Accommodative, and Productive.
SUMMARY
This chapter is one of those that could cause big debates. It is not always as easy as black
and white (right and wrong), ethics often comes in many shades of gray. The assignment
for this chapter was thought provoking. I could have taken either side and debated the
positives and negatives. When I chose my answer, it was based on my own ethics and
the "newspaper" question. If I chose to bribe the foreign government and the local
newspaper reported on it - they would not care how many people benefited by my
decision. The end does not always justify the means.

October 24-29, 2005
CHAPTER 3: UNDERSTANDING ENTREPRENEURSHIP AND BUSINESS
OWNERSHIP
What is a "Small Business?
The Importance of Small Business in the U.S. Economy
Small Businesses are very important to the US Economy. Small businesses provide
products and services to local customers. They pay taxes that help the government
provide services and benefits to citizens. They employ local people, often create major
innovations, and they sell products made by big businesses.
Popular Areas of Small-Business Enterprise
Services, Construction, Finance and Insurance, Wholesaling, Transportation, and
Manufacturing are the most popular small-business areas.
Entrepreneurship
Entrepreneurs are people who assume the risk of business ownership with a primary goal
of growth and expansion. They have certain characteristics that set them apart from the
small business owner. They have a strong desire to be their own boss, to gain control
over their lives, build a business for their families, they are resourceful, offer personal
customer relations, and see the potential their businesses have.

Starting and Operating the Small Business
My brother and his wife are trying to open a small clothing consignment store. They
have attended classes, done research (such as population, men/women ratios, incomes,
geographic location), put together a business plan (including everything financial that
happens behind the closed doors of offices) containing thousands of pages, designed the
storeroom floor, and many more paper and leg work things. Starting a business is not just
deciding to do it, renting space, and stocking shelves.
Whether you buy an existing business or start from scratch, you will need sources of
investment, a good product, the drive, and plenty of time to make it successful.
Franchising
A franchise permits the buyer to sell a well-known product or service.
Success and Failure in Small Business
More small businesses are being started by minorities and women. They are also started
by people who have decided to leave big corporations and put their experience to work
for themselves. My daughter and son-in-law who operate a small computer consulting
business gained their experience working for various big companies.
Noncorporate Business Ownership
This has Sole Proprietorships and Partnerships. Each have their advantages and
disadvantages.

Corporations
There are several types of corporations:
• Private Corporation
• S Corporations
• Limited Liability Corporations
• Professional Corporations
• Multinational
There are also special issues regarding corporate ownership:
• Joint Venture and Strategic Alliances
• Employee Stock Ownership Plans
• Institutional Ownership
• Mergers, Acquisitions, Divestitures, and Spin-Offs
SUMMARY
I found this chapter very interesting and easy to relate to people I know who are running
their own business, considering starting one, or have ran an unsuccessful business in the
past.
Key points for me to remember for success, should I decide to open my own business
someday are:
• A service or product that a customer would want (and want again and again)
• Location that makes the service/product easy to reach
• Hard work, drive, and dedication

• Market demand for the products or services (supply and demand)
• Managerial competence
• Good Business Plan - setting goals, objectives, revenue forecasting, financial
planning
• Performance Indicators - to monitor areas of success or failure, effective control
system
• Finances - sufficient capital, budgets, a trustworthy accountant
• LUCK
You have to know:
• Who are my customers?
• Where are they located?
• What price will they pay for my product/service?
• How much will they buy (Quantities)?
• How will my product differ from my competitors?

October 29-31, 2005
CHAPTER 4: UNDERSTANDING THE GLOBAL CONTEXT OF BUSINESS
This chapter covered The Rise of International Business, International Business
Management, and Barriers to International Trade.
SUMMARY
I found the assignment to be thought provoking, what I at first thought was a good idea
(Buy American), I later learned it could upset the World Economy as well as our own.
Many barriers stop businesses from exporting goods to other countries. Social, Cultural,
Economic, Legal, Political, quotas, tariffs, subsidies, protectionism, local content laws,
and business practice laws. Despite all these barriers, exports and imports to the U.S.
have steadily climbed over the past 10 years.
Our nation is suffering from a trade deficit due to importing more than exporting. In
order to have a balance of trade, we need to surpass those barriers I mentioned above and
up the amount of exports. I feel the U.S. Government could help improve exports if it
were to provide incentives and propose regulations that enhance business activity. They
could make it easier for businesses of all sizes to perform market researches to determine
products and services that are in demand in other countries. They could work with
foreign governments (perhaps thru the WTO) in matters relating to entry and operational
procedures associated with establishing businesses in developing countries. They could
provide access to any reliable information provided by governments that allow businesses

to compete for government tenders and gain market access easier. The government could
also re-evaluate the Effect of Trade Agreements and make changes as necessary to tip the
scales and balance out import to export ratios.
For over a year my 7 year old has been fascinated by the amount of products we have that
have the "Made in China" label on them. She makes it a point to tell us when she sees
each label. Reading the chapter brought to light several facts about China I was unaware
of and that fascinated me. The following for instance:
• Has the 3rd
largest economy
• Is an attractive market because it is heavily populated
• Is in the lowest-income bracket of the major world marketplaces
• Our input from China is at $100 billion and our exports to them is only $16.2 billion
That was not enough for me so I researched on the internet and found that China's
merchandise exports totaled $593 billion and imports totaled $561 billion in 2004. Its
global trade surplus was up by about 25%, to $32 billion. China's primary trading
partners include Japan, the EU, the United States, South Korea, Hong Kong, and Taiwan.
According to U.S. statistics, China had a trade surplus with the U.S. of $162 billion in
2004.
Under its WTO accession agreement, China is reducing tariffs and eliminating import-
licensing requirements, as well as addressing other trade barriers. Perhaps this will
equalize our import-export ratios with them.

Module 2:
The Business of
Management

Module 2 - The Business of Management
November 1-2, 2005
CHAPTER 5: MANAGING THE BUSINESS ENTERPRISE
There are three levels of management (top, middle, and first-line), five management skills
(technical, human relations, conceptual, decision-making, and time management), and
two 21st Century skills (global and technology). Each level of management has its own
need for strength in certain management skills but each manager should strive to achieve
high levels of performance in all.
Global Skills - This is the ability to manage a business in a global environment. These
managers must have an understanding of international operations, they must know how
cultures regulate business strategies and policies, and they must know the laws and
customs of the area in which they are assigned.
Technology Skills - This skill places importance on the ability to learn and use
technology as a tool for successful management. Utilizing the capabilities of new
technologies as they become available with confidence is an important part of this
management skill.
Technical Skills - These skills are developed through a combination of education and
experience. You cannot successfully manage a group of people or help them solve issues
if you do not know the processes and procedures involved in obtaining results. You can
not, for example, plan and organize a mechanic's schedule if you are unsure of the time it
takes to overhaul an engine. People who work their way up from the ground floor of a
business or who specialized in a particular field in their studies are probably well
equipped in this area.

Conceptual Skills - This skill helps to see the differences between general and specific
situations and to make judgment calls accordingly. This is a skill that allows managers to
see "cause and affect" in any given problem or issue and to act accordingly. Many
decisions would have no basis for conclusion and could often be erroneously directed
without this skill.
Decision-Making Skills - This management skill helps to define a problem or issue, to
chase down the root cause, evaluate the alternatives, and to implement the decision(s). A
manager needs to have enough Technical Skills and Conceptual Skills to come to an
acceptable decision. Sometimes decisions must be spur of the moment AND accurate.
Time Management Skills - This skill is a juggling act and may often go hand in hand with
a manager's ability to delegate. On Page 152 of our textbook are listed four time eaters
(paperwork, telephone, meetings, and e-mail). The lack of this skill can often be
supplemented with a good administrative staff (clerks, secretaries, etc). (Can you tell that
my title at work is an Administrative Specialist?) It is still a struggle for many managers
to successfully accomplish. It is what I believe keeps them working long past normal
business hours.
Human Relations Skills - This is the ability to communicate with people. This is the basic
skill needed to understand and to be understood. These skills can also be developed
through both education and experience. Managers who are weak in this area may loose
the confidence of co-workers/peers, superiors, employees, customers, and even
stockholders. Regardless of how well the policies and strategies are laid out, if you
cannot communicate the businesses culture by both example and direction, the workers

will not support you, the policies, or the strategies. Of all the skills listed, this one is one
you absolutely cannot delegate. Regardless of which level or area of management you
are, communication and human relations, in my opinion, is the most important skill.
Corporate Culture is defined as the shared experiences, stories, beliefs, and norms that
characterize an organization. Managers who lead and coach by example relay the
corporate culture to employees. Employees in turn learn and contribute to corporate
culture by their actions. Stockholders, consumers, new hires, suppliers, regulators, and
any group who is exposed to the corporation get a feel for what the company stands for
through its corporate culture.
SUMMARY:
Corporate Culture can make or break a company. From the top down and bottom up all
employees of an organization, contribute to its culture. Managers need to develop certain
skills in order to stress the goals, strategies, and aurora the company needs to relay to
continue being productive.

November 2-4, 2005
CHAPTER 6: ORGANIZING THE BUSINESS ENTERPRISE
Several elements influence firms to choose one organizational structure over another.
Those are its purpose, mission, strategy, size, technology, and changes.
Job specialization and departmentalization are building blocks of an organization's
structure. Job specialization is the process of identifying specific jobs that need to be
done and designating people to perform them. Departmentalization is the process of
grouping jobs into logistical units. This may occur along customer, product, process,
geographic, or functional lines.
Once the job specialization and departmentalization are determined, you need to
distinguish responsibility, authority, delegation, and accountability. Decision-making is
done differently in centralized organizations as apposed to decentralized organizations.
In the centralized organization, decisions are made by upper management and low-level
decisions must be approved by upper management. Centralized organizations reflect tall
organizations and have multiple layers of management and relative narrow spans of
control. Narrow spans of control are prone to change and more diverse. In a
decentralized organization, the authority of decision-making is delegated to levels of
management at various points below the top. Decentralized organizations tend to reflect
flat organization structures with few layers of management and relatively wide span of
control. Wide spans of control often perform simple or interrelated tasks.

The process of delegation, responsibility, authority and accountability should be well
balanced. A manager may assign a task to a subordinate. This gives the responsibility to
the subordinate. If he does not have the power to make the decisions necessary to
complete the task (authority), then the liability (accountability) for not accomplishing the
task may fall back onto the manager and/or the subordinate.
The decision-making hierarchy consists of assigning a task, performing a task, and
distributing authority.
Three forms of authority are line, staff, and recently the committee & team authority.
Line authority: flows up and down the chain of command.
Line department: linked directly to the product and sale of specific products.
Line managers: directly involved in production
Staff authority: based on experience that usually involves counseling and advising line
managers.
Staff members: aid line departments make decisions but do not have the authority to
make final decisions. They provide a service to managers.
Committee & Team - authority granted to committees or work teams involved in a firm's
daily operations. This may be top managers from several major areas. They may be
granted special decision-making authority beyond their individual manager authority.

There are several organization structures:
Functional - Authority is determined by the relationship between the group functions and
activities. This is usually in smaller firms, marketing, operations, and finance
departments.
Divisional - Corporate divisions operate as independent businesses under the larger
corporate umbrella.
Matrix - Teams are formed and team members report to two or more managers. This is
often a temporary or semi-permanent form. These rely on committees and team
authority.
International - Structure developed in response to the need to manufacture, purchase, and
sell in a global market.
Newer organization structures include:
Boundaryless - Traditional boundaries and structures are minimized or eliminated. They
flow freely between businesses and groups.
Virtual - These have little or no formal structure. They usually have a small number of
permanent staff. The staff usually consists of temporary employees and/or contractors.
The work is often outsourced and they lease the facilities they use.
Team - Relies almost exclusively on project-type teams with little or no functional
hierarchy.
Learning - Works to integrate continuous improvement with continuous employees
learning and development.

There are also formal and informal organizational systems. The formal organization
system can be seen and represented in chart form. They have formal assignments of
authority. The informal organization system is a network or everyday social interactions
among employees. Informal organizations often have "grapevines". These are an
informal communication network that can be found in all but the very smallest
businesses. Some managers try to stop informal organizations but successful managers
use the "grapevines" to gather important information that can be obtained from them.
They can find out how the motivation levels of their employees is, what programs they
buy into, and what concerns they have.
Some companies are encouraging intrapreneuring. Intrapreneuring is the creating and
maintaining of innovation and flexibility of a small-business environment within the
confines of a large organization. These are desirous because most innovations have come
from individuals in small businesses.
SUMMARY
There needs to be a balance between authority and responsibility. Giving one without the
other is setting you up for failure. An imbalance frustrates both Managers and Workers
who are delegated responsibility without the authority to make it happen. Where it is a
common belief that decisions and responsibility are more efficient when they are at the
levels that perform them, it is often hard to give the authority needed to accomplish the
job. Along with decision making and responsibility is accountability. Lower level
people are being held accountable for their actions. If they do not have the authority to

make the job happen and are held accountable, the company needs to look over it's
strategies and realign goals.
I am beginning to see where all these chapters are building off one another. Some of
what you learn in prior chapters will be expanded on or connect to the next chapter.
Some will refer back to previous chapters. Some of the questions that the professor has
asked will be answered in the next chapter. Some of the answers I have given have
showed up in subsequent chapters as well.

November 4-6, 2005
CHAPTER 7: MANAGING OPERATIONS AND IMPROVING QUALITY
Goods-Manufacturing either combine resources or break them into component parts. It is
an analytical or synthetic process. Analytical process is the production process in which
resources are broken down into components to create finished products. A synthetic
process is the production process in which resources are combined to create finished
products.
Production is manufacturing tangible products (they can be touched, tasted, smelled,
and/or seen). Manufacturing Operations are how goods are produced and the focus on
the outcome of the product is part of the process.
Services are intangible (cannot be touched, tasted, smelled, or seen). Customer-oriented
performance is a key factor of measuring effectiveness. The focus of services is on the
process and the outcome. Interpersonal skills are necessary. Services have a high degree
of unstorability. Customers usually receive pleasure, satisfaction or feelings of safety
from a service they receive.
Services are performed and can be determined by the extent of customer contact needed.
There is a High-Contact System where the level of customer contact is part of the system
during service deliveries. There is also a Low-Contact system where the level of
customer contact could be that the customer need not be present to receive.

Operations Management covers both services and goods. It is the system direction and
control of processes that transform resources into finished services and goods for value
and service to customers. Utility is a product's ability to satisfy a human want.
Both products and services provide businesses with economic results; profit, wages, and
goods or services.
There are five factors involved in operations planning:
• Capacity
• Location
• Layout
• Quality
• Method
Total Quality Management (TQM) is the sum of all activities involved in getting high-
quality products into the marketplace. This is often referred to as quality assurance and
some businesses have a Quality Assurance (or Quality Control) Department. It considers
all aspects of a business (customers, suppliers, and employees). It includes all activities
for getting a quality product to the marketplace. TQM involves planning, organizing,
directing, and controlling.

Planning - plan for production processes including equipment, methods, worker skills,
and materials.
Performance Quality - performance features offered by a product.
Quality Reliability - consistency of a products quality from unit to unit.
Organizing for Quality - Quality Assurance Departments would solve quality-related
problems, monitor quality control activities to identify areas for improvement.
Controlling for Quality - would involve monitoring products and services, specific
standard and measurements, and management observations.
Directing for Quality - Quality Ownership - principle of TQM that holds that quality
belongs to each person who creates it while performing a job. Motivation of employees,
training, employees, encouraging involvement, and tying compensation to work quality
all fall under this.
Some of the key tools for TQM are:
• Statistical Process Control (SPC)
• Quality/Cost Studies
• Getting Closer to the Customer
• ISO9000
• Process Reengineering
• Outsourcing
Adherence to standards (government, industry or company) is important to ensure that
what is done is consistent with what should be done.

Traditional Strategies assume that a business is managed as an individual firm rather than
a member of a coordinated supply system with each business acting in its own interest.
A Supply Chain is the flow of information, materials, and services that starts with raw
materials suppliers and continues through other stages in the operations process until the
final product reaches the customer.
Supply Chain Strategy is based on an idea that members of the chain, working as
coordinated units, will gain competitive advantages. Here, everyone focuses on the entire
chain of relationships rather than the next stage in the chain.
SUMMARY:
In summary, for a business to gain profit and be successful, they have to offer a service or
goods to customers that fulfill a desire or need. To ensure the customer will return for
more service or goods the operations management must make sure the product/service is
consistent and dependable. The customer must be happy with what they received.
Although profits can be achieved from both services and products, different control and
strategies are used depending on which the company is selling. Various tools are used to
ensure operations management is successful.

Module 3:
Understanding
People in
Organizations

Module 3 - Understanding People in Organizations
November 9-10, 2005
CHAPTER 8: MANAGING HUMAN RESOURCES AND LABOR RELATIONS
Human Resource Management (HRM) is the set of organizational activities directed at
attracting, developing, and maintaining an effective work force (staffing).
Planning for staff includes job analysis, forecasting HR demand and supply, and
matching HR supply with demand. Forecasting is done internally and externally. It
involves replacement charts and skill inventories. HR can forecast who is ready for
retirement but they cannot know who will retire, nor, by law can they ask. Things like
this make their jobs difficult.
Tasks that are involved in staffing include recruiting (both inside the company and from
outside). Recruiting externally is the process of attracting qualified persons to apply for
jobs that an organization is seeking to fill. It can also be done internally, which involves
a skills inventory system that lets HR know who is qualified for various jobs.
When selecting possible candidates for employment there are several things that HR
needs to consider such as whether they need contingent/temporary employees,
Knowledge Workers. They also have to consider key legal issues involved in hiring.
Equal Employment Opportunity, protects certain classes in the work place (race, color,
religion, gender, age, national origin, disability, veteran statuses are protected classes).

There are varieties of ways that HR can find prospective employees: Union halls,
monster.com (or other online job agencies), temp services, Unemployment Departments,
employee recommendations, schools, etc. When my employer looks for technical
positions, they often turn to the employees for recommendations. They sometimes offer
up to $2,000 for recommendations that result in the person being hiring.
Once possible names are gathered, the process for selecting employees may include
application form, resumes, tests, interviews, physicals, drug tests, and credit checks. I
work in nuclear and we have fingerprint checks as well as background checks. These
checks are periodically rerun through the system.
The compensation system is what an employer uses to attract and keep employees.
Compensation is the set of rewards an organization provides in return for performing
various jobs and tasks. It consists of wages/salaries, incentives (individual and company-
wide), profit sharing, bonuses, employee benefit programs (retirement, social security,
insurance, vacation, sick time, etc), pay for performance, and variable pay to mention a
few.
We have a Cafeteria Benefit Plan where I work. The company allows us a set amount of
money to use toward our choices and we kick in the remaining monies needed. This plan
is usually only successful in large businesses because, for example, they have several
medical and dental plans for us to choose, smaller businesses could not buy into the
various programs needed to offer employees the different options. Besides choosing our

medical and dental plans from several providers or plans, we have the option of
purchasing vacation (up to a week by contract but the last two years the company has set
a 1-day limit), purchasing life insurance for our spouses and children, increasing the
amount of life and accidental insurance on ourselves.
HR must consider contemporary legal issues such as safety and health (OSHA),
employee rights, employment-at-will, aids, sexual harassment (quid pro quo, and hostile
work environment). They must provide a safe work environment.
Once employees are hired, HR must consider their development. Some options are OTJ
(On the job) training or Off the Job training, simulators or web based training programs.
Where I work, the company provides Continued Training (CT) for such groups as
Engineering, Chemistry, and Radiation Protection. Managers perform Training
Performance Evaluations (TPE) to determine if what they have learned has been a benefit
to their job performance. They also pay 100% for pre-approved courses. That is how I
am taking this course and will be taking future courses.
Diversity is a big issue in businesses that have a diverse population. My employer used
to have a Diversity Task Force of which I was a member. We brought monthly issues to
groups to help them deal with diversity issues that may come up during their professional
and/or personal lives. We also held a yearly Diversity Task Force Food Fair in which
foods from various cultures were served, various kinds of music were played, and people

dressed like the country's they represented. This force was eliminated shortly after the
company was bought by the company that owns us now.
Another issue that HR faces is the Collective Bargaining Process for its Union
Employees. Being a new Union Steward (under 2 years) myself, I found this section of
study very interesting. My company has its first contract negotiations coming up in the
summer of 2006 and I have never been involved in this.
Unions were formed to regulate work hours, provide safe work environments, secure
jobs, obtain fair wages and benefits, and to force management to listen to worker's
concerns. Although union membership has declined in recent years, and our text tells us
a few reasons, I wonder if the fall of union numbers may be, in part, due to union jobs
being replaced by management. My business is planning a huge work place reduction the
end of 2006, with minor reductions in 2007. I work in the Chemistry group and we are
loosing 6 technicians and gaining 5 management jobs.
Unions now work with instead of against management in many situations. They work
more for job security, improved pensions, trying to get greater worker input in decisions,
fighting the company's from moving to other countries, and to retain benefits it has won
in past negotiations (like 10-year status).
Engineers, Gen Specs, and Planners at my employment are in the process of trying to join
our union. This is mostly to regulate work hours and secure jobs. Management people
are often required and expected to work 60-80 hours per week. They must attend

meetings that may start as early as 6:00am and the last ones of the day may be scheduled
for 7:00pm. There is a lot more involved in forming (or for a group to join a union) than
I realized and more than I know. Our text pointed out that Wal-Mart is a business to
watch for this possibility also.
Collective Bargaining is the reaching of an agreement or contract term. Both Union and
Management need to find a bargaining zone for each contract issue (compensation,
benefits, flexibility of hours, job security, etc). Once they find that zone negotiations
progress. If they do not find that zone, the Union could have a strike, walk picket lines,
have a work slow down, or stage a sick out (to mention a few options). Management
could have a lockout, hire temporaries, or hire strikebreakers.
SUMMARY:
Staffing a company and keeping it staffed is a long and involved process.
In August of this year, Interface Solutions (a company in Volney, NY) notified its
employees that they were being locked out and were not to report for their next scheduled
shift after negotiations seemed (to the company) to have broken down. Some employees
were escorted out of the plant by a private security force to their cars and told they had to
leave the parking lot immediately. The company hired replacement workers and the
union were on the picket lines. The union was informed that since the company and the
union had not been able to come to an agreement on a new contract (they did not find the
bargaining zone), Interface would lock them out until a final agreement was reached.
This is a sad and unfortunate example of failed bargaining.

Module 3 - Understanding People in Organizations
November 10-17, 2005
CHAPTER 9: MOTIVATING, SATISFYING, AND LEADING EMPLOYEES
This chapter discussed how managers and employees are motivated and motivate as well
as how they find job satisfaction.
Psychological Contracts are a set of expectations held by an employee about what he or
she will contribute to an organization and what the organization will in return provide the
employee (inducements).
The importance of psychological contracts is that it provides job satisfaction (satisfaction
in pay, benefits, co-workers, and promotional opportunities). When a worker feels job
satisfaction, they tend to work better. Their moral is up and they are a benefit to the
organization. They have fewer grievances, engage in fewer negative behaviors, have
fewer sick days, and remain with the organization.
Theories of Employee Motivation (motivation is the set of forces that cause people to
behave in certain ways):
Classical Theory
Frederick Winslow Taylor said that employees are motivated solely by money. If you
pay more they will work more. There was strong criticism to this theory that treats
humans like machines and assumes that workers are satisfied by money alone. This is

known as Scientific Management. Before Scientific Management, however, such things
as work-study, personnel, maintenance, and quality control did not exist.
Behavior Theory
When employees are given special attention there is a rise in production. The Hawthorne
Effect (Hawthorne is not the name of a researcher but of the Western Electric Company
where the effect was first described and observed) refers to improvements in productivity
or quality which result not so much because of intended changes to working conditions,
but because the workers are aware of extra (positive) attention being paid to them.
Contemporary Motivational Theories
This is how management thinks of and treats workers.
• The Human Resource Model: Theories X and Y. X=Management thinks negatively
of workers. Punish or reward for productivity. Y=Management thinks positively of
workers and believe that people are basically good.
• Maslow's Hierarchy of Needs Model from low to high :
1) Physiological: hunger, thirst, bodily comforts, etc.
2) Security: security, out of danger
3) Social: Belonginess and love, affiliate with others, to be accepted
4) Esteem: to achieve, be competent, gain approval and recognition.
5) Self-actualization: to find self-fulfillment and realize one's potential
Two-Factor Theory
Hygiene factors - working conditions (only when bad)
Motivational factors - recognition

These are not effective with clerical or manufacturing and are more for accountants and
engineers.
Expectancy Theory
This theory believes that people are motivated to work towards a desired and attainable
reward. My employer used to offer hours off work for successfully completing outages.
We could earn 4 hours of vacation time for each on preset amounts of: Scheduling
(finishing on time), Safety (no accidents), Dose (not getting above the limits of radiation
dose), and Budget (keeping the outage at or below the set budget).
Equity Theory
People evaluate their treatment by employees relative to the treatment of others. People
analyze the ratio of their input (contributions of time, effort, education, experience)
relative to outputs (what they receive in return, like salary, benefits, security,
recognition). Then they compare this ratio to others. They experience feelings of equity
or inequity depending on their assessments.
Some of the strategies used by organizations to improve job satisfaction and employee
motivation are:
Reinforcement/Behavior Modification Theory is the belief that behavior can be
encouraged or discouraged by means of reward and punishment.
Management by Objectives (MBO) is a set of procedures involving both managers and
subordinates setting goals and evaluating progress.

Participative Management and Empowerment is a method of increasing job satisfaction
by giving employees a voice in the management of their jobs (how the company is
managed).
Team Management is where certain activities allow employees to be given decision-
making responsibilities.
Job Enrichment is a method of increasing job satisfaction by adding one or more
motivating factors to a job activity. Job Redesign is a method of increasing job
satisfaction by designing a more satisfactory fit between workers and their jobs.
Modified Work Schedules consider Work-Share Programs, Flextime Programs,
Alternative Workplace Strategies, Telecommuting, and Virtual Offices as a way to
improve job satisfaction and motivate employees.
There are three different kinds of managerial styles of leadership. Each of these has an
impact on Human Relations in the workplace.
Autocratic Style
Where managers generally issue orders and expect them to be obeyed without question.
This can cause frustrated workers because they have no input or control.
Democratic Style
Where managers generally ask for input from subordinates but retain final decision-
making power. Employees who want decision-making responsibilities and those who do
not can become disconcerted with this style.

Free-Rein Style
This is where managers typically serve as advisers to subordinates. Subordinates are
allowed to make decisions. Employees may not have the background, education, or skill
necessary to make correct decisions. Employees who are not self-motivated my become
frustrated with this style.
SUMMARY
Not all theories for employee motivation apply to all people.
Not all strategies will motivate or give job satisfaction to people.
Not all people will be motivated by certain managerial styles of leadership.
Managers need to know how their employees want to be treated. They need to know
what the employees situations are (college graduate, experience, job title) before they will
know how to motivate and provide job satisfaction to their workers.

Module 4:
The Principles of
Marketing

Module 4 - The Principles of Marketing
November 18 -20, 2005
CHAPTER 10: UNDERSTANDING MARKETING PROCESSES AND
CONSUMER BEHAVIOR
Marketing is everything that a businesses needs to do to get a product into the hands of
the consumer (customer). It creates, distributes, promotes, and prices products and
services. It focuses on the development and implementation of competitive strategies. It
is the marketer's responsibility to understand changes in customer needs and to get the
right products to the market at the right time.
Marketing is very important. Increasing globalization, technical improvements, and
higher living standards bring consumers a growing choice of products and services, each
of which has to be marketed.
Five forces constitute the "external marketing environment" (outside factors that
influence marketing programs by posing opportunities or threats).
1) Political and Legal Environment
2) Social and Cultural Environment
3) Technological Environment
4) Economic Environment
5) Competitive Environment

A marketing plan is the detailed strategy that a business uses to focus marketing efforts
on consumer needs and wants. Marketing Managers are responsible for planning and
implementing everything that needs to be done to get a product into the hands of the
consumer (customer).
There are four components of the combination of product, pricing, promotion and
distribution strategies used to market products, called The Marketing Mix. These
components are known as the "Four P's". All of are necessary if a business is to
successfully deliver merchandise and services to consumers.
1) Product
2) Pricing
3) Place (distribution)
4) Promotion
Consumers have different needs, desires, interests, and wants. Market segmentation is a
strategy used to analyze consumers, not products.
In the consumer market, buying and selling transactions are visible to the public. They
can see the advertisements, purchase products, see others purchase products, receive
services, see the products being delivered to the stores, and see the store shelves being
replenished. Buyer-seller relations are often face-to-face, personal, and may be long term.
In most situations, the consumer may be somewhat knowledgeable, but not an expert on
products or services they purchase.

In the organizational/commercial (industrial, reseller, government, institutes) market
transactions and merchandise are not so visible. Buyer-seller relations are often short-
lived, one-time interactions of an impersonal nature. They have specialists who are very
knowledgeable in the products they purchase. They gather information and research from
several different areas on a constant basis to keep up on innovation and alternative
options. They arrange for formal contracts when necessary.
With those differences in mind, marketers must gear their promotions differently when
dealing with consumers and organizational buyers. For instance, when selling a new
product to consumers they may place advertisement in magazines or local newspapers
and commercials on television. Rather than create national advertisements they may send
literature to companies to introduce a particular line or product when selling to an
organizational buyer. They will have to produce in bulk and price for bulk to
organizational buyers and smaller quantities and competitive prices for consumers.
Marketers may also form a design team with an organizational buyer to create products
that would benefit both the organizational buyer and the seller. Consumer products often
have to be place in a certain area at a time that they are needed - often in a store. Products
that are going to an organizational buyer are usually shipped direct from the manufacturer
to them.
Thus, the marketers handling of the four P's (product, price, promotions and place) are
handled differently between the organizational buyer and the consumer.

Target Marketing involves a group of people who have similar wants and needs. They
can be expected to show interest in the same products. Defining and selection of which
group of consumers will want your product is usually the first step in promoting
merchandise.
Data warehousing, which is the process of collecting, storing, and retrieving data in
electronic files and Data Mining, the application of electronic technologies for searching,
sifting through, and reorganizing data in order to collect marketing information, are used
by promoters to determine the target markets as well.
Promoters target consumers by geographic variables, demographic variables and/or
psychographic variables. They know that there are key factors that influence the
consumer buying process (consumer behavior) and use those to help sell the product.
Those factors may be influences such as psychological, personal, social, or cultural.
They also consider customer loyalty with certain brands.
The consumer buying process usually consists of the following:
1) Problem/need recognition
2) Information seeking
3) Evaluation of alternatives
4) Purchase decision (rational, emotional)
5) Post purchase evaluations

There are three categories of organizational markets, which are:
1) Reseller Market - organizational market consisting of intermediaries that buy and
resell finished goods.
2) Institutional Market - organizational market consisting of nongovernmental
buyers of goods and services such as hospitals, churches, museums, and charitable
organizations.
3) Government - Federal, State, Municipalities, Countries, Towns, School Districts
Every product is a value package that provides benefits to satisfy the needs and wants of
customers. Selling a product as a value package focuses marketing on benefits to the
consumer.
Consumer products are classified as convenience goods, shopping goods, specialty
goods. Industrial products are classified as expense items and capital items.
The product mix is a group of products that a business makes for sale and within which it
may have several product lines. Product lines are groups of similar products intended for
a similar group of buyers who will use them in similar ways.
Branding is the process of using symbols to communicate qualities of a product made by
a particular producer. Like the Energizer Bunny for Energizer batteries and the Red
Target Symbol for the Target Stores. Brands are used to signal uniform quality. They
help customers easily recognize (and remember) the product so they can buy them again.

Brand awareness is the extent that a brand name comes to mind when the consumer
considers a particular product category - like Clorox, Kleenex, and Band-Aids. Those
products are actually bleach, facial tissues, and bandages. The branding has been so
embedded that people often call them by their brand name rather than what they actually
are.
Packaging the product makes it look attractive, identifies its benefits, provides in-store
advertisement, displays brand name, help to brand the merchandise, reduce risk of
damage, and may double as cooking pan or storage container.
According to our text, there are an estimated 50 new product ideas to generate 1 product.
More than 25,000 new household, grocery, and drugstore items are created annually. At
any given time, an average grocery store will carry 20-25 thousand different items.
Because of a lack of space and customer demand, about 9 out of 10 new products will
fail.
The Product Life Cycle (PLC) is a series of stages in a product's profit making life:
1) Introduction
2) Growth
3) Maturity
4) Decline

The Barbie Doll has probably gone up and down level 2-4 several times in its PLC.
Every time she starts to decline, Mattel introduces a new line of products or upgrades her.
I found some interesting information on Barbie at http://en.wikipedia.org/wiki/Barbie.
Firms must constantly upgrade old and/or develop new products if they are to succeed.
Putting canned cat food into rip open bags, putting pull tabs on Campbell Soups, putting
bricks of cheese in zip lock bags and adding or changing Barbie to meet the times all help
boost declining sales.
Selling merchandise internationally requires several changes. The product may have to
adapt in order to sell. Marketers have to consider the price of transporting and selling.
Promotional tactics that work in the United States may not work abroad due to cultural
and language differences.
SUMMARY:
Marketing is customer satisfaction. The creation, promoting, and distributing of a
product depends entirely on the customer. Their opinions, where they live, what they use
and how they use it are only a few examples. When marketing is done correctly, it
provides the customer with fulfillment and/or satisfaction from the products and/or
services they purchase. It informs the customer of the availability of products. It creates
products and services that will make their lives easier or happier. When a firm leads a
consumer into a direction they want to go (even if the customer does not yet know it),
amazes them, and carries them to innovation they had never dreamt of - they are
providing customer satisfaction.

I found this chapter difficult to make comments to in the assignment area. Everyone had
great answers but they were mostly fact and not opinion. Agreeing with everything they
wrote and nothing really new brought into their answers made it difficult to comment on.
After reading and re-reading their answers, I finally decided to comment on their choices
for successful and unsuccessful promotional campaigns as this was the one I had to think
a lot on myself and do research for before I posted my answers. I thought their choices
were very good and everyone seemed to choose the same company for examples of both.
I chose the New Coke. Some of the other students chose such campaigns as Diet Pepsi
and Joe Camel.

Module 4 - The Principles of Marketing
November 20-22 2005
CHAPTER 11: PRICING, DISTRIBUTING, AND PROMOTING PRODUCTS
Pricing is defined as the process of determining what a company will receive in exchange
for its products. It is the second major component of the marketing mix. Pricing has to
meet business objectives. The price (and thus profit) that a company receives from its
products is determined by weighing sales revenues against material and labor costs,
capital resources, and marketing costs.
Several tools are used to determine price. Some of these tools are cost-oriented pricing,
and breakeven analysis.
The Distribution Mix is the combination of distribution channels by which a firm gets its
products to end users. Distribution channels are the network of intermediaries
(middlemen) companies through which a product passes from producer to the end user.
There are eight different distribution channels.
Consumer Distribution
1) Direct
2) Retail (bargain, product line, non store/electronic, department, supermarkets,
specialty)
3) Wholesale (such as BJ's or Sam's Wholesale Clubs)
4) Sales Agents or Brokers (such as stock)
Distribution Channel used by both consumer and businesses
5) Agents and Businesses

Business Distribution
6) Direct
7) Wholesale
8) Wholesale Business to Business Retailers
Products are transported by highways (trucks), railroads, air (planes), water (boats), and
pipelines. When determining which mode of transportation a product is to travel, it is
important that a business consider where they are located in regards to their suppliers,
warehouses, distribution centers, and customers. They need to consider this so they know
the distance their product needs to travel.
- They must access the speed and frequency in which their customers need their products.
- They need to determine the level of customer service.
- They need to consider the nature of their product.
- The best price available for the mode of transportation they select.
The Communication Mix is the message a business sends to consumers about is product.
The Promotional Mix is a combination of tools used to promote a product. Advertising is
a promotional tool. Some sales promotions may consist of coupons, premiums,
incentives, contests, infomercials, publicity, public relations, and point-of-purchase
(POP) displays in stores.
The Media Mix consists of key advertising media such as television, newspapers, direct
mail, radio, magazine, outdoor advertising, billboards, buses, street furniture, taxis,
stadiums, subways, catalogs, sidewalk handouts, yellow pages, skywriting, telemarketing,
special events, door-to-door, and internet web sites (sometimes those awful pop-ups).

SUMMARY:
So far, we have learned about various mixes that are used in selling products. These are,
Product Mix, Distribution Mix, Communication Mix, Promotional Mix, and Media Mix.
Each plays their own important role in customer satisfaction. If there are problems with
any of these mixes, there could be problems with profits or the customer their
satisfaction.
The textbook states that Penetration Pricing is setting an initially low price to establish a
new product in the market. Two recent articles I read online from the LOS ANGELES
(Reuters) and NEW YORK (Fortune) discussed the pricing strategies of Microsoft's
Xbox and Sony's PS3 game consoles. The cost of building a Microsoft Corp. Xbox 360
video game console is nearly 40 percent higher than the retail price. It goes on to say it is
estimated the total cost to manufacture and test a premium Xbox 360, was $552.27, they
were selling for $399 for a premium bundle. Several games for this console will sell at
$60.00. I am sure they plan to make up any loss from the price of the console with the
profits from the games. This is an example of Penetration Pricing, of getting their product
on the market before their competition (whom they are second to) and who are planning
to release their PS3 game console in the spring of 2006. I wonder what Sony has planned
for their game consoles and how much they will be priced.

Module 5:
Managing
Operations and
Information

Module 5 - Managing Operations and Information
CHAPTER 12: MANAGING INFORMATION SYSTEMS AND
COMMUNICATION TECHNOLOGY
Businesses must manage information to gather and interpret data for such things as
customers, competitors, operations, evaluations of employees, and to formulate strategy.
Computer systems and communication technologies have revolutionized information
management. Electronic conferencing (teleconferencing, videoconferencing, instant
messages, and electronic white boards) allows remote employees to communicate as if
they were in the same room. Nine Mile Point, where I work, are using these with more
frequency than ever before. Constellation has recently re-organized its nuclear plants
into a nuclear fleet (Nine Mile Point and Ginna are both in NY State and Calvert Cliffs is
in Maryland). The ability to hold virtual meetings in which management teams and
departments can conduct meetings from these three locations has saved the company
money that it once would have spent on transportation, lodging, meals, and lost
production while employees traveled from site to site.
There are three elements of data communication networks:
1. The Internet (Net) is a global electronic messaging and information network that
allows people to quickly and cheaply communicate and gather data. I access this
through my Time Warner Road Runner Service. This is an Internet Service Provider
(ISP) that allows me to access the internet.

2. The World Wide Web (WWW) is a subsystem of computers that allows the internet
to communicate electronically. The web is a system with universal language that
allows us to surf the net.
3. An Intranet is a private network that allows only employees access to internal web
sites that are linked within the company. Constellation uses the intranet for providing
employees with important information and data.
There are five options for organizational design that have emerged from the rapid growth
of Information Technologies.
1. Leaner Organizations - Information networks are helping companies to lower costs by
allowing them to do more with fewer employees and simpler structures. The
Constellation Nuclear Fleet has the ability to instantly access (through the intranet,
Local Area Network, and shared databases) information relevant to an issue one of
the other plants may have experienced and inventory that may be shared throughout
the fleet. What once took teams of employee's weeks to determine a root cause to a
problem or to locate parts is now readily available through shared computer software
programs. As they continue to share resources, information, and data there will be
less need for as many employees as it has now. This will allow Constellation to lay
off hundreds of people over the next few years. This is a downside for those
employees but a huge cost savings for the company.

2. More Flexible Operations such as electronic networks which contain information and
data on production schedules, suppliers, shippers, customers, product production,
production worker, inventory, and company websites. Being connected via info
networks allows for faster service and customer satisfaction.
3. Improved Management Processes are also a benefit of Information Technology. It
could eliminate middle and first line management positions because Top Managers
will be able to immediately access detailed information that once filtered upward in
the workplace. This allows Top Managers to coordinate company (and fleet) wide
performance making some middle and first line management positions no longer
necessary. Another added benefit to the company but downside for employees.
4. Increased Collaboration from networked systems is making it cheaper, easier, and
faster to connect internal and external firms.
5. Information Technology is making for greater independence of company and
workplaces despite geographically and even globally separated divisions of a
company who may interface and easily work together on one project.
There are different information system application programs are available for users at
various organization levels. The knowledge worker (which includes Engineers,
Scientists, IT Specialists, and office workers) are employees who use information and

knowledge as raw materials and who rely on IT to design new products of business
systems. Some of the programs utilized by this group are word processing, desktop
publishing, document imaging, CAD (computer-aided design), CAM (computer-aided
manufacturing).
As an Administrative Specialist, I have used all of the above except the CAM for work
related assignments. When I first started working for Nine Mile Point, we used terminals
that had limited abilities to hold data, sort information, store input, and prepare reports.
Our word processor was a WANG. Just in the 20 years, I have worked for the company I
have seen the benefit that IT has had for workers and the company.
SUMMARY:
Telecommunications and networks have not only changed the way businesses operate but
have also made it easier for people to communicate with friends and relatives. The use of
home faxes, cell phones, printers, copiers, scanners, photo printers, pagers, and even
cable television has made the consumers needs and wants change dramatically over
recent years. Global Positioning Systems (GPS) have helped people in boats and
vehicles avoid getting lost. The use of Personal Digital Assistance (PDA) has helped
people be more efficient in their home and ability to be better organized.

Module 5 - Managing Operations and Information
CHAPTER 13: UNDERSTANDING PRINCIPLES OF ACCOUNTING
Accountants prepare performance reports for owners, the public and regulatory agencies.
They can also determine how well a business is being managed and determine how
financially strong (or weak) it is.
Private accountants provide services to support managers in marketing, engineering, etc.
Certified Public Accountants (CPA) are licensed by the state and offer services to the
public such as audits, tax services, and management advisory services.
The CPA profession is changing. Core Services are broader and look at areas outside
accounting, such as, financial planning, assurance and Information integrity, technology,
management consulting and performance management, and international business. Core
competencies such as strategic and critical thinking skills, communications and
leadership skills, focus on the customer, client and market skills in interpreting
converging IT skills all play a role in the new CPA profession.
Financial statements provide a lot of information and data, which in return can be applied
to various ratios (solvency rations, profitability ratios, activity ratios). These ratios are
used to analyze a firm’s financial health or check its progress by comparing current and
past statements.

The three basic financial statements and how they reflect the activity and financial
conditions of a business are as follows:
1. Balance Sheet (or Statements of Financial Position) is a snapshot of a firm’s financial
position at any given time. It shows this position by utilizing the Accounting Equation,
which is:
Assets = Liabilities + Owner Equity
2. Income Statements (or Profit-and-Loss Statements) show the bottom line of income,
expenses, profits or losses. It also summarizes its revenue and expenses for any given
time. It shows this by utilizing the following equation:
Revenues – Expenses = Profit or Loss
3. Statement of Cash Flow shows a firms ability to pay its bills by showing the incoming
and outgoing money from operations, investing and financing for any given time. It is
used to determine the short-term viability of a company. This does not include non-cash
items (such as depreciation) or future incoming and outgoing cash that has been recorded
on credit. It provides important information to lenders and investors and is required by
the Securities & Exchange Commission for all firms whose stock is publicly traded.
Budgets are important for internal planning and control as they assist in planning,
controlling, and decision making for the future. They often contain a detailed statement
of estimated receipts and expenditures for a period in the future.

SUMMARY:
The data and information that accountants track and record are important for both internal
and external users. It is important that accountant firms have a good corporate culture
and each accountant have good work ethics and integrity. To make sure they maintain
both, audits are performed by outside agencies. If any of this fails, a business will be in
grave trouble.
The opening story "Humpty-Dumpty Time at Arthur Andersen" discussed Arthur
Andersen's role of accounting in the Enron collapse. On July 30, 2002 the Sarbanes-
Oxley Act was introduced. Although our textbook did not mention this, I thought it an
important part of accounting that should be mentioned.
This act followed a series of highly profiled scandals, such as Enron. It is intended to
deter and punish corporate and accounting fraud and corruption, ensure justice for
wrongdoers, and protect the interest of workers and shareholders. When this act was
introduced, there were several immediate changes to my job duties where finances were
involved. Until I started taking this course, I did not quite understand what Sarbanes-
Oxley was all about (only that I had to process more paperwork and obtain more
approvals for various tasks).

Module 6:
Understanding
Financial Issues

Module 6 - Understanding Financial Issues
December 1-4, 2005
CHAPTER 14: UNDERSTANDING MONEY AND BANKING
Money is any object that is portable, divisible, durable and stable. It serves three
functions, a medium of exchange, a store of value, and a unit of account. In the United
States, it is the dollar, in Britain, it is the pound, and in Japan, it is the yen.
For money to serve its purpose, both buyer and seller must agree on the value. To
measure the value we use M-1 and M-2.
M-1 is the measure of money supply that includes only the most spendable forms of
money. For example, currency, bank accounts, bank account funds that may be
withdrawn at any time (demand deposits), and other checkable deposits which are in no
or low interest bearing forms.
M-2 uses all of M-1 and time deposits like Certificates of Deposits (CDs) and savings
certificates only those less than $100,000 that depend on financial institutes to provide
services.
There are different kinds of financial institutions that comprise the U.S. financial system.
They are as follows: Commercial Banks, Savings and Loan Associations, Mutual
Savings Bank, Credit Unions, and No Deposit Institutes (such as pension funds,

insurance companies, financial companies, and brokers). They provide a variety of
services.
My bank Oswego County National Bank allows my paycheck to be directly deposited
into my checking account. Once a week a preset amount is transferred from my checking
and deposited into my savings account automatically. My mortgage, van payment, and
electric bill are automatically paid out of my checking account. I have the ability to pay
my credit card bills online and use my debit card to pump gas. The amount of actual
currency I need to carry is very small. I also own shares of stock in the bank, which
periodically send dividend checks to my home. Most of this happens behind the scenes
and before reading this chapter, I was unaware of the process and route the services take.
Most banks create money by taking in deposits and making loans (interest payments).
The Federal Deposit Insurance Corporation (FDIC) is an agency that guarantees the
safety of all deposits up to $100,000 in the financial institutions that it insures. Banks
pay a fee for membership.
The Federal Reserve System (the Fed) is the Central Bank of the United states, which
acts as the government's bank, serves member commercial banks, and controls the
nation's money supply.

Inflation is a rise in price levels in the economy that happens too fast or is too high. If
income does not keep up with rising costs, consumers are hurt. Their money does not last
as long as it did and they have to depend on less impulse and more thought for purchases.
This is when and why the Fed steps in and tries to manage inflation. When sales drop,
prices drop. The Fed tries to lower prices by reducing the amount of money in the
economy.
The Fed's monetary policy should support a growing economy but not adversely affect
the general price levels. It has to maintain a balance of money and credit that meets the
economy's needs for cash and credit.
The Fed has several different tools to help them accomplish this. The most important,
fastest and most predictable tool is the open market operation. They sell securities they
own (like U.S. Treasury notes and bonds) through dealers. When dealer's banks are
debited for the sales, money flow is decreased (because these banks will want to loan less
money and thus raise interest rates). When consumers have less money available to them,
sales drop and prices drop with them.
An imbalance or incorrect use of the tools available to them could actually cause inflation
or recession.

The Fed could also increase reserve requirements, increase the margin rate for stock
purchases, and/or increase the discount rate on loans to banks.
Consumer confidence can fall from a variety of reasons. Unemployment (whether real or
a possibility), soaring prices (like gas, heating fuel), certain events as 911 and Katrina,
and the unpredictability of the stock market are some examples.
By stopping or reducing purchases of long-lasting goods like cars and refrigerators,
consumers can create their own recession. This slows the U.S. Economy.
When consumers refrain from purchases, producers may cut spending on the factors of
production (labor, capital, physical resources, information resources, and entrepreneurs)
causing unemployment and more supplies than demand (from resource purchases they
cut back on). The amount of merchandise they produce may decrease as well.
Retailers will have fewer profits and order less stock from producers. Consumers scaling
back purchases over the holiday season could cause some retailers to go out of business.
Many retailers depend on the holiday sales in their budgets and spend according to these
budgets. Spending what they think they will receive and then not receiving it could force
them out of business.

As Credit Unions and Banks use deposits to make loans, and interest is one of their
means of making money, unemployment allows them less money to loan. This force up
interest rates and consumers find themselves with less money being available to them.
The financial industry is changing due to deregulation, interstate banking, and the impact
of electronic technologies (ATM, EFT, Debit Cards, Smart Cards, E-Cash). Many banks
have gone out of business because they were unable to provide the services the customers
need in this new industry.
Some of the key concepts and activities in international banking and financing are the
International Payment Process, International Bank Structure (there is no worldwide
banking system and stability agrees on fragile agreements among countries or groups of
countries), the World Bank, and the International Monetary Fund (IMF).
SUMMARY:
Money and the availability of money is what make our Laws of Demand and Supply that
govern our market economy work and control the financial health of our economy. Every
consumer plays a role in what is produced and how much it will cost. Consumers have
many options available to service their money, such as banks and credit unions. When
things go awry, it is time for the Federal Reserve System (the Fed) to step in. By using
the tools available to them, they try to control the nation's money supply and keep the
economy growing instead of slowing. Information Technology has changed the banking
system and the way our money flows. People, financial institutions, and the Fed need to
keep up with the times.

Module 6 - Understanding Financial Issues
December 4-6, 2005
CHAPTER 15: UNDERSTANDING SECURITIES AND INVESTMENTS
Primary Securities Markets are where new stocks and bonds are sold by firms and
governments. These are sold to single buyers or small groups (large pension funds and
other institutions) by private placements, which cannot be resold in the open market.
Secondary Securities Markets are where existing stocks and bonds are sold by organized
stock exchanges.
STOCKS
Firms sell common stock (among the riskiest of securities) to individuals and other
companies. They are purchased with the hope that they will increase in value and/or
produce dividends. Common stock value is determined by Par Value, Market Value and
Book Value.
Blue Chip Common stocks are issued by stable and well-known companies with a sound
financial health and a stable pattern of dividend payouts.
Preferred stock usually issued with stated par value and dividends are expressed as a
percent of par value. Some preferred stock is callable. The issuing firm can call in
shares for cash payments (the call price) which is specified in the purchase agreement.
Preferred stockholders have first rights to dividends so they are less risky.
BONDS
U.S. Government Bonds are among the safest investments. They are issued by the U.S.
Government to finance its debt.
Municipal Bonds are issued by state and local governments to finance school and
transportation systems. Investors do not pay tax on interest received from these bonds.
This makes them an attractive investment.
Corporate Bonds are issued by U.S. Companies for financing. Maturity ranges from 10
to 30 years. Longer-term corporate bonds are riskier than shorter-term bonds.
Registered Bonds bear the name of the older and are registered with the issuing company.
Bearer (Coupon) Bonds are paid when the holder clips and submits a coupon for interest.
Secured Bonds are backed by assets or pledges.

Debenture Bonds are unsecured with no specific property pledges as security.
Other investment opportunities:
Mutual Funds pool investments from individuals and organizations to purchase a
portfolio of stocks, bonds, and other securities. Balanced Mutual Fund is a portfolio of
bonds, preferred and common stock. Aggressive growth funds seek maximum capital
appreciation.
Securities are bought and sold by using several different processes, such as short sales,
market orders, and margin trading.
NASD and NYSE exercise self-regulation to maintain public trust and ensure
professionalism in the industry.
NYSE, for example, established rules for reducing excessive market volatility and
promoting investor confidence. It suspends trading for a preset length of time whenever
the market begins spiraling out of control during a single day. These can last from an
hour to half a day depending on how many points drop within a specified time.
The Securities and Exchange Commission regulates the public offering of new securities
by requesting all companies file prospectuses before proposed offerings start. It also
inforces laws against insider trading and can set a penalty of up to 3 times the profit that

was gained from insider trading. It can offer a 10% bounty for information that leads to
civil penalties for illegal insider trading to people who provide the information.
Blue-Sky Laws require securities dealers to be licensed and registered with the states in
which they do business.
SUMMARY:
The information I gained from this chapter and our assignment regarding the dropping of
stocks prompted me to print an overview of my 401k investments and compare the
information I read to my 401k investments. I actually understood (finally) what most of
the information on the overview, the charts, and percentages were actually saying.
For instance, my printout showed that my investments in the stock sector are about 19%
in the Information sector (broken into various percentages of software, hardware, media,
and telecommunications), 35% in Services (healthcare, consumer services, business
services, and financial services), and 45% in Manufacturing (consumer goods, industrial
materials, energy, and utilities). I wonder if I should have more invested in the
information sector as that seems to be what is driving so much change in the business
world right now.
It also showed that I have 76% in U.S. (and Canada) stocks and 5% in foreign stocks
(Europe, Japan, Latin America, Pacific Rim). This could probably be balanced a little
better, perhaps increasing the foreign stocks to 25%.

My portfolio has 4% in High Yield, .5% is distressed, 13% in slow growth, 30% in
classic growth, 7% in aggressive growth, and 37% in speculative growth. I am not
exactly sure what the difference in "growth" headings is but they sound self-explanatory.
If something is distressed, it is not working - those could probably be shuffled around.
My stock industry fund categories are 36% large growth, 26% Electric Utilities, 16%
Intermediate-Term Bond, 16% large blend, and 6% Moderate allocation. The biggest
year to date total return was for the electric utilities stock and least was the Intermediate-
Term Bond. That interested me because I thought bonds would produce more returns.
From all this information, I gather that my portfolio is diversified and allocations may be
somewhat unbalanced.
Because I still have about 10 years before I plan to retire I think the balance I have in
each area is diverse enough that any losses will be made up on the gains and hopefully
even out in the end. I guess I will keep an eye on things for a while (now that I
understand the market a little better) and see what happens.

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