Business Concepts: A Comprehensive Review
Financial Management
Capital Budgeting
Airlines use capital budgets to analyze funding options for major purchases like aircraft.
Risk-Return Trade-Off
Companies facing financial challenges may need to offer higher interest rates on bonds, illustrating the risk-return trade-off.
Debt vs. Equity Financing
Debt financing involves borrowing money (e.g., bank loans), while equity financing involves issuing stock and giving ownership stakes.
Financial Planning and Forecasting
Financial planning involves creating budgets and managing cash flow. Forecasting predicts future financial needs.
Marketing
Consumer Purchase Decisions
Consumers go through stages like problem recognition, information search, evaluation, purchase, and post-purchase evaluation.
Marketing Mix (4 Ps)
The marketing mix consists of product, price, place (distribution), and promotion.
Market Segmentation and Targeting
Market segmentation divides customers into groups. A target market is a specific segment a company focuses on. Examples include differentiated targeting (different mixes for different segments) and focused targeting (niche markets).
Product Life Cycle
The product life cycle stages are introduction, growth, maturity, and decline. The introduction stage has few competitors and sales are starting.
Branding and Product Types
Products can be branded (with a specific name and identity) or generic (unbranded). Examples include convenience products (frequently purchased, low-priced items).
Pricing Objectives
Pricing objectives include profit maximization (charging higher prices based on product desirability) and market share (gaining a larger portion of the market).
Distribution Channels
Distribution channels involve intermediaries, wholesalers, and retailers to move products from producers to consumers. Distribution intensity can be intensive (widely available) or selective (limited outlets).
Promotional Strategies
Promotional strategies include push strategies (incentivizing intermediaries) and pull strategies (directly targeting consumers).
Operations Management
Operations Management Function
Operations management involves transforming inputs into outputs that meet customer demand, ensuring product availability, and managing quality.
Inventory Management
Inventory management is crucial for all businesses, not just manufacturers, to ensure they have enough stock to meet demand without excess inventory.
Facility Location and Layout
Location strategies include clustering (near competitors) and offshoring (in other countries). Layout types include process layouts (flexible for various products).
Quality Management
Total quality management (TQM) involves all employees in continuous improvement. Statistical process control (SPC) uses control charts to monitor process variability.
Service Characteristics
Services have unique characteristics like perishability (e.g., an empty hotel room cannot be saved for another night).
Business-to-Consumer (B2C)
B2C refers to businesses selling directly to consumers.
Business Buying Behavior
Business buying decisions often involve multiple people and are more complex than consumer decisions.
Modified Rebuy
A modified rebuy occurs when a business revisits product specifications due to changing circumstances.
Postponement
Postponement delays final product customization until an order is received (e.g., a custom birthday cake).
Segmentation Map
A segmentation map visually represents different market segments and their characteristics.
Total Market
The total market includes all potential customers with the ability, willingness, and authority to purchase a product.
Trade Credit
Trade credit allows customers to pay for goods or services after a certain period (e.g., 30 days).