706 Business Principles
Final Test Summer 2020
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- An important trend in business is the increasing reliance on self-managed teams. What contributed to this change? How would you manage an able team? How would you compensate for this team? (5 marks)
A self-managed team is a group of workers that is accountable or responsible for most aspects of production or delivery of certain services. Therefore, self- managed teams are increased to enhance the production and supply of goods and services. A self-managed team is efficiently managed by assigning them particular tasks and allocating the required resources of production. An employer can compensate his or her self-managed teams in various ways; improving working conditions, giving out bonuses and allowances, providing medical cover, increasing their salaries and so on.
- Why is market segmentation important? Describe three ways firms can segment consumer markets. (5 marks)
Market segmentation is essential as it helps marketers in terms of resources such as money and time. Marketers get to know the customer’s wants and needs and therefore enabling them to make a wise decision while purchasing products.
Three ways to segment consumer markets include;
1) Geographic segmentation; where consumer markets are segmented by region of the county, city, country, climate, or market density. Most firms segment their market geographically in order to meet area buying habits and preferences.
2) Psychographic segmentation; this strategy provides essential information that usually is much more useful to craft the marketing and selling message. This kind of segmentation is market segmentation by lifestyle and personality. In other words, “Demographics provide the skeleton, but psychographics adds meat to the bones.”
3) Income; levels of income often influence consumer buying power, wants and needs. For this reason, marketers should determine where to locate particular businesses based on consumer’s levels of income.
- Explain the role of the operating budget, the capital budget, and the cash budget play in financial planning. (5 marks)
A budget is a vital tool used by managers to plan and control the use of limited resources in production. The operating budget is purposely used to plan future incomes and earnings or results in the proposed and expected income statement. Whereas, a capital budget is a budget mainly made to finance for the maintenance and acquisition of fixed assets in an organization such as equipment, land, and equipment. Lastly, the cash budget is a budget estimated flow of cash to be used in business operations during a particular period of time like a month or year.
- Explain how the Bank of Canada manages the money supply. Identify the duties and responsibilities of the Bank of Canada. (5 marks)
The Bank of Canada manages the money supply by use of the monetary policy. Monetary policy refers to actions mainly used by the nation’s central banks such as Bank of Canada, to regulate the amount of money in circulation to achieve sustainable economic growth. The bank increases or decreases interest rates of borrowing money (by private banks), depending on market stability. If the money in circulation is the more, interest rate of borrowing is increased to reduce money lending.
Functions of the Bank of Canada include; implementing monetary policy, controlling private banks, providing financial guidance and services to economic research, keeping reserves, and it is only the bank of Canada where the country can borrow and save it money. In other words, it is the bank of a nation. The goals of Bank of Canada is to stabilize the country’s currency, preventing inflation, and lowering unemployment rates.
- Dramatic changes in the Canadian labour force will make the work of human resource managers more interesting, and more difficult after the pandemic passes. Identify and describe the three changes that you believe will occur. (5 marks)
Technology moves work beyond the office; since most firms and companies have adopted a new trend of working from home due to this global pandemic, workers are expected to work deliver from their comfort of homes. As a result, human resource managers will have less work to evaluate and appraisal job performance of each worker.
Feedback becomes Fluid; Human managers will easily able to know which area or employee needs training or more resources since the individual output will be ranked. Besides, it will be easy to give feedback to individuals working separately than a group of workers.
Increased productivity; I believe there will be increased productivity because there are less social distractions and more opportunities to get necessary breaks. Workers can decide when to work comfortably and willingly.
- Identify and describe the primary tactics used by unions and management when collective bargaining efforts break down. (5 marks)
Striking; this happens when employees refuse to resume their duties until their grievances are fulfilled. The organization or companies come to a standstill and agreement to grant the demands of unions. Although, the employees on strike do not get paid. Therefore the firms and companies try to hold strategy to see how long the employees will survive without salaries.
Parading; this occurs when workers unions go parading with posters and banners to inform the general public about bad things of a particular company or organization, such as poor working conditions, low wages and so on.
Boycotting is another strategy used by workers unions when collective bargaining efforts break down. This happens when workers of a particular organization reject companies’ products and convince the public not to buy such products. Workers may boycott expensive products or low-quality commodities.
- What factors do marketers consider that may play into a consumer’s decision to buy a product? For example, what does the Marketing department consider when creating a campaign to sell a pair of jeans? (5 marks)
There are several factors that marketers should consider before establishing or opening their business. Such factors include;
Competition, for example, before opening a shop to sell jeans, you have to determine if there other shops selling the same or related products. To avoid stiff competition, establish your business from competition marketers, and this can be achieved by selling different or unique products.
Location; marketers ought to locate their business near to their customers to reduce transportations and other related costs.
Set –up costs; Marketers should consider setting up their business where land and rent rates are relatively low. This reduces operating costs, and thus you will sell your products at affordable prices hence attracting more buyers.
Market and demand; different customers have different taste and preferences. Therefore, consider setting up your business where your product has a high demand.
Security; typically, every buyer wants to shop where the level of protection is high. Customers need a secure place to park their vehicles. For this reason, marketers should locate their business in safe places in order to attract more customers.
- What is a brand? What is meant by brand equity? What does a brand name assure for the buyer? (5 marks)
A brand is a company’s identity. For instance, who they are, what they do, what they produce, what’s their reputation? To nearly every business need an established marketing brand. On the other hand, brand equity is marketable or commercial value that develops from buyer/consumer view of the brand name of a particular service or product, but not from service or product itself.
A brand name assures following things for the consumer such as quality, health and safety of the product, price of the product, the durability of the product, and so on. However, in most cases, companies with reliable brand names tend to sell their products at relatively higher prices.
- Calgary Chemicals plans to utilize its computers to provide continuous auditing of their financial statements. Analyze this situation. What are the advantages, and what the disadvantages? (5 marks)
Advantages of using compute to provide continuous auditing of financial statements include:
The IT application regulates all financial entries hence controlling risks and theft of funds.
The financial records can be easily retrieved in future use without dependence on the client.
There is increased accuracy in auditing financial statements.
Disadvantages of these techniques include
It is expensive to install- purchasing and training workers how to use it in business.
Customers’ cooperation and permission might be difficult to obtain
Audit workers may not have IT personnel.
Financial statement data may be lost or corrupted during the application of CAATs.
- Sue has a personal wellness business. Due to Covid-19, Sue needs short-term financing. She is uncomfortable with making a loan application to a bank and decides to use her existing credit card for any short-term financial needs. As Sue’s accountant, what methods of raising short-term cash would you recommend? (5 marks)
As Sue’s accountant, I will recommend her to try trade credit. Trade credit is where merchandise or firm supplies goods to the retailer or seller without paying for goods. Sue if she is lucky enough to get the right supplier, she will be expected to repay the products on loan after a certain period without no additional interest rate.
Another effective way of raising short-term capital is to borrow money from friends and relatives. I think this might be a good source since close people will not charge her interest rates for the borrowed money.
Invoice discounting; is also a source of short –term cash, in this. In this case, the receivables invoices are discounted with a third party or bank. In other words, the bank will be the one to pay the money during the discounting period. The bank will then collect the cash from Sue’s customers in case the bill becomes due.
Factoring; this where the accounts receivables are retailed to another person (third party) and generally at a lower price than realizable value of the accounts receivables. The purchasing person or party is usually referred to as a factor.