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Unit 5.01 – 5.03 MPAUnpacked ContentDistinguish between economic goods and services (EC:002, EC LAP 10) (CS)Define wantsEconomic wantNoneconomic wantDefine goods and servicesConsumer goodsIndustrial goodsCapital goodsExplain the concept of economic resources (EC:003, EC LAP 14) (CS)Define economic, natural and human resources.Factors of productionDescribe the concepts of economics and economic activities (EC:001, EC LAP 6) (CS)Define the following terms: economics, scarcity, economizing, opportunity cost, trade-offs, consumption, consumer, production, producer, exchange, and distributionThe three economic questions that all societies must answerWhat will be produced?How will the products be produced?How will the products be allocated?Describe four economic activitiesConsumptionProductionExchangeDistributionDetermine economic utilities created by business and marketing activities (EC:004, EC LAP 13) (CS)Form utilityPlace utilityTime utilityPossession utilityExplain the principles of supply and demand (EC:005, EC LAP 11) (CS)Define the following terms: demand, law of demand, supply, law of supply, law of supply and demand, buyer’s market, seller’s market, elasticity, elastic demand, and inelastic demandList the conditions required for demand to existDesire for a good or serviceBuying power to pay for a good or serviceWillingness to give up some buying powerDescribe the functions of prices in markets (EC:006, EC LAP 12) (CS)Relative pricesSubstitution effectRationingEquilibrium priceExcess supplyExcess demandMarket price5.01 – How It’s Made (page 1)Part I.Directions: Students will answer the following questions as they follow a product as it makes its way through the production/distribution channel to the consumer. The teacher will assign a product or the student will choose a video from “How It’s Made” website to learn about how a product is made. The website is Goods and ServicesWhat is the product?Where is this product made (location)?What industrial goods were used to create the product?What classification of the industrial goods were used in the production of this product?. Use the following link to view the categories of classification. Manage Mentor website - provides the raw material to make the product?In your own words, describe the process used to create the product. Use complete sentences.What happens to the product after it is made?How does it get into the hands of the consumer?What is the consumer classification of this product - Convenience goods, shopping goods or specialty goods? Explain your answer. Use complete sentences.How is this product used?Who is the target market for this product?Where is this product sold?5.01 – How It’s Made (page 2)Part II.Directions. Use your own resources to complete the following:Define service industry. Provide an example of a service industry.Define consumer service.Provide an example of a consumer service.5.01 – Those Golden Jeans Activity (page 1)As you go through the steps of this assignment, record your answers here. Website used - I.Step 1$2.00 a slice – $1.50 a slice – $1.00 a slice – $0.50 a slice – Price Per SliceQuantity DemandedYouFriendFriendFriendTotal$2.00$1.50$1.00$0.50What happens to the number of slices of pizza, you and your friends are willing and able to buy as the price goes up?What generalization can you make about the relationship between price and quantity?After reading the art of pizza, answer the following:An example of a human resource in the first paragraph.An example of a natural resource in the fourth or sixth paragraph.An example of capital resources in the fourth paragraph.5.01 – Those Golden Jeans Activity (page 2)Part II.List the productive resources beside the type of resource that it represents.Natural – Human – Capital – Look at the alternative prices for slices of cheese pizza and answer the following:How many slices are consumers willing to buy at $2.50?What problem does this create?How much would the surplus be at $2.00?Explain how you determined the amount of surplus.What would happen if the price is set at $1.00?How many slices are the pizza owners willing and able to supply at $1.00?At $1.00, how many slices are consumers willing and able to buy?How could this shortage be eliminated? Explain.A surplus exists at $2.50 per slice and a shortage exists at $1.00 per slice. How much could pizza owners charge for a slice of pizza without causing a shortage or a surplus? Explain.5.01 – Those Golden Jeans Activity (page 3)Part III.You are now going to apply what you have learned to blue jeans. Using the websites provided, answer the following:Find an example of a natural resource.Find an example of a human resource.Find an example of a capital resource.Activity 2 – Market Schedule for Blue Jeans351155652780 20 40 60 80 100 120 20 40 60 80 100 12022802855243830QuantityQuantity-1600202190750Price00Price373380991235$60$50$40$30$2000$60$50$40$30$205.01 – Those Golden Jeans Activity (page 4)Part III (continued)What is the market clearing price or equilibrium for blue jeans? Explain why this is the equilibrium price.At what price would there be a shortage?Why would there be a shortage?At what prices would surplus occur?5.01 Those Golden Jeans Lesson PlanAdopted from: Key Briefing: Economics Concepts and ActivitiesDefine economics.The study of how to meet unlimited, competing wants with limited resources Describe two basic types of wants.Economic wants: Desires for items that can only be obtained by spending money.Noneconomic wants: Desires for things that can be obtained without money (e.g., fresh air and sunshine).Discuss the characteristics of wants.Unlimited: Everyone always has them. That includes individuals, businesses, and governments.Changeable: Wants change. Think of things that children want vs. what teens wants vs. what adults want vs. what senior citizens peting: Everyone must choose which wants to satisfy at any one time because resources are limited. We don’t have enough resources to satisfy all needs at the same time.Define and describe resources in economics.Any items that can be used to produce goods and services. Categories:Natural resources: Items that are found in nature that are used to produce goods and services. Examples include trees, air, and land.Human resources: People. In economics, they are valued for the physical and mental work that they do to produce goods and services. They include anyone who works.Capital goods: All of the manufactured or constructed items that are used to produce goods and services (e.g., buildings, equipment, transportation systems).Discuss reasons for limited resources.Natural resources: There simply are not enough resources available to satisfy everyone. We depend on the earth for practically all of our natural resources. As the world’s population increases, there will be more and more people making use of those resources. As a result, there will be fewer resources per person.Some natural resources are difficult or costly to obtain. For example, wind power can be difficult to capture when the wind isn’t blowing. Some developing countries lack the technology to tap their natural resources. And finally, weather conditions and the environment affect the supply of some natural resources.Human resources: Only some of the world’s people are willing and able to work. Others, especially those who are young, disabled, or elderly, are not part of the workforce.Many parts of the world experience worker shortages in such professions as nursing and welding. This may be due to a lack of special training, or the people may not live in the geographic region where the job opportunities exist.Capital resources: In some parts of the world, capital resources are limited due to a lack of technology. In under-developed societies, people still use primitive hand tools rather than mechanized machinery to produce goods and services. As a result, they produce fewer goods and services than we do in our society and those that they produce are for personal use rather than for capital goods.What is scarcity?This is the gap between unlimited wants for goods and services and limited resources. Economics is sometimes called the study of scarcity. Goods and services are said to be scarce, or limited, because not everyone can have everything s/he wantsThe only ways to eliminate scarcity are to find unlimited resources or to limit human needs and wants. Neither one can happen.Discuss the fact that scarcity requires economic choices.Involves allocating resources: Resources must be directed to their best use. Involves economizing: The process of deciding which goods and services to purchase or provide so that the most satisfaction can be obtained is known as economizing.Involves opportunity costs: When we economize, we decide how scarce resources will be used. When people, governments, and businesses make decisions about allocating their resources, they feel that they will gain more satisfaction from one choice rather than from another. When a choice is made about the best use of resources, the next-best alternative that is given up is called the opportunity cost of that choice. This is the benefit that is lost from making one choice vs. another.Involves tradeoffs: This means that individuals, businesses, and governments must be willing to give up all or a part of one thing to get something else. The trade-offs that everyone is willing to accept should be based on the opportunity costs involved.Explain that making economic choices involves economic questions.To use scarce resources efficiently, all societies must answer three basic economic questions:What to produce?They must determine what and how many goods and services to produce. They must decide how to allocate their limited resources between the production of capital goods and consumer goods.How will products be produced?Most goods and services can be produced in a variety of ways. Societies must decide the best, most efficient ways to use their limited resources to produce products.How to allocate products?Societies must determine how the goods and services will be divided among people. They need to decide how individuals, businesses, and governments will share products.Explain the relationship between economics and decision making.The heart of economics is decision-making—choosing among alternatives. The objective of studying economics is to prepare for effective decision-making and responsible citizenship in society.Describe major economic activities.Today, people rely on others to provide them with at least some of the goods and services they desire. As a result, goods, services and resources must move, or flow, from one person to another. The following four economic activities make that movement possible.ConsumptionThis is the ultimate goal of all economic activity. It is the process or activity of using goods and services. Anyone who used goods and services is a consumer. People consume goods and services to satisfy their wants and desires.Production For consumption to occur, goods and services must be produced. Individuals who make or provide goods and services are called producers. They transform natural, human, and capital resources into more valuable goods and services for consumers. Examples of producers: hairstylists, clothing manufacturers, farmersExchange Resource owners—people and organizations who provide human resources, natural resources, or capital goods for use in production—require some form of payment for the use of their resources. Usually, this payment is in the form of money—wages, salaries, profits for human resources; interest or rent for capital goods; etc.After acquiring enough resources from resource owners, producers are able to produce goods and services. Consumers make money payments to the producers for the goods and services. This money payment is the price of the good or service.DistributionThis is the process or activity by which income is divided among resource owners and producers. Money received by resource owners and producers is known as income. Resource owners use their money to buy more goods and services. Producers use their income to buy more resources. Those receiving larger incomes are able to buy more goods, services, and resources than those with lower incomes.Resource owners must feel that their incomes are large enough so that they will continue to supply resources. If they decided that their incomes weren’t sufficient, they may choose not to share their resources with producers. This would cause production to cease. Likewise, producers must receive enough income to continue making or providing goods and services. If they decided their incomes weren’t sufficient, they might choose not to make goods and services. In that case, consumption would cease. This results in a tug of war between resource owners and producers over how to divide the income they receive from consumers. The manner in which resource owners and producers divide their income depends on the type of economic system that exists.5.01- Key Briefing: Economics Concepts and ActivitiesGraphical Organizer (page 1)Define economics.The study of how to meet unlimited, competing wants with limited resources.Describe two basic types of wants.Economic wants: Noneconomic wants: Discuss the characteristics of wants.Unlimited:Changeable: Competing: Define and describe resources in economics.Any items that can be used to produce goods and services. Categories:Natural resources: Human resources: Capital goods: Discuss reasons for limited resources.Natural resources: Human resources: Capital resources: 5.01- Key Briefing: Economics Concepts and ActivitiesGraphical Organizer (page 2)What is scarcity?Discuss the fact that scarcity requires economic choices.Involves allocating resources: Involves economizing: Involves opportunity costs: Involves tradeoffs: Explain that making economic choices involves economic questions.To use scarce resources efficiently, all societies must answer three basic economic questions:What to produce?How will products be produced?How to allocate products?Explain the relationship between economics and decision making.Describe major economic activities.Today, people rely on others to provide them with at least some of the goods and services they desire. As a result, goods, services and resources must move, or flow, from one person to another. The following four economic activities make that movement possible.ConsumptionProduction Exchange Resource ownersDistribution5.01 Economic Question Activityleft274955Who? What? How?00Who? What? How?The 3 Key Economic Questions every Society must answer:As we have been learning, everyone is forced to deal with scarcity. We, as individuals, are forced to deal with it. We, as families, are forced to deal with it. And we, as societies, as countries, are forced to deal with it. The way we, as individuals, face it is through the choices we make. Since all of us make different individual choices, it stands to reason that we all use different methods, or reasoning, to arrive at those choices. Different societies & countries also use different methods to arrive at their choices. Because of scarcity (not enough to go around because of LIMITED resources), every nation is faced with The 3 Key Economic Questions Every Society Must Ask:What –goods & services should be produced?“What to produce?” is an allocation question. All economic systems must determine how to allocate productive resources in the form of land (natural resources/raw materials), labor (work for which we earn pay) and capital (human - education & job training) (physical – buildings, equipment & tools). Who – consumes the goods & services produced in society?“For whom?” is a public choice question. All economic systems must determine which goods and services will be available for public use and which for private use.How – should goods & services be produced?“How to produce?” is an efficiency (the ability to do something or produce something without wasting materials, time, or energy) question. All economic systems must determine how goods and services will be produced.In Column 1 list the three questions that each society must answer. In column 2 explain the question that must be answered. Column #1 Column #21-2-3-How do different economic systems respond to the 3 Key Economic questions? First of all, we need to define exactly what an “Economic System” is: The institutional framework of formal and informal rules that a society uses to determine what to produce, how to produce and how to distribute goods and services.Another, more popular term for economic system is economy. An economy, or economic system, is the structural framework in which households, businesses, and governments undertake the production and consumption decisions that allocate limited resources to satisfy unlimited wants and needs. Economic systems can be categorized according to who makes most of the decisions in an economy. Most economies can generally categorized as one of two kinds:Market EconomyAn economy that relies on a system of interdependent market prices to allocate goods, services, and productive resources and to coordinate the diverse plans of consumers and producers, all of them pursuing their own self-mand EconomyAn economy in which most economic issues of production and distribution are resolved through central planning and control.So, how do different economic systems respond to the three basic economic questions? In a socialist or command system, the central authority determines what, how, and for whom goods and services will be produced. A Mixed System incorporates elements of both command and market systems in determining answers to the three questions. Mixed economies with strong market components also include a public goods and services sector, just as command economies like Cuba include a private goods and services sector.In a market economy, most of the decisions in the economy about what to produce, how to produce it and who receives it are made by individuals and firms. At the other end of the spectrum:In a command economy, government officials make most of the decisions in the economy about what to produce, how to produce it and who receives it. Most economic systems also contain elements of tradition or repeating decisions in ways made at an earlier time or by an earlier generation. Today, nearly all economies are actually mixed, in that some economic decisions are made by individuals and private firms, but some are also made by government officials, either through rules and regulations or through government-owned firms. The U.S. economy leans toward the market-oriented side of the spectrum. An economy like Cuba or North Korea is near the command economy side of the spectrum. But the dividing line between market and command economies in most nations is blurry rather than bright.Market Economies (“Capitalism”)Capitalism is undoubtedly at the top of any list of economic systems operating in the modern world. This system is based on: (1) private property--private ownership of resources and the means of production, (2) individual liberty--relative freedom on the part of the resource owners to use their resources as they see fit, and (3) competitive markets--a system of relatively competitive markets.Under capitalism, governments establish the basic rules of the game and are responsible for the production of public goods, but the vast majority of resource allocation decisions are undertaken by individuals, as either consumers or producers. The United States is one of the more noted examples of capitalism. However, most modern industrialized economies of Europe, Asia, North America, and South America operate under mand Economies (“Socialism”)In theory, socialism is the transition between capitalism and communism and is based on: (1) government ownership of resources and the means of production, (2) worker control of government, and (3) income distributed according to needs. As practiced in the real world, socialism is an economic system based on (1) nationalized industries--government ownership and control of key industries and (2) central planning--relatively detailed, but not comprehensive, resource allocation decision making by the central government. Under real world socialism, governments exert extensive control over resource allocation decisions, primarily involving key industries such as transportation, energy production, communication, and health care. While Sweden exemplifies modern socialism, several European nations have practiced varying forms of socialism over the decades. Command Economies (“Communism”)In theory, communism is an economic system based on: (1) a classless society, (2) common ownership of resources, (3) no government, and (4) income distributed according to needs. As practiced in the real world, communism is an economic system based on (1) government ownership--government ownership and control of most resources and the means of production and (2) central planning--excruciatingly detailed and comprehensive resource allocation decision making by the central government. Under real world communism, governments undertake the vast majority of the resource allocation decisions, with few decisions undertaken by individuals. The former Soviet Union was the primary example of real world communism before if disbanded in the late 1980s. China, Cuba, and a scattering of African nations continue to operate under various forms of communism.5.01 The 3 Key Economic Questions every society must answer:Who? What? And How?Who __________________________________________________________________________________________________________________________________________________________________________________________________________________________________What _________________________________________________________________________________________________________________________________________________________________________________________________________________________________How __________________________________________________________________________________________________________________________________________________________________________________________________________________________________Economic System __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Mixed System ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________In a Market Economy: ______________________________________________________________________________ _____________________________________________________________________________In a Command Economy: ____________________________________________________________________________________________________________________________________________________________Market Economies (“Capitalism”) ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Command Economies (“Socialism”) ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Command Economies (“Communism”) ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________Unpacked ContentTypes of economic systems Define the following terms: economic system, traditional economic system, command economic system, communism, and socialismDescribe the characteristics, strengths and weaknesses of:Traditional economic systemsCommunismSocialismMarket economic systemThe three economic questionsWhat to produce?How to produce?For whom to produce?Private enterpriseDefine the term private enterpriseDescribe the characteristics, advantages and disadvantages of a private enterprise systemFactors affecting a business’s profitDefine the following terms: profit, profit motive, income, expenses, cost of goods, operating expenses, gross profit, and net profitProfitCalculation: Revenues-ExpensesImportance of profitBusiness riskDefine the following terms: business risk, economic risks, natural risks, human risks, pure risks, speculative risks, guarantees, and warranties (see key terms)Managing risk:Control risksTransfer risksRetain risksAvoid risksCompetitionDefine the following terms: competition, direct competition, indirect competition, price competition, non price competition, monopoly, oligopoly, perfect competition, and regulated monopolies (see key terms)Government legislation affecting competitionCompetitionFreedom of ChoicePrivate PropertyProfitKey TermsKey TermDefinitionBusiness riskThe possibility of loss (failure) or gain (success) inherent in conducting business (EC LAP 3)Command economic systemAn economic system in which all or many of the means of production and distribution are owned and controlled by the government. (EC LAP 17)CommunismA command economic system in which the government controls the economic system and does not allow private ownership of the means of production and distribution (EC LAP 17)CompetitionThe rivalry among two or more businesses to attract scarce customer dollars (EC LAP 8)Cost of goodsThe amount of money a business pays for the products it sells or for the raw materials from which it produces goods to sell; the amount of money a business pays for the products (or for any part of the products) it sells. (EC LAP 2, FI LAP 5)Direct competitionRivalry between or among businesses that offer similar types of goods or services. (EC LAP 8)Economic risksRisks that result from changes in overall business conditions.Economic systemThe organized way in which a country handles its economic decisions and solves its economic problems. (EC LAP 15, EC LAP 17)ExpensesMoney spent or cost incurred in an organization's efforts to generate revenue, representing the cost of doing business. (FI LAP 11, EI LAP 19)GuaranteeA promise made to the consumer that a product’s purchase price will be refunded if the product is not satisfactory (SE LAP 115)Human riskPerils caused by human errors as well as the unpredictability of customers, employees, or the work environment.IncomeThe money received by resource owners and by producers for supplying goods and services to customers (EC LAP 2, EC LAP 6, EC LAP 19, FI LAP 3, FI LAP 4, IM LAP 7, MP LAP 2) Indirect competitionRivalry between or among businesses that offer dissimilar goods or services. (EC LAP 8)MonopolyA type of market structure in which a market is controlled by one supplier, and there are no substitute goods or services readily available. (EC LAP 8, EC LAP 16, SE LAP 129) Natural risksPerils resulting from environmental causes.Non-price competitionA type of rivalry between or among businesses that involves factors other than price (e.g., customer services, modern facilities, trained personnel, and variety of products) (EC LAP 8)Operating expensesAll of the expenses involved in running a business. (EC LAP 2, FI LAP 4, FI LAP 5, FI LAP 6, PI LAP 3, QS LAP 38, QS LAP 44)OligopolyA market structure in which there are relatively few sellers, and industry leaders usually determine prices. (EC LAP 8, PI LAP 3)Perfect competitionA market structure in which there are many businesses selling a lot of identical products for about the same price to many buyers; also known as pure competition. (EC LAP 8, EI LAP 15)Price competitionA type of rivalry between or among businesses that focuses on the use of price to attract scarce customer dollars. (EC LAP 8)Private enterprise systemAn economic system in which individuals and groups, rather than government, own or control the means of production–the human and natural resources and capital goods used to produce goods and services. Also known as free market economy, private profit system, market system, capitalistic system, or free enterprise system (BL LAP 1, EC LAP 2, EC LAP 3, EC LAP 16, MK LAP 1, SE LAP 117) ProfitMonetary reward a business owner receives for taking the risk involved in investing in a business; income left once all expenses are paid. (BL LAP 2, EC LAP 2, EC LAP 3, EC LAP 12, EC LAP 14, EC LAP 15, EC LAP 17, EC LAP 19, EI LAP 4, FI LAP 5, HR LAP 19, HR LAP 25, IM LAP 7, MK LAP 1, MP LAP 2, OP LAP 5, PI LAP 3, SE LAP 130, SM LAP 1)Profit motiveThe desire to make a profit which moves people to invest in business (EC LAP 2, EC LAP 15)Pure risksThe possibility of loss to a business without any possibility of gain.Regulated monopolyMonopoly that the government allows to exist legally. (EC LAP 8)SocialismA modified command economic system in which government owns the basic means of production and allows private ownership of businesses as well. (EC LAP 17)Speculative risksChances of loss that may result in loss, no change, or gain. (EC LAP 3, FI LAP 8)Traditional economyAn economic system in which people produce only what they must have in order to exist; all economic decisions are based on habit and tradition. (EC LAP 17)WarrantyA promise made by the seller to the customer that the seller will repair or replace a product that does not perform as expected. (EC LAP 3, FI LAP 10, IM LAP 7, MP LAP 2, OP LAP 2, PM LAP 4, PP LAP 7, SE LAP 115, SE LAP 119, SE LAP 130, SE LAP 131) A promise to the purchaser that a product will be repaired or replaced if it proves to be defective (PM LAP 7)5.02 – Economic Systems World Fact Book ActivityUse the CIA’s online database, The World Fact Book, , to study various features of four unique countries (North Korea, Singapore, United States, and Zambia) and be able to identify the economic system for each country. Fill in all data points about the four assigned countries. If data is unavailable, write “N/A” in the box.Country NameGovernment ExpendituresEconomyEducation Expenditure RateGDP (PPP)Military Expenditures RateGDP per CapitaOther Notable FactsGDP Real Growth RateLabor Force by Occupation agriculture industry + servicesUnemployment RatePoverty RateExport ValueImport ValueInvestment RatePeoplePopulationUrban Population RateLife Expectancy AgeFertility RateLiteracy RateWhat supporting evidence did you find to help you label this country’s economic system?5.02 – A Private Enterprise SystemDirections: In a private enterprise system, businesses are owned by individuals instead of the government. There are many entrepreneurs that started their business at an early age. Find an entrepreneur in the United States that is younger than 25. Use your findings to complete the chart below. Name of the EntrepreneurProvide a brief back story of the entrepreneurName of the BusinessType of businessWhat is the entrepreneur’s monetary worth?Private EnterpriseWhat goods or services are produced?How are the goods or services produced?Who is the intended target market for these goods and services?Freedom in the MarketplaceWhat resources are needed for the production of the goods or services?How are the products or services marketed?Private PropertyWhat type of property or equipment is needed for this business?Limited Government ControlAre there any government regulations or mandates concerning this business?Would there be any concerns to protect citizens from any part of this business?CompetitionList two competitors of this businessEconomic FreedomsWhat economic freedoms did the entrepreneur have when starting this business?What limits to freedom may this business experience or has experienced?5.02 – Just WHAT is PROFIT? Activity Identify factors affecting a business’s profitRead the article, Just What is Profit, located at to complete this worksheet?What is a misunderstanding about profit?Complete this sentence. The higher the risk, .381008636000Define the following terms:Return on investment – Fixed costs – Examples:Variable costs - Examples:Overhead - Markup - Margin - Write the formula for profit.What decisions can affect profit?5.02 – Let’s Practice Making ProfitThis is the story of Goodies Gift Shop in its third year of operation in Small Town USA. Amelia Goodies, the owner, runs the shop with 4 full time employees, 2 part timers and herself. Her sales last year were $500,000 and her profit was $20,000 after taxes. If her balance sheet shows a net worth of $100,000 can you tell us what her return on investment was last year??Balance Sheet (Year 2)Current AssetsCash10,000Accounts Receivable15,000Inventory200,000Property and Equipment100,000Total Assets325,000LiabilitiesAccounts Payable80,000Loan Balance145,000Owner’s Equity100,000Total Liabilities and Equity325,000This year Amelia has projected sales of $600,000 with a margin of $250,000. She has budgeted the following overhead:?Owner Salary35,000Employee Wages100,000Rent10,000Advertising4,200Supplies1,000Telephone1,000Other utilities600Insurance2,000Payroll Taxes30,000Maintenance3.700Legal and other professional fees500Miscellaneous2,000Interest on Loan10,000Total Overhead Expenses200,000If taxes are 20% of Net Income, what is the planned profit for the year?5.02 – Let’s Practice Making ProfitEFFECTS ON PROFITThe day-to-day decisions for the gift shop and the level of business Amelia is able to maintain will affect this budget, resulting in many variations of the plan. What are the effects the following issues would have on profit?The employees demand a 10% raise.The lease is up on the building and the owner would like to sell her the building for $150,000 or increase the rent to $15,000.?Amelia is considering adding another full time employee for an annual cost of $20,000.Insurance coverage is too low and she needs to double it.There are new opportunities to advertise in connection with community events that would expand her advertising budget.She needs to buy a computer to improve her record keeping systems.Shoplifting losses force her to increase her markup an extra 5%.?Sales in the first six months have been 10% below expectations.?Her daughter "borrows" money from the register and does not repay it.?She is considering buying a used van for $10,000 and offering free delivery services to her customers.?5.02 Factors Affecting Business Risks Directions: Review the Factors Affecting Business Risks movie (or PowerPoint) to fill in the blanks to the following information.Identify Business RisksDefine Risk:Risk Management:Business Risk:Speculative Risk:Examples:Pure risk:Economic risk:Examples:Natural risk:Examples:Human risk:Examples:5.02 Factors Affecting Business RisksMethods of dealing with business risks:Risk reduction:Design areas to reduce the chance of accident or fire.Educate on safe use of equipment.Check and service safety on a regular basis.Stress the limits of your company’s .Implement ways to reduce .Control employee .Implement ways to reduce .Risk Transfer:Property insurance – Real property – Personal property – Business interruption insurance – Casualty insurance – Errors-and-omission insurance – Product liability insurance – Fidelity bonds – Performance bonds – Life insurance – Worker’s Compensation – Risk Retention – Emergency Planning – Avoidance – 5.02 Factors Affecting Business RisksClassify each of the following situations according to the risk it represents – economic human, or natural.Basketball shoes endorsed by professional players are no longer trendy among teenagersA high unemployment rate causes a downturn in the retail sales for the year.Employees at a local restaurant improperly cook hamburger leading to customers being hospitalized.Hurricane Floyd led to increased losses for insurance companies.Because of a flu epidemic, a local school district must employee additional substitutesFaulty wiring done by an electrician leads to an apartment fire.Poor employee cash register training causes some customers to leave the store because of the long lines.The National Football League goes on strike causing the cancellation of several games.A local manufacturer has to pay higher wages because there is a lack of skilled apprentices in the community.High gasoline prices resulted in lower attendance on the South Carolina beaches.Each of the examples below fall into one of these categories. Assume that you are the entrepreneur in each instance, and decide which form of risk management is being used. Write your answers in the appropriate blanks. Determine whether the risk is avoidance, reduction, transfer, or retention.You hold employee meetings to discuss ways of reducing accidents.You purchase fire insurance.You choose not to carry a line of products that appears to be especially easy to shoplift.You move your store from an isolated corner to a busy mall.You bond your employees who handle cash.When it rains, you place rubber mats in the entryways of your business.You provide your employees with safety gear and see that it is used routinely and properly.When it rains, you lace the nonskid floor mats in the entryways of your business.You put flood lamps at each exterior corner of the store.You have a silent alarm system installed that signals the nearest policy station.Unpacked ContentExplain the role of business in society (EC:070, EC LAP 20) (CS) Define the following terms: social responsibility, producers, raw-goods producers, manufacturers, builders, trade industries, retailers, wholesalers, and service businesses.Categories of social responsibility:Economic Responsibilities- Companies need to make sure that the company itself if profitable.Legal Responsibility- Requirements placed on company by law.Ethical Responsibility- Corporation leadership core mission aligns to their actions.Philanthropic Responsibilities- Going above and beyond ethical responsibility making an effort to benefit society. Describe types of business activities (EC:071, EC LAP 19) (CS) Define the following terms: business, accounting, customer relations, finance, human resources management, information management, management, marketing, operations, and production.Primary business activitiesFinancial AnalysisHuman Resources ManagementInformation ManagementMarketingOperations ManagementStrategic ManagementExplain the nature of business ethics (EC:106, EC LAP 21) (SP)Distinguish between ethics and regulations.Discuss the need for business ethics.Describe factors that affect the business environment (EC:105, EC LAP 26) (SP)Internal factors affecting the business environment.External factors affecting business environments.Discuss reasons that the business environment can be affected by external factors.Ethical factors that affect the business environment.Cultural factors that affect the business environment.Socio-political factors that affect the business environment.Economic factors that affect the business environment.Discuss the global environment in which businesses operate (EC:104, EC LAP 22) (SP)The impact of globalization on businessesFactors driving the existence of a global business environmentForces that maintain differences between countries/regionsReasons that businesses go abroadWays in which businesses can enter a foreign market.Explain how organizations adapt to today’s markets (EC:107, EC LAP 25) (SP)Forces that are driving market changesGlobalizationConsumer demandsSpending trendsIndustry structure changesDiscuss management processes that aid adaptation to market conditionsProactive managementCompetitive aggressionInnovative managementOrganizational learningMarket orientationSlack resourcesExplain the organizational design of businesses (EC:103, EC LAP 23) (SP) Explain principles of organizational design.Types of organizational structures that businesses use:Functional structuresAdvantagesDisadvantagesDivisional structuresAdvantagesDisadvantagesMatrix structuresAdvantagesDisadvantagesLateral relationsAdvantagesDisadvantagesKey TermsKey TermDefinitionAccountingThe process of gathering, recording, organizing, and reporting financial data (FI LAP 9)AuthorityPower to influence or control the opinions or behavior of others. (HR LAP 36, QS LAP 10)BuildersA type of producer that constructs roads, bridges, buildings, or houses. (EC LAP 20)BusinessAn organized effort to produce and/or distribute goods and services. (EC LAP 19)Business ethicsThe basic principles that govern a business’s actions (EC LAP 21)Competitive aggressionA negotiating style in which one or both parties view the negotiation as a game-like challenge or a rivalry; one or both parties consider only their interests to achieve a desired outcome. (EI LAP 8, QS LAP 3)Consumer demandsManner in which individuals act that determines what they buy and sell (CD LAP 2)Customer RelationsAll the activities a business engages in to interact with its customers (CR LAP 1)EthicsThe basic principles that govern your behavior (EC LAP 21, EI LAP 4, EI LAP 16, EI LAP 21, HR LAP 19, MN LAP 44, QS LAP 8, SE LAP 117, SE LAP 129)FinanceThe process of obtaining funds and using them to achieve the goals of the business (PD LAP 15, SM LAP 1) GlobalizationThe rapid and unimpeded flow of capital, labor, and ideas across national borders (EC LAP 4, EC LAP 22, EC LAP 25, EC LAP 26, EC LAP 29, EI LAP 11, HR LAP 35, KM LAP 1)Human Resources ManagementThe process of planning, staffing, leading, and organizing the employees of the business. (EC LAP 19, HR LAP 35)Information ManagementThe process of accessing, processing, maintaining, evaluating, and disseminating knowledge, facts, or data for the purpose of assisting business decision making. (NF LAP 3)Innovative managementA style of management that is more participative and facilitative than traditional, controlling management (EC LAP 25)Line authorityFormal, direct authority that affects a business’s day-to-day operations (EC LAP 23)Line of commandThe flow of authority within an organization; also called line of command (EC LAP 23)ManagementThe process of coordinating resources in order to accomplish an organization's goals (Career Opps in BMA, HR LAP 36, SM LAP 1)ManufacturersA type of producer that changes the shapes or forms of materials so that they will be useful to customers (EC LAP 13, EC LAP 20, FI LAP 3, OP LAP 2, SE LAP 117)Market orientationA strong focus on meeting customer needs and wants (EC LAP 25)MarketingThe process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives (EC LAP 13) OperationsThe day-to-day activities for continued business functioning. (OP LAP 3, SM LAP 1)Organizational learningA concept that refers to a firm’s ability to accept and respond to change appropriately, becoming as effective and efficient as it can be (EC LAP 25)Proactive managementA style of management that involves anticipating and planning in advance for change, rather than simply reacting to outside events when they occur (EC LAP 25)ProducersThe people who make or provide goods and services. (CM LAP 1, CM LAP 2, EC LAP 6, EC LAP 10, EC LAP 12, EC LAP 13, EC LAP 14, EC LAP 17, EC LAP 20, MK LAP 4, SE LAP 117)ProductionThe economic process or activity of producing goods and services. (EC LAP 6, EC LAP 14, EC LAP 19, IM LAP 9)Raw-goods producersA type of producer that provides goods in their natural state. (EC LAP 20)RegulationsAn established set of rules (QS LAP 40)ResponsibilityFulfilling one’s obligations in a dependable, reliable manner. (EI LAP 16, QS LAP 8) The duty to get the job done (EC LAP 23)RetailersA business that buys consumer goods or services and sells them to the ultimate consumer (CM LAP 1, CM LAP 2, EC LAP 13, EC LAP 20, FI LAP 3, IM LAP 9, OP LAP 2, SE LAP 117, SE LAP 119)Service businessesA type of business that performs intangible activities that satisfy the wants of consumers or industrial users. (EC LAP 18, EC LAP 20, FI LAP 3, OP LAP 3)Slack resourcesResources above and beyond what are needed to operate an organization (EC LAP 25)Social responsibilityThe duty of business to contribute to the well-being of society (EC LAP 20, EC LAP 21, EC LAP 26) Span of controlThe measurement of how many workers are supervised by one manager (EC LAP 23)Staff authorityAdvisory authority, often without the ability to enforce or take action (EC LAP 23)Trade industriesBusinesses that buy and sell goods to others; retailers and wholesalers. (EC LAP 20)WholesalersIntermediaries who help to move goods between producers and retailers by buying goods from producers and selling them to retailers. (CM LAP 1, CM LAP 2, EC LAP 13, EC LAP 20, HR LAP 19, IM LAP 9, OP LAP 2, SE LAP 117)5.03 – Different Forms of Social ResponsibilityPart I. All businesses have a level of social responsibility, whether it be to employees, the company itself, the community or to customers. Using the list of businesses provided, choose four businesses to research. Determine how each business demonstrates social responsibility. Record your answers in the table provided.Social Responsibility by CompaniesCompany NameHow is the company socially responsible?Part II. In your own words, write a paragraph stating which business has the best form of social responsibility. This should be written as your opinion and addressing the four businesses that you researched. Use facts from the research to support your answer. Submit the paragraph per the teacher’s instructions.Part III. If you were starting a company, what would be included in your social responsibility statement?5.03 – Great Examples of Socially Responsible Businesses*AdidasAppleBen & Jerry’sBMWBombardier, Inc.Burt’s BeesCisco Systems, Inc.Colgate-PalmoliveDaimler (Mercedes-Benz)Dell Inc.Ecomagination: GEFord Motor CompanyGAP IncGeneral Electric CompanyGildan ActivewearGoogleIntel Corp.International Business Machines, Corp (IBM)Kellogg CompanyKenneth ColeLEGO GroupLinkedInMcDonald’sMethod (cleaning product)MicrosoftNokia CorpPedigreePeople WaterPepsicoPhillips ElectronicsSony CorporationStarbucks CorporationSurveymonkeyThe Hersey CompanyThe Walt Disney CompanyToms shoesUnited Parcel Services IncVerizonVolkswagenWhole FoodsZappos*This listing can be modified to fit the needs of the individual teacher and the assignment.5.03 –Business in Society ActivityDirections: Describe in your own words the following four terms and provide an example of each.Type of CommodityDescriptionExamplesServiceGoodDistribution MediumDescriptionExamplesRetailerWholesalerKey Briefing- 5.03 Describe Types of Business ActivitiesWhat is a business?An entity with goals that can be financial or tied to a particular missionA business that operates for profit makes money to fulfill financial goals.A nonprofit business makes money to fulfill a specific mission or undertaking. The money it makes goes to support that mission.Both for-profit and nonprofit businesses are organized efforts to produce and/or distribute goods, services, or ideas.What does a business need to accomplish?Obtain necessary resourcesProduce/provide goods and servicesMarket/sell those goods and servicesStore/retrieve information effectivelyPlan for the futureTo get everything done, businesses involve themselves in:Financial analysisHuman resources managementInformation managementMarketingOperations managementStrategic managementThese primary business activities are the main things businesses do to stay in business.What are types of business activities?Financial analysis is the process of planning, maintaining, monitoring, controlling, and reporting the use of financial resources. It includes finance and accounting.Businesses need money to make money, and finance activities help them obtain that money.They need money for land, equipment, supplies, employees, and overhead expenses.They need money for whatever it takes to run the business.They get this money from venture capital, debt, and equity.Venture capital is the money “angel” investors put into start-up businesses. The purpose is to get those start-up businesses off the ground. Investors look for long-term growth in return for their risky investment.Using debt to finance a project involves issuing bonds or taking out loans that require principal and interest repayment over time.Equity (what the business owns or controls minus debt) is used when businesses sell shares of stock, company real estate, or other business assets to benefit a particular undertaking.Whatever finance method a business chooses, obtaining funds provides an important way to accomplish business goals.Financial analysis is also about keeping accurate and useful financial records—and analyzing and interpreting the recorded information. These activities form the basis of accounting.By accounting for all expenses, and comparing expenses to income, businesses can make judgments and predictions about their own financial status.They can work toward:Being able to pay their billsBeing able to make a healthy profitHuman resources management is the process of planning, staffing, leading, and organizing employees.Every business needs people to accomplish the tasks intended to meet business objectives.Without employees, businesses would have difficulty operating.Although specific robotic machines can “replace” employees in certain manufacturing situations.Most businesses do not have machines that can perform job tasks as well as humans can.Most businesses must hire people to do the job.All employees of a business fall under the label of human resources.Besides “regular” employees, businesses usually require supervisors, managers, and executives.Human resources management covers everything the business needs in this regard.Human resources management involves:Planning for organizational changesRecruiting appropriate employeesSelecting the “right” people to do the jobOrienting new employees to their jobsTraining employees in policies and proceduresEvaluating employee performanceFacilitating employee compensationHuman resources management takes care of the responsibilities associated with having employees and makes the business a fair and inviting place to workInformation management is the process of coordinating the resources pertaining to business knowledge, facts, or data.Each business should ensure that valuable information is available when and how it is needed.This will avoid the uncomfortable (and unprofitable) situation in which vital business information has been discarded or is unable to be retrieved.Businesses should have a system for:Identifying necessary information—includes knowing which facts the business will need to use in the futureDetermining how that information should be presented, viewed, or accessedInformation can be viewed in formats such as reports, graphs, or spreadsheets.Format depends on how it is going to be used.Providing appropriate access to the informationTo access information, an employee could just walk to a file cabinet and pull out a client file.Or, the employee can do something complex, such as run an advanced query on a company database.Situations in which having the right information at the right time can be critical to the success of a business include:When an airline needs to know who is flying on a particular airplaneWhen a law enforcement officer needs to know if a specific person is a risk to the communityWhen a board of directors needs to know the profits from last quarterWhen a sales representative needs to know if a product requested by a customer is availableAll of these things can be handled with technology, but how technology is used to manage information has changed—and will change—over rmation management is not as much about pinning down the perfect technology for the task as it is about making sure that a reliable system is in place, so the business can make the best use of its information.Marketing is the process of creating, communicating, and delivering value to customers and managing customer relationships in ways that benefit the organization and its stakeholders.At first glance, marketing is simple: A good or service that is ready for sale is marketed to potential customers so they can buy it. But, long before a product is ready for sale, marketing is involved in the process of preparation.Marketing is present when the product idea is conceived.Marketing is present during the product’s design and creation.Marketing is actually involved in everything related to fulfilling a customer’s product needs.Marketing is put into action with activities such as:Locating potential customers by determining who will benefit from the productPricing the product appropriately by finding out what customers are willing to payPromoting the product to potential customers by communicating product benefitsGetting the product into customers’ hands by completing sales transactionsTo accomplish these four things, an office-supply store would:Identify local offices and businesspeople who should know about the store and what it has to offerConduct research, surveying the profit opportunity in its areaInvestigate what its competitors are doing—and how customers are responding to their pricesPrice its products slightly higher or lower, depending on its findingsMake a point of advertising the benefits of popular products it sellsLet potential customers know why products at this store are better than products at other storesMake the purchase process easy and seamless—by providing layaway, credit, or whatever customers might need to purchase the product immediately.Operations is the process of planning, controlling, and monitoring the day-to-day activities required for continued business functioning.This includes such activities as:ProductionQuality concernsSafety and securityPurchasingInventory managementProject planningExpense controlProperty and equipment maintenanceEvery business needs to produce or provide its product, whether that product is a good or a service.One aspect of operations is productionTo produce a good, a business obtains supplies for manufacturing, “makes” the good, and then distributes the good to a warehouse or other holding facility.To provide a service, a business obtains the means for providing the service, and then provides the service to its customers.Operations also includes establishing the best processes for production and quality controlNeed to vary processes to reduce unnecessary procedures and wasted materials.Need to provide easy-to-follow instructions to increase the likelihood that employees will perform as neededNeed to improve processes regularly to keep them up to dateThis leads businesses to engage in continuous process improvement by:Regularly evaluating how well the process worksFinding its error pointsCorrecting the errors as efficiently as possibleStrategic management is the process of planning, controlling, and organizing an organization or department.Businesses need to know where they are in the “big picture.”Just having the money, hiring the workers, making/providing the product, and marketing/selling the product are not enough.They need to know:Are they headed in the right direction?Are they likely to experience long-term success?These questions can be answered by analyzing the strategic position of the company—and managing that position effectively.Need to establish the organization’s capabilitiesNeed to determine how they can succeed in the long term and what will put them in reach of their goalsNeed to do what they’re capable of doing to reach the goals they’ve set for themselvesStrategic management involves long-term planning and organizing for future success.Long-term planning involves creating the mission and vision of the business, determining its goals, and selecting strategies to support those goals.Long-term planning shows how the business intends to accomplish anizing for future success includes determining what will be required to reach the long-term goals of the business.“Organizing” spells out how the business should be set up to meet its objectives.If the business plan changes, then strategies and tactics will also likely change.How are business activities interrelated or dependent on one another and work together?If a business (or a particular business project) changes in some way, the primary business activities must adjust in response.If one business activity has to change, the others have to change, too.Situation demonstrating interrelationship of primary business activitiesCompany ABC is a large business that makes and sells soft drinks to bottling companies.Since the company wants to gain the strategic position of the most unique beverage manufacturer in the industry, it has devised a plan for offering a new flavor of soft drink—feijoa.About the feijoa:A subtropical fruit, the feijoa grows primarily in South America, Australia, New Zealand, and California.Its aromatic flavor has been likened to that of the guava, but nothing can really describe the feijoa’s unique taste.The company feels that a feijoa-flavored soft drink will have an edge over “boring” lemon-lime soft drinks—and that the new product will bring in significant revenues.Before the revenues come flowing in, the company needs to obtain money to get the project started.As part of its financial analysis, Company ABC determines that the best way to bring in the necessary funds is through debt financing.The company feels certain that it can easily obtain a low-interest bank loan since it has an excellent credit rating.If the new product is a “winner,” the company will be able to repay the entire loan in a short period of time.All the company needs to do is make sure that the borrowed amount will cover the project’s expenses—including things such as:Salaries for employees in research and developmentThrough its human resources professionals, the company hires the most qualified research-and-development experts it can find.It offers these employees competitive pay for their expertise, so that the company can rely on the end result of their work.Advertising for the new productFrom the marketing side of things, the company plans and develops suitable advertising.The advertising will let people know about the new product and when it will be introduced to the public.Tools and equipment necessary for productionThe company examines its operations—including tools and processes involved in producing the new soft drink.Although the company has purchased the best tools and has fine-tuned the production process over time, there remains one error that needs to be addressed.The company does not have an appropriate system for storing and retrieving the information involved in researching and developing this product, so it makes revision of its information-management system. A revision means the entire plan changes (if even slightly).Puts a strain on the financing available for the project, and causes every business activity to adjustIn human resources management, the company must scale back the number of employees it hires to perform the product’s research and development.In marketing, the company must limit the number of advertisements it places to introduce the product.In strategic management, the company must align the change with its long-term goals.In financial analysis, the company must determine if there is a way to avoid similar financing shortages in the future.Description of special situationsWhen a business changes—internally or externally—it must adjust its primary business activities to suit its new situation.Example: If during strategic management a business decides that internal structure changes will help it be more effective in reaching its goals, human resources management and operations management will be affected instantly.New job descriptions, new tasks, and possibly new processes will be involved.New methods of managing information may be required.With financial analysis, the business will provide the financial means for making the change.Through marketing, the business will let the public know that the company is improving for the benefit of its customers.External business changes affect the primary business activities, too.Consider the effects of a merger between two large businesses.The goals of the two businesses change as the two companies become one.This means that the strategic management of the two businesses combines.The same thing happens with marketing, information management, human resources management, and financial analysis.What each business did before changes into what the single, united business does now.There are a few circumstances in which business activities are performed in an “out of the ordinary” manner—although with the technological progress, these situations are becoming much more common.OutsourcingOutsourcing involves using outside organizations or consultants to perform one or more of the primary business activities.When a business needs human resources management, it can hire an outside firm to perform the activity without hiring in-house employees for that purpose.Offering virtual servicesA virtual service is one that is offered through a medium of communication (such as the Internet), rather than in person.Example: Online banking—Instead of expecting customers to drive to your banking business, you can provide a way to complete their banking tasks through the Internet.The benefits of virtual services include speed and efficiency.5.03 - Private Enterprise SystemDirections: Brainstorm to create a list of benefits that you receive by living in a country in which private enterprise is practiced. List advantages and disadvantages to each.Benefit of Private Enterprise in U.S.AdvantageDisadvantage5.03 - Business Ethics Case StudiesDirections for this assignment:This is a group activity. Teacher will place students in groups of 3 or 4. An ethical case study will be assigned to each group. Students will assign roles to group members – reader, recorder, and presenter. Each group is responsible for discussing their assigned case study and answering the questions.Each group will present their case study, the answers, and their opinions on the case study to the class.Each student will write a brief paragraph stating the overview and their opinion of each case study presented.The following is a list of case studies:Affirmative ActionDiscrimination in the WorkplaceEmployee AbsenceNetworking and JR HYPERLINK \l "purchasing" Purchasing Ethics HYPERLINK \l "substance_abuse" Substance Abuse5.03 - Business Ethics Case StudiesCase Study: Affirmative Actionby Elaine E. EnglehardtHumanities/PhilosophyPeter is a vice president in a large corporation. As part of his duties, he supervises fifteen managers; fourteen of these managers are men. Only one of the managers is a black man, and one is a white female.Peter is replacing one of the white, male managers. He has advertised the position both in house and outside, as required by his company's hiring policies. After reviewing all of the applications, he believes that Steve, an employee of the company for 12 years, is the most qualified applicant. However, in the pool of applicants there are three qualified women and two qualified black men. Morally what should Peter do?Questions:Is it fair to hire Steve, even though this will still mean that the managers will have definite gender and race inequity?Is it fair to Steve to hire someone less qualified to agree with Affirmative Action?Should Peter give up and let the other manager’s vote on who should be hired?Utah Valley State College ? 800 West University Parkway, ? Orem, UT 84058 ? (801) 863-INFOCopyright ? 2003 UVSC All Rights Reserved. ? 5.03 - Business Ethics Case StudiesCase Study: Discrimination in the Workplaceby Elaine E. EnglehardtHumanities/PhilosophyMarian, a top graduate from Loyola in Humanities, was hired by a major corporation into a management position. Marian finished the corporation's management training program top in her group, and is performing above the norm in her position. She is really enjoying her work.As a black woman she feels isolated, as there are no other black women managers and few women in her area. One night at a company party she heard a conversation between two of her male co-workers and their supervisor. They were complaining to him about Marian's lack of qualifications and her unpleasant personality. They cursed affirmative action regulations for making the hiring of Marian necessary.Marian is very upset and wants to quit.Questions:Should Marian quit?Are her co-workers correct in their evaluation?Should Marian confront the co-workers?Should Marian file a discrimination suit?Should Marian go to the supervisor?What else could Marian do?Utah Valley State College ? 800 West University Parkway, ? Orem, UT 84058 ? (801) 863-INFOCopyright ? 2003 UVSC All Rights Reserved5.03 - Business Ethics Case StudiesCase Study: Employee Absenceby Stephen AdamsGraphics and Commercial ArtJoan, an employee of Great American Market, was warned about her excessive absenteeism several times, both verbally and in writing. The written warning included notice that "further violations will result in disciplinary actions," including suspension or discharge.A short time after the written warning was issued, Joan called work to say she was not going to be in because her babysitter had called in sick and she had to stay home and care for her young child. Joan's supervisor, Sylvia, told her that she had already exceeded the allowed number of absences and warned that if she did not report to work, she could be suspended. When Joan did not report for her shift, Sylvia suspended her for fifteen days.In a subsequent hearing, Joan argued that it was not her fault that the babysitter had canceled, and protested that she had no other choice but to stay home. Sylvia pointed out that Joan had not made a good faith effort to find an alternate babysitter, nor had she tried to swap shifts with a co-worker. Furthermore, Sylvia said that the lack of a babysitter was not a justifiable excuse for being absent.Questions:Was the suspension fair?Did Sylvia act responsibly?Should Joan be fired?Should the babysitter be fired?Was Sylvia fair in her actions?Is there ever a solution for working mothers?Should working fathers take turns staying home?Utah Valley State College ? 800 West University Parkway, ? Orem, UT 84058 ? (801) 863-INFOCopyright ? 2003 UVSC All Rights Reserved. ? 5.03 - Business Ethics Case Studies5.03 - Business Ethics Case StudiesCase Study: Networking and J.R.by Doug CarterElectronics TechnologyThe University needed to purchase a networking system. Tim pressed hard for the 3-COM network which Tiddley endorsed and supported. C.G. made an excellent point that Novell was the system used in the industry as a standard. When Tim learned that Tiddley could bid Novell, he agreed and bids were let for Novell's Netware.Three very high priced bids came back from companies C.G. had never heard of; Tiddley bid $46,000 and BIG BYTE bid $20,000. Tim suggested that the low bid be thrown out as low bids often are. C.G. was frustrated, claiming the hardware shouldn't cost more than $14,000 - $15,000 at the most, proved it with ad prices, but Tiddley got the bid, this time through Cripple Creek franchise's new salesman, Jim (J.R.'s son).A clause in the bid required the equipment to be operational in thirty days. Three months later the Tiddley installers contacted C.G. asking for help. C.G. found that Tiddley would have to develop special drives. C.G. reported this to the CCVU purchasing agent who called Tiddley Corporate Office (about the 30-day clause), they sent out 2 reps and fired the Cripple Creek store manager on the spot. J.R. put his arm around the store manager, escorted him to CCVU personnel office, and informed the personnel officer that Computer Services had a new employee. The personnel officer questioned the hiring; he soon left the University. The former Cripple Creek Tiddley franchise manager remained with the University. The system finally came on line, but has had many problems during its operation.Questions:Does the information presented raise questions about J.R.'s ethical philosophy?If so, who should be concerned?Tim was apparently between a rock and a hard place. Should he have acted differently?What has CCVU taught C.G. Farnsworth about ethics?What should C.G. do?What was the ethical thing for the personnel officer to do?If you were a member of the CCVU faculty, what would you do?5.03 - Business Ethics Case StudiesCase Study: Purchasing Ethicsby Doug CarterElectronics TechnologyJ.R. accepted a position at Cripple Creek Vocational University and he and his family made a permanent move. Soon, J.R. was promoted to Administrative Vice President, overseeing the purchasing department of the University. His oldest son, Jim, got a good job in educational equipment sales at Tiddley Computer Corporation in Fort Worth.As Vice President, J.R. quickly saw the need for 4 to 5 computers in his office. Although CCVU had a bidding policy, J.R. purchased Tiddley Corporation's computers direct from Tiddley for about $3500 each, when IBM clones were selling for around $2000 and the clone had more promising features than the Tiddley. Jim handled the sale and received a healthy commission on the sale. If the purchase had gone through the normal bidding process, the TC model would not have been selected. Tiddley's local Cripple Creek franchise dealer objected to Tiddley Corporation that his protected franchise had been bypassed in the deal.Questions:Since J.R. was over the purchasing department and had final decision authority, should purchasing have gone through the normal bidding routine?Is it acceptable for a V.P. to bypass the normal routine to do business with a family member?Was J.R.'s decision not to request bids an ethical choice?What should the college purchasing agent do?Should anyone else at CCVU have any interest in this activity?Has Tiddley's Cripple Creek franchise owner been wronged?Should Jim have made the sale? Received a commission?Utah Valley State College ? 800 West University Parkway, ? Orem, UT 84058 ? (801) 863-INFOCopyright ? 2003 UVSC All Rights Reserved. ? 5.03 - Business Ethics Case StudiesCase Study: Substance Abuseby Stephen AdamsGraphics and Commercial ArtFred, a 17-year employee with Sam's Sauna, was fired for poor job performance and poor attendance, after accruing five disciplinary penalties within a 12-month period under the company's progressive disciplinary policy. A week later, Fred told his former supervisor that he had a substance abuse problem.Although there was no employee assistance program in place and the company had not been aware of Fred's condition, their personnel director assisted Fred in obtaining treatment by allowing him to continue receiving insurance benefits and approved his unemployment insurance claim.Fred subsequently requested reinstatement, maintaining that he had been rehabilitated since his discharge and was fully capable of being a productive employee. He pointed to a letter written by his treatment counselor, which said that his prognosis for leading a "clean, sober lifestyle" was a big incentive for him. Fred pleaded for another chance, arguing that his past problems resulted from drug addiction and that Sam's Saunas should have recognized and provided treatment for the problem.Sam's Saunas countered that Fred should have notified his supervisor of his drug problem, and that everything possible had been done to help him receive treatment. Moreover, the company stressed that the employee had been fired for poor performance and absenteeism. Use of the progressive discipline policy had been necessary because the employee had committed a string of offenses over the course of a year, including careless workmanship, distracting others, wasting time, and disregarding safety rules.Questions:Should Fred be reinstated?Was the company fair to Fred in helping him receive treatment?Did the personnel director behave ethically toward Fred?Did Fred act ethically for his company?Would it be fair to other employees to reinstate Fred?5.03 - How Organizations Adapt to Today’s Market Directions: Choose a company from the Fortune 500 list ()Research the history of the company to answer the following questions.What is the name of the business?What type of business is this?What changes have been made over the years to aid in the company’s success?How can these changes be categorized (proactive management, innovative management, organizational learning, competitive aggression, market orientation)? Explain your answer.Did the company have success with every change made?Does the company have a global component?What resources are used to reach customers or potential customers?Create a chart/timeline to show the businesses success with new products, mergers, innovation, product improvement, etc). ................
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