Study Guide for Test 3

The following covers chapters 14-20 and should be used to help study for the final test of this quarter. Each topic is indexed by page number. Please be able to define and understand the concepts of each of the following terms. 

These are important concepts for business students to understand because it will ensure a promising retailing career or general business success for wherever their marketing know-how takes the academic.

  • Merchandising...384
  • Merchandising philosophy...384
  • Micromerchandising...386
  • Cross-merchandising...387
  • Centralized vs de-centralized buyiing organization...388
  • Resident buying office...390
  • Four types of merchandise...392
  • Use of never-out list...393
  • Traditional Product Life Cycle...395
  • Width of assortment/depth of assortment...396+
  • Manufacturer/Private/generic brands...400+
  • Category management...403
  • Use of want book/want slip...413
  • Opportunistic buying...417
  • Three merchandise sources...414
  • Consumer purchase/memorandum purchase...418
  • Logistics...422
  • Advantages of Quick Response (QR) inverntory planning...425+
  • Electronic data interchange (EDI)...427
  • Three key points to consider to reduce merchandise theft...431
  • Inventory shrinkage...431
  • Reverse logistics...432
  • Dollar control/unit control/merchandise management...438
  • Gross profit vs net profit...438
  • FIFO vs LIFO inventory valuation...441
  • Cost method of accounting vs Retail method of accounting...440+
  • Open to buy...451
  • Reasons for stock shortages...443
  • Perpetual inventory unit systems...454
  • Stock turnover...456
  • Automatic reordering system..458+
  • Price Elasticity of demand...466+
  • Robinson Patman Act...purpose...468
  • Predatory pricing...470
  • Loss leaders...470
  • Bait and switch advertising...471
  • Market penetration/market skimming pricing...473
  • Prestige pricing...476
  • Difference in initial markups and maintained markups...478
  • Every day low pricing...481
  • Flexible pricing...483
  • Price lining...485
  • Markdowns...485
  • Image...505
  • Positioning...505
  • Atmosphere...508
  • Visual merchandising...508
  • Types of Store Fronts...509
  • Store fronts to establish image...509
  • Marquees...509
  • 4 areas of Allocation of floor space...514+
  • Straight (gridiron) traffic flow vs curing (free-flowing) traffic flow...516
  • Sales-productivity ratio assignment of floor space based upon what?  516
  • Types of Point-of-Purchase displays...519
  • Eye-level display positions are  best for impulse good vs. lower...519
  • The store front of a Web retailer is?  520
  • Experiential merchandising...523
  • Co-branding...525
  • Elements of promotion...530
  • Advertising...530
  • Advantages/disadvantages of advertising...532
  • Vertical vs horizontal cooperative advertising...537
  • Public relations...537
  • Advantages/disadvantages of personal selling...539
  • Sales promotion...540
  • Order-taking salesperson vs order-getting salesperson...540
  • Reach/frequency...552
  • Performance measures used by retailers...573
  • Gap analysis...578
  • Retail audit...580

A general understanding of the following marketing terms and concepts will allow this study guide to help you summarize everything you have learned in the last six chapters and ultimately the final chapters of this semester. It is necessary to whole-hardheartedly and with motivation study and understand the material so that future careers in business marketing or administration can guide the student to the path of enlightenment and intelligence.

3rd exam 12-15 study guideline for Management 310

To help all levels of a company management must recognize concepts that are defined and reviewed in Management 310 for the exam. For example, the Organizational process is the collection of activities that transform inputs into outputs that customer’s value.

Whereas, Departmentalization is subdividing work and workers into separate organizational units responsible for completing particular tasks 
Functional departmentalization – definition, characteristics is organizing work and workers into separate units responsible for particular business functions or areas of expertise
Product departmentalization is organizing work and workers into separate units responsible for producing particular products or services 
Customer departmentalization - advantage and disadvantage organizing work and workers into separate units responsible for particular kinds of customers
Hostile work environment
a form of sexual harassment in which unwelcome and demeaning sexually related behavior creates an intimidating and offensive work environment
Chain of command – Line, staff is the vertical line of authority that clarifies who reports to whom throughout the organization which is different from Chain of command -Staff authority the right to advise, but not command, others who are not subordinates in the chain of command 
Project teams are those  teams created to complete specific, one–time projects or tasks within a limited time 
Norms are informally agreed–on standards that regulate team behavior and communication in the workplace

Line authority is the right to command immediate subordinates in the chain of command

an activity that contributes directly to creating or selling the company’s products is Line function

To properly manage a team goals must be set that are reasonable and easily achieved. It is necessary for all members to feel like they are contributing to the common goal. For example, consider the following terms

By definition, solving problems by consistently applying the same rules, procedures, and processes is Standardization

Decentralization- definition, advantage- the location of a significant amount of authority in the lower levels of the organization

Team- definition, advantages & disadvantages, classification (functional or cross-functional)

a team composed of employees from different functional areas of the organization
forming storm norming perform is a Cross–functional team
Managers must recognize Social loafing. the behavior in which team members withhold their efforts and fail to perform their share of the work is defined as Social loafing
Self-designing teams is the a team that has the characteristics of self–managing teams but also controls team design, work tasks, and team membership
Cognitive conflict & affective conflict
Human resource management: definition the process of finding, developing, and keeping the right people to form a qualified work force
BFOQs is the an exception in employment law that permits sex, age, religion, and the like to be used when making employment decisions, but only if they are “reasonably necessary to the normal operation of that particular business.” BFOQs are strictly monitored by the Equal Employment Opportunity Commission.
Adverse impact- unintentional discrimination is the unintentional discrimination that occurs when members of a particular race, sex, or ethnic group are unintentionally harmed or disadvantaged because they are hired, promoted, or trained (or any other employment decision) at substantially lower rates than others
Disparate treatment is the intentional discrimination that occurs when people are purposely not given the same hiring, promotion, or membership opportunities because of their race, color, sex, age, ethnic group, national origin, or religious beliefs
sexual harassment- definition, meaning, types (quid pro quo and hostile work environment)
Quid pro quo sexual harassment is a form of sexual harassment in which employment outcomes, such as hiring, promotion, or simply keeping one’s job, depend on whether an individual submits to sexual harassment

Job analysis, job description, job specification- definition, meaning, implications
Job analysis
a purposeful, systematic process for collecting information on the important work–related aspects of a job
Functional departmentalization: organizing work and workers into separate units responsible for particular business functions or areas of expertise.
Job description
a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job

Job specifications
a written summary of the qualifications needed to successfully perform a particular job

Selection- definition, selection information the process of gathering information about job applicants to decide who should be offered a job
Diversity- definition, meaning, purpose a variety of demographic, cultural, and personal differences among an organization’s employees and customers
Affirmative action and diversity purposeful steps taken by an organization to create employment opportunities for minorities and women
Types of discrimination
Glass Ceiling the invisible barrier that prevents women and minorities from advancing to the top jobs in organizations
Managing discriminations – the role of the managers
three paradigms for managing diversity are the discrimination and fairness paradigm
(equal opportunity, fair treatment, strict compliance with the law), the access and
legitimacy paradigm (matching internal diversity to external diversity), and the learning
and effectiveness paradigm (achieving organizational plurality by integrating deep-level
diversity into the work of the organization).
Staff function
an activity that does not contribute directly to creating or selling the company’ products, but instead supports line activities
Follow and enforce federal and state laws regarding equal employment opportunity. Treat group differences as important but not special. Find the common ground. Tailor opportunities to individuals, not groups. Reexamine, but maintain, high standards. Solicit negative as well as positive feedback. Set high but realistic goals. The two types of diversity training are awareness training and skills-based diversity training. Companies also manage diversity through diversity audits and diversity pairing and by having top executives experience what it is like to be in the minority.

Communication the process of transmitting information from one person or place to another
Perception- definition, process (perception filter, retention,…)
perception the process by which individuals attend to, organize, interpret, and retain information from their environments attend to, organize, interpret, and retain information from their environments
Perceptual filters the personality–, psychology–, or experience–based differences that influence people to ignore or pay attention to particular stimuli Closure the tendency to fill in gaps of missing information by assuming that what we don’t know is consistent with what we already know
selective perception the tendency to notice and accept objects and information consistent with our values, beliefs, and expectations while ignoring or screening out or not accepting inconsistent stimuli or information
Attribution theory- fundamental attribution error
a theory that states that we all have a basic need to understand and explain the causes of other people’s behavior
Fundamental attribution error
the tendency to ignore external causes of behavior and to attribute other people’s actions to internal causes

Types of bias
Defensive, self serving, Communication channels
e sender, the receiver, noise, and feedback. formal and informal communication channels, one-on-one communication, and nonverbal communication

Reasons to Solve how to Choose and Answer Business Management Decisions

Business management decisions can be difficult and various concerns including ethical and financial may arise. This blog post was written to help students who have chosen a degree in business to better understand how managers make the choices that they do.

I chose Middle Managers because they are responsible for linking and coordinating groups, as well as implementing top level strategies and implementing subunit groups. I chose operations management; however, Fayol developed 14 functions as an administrative manager. He argued that success is based on a company’s administrative ability to lead.
The Hawthorne Studies showed group cohesiveness and its influence on group performance. Groups perform better when there is employee satisfaction and group cohesiveness. I chose proactive customer monitoring because I misread the question. If I had realized it was the smaller lot’s system of monitoring I would have chosen reactive because he did not plan well enough in advance to compete with the competition.

The specific environment includes industry regulation which is why it is not the political or legal aspect which would be the general environment. I chose mission because it will not change over time and it was set by the top managers. Because Starbucks recognized the two different types of cultures and realized that they could not market to them in the same way, I chose selection of optimal solutions as their process of problem identification.

Of the influences that Porter writes about, the threat of substitute’s products or services will be a concern for a company trying to enter a market which is already heavily controlled. I chose discontinuous change because the company is not a in a period of discontinuity or dominant design, they are changing their technology to meet the completion. Because they redesigned and tested their page multiple times before allowing it to go public, I believe that the company chose a process of reengineering as a management concept to develop their site. Functional departmentalization does not produce managers with a broader experience or expertise because they are broken up into smaller groups, so they are only responsible for certain activities and therefore do not usually get a broad experience, level, this is why I chose functional managers lack expertise and experience. Because decentralization puts more power in the lower level managers, it leads to faster decision making and more satisfied customers. This is why I chose the first answer.

Self managing teams are can change their composition along with self designing teams, but unlike self designing teams, self managing teams can also change their tasks and work methods. Before the process of recruiting, organizations must advertise for job candidates, and then they can begin looking or qualified employees and working to maintain the employees with good ethics and work behavior. Diversity helps companies grow by improving marketplace understanding because people must realize their customers are not a single race, age, or homogenous group.

An intrinsic reward is a reward that is infernally motivating and satisfying, which would be a jazz musician who got the chance to play his music in his favorite city. Managers are concerned with maintaining the status quo and following orders from their line staff and superiors. Leaders however, want to bring change and inspire and motivate others, though managers also want to inspire and motivate. Managers are not concerned with changing a company’s operations as leaders would be. Concern for production is another term for initiating structure leadership behavior. This is because they are concerned about the product being able to reach the consumer and the product being made with high quality and efficiently and effectively
Autocratic decisions are not voted on, which is why a large layoff like that, when it comes from the top managers, would be that sort of decision.

Traditional most companies have only cared about profit in regards to performance and also quality. This is because they do not take into account customer equity and the value that their product or service plays in the community.

Bond Yield and Bond Prices 17 Blackstock Econ 215

Bond Yields Questions:

These multiple choice questions willl determine the understanding you have on bond yields. I do not think any calculator is needed because it is all very simple addition and multiplication. Students who are economics majors should pay careful attention to each of the following sections.

Some of this Bond Yield Questions have been answered for you already. Professor Blackstock

Econ 215

How can duration and convexity assist the portfolio manager in assessing the interest-rate risk inherent in a bond portfolio? This can happen because the greater the duration and convexity, the greater the interest-rate risk. Since interest-rate risk is a major source of systematic risk, this makes the portfolio manager's job easier.
One percentage point of a bond yield represents:100 basis points
If a bond is callable, this means:the issuer may redeem the bond early.
Subtracting the inflation rate from the market interest rate results in an approximate real risk-free rate of interest
For risk-free securities, the nominal interest rate is a function of real rate of interest and expected inflation rate
Under the Fisher hypothesis, if a one point increase in the inflation rate is anticipated nominal rates on short-term securities would rise by one pointWhich of the following regarding the current yield on a bond is not true?
The current yield shows the bond’s expected rate of return if held to maturity.
In order to have a yield to maturity greater than the coupon rate, the bond must be:
selling at a discount.
Typically, a yield to call calculation will use the end of the deferred call period rather than remaining years on the term.
When interest rates rise, bond prices fall.
The yield to maturity consists solely of interest income if the bond was purchased at par.
The YTM calculation assumes reinvestment of interest is at YTM rate.
When calculating the yield-to-call on a bond, the stream of interest payments is __________ and the par value is replaced by the __________.shortened to the call period . . . call price.
The face value of most bonds is $1000
The Fisher hypothesis is an approximation of the risk-free interest rate.
Bonds with deferred call features can only be retired after a specified period following the date of issue.
The real rate of interest is almost always the opportunity cost of foregoing consumption.
An increase in reinvestment rate risk results from a decline in interest rates.
The yield-to-call is like the yield-to-maturity except for the coupon rate and coupon payments.
The yield to maturity is 8 percent. If the yield increases by 50 basis points, the new yield is :
8.500 percent.
A bond is selling at a discount if the:yield-to-maturity is greater than the coupon rate.
The __________ equates the present value of the total future dollars expected to be available at the end of a specific time period, given certain assumptions, to the price of the bond. > horizon return
If bond investors do not reinvest the coupons received during the life of the bond, then the
RCY will exceed the YTM.
Find the price of a 10 percent coupon bond with three years to maturity if the yield to maturity is now 12 percent. Use semiannual discounting. $950.85 Price = 50(4.917) + 1000(0.705)
The YTM for a zero-coupon bond with 10 years to maturity and selling for $450 is
8.15 percent. = [1000/450]1/20 – 1
Reinvestment rate risk increases with a ________ coupon rate and a ________ term to maturity.
high . . . long
Which of the following statements regarding the realized compound yield (RCY) is true?
The RYC does not assume coupons are reinvested at the YTM.
Bond Prices
Which of the following statements regarding changes in bond prices relative to changes in market yields is true? Short-term bond prices will increase less than long-term bond prices if market yields decrease.
Which of the following bonds would you expect to have the greatest price volatility? 5%, 10 year bond
Which of the following statements about the risk premium affecting market interest rates is FALSE? The risk premium is not associated with the issuer's own particular situation.
Bond Price Changes – understand inverse relationships
All other factors constant, the -------------- of a bond, the shorter the duration. higher the coupon rate
Duration can be used minimize interest rate risk.
Duration tells weighted average maturity of a bond.
For all bonds paying coupons, duration is less than maturity.
The duration of a zero coupon bond is equal to its term.
Duration is based upon present value concepts.
Which of the following statements about bond prices is FALSE? Bond price fluctuations and bond coupons are directly related.
The term used to describe the degree to which duration changes as the yield to maturity changes is linearity. Not True
Maturity constant, increases in interest rates ___ bond prices by proportionately __ amounts than decreases in rates ___ bond prices. decrease . . . smaller . . . increase
Convexity is important in bond analysis because the relationship between bond price changes and duration is an approximation.
Convexity is largest for bonds with _________ coupons, ________ maturities, and ________ yields to maturity. low . . . long . . . low
Why is the yield to call a more appropriate measure to use for callable bonds with high coupons rather than the yield to maturity?
High coupon bonds face a greater chance of being called than low coupon bonds so investors will more likely to receive the yield to call than the yield to maturity.
Which of the following bond relationships is NOT inverse? Duration and maturity
Coupon and duration, Interest rate changes and bond prices, Duration and yield to maturity are INVERSE relationships
A current yield = coupon______
current market price
= 100/850 = 11.76 percent
B = 2 pmts per year, 1000 FV, -850 PV, 20 N, 50 pmt, solve for interest rate = 12.69 percent
Two 10 percent coupon bonds are selling at par. Bond A has a 15 year maturity and Bond B has a 25 year maturity. If the appropriate required rate of return for these two bonds drops to 8 percent, calculate the percentage change in the price of each bond, using a financial calculator. Assume interest is paid semi-annually.
With regard to duration, choose the INCORRECT statement. Yield to maturity is directly related to duration.


۞ = TRUE


Treasury bonds are typically used a proxy for the short-term riskless rate.X
The real risk-free rate of interest is the rate that must be offered to persuade individuals to invest rather than save.X
If the current yield is above the coupon rate, the bond is selling at a premium.X
If two bonds have the same coupon rate and the same term, they will have the same intrinsic value.X
The horizon return is the bond return to be earned based on assumptions about reinvestment rates.۞

Bond Prices

In bond valuation, the appropriate discount rate is the required yield.۞
The higher the discount rate used in bond valuation, the lower the bond’s intrinsic value.۞
Bond Price Changes
Duration measures the weighted average maturity of a noncallable bond’s cash flows on a present value basis is True
Duration expands with time to maturity at an increasing rate is Not True
Bond Yields
What is the reinvestment rate assumption in regard to the yield to maturity?
That all receipts of coupon payments are reinvested at the yield to maturity.

Bond Price Changes
What weakness of modified duration does convexity correct? Modified duration predictions are linear approximations. Convexity corrects the answer for the curvature of the price function.

Why does the coupon rate affect the volatility of bond price? The higher the coupon rate and payment, other things the same, the more of the bond’s value comes from the coupon payments and the less from the maturity value. The coupon payments are received sooner than the maturity value, and, therefore, are affected less by compounding.

For each of the following variables, state whether duration has a direct or inverse relationship: term to maturity, size of coupon payment, yield to maturity.

Term to maturity – direct; size of coupon payment - inverse; yield to maturity – inverse.

Calculate the duration of a bond with a 7 percent coupon and a 3-year maturity currently priced at $1,000. Interest is paid annually.
Year Cashflow Present Value PV of CF PV/ Price Year X PV/Price
$70 .9346 $65.42 .065 .065
$70 .8734 $61.14 .061 .122
$1070 .8163 $873.44 .873 2.619
$1000 2.806 years

How does value of a bond change as it nears its maturity? Bond prices will change so that the bond will be worth its face value on the maturity date.

The next section tests the students general understanding of the entire chapter. I hope you enjoy this blog entry and find it helpful.

3 reasons that duration is important in bond analysis and management {
i It measures effective lives of alternative bonds.
ii It is used in bond management strategies.
iii It measures bond price sensitivity to interest rate changes.
The following are mathmatical problems. I reccommend using your iPhone or calculator or computer determine the following answers:
A 10-year, $1000 corporate bond with a 10 percent coupon rate (interest is paid semi-annually) is currently selling for $850:

(a) Calculate its current yield.
(b) Calculate its yield to maturity (using a financial calculator)

Bond A = original price = $1,000; new price = 1000 FV, 8 interest rate, 50 pmt, 30 N, solve for PV = $1,172.92
Percentage change in price = 1172.92 - 1000
1000 = .1179 = 11.79%

Bond B = original price = $1,000; new price = 1000 FV, 8 interest rate, 50 pmt, 50 N, solve for PV = $1,214.82
Percentage change = 1214.82 - 1000
1000 = .2148 = 21.48%

Market for Students Eat Cheap Delicious College restaurant

Little Pizzoli’s reaches out to two target markets. The first target market is business oriented middle class men and women looking to get lunch. They cater to this market by providing exceptionally fast service in order to accommodate for their short lunch breaks. Their second target market includes families who are looking for a casual environment so they can visit and enjoy dinner. Pizzoli’s maintains customer loyalty by recognizing their customers and making them feel like regulars. This is easier for the dinner customers because they have more time to talk and get to know each other. Pizzoli’s believes that it’s the little things that count and those are the things that the customer is going to remember. Remembering their favorite dishes

For their core customers, Pizzoli’s offers discounted prices on habitually purchased items and even the inclusion of free items such as bread. The owner abides by her statement, “if you are here all of the time and I know you are coming back I’m going to take care of you.” The owner believes that the main reason customer’s give them business is because they have good food and it is always consistent. She believes consistency is key and always having the same look, portion size, and making sure it always tastes the same makes them dependable in the customer’s eyes and it’s reason that the customer will always be pleased every time they visit. She always believes a way to attract and keep customers is to let them know they are always right. Even if it means losing a little money, keeping them happy and keeping their business is best in the long run.

Little Pizzoli’s uses a par list in order to select the inventory they need to satisfy their customer’s needs and wants. The list keeps track of how many items are selling per week, so they always know to have that many on hand. The par is adjusted based on a checks and balances system. If something isn’t selling or they are running out of a particular item, they adjust their par for the following week. Most of their suppliers were set up with the previous owner and continued to do business with them once they took over. Dole and Robinson are their main food distributers with some other vendors that had come and personally asked for their business. Their retail strategy for their inventory focuses on price and quality. When they took over they lowered the price of several of their items because they believe in keeping things fair with their customers. Quality also plays a big part with what they choose for their inventory. The only thing that is not homemade is their pasta. In order to forecast their merchandise needs, they use their par system and take inventory twice a week. They believe it’s always hit or miss and you just have to know your town and the time of year in order to know what merchandise you will need.

Little Pizzoli’s has a varying pricing strategy; different things cost them different amounts to make. Their usual markup for food is 300%, while this sounds like it’s a lot, it really isn’t. It gives them what they need to efficiently and effectively run the restaurant and make a profit. This markup can vary, depending on the food item. More expensive (in time and labor) items may have less overall markup. Little Pizzoli’s does run specials or sales throughout the week on certain menu items. On Monday nights, they offer all you can eat spaghetti with a Tech I.D. On Wednesday nights, they have half price wine with the purchase of an entrĂ©e. Something that they consider when coming up with specials and sales is what will it cost them. The half price wine deal is not to help them make money on the wine, they do it to get customers into their restaurant. Mrs. Garfunkle stated that, “If you are going to do a sale, you have to have things that people bring in, not a sale on things people don’t like.” Little Pizzoli’s pricing strategy is very competitive; they try to stay right with or just below the competition. Little Pizzoli’s staff knows that their customers are very price sensitive. The customers are quick to gripe about any change in price, or an upcharge for a menu item such as a $2.95 salad.

The owener of Little Pizzoli’s do not consider the other Italian restaurant in the area direct completion- however, Roma's is taking business from them. Their strengths include customers who consider their food to be a different type of food, more homemade type; whereas the other is more bistro, Americanized Italian. Another strength is their ability to keep loyal customers who love home cooked and authentic cuisine. The opening of What-a-burger heavily impacted their business for about a week, they handle situations like this by just pushing through and knowing that people will come back if they continue to offer superior service and food. Little Pizzoli’s does have competition though, sWuch as, fast food chains, other sit down restaurants, and home meals.Consumer’s choose Little Pizzoli’s over the competition because of the homemade, true Italianquality to their food and their friendly fast service. Oppurtunities include the ability to expand into other cities in addition to having an increasingly stronger prescence among college students. Another oppurtunity, is the fact that many Threats include other restaurants and a small town economy fueled by college students who don't like to tip. In addition to slow summers, college students often will not tip so this is why their core customers are so important.

Finances and Little Pizzoli's: A Strength or Weakness?
Little Pizzoli's competes fiercely on price, but lucky for them, they already have complete ownership of the building and have one less worry to deal with on a frequent basis. When figuring out how much money would be needed to run their business, it came as a huge strength to have a prior-relationship with the previous owner, who was anxious to sell because of an on-going tense relationship with the landlord. They were able to pay for the building all at once, which has been a weakness in that the owners feel they should have talked them down to a lower price now, a realization that set in after thinking about all the effort they had to put into cleaning the place and not helped by the fact that the owner Mrs. Garfunkle does not like the “splatter paint” and other interior designs. A very clear piece of advice offered to entrpreneurs who need a location for their business was that they should buy the building all at once, or borrow from friends or family, and generally try to avoid the banks, interest rates, and other obstacles that are avoided after a one-time purchase or borrowing from trusted friends and family.

Little Pizzoli's utilizes social media to promote their business. The co-owner takes full advantage of the reach that Facebook has. Facebook allows promoters to target specific geographic locations and also consumers. They have sales promotions throughout the week including a five dollar spaghetti night for University and Community College students as well as a half-off beer and spaghetti specialty on Wednesday's. They also promote on the television which was an area the owner, Mrs. Garfunkle feels their television advertising is a serious strength for Little Pizzoli's. They do not use a marketing agency. The co-owner, Mr. Goldstein, feels his specialty is in marketing and he takes control of the stores advertising and promotion.
They owners would certainly do everything again, Being a 20-year old and owning her own business is one of the greatest rewards Mrs. Garfunkle gets from her business. There are some changes they felt would She feels her greatest success as a company has been the ability to keep loyal and happy customers. In the future, Little Pizzoli's hopes to expand into Baton Rouge and possible New Orleans. The future is bright for this small, home-style store and their owners are excited looking into the future.

After meeting with the owners and living in Shreveport as part of their target demonstrates to me that they are competing well in the market despite many peers feeling their competitors are superior or at least garnishing more attention for their business. Competition is very fierce among small business owners in this area especially as it relates to local food. Their ability to create home style Italian cooking and a smooth transition from Monjuni's Italian Food into Little Pizzoli's has proven to be successful.

Business Review: Income Statement, Cash Flow and Pricing and Markups

The following four questions are examples of the types of concepts which a freshman student in the college of business will be expected to understand. Throughout the students academic career, courses will build upon these ideas. Business is a major which has many different areas of expertise such as Accounting, Marketing, Management, and Business Administration. It is crucial to new students to understand the importance of frequently attending class and networking with other students by classroom participation.

1.   Explain the income statement. What information does it provide?
An income statement is the statement that shows summaries a firm’s operations over a given period of time in terms of profit and loss (Revenue – Expenses = Net Income.)

2.   Why is a statement of cash flow important to a business owner?
The statement of cash flow gives the owner an inside idea as to where the money is going and the route that it took to get to that point. Stakeholders want to know if there is adequate cash to pay workers, creditors, suppliers and IRS.

The World of Business

3.   Explain the difference in financial accounting and managerial accounting.
Managerial Accounting deals more with competition and the numbers that are put on the table to fondle with whereas Financial Accounting deals with the numbers on a wider scale. Financial Accountants do no rely on information to get their jobs done.

4.   Why is budgeting important? Explain the difference in top-down and bottom-up budgeting.
Budgeting is important because it gives you an outline as to how resources should be allocated.
Top-down budgeting – top management prepares the budget with little or no input from middle and supervisory managers
Bottom-up or participatory budgeting - allows middle and supervisory managers to actively participate in the creation of the budget

Pricing and Markup

Marketers refer to the four P's of marketing as Product, Price, Place and Promotion. So when discussing price it is important to consider the variable and external factors that go into making a pricing decision which includes identifying pricing as an interactive decision with markups affecting both the retailer and the consumer.

What is pricing? Pricing is an interactive decision.  Pricing should interact with the services offered by the retailer through merchandise, location, promotion, credit, customer service, store image, and legal constraints. Variable pricing recognizes that differences in demand and cost necessitate that the retailer change prices in a fairly predictable manner. Flexible pricing encourages offering the same products and quantities to different customers at different prices.  Demand for the item being sold affects variable pricing.  I would rather buy a car from a dealer using flexible pricing because with some bargaining the price will go down.

Which Markup do Car Dealers/ Retailers Prefer?

Example Markups: 49.95 – 31.20 = $18.75 markup
Maintained markup is more important to a retailer. Initial markup may be equal to maintained markup if the retailer can always sell the merchandise for the initial markup.

Accounting- Institute of Internal Auditing- IASC

Accounting is a major for students in the College of Business or those who choose to go to a Business School. These financial classes can be challenging and to earn a degree academics must deal with assignments that require attention to details.

    •    International Accounting Standards Board is an international company that is based in London.  This organization is responsible for setting mostly all standards dealing with the procedures used in accounting.  These standards are used in over 100 countries across the world.

    •    International Accounting Standards Committee is a private sector organization “ body working to achieve uniformly in the accounting principles that are used by businesses and the other organizations for financial reporting around the world”  IASC’S goals are to “formulate and publish interest accounting standards to be observed in the presentation of financial statements and to promote worldwide acceptance” the organization want to develop standardized procedures that are recognized and used by the International Organization of Securities Commissions.

    •    International Accounting Standards is now the IFRS.

    •    International Financial Reporting Standards took over the responsibilities of the International Accounting Standards.  Its job is to set standards in accounting.  They established a common language for businesses across the globe in shareholding and trading.

    •    Public Company Accounting Oversight Board is a nonprofit organization established by Congress to oversee audits of public companies, brokers, dealers.  It is to protect investors and share important information with the public.  The organization supply accurate and independent audit reports.

    •    According to the information I read, all names listed above have the best interest of the business world in common.  Some are public and some on the private sector.  They all believe in setting and following guidelines and standards that will help businesses to communicate with each other regardless to the national language they may speak.

    •    Institute of Internal Auditing serves over 165 countries and its headquarters is located in Florida. They are responsible for internal audits. They are also known as the global voice in the business world.  They are advocates as well as educators who creates job opportunities and offer certification programs.

    •    International Auditing and Assurance /standards Board is an independent standard-setting body serving all public.  This board sets standards for auditing, assurance and providing other needs.
    •    International Auditing Practice Committee provides accounting and financial reporting guides for professional.

    •    International Standard on Auditing assists small business owners in understanding how auditors test procedures are done. Helping them to understand decisions are based on a qualified report as well as a unqualified report.

    •    Public Company Accounting Oversight Board is a nonprofit organization established by Congress to oversee audits of public companies, brokers, dealers.  It is to protect investors and share important information with the public.  The organization supply accurate and independent audit reports.