1. Franchising – good or bad idea

The key point of franchising is, that a company gives the right to manufacture its product to a foreign company for a fee. There are many pros and cons of this option.

First of all, the whole ‘know-how’ the business is already given. A franchisee uses the brand name and reputation of franchiser. The headquarter always provides the partner with expertise and helps fixing problems. Finally, marketing and public relations are handled up in the company, so there are no additional expenses.

On the other hand, there are also many disadvantages. Large regular payments must be made from the small business side, what decreases the eventual profit. Head Office tightly controls the franchisee, sets the requirements and decides on every aspect. Franchisee is discouraged and pays too much attention on meeting those requirements, instead of actually running the business.

2. What documents is accountant to prepare?

• day to day operations are recorded chronologically into ‘journals’,

• information from the journals is posted into ‘ledgers’, where it accumulates in specific categories (eg cash account),

• A trial balance (rachunek obrotów) is prepared at the end of each accounting period. This is the summary of the ledger information and is used directly to prepare the main financial statements:

  • The profit and loss account (=income statement, the P&L) summariezes the business activity over a period of time.

  • Balance sheet reports the company’s financial condition on a specific date.

  • Cash flow statement is a separate record of cash receipts and cash payments.

3. Difference between Chief Accountant and Chief Financial Officer

The organizational structure in a company’s financial department is headed by the Chief Financial Officer (CFO). He is a member of the Board, which gets involved in ‘big picture’ strategic planning. He manages and is responsible for corporate finance. There are three senior (top) managers who report to CFO:

• Financial Controller, who prepares forecasts and budgets, planned spending with actual spending.

• Treasurer, who manages cash flow and raises new funds.

• Chief Accountant, who is the top accountant in a company. He keeps the company’s books and prepare the main financial statements. Their tasks belong also preparing tax returns and developing strategies to minimize taxes.

In general, the main difference between those positions is the level in the company’s hierarchy. CFO is a boss of Chief Accountant.

4. Company structures, advantages and disadvantages.

• organization by function - the company is divided into departments

  • advantages: each department is responsible for one area of expertise,

  • disadvantages: problem of handling the information flow and clients that are the most important,

• organization by product – to bring together staff who are involved in the same product line

  • advantages: directly affecting relationships with customers, it is good to pay a lot of attention to each of them,

  • disadvantages: managerial misunderstanding, not obvious who reports to who,

• organization by customer type - the company is organized around different sectors of the market

  • advantages: customer is a king, finding and focusing on a right niche is the key to success,

  • disadvantages: managerial misunderstanding, not obvious who reports to who,

• organization by geographical area. The company is organized according to regions

  • advantages: orientation on the local customs and characteristics of regions

  • disadvantages: a threat of losing control over an overseas division, giant costs, some barriers are possible

• hierarchical structure - there are three levels of management: top (senior) management who sets the direction for the organization; middle management, who is developing detailed plans and procedures based on the firm’s overall strategy; supervisory management who is responsible for assigning no-managerial employees to a specific job

  • advantages: transparency of power and control, the hierarchy is motivating

  • disadvantages: can cause reluctance and resistance of workers

5. Forms of business expansion

• internal growth: stay private. This means that the company is expanding internally, without changing the current ownership structure.

• internal growth: IPO. Initial public offering means that the company goes public. It moves from being a small, privately owned business to becoming a large corporation listed on a stock exchange

• internal growth: “trade sale”. It means that the company trades itself to a much larger company in the same sector. The small company becomes a part of a bigger company.

• merger – two companies join each other to form one, bigger entity. The two companies operate as a single company.

• acquisition (takeover) - one company buys another one. In an acquisition is often to take a controlling stake in the other company. This can be achieved by buying a large number of shares, but without complete ownership.

6. What is IPO

It is a process of issuing shares on the stock market for the first time. This process is also called a flotation or a listing. Through this process, a private company transforms into a public one. IPOs are used by companies to raise money when they plan to expand their activity.

The advantages are:

• it brings a huge amount of new capital into the company

• company can be seen as more credible

• creating multiple financing opportunities, such as cheaper bank loans

IPO’s disadvantages are for example:

• shareholder pressure and the red tape

• IPOs are very expensive

• loss of control over the company

7. What changes take place in a company after IPO?

• investors can have different idea for managing the company which might be the source of problems within the company

• there is more bureaucracy and pressure from the company’s environment – public companies have to publish their financial reports frequently

• the company has to appoint independent, external auditors who will check the accounts for accuracy

8. Advantages/disadvantages of being self-employed

Advantages:

• you can make your own decisions about your work and there will be no one to question your decisions

• you have total control over your career and job – you can’t be fired

• if you want to go for a vacation, then you no longer need to take permission from anyone

• you can work whenever you want to and choose your own work place and conditions

Disadvantages

• often irregular work hours (longer than 40 hours/week)

• you will have to work hard in the starting of the business and sacrifice all your vacations and leaves

• you will have to pay for your own health insurance

• you will need some really hard work to build up your business reputation.

• higher responsibility

9. Advantages and disadvantages of celebrity endorsement.

Advantages:

• allows to build a desired brand image and the product is often associated with the celebrity who might have a strong influence on the people

• the product might be believed to be actually used by the celebrity and thus positively contribute to the sales.

Disadvantages:

• celebrities are much more expensive

• celebrity might lose their popularity

• celebrities can overshadow the brand which means that consumers might only pay attention to the celebrity and thus fail to identify the brand.

10. Global business cycle

The term business cycle refers to economy-wide fluctuations in production, trade and economic activity.

The business cycle is the upward and downward movements of levels of GDP and refers to the period of expansions and contractions in the level of economic activities around its long-term growth trend.

These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth and periods of relative stagnation or decline.

11. Forms of marketing and promotion:

1. personal selling - it's direct face-to-face communication between salesperson and customer. The stages:

   1. advertising- the use of different media to attract new customers

   2. PR- includes establishing good relationship with the news media in order to control this information, issuing press release and holding press conferences,

   3. events - memorable occasions

   4. sponsorship

   5. endorsements by celebrities

   6. trade promotion to retailers

2. others: product placement, word-of-mouth, viral marketing (online through special networking, websites and friends emailing video clips). The term guerrilla marketing covers all unconventional techniques.

12. The marketing mix

The marketing mix is often crucial when determining a product or brand's offering, and is often synonymous with the four Ps: price, product, promotion, and place.

• product - is seen as an item that satisfies what a consumer needs or wants. Every product is a subject to a life-cycle including a growth phase, maturity phase and period of decline as sales falls.

• price - the amount a customer pays for the product. The price is very important as it determines the company's profit. Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product.

• promotion - all of the methods of communication that a marketer may use to provide information to different parties about the product.

• place (distribution)- refers to providing the product at a place which is convenient for consumers to access.

• some writers would also add 5th P: packaging. The importance of packaging is often underestimated. It attracts buyer's attention, it explains the benefits of the product, it describes the content and it protects the product during handling and contributes to convenience and ease-of-use.

• there is even sixth P: people. It refers to knowledge, skills and personality of the pre-sales and after-sales staff who come into contact with customer.

13. Importance of advertising

1. For the company

- Firstly, it helps to launch a new product on the market. This helps to capture the market and increase sales of an advertiser. Moreover, advertising is a useful tool in creating brand loyalty. - Secondly, advertising sparks an interest in masses about advertised products and/or services of its advertiser. This interest creates demand in the market.

- Thirdly, it provides the very wide coverage for an advertiser so that it can boost his/her sales rapidly.

2. For the customers.

- If the product is not advertised, no customer will come to know what products are available and will not buy the product even if the product was for their benefit.

- One more thing is that advertising helps people find the best products for themselves, their kids, and their family.

3. For the society.

- Advertising has a remarkable ability to reach masses and educate the society.

- Many Governments and even Non-Governmental Organizations (NGO) often take help of advertisements to reach and educate people on important social issues.

14. SWOT analysis

An element of strategic planning with the aim to evaluate company's:

• Strengths: characteristics of the business or project that give it an advantage over others

• Weaknesses: are characteristics that place the team at a disadvantage relative to others

• Opportunities: elements that the project could exploit to its advantage

• Threats: elements in the environment that could cause trouble for the business or project

Internal factors concentrates on the company itself and its competitive environment.

The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or in competitive position.

SWOT analysis may be used in any decision-making situation when a desired end-state has been defined.

15. Profit and Loss account/Balance sheet

P&L is one of the financial statements of a company and shows the company's revenues and expenses during a particular period. It shows how the revenue is transformed into the net income. P&L account summarizes business activity over a period of time.

A standard company balance sheet has three parts: assets, liabilities and ownership equity. Balance Sheet reports the company’s financial condition on a specific date.

16. Kinds of assets of a balance sheet

1. current assets

• cash at bank

• accounts receivable – the amount owed to the business by customers (=creditors)

• inventory – the value of raw materials&stocks

• marketable securities – shares intended for disposal within one year

• total current assets

2. fixed assets

• building and improvements less accumulated depreciation (the loss in value of a tangible assets)

• equipment and vehicles

• furniture and fixtures

• long-term financial investment

• total intangible assets

3. intangible assets

17. Strategies that can be adopted during globalization

• import/export – this is the lowest risk but also gives the lowest profit potential. A company can choose franchising and foreign investment.

• outsourcing – this is a long-term contractual agreement which requires deeper level on involvement.

• foreign direct investment (FDI) – this is the highest risk but gives the most control and shows the most commitment to the global market. FDI includes:

- acquisitions to create overseas divisions (subsidiaries)

- joint venture (two or more companies share the costs and profits in a particular market, but keep their separate identities)

- strategic alliances

18. What are the forces driving globalization?

• cost factors - companies are looking for cheaper labour and manufacturing costs

• market factors - emerging markets offer new opportunities

• technology factors - the Internet makes comparison of supply chains costs. Mobile communications allow employees to keep in touch all over the world. Software tools on company intranets allow managers to access information anywhere, anytime.

• global business cycle

• recovery

• growth

• recession

• depression

19. Advantages and disadvantages of globalization for a small-and middle-sized company

Advantages:

- skills development and technology transfer
- technological progress in logistics and distribution
- high identification with the business, stable culture.
- possibility to cooperate with a partner who is not locally available.
- expansion of customer base.
- reduction of dependence on few major customers.

- basis for specialization, often successful with niche strategies

Disadvantages:
- bigger international companies may offer lower prices and wider range of products

- customers might look out for new suppliers by using the Internet
- customers switch to other companies which offer them new trends.

- difficulties to compete with big corporations which have more resources, more manpower

- difficulties to adapt corporate culture to new situations and challenges

- spendings for market research and market entry take a much higher proportion of total spending

20. Importance of the Internet on the global economy

• the Internet makes comparison of supply chains costs easy for manufacturers, and comparison of final price easy for end-user

• mobile communications allow employees to keep in touch all over the world

• software tools on company intranets allow managers to access information anywhere, anytime

• businessmen can follow the news from all over the world

• some transactions, including these on the stock exchange, can be made online

21. Importance of the Internet on the global market

• the Internet has allowed businesses to instantly access any new product developments and technological advances that can help improve their products and compete with other companies

• businesses can speak with developers and vendors all over the world

• the ability for businesses to reach an international audience for a very low cost

• the Internet allows business owners to be more mobile by making it easier to manage a business from anywhere. Business owner on a business trip can stay in real-time contact with his office through an online

22. Central banks and its functions

• issuing bank - issue the currency that is legal tender in the country.

• banks' bank - performs regulatory functions with regard to other banks, in order to ensure the safety of deposits held by the banks and the stability of the banking sector.

• central bank of the State - provides banking services to the central government, holds the accounts of government and other central state institutions

23. When Central Bank increases interest rates?

The Central Bank usually raises interest rates when the economy is booming. The point is to cool the economy and make borrowing money more expensive. Firms borrow less money they also invest less and spend less money on labour, equipment etc., what leads to lowering the growth of the economy.

Higher interest rates will have various economic effects:

• increases the cost of borrowing

• increased incentive to save rather than spend

• rising interest rates affect both consumers and firms

24. Fiscal and monetary policies – differences

The main difference between fiscal and monetary policy is that the government is responsible for the fiscal policy, whereas the monetary policy is conducted by the country’s central bank. In fiscal policy:

- increasing/decreasing taxes

- increasing/decreasing government spending

- adjusting budget deficit

In monetary policy:

- raising/lowering interest rates

- changing reserve requirements

- open-market operations

27. Stocks vs bonds

Stocks can be bought by private investors as well as financial institutions. Investment funds buy stocks of many companies and form a “basket” to diversify risk. Investment in stocks can give profit from dividends and an increase of the share’s price. Stocks are traded on a stock exchange.

In bonds, the issuer receives the money as a loan from the buyer. The amount of money is the principal.

The bond market is quite different from the stock market – it’s much bigger, and it doesn’t have a physical location.

What’s important, bonds don’t have to be held by the same bondholder until their maturity – they can be freely traded on the open market. Their market price depends on the inflation and currency fluctuations.

These bonds are graded – safer corporate bonds are given “investment grade”, whereas riskier securities are called “junk bonds”.

28. Bear vs bull market

The term ‘bear market’ is used to describe a situation, when the stock market is weak. We can say that such a market is depressed or falling.

On the other hand, ‘bull market’ means that there is good investment sentiment and the stock prices go up. Such a market can be also described as booming or rising.

In time of the bear market there is a downward trend of stock prices. The investment sentiment is weak. The investors are pessimistic or very uncertain of the future. It usually reflects a poor situation of an economy. Eventually, the market bottom should be reached, and after that the trend is reversed.

The bull market most often exists when there is a boom in the economy. The stock prices go up, sometimes very rapidly. The investment sentiment is improving and it draws other buyers to the market, sometimes inexperienced investors.

30. What factors influence share prices?

• demand and supply

• bank rate - if the bank rate is low it encourages public to borrow more money from banks in order to purchase securities

• political situation - the stock exchange is influenced by the political disturbances

• trade activities - trade activities will be fast in the boom period, if the prices of the securities tend the increase

• directors' dividend policy - if the company earned large profit during the particular period, more dividend will be distributed among the shareholders

• insurance companies

• director's influences

• activities of the speculations

• inflation and deflation - if the country suffers from inflation, the prices of the securities tend to go up

31. Why companies invest in CRM

CRM is a model for managing company’s interactions with current and future customers. It involves using technology to synchronize sales, marketing, customer service, and technical support. CRM requires use of specified software systems often utilizing cloud computing to synchronize the customer data within the company and manage sales, vendors and after-sales support. A recent trend in CRM has been to utilize social media and online communities.

Companies invest in CRM systems because it allows them to manage their sales effectively and optimize the interactions with customers.

32. Why is cash flow statement prepared?

The short answer is that companies listed on stock exchange simply have to prepare it as part of their financial statements. A cash flow statement simply reflects the flow of cash through a company and can’t be easily manipulated.

A cash flow statement has three distinctive components:

• Cash flow from operating activities (CFO) – the amount of cash a company generates from its business activities

• Cash flow from investing activities (CFI) – the amount of cash spend on investments

• Cash flow from financing activities (CFF) – cash raised from issuing equity and debt

34. What might be the causes of cash flow problems?

• unexpected late payments, and non-payments

• unforeseen costs:

• an unexpected drop in demand

• investing too much in fixed assets

Solutions might include:

• credit control: chasing overdue account

• stock control: keeping low level of stocks, minimizing work-in-progress, delivering to customers more quickly

• expenditure control: delaying spending on capital equipment

• a sales promotion to generate cash quickly

• using an outside company to recover a debt

35. Outsourcing – good solution?

Advantages:

• lack of expert-labor in some portions of the business process

• availability of cheaper labor

• ability and feasibility to concentrate on the other crucial business process

• vendors also have specific equipment and technical expertise, most of the times better

• outsourcing the supporting processes gives the organization more time to strengthen their core business process.

• outsourcing eludes the need to hire individuals in-house;

Disadvantages:

• risk of exposing confidential data

• synchronizing the deliverables

• lack of customer focus: vendor may be catering to the expertise-needs of multiple organizations at a time

36. Theories of motivation, which is the most useful for a manager

Maslov theory

T here’s a pyramid of needs. We can move up the pyramid only when the lower needs are met.

Herzberg theory

Sense of achievement, earned recognition and interest in the job are the most important motivators. However there are also hygiene/maintenance factors such as salary, job security, working conditions and good relations with co-workers. If those are missing, it causes employee dissatisfaction.

McGregor theory

There are two types of managers – those who believe in theory X or theory Y. Theory X managers believe that people dislike work and must be controlled and directed. Theory Y managers believe that people like work and seek responsibility. That is why they should be empowered (given the authority to make decisions) and enabled (given the necessary tools)

Drucker theory

Assigning employees clear, ambitious and achievable goals is the best way to motivate them. Achieving objectives should be awarded with pay rises, bonuses, etc. This method is called Managing by objectives (MBO).

37. What supply chain management involves?

A manufacturer might have a component maker as a first-tier supplier, but also the component maker’s supplier (eg a raw materials company) as a second-tier supplier. Together, they form the ‘upstream’ or ‘supply side’ end of the network. Equally, they might have a distributor as first-tier customer, but also the distributor’s customer (eg a retailer as second-tier customer. Together they form the ‘downstream’ or ‘demand side’ end of the network.

Supply chain management includes:

- procurement (=sourcing + purchasing) from first-tier suppliers (AmE vendors)

- materials management inside the plant

- logistics (=distribution) to first-tier customers

38. JIT

The philosophy of JIT is simple: the storage of unused inventory is a waste of resources. The most important idea of lean operations is that of minimizing inventory kept on the premises – both stock and work-in-progress (WIP). So parts, components, raw materials and other supplies are delivered to the factory just as they are needed.

Just-in-time techniques include:

- making every effort to eliminate waste

- developing working practices which support ‘continuous improvement’

- involving all staff in quality initiatives

- improving the flow of work-in-progress around the plant by rearranging layout and using machines that are small, simple, robust and flexible

- reducing set-up and change-over times.

- incorporating manufacturing considerations into the design process

39. Kaizen

Kaizen , or ‘Continuous Improvement’ is a policy of constantly introducing small incremental changes in a business in order to improve quality and/or efficiency. This approach assumes that employees are the best people to identify room for improvement, since they see the processes in action all the time. A firm that uses this approach therefore has to have a culture that encourages and rewards employees for their contribution to the process.

Key features of Kaizen:

• improvements are based on many, small changes

• as the ideas come from the workers themselves, they are less likely to be radically different

• small improvements are less likely to require major capital investment

• the ideas come from the talents of the existing workforce

• all employees should continually be seeking ways to improve their own performance

• it helps encourage workers to take ownership for their work

40. TQM

The continuous process of reducing or eliminating errors in manufacturing, streamlining supply chain management, improving the customer experience and ensuring that employees are up-to-speed with their training.

Key features:

• customer-focused - the customer ultimately determines the level of quality

• total employee involvement - all employees participate in working toward common goals

• process-centered – a process is a series of steps that take inputs from suppliers and transforms them into outputs that are delivered to customers

• integrated system - an organization may consist of many different functional specialties often organized into vertically structured departments

• strategic and systematic approach - a critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals

• continual improvement.

• fact-based decision making - in order to know how well an organization is performing, data on performance measures are necessary.

• communications - effective communications plays a large part in maintaining morale and in motivating employees at all levels.

41. Importance of market research in product development process?

Market research is a key factor to get advantage over competitors. Market research provides important information to identify and analyze the market need, market size and competition.

Aims of market research:

• identifying the need for new products and new product lines

• improvement of existing products

Secondary Research:

It is collecting existing data already available. This may be internal company data such as the company's sales figures broken down according to different categories.

Primary Research:

It is research conducted first time. More difficult and expensive, but give answers to the exact questions that marketers are interested in. It includes gathering both quantitative information and qualitative information. Sometimes involves process of benchmarking – looking at the activity of competitors.

42. Stages of recruitment process:

Steps in the process for hiring employees are:

1. identify job requirements

2. choose the sources of candidates

3. review applications and resumes

4. job interviews

5. conduct employment tests and check references

6. decide on a 'shorltlist' of strong candidates and hold follow-up interviews

7. select a candidate and negotiate the package: compensation and benefits, job performance, expectations

In order to avoid making a mistake HR department makes use of:

1. assessment centers

2. checks on candidate background

3. trial (probationary) periods

43. Responsibilities of HR Department

In general the HR department is devoted to providing effective policies, procedures, and people-friendly guidelines and support within companies. Additionally, the human resource function serves to make sure that the company mission, vision, values or guiding principles, the company metrics, and the factors that keep the company guided toward success are optimized.

Key areas oh HR Department:

1. staffing and recruitment

2. worker-management relations

3. training & development

4. appraisal/evaluation

5. motivation

44. Top management

It sets a direction for the organization and aim to inspire employees with their vision for the company’ future.

General issues for top management:

• setting overall sales and revenue goals

• setting budgets and making long-term forecasts of costs

• improving distributions channels

• identifying new markets

• identifying opportunities for new products

• pricing policy: value-for-money products vs high quality/premium price products

• building brand loyalty

• investing in technology, plant and equipment

• integrating on-line and off-line procedures (eg for sales and for customer service)

• Chief Executive Officer (CEO) is typically responsible for the entire operations of the corporation and reports directly to the chairman and board of directors

• Chief Operations Officer (COO) looks after issues related to marketing, sales, production and personnel

• Chief Financial Officer (CFO) is responsible for analyzing and reviewing financial data, reporting financial performance, preparing budgets and monitoring expenditures and costs.

45. Advantages of free trade

Free trade occurs when there are no artificial barriers put in place by governments to restrict the flow of goods and services between trading nations.

• increased production

• production efficiencies

• benefits to consumer

• foreign exchange gains

• employment

• economic growth

Disdvantages of free trade

• with the removal of trade barriers, structural unemployment may occur in the short term

• increased domestic economic instability from international trade cycles, as economies become dependent on global markets

• international markets are not a level playing field

• developing or new industries may find it difficult to become established in a competitive environment

• free trade can lead to pollution and other environmental problems

• pressure to increase protection during the GFC
  
  

46. Centralization vs. decentralization

• centralization - strong corporate image; decisions made by experienced managers; standardized procedures (economies of scale and simpler distribution channels)

• decentralization – lower-lever managers are more familiar with local conditions; delegation of decision-making is likely to lead to higher level of morale

47. Information and communication technology

• computing power is moving away from the local PC

• software is moving to the network

• wireless connectivity is becoming more and more devices

• bandwidth is increasing

• processing power and storage capacity keep increasing

• open-source platforms are becoming more common

• profitability is becoming an issue for vendors

• integrating and managing IT systems is becoming important

• back-office functions and software development are being outsourced to low-cost countries

• there is the development of an ‘Internet of things’

• there is a convergence between traditionally separate media

47. Managing the production

• planning – bringing together customer demand and operational issues of volume, timing and the purchase of materials

• sequencing – deciding which workstation will carry out which tasks in which order

• scheduling – deciding when particular tasks should start and finish

• dispatching – authorizing tasks to begin

• loading – introducing materials or parts to production

• monitoring – checking progress, eliminating bottlenecks, identifying and solving problems

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