WGU C201 BUSINESS ACUMEN CHAPTERS 3 & 7: ECONOMICS AND ORGANIZATIONAL STRUCTURE Q&A Latest Summary 2023

WGU C201 BUSINESS ACUMEN CHAPTERS 3 & 7: ECONOMICS AND ORGANIZATIONAL STRUCTURE Q&A Latest Summary 2023 Factors Influencing Demand *** Demand is driven by price, consumer preferences, the economy, the number of buyers in a market, customer incomes, price of substitutes and complimentary items. Factors of Production *** Natural resources, capital, human resources and entrepreneurship. What is the key factor influencing demand? *** Price Demand Curve *** A graph of the amount of a product buyers will purchase at different prices. Supply Curve *** Shows the relationship between the price of a good or service and the quantity supplied for a given period of time. Opposite of demand curve. Slopes upwards. Equilibrium Price *** The prevailing market price at which you can buy an item. Where supply and demand pricing meet on the curve. Explain a situation where a supplier would reduce prices. *** The cost of inputs decrease. The cost of technology decreases. The cost of taxes decrease. There are more suppliers. Microeconomics *** The study of economic behavior among individual consumers, businesses, and families whose collective behavior in the marketplace determines the quantity of goods and services demanded at different prices. Key terms: supply and demand. Macroeconomics *** The study of the broader economic picture and of how an economic system maintains and allocates its resources. Monopoly *** Government controls who can enter the industry. Market situation where one producer controls the supply of a good or service, and where the entry of new producers is prevented or highly restricted. Pure Competition *** It's easy to get into the industry and easy to get out. There is not a large differentiation between the products in the industry or the consumers who purchase the products. Oligopoly *** Oligopoly is a market structure in which a small number of firms has the large majority of market share. There are few competitors. The ease of entry into industry is somewhat difficult. The similarity of services and goods of competitors is different. Socialism *** Government ownership of major industries like communications. Major industries are too important to be left in private hands. Significant government planning. Only the private sector of the economy generates profit. Government influences career decisions. Incentives are limited. Example- Canada. Healthcare is controlled by government, but citizens can open stores. Capitalism *** Businesses are owned privately. Companies and individuals can earn profits. People have the right to choose a profession. There is more incentive to work hard and innovate. Functional Unemployment *** Individual is temporarily unemployed and looking for a job. Example: new graduates. Seasonal Unemployment *** Individuals are unemployeed during slow seasons. The only type of unemployment where the individual is not actively seeking employment. Structural Unemployment *** Individuals are unemployed because there is no demand for their skills. They need retraining. When an individual becomes unemployed as a result of their job becoming obsolete for reasons such as technology. Examples: assembly line workers, toll takers on a bridge transitioning to EZ Pass. Cyclical Unemployment *** Individual becomes unemployeed due to an economic slowdown. Example: executives when companies downsize. How do we measure economic growth? *** Productivity - Ratio of outputs to inputs. Gross Domestic Product *** Total output. Total goods and services that are available. How do we measure if growth is sustainable? *** By looking at inflation and deflation. Inflation *** Rising prices caused by a combination of excess demand and increases in the costs of raw materials: component parts, human resources, and other factors of production. Demand is up, and prices for raw materials are up. Deflation *** Caused by demand going down and the price of materials needed to make products going down. Consumer Price Index *** Used by government to track changes in price levels. Measures the monthly average change in prices of goods and services based on market basket. We measure this to find out if economy is stable. Should companies focus on capital investments in a low-inflation or hyper-inflation environment? *** Low inflation because interest rates are low. Monetary Policy *** Government actions to increase or decrease money supply. Using interest rates to influence spending. Lower rates lead to an increase in spending. An increase in rates lead to a decrease in spending. Fiscal Policy *** Using taxes to influence economic activities. Increased taxes restrict economic activities. Reduced taxes and increased government spending boosts spending and profits, lowers unemployment rates, and fuels economy expansion. Top Management *** This level of management develops long range plans, sets direction for the organization, and inspires managers and employees to achieve mission. Examples: • Chief Executive Officer • Chief Financial Officer • Governor • Mayor Middle Management *** This level of management focuses on specific operations, products or customer groups. They develop detailed plans and procedures, report to executives, and supervise supervisors. They may budget money for product development and train and motivate people. Examples: • General Manager • Plant Manager • Unit Manager • Regional Manager • Division Head • Director Supervisory Management *** These managers are directly responsible for assigning employees to jobs and evaluating their performance. They provide customer service. They motivate workers to accomplish daily, weekly, and monthly goals. Examples: • Foreman • Head chef • Supervisor • Shift Manager • Program Manager Technical Skills *** One of the three types of skills needed by managers. Techniques, knowledge, tools and equipment of a specific discipline. Knowledge of the process you are managing. Technical skills are especially important for first line managers - less so for top level managers. Most top level managers started as first line manager so they have these skills. Human Skills *** One of the three types of skills needed by managers. Interpersonal skills include communication, conflict management, and motivating, leading employees. Conceptual Skills *** One of the three types of skills needed by managers. These skills include the ability to see the big picture and how all of the parts fit together. Analyzing and interpreting information. It's very important for top level managers to know how different departments work together. Managerial Functions: Planning *** Includes anticipating future events, determining courses of action. Plans should be flexible and responsive. Managers at all levels should be involved in planning. There are four types of planning and each one is performed by a different level of management. Managerial Functions: Organizing *** Includes blending human and material resources, arranging work tasks, and accomplishing objectives. May include creating organizational charts and position descriptions. Example: An executive team meets to evaluate if all of the manufacturing locations are needed in a specific region. Managerial Functions: Directing *** Includes guiding and motivating employees to accomplish company goals, training, scheduling, delegating, and monitoring. Usually done on the floor. Employees sign off the training before going to work. Example: A supervisory manager holds a shift meeting to instruct employees on new traffic patterns in the warehouse. Managerial Functions: Controlling *** Includes evaluating performance against objectives 1) establish standards 2) monitor performance 3) compare performance with standards 4) make corrections Example: An executive team monitors the performance of a new manufacturing line for efficiency goals. Strategic Planning *** Usually done by top management. Includes determining primary objectives of an organization and then allocating resources to achieve those objectives. Includes mission and goals. Tactile Planning *** Done by middle level management. Includes implementation of activities in specific functional areas. Turning long term plans into quarterly plans. Operational (Daily/Weekly) Planning *** Done at the supervisor level. Includes the development of detailed standards that guide the implementation of tactical plans. Contingency Planning *** Requires input from all levels and sign off by top level management. Includes preparing for unforeseen business disruptions, such as major accidents, natural disasters, and economic downturns. Usually includes a chain of command for crisis management, assigning specific functions to particular managers and employees in an emergency. 5 Steps in the Decision Making Process *** 1. Recognize Problem or Opportunity. 2. Develop Alternative Course of Action. 3. Evaluate Alternatives. 4. Select and Implement Chosen Alternative. 5. Follow up Determine Effectiveness of Decision. 5 Tips for Managing a Millennial Workforce *** 1. Provide structure, leadership, guidance, feedback. 2. Utilize their optimistic outlook and build on their desire for teamwork. *3. Listen to their ideas and cultivate innovation. 4. Offer work-life balance. 5. Let them know about career opportunities. 3 Key Elements to Organizations' Structure *** 1. Human interaction 2. Goal directed activities 3. Structure Organizational Structure: Line *** The oldest, and simplest organizational structure. Direct flow of authority from chief executive to employees. Everyone knows who is in charge. Good fit for small organizations. Organizational Structure: Line and Staff *** Common in midsize or large organizations. Combines the direct flow of a line organization with staff departments that support line departments. Accounting, engineering, and HR are examples of staff departments that support the line authority. Line and staff managers differ in their authority relationships. Line managers interact with functions of production. Staff managers provide advice, technical assistance to aid line managers. Organizational Structure: Committee *** Authority and responsibility are in the hands of a group of people. May include managers from different areas. Decisions usually represent diverse perspectives. Usually act slowly and conservatively. Making decisions by compromising. Organizational Structure: Matrix *** Links employees from different parts of the organization to work together on specific projects. Employees keep their ties to line and staff structure. Employees may report to line manager and project manager. Advantages: flexibility and adapting to changes, focus on major problems or projects. Outlet for employees creativity and innovation. Disadvantages: many specialists on one team, functional manager must adjust workload because employees are reporting to two managers. Product Departmentalization *** Organized based on the goods and services a company offers. Example: video game company organized by games. WGU: academic programs, student support, marketing, enrollment. Geographical Departmentalization *** Organized based on regions. Customer Departmentalization *** Organized by different groups of targeted customers. Example: business customers, and consumers Functional Departmentalization *** Organized by function. Example:Departments for accounting, finance, human resources. Process Departmentalization *** Separate departments for steps in a process. Example: Cutting, sewing, buttons Factors Impacting the Supply Curve *** A shift in the price of any factor of production impacts the supply curve. Describe the Shape of the Demand Curve *** Demand curves typically slope downward meaning that lower and lower prices attract larger and larger purchases. What influences the shape and position of the Demand Curve? *** Demand How does price influence supply? *** As the price goes up, the supplier is willing to produce more. They want to sell the max amount at the highest price to maximize profit. Communism *** A system in which goods are owned in common and are available to all as needed. North Korea is an example. 95 % of goods produced are controlled by government. Expansionary Monetary Policy *** Increases the money supply in an effort to cut the cost of borrowing. Encourages business decision makers to make new investments. Stimulating employment and economic growth. Changing the interest rates charged to commercial banks affects the interest rates charged to borrowers and, consequently, their willingness to borrow. Restrictive Monetary Policy *** Reduces the money supply to curb rising prices, overexpansion, and concerns about overly rapid economic growth.