Solution Manual for Contemporary Business 16th Edition by Louis E. Boone

Solution Manual for Contemporary Business 16th Edition by Louis E. Boone

Solution Manual for Contemporary Business 16th Edition by Louis E. Boone

This text is an unbound, three-hole-punched version.

Boone and Kurtz, Contemporary Business 16th Edition, delivers solutions at the speed of business to stimulate curiosity, show relevance, promote creativity and prepare students for what’s ahead, in their academic and business careers. With thoroughly revised cases, fresh, current examples, and an updated video series, the 16th Edition provides insights into the many facets of business that contribute to the dynamic, ever-changing world of work.

PART 1 Business in a Global Environment 2

Chapter 1 The Changing Face of Business 2

What Is Business? 4
Not-for-Profit Organizations 5

Factors of Production 6

The Private Enterprise System 7
Basic Rights in the Private Enterprise System 9, The Entrepreneurship Alternative 9

Seven Eras in the History of Business 10
The Colonial Period 11, The Industrial Revolution 11, The Age of Industrial Entrepreneurs 12, The Production Era 12, The Marketing Era 13, The Relationship Era 13, The Social Era 14, Strategic Alliances 15, The Green Advantage 15

Today’s Business Workforce 16
Changes in the Workforce 16

The 21st-Century Manager 19
Importance of Vision 19, Importance of Critical Thinking and Creativity 20, Ability to Lead Change 21

What Makes a Company Admired? 21

What’s Ahead 23

Chapter in Review 23
Summary of Learning Objectives 23, Business Terms You Need to Know 25, Review Questions 25, Projects and Teamwork Applications 26, Web Assignments 26

Case 1.1 Mars, Inc.: A Sweet Place to Work 27

Case 1.2 Nordstrom Rides High 27

Video Case 1.3 New Harvest Coffee Roasters Brews Up Fresh Business 28

Chapter 2 Business Ethics and Social Responsibility 30

Concern for Ethical and Societal Issues 32

The Contemporary Ethical Environment 32
Individuals Make a Difference 34, Development of Individual Ethics 35, On-the-Job Ethical Dilemmas 35

How Organizations Shape Ethical Conduct 38
Ethical Awareness 39, Ethical Education 39, Ethical Action 40, Ethical Leadership 41

Acting Responsibly to Satisfy Society 41
Responsibilities to the General Public 43, Responsibilities to Customers 47, Responsibilities to Employees 49

Responsibilities to Investors and the Financial Community 54

What’s Ahead 55

Chapter in Review 55
Summary of Learning Objectives 55, Business Terms You Need to Know 56, Review Questions 57, Projects and Teamwork Applications 57, Web Assignments 58

Case 2.1 Hilton Joins the Global Soap Project 58

Case 2.2 Will That Pallet Be Aluminum, Timber, or Plastic? 59

Video Case 2.3 Being Socially Responsible Helps Timberland Thrive 60

Chapter 3 Economic Challenges Facing Contemporary Business 62

Microeconomics: The Forces of Demand and Supply 64
Factors Driving Demand 64, Factors Driving Supply 67, How Demand and Supply Interact 67

Macroeconomics: Issues for the Entire Economy 69
Capitalism: The Private Enterprise System and Competition 69,
Planned Economies: Socialism and Communism 72, Mixed Market Economies 72

Evaluating Economic Performance 74
Flattening the Business Cycle 74, Productivity and the Nation’s Gross Domestic Product 75, Price-Level Changes 76

Managing the Economy’s Performance 80
Monetary Policy 80, Fiscal Policy 80

Global Economic Challenges of the 21st Century 82

What’s Ahead 84

Chapter in Review 85
Summary of Learning Objectives 85, Business Terms You Need to Know 86, Review Questions 87, Projects and Teamwork Applications 87, Web Assignments 88

Case 3.1 The State of Nuclear Energy 88

Case 3.2 Pawnshops Go Mainstream 89

Video Case 3.3 Secret Acres: Selling Comics Is Serious Business 90

Chapter 4 Competing in World Markets 92

Why Nations Trade 94
International Sources of Factors of Production 94, Size of the International Marketplace 94, Absolute and Comparative Advantage 96

Measuring Trade between Nations 97
Major U.S. Exports and Imports 97, Exchange Rates 98

Barriers to International Trade 99
Social and Cultural Differences 100, Economic Differences 101, Political and Legal Differences 102, Types of Trade Restrictions 105

Reducing Barriers to International Trade 106
Organizations Promoting International Trade 106, International Economic Communities 107, NAFTA 108, CAFTA-DR 109, European Union 109

Going Global 110
Levels of Involvement 111, From Multinational Corporation to Global Business 114

Developing a Strategy for International Business 115
Global Business Strategies 115, Multidomestic Business Strategies 116

What’s Ahead 117

Chapter in Review 117

Summary of Learning Objectives 117, Business Terms You Need to Know 119,
Review Questions 119, Projects and Teamwork Applications 119, Web Assignments 120

Case 4.1 McDonald’s Local Menu Strategy a Hit 120

Case 4.2 TOMS Shoes Takes One Step at a Time 121

Video Case 4.3 Smart Design: Life Is in the Details 121

Part 1: Greensburg, KS: New Ways to Be a Better Town 123

Part 1: Launching Your Global Business and Economics Career 124

PART 2 Starting and Growing Your Business 126

Chapter 5 Forms of Business Ownership and Organization 126

Most Businesses Are Small Businesses 128
What Is a Small Business? 128, Typical Small-Business Ventures 128

Contributions of Small Business to the Economy 130
Creating New Jobs 131, Creating New Industries 131, Innovation 132

Why Small Businesses Fail 133
Management Shortcomings 133, Inadequate Financing 134, Government Regulation 134

The Business Plan: A Foundation for Success 135

Assistance for Small Businesses 136
Small Business Administration 136, Local Assistance for Small Businesses 138, Private Investors 139, Small-Business Opportunities for Women and Minorities 139

Franchising 140
The Franchising Sector 141, Franchising Agreements 141, Benefits and Challenges of Franchising 141

Forms of Private Business Ownership 143
Sole Proprietorships 144, Partnerships 144, Corporations 145, Employee-Owned Corporations 146, Family-Owned Businesses 147, Not-for-Profit Corporations 147

Public and Collective Ownership of Business 148
Public (Government) Ownership 148, Collective (Cooperative) Ownership 148

Organizing a Corporation 149
Types of Corporations 149, Where and How Businesses Incorporate 149, Corporate Management 150

When Businesses Join Forces 151
Mergers and Acquisitions (M&A) 151, Joint Ventures: Specialized Partnerships 152

What’s Ahead 153

Chapter in Review 153
Summary of Learning Objectives 153, Business Terms You Need to Know, 155, Review Questions 156, Projects and Teamwork Applications 156, Web Assignments 156

Case 5.1 Ideeli Gives Members (and Suppliers) Daily Deals 157

Case 5.2 GoPro Your Next Big Wave or Snowboard Run 157

Video Case 5.3 The Mei Mei Group: A Family Affair in Boston 158

Chapter 6 Starting Your Own Business: The Entrepreneurship Alternative 160

What Is an Entrepreneur? 162

Categories of Entrepreneurs 163

Reasons to Choose Entrepreneurship as a Career Path 164
Being Your Own Boss 164, Financial Success 164, Job Security 165, Quality of Life 165

The Environment for Entrepreneurs 166
Globalization 166, Education 167, Information Technology 168, Demographic and Economic Trends 168

Characteristics of Entrepreneurs 169
Vision 170, High Energy Level 170, Need to Achieve 170, Self-Confidence and Optimism 170, Tolerance for Failure 171, Creativity 172, Tolerance for Ambiguity 172, Internal Locus of Control 172

Starting a New Venture 173
Selecting a Business Idea 173, Creating a Business Plan 175, Finding Financing 176, Government Support for New Ventures 178

Intrapreneurship 178

What’s Ahead 179

Chapter in Review 180
Summary of Learning Objectives 180, Business Terms You Need to Know 181, Review Questions 181, Projects and Teamwork Applications 181, Web Assignments 182

Case 6.1 Glassybaby Sees the Light 182

Case 6.2 Unreal Brands “Unjunks” Candy 183

Video Case 6.3 Comet Skateboards: It’s a Smooth Ride 183

Part 2: Greensburg, KS: A Great Place to Start 185

Part 2: Launching Your Entrepreneurial Career 186

PART 3 B Management: Empowering People to Achieve Business Success 188

Chapter 7 Management, Leadership, and the Internal Organization 188

What Is Management? 190
The Management Hierarchy 190, Skills Needed for Managerial Success 191, Managerial Functions 192

Setting a Vision and Ethical Standards for the Firm 193

Importance of Planning 194
Types of Planning 194, Planning at Different Organizational Levels 196

The Strategic Planning Process 197
Defining the Organization’s Mission 197, Assessing Your Competitive Position 198, Setting Objectives for the Organization 200, Creating Strategies for Competitive Differentiation 200, Implementing the Strategy 200, Monitoring and Adapting Strategic Plans 200

Managers as Decision Makers 201
Programmed and Nonprogrammed Decisions 201, How Managers Make Decisions 201

Managers as Leaders 203
Leadership Styles 203, Which Leadership Style Is Best? 204

Corporate Culture 204

Organizational Structures 205
Departmentalization 206, Delegating Work Assignments 208, Types of Organization Structures 209

What’s Ahead 211

Chapter in Review 212
Summary of Learning Objectives 212, Business Terms You Need to Know 214, Review Questions 214, Projects and Teamwork Applications 214, Web Assignments 215

Case 7.1 Strong Leadership Keeps Ford on Track 215

Case 7.2 No Workaholics Allowed at BambooHR 216

Video Case 7.3 Dan Formosa: At the Forefront of Smart Design 216

Chapter 8 Human Resource Management: From Recruitment to Labor Relations 218

Human Resources: The People Behind the People 220

Recruitment and Selection 220
Finding Qualified Candidates 220, Selecting and Hiring Employees 221

Orientation, Training, and Evaluation 223
Training Programs 223, Performance Appraisals 224

Compensation 225
Employee Benefits 226, Flexible Benefits 227, Flexible Work 228

Employee Separation 229
Voluntary and Involuntary Turnover 229, Downsizing 229, Outsourcing 230

Motivating Employees 230
Maslow’s Hierarchy of Needs Theory 232, Herzberg’s Two-Factor Model of Motivation 233,
Expectancy Theory and Equity Theory 233, Goal-Setting Theory and Management by Objectives 234,
Job Design and Motivation 235, Managers’ Attitudes and Motivation 235

Labor–Management Relations 236
Development of Labor Unions 236, Labor Legislation 237, The Collective Bargaining Process 237, Settling Labor–Management Disputes 237, Competitive Tactics of Unions and Management 238,
The Future of Labor Unions 239

What’s Ahead 240

Chapter in Review 240
Summary of Learning Objectives 240, Business Terms You Need to Know 242, Review Questions 242, Projects and Teamwork Applications 242, Web Assignments 243

Case 8.1 Evernote’s Message to Employees: Go on Vacation 243

Case 8.2 Winning HR Practices at the Cheesecake Factory 244

Video Case 8.3 Timberland’s Culture Rooted in Community Building 244

Chapter 9 Top Performance through Empowerment, Teamwork, and Communication 246

Empowering Employees 248
Sharing Information and Decision-Making Authority 248, Linking Rewards to Company Performance 249

Teams 250

Team Characteristics 252
Team Size 253, Team Level and Team Diversity 254, Stages of Team Development 254

Team Cohesiveness and Norms 256

Team Conflict 256

The Importance of Effective Communication 257
The Process of Communication 257

Basic Forms of Communication 259
Oral Communication 259, Written Communication 260, Formal Communication 261, Informal Communication 262, Nonverbal Communication 263

External Communication and Crisis Management 264

What’s Ahead 266

Chapter in Review 266
Summary of Learning Objectives 266, Business Terms You Need to Know 268, Review Questions 268, Projects and Teamwork Applications 268, Web Assignments 269

Case 9.1 Southwest Airlines Thrives on Customer Service 269

Case 9.2 Merrill Lynch Tells Its Advisers: Join a Team 270

Video Case 9.3 Necco Empowers and Engages Employees 270

Chapter 10 Production and Operations Management 272

The Strategic Importance of Production 275
Mass Production 275, Flexible Production 276, Customer-Driven Production 276

Production Processes 276

Technology and the Production Process 277
Green Manufacturing Processes 277, Robots 278, Computer-Aided Design and Manufacturing 279, Flexible Manufacturing Systems 279, Computer-Integrated Manufacturing 280

The Location Decision 280

The Job of Production Managers 282
Planning the Production Process 283, Determining the Facility Layout 283, Implementing the Production Plan 285

Controlling the Production Process 289
Production Planning 289, Routing 289, Scheduling 290, Dispatching 291, Follow-Up 291

Importance of Quality 292
Quality Control 293, ISO Standards 294

What’s Ahead 294

Chapter in Review 295
Summary of Learning Objectives 295, Business Terms You Need to Know 296, Review Questions 296, Projects and Teamwork Applications 297, Web Assignments 297

Case 10.1 Home Depot Customers Feel the Need for Speed 298

Case 10.2 The F-35 Fighter Jet Flies over Budget 298

Video Case 10.3 Necco Produces Classic Valentine’s Day Treats 299

Part 3: Greensburg, KS: No Time to Micromanage 301

Part 3: Launching Your Management Career 302

PART 4 Marketing Management 304

Chapter 11 Customer-Driven Marketing 304

What Is Marketing? 306
How Marketing Creates Utility 306

Evolution of the Marketing Concept 307
Emergence of the Marketing Concept 307

Not-for-Profit and Nontraditional Marketing 308
Not-for-Profit Marketing 308, Nontraditional Marketing 309

Developing a Marketing Strategy 312
Selecting a Target Market 313, Developing a Marketing Mix for International Markets 314

Marketing Research 315
Obtaining Marketing Research Data 315, Applying Marketing Research Data 317, Data Mining 317

Market Segmentation 318
How Market Segmentation Works 318, Segmenting Consumer Markets 319
Segmenting Business Markets 323

Consumer Behavior 324
Determinants of Consumer Behavior 324, Determinants of Business Buying Behavior 324,
Steps in the Consumer Behavior Process 325

Relationship Marketing 325
Benefits of Relationship Marketing 326, Tools for Nurturing Customer Relationships 327

What’s Ahead 328

Chapter in Review 328
Summary of Learning Objectives 328, Business Terms You Need to Know 330, Review Questions 330, Projects and Teamwork Applications 331, Web Assignments 331

Case 11.1 Louis Vuitton: From Luxury to Ultra Luxury 332

Case 11.2 Arthritis Foundation Takes Aim at Pain 332

Video Case 11.3 Mei Mei Group Communicates and Delivers Value 333

Chapter 12 Product and Distribution Strategies 334

Product Strategy 336
Classifying Goods and Services 336, Marketing Strategy Implications 338,
Product Lines and Product Mix 338

Product Life Cycle 338
Stages of the Product Life Cycle 339, Marketing Strategy Implications of the Product Life Cycle 340, Stages in New-Product Development 341

Product Identification 343
Selecting an Effective Brand Name 344, Brand Categories 344, Brand Loyalty and Brand Equity 344, Packages and Labels 346

Distribution Strategy 347
Distribution Channels 347

Wholesaling 350
Manufacturer-Owned Wholesaling Intermediaries 351, Independent Wholesaling Intermediaries 351, Retailer-Owned Cooperatives and Buying Offices 351

Retailing 352
Nonstore Retailers 352, Store Retailers 353, How Retailers Compete 354

Distribution Channel Decisions and Logistics 357
Selecting Distribution Channels 357, Selecting Distribution Intensity 358,
Logistics and Physical Distribution 359

What’s Ahead 361

Chapter in Review 361
Summary of Learning Objectives 361, Business Terms You Need to Know 363, Review Questions 364, Projects and Teamwork Applications 364, Web Assignments 365

Case 12.1 “Chucks” Brand Appeal from Court to Street 365

Case 12.2 Luxury Brands in China Slow Down 366

Video Case 12.3 Secret Acres: Getting the Word Out 366

Chapter 13 Promotion and Pricing Strategies 368

Integrated Marketing Communications 370
The Promotional Mix 371, Objectives of Promotional Strategy 372, Promotional Planning 374

Advertising 375
Types of Advertising 375, Advertising and the Product Life Cycle 376, Advertising Media 376

Sales Promotion 381
Consumer-Oriented Promotions 381, Trade-Oriented Promotions 383, Personal Selling 383,
Public Relations 387

Pushing and Pulling Strategies 388

Pricing Objectives in the Marketing Mix 388
Profitability Objectives 388, Volume Objectives 389, Pricing to Meet Competition 389,

Prestige Objectives 389

Pricing Strategies 390
Price Determination in Practice 391, Breakeven Analysis 391, Alternative Pricing Strategies 392

Consumer Perceptions of Prices 394
Price–Quality Relationships 394, Odd Pricing 394

What’s Ahead 394

Chapter in Review 395
Summary of Learning Objectives 395, Business Terms You Need to Know 396,
Review Questions 397, Projects and Teamwork Applications 397, Web Assignments 397

Case 13.1 Brand Names versus Store Brands 398

Case 13.2 Alex & Ani Delivers Deals with Real-Time Mobile Marketing 398

Video Case 13.3 Zipcar Informs, Persuades, and Reminds 399

Part 4: Greensburg, KS: Think Green, Go Green, Save Green 401

Part 4: Launching Your Marketing Career 402

PART 5 Managing Technology and Information 404

Chapter 14 Using Technology to Manage Information 404

Data, Information, and Information Systems 406

Components and Types of Information Systems 407
Databases 408, Types of Information Systems 409

Computer Hardware and Software 410
Types of Computer Hardware 410, Computer Software 412

Computer Networks 413
Local Area Networks and Wide Area Networks 413, Wireless Local Networks 413, Intranets 414, Virtual Private Networks 414, VoIP 415

Security and Ethical Issues Affecting Information Systems 415
Cybercrime 415, Computer Viruses, Worms, Trojan Horses, and Spyware 416,
Information Systems and Ethics 417

Disaster Recovery and Backup 418

Information Technology Trends 419
The Distributed Workforce 419, Application Service Providers 420, On-Demand, Cloud, and Grid Computing 420

What’s Ahead 421

Chapter in Review 422
Summary of Learning Objectives 422, Business Terms You Need to Know 424, Review Questions 424, Projects and Teamwork Applications 424, Web Assignments 425

Case 14.1 Khan Academy Distributes Knowledge 425

Case 14.2 Skype Continues to Thrive 426

Video Case 14.3 Technology Drives Zipcar’s Success 426

Part 5: Greensburg, KS: The Dog Ate My Laptop 428

Part 5: Launching Your Information Technology Career 429

Part 6: Managing Financial Resources 430

Chapter 15 Understanding Accounting and Financial Statements 430

Users of Accounting Information 432
Business Activities Involving Accounting 433

Accounting Professionals 433
Public Accountants 433, Management Accountants 434, Government and Not-for-Profit Accountants 435

The Foundation of the Accounting System 435

The Accounting Cycle 436
The Accounting Equation 437, The Impact of Computers and the Internet on the Accounting Process 438

Financial Statements 440
The Balance Sheet 440, The Income Statement 441, Statement of Owners’ Equity 444,

The Statement of Cash Flows 444

Financial Ratio Analysis 446
Liquidity Ratios 446, Activity Ratios 447, Profitability Ratios 448, Leverage Ratios 449

Budgeting 449

International Accounting 451
Exchange Rates 452, International Accounting Standards 452

What’s Ahead 453

Chapter in Review 454
Summary of Learning Objectives 454, Business Terms You Need to Know 456, Review Questions 456, Projects and Teamwork Applications 456, Web Assignments 457

Case 15.1 Walnut Scandal Costs Investors Plenty 457

Case 15.2 BDO Seidman: An Accounting Approach for the 21st Century 458

Video Case 15.3 Mei Mei’s Secret Recipe: Attention to Accounting Details 459

Chapter 16 The Financial System 460

Understanding the Financial System 462

Types of Securities 463
Money Market Instruments 463, Bonds 464, Stock 466

Financial Markets 467

Understanding Stock Markets 469
The New York Stock Exchange 469, The NASDAQ Stock Market 469, Other U.S. Stock Markets 470, Foreign Stock Markets 470, ECNs and the Future of Stock Markets 471, Investor Participation in the Stock Markets 471

Financial Institutions 472
Commercial Banks 472, Savings Banks and Credit Unions 474, Nondepository Financial Institutions 475, Mutual Funds 475

The Role of the Federal Reserve System 476
Organization of the Federal Reserve System 476, Check Clearing and the Fed 477,
Monetary Policy 477

Regulation of the Financial System 479
Bank Regulation 480, Government Regulation of the Financial Markets 480,
Industry Self-Regulation 481

The Financial System: A Global Perspective 482

What’s Ahead 483

Chapter in Review 483
Summary of Learning Objectives 483, Business Terms You Need to Know 486, Review Questions 486, Projects and Teamwork Applications 486, Web Assignments 486

Case 16.1 Silicon Valley’s Banker 487

Case 16.2 PayNearMe Serves “Unbanked” Consumers 487

Video Case 16.3 New Harvest Coffee Goes Beyond Fair Trade 488

Chapter 17 Financial Management 490

The Role of the Financial Manager 492

Financial Planning 494

Managing Assets 496
Short-Term Assets 496, Capital Investment Analysis 498, Managing International Assets 499

Sources of Funds and Capital Structure 499
Leverage and Capital Structure Decisions 500, Mixing Short-Term and Long-Term Funds 500,

Dividend Policy 501

Short-Term Funding Options 503
Trade Credit 503, Short-Term Loans 503, Commercial Paper 504

Sources of Long-Term Financing 504
Public Sale of Stocks and Bonds 504, Private Placements 505, Venture Capitalists 505,
Private Equity Funds 505, Hedge Funds 506

Mergers, Acquisitions, Buyouts, and Divestitures 507

What’s Ahead 509

Chapter in Review 509

Summary of Learning Objectives 509, Business Terms You Need to Know 511,
Review Questions 511, Projects and Teamwork Applications 512, Web Assignments 512

Case 17.1 Macy’s CFO Guides Retail Giant with a Steady Hand 513

Case 17.2 Hewlett-Packard Continues Its Focus on Hardware 513

Video Case 17.3 Comet Skateboards Rides the Triple Bottom Line 514

Part 6: Greensburg, KS: So Much to Do, So Little Cash 515

Part 6: Launching Your Finance Career 516

Chapter 18 Trends in E-Business Online

Appendixes

Appendix A Business Law A-1

Appendix B Insurance and Risk Management A-17

Appendix C Personal Financial Planning A-27

Appendix D Developing a Business Plan A-38

Appendix E Careers in Contemporary Business A-47

Glossary G-1

Notes N-1

Name Index I-1

Subject Index I-11

International Index I-27

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Solution Manual for Contemporary Business 16th Edition by Louis E. Boone