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Dec 16, 2015
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Our Agenda The Nature of Business Types of Businesses Business Trends Business Functions The Organization of a Business
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Our Agenda Information and Business
Operations Information and Business
Management Basic Business Information
Processing Information Systems and Business
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Learning Objectives Explain the purpose of a business
and describe the main types of businesses.
Describe several trends that affect businesses today.
Describe the major business functions and explain how a business is organized.
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Learning Objectives (cont’d.) Diagram typical flows of
information in business operations. Explain how information is used in
the management of a business. Describe several basic business
information processing activities used in businesses.
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Learning Objectives (cont’d.) Explain how information systems
support information needs in all functions of all types of businesses and organizations.
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The Nature of Business The purpose of a business is to
provide products – goods and services – for its customers.
Money, or value, received from customers for its products is revenue.
To provide its products, the business incurs expenses.
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The Nature of Business (cont’d.) Most business are “for profit”. Some businesses are “not-for-
profit”. The business environment includes
economic, legal, cultural, and competitive factors.
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Types of Businesses Products sold to other businesses
are sold at wholesale. Products sold to the consumer are
sold at retail.
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Types of Businesses (cont’d.) Manufacturers Wholesalers (or Distributor) Retailers Service Businesses Not-for-profit Organizations Government
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Business Trends Globalization of business Consolidation of businesses Shift away from manufacturing
towards service businesses
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Business Functions Accounting Finance Marketing Production Human Resource Management Other functions
Research and Development Information Services
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The Organization of a Business Employees often grouped by
general functions. Departments Workgroups
Organization Chart diagrams the arrangement of employees functionally.
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Information and Business Operations Business operations are those
activities that provide products and ensure the business makes a profit.
Information flow within a business may be within or between workgroups, within or between departments, or within or outside the business.
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Information and Business Management Management is all the activities
related to deciding how a business functions.
A decision is a selection among different courses of action.
Management decisions are of three types: Strategic decisions
Usually made at the highest level Generally long-term decisions
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Information and Business Management (cont’d.)
Tactical decisions Usually made at the department or
workgroup level Generally short to medium term in nature
Operational decisions Usually made by individuals at the “front
line” Generally short term in nature
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Basic Business Information Processing Eight basic information processing
activities1. Entering customer orders2. Billing (invoicing) customers3. Collecting customer payments4. Keeping track of inventory5. Purchasing stock and materials6. Paying bills7. Paying employees8. Reporting financial information
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Entering Customer Orders Customer order acceptance and
preparation of a sales order in a form the business can use.
Usually part of the marketing function and performed in the Sales Department.
Sales Department determines if there is sufficient inventory on hand and the creditworthiness of the customer.
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Entering Customer Orders (cont’d.) Inputs
Customer orders May be received by mail, phone, fax,
email, and other methods
Outputs Sales order Shipping order
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Billing Customers Shipping Department uses the
sales order to determine what items should be shipped to the customer.
Billing Department prepares the customer’s bill (invoice) for those goods shipped by the Shipping Department.
Billing department may be part of the accounting or marketing function.
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Billing Customers (cont’d.) Inputs
Sales order Shipping order
Outputs Invoice
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Collecting Customer Payments The Accounts Receivable
Department uses a copy of the invoice produced by the Billing Department to keep track of the amount a customer owes the business.
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Collecting Customer Payments (cont’d.) Inputs
Invoice Customer payments
Outputs Customer statements Overdue notices Accounts receivable reports
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Keeping Track of Inventory A business must keep track of its
inventory and report when inventory is low so it can reorder more stock.
Can be a part of the production or operations function.
Can be a part of the marketing or accounting function.
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Keeping Track of Inventory (cont’d.) Types of inventory
Raw Materials Work-in-Process Finished goods
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Keeping Track of Inventory (cont’d.) Inputs
Receiving notice Outputs
Inventory reorder report Inventory value report
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Purchasing Stock and Materials Determine the best suppliers and
prepare purchase orders which indicate to the suppliers what items the business wants to purchase.
Can be a part of the production or operations function.
Can be a part of the accounting function.
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Purchasing Stock and Materials (cont’d.) Inputs
Inventory reorder report Outputs
Purchase order
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Paying Bills Accounts Payable Department uses
a copy of the purchase order to keep track of money owed by the business for purchases, called accounts payable.
Part of the accounting function.
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Paying Bills (cont’d.) Inputs
Purchase order Receiving notice Invoice from supplier
Outputs Checks payable to suppliers Accounts payable report
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Paying Employees Involves paying employees wages
or salaries and providing reports to other business functions.
Usually part of the accounting function, but may be part of the human resources management function.
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Paying Employees (cont’d.) Inputs
Employee work report (time sheet) Outputs
Payroll report Paychecks to employees
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Reporting Financial Information Provides reports of financial
information for the management and owners of the business.
Usually a part of the accounting department.
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Reporting Financial Information (cont’d.) Categories of “accounts”
Assets – what the business “owns” Liabilities – what the business “owes” Stockholder’s Equity – what the
business is “worth” Revenues – the income of the
business Expenses – the costs incurred to
produce the revenues of the business
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Reporting Financial Information (cont’d.) Inputs
Reports on revenue, expenses, assets and liabilities – the transactions of the business
Outputs Balance Sheet Income Statement
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Information Systems and Business IS can control the information flow
in business operations. IS can increase the effectiveness of
management decision making. Information processing activities
are more efficient and effective when IS are utilized.
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Key Terms Accounting Department Finance Human Resource Management Information Services Manufacturer
Marketing Operations Organization Chart Production Research and Development (R&D) Retailer
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Summary The Nature of Business Types of Businesses Business Trends Business Functions The Organization of a Business
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Summary Information and Business
Operations Information and Business
Management Basic Business Information
Processing Information Systems and Business