IT Passport ExamPreparation BookITPassportiAbout this Book ................................................................... 1Overview of Examination .................................................... 4Scope of Questions .............................................................. 8Strategy ---------------------------------------------------------------------- 12Chapter 1Corporate and legal affairs............................ 141-1Corporate activities ---------------------------------------- 151-1-1Management and organization ............................................. 151-1-2OR (Operations Research) and IE (Industrial Engineering) .... 211-1-3Accounting and nancial affairs .......................................... 371-2Legal affairs --------------------------------------------------- 431-2-1Intellectual property rights .................................................... 431-2-2Laws on security .................................................................... 481-2-3Laws on labor and transaction ............................................. 491-2-4Other legislation, guidelines, and engineer ethics ............. 521-2-5Standardization ...................................................................... 561-3Chapter quiz --------------------------------------------------- 60CONTENTSiiChapter 2Business strategy .......................................... 642-1Business strategy management --------------------- 652-1-1Business strategy techniques .............................................. 652-1-2Marketing ................................................................................ 702-1-3Business strategy and goal/evaluation ............................... 722-1-4Business management systems .......................................... 742-2Technological strategy management ------------- 752-2-1Technological strategy planning and technology development planning ........................................................... 752-3Business industry---------------------------------------------772-3-1Business system .................................................................... 772-3-2Engineering system ............................................................... 822-3-3E-business .............................................................................. 832-3-4Consumer appliances and industrial devices ..................... 852-4Chapter quiz --------------------------------------------------- 86Chapter 3System strategy ............................................. 903-1System strategy --------------------------------------------- 913-1-1Concept of information systems strategy ........................... 913-1-2Concept of business process ............................................... 923-1-3Solution business .................................................................. 993-2System planning ------------------------------------------- 1023-2-1Computerization planning ................................................... 1023-2-2Requirements denition ...................................................... 1043-2-3Procurement planning and implementation ...................... 1053-3Chapter quiz ------------------------------------------------- 109ITPassportiiiManagement --------------------------------------------------------------112Chapter 4Development technology ............................. 1144-1System development technology ----------------- 1154-1-1Process of system development ........................................ 1154-1-2Software estimation ............................................................. 1254-2Software development management techniques ---------------------------------------------------- 1264-2-1Software development process and methods .................. 1264-3Chapter quiz ------------------------------------------------- 129Chapter 5Project management ................................... 1305-1Project management ------------------------------------ 1315-1-1Project management ............................................................ 1315-1-2Project scope management ................................................ 1335-2Chapter quiz ------------------------------------------------- 138Chapter 6Service management ................................... 1406-1Service management ------------------------------------ 1416-1-1Service management ........................................................... 1416-1-2Service support .................................................................... 1436-1-3Service delivery .................................................................... 1446-1-4Facility management ........................................................... 1466-2System audit ------------------------------------------------- 1476-2-1System audit ......................................................................... 1476-2-2Internal control ..................................................................... 1506-3Chapter quiz ------------------------------------------------- 152ITPassportivTechnology ---------------------------------------------------------------- 154Chapter 7Basic theory ................................................. 1567-1Basic theory ------------------------------------------------- 1577-1-1Discrete mathematics .......................................................... 1577-1-2Applied mathematics ........................................................... 1627-1-3Theory of information .......................................................... 1667-2Algorithms and programming ----------------------- 1717-2-1Data structures ..................................................................... 1717-2-2Algorithms ............................................................................ 1747-2-3Programming and programming languages ..................... 1797-2-4Markup languages ............................................................... 1807-3Chapter quiz ------------------------------------------------- 183Chapter 8Computer system ......................................... 1868-1Computer component ----------------------------------- 1878-1-1Processor ............................................................................. 1878-1-2Storage device ..................................................................... 1908-1-3Input/Output devices ........................................................... 1998-2System component --------------------------------------- 2048-2-1System conguration .......................................................... 2048-2-2System evaluation indexes ................................................. 2088-3Software ------------------------------------------------------- 2128-3-1OS (Operating System) ........................................................ 2128-3-2File management .................................................................. 2148-3-3Development tools ............................................................... 2188-3-4OSS (Open Source Software) ............................................. 2218-4Hardware ------------------------------------------------------ 2238-4-1Hardware ............................................................................... 2238-5Chapter quiz ------------------------------------------------- 229vChapter 9Technology element .................................... 2349-1Human interface ------------------------------------------- 2359-1-1Human interface technology ............................................... 2359-1-2Interface design ................................................................... 2369-2Multimedia ---------------------------------------------------- 2409-2-1Multimedia technology ........................................................ 2409-2-2Multimedia application ........................................................ 2439-3Database ------------------------------------------------------- 2479-3-1Database architecture ......................................................... 2479-3-2Database design .................................................................. 2509-3-3Data manipulation ................................................................ 2539-3-4Transaction processing ....................................................... 2559-4Network -------------------------------------------------------- 2589-4-1Network architecture ........................................................... 2589-4-2Communications protocols ................................................ 2679-4-3Network application ............................................................. 2729-5Security -------------------------------------------------------- 2799-5-1Information assets and information security .................... 2799-5-2Information security management ..................................... 2849-5-3Information security measures/information security implementation technology ................................................ 2889-6Chapter quiz ------------------------------------------------- 301Practice exam .................................................................. 308Practice exam 1 ................................................................................. 309Practice exam 2 ................................................................................. 340Practice exam 3 ................................................................................. 370Index ................................................................................ 4001About this Book1Structure of this BookThis book is comprised of the following sections.Overview of ExaminationScope of QuestionsThis section describes the basic approach for the examination questions and the scope of the ex-amination questions.Chapter 1Corporate and legal affairsChapter1explainsthebasicknowledgeofcorporateactivitiesandbusinessmanagementthat business workers should possess, as well as legal compliance and corporate ethics.Chapter 2Business strategyChapter 2 explains typical systems in each eld including typical information analysis techniques and marketing techniques, business management systems, and technological strategies.Chapter 3System strategyChapter 3 details business processes, methods to improve business operations, the ow of infor-mation system construction, the composition of a requirements denition aimed at computeriza-tion, and other items based on information systems strategy.Chapter 4Development technologyChapter 4 explains system development processes and test techniques, as well as software devel-opment processes and development methods.Chapter 5Project managementChapter 5 explains the processes of project management and techniques of project scope manage-ment.Chapter 6Service managementChapter 6 explains the basic roles and components of IT service management including the man-agementofinformationsystemoperations,servicesupport,theconceptofsystemenvironment development, and the basic principles of system audits.Chapter 7Basic theoryChapter 7 explains the fundamental concepts of radixes, sets, probabilities, and statistics, as well as the digitization of information and algorithms.Chapter 8Computer systemChapter 8 examines computer components, system components, hardware, and software, and ex-plains each type of component and their characteristics.Chapter 9Technology elementChapter9examinesthecharacteristicsofhumaninterfacesandmultimediatechnology,basic knowledge about database design and networks, as well as security measures and other aspects.Practice examThe practice exam includes practice questions for the IT Passport Examination.Answers and Explanations BookletThe booklet contains answers and explanations for the chapter quiz (Chapters 1 to 9) and practice exam questions.2Notations Used in this BookThe notations used in this book serve the following purposes.Reference A short summary of useful information or terminology, or a citation of a subchap-ter for an explanation.*Supplementary notes or content to pay attention toThe text in this book may contain laws, standards and accounting rules that only apply in Japan.23Answers and Explanations BookletThebookletattheendofthisbookcontainsanswersandexplanationsforthechapterquizand practice exam questions.19Q1. Section 1-2Legal affairsAnswerdExplanationIf used within the scope covered by the license agreement, then it does not violate the Copy-right Act.Q2. Section 2-1Business strategy management AnswerdExplanationSWOTanalysisisananalysistechniqueusedforplanningcorporatestrategies.TheS stands for strengths, and W for weaknesses.Q3. Section 1-1Corporate activitiesAnsweraExplanationCSR (Corporate Social Responsibility) refers to the responsibilities that a corporations should fullltosociety.ManycorporationspublishtheirCSRapproachthroughtheirWebpageor publish a CSR report in order to earn the condence of stakeholders.Q4. Section 2-1Business strategy managementAnsweraExplanationThe star of PPM is a product that requires investment with growth, but offers a high market growth rate and market share.b): Describes a dog.c): Describes a question mark.d): Describes a cash cow.Q5. Section 1-2Legal affairsAnswerbExplanationa):Under a dispatch contract, the client company has the right to issue instructions to the dis-patch employee, but matters concerning the dispatch contract such as paid leave and over-time must be cleared rst with the dispatching company.c):Even if erroneous entry of data into a product management system leads to the production of defective goods, the right to issue instructions lies with the client company. Therefore, the client company cannot blame the responsibility for the manufactured goods on the dis-patching company.d): Instructing an employee to work overtime as if the person were an employee of the client company is a matter that concerns the dispatch contract, so the client company must obtain the approval of the dispatching company.Practice exam 1 answers1 SectionSection Sections that are applicable to this book.13Overview of Examination51Typical ExamineesIndividualswhohavebasicknowledgeofinformationtechnologythatallbusinessworkers should commonly possess, and who perform information technology related tasks, or are trying to utilize information technology in his/her tasks in charge.2Tasks and RolesIndividualswhohavebasicknowledgeofinformationtechnologythatallbusinessworkers shouldcommonlypossess,andwhoperforminformationtechnologyrelatedtasks,oraretrying toutilizeinformationtechnologyinhis/hertasksincharge.Chapter5explainstheprocessesof project management and techniques of project scope management.Understand information devices and systems to use, and utilize them.Understand the tasks in charge, identies problems of those tasks, and act to provide required solutions.Perform acquisition and utilization of information safely.Support task analysis and systemization activities under the guidance of superiors.3Expected Technology LevelThe following basic knowledge shall be required as a working person in order to determine infor-mation devices and systems, and to perform tasks in charge as well as facilitate systemization.Knowledge of computer systems and networks to determine the information devices and sys-tems to use, and knowledge of how to utilize ofce tools.Knowledge of corporate activity and relatedtasksin order to understand the tasksin charge. Also, in order to identify issues of the tasks in charge and provide required solutions, system-atic thinking and logical thinking as well as knowledge of problem analysis and problem solv-ing methodologies shall be required.Ability to act in accordance with relevant laws and regulations as well as various information security provisions in order to utilize information safely.Knowledge of development and operations of information systems in order to support analysis and systemization of tasks. Overview of Exam64Supplementary Explanation of Expected Technology LevelThe following basic knowledge shall be required as a working person in order to determine infor-mation devices and systems, and to perform his/her tasks in charge as well as facilitate systemiza-tion.Understand and utilize the information equipment and systems to be used:Capabilitytounderstandtheperformance,characteristics,andfunctionsoftheinformation devices used in the workplace and utilize them appropriately.Capability to understand the signicance of the operations and functions of OS settings and application software such as ofce tools used in the workplace and be able to utilize them.Capabilitytoutilizeofcetoolsandotherapplicationsoftwareandgroupwareusedinthe workplace considering efciency in carrying out tasks.Understand the tasks in charge and the relevant problems, and execute requi-site solutions:Capabilitytoorganizeprocessesrelatedtothetasksinchargeusingmethodssuchastask workows, and to identify issues.Capabilitytoanalyzedatarelatingtothetasksinchargeusingsimpleanalyticalmethods and information technology and identify issues.For problematic issues identied, capability to consider solutions independently, and consid-er solutions by accepting the opinions of superiors and co-workers.Collect and utilize information safely:Capabilitytoutilizevariouskindsofinformationrelatingtothetasksinchargeincompli-ance with laws and regulations.Capabilitytounderstandthepurposeofinternalcomplianceprogramsandbeabletocon-form to them.Capability to prevent the leakage, loss or damage of information while utilizing internal in-formation devices and systems, particularly through internet use.Support computerization of tasks and systemization under the direction of su-periors:Capabilitytoparticipateinthediscussionconcerningtheinvestigationandorganizationof data relating to the tasks in charge under the direction of superiors.Capability to participate in the discussion concerning the systematization of tasks in charge under the direction of superiors.75Conguration of the ExaminationExam Duration 165 minutesExam TypeMultiple-choice (1 out of 4 choices)(1)Short question type (1 exam question contains 1 question) (2)Mediumquestiontype (1examquestioncontains4questions.Theques-tionsexamineknowledgeandunderstandingfromseveralviewpointswith regard to a single situational setting). Number of Questions100 questions, answers required for all questions(1)Short question type: 88 questions(2)Medium question type: 12 questions (3 exam questions consisting of 4 sub-questions each)Number of Questions per FieldQuestions are asked according to the following ratio with regard to the 3 elds comprising the scope of questions:(1)Strategy eld: about 35%(2)Management eld: about 25%(3)Technology eld: about 40%Point Allocation 1,000 total pointsGrading MethodAccordingtorawpoints (pointsareallocatedforeachquestion,andallocated points for correct answers are totaled)Pass criteriaA pass is granted when both (1) and (2) below are satised:(1)Total points (totaled from each eld): more than 60% of maximum points(2)Points in each eld: more than 30% of the maximum points in each of the 3 elds.Scope of QuestionsThis section describes the basic approach for the ex-amination questions and the scope of the examination questions.91Basic Approach for Examination QuestionsThe following section summarizes the basic approach for questions that appear in the IT Passport Examination, in the respective elds of strategy, management, and technology.STRATEGYQuestions in the examination are designed to test knowledge in the following areas: fundamental terminology and concepts necessary to analyze computerization and corporate activities, as well as fundamental terminology and concepts described in information courses through post-second-ary education and in general newspapers, books, and magazines. Also included are questions that test the fundamental knowledge of methods for solving problems by grasping and analyzing the work at hand, and the fundamental knowledge for utilizing ofce tools to analyze data and solve problems.MANAGEMENTQuestionsintheexaminationaredesignedtotestknowledgeoffundamentalterminologyand concepts relating to systems development and project management processes. The exam does not includequestionsthattestknowledgeofspecicandhighlyspecializedterminologyandcon-cepts. Also included are questions that test the basic knowledge for considering the development of business environments such as using computers, networks, and ofce tools.TECHNOLOGYQuestionsintheexaminationaredesignedtotestknowledgeoffundamentalterminologyand concepts,andthelogicalthoughtprocessoftheexaminee.Theexaminationdoesnotinclude questionsofatechnicalandhighlyspecializednature. Alsoincludedarequestionsthattestthe fundamental knowledge for safely using the systems on hand.2Scope of QuestionsCommon Career/Skill Framework Scope of questions to be asked (Concept of exam questions) Field Major Category Middle Category Strategy1 Corporate and legal affairs 1 Corporate activities Askaboutthefundamentalconceptsaboutcorporateactivitiesand business management. Askaboutthetechniquesforanalyzingfamiliarbusinesstasksand resolving issues, the concept of PDCA, and operational planning us-ing techniques such as Pareto charts. Askaboutthevisualexpressionsusedforunderstandingbusiness tasks, such as workow. Askaboutthefundamentalconceptsofaccountingandnancialaf-fairs, such as nancial statements and break-even points. 2 Legal affairs Ask about the familiar laws of workplaces, such as intellectual prop-erty rights (copyright, industrial property rights, etc.), Act on the Pro-tection of Personal Information, Labor Standards Act, and Act for Se-curing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers. Ask about the concepts and characteristics of software license, such as license types and license management. Askabouttheconceptsofcorporaterulesandregulations,suchas compliance and corporate governance. Ask about the signicance of standardization.Scope of Questions10Common Career/Skill Framework Scope of questions to be asked (Concept of exam questions) Field Major Category Middle Category Strategy2 Business strategy3 Business strategy management Askaboutthefundamentalconceptsabouttypicalmanagementin-formationanalysistechniquesandbusinessmanagementsystems, such as SWOT analysis, PPM (Product Portfolio Management), cus-tomer satisfaction, CRM, and SCM. Ask about the fundamental concepts relevant to marketing. Askaboutthetypicalinformationanalysistechniquesforplanning business strategies. Askabouttheunderstandingoftheuseofofficetools (software packages) such as spreadsheet software, database software, etc.4 Technological strategy management Ask about the understanding of the signicance and purpose of tech-nology development strategy. 5 Business industry Askaboutthecharacteristicsoftypicalsystemsinvariousbusiness elds such as e-commerce, POS systems, IC cards, and RFID appli-cation systems. Askaboutthecharacteristicsoftypicalsystemsintheengineering led and e-business. Askaboutthecharacteristicsandtrendsofintelligenthomeappli-ances and embedded systems. 3System strategy 6System strategy Ask about the signicance and purpose of information system strate-gies and the concepts of strategic goals, business improvement, and problem solving. Ask about the concepts of typical modeling in business models. Askabouttheeffectiveuseofgroupwareforcommunicationandof ofce tools. Askaboutthepurposeandconceptsofincreasingoperationalef-ciency by using computers and networks. Ask about the concepts of solutions through typical services. Ask about the signicance and purpose of the promotion and evalua-tion activities of system utilization. 7System planning Ask about the purpose of computerization planning. Askaboutthepurposeoftheoperationalrequirementsdefinition based on the analysis of current state. Ask about the fundamental ow of procurement, such as estimates, RFPs, and proposals. Management4 Development technology8 System development technology Ask about the fundamental ow of the process of software develop-ment such as requirements denition, system design, programming , testing, and software maintenance. Ask about the concepts of the estimate in software development. 9 Software development management techniques Ask about the signicance and purpose of typical development meth-ods.5 Project management10 Project management Ask about the signicance, purpose, concepts, processes, and meth-ods of project management.6 Service management11 Service management Ask about the signicance, purpose, and concepts of IT service man-agement. Ask about the understanding of related matters such as help desks. Askabouttheconceptsaboutsystemenvironmentmaintenance, such as computers and networks.12 System audit Ask about the signicance, purpose, concepts, and target of system audit. Askabouttheowofsystemaudit,suchasplanning,investigating, and reporting. Ask about the signicance, purpose, and concepts of internal control and IT governance. Technology7 Basic theory 13 Basic theory Ask about the fundamental concepts about radix including the char-acteristics and operations of binary numbers. Askaboutthefundamentalconceptsaboutsets,suchasVenndia-grams, probability, and statistics. Askaboutthefundamentalconceptsofhowtoexpressinformation content, such as bits and bytes, and of digitization. 14 Algorithm and programming Askaboutthefundamentalconceptsofalgorithmsanddatastruc-tures, and how to draw ow charts. Ask about the roles of programming. Askaboutthetypesandfundamentalusageofmarkuplanguages, such as HTML and XML. 11Common Career/Skill Framework Scope of questions to be asked (Concept of exam questions) Field Major Category Middle Category Technology8 Computer system15 Computer componentAsk about the fundamental conguration and roles of computers. Ask about the performance and fundamental mechanism of proces-sors, and the types and characteristics of memory. Ask about the types and characteristics of storage media. Askaboutthetypesandcharacteristicsofinput/outputinterfaces, device drivers, etc. 16 System componentAskaboutthecharacteristicsofsystemcongurations,ofthetypes of processing, and of the types of usage. Ask about the characteristics of client/server systems. Ask about the characteristics of Web systems. Askabouttheconceptsofsystemperformance,reliability,andeco-nomic efciency. 17 Software Ask about the necessity, functions, types, and characteristics of OSs. Askabouttheconceptsanduseofbasicfunctionsoflemanage-ment, such as access methods and search methods, and the funda-mental concepts of backups. Ask about the characteristics and fundamental operations of software packages, such as ofce tools. Ask about the characteristics of OSS (Open Source Software). 18 Hardware Ask about the types and characteristics of computers. Ask about the types and characteristics of input/output devices. 9 Technical element19 Human interfaceAskabouttheconceptandcharacteristicsofinterfacedesign,such as GUI and menus. Ask about the concepts of Web design. Ask about the concepts of universal design. 20 Multimedia Ask about the types and characteristics of encodings such as JPEG, MPEG, and MP3. Ask about the purpose and characteristics of application of multime-diatechnology,suchasVR (VirtualReality)andCG (Computer Graphics). Askaboutthecharacteristicsofmedia,andcompressionandde-compression of information data. 21 Database Ask about the signicance, purpose, and concepts of database man-agement systems (DBMS). Ask about the concepts of data analysis and design, and the charac-teristics of database models. Ask about the manipulation methods such as data extraction. Askaboutdatabaseprocessingmethodssuchasexclusivecontrol and recovery processing. 22 Network AskaboutthetypesandcongurationsofLANandWANregarding networks, and the roles of Internet and LAN connection devices. Ask about the necessity of communication protocols, and the roles of typical protocols. Ask about the characteristics and fundamental mechanism of the In-ternet. Ask about the characteristics of e-mail and Internet services. Askabouttheunderstandingofthetypesandcharacteristics,ac-counting, and transmission rates of communication services, such as mobile communication and IP phones. 23 Security Askaboutthefundamentalsofinformationsecurityfromtheview-point of safe and secure activities in a network society. Askabouttheinformationassets,thepurposeofriskmanagement, and the concepts of information security policy. Askabouttheconcepts,types,andcharacteristicsoftechnological security measures, such as measures against computer viruses. Askabouttheconcepts,types,andcharacteristicsofphysicaland human security measures, such as entrance/exit control and access control. Askaboutthetypesandcharacteristicsofauthenticationtechnolo-gies such as ID, password, callback, digital signature, and biometric authentication. Ask about the mechanisms and characteristics of encryption technol-ogy such as public keys and private keys. Chapter 1Corporate and legal affairs ....... 14Chapter 2Business strategy ..................... 64Chapter 3System strategy........................ 90STRATEGY1-1Corporate activities............................151-2Legal affairs........................................ 431-3Chapter quiz....................................... 60Chapter1explainsthebasicknowledgeofcorporate activitiesandbusinessmanagementthatbusiness workers should possess, as well as legal compliance and corporate ethics.1ChapterCorporate and legal affairs151-1-1Management and organizationItisimportanttohaveanoverallunderstandingofacorporationinterms ofbusinessactivities,objectives,andrelevantlawsinordertorecognize andresolveissuesinresponsiblebusinessareas,andfacilitatetheexecu-tion of operations.1Corporate activitiesIn conducting corporate activities, it is important to clearly understand the importance of existence of the corporation and its values. If these are not clearlydened,thecourseofcorporateactivitiesbecomesuncertain.No matterhowhardeachemployeeintheirresponsiblebusinessareaworks, such efforts will lack efciency if they are not properly guided.Understanding the goals and responsibilities that a corporation should des-ignate will lead to well-balanced corporate activities.(1)Corporate philosophy and corporate objectiveThe purpose of corporate activities is to earn prots and contribute to soci-ety. Accordingly, corporations adopt a corporate philosophy and cor-porate objective in which to conduct its activities. Corporate philosophy and corporate objective are universal ideals that essentially do not change.However, the environment surrounding a corporation is undergoing signi-cantchangesintermsofsocialclimate,technology,andotherfactors.In order to fulll its corporate philosophy and objective, a corporation must fromalong-termperspectivedevelopthecapabilitytoadapttosuch changes.(2)Corporate social responsibilityCSR (CorporateSocialResponsibility)referstotheresponsibilities thatacorporationshouldfulfilltosociety.Manycorporationspromote their CSR approach through their websites, or publish a CSR report in or-der to earn public interest and stakeholder trust.Corporations must endeavor to create business from the perspective of all stakeholders,andnotsolelyforthepursuitofprot. Asevidencedbythe existence of the term corporate citizen, corporations are expected to act as productive members of society. Doing so leads to earning public con-dence and creating new corporate values.CSRAbbreviationforCorporateSocialRe-sponsibility.ReferenceDisclosure of nancial resultsAcorporationshouldendeavortodis-closenancialresultsandotheruseful informationinatimelyandappropriate mannert ost akehol ders,i ncl udi ng shareholdersandinvestors.Improving management transparency by such dis-closures makes it possible to build trust and enhance corporate value.ReferenceSRIAbbreviationforSociallyResponsible Investment.Corporate activities1-1Reference16Corporate and legal affairsChapter 1Themostbasicresponsibilitiesofacorporationareconductingcorporate activitiesinalaw-abidingmanner,achievingregulatorycompliance,and providingproductsandservicesthatcombinefunctionalitywithsafety. Moreover, CSR is increasingly expected to encompass such aspects as en-vironmental initiatives, social welfare activities, and local community co-operation as corporations explore their approach to social contribution.2Management resourcesThe three major elements that are essential to the management of a corpo-ration and serve as corporate resources are people, materials, and money. More recently, information has been cited as a fourth element.PeopleFrom a corporate perspective, the term people refers to employees (hu-manresources).Peoplearethemostimportantresourceforallcorporate activities.Enhancinghumanresourcesbyimpartingeachemployeewith the corporate philosophy and objective, and training them in a manner that is consistent with these values can lead to increased prots.MaterialsFromacorporateperspective,thetermmaterialsreferstoproductsand merchandise. In the manufacturing industry, it also refers to production fa-cilities. Althoughseeminglyunrelated,theservicesindustryisalsode-pendentonavarietyofmaterialssuchascomputers,printers,andcopy machines to facilitate corporate activities.Some materials are essential and others are non-essential. It is important to clearlyidentifythosematerialsthatareessentialandnon-essentialtothe corporate activities of a corporation.MoneyFrom a corporate perspective, the term money refers to funds. Money is required to purchase and make materials, and secure people. Money is an essential resource to fund the execution of corporate activities.InformationFrom a corporate perspective, the term information refers to documents anddatathatenableacorporationtomakecorrectdecisionsandremain competitive.Theeffectiveuseofinformationcanleadtoimprovedpro-ductivity,addedvalue,innovativeideasforactivitiesplanning,andother positive results.173Business managementBusinessmanagementinvolvescoordinatingandintegratingmanage-ment resources (people, materials, money, and information) in order to ful-ll the objectives of the corporation. It is important to maximize the use of resourcesthatareavailabletothecorporationandproduceresults.To achieve this, corporations set business objectives and manage them using a PDCA (Plan, Do, Check, Act) cycle.PDCAisafundamentalapproachforbusinessmanagementthatin-volves the execution of a four-step cycle of Plan, Do, Check, Act to con-tinuously improve product quality and work. Repeated execution of PDCA renes and enhances business management.PlanDetermine what to improve and how.CheckEvaluate resultsfrom Do.ActImplement measures toimprove results from Check.DoExecute activitiesaccording to Plan.4Organizational structure of a corporationA corporation is an organizational entity that engages in economic ac-tivities such as production, sales, and provision of services typically for the purpose of making prot. In the narrow sense, it refers to a private corpo-ration such as a stock company or limited liability company. In the wider sense, it also includes public corporations in which the government has a stake.An organization is a collective entity that has been assembled and inte-grated into a system to achieve a common purpose.(1)Structure of a corporationA corporation is an organization that is structured according to task in or-der to conduct operations efciently.Therearevariousformsoforganizationsincludingfunctionalorganiza-tions,divisionalsystemorganizations,matrixorganizations,andproject organizations.ReferenceManagementresourcesfor business managementManagementresourceswithinthecon-textofbusinessmanagementreferto people (humanresources),materials (assets), money (nances) and informa-tion (information management).ReferenceBusiness objectiveAbusinessobjectiveisamedium-or long-term goal that is set in order to ful-fillthecorporatephilosophyorcorpo-rate objective.ReferenceFormal organizationAformalorganizationisacollective entitythatisclearlydefinedbyanor-ganizational purpose or company rules. Formalorganizationsincludecompa-nies and institutions.ReferenceInformal organizationAn informal organization is a collective entitythatisnotclearlydenedbyor-ganizationalrulesorregulations,al-though it has an overall purpose.18Corporate and legal affairsChapter 1Functional organizationA functional organization is structured by job function such as manu-facturing, sales, marketing, accounting, and human resources. This type of organizations key characteristic is that it enables the pursuit of specializa-tion and efciency in each job function, which in turn allows each organi-zation to produce high quality results. At the same time, there is a tendency for boundaries to develop between each functional organization, and issues can arise from departments acting in their best interest.Afunctionalorganizationiscomprisedofaline (direct)department andastaff (indirect)department. Alinedepartmentisdirectlyin-volved in the areas of earning prot such as sales, production, and materi-als. A staff department supports the line department in areas such as human resources, accounting, and general affairs.ManagementSales departmentProductiondepartmentHuman resourcesdepartmentLine (direct)departmentAccountingdepartmentStaff (indirect)departmentHierarchical organizationA hierarchical organization is an organization form with a hierarchical structure so that there is typically one chain of command. For example, in ahierarchicalorganization,thereareanumberofdepartmentsbelowthe president.Belowthesedepartmentsaresectionsthatareresponsiblefor different business segments.This organizations key characteristic is that it facilitates the spread of cor-porate policies throughout the organization.Board of directorsManagement department Sales department Manufacturing departmentHumanresourcesGeneralaffairsCorporatesalesConsumer sales Plant X Plant YDivisional system organizationA divisional system organization is separated along the lines of prod-uct, region, or market with each business division having its own staff de-partment, either partially or in entirety.This organizations key characteristic is that since each business division is capable of performing a broad base of functions, it is possible to issue uni-ed directions so as to rapidly accommodate shifting market needs.ReferenceStaffdepartmentandline departmentThestaffdepartmentincludesthefol-lowing departments: Human resources, accounting, gener-al affairs, and information systems.The line department includes the follow-ing departments: Sales, production, and materials.19In principle, each business division conducts its own accounting, and is re-sponsible for operating business and generating prots independently.ManagementX business division Y business division Z business divisionProduction Sales Accounting Production Sales Accounting Production Sales AccountingMatrix organizationA matrix organization is an organization form often employed by ma-jorenterprisesandglobalcorporations,andisstructuredalongmultiple chains of command such as function and region or function and product.Since this organization takes the form of multiple managers overseeing the personsthatdothework,thereispotentialforconfusioninthechainof command. Atthesametime,departmentalboundariesareeliminateddue to the sharing of work.Project XProject YProject ZDevelopmentdepartmentPlanningdepartmentResearchdepartmentMarketingdepartmentCompany system organizationAcompanysystemorganizationreferstoastructurethatseparates business divisions, and administrates the departments as independent com-panies.Thisincreasestheautonomyoftheorganizationandenhancesits abilitytoadapttoitsenvironment. Theorganizationalstructureissimilar tothedivisionalsystemorganization,butunderthecompanysystemor-ganization, there is greater freedom and discretion to make human resourc-es decisions.Board of directorsCompany X Company Y Company ZSales Plant Sales Plant Sales Plant20Corporate and legal affairsChapter 1Project organizationA project organization is temporarily structured along the lines of per-sonnelwhohavevariousspecializedcapabilities,andisseparatefroma standing organization. It is only intended as a temporary organization and is disbanded once the purpose is achieved.Project XDevelopmentdepartmentMarketing departmentPlanning departmentResearch department(2)Departmental structureThe corporate organization is comprised of departments that are sepa-rated by the content of work they are responsible for. To facilitate compu-terization, it is necessary to have a precise grasp of where a department is positioned within the corporation.The departmental structure and content of work are summarized below.Department Content of workHuman resources(Labor)Hire and train personnel, and assign them to departments. Engage in various types of work that is employee-related.Accounting(Finances)Manage the funds that support the business infrastructure ofthecorporation.Inadditiontoprocuringandadminis-trating funds, in some corporations the accounting depart-mentalsomanagescorporateassetsandevaluatesthe business results.General affairs Coordinate between the departments and perform admin-istrative management.Information systems Developandmanageinformationsystemswithinthecor-poration.Staffedwithspecialistssuchassystemengi-neers, programmers, and systems operation engineers.Marketing Perform market research.Research and develop-mentProvide technical development and research for new prod-ucts.Sales(Marketing)Selltheproductsorservicessuppliedbythecorporation directly to the customer.Typically includes payment collection.Production(Manufacturing)Manufactureproducts.Insomecorporations,production also incorporates the function of the materials department.Materials(Purchasing)Procures materials required for product manufacturing and business operations.21ReferenceOROR is a set of scientic techniques for determining and implementing business pl ansi nacorporat i on,whi chhas emergedasafieldofappliedmathe-matics and computing.Drawingwidelyfromtechniquesand tools of science, it is a method for ana-lyzingtheproblemsinvolvedinagiven taskanddiscoveringtheoptimalsolu-tion.Abbreviation for Operations Research.ReferenceIEIEisamethodforstreamliningthe processesinvolvedinmanufacturing, construction,etc.Morespecically,it usesavarietyofmethodstostudythe timeinvolvedinatask,toplanand managedailyschedules,tomanage costs,etc.Itiswidelyusedonthepro-duction eld as a technique for improv-ing operations.AbbreviationforIndustrialEngineer-ing.1-1-2OR (Operations Research) and IE (Industrial Engineering)OR (Operations Research) is a method for analyzing and solving prob-lems that arise in business administration. IE (Industrial Engineering), Meanwhile,isamethodforimprovingproblemsthatariseintheproduc-tion eld or services.Because of the great impact that people, materials, money, and information have on the conduct of business activities, it is important to analyze, solve, and improve problems that arise at both the managerial level and the eld level.1Understanding operationsVariouskindsofchartsanddiagramsareusedinORandIEtoanalyze, solve, and improve work issues.The followings are used to understand operations.Illustrating the ow of work WorkowExplicating the structure of problems Associationdiagram,treediagram,affinity mapExpressing relationships Matrix diagram, matrix data analysisExpressing trends over time Z graphExpressing distributions Distribution diagram, portfolioUsed in planning and management Gantt chartWorkflowA workflow shows tasks as linked chains of actions. Using a workow makes it possible to recognize which department is carrying out what task, and what relationships there are between which departments.Customer Sales Marketing Warehouse AccountingOrders productReceives productIssues paymentReceives orderBooks order Checks inventoryRequests product shipmentChecks productShips product Settles payment for product22Corporate and legal affairsChapter 1Association diagramAnassociationdiagramindicatesbyarrowsrelationshipsbetween causes and effects or goals and methods to explicate the structure of a problem.Thisisusefulwhenaproblemthatneedssolvingiswell-estab-lished, but the causes behind it are convoluted.This method may go through several rounds of revisions by multiple team members who will approach the problem from different angles, effectively getting at the root of the problem, and helping to nd a solution.Simple taskIncrease in mistakesNew person added Procedure deterioratesWork efficiency deterioratesIncrease of malfunctionsObsolete infrastructureLack of concentration: Cause: EffectIncrease in chatterTree diagramAtreediagramisamethodforhierarchicallyexpressingachainof goals and means in order to discover ways to solve a problem. The proc-essofcreatingatreediagramandthecompletedresultscanprovidespe-cic policies and actions for resolving the problem.GoalMeans for improvingwork efficiencyMeans forequipment measuresStaff educationImproved allocationIntroduce new modelRe-examine operationsEquipment measuresStaffing measuresImprove workefficiencyMeans forstaffing measures23Affinity diagramAn affinity diagram is a way of summarizing mutual afnities between data, organizing data into named groups, and analyzing data. It can eluci-date vague problems and clarify trouble-spots.Declining salesProductFew products in line with needsHigh prices compared to competitorsNegotiations with customersNot making proposals that respond to customer needsNot knowing key decision-makersNot following up periodicallyMatrix diagramA matrix diagram organizes elements to be analyzed into rows and col-umns, marks their relationships at their intersections to dene the existence andformofaproblem,andsparksideasthatleadtosolutions.Viewing these intersections as starting points for ideas is an effective way to solve problems.Company name Skill Service Delivery date CostCompany A Excellent OK Good BadCompany B OK Good Good OKCompany C Bad OK Bad ExcellentCompany D Excellent OK Bad GoodCompany E Good Excellent OK Good24Corporate and legal affairsChapter 1Matrix data analysisMatrix data analysis is a method for organizing data properties when it ispossibletoexpresstheinterrelationshipsamongmultipledatamatrices as numerical data. It makes it possible to grasp the characteristics of each element when a large volume of data makes the overall picture difcult to understand.TechnicalskillTrainee AA 5 910555.2 (average)107 8 BB9 2 CC4 7 DD1 9 EE5.2 7.0 AverageAdministrativeskillAdministrative skill Skill tableIf focusing on technical skills, choose B, CTechnical skillZ graphA Z graph expresses trends over time, and is named after the Z shape that the lines assume.For example, this graph shows revenues, cumulative revenues, and moving totals (cumulativeoverpastyear).Ifthemoving-totaltrendlineisrising, then sales results are solid; if the line is dropping, then results are poor.Sales results tableThis yearNov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSales 90 70 70 50 90 110 80 100 70 60 80 90 100 80Total 790 840 70 120 210 320 400 500 570 630 710 800 900 980Moving total 820 840 860 880 890 910 930 940 940 940 950 960 970 980120010008006004002000Jan FebMar Apr May JunJulAug Sep Oct Nov DecProfitTotalMoving totalAmountPeriod25Distribution diagramA distribution diagram represents the number of elements that fall into each quadrant to show their distribution.Forexample,thisgraphchartstheprotabilityofproductsagainsttheir sales continuity.ProfitabilityContinuityProductCProductEProductDProductBProductAPortfolioA portfolio is a graph that represents distributions.For example, in the graph shown here, each area visually represents sales volume and market share.Area A Area DArea B Area CMarket shareSales volumeGantt chartA Gantt chart indicates by horizontal bars to represent work schedules and results. The horizontal axis is marked to indicate hours, days, months, etc., and individual tasks or projects are stacked vertically.PlanDesignOperation1 2 3 4 5 6 7 8 (week)ReferenceManagement science methodManagementsciencemethodisthe useofari thmeti cmethodstosol ve problemsastheyapplytobusiness. Time-seriesanalysiscanbeusedto predictfuturesalesbyanalyzingpast productsalestrends,whileportfolio analysisandinvestment-calculation models can be used to make decisions.ReferenceManagement science methodManagementsciencemethodisthe useofari thmeti cmethodstosol ve problemsastheyapplytobusiness. Time-seriesanalysiscanbeusedto predictfuturesalesbyanalyzingpast productsalestrends,whileportfolio analysisandinvestment-calculation models can be used to make decisions.26Corporate and legal affairsChapter 12Job analysis and operational planningTables and charts are used to analyze data, and making graphs can help to improve business processes.Themethodsusedforjobanalysisandoperationalplanningaresumma-rized below.Expressing the impact of a job Pareto chart, ABC analysisExpressing the order of tasks and number of days Arrow diagramExpressing distributions Scatter diagram, histogramComparing and balancing multiple elements Radar chartExpressing the status of a process Control chartExpressing big/small relationships Bar chartExpressing proportions of a whole Pie chartExpressing trends over time Line chartExpressing predictions Regression analysisPareto chartA Pareto chart shows total values for multiple elements arranged in de-creasing order as a bar chart, overlaid with a line chart showing cumulative values for all elements.Forexample,inthechartshownhere,householdappliancesarearranged by sales volumes, running from personal computers down to washing ma-chines.Unit sales Cumulative unit salesCumulative values of bars1001201408060402001002030405060Air conditionerTelephoneTelevisionRefrigeratorWashing machinePersonal computer27ABC analysisAnABCanalysisisamethodforclarifyingtheimportanceorpriority of multiple elements (products, etc). This is useful in numerous aspects of businessadministration,includingsalesstrategyandmanagement,inven-torycontrol,etc.ItusestheParetochart,withelementsarrangedinde-creasing order of priority, and divided into three categories: A, B, C.Ingeneral,thetop70%groupisgroup A,the7090%groupisgroupB, and the remainder is group C.For example, in the example chart, personal computers and air condition-erscombinedmakeup70%ofsales,sothosetwoproductscompose Group A, suggesting that product management should give greater weight to them.Total units sold=130Unit sales120100%90%80%8070% A (Important) 70%60%6050%40%4030%20%2010%0%0100Group APersonal computerAir conditionerGroup BTelephoneTelevisionGroup CRefrigeratorWashing machinePersonalcomputerAirconditionerTelephoneTelevisionRefrigerator WashingmachineArrow diagramAn arrow diagram is a method for preparing better activity plans. It or-ganizesthesequentialrelationshipsbetweentasksandthedaysrequired indicated by arrows. It is also used as a PERT chart.For example, the diagram here shows that task E can begin once both tasks C and D are complete.1 234 5Task A5 daysTask C5 daysTask B Task D3 days 4 daysTask E2 daysReferenceCritical pathA critical path in schedule planning, is the path down the middle of the sched-ulethattakesthegreatestnumberof days.Becauseanycritical-pathactivity fal l i ngbehi ndwi l lcausetheenti re scheduletofallbehindaswell,those activitiesdemandspecialmanagement attention.ReferencePERTAbbreviationforProgramEvaluation and Review Technique.28Corporate and legal affairsChapter 1Scatter diagramAscatterdiagramplotstwopropertyvaluesontheX-and Y-axesto show the correlation between two kinds of data.For example, the positive correlation graph plots volume of cold beverage salesagainsttemperature,showingthatastemperatureincreases,salesof coldbeveragesincreases.Thenegativecorrelationgraphplotshotbever-age sales against temperature, showing that as temperature increases, sales ofhotbeveragesdecrease. Thenocorrelationgraphplotsmagazinesales against temperature, showing that the two are not related.Positive correlation Negative correlation No correlationTemperature Temperature TemperatureSales of cold beveragesSales of hot beveragesSales of magazinesRadar chartA radar chart is used to compare and balance multiple elements.Forexample,thischartshowsthebalancebetweenscoresastudentre-ceived on tests in various subjects.20406080100EnglishJapanese historyMathematicsJapaneseCompositionBiologyReferenceCorrelationCorrelation refers to a relationship be-tweentwopropertiessuchthatasthe valueforoneincreases,theotherde-creases. When the relationship between these two is nearly linear, the two prop-erties are said to be correlated.29Control chartAcontrolchartexpressesthestatusofworkprocessesusingaline chart.For example, the chart here shows irregular points based on the following criteria:Any points outside the control bounds, either high or lowIf there are six or more points in a row above or below the centerline, the sixth point and beyond.Based on these criteria, there are three points judged to be irregular in the example chart.Upper limitMedian data valueLower limitUppercontrol boundIrregularity biased to one side of medianCenterlineLowercontrol boundIrregularity out of boundHistogramAhistogramisamethodforrepresentingthenumberofelementsin eachgroupasabargraph,dividingtotaleddataintosomenumberof groups.A histogram can reveal an overall picture of the data, the central position, range of variation, etc.Forexample,thischartshowstheresultsofasurveyofcellularphone owners in a certain city broken down by age group, revealing that cellular phonesaremostcommonamongpeopleaged21-30,followedbypeople aged10-20,then31-40,andthattheywereleastcommonamongpeople aged 51 and over.Number of peopleAge bracket504030201010

2021

3031

4041

50Number of cellular phone owners (City X)10orless51ormoreReferenceControl chart schemePlottingthemeasureddatawillreveal processirregularitieswhenpointsfall outsidetheboundsorareclusteredon one side of the centerline.30Corporate and legal affairsChapter 1Bar graphA bar graph is a graph to compare multiple elements each other.For example, sales results for each sales executive, or proceeds of sales for several months can be compared.Units: Yen800,000700,000600,000500,000400,000300,000200,000100,0000AprilMayJuneFirst quarter salesSales Department 1Sales Department 2Sales Department 3Pie chartApiechartrepresentstheproportionorshareofeachelementthat makes up a whole.For example, pie charts might be used to show the relative shares of sales of various products, or the age-group breakdowns to a survey.Distribution of cellular phone owners (City X)TeensTwentiesThirtiesFortiesFiftiesSixtiesOther25%24%18%16%11%5%1%31Line chartAlinecharttypicallyshowsanumericalvaluealongoneaxisan elapsed time along the other, with a line connecting points plotted at each time marker, giving this graph its name. It is used to represent trends over time, as with changes during the course of a year.

JanFebMarAprMayJunJulAugSepOctNovDecMinimum temperature by region (2009)

Region ARegion BRegion CRegression analysisRegression analysis expresses a correlation between two kinds of data that are plotted on a scatter diagram, using a straight line to show the rela-tionship.If the two kinds of data are x and y, then the linear regression can be expressed as y=ax+b. In this case, a is the slope of the linear regres-sion, and b is the y-intercept.For example, in this graph, if the annual average temperatures can be pre-dicted, beverage sales can also be predicted, which would help determine quantities of products to order.Alinearregressionisastraightlinewiththeshortestdistancetoeach point, which is calculated using the least-squares method.y=ax+bxyTemperatureLinear regressionCold-beverage sales profitReferenceLeast-squares methodTheleast-squaresmethoddrawsa straightlinethathasthesmallesttotal valueforthesquaresofthedistances betweenpl ottedpoi ntsandthere-gressed line.ReferenceLeast-squares methodTheleast-squaresmethoddrawsa straightlinethathasthesmallesttotal valueforthesquaresofthedistances betweenpl ottedpoi ntsandthere-gressed line.32Corporate and legal affairsChapter 13Decision-makingIn order for a company to turn a prot, it needs to operate efciently and contain costs.The following methods can be used to efciently make decisions that solve problems.(1)Cause and effect diagramA cause and effect diagram maps the effects (results) that are creating work problems along with the apparent causes (factors) that relate to them inadiagramthatresemblesafishsskeleton.Itisalsoreferredtoasa fishbone diagram. It is useful for laying out and summarizing multiple causes.For example, in the diagram here, the causes that have led to a degradation inqualityhavebeenlaidoutasasystemoffourfactors (workmethods, materials,machinery,andstaff),andthismakestherelationshipamong factors evident.InefficientRejectsNegligence DeteriorationBreakdowns Short-staffingWork methods (Cause)Equipment (Cause) Staff (Cause)Materials (Cause)Quality degradation (Effect)(2)SimulationAsimulationisanexperimentthatmimicsactualcircumstancesbased on a realistic prediction of conditions.The methods for conducting simulations are summarized below.Linear programmingLP (LinearProgramming)isamodelusedforaparticularkindof problem-solving,ndingthemosteffectivewaytoallocateresourcesun-der a certain set of constraints.Queueing theoryQueueingtheoryisamodelforanalyzingcustomerwaiting-timeand line length in service situations such as bank-teller windows, based on cus-tomer arrival time, the number of windows, and average service duration. Waiting period and the number of people in line can be expressed as an ex-pectation value.(3)Inventory controlInventory control is the foundation of business management for a company.If inventory is excessive or inadequate, supply and demand go out of bal-ance, and too much inventory puts pressure on all the companys resourc-es, increasing costs. This makes it especially important to maintain appro-priate inventory levels as part of inventory control.The methods for inventory control are summarized below.ReferenceLPAbbreviation for Linear Programming.ReferenceExpectation valueAnexpectationvalueistheaverage valuethatisobtainedaftermultipletri-als.Forexample,rollingdicesome numberoftimescanbeexpectedto produce an average value.33Kanban systemTheKanbansystem,alsoreferredtoastheJIT (Just-In-Time)sys-tem is a manufacturing system popularized by Toyota as a method to pro-cure the item that is needed in the quantity needed at the time it is needed.It keeps intermediate warehousing to a minimum by matching the current production step to the production status of later steps (which use the part), and procuring the parts needed from previous steps (parts makers and sup-pliers).Kanbanreferstothestatementofworkthatdetailsthedeliverytimes and quantities of components, which is carried from the end of later steps to the beginning of former steps in order to manage production.MRP (Materials Requirement Planning)MRP (MaterialsRequirementPlanning)isamethodinmanufactur-ing planning for calculating the net required quantity of a part that needs to be procured.In MRP, the total quantity of parts that will be required under the manufac-turing plan is calculated, and the net required volume is obtained by sub-tracting the amount that can be placed in inventory.Economic ordering quantityEconomicorderingquantityisamethodforcalculatingtheoptimal quantity to order when stocking inventory.Minimizing the ordering cost and inventory carrying cost associat-edwithstockinginventoryisanimportantpartofrunningabusinessto maintain protability. Appropriate ordering quantities help maintain an in-ventory that incurs the lowest cost possible.Ordering cost Expenses associated with a single order. Individual orders forlargequantitieslowerorderingcost,andtherefore, overall cost.Inventory carrying cost Theexpensesrequiredtomaintainaninventoryincluding inventory management. This cost rises with large inventory volumes or long periods in inventory.Total inventory cost Total of inventory carrying cost and ordering cost.Volume orderedEconomic ordering quantityTotal inventory costInventory carrying costOrdering costCostReferenceMRPAbbreviation for Material Requirements Planning.ReferenceMRPAbbreviation for Material Requirements Planning.ReferenceNet required quantityNet required quantity is the quantity of new parts needed in an order.34Corporate and legal affairsChapter 1ExampleObtaintheorderingquantitythatminimizestotalinventorycosts under the following conditions[Conditions](1) Orders are by lots, where one lot consists of 500 pieces.(2) Inventorycarryingcostsareproportionatetovolumeperor-der, where one lot costs 15,000.(3) Ordering costs are 6,000 yen per order.(4) The volume that will be used during the period is 20,000 pieces.The procedure for calculating the order volume (number of lots) that will minimize total inventory costs is summarized below. Figure the number of ordersQuantityused (quantityorderedpiecesperlot)roundupfrac-tions Figure the total ordering costNumber of orders placed ordering cost Figure the inventory carrying costOrder size carrying cost per lot Figure total inventory cost Total ordering cost + inventory carrying costOrder sizeNumber of orders Ordering cost Inventory carrying costTotal inventory cost220,000(2500)=20206,000=120,000215,000=30,000120,000+30,000=150,000320,000(3500)=14146,000=84,000315,000=45,00084,000+45,000=129,000420,000(4500)=10106,000=60,000415,000=60,00060,000+60,000=120,000520,000(5500)=886,000=48,000515,000=75,00048,000+75,000=123,000Therefore, the order size that results in the lowest overall costs is 4 lots.Inventory valuing methodAninventoryvaluingmethodisamethodforvaluinginventoryre-sources on handas assets by replacing them with their cash equivalent.The typical valuation methods are summarized below.Category DescriptionFirst-infirst-out methodConsiders oldest products to be sold and calculates inventory value of products in stock at end of period (new products in inventory).Last-infirst-out methodConsiders newest products to be sold and calculates inventory val-ue of products in stock at end of period (old products in inventory).Aver agecost methodCalculatesinventoryvalueatendofperiodbasedonaverage cost of goods on hand.Specic identi-cation methodCalculates inventory value at end of period based on actual costs for each particular item.ReferenceLotAlotisaunitofquantityusedinpro-duction and shipping.It refers to a grouping of the same prod-uct.ReferenceLotAlotisaunitofquantityusedinpro-duction and shipping.It refers to a grouping of the same prod-uct.35ExampleFigure out the inventory valuation the end-of-period using rst-in rst-out or last-in rst-out methods.Assumes items stocked first have been shippedAssumes items stocked last have been shippedFirst-in rst-out method Last-in rst-out methodPurchase Units Unit priceShipped Inven-toryInventory valuationShipped Inven-toryInventory valuationBeginning inventory3 units 10 yen3 units 0 units 3 units 3 units 10 yen = 30 yenApril 1 unit 11 yen1 unit 0 units 1 unit 1 unit 11 yen = 11 yenJune 2 units 12 yen1 unit 1 unit 1 unit 12 yen = 12 yen2 units 2 units 12 yen = 24 yenJuly 3 units 13 yen3 units 3 units 13 yen = 39 yen1 unit 2 units 2 units 13yen = 26 yenSeptember 4 units 14 yen4 units 4 units 14 yen = 56 yen4 units 0 unitsEnding inventory8 units107 yen 91 yenTherefore, inventory valuation is 107 yen using the rst-in rst-out meth-od, and 91 yen using the last-in rst-out method.(4)DepreciationMachinery, buildings, and other xed assets reduce asset value over time. Thisiscalleddepletion.Thetaxcodestipulatesthatthisdepletionbe calculated in a certain way, and spread out over accounting periods.Thisiscalleddepreciation. Twomethodsforguringdepreciationare the straight-line method and the declining-balance method.Revisions to the Japanese tax code in 2008 changed depreciation methods sothatforequipmentacquiredafter April1,2008,anewdepreciation methodcouldbeappliedthatallowsfordepreciationdowntoaresidual value of 1 yen.Methods of depreciationDescription Formula for calculating depreciationStraight-line methodThe purchase price is depreciated by a xed amount every accounting period. Equipment acquired March 31, 2008 or before: (acquisitioncostresidualvalue)Useful life Equipment acquired April 1, 2008 or after:acquisitioncostdepreciationratecorre-sponding to useful life (revised)Declining-balance methodInthismethodof depreciation,the originalacquisition costminusthefull depreci ati onex-pensesuptothat pointaretakenas theUndepreciated balance,andthe assetisdepreciat-edbyaxedper-centage rate every period. Equipment acquired March 31, 2008 and before:Undepreciatedbalancedepreciationrate corresponding to useful life Equipment acquired April 1, 2008 and after:Undepreciatedbalancedepreciationrate corresponding to useful life (revised)*In Japan, the limit on the amount depreciated = acquisition cost useful life corresponding to a guaranteed rate.*However,ifthecalculationofthedepreciation expense is smaller than the limit on the amount depreciated,thenthedepreciationexpensefor that period is recomputed as follows.Undepreciated balance useful life correspond-ing to revised depreciation rate 1 yenReferenceAcquisition costAcquisitioncostisthepricerequired topurchasetheequipment.Thisisthe totalamount,whichmayincludehan-dling fees, etc.ReferenceResidual valueResidualvalueistheexpectedvalue of an asset after the statutory useful life havepassed.Itistypically10%ofthe acquisition cost.ReferenceUndepreciated balanceUndepreciated balance is the acquisi-tion cost less the depreciation expense.ReferenceDepreciation rateDepreciation rate is a xed rate corre-sponding to the statutory useful life, giv-en in the tax code.ReferenceGuaranteed rateGuaranteedrateisaxedratecorre-spondingtothestatutoryusefullife; used to calculate the guaranteed depre-ciation amount.ReferenceStatutory useful lifeStatutory useful life refers to the years ofserviceestablishedbytheFinance Ministry of Japan based on its Years of ServiceforFixed AssetsIncludingMa-chinery,Buildings,andEquipment.In thetaxcodeandotherregulations, years of service are also established for different categories of assets.36Corporate and legal affairsChapter 14Problem-solving methodsThe basic methods for solving problems are summarized below.BrainstormingBrainstorming is a method for a group of people to generate new ideas by exchanging opinions according to certain rules, and produce a solution. The rules for brainstorming are as follows.Rule DescriptionNo criticizing Do not criticize or nd fault with the opinions of other people. Criti-cizing and fault-nding inhibit the free ow of ideas, which is to be avoided.Quantityover qualityTry to produce as many different opinions as possible in a short pe-riodoftime. Thegreaterthequantity,themorelikelyagoodsolu-tion will be found.No constraints Speak freely without being bound by existing ideas or xed ideas. A tangent off of a major or minor theme may be hiding a breakthrough idea.Combineand piggybackJointogethertwoideasorimproveuponsomeoneelsesidea. These can be expected to produce new ideas.Pointstoconsiderformakingbrainstormingsessionsrunsmoothlyare summarized below. The group should include 58 participants. Allmembersshouldbeatthesamelevelinthehierarchy,withnosubordi-nate/superior relationships to promote free expression of opinions. The location should be a conference room that members can relax in. The leader should create an atmosphere that elevates the enthusiasm of all members to draw out ideas and opinions. If it runs for more than one hour, take a break.ReferenceKJ methodKJ method is a method for expressing groupmembershipandclarifyingprob-lemareas.Usingbrainstormingtech-niques,avarietyofdifferentideasare generated, each noted on its own card, and similar cards are grouped together.ReferenceBrainstormingBrainstormingisacombinationofthe wordsbrainandstorm.Itrefersto the spontaneous thinking of ideas.ReferenceGordon methodTheGordonmethodisamethodfor generating ideas through brainstorming. Thisdiffersfrombrainstorminginthat participantsarenotactuallyawareof theissues.Sincetherearenoprecon-ceptions,thereismorefreedomtoex-plore new ideas and concepts than in a conventional brainstorming session.37Buzz sessionAbuzzsessionisamethodforholdingunstructureddiscussionsand collecting ideas in a small group of people. In a buzz session, a discussion proceeds as follows.Assign roles Each group decides on a leader and note-taker.Break into groups Participants are broken into small groups of 58 people.Discussion within groupEach group has a discussion on a theme, lasting about 10 minutes.Presentation of positions The leader of each group presents the groups position.Decide on a position Each group takes a position on its theme.1-1-3Accounting and nancial affairsAccountingreferstorecording,calculating,andorganizingprotand loss events. This process is referred to as a financial affair, and the re-sults are managed using several types of financial statements.1Sales and protManagersofacorporationalwaysneedtobeawareofsalesandvol-ume of sales in the course of their business activities. Towards that end, theyaimtomanageprofitandloss,adjustinventories,andachieve maximum prot for little cost.ReferenceBuzz sessionBuzz refers to enthusiastic chatter. ReferenceBuzz sessionBuzz refers to enthusiastic chatter. 38Corporate and legal affairsChapter 1(1)ExpenseExpense refers to the money that a corporation must pay in order to car-ry out business activities. The major categories of cost are summarized be-low.Cost Theoriginalcostofpurchasingmaterialsandmanufacturing products.Variable cost Expensesthatvarywithprotincludingthecostofgoodssold, product shipping, etc.Fixed cost Expensesthatdonotvarywithprofitincludingcostofequip-ment, labor, etc.Selling,general andadministra-tive expenseAllexpensesinvolvedinmanufacturingproductsandsalesin-cludingthecostofoperatingsales,generaladministration,etc. Also referred to as operating expenses.(2)Prot Profit is the amount of money left after subtracting expenses from sales. There are several ways to calculate prot in accountancy.The typical methods of calculating prot are summarized below.Gross prot Prot calculated by subtracting cost of goods sold from sales.Gross prot = sales cost of goods soldOperating incomeProt calculated by subtracting Selling, general and administra-tive expense from gross prot.Operatingincome=grossprotSelling,generalandad-ministrativeOrdinary income Operatingincomeplusnon-operatingincome,lessnon-operat-ing expenses.Ordinaryincome=operatingincome+non-operatingin-come non-operating expensesThese forms of prot are calculated in an income statement.(3)Break-even pointThe break-even point is where sales and expenses are equal, resulting in zero prot or loss. This is referred to as break-even revenues.The break-even point is calculated so that it is possible to identify a prof-itable line, where any revenues above the break-even point can turn in a prot.Break-even revenues can be calculated as follows.Break-even revenues = fixed cost (1 (variable cost revenues))Unit variable costUnit contribution marginUnit variable cost The proportion of revenues accounted for by variable cost. variable cost revenuesUnitcontribution marginThe proportion of revenues accounted for by prot. 1 unit variable costReferenceIncome statementReferto1-1-32 (2)Incomestate-ments.ReferenceNon-operating incomeNon-operatingincomeisinterestre-ceived, dividends, and other income re-ceivedapartfromtheoperationofthe business.ReferenceNon-operating expensesNon-operatingexpensesareinterest paid and other expenses incurred apart from the operation of the business.39ExampleWith revenues of 1 million yen, variable cost of 800,000 yen, and xed cost of 100,000 yen, calculate the unit variable cost, the unit contribution margin, and break-even revenues.Unit variable cost800,000 1,000,000 = 0.8Expresses that 1 yen of sales incurs 0.8 yen of variable cost.Unit contribution margin 1 0.8 = 0.2Expresses that 1 yen of sales contributes 0.2 yen of prot.(0.2 yen includes prot and xed costs.)Break-even revenues100,000 0.2 = 500,000The break-even point is where prot is zero, which makes all contributing protsxedcosts.Tocalculatebreak-evenrevenuesfromxedcost,di-vide xed cost by the unit contribution margin. In this case, with revenues of 500,000 yen being the break-even point, exceeding that value results in a prot, and failing to meet it results in a loss.Break-even point(500,000)Total cost(fixed + variable cost)Variable cost(800,000)Fixed cost (100,000)Revenues1 million yenSales volumeProfit (100,000)Loss0.210.8If revenue at the break-even point is set to 1, then the ratio of variable cost and fixed cost is equal to the ratio of unit variable cost to unit contribution margin, or 0.8 : 0.2.AmountReferenceMarginal protMarginalprotistheprotremaining after subtracting variable cost from rev-enues.ReferenceTarget incomeTargetincomeistheamountofprot soughtfromthemanufactureandsale of a product. Setting a target income is useful for break-even point calculations, includinghowmanyunitsneedtobe sold.Forexample,tocalculatethebreak-evenpointbasedonatargetincome, calculate the marginal prot + target in-come.Inotherwords,xedcost+tar-get income = (unit revenue unit varia-blecost)unitssold.Fromthat,units sold= (fixedcost+targetincome) (unit revenue unit variable cost).40Corporate and legal affairsChapter 12Types of nancial statements and their purposesIn nancial accounting, a corporation prepares a financial statement to reportitsfinancialstatustointerestedparties,includingshareholders, banks, vendors, and public institutions.The following are examples of nancial statements.Checks state of business operationsABC trading company XYZ bankFinancialstatement(1)Balance sheetA balance sheet shows a corporations nancial status at a certain point in time. On a balance sheet, debits or assets appear on the left, and cred-itsorliabilitiesappearontheright.Theprocessofcheckingwhether the nal totals of assets and liabilities agree is called a balance check. A balance sheet has the following tabular format.Titles Amount Titles Amount(Assets) (Liabilities)Cash: 1,000,000 yen Debt: 70,000 yenAccounts receivable: 50,000 yen Accounts payable: 40,000 yenInventory: 60,000 yenTotal liabilities: 110,000 yen(Owners Equity)Capital stock: 800,000 yenRetained earnings: 200,000 yenTotal owners equity: 1,000,000 yenTotal assets: 1,110,000 yen Total liabilities & owners equity:1,110,000 yenAbalancesheettreatseverything,includingproductsasiftransactedin termsofmonetaryvalue.Evenifarentalagreementispending,itisnot subject to recording since no money has changed hands at this point.ReferenceAssetsAssetsarei temssuchascashor property.Theyincludebuildingssuch asshopsandoffi ces,automobi l es, products, and other debits that can be cashed in.Major accounting titles of assetCurrent assetsExample: Cash,securities,accounts receivables, etc.Fixed assets Tangible assetsExample:Land,buildings,fixtures, etc. Intangible assetsExample:Patentrights,leasehold rights, goodwillDeferred assetsExample:Franchisefees,develop-mentcost s,corporat e bond issuance fees, etc.ReferenceLiabilitiesLiabilitiesareitemssuchasdebt. Theyrefertoanycreditsthatneedto be paid.Major accounting titles of liabilityCurrent liabilitiesExample: Notespayable,accounts payable,short-termdebt, etc.Fixed liabilitiesExample: Corporate bonds, long-term debt, accrued employee re-tirement benet, etc.ReferenceB/SAbbreviation for Balance sheet.ReferenceNet assetsNet assets is total assets less total lia-bilities.(2)Income statement (P/L)AnincomestatementorP/L (Profit&Lossstatement)showsa corporationsprofitsandlossesforafixedperiod.Disclosingexpenses (losses) and income (prots) makes it possible to ascertain the state of the corporations nances.Income statementFrom: 1 April 200XTo:31 March 200X(units: million yen)SalesCost of goods soldGross profitSelling, general and administrative expenseOperating incomeNon-operating incomeNon-operating lossOrdinary incomeExtraordinary profitExtraordinary lossPre-tax profitCorporate taxes, etc.Net income1,000650350200150305013010201205070(3)Cash-ow statementA cash-flow statement represents the ow of cash over a xed period, by how much cash was on hand at the start of the period, and how much is leftattheend.Preparingacash-owstatementclarieswheremoneyis going, and by looking at it alongside a P/L and B/S, it should be possible tomanagefundspredictablyandformulateafund-managementplanfor more efcient business management.ReferenceROE (Return On Equity)ROE (Return On Equity) is the rate of protabilityperunitofassetsorshare-holder equity. It shows a ratio of net in-come (t her et ur n)agai nstcapi t al (shareholders equity) for the number of sharesofstockissued.Inshort,itan-swersthequestionofhowmuchprot is being returned for the money entrust-ed to the company by shareholders, as an index of managerial efciency.ROE = Net income shareholders eq-uity 100ReferenceP/LAbbreviationforProfit&Lossstate-ment.ReferenceCurrent ratioCurrent ratio is an index that shows to whatextentcurrentassetsexceedcur-rentliabilities.Thecurrentratio,asa percentage is given by the formula (cur-rent assets current liabilities) 100.Highervaluesareindicativeofstable corporate management.ReferenceProtabilityProfitabilityisanindexexpressing howmuchcapi tali susedandhow muchprotisproduced.Protability= grossprotmargintotalassetturno-ver, where gross prot margin = prot revenuesandtotalassetturnover= revenues assets.Thehigherthevalue,thegreaterthe protability.413Other forms of bookkeepingApart from required nancial statements, the following are forms of book-keeping used for corporate nancial management.(1)Journal bookAjournalbookiswherealltransactionsareorderedandenteredby date, and every journal page is tabulated on a single statement. For exam-ple,1,000yenworthofofcesuppliespurchasedwithcashwouldbere-corded as follows.Titles Amount Titles AmountSupplies Expense 1,000 Cash 1,000(2)General ledgerA general ledger in corporate accounting plays a fundamental role, as it is necessary for settling accounts. It is a place to organize transactions into accountingtitle.Forexample,1,000yenworthofofficesuppliespur-chased with cash would be recorded as follows.CashTitles Amount Titles AmountSupplies Expense 1,000Supplies expenseTitles Amount Titles AmountCash 1,000(3)Trial balance sheetA trial balance sheet is a table showing the credits and debits for each title of account, showing balance totals, without P/L or B/S sections. These gures are used as a check when preparing nancial statements.Also referred to as total trial balance sheet.Balance Debit Accounting title Credit Balance700,000 1,300,000 Cash 600,000150,000 500,000 Accounts payable 350,000200,000 Accounts receivable 600,000 400,000Capital stock 1,000,000 1,000,000800,000 800,000 Retained earningSales 850,000 850,000600,000 600,000 Purchase2,250,000 3,400,000 3,400,000 2,250,000ReferenceAccounting titleAnaccountingtitleisajournalitem that appears in a nancial statement as atitle.Theseincludecash,expenses, product,accountspayable,accounts receivable, etc.Accountspayableisatermusedfor purchases by the company, where pay-mentistobepaidinthefuture;ac-countsreceivablearepurchasesfrom thecompanywherepaymentistobe received in the future.42Corporate and legal affairsChapter 143Legal affairs1-2-1Intellectual property rightsIntellectual property rights are rights that are afforded to protect crea-tions that arise from the intellectual and creative activities of persons.Intellectualpropertyrightscanbeorganizedintothecategoriessumma-rized below.Rights to protect the use and ownership of industrial productsRights to protect the creative expressions of authorsCopyright and property rightsMoral rightsTrademark rightsDesign rightsUtility model rightsPatent rightsCopyright and property rightsMoral rightsTrademark rightsDesign rightsUtility model rightsPatent rightsCopyrightIndustrial property rights Industrial property rightsScope of protection:Ideas, inventions, designs, marks, and product names, etc.Term of protection:10 to 20 yearsRegistration of rights:RequiredScope of protection:Programs, databases, websites, design content collection, cinematic work, etc.Term of protection:50 years from authors death (50 years from publication by a corporation, 70 years from release of cinematic work)Registration of rights:Not requiredCopyrightIntellectual property rightsIntellectual property rights1CopyrightA copyright is a right that protects the creative expressions of authors. Copyrights were originally established to protect the rights of authors who created works such as paintings and stories. Following the widespread use ofcomputers,thescopeofcopyrightswasexpandedtoincludeprograms anddata.Copyrightsaredistinctfromintellectualpropertyrightsinthat copyrightsprotectthecreativeexpressionsofauthors,whileindustrial propertyrightsprotectideas.Inaddition,acopyrightbecomeseffective immediatelyuponcreationofanywork. Anapplicationorregistrationis unnecessary to obtain the rights.Copyrightsarebroadlycategorizedintomoralrightsandcopyright and property rights.ReferenceBusiness model patentAbusinessmodelpatentreferstoa patentforamodelormethodofbusi-ness.AdvancementsinITinparticular have led to the adaption of IT into busi-ness methods, enabling corporations to substantiate what they do as a business and where they make prot. A new busi-ness method is rst recognized when it is submitted for a patent application and issuccessfullyapproved.TheJapan PatentOfcecallsthesepatentsbusi-ness method patents.1-244Corporate and legal affairsChapter 1(1)Moral rightsMoral rights are rights that are exclusively held by the author in order toprotecttheirfeelings,sentiments,andconscience.Moralrightsbelong solely to the author, and generally cannot be transferred or inherited. In ad-dition, the term of protection is considered to continue in perpetuity.The most common examples of moral rights are summarized below.Moral rights DescriptionRight of publication Right to decide timing and method of publication.Rightofrealname announcementRighttodecideuseofrealnameanditsdisplayattimeof publication.Rightofavoidance of modicationRight to prevent unauthorized alteration of work.If changes are made unilaterally without obtaining the consent of theauthor,itisaninfringement oftherightofavoidanceof modification.Authors manuscriptPublished bookSection omitted without authorizationEditor(2)Copyright and property rightsCopyright and property rights are rights that protect any property re-latedtotheauthorswork.Copyrightandpropertyrightsarecommonly referred to as simply copyrights. As a rule, the term of protection is 50 years from the death of the author, or 50 years from publication by the cor-poration.Fromtheperspectiveofproperty,copyrightandpropertyrights can be transferred or inherited either partially or in entirety.The most common examples of copyright and property rights are summa-rized below.Copyright and property rightsDescriptionRight of reproduc-tionRight to reproduce work in the form of copies, photographs, and audio and visual recordings.Right of translation Right to translate or rearrange work.Right of public rentalRight to provide reproductions of work (excluding cinematic work).Right of public transmissionRight to broadcast work, or engage in automatic transmission of information from a server based on requests from the public.Right of screening Right to screen cinematic work.Right of recitation Right to communicate the work such as through recitation.ReferenceNeighboring rightsNeighboringrightsarerightsthatare held by those who play a vital role in the communicationofwork,suchasper-formersandbroadcasters.Unauthor-izedactssuchasmakinganaudiore-cordingofaliveconcertperformance, is an infringement of neighboring rights. Thetermofprotectionforneighboring rights is 50 years from the live perform-ance.ReferenceReproduction of white papersWhitepapersarereportsthatarepub-lishedbyorganizationssuchasfederal andlocalgovernmentinstitutions,and independentadministrativeagencies. Forthisreason,reproductionofwhite papersispermittedforitemssuchas explanatory documents unless explicitly prohibited.45(3)Intellectual property rights for websitesArticle10-1oftheCopyright Actdoesnotcontainanyreferencetoweb-sites in giving concrete examples of works. However, Article 2-1-1 of the Copyright Act denes work as a production in which thoughts or senti-ments are expressed in a creative way and which falls within the liter-ary, scientific, artistic, or musical domain. Accordingly, if a website is expressed in a creative way, it is thought to be protected as a work. When requesting an outside party to prepare a website, it is important to clearly state who the copyright belongs to. Care must also be taken to ensure that informationcontainedinwebsitesdoesnotinfringeonthecopyrightsof others.2Legislation concerning industrial property rightsIndustrial property rights are afforded for the monopolized use of ide-as, inventions, designs, and logo marks for industrial products, and to pro-tect against imitations. These rights fall under the jurisdiction of the Japan Patent Ofce.The types of industrial property rights are summarized below.Industrial property rightScope of protectionRelated legislationTerm of protectionPatent rights Ideas and inventions Patent Act 20 years from applicationUtility model rightsIdea or contrivance relating to the shape or structure of an articleUtility Model Act10 years from applicationDesign rights Design or decoration of an articleDesign Act 20 years from registrationTrademark rights Trademarks including marks and product names that denote a productTrademark Act10 years from registration (Extendable)3Unfair Competition Prevention ActThe Unfair Competition Prevention Act prescribes the regulations for acts of unfair competition. Specically, it deals with areas such as theft of trade secrets and ideas, imitation of goods, and circulation of rumors in a waythatisdisadvantageoustoacompetitor.Whencompetitionthrough such unfair acts is neglected and permitted to exist, it erodes the principle of fair competition in the market, which may cause confusion in the mar-ketplace and result in signicant damages to the consumers. Whereas intel-lectual property rights exist to protect proprietary rights, the Unfair Com-petitionPrevention Actwasenactedfromthestandpointthatsuchrights onlyexistifafairmarkethasbeensecured. Accordingly,thepurposeof theUnfairCompetitionPrevention Actistocontrolillegalactsthatare detrimental to fair competition.ReferenceTrade secretsTradesecretsundertheUnfairCom-petitionPreventionActincludeknow-how, customer lists, marketing manuals, termsofbusiness,andsystemsdesign documentsthathavenotbeendi s-closedtothepublic. Thetermrefersto tradeortechnicalinformationthatis managedwithinacorporationasase-cret.46Corporate and legal affairsChapter 1Major acts of unfair competition are summarized below. Using a famous brand belonging to another party for advertising purposes. Marketinganimitationproductthatisidenticaltotherealproductwithin three years from the day it was marketed. Acquiringandusingcondentialinformationofanothercompanysuchas technicalmanufacturinginformationandcustomerinformationthroughun-fair means such as fraud or theft. Providingfalseinformationabouttheorigin,quality,contents,manufactur-ing method, application, and quantity of goods. Circulating falsied facts or rumors that damage the business reputation of another competitor. Acquiring and abusing the domain name of a famous corporation before it is ofcially created.The Unfair Competition Prevention Act allows for injunctions to be made against infringing persons, and provides measures for restoring the reputa-tion of the business. It also facilitates the seeking of damages based on the estimated amount of damages, and the ling of a criminal case in the event of infringement.4Software licenseA software license refers to the right to use software, and is granted by the software maker to the purchaser.(1)Software and copyrightSoftware is protected under the Copyright Act. Any illegal copying of soft-ware is a clear copyright infringement and considered a criminal act. The scope of protection under the Copyright Act is summarized below.Area Scope of protection Not protectedPrograms and related Programs (Source programs, object pro-grams,applicationprogram, operating systems) Solutions for programs Algorithms Languagesforcreating programs RulesData and related Databases DataMultimedia and related Websites Stillimagesfromdesigncon-tent collection Movingimagesfromdesign content collection Audioclipsfromdesigncon-tent collectionReferencePublic domain softwarePublicdomainsoftwarereferstosoft-ware in which the copyrights have been disclaimed.Sincethecreatordisclaimsallrights, those who obtain the software may use it free of charge or alter the software at will.ReferenceDigital watermarkingDigital watermarking is the process of embeddingdigitalinformationsuchas images and audio with special informa-tiontotheextentthatitdoesnotaffect the integrity of the quality. Digital water-marking is used to protect copyrights by guardingagainstunauthorizedcopying and alteration.47(2)Prohibition of copying softwareReproducingsoftwarewithoutthepermissionofthecopyrightholderis strictlyprohibited.Commercialsoftwareusuallycontainsanagreement when purchased. The right (license) to use the software is granted only if the purchaser consents to the contents of the agreement such as the scope of use.In general, copying software is permitted only for backup purposes.(3)License agreementAlicenseagreementreferstoanagreementtopurchaseasoftwareli-cense. Thecontentsofthelicensemayvarydependingonthenumberof computers involved. When a corporation or school installs software in vol-ume,itissometimescalledavolumelicenseagreement