Running, Managing, And Operating A Corporation

Setting Up, Managing, and Operating a

Corporation

1

Table of Contents

Why a Corporation- Slide 4

Sole Proprietorship- Slides 5-7

Partnerships- Slides 8-10 Franchise- Slides 11-13 Corporations Slides 14-22 Shareholders and

Stockholders- Slides 23-25 How to Set Up a

Corporation – Slides 26-27 Articles of Incorporation –

Slides 28-30 Bylaws- Slide 31 Company Handbooks-

Slides 32 Groups & Teams- Slides

33-44

Outsourcing & Backsourcing- Slide 45

CEO- Slides 46-54 Agent of Service- Slides

55-57 Board of Directors- Slides

58-60 Secretary- Slides 61-70 Secretaries- Slides 76-77 Accounting & Financing-

Slides 78-131 Human Resources- Slides

132-143 Information Technology-

Slides 144-159 ERP- Slides 160-171 Operations & Logistics-

Slides 172-180 Sales & Marketing- Slides

181-191 Legal Department- Slide

192 Closing- 193 References - 194

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Table of Contents

3

Why a Corporation?

Business owners should incorporate for many reasons demonstrated throughout this presentation.

The main reason for incorporation of the production company is limited liability.

No business is worth losing everything you own

Incorporation will lead to a more successful company

Small business owners can incorporate as well as other business owners

4

Sole Proprietorship

A sole proprietorship is a business that is owned and usually managed by one person

Examples would be: a word processing service out of your home- a website- a restaurant- your own car repair center

Usually fits the needs of the community

72% of businesses in America are sole proprietorships

5

Advantages of a Sole Proprietorship

Ease of starting and ending the business

Being your own bossPride of ownershipLeaving a legacyRetention of company profitNo special taxes

6

Disadvantages of a Sole Proprietorship

Unlimited Liability- the risk of personal losses

Limited financial resources (in most cases but not all)

Management difficulties Overwhelming time commitmentFew fringe benefitsLimited growthLimited life span

7

Partnerships

A partnership is a legal form of business with two or more owners

Two or more people legally agree to become co owners of a business

Make up 8 % of businesses in America

8

Advantages of Partnerships

Easier to own and manageMore financial resourcesShare management and

pooled/complementary skills and knowledge

Longer survivalNo special taxes

9

Disadvantages of a Partnership

Unlimited liabilityDivision of profitsDisagreements among partnersDifficult to terminate

10

Franchises

A franchise is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product of service to others in a given territory

A franchise can be a sole proprietorship, a partnership, or a corporation.

Examples of a franchise: McDonald’s, 7 Eleven, Holiday Inn, etc…

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Advantages of a Franchise

Management and marketing assistance

Personal OwnershipNationally recognized nameFinancial advice and assistanceLower failure rate

12

Disadvantages of a Franchise

Large start up costShared profitManagement regulationsCoattail effectsRestrictions on sellingFraudulent franchisors

13

Corporations

A corporation is a state chartered legal entity with authority to act and have liability separate from its owners

Corporations can fit into more than one category

Two most common types of corporations are S corporations and C corporations

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S Corporation or C Corporation

C Corporation – a state chartered legal entity with authority to act and have the liability separate from its owners

S Corporation- a unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.

15

Types of Corporations

Alien corporation- does business in the United States but is chartered (incorporated) in another country

Domestic corporation- does business in the state in which it’s chartered(incorporated)

Foreign corporation- does business in one state but is chartered in another. About 1/3 of all corporations are chartered in Delaware because of its relatively attractive rules for incorporation. A foreign corporation must register in states where it operates.

16


Closed (private) corporation- the stock is held by a few people and isn’t available to the general public

An open (public) corporation- sells stock to the general public. General Motors and Exxon/Mobile are examples of public corporations

Quasi Public corporation- chartered by the government as an approved monopoly to perform services to the general public. Public utilities are examples of quasi public corporations

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Professional corporation- one whose owners offer professional services (doctors, lawyers, etc.) Shares in professional corporations aren’t publicly traded.

Nonprofit corporation- one that does not seek personal profit for its owners

Multinational corporation- a firm that operates in several countries 18

Advantages of Corporations

Limited liability- hugest advantageMore money for investmentSizePerpetual lifeEase of ownership changeEase of drawing talented employeesSeparation of ownership from

management

19

Disadvantages of a Corporation

Extensive paperworkDouble taxationTwo tax returnsSizeDifficulty of terminationPossible conflict with stockholders

and board of directorsInitial cost

20

Stock Corporations

Issues and sells the stock to individuals to raise money for business start up or growth

Stock can be privately held or publicly heldPrivately held stock is usually only offered to

a few individualsPublicly held companies can publicly trade

or sell to many or a few individuals.Can be closely held or widely tradedStock decisions must be included on the

Articles of Incorporation when applying for corporate status.

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Non Stock Corporations

A corporation that does not issue shares of stockNon profit corporations are non stock corporationsA for profit corporation may be a non stock

corporation for several reasons: 1. The corporation may be closely held or owned by

a few individuals who have no interest in selling shares

2. The corporation may be formed for a single short term purpose

3. The corporation may be set up as a non profit with members instead of shareholders

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Shareholders/Stockholde

rs Any person, company, or other

institution that owns at least one share in a company. Referred to as shareholders or stockholders

Shareholders are the owners of a company. They have the potential to profit if the company does well, but that comes with the potential to lose if the company does poorly(they won’t lose anything more than the investment in stocks- they can’t lose any personal belongings).

Shareholders can not lose anything other than their investment in the company.

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Stockholders or Shareholders PrivledgesStockholders are granted special privileges depending

on the class of stock. These rights may include:The right to vote on matters such as elections to the

board of directors. Usually, stockholders have one vote per share owned, but sometimes this is not the case

The right to propose shareholder resolutionsThe right to share in distributions of the company’s

incomeThe right to purchase new shares issued by the

companyThe right to a company’s assets during a liquidation of

the company.

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Shareholders & Stockholders

Play an important role in raising capital for organizations

Deciding between privately held or public stockholders is up to the owner

Companies typically provide all the necessary proofs to shareholders to show that they are investing at a right place

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How to Set up a Corporation

Owners can incorporate in any state but Delaware is the easiest place to incorporate.

Register as a foreign corporation in your actual home state after incorporating in Delaware if that is where you choose to register

Consult an attorney specializing in this area

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Six Steps to Getting Started

1) Create the corporation’s Articles of Incorporation

2) Determine which type of corporation you want to create.

3) Consider registering your corporation in Delaware

4) File those Articles with the Secretary of State of the state in which you choose to be headquartered

5) Submit a check with the Articles of Incorporation. Processing fees for this service vary by state

6) Register as a foreign corporation if you will be doing business in any states not designated as your home state.

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Articles of Incorporation

Articles of Incorporation are a document filed with a U.S. state by a corporation’s founders, describing the purpose, place of business, and other details of a corporation– also called a charter.

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Articles of Incorporation Usually Include

The corporations nameThe names of the people who

incorporate itIts purposesIts duration (usually perpetual)The number of shares that can be

issued, their voting rights, and any other rights the shareholders have

The corporation’s minimum capitalThe address of the corporation 29

Articles of Incorporation Usually Include

The name and address of the person responsible for the corporation’s legal service (The Agent of Service)

The names and addresses of the first directors

Any other public information the incorporators wish to include

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Bylaws

How, when, and where shareholders’ and director’s meetings are held, and how long directors are to serve

Director’s authorityDuties and responsibilities of officers,

and the length of their serviceHow stock is issued (private of

public)Other matters, including

employment contracts 31

Company Handbooks

Company HandbookPolicies, Practices, and Procedures

for each employee and each department

Mission StatementEthical Guidelines

32

Groups & Teams in an Organization

Groups: Two or more individuals, interacting and interdependent, who have come together to achieve particular goals

Teams: Individuals generating positive synergy through coordinated efforts. Several individuals whose individual efforts result in a level of performance that is greater than the sum of those individual inputs. 33

Groups

Groups can be formal or informalFormal group: Groups defined by

the organization’s structure, with designated work assignments establishing tasks. The behaviors are stipulated by and directed toward organizational goals.

Informal group: Alliances that are neither formally structured nor organizationally determined. 34

Five Stages in Groups

1) Forming2) Storming3) Norming4) Performing5) Adjourning

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Advantages of Groups

Numerous resourcesSmooth processesHigh performance Successful resultsSatisfied employees

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Teams

Work Teams: generate positive synergy through coordinated effort and individual efforts of members result in a level of performance that is greater than the sum of those individual inputs.

Work Teams provide services, negotiate deals, coordinate projects, offer advice and make decisions

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Types of Teams

Problem Solving TeamsSelf Managed Work TeamsCross Functional TeamsVirtual Teams

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Problem Solving Teams

Groups of 5 to 12 employees from the same department who meet for a few hours a week to discuss ways of improving quality, efficiency, and work environment

Share ideas or offer suggestions on which work processes and methods can be improved

Rarely given authority to unilaterally implement any of their suggested actions

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Self Managed Teams

Groups of 10-15 people who take on responsibilities of their former supervisors.

Tasks include: planning & scheduling of work- assigning tasks to members- collective control over the pace of work- making operating decisions- taking actions on problems- working with suppliers and customers

Select their own membersMembers evaluate each other’s

performance

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Cross Functional Teams

Employees from about the same hierarchical level but different work areas coming together to accomplish a task

Examples would be: a task force- committees composed of members from across departmental lines- the large task force IBM created made up of employees from across departments in the company to develop its highly successful System 360

Allow exchanging of information- developing new ideas- solving problems- and coordinating complex projects

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Cross Functional Teams

No picnic to manageEarly stages of development are

time consumingMembers must learn to work with

diverse and complex individualsBuilding trust is not easy

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Virtual Teams

Teams that use computer technology to tie together physically dispersed members in order to achieve a common goal.

Collaborate online using communication links wide area networks- video conferencing- or emailing whether a room apart or continents apart

Do everything other teams do such as: share information- make decisions- complete tasks- include members from within or outside of the organization

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Virtual Teams

Convene for a few days or months to solve problems

Three factors differentiating virtual teams from face to face teams are:

1) The absence of paraverbal and nonverbal cues

2) Limited social context3) Ability to overcome time and space

constraints44

Outsourcing and Backsourcing

Outsourcing and Backsourcing are becoming the norm in today’s companies.

Outsourcing- the subcontracting a process, such as product design or manufacturing, to a third party company- the transfer of a business function to an external service provider- contracting work to an outside supplier

Backsourcing- the bringing of services back into the organization after they have been outsourced.

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Chief Executive Officer (CEO)

Responsible for operations of the firm

Highest ranking officer in the organization

Reports to the board of directorsResponsible for everythingDelegates responsibilitiesSets the overall strategy for the

companyResponsible for management 46


The officer who has ultimate management responsibility for the organization

Appoints other managers to assist in carrying out the responsibilities of the organization

Held accountable for organizational performance

47


Sets the tone for the organizationMotivates employeesCarries out strategic plans and

policiesTop CEO’s are paid about 10 ½

million a yearShould have education in business-

communication and/or law Has total authority to hire & fire with checks and balances or course 48

Chief Executive Officer (CEO)’s Two Major Functions

1. Direct and execute all activities of the association either directly or through delegated authority

2. Provide leadership in these and other areas: the creation of strategic, tactical, and financial plans; developing goals and measuring performance to the approved goals; organizational development; liaison to the public, government, affiliated organizations, and other stakeholders; develop member services and member development; the development of the association’s staff

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CEO’s Roles and Responsibilities

Leadero Advises the Boardo Advocates/promotes organization and stakeholder change

related to organization missiono Supports motivation of employees in organization

products/programs and operations

Visionary/Information Bearero Ensures staff and Board have sufficient and up-to-date

information o Looks to the future for change opportunitieso Interfaces between Board and employeeso Interfaces between organization and community

Decision Makero Formulates policies and planning recommendations to the

Boardo Decides or guides courses of action in operations by staff

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CEO’s Roles and Responsibilities

Managero Oversees operations of organizationo Implements planso Manages human resources of organizations o Manages financial and physical resources

Board Developero Assists in the selection and evaluation of board memberso Makes recommendations, supports Board during

orientation and self-evaluation

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Duties of the CEO

Specific duties of CEO’s vary based on the type of organization but typical functions or job descriptions include:

Provide leadership in the development of the association’s statement of vision, mission, and goals, and the corresponding strategies, plans, and budgets to achieve them

Ensure the development of priority plans, performance measurements, management controls, and critical success factors

Review approved plans and budgets as part of the annual planning and budgeting cycle and present recommendations to the board of directors and/or the appropriate committee

Develop and provide appropriate policy recommendations for consideration by the board

Ensure that an annual plan and budget are prepared for and presented to the board of directors

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Duties of the CEO

Propose agendas for the board of directors reflecting issues, opportunities, and priorities

Present a written report to all board meetings Develop and maintain an effective staff organization which

provides appropriate policy and program recommendations for consideration by the board and its committees, and which delivers services, programs and information beneficial to the members

Hire, reward, discipline, terminate, and set the remuneration of, all association employees except for him/herself, in accordance with policy and/or approved budgets

Identify, document, and articulate the needs of members to geographic sub-units, committees, and other forums which exist to serve member needs

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Duties of the CEO

Promote collaboration with and among the association’s geographic sub units to address the needs of members and the mission and goals of the association

Maintain the necessary contacts to keep abreast of emerging issues of significance to the association management profession

Act as the spokesperson for the association Serve as ambassador for the association to relevant

organizations in Canada and internationally Perform such other duties as are prescribed in writing from

time to time by the board of directors Typically a non voting director and officer of the association May be a non-voting ex officio member of all committees,

councils, task forces, and other member forums appointed or established by, and accountable to, the board of directors

Usually the representative of the association as the employer of paid staff and solely responsible for establishing compensation and benefits, and the hiring and release , of the association's employees

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Agent of Service and Process

Officer appointed by a corporation to receive legal notices or processes on the corporation’s behalf

Also called the registered agentMandatoryMust be named in the Articles of

IncorporationCan be the ownerCan be anyone in the organization

who agrees to take on the responsibility

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Receives legal notices or processes on corporations behalf such as:

SummonsComplaintsSubpoena’sOrder to show cause writsNotice to quit premisesOther legal documents

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Cannot be a party to the actionMust deliver the summons of

complaint to the defendantCould be an outside law firmCould be someone in the legal

department of the corporation

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Board of Directors

Body of elected or appointed members who jointly oversee the activities of a company or organization

Must (or usually) consists of an odd number of members

Activities and duties are determined by the powers, duties and responsibilities delegated to it or conferred on it by an authority outside itself

The responsibilities and/or duties are typically detailed in the organizational bylaws

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Board of Directors

The bylaws usually specify the number of members on the board- how they are to be chosen- and when they meet

The board acts on behalf of the organization’s full assembly

The full assembly usually choose the members of the board

In a stock corporation the board is elected by the stockholders 59

Board of Directors Duties

Typical duties include:Governing the organization by establishing

broad policies and objectivesSelecting, appointing, supporting, and

reviewing the performance of the CEO (no termination without just cause- post conditions in handbook)

Ensuring the availability of adequate financial resources

Approving annual budgetsAccounting to stakeholders for the

organizations performance 60

Secretary

This is not the same as a secretary or administrative assistant

Reports to the board of directorsOrganizations are required by law to

maintain certain records for several purposes including:

Accurate recollection of decisionsDetermination of eligibility to voteContinuity of policies and practicesAccountability of directors and

officers61

Responsibilities of the Secretary

The Secretary is responsible for:Ensuring that accurate and sufficient

documentation exists to meet legal requirements

Enable authorized persons to determine when, how, and by whom the board’s business was conducted

Records minutes of meetingsEnsures accuracy and availability Proposes policies and practices 62

Responsibilities of the Secretary

Fulfills any other requirements of a Director and Officer

Performs other duties as the need arises as defined in the bylaws

Accountable to the Board of Directors

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Specific duties of the Secertary

The specific duties include:Minutes: Accurate minutes of meetings

are taken and approved and should include:I. Date, time, & location of meetingII. List of those present and absentIII. List of items discussedIV. List of reports presentedV. Text of motions presented and description of

their dispositions ‘VI. The secretary signs a copy of the final, approved

minutes and ensures that this copy is maintained in corporate records

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Specific Duties of the Secretary

Custodian of records: Ensures that the records of the organization are maintained as required by law and made available when required by authorized persons. These records include:

I. Founding documents (letter patents, articles of incorporation)

II. Lists of directorsIII. Board and committee meeting minutes IV. Financial reportsV. Other official records

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Specific duties of the Secretary

Membership Records: The Secretary ensures that official records are maintained of members of the organization of the board. Ensures the records are available when required for reports, elections, referenda, other votes, etc…

Bylaws: The Secretary ensures that an up to date copy of the bylaws is available at all meetings 66


Communication: The secretary ensures proper notification is given of directors’ and members’ meetings as specified in the bylaws. Manages the general correspondence of the Board of Directors except for such correspondence assigned to others

Meetings: The Secretary participates in Board meetings as a voting member. Provides items for the agenda as appropriate

67


Signing Officer: The Secretary may be designated by the Board of Directors and/or bylaws as one of the signing officers for certain documents. Authorized to sign on behalf of the organization:

I. ChecksII. CorrespondenceIII. ApplicationsIV. ReportsV. ContractsVI. Other documents

68


Filing of Documents: The Secretary could be the registered agent with respect to the laws of the jurisdiction. Responsible for ensuring that documents necessary to maintain the corporation are filed

Note 1: The definition and duties use the word "ensure" to convey the intent that accountability for the specified responsibilities lies with the Secretary but it is not necessarily the Secretary who carries out the activity. Indeed, we expect that many of these responsibilities will be delegated to board committees, staff, or others including experts retained for a specific purpose. The word "ensure" is not intended to imply any additional source of legal duties beyond those that are required by law.

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Note 2: Minutes should have enough information to help absent directors and members understand what issues were discussed and what decisions were made. Some lawyers advise that in certain circumstances, minutes should include summary of discussion, rationale for decision, names of those participating in the discussion, and the roll call, noting any declared conflicts of interest. These circumstances: are if the matter is contentious, if board members dissent, if there is any concern about exposure to liability, or if a board member has a conflict of interest.

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Secretaries or Administrative Assistants

A person employed to handle correspondence, keep files, and do clerical work for a person or organization

Considered entry level positions but play a major role in the daily operations of an organization

Besides performing clerical tasks such as typing, photocopying and faxing secretaries conduct research and prepare large scale reports among other things mentioned (next slide)

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Duties

Duties of a secretary include: Performing clerical duties Schedule meetings Organize paperwork and electronic files Manage projects Creating spreadsheets as necessary Composing correspondence within the

office Managing a database and developing

presentation or reports using publishing software and digital graphics

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Typical Functions

Typical functions of a secretary are: Open., scan, read and distribute mail Compose official correspondence for

supervisors signature, disposes of routine correspondence

Screen phone calls; provide information or refer callers to appropriate staff members; answer inquiries

Receives visitors; answer inquiries personally or refer to appropriate official (s)

73

Typical Functions

Arranges for special conferences and meetings; maintains supervisor’s calendar, advising of commitments; arranges for travel itinerary and accommodations; prepares and submits travel claims and expense account

Independently researches, assembles and summarizes material, information and data for administrative board or commission consideration and action; takes and transcribes dictation of confidential, technical and legal material requiring a high degree of accuracy; records and transcribes proceedings of meetings and conferences

74

Typical Functions

Appears before legislative committee hearings alone or in the company of a supervisor to present facts relative to agency programs, mission and/or budget; drafts proposed legislation; proposes budget items; confers with administrators on matters of staffing, budget and purchasing and contracts and/or policy

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Departments in the Corporation

Accounting and Financing Human Resources Information Technology Operations and Logistics Sales and Marketing Legal

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Departments in the Corporation

Other departments might be necessary but the ones mentioned in this power point will be necessary

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Accounting and Financing

Accounting is the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions.

Accounting is the measurement and reporting of economic activities of the firm Financial transactions include: Buying and selling goods and services Acquiring insurance Paying employees Using supplies

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Chief Financial Officer

Chief Financial Officer: Head of Accounting Department The executive who is responsible for financial planning and

record keeping for a company Delegates responsibilities if necessary Professionally qualified accountant Many CFO’s have a Master of Business Administration but

no qualified accountancy qualification such as Certified Public Accountant status

Hires the employees in the Accounting Department Answers to the CEO

79

Possible Employees Necessary in an Accounting Department

A/P Clerk Tax Accountant Director of Accounting &

Financing/Controller Chief Financial Officer Financial Planner/Budget

Specialist Cost Accountant Financial Planning

Manager Financial Planner/Budget

Specialist Administrative Assistant

(a secretary) General Accountant General Accounting

Supervisor A/R Clerk Payroll Manager

Payroll/Tax Clerk Former IRS employee Auditors Certified management

Accountant Private Accountant Public Accountant Certified Public Accountant Certified Internal Auditor A bookkeeper

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Inp

uts

A

ccou

nti

ng

D

ocu

men

ts Accounting

Documents

Sales Documents

Purchasing Documents

Shipping Documents

Payroll records

Bank Records

Travel records

Entertainment records

Pro

cess

ing

1. Entries are made into journals; recordings

2. The effects of these journal entries are transferred or posted into ledgers: classifying

3. All accounts are summarized

Ou

tpu

ts

Fin

an

cial

Sta

tem

en

ts Balance Sheet

Income StatementStatement of Cash FlowsOther reports (ex: annual reports)

81


Accounting serves a few purposes: Help managers evaluate the financial

condition and operating performance enabling well informed decisions to me made

Report financial information to people outside the firm such as:

1. Owners2. Creditors3. Suppliers4. Investors5. The government

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Five working areas of accounting

1. Managerial Accounting2. Financial Accounting3. Auditing4. Tax Accounting5. Government and non profit

accounting

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Managerial Accounting

Accounting used to provide information and analyses to managers within the organization to assist them in decision making

Concerned with measuring and reporting costs of:

Production Marketing Cost accounting Preparing budgets Checking if units or departments are staying within

budgets Designing strategies to minimize taxes

84

Financial Accouting

Accounting information and analyses prepared for people outside the organization

Information goes to: Prospective owners Creditors & Lenders Employee Unions Customers Suppliers Government agencies General Public 85

Financial Accounting

These users are interested in the organizations profits, abilities to pay its bills, and other financial information

Information usually contained in the company’s annual report

Information must be accurateFinancial Accounting Standards

Board defines the set of generally accepted accounting principles accountants must follow

86

Auditing

The job of reviewing and evaluating the records used to prepare a company’s financial statements

Ensures that proper accounting procedures and financial reporting is being carried out within the organization

Examine the financial health of an organization as well as operational efficiencies and effectiveness 87

Tax Accounting

The preparing of tax returns and developing tax strategies

Tax accountant: an accountant trained in tax law and responsible for preparing tax returns or developing tax strategies

Taxes are the price we pay for roads, parks, schools, police protection, the military, and other functions provided by the government.

Federal, state, and local governments require submission of tax returns that must be filed at specific times & in a precise format

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Tax Accounting

Governments often change tax policies according to specific needs or objectives

Tax Accountants must continually monitor tax laws

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Government and not for profit accounting

Accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget.

Governments require an accounting system that satisfies the needs of their information users.

The primary users of government accounting information are citizens, special interest groups, legislative bodies, & creditors.

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Government and Not for Profit Accounting

Users want to make sure the government is fulfilling its obligations and making the proper use of taxpayers money

GASB sets the government accounting standards

FBI, IRS, Missouri Department of Natural Resources, & Cook County Department of Revenue are a few government agencies offering career possibilities in accounting.

91

Government and Not for Profit Accounting

Not for profit organizations require accounting professionals as well

Contributors want to see where there money is being spent

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Accounting versus Bookkeeping

Accounting: the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions

Bookkeeping: the recording of business transactionsBookkeeping is important in financial reporting but

accounting goes far beyond the mere recording of financial information

Accountants classify and summarize financial data provided by bookkeepers, and then interpret the data and report the information to management as well as suggest strategies for improving the financial condition and progress of the firm

93

Accountants versus Bookkeeping

Accountants classify and summarize financial data provided by bookkeepers, and then interpret the data and report the information to management as well as suggest strategies for improving the financial condition and progress of the firm

Accountants are important in financial analysis and income tax preparation 94

Bookkeepers

Tasks include: Dividing all of the firm’s transactions into

meaningful categories such as: sales documents, purchasing receipts, & shipping documents

Keep information organized and manageable

Recording financial data from the original transaction documents into record books called journals

Bookkeepers record all there transactions into two places( the journals and ledgers)

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The Six – Step Accounting Cycle

Accounting cycle: A six-step procedure that results in the preparation and analysis of the major financial statements.

Requires the work of the bookkeeper and the accountant The first three steps are continual1) Analyzing and categorizing documents2) Putting the information into journals3) Posting that information into ledgers4) Preparing a trial balance5) Prepare the financial statements (including balance sheet,

income statement, and statement of cash flows)6) Analyze the financial statements and evaluates the financial

condition of the firm Note: Computers and accounting software have simplified

this process considerably

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Various Accounting Software Programs

Accounting software simplifies the mechanical tasks involved in accounting, enabling managers and other interested users to get financial reports exactly when and how they want

Financial information & transactions can be recorded by hand or by computer

Accounting software packages include programs that handle tasks involving:

General ledgers Sales processing Accounts receivable Purchase orders Accounts payable Cash flow analysis Inventory control Tax returns (tax accounting software) Tax planning (tax accounting software)

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Accounting Software

Top Ten Low- End Accounting Software programs for companies with up to $5 million in Revenue

Business Vision 32 (Softline) BusinessWorks (Best Software) Small Business Manager (Microsoft/ Great Plains) M.Y.O.B. (M.Y.O.B. Software) Oracle Small Business Suite (formerly Netledger) Peachtree Complete Accounting 2004 (Best Software) QuickBooks for the Web (Intuit) QuickBooks Pro 2002 (Intuit) Simply Accounting (ACCPAC International) Vision Point 2000 (ACCPAC)

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Accounting Software

Top Ten Middle Market Accounting Software Programs for companies with $2 million to $50 million in Revenue)

ACCPAC Advantage Series Corporate Edition (ACCPAC International)

ACCPAC ProSeries (ACCPAC International) Accountmate (Softline) BusinessVision 32 (Softline) SYSPRO (SysproUSA) MAS 90 & MAS 200 (Best Software) Navision (Microsoft) Solomon (Microsoft) SouthWare Excellence Series (SouthWare) TRAVERSE (Open Systems)

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Accounting Software

Top Ten Accounting Software programs in the Beginning ERP Market for companies with $25 mlillion to $500 million in Revenue

ACCPAC Advantage Series Enterprise Edition (ACCPAC International) ACCPAC ProSeries (ACCPAC International) Axapta (Microsoft Software) Epicor (Epicor Software) e-Business Suite (Oracle) Great Plains (Microsoft) SYSPRO (SysproUSA) MAS 500 (Best Software) Navision (Microsoft) Solomon (Microsoft)

100

Accounting Software

Top Ten Accounting Software programs for companies with revenue ranging from $250 million and up

ACCPAC Executive Series (ACCPAC) Axapta (Microsoft) Epicor (Epicor) MAS 500 (Best Software) Great Plains (Microsoft) Lawson Enterprise 400 (Lawson Software) One World (J.D. Edwards) Oracle Financials (Oracle) PeopleSoft (PeopleSoft) SAP R/3 (SAP) 101

Accounting Software Program Problems

Many accounting software programs suffer from obvious problems such as:

older technology Proprietary technology Lack of support Lack of adequate size customer base Lack of distribution channel Poor performance on a local area network Bugs Missing modules Missing key features Lack of capital

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Attributes to look for in Accounting Software

The product must have good, clean, stable code

The product must have underlying technology

The product must have a good company & leadership behind the product

The product must have strong financial reporting capabilities

The product must have a sizable customer base

The product must have a well developed & knowledgeable VAR channel

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Attributes to look for in Accounting Software

The product must have a wide breadth of modules

The product must have a well developed offering of third party add on products

There should be a minimal number of missing features

There should be no significant problems (such as missing modules, etc) 104

Articles to Read on Accounting Software

1. 10 Step Blueprint for Evaluating and Selecting Entry Level Accounting Software

2. 25 Step Blueprint for Evaluating and Selecting Mid-Range to High-End Accounting Software

3. Listing of 50 Key Features4. Feature Table5. ASA Power Rating Based Upon 350 Key Features

6. A Discussion About Evaluating Accounting Software

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http://www.accountingsoftwareadvisor.com/main/keyfeatures.htm

http://www.accountingsoftwareadvisor.com/main/featuretable.htm

http://www.accountingsoftwareadvisor.com/topics/asapowerratings.htm

http://www.accountingsoftwareadvisor.com/topics/asapowerratings.htm

http://www.accountingsoftwareadvisor.com/topics/evaluating.htm

http://www.accountingsoftwareadvisor.com/topics/evaluating.htm

ERP

Although examples of accounting software have been discussed – ERP is suggested and discussed in more detail in this power point.

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Sample Balance Sheet & Income Statement

A Sample Balance Sheet and Income Statement will be attached with this power point as well as in the paper.

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Accounting and Bookkeeping

Accounting and bookkeeping is a bit more detailed. The next few slides will be accounting terms which the owner of a corporation should be familiar with.

Although hiring professionals to do the job- knowledge is power and if you know every aspect of your company your organization will be more successful

Before owning a place such as McDonald’s the owners are required to know everything from making an ice cream cone to bookkeeping. The same should apply for owning

your own corporation. Chapters about accounting – sample balance sheets &

income statements will be attached to the paper accompanying this power point.

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Important Accounting and Bookkeeping Terms

managerial accountingAccounting used to provideinformation and analyses tomanagers within theorganization to assist themin decision making.certified managementaccountant (CMA)A professional accountantwho has met certaineducational and experiencerequirements, passed aqualifying exam in the field,and been certified by theInstitute of CertifiedManagement Accountants.financial accountingAccounting information andanalyses prepared forpeople outside theorganization.annual reportA yearly statement of thefinancial condition,progress, and expectationsof an organization.private accountantsAccountants who work for asingle firm, governmentagency, or nonprofitorganization.

public accountantAn accountant whoprovides his or heraccounting services toindividuals or businesses ona fee basis.certified public accountant(CPA)An accountant who passes aseries of examinationsestablished by the AmericanInstitute of Certified PublicAccountantsauditingThe job of reviewing andevaluating the records usedto prepare a company’sfinancial statements.independent auditAn evaluation and unbiasedopinion about the accuracyof a company’s financialstatements.certified internal auditor(CIA)An accountant who has abachelor’s degree and twoyears of experience ininternal auditing, and whohas passed an examadministered by theInstitute of InternalAuditors.

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Important Accounting and Bookkeeping Terms

tax accountantAn accountant trained intax law and responsible forpreparing tax returns ordeveloping tax strategies.government and not-for-profitaccountingAccounting system fororganizations whosepurpose is not generatinga profit but servingratepayers, taxpayers,and others according toa duly approved budget.bookkeepingThe recording of businesstransactions.journalThe record book or computerprogram where accountingdata are first entered.double-entry bookkeepingThe concept of writingevery business transaction intwo places.accounting cycleA six-step procedure thatresults in the preparationand analysis of the majorfinancial statements.

ledgerA specialized accountingbook or computer programin which information fromaccounting journals isaccumulated into specificcategories and posted sothat managers can find allthe information about oneaccount in the same place.trial balanceA summary of all the data inthe account ledgers to showwhether the figures arecorrect and balanced.financial statementA summary of all thetransactions that haveoccurred over a particularperiod.fundamental accountingequationAssets _ liabilities _owners’ equity; this is thebasis for the balance sheet.balance sheetThe financial statement thatreports a firm’s financialcondition at a specific time.assetsEconomic resources (thingsof value) owned by a firm. 110

Various Accounting and Bookkeeping Terms

liquidityHow fast an asset can beconverted into cash.current assetsItems that can or will beconverted into cash withinone year.fixed assetsAssets that are relativelypermanent, such as land,buildings, and equipment.intangible assetsLong-term assets (e.g.,patents, trademarks,copyrights) that have noreal physical form but dohave value.liabilitiesWhat the business owes toothers (debts).owners’ equityThe amount of the businessthat belongs to the ownersminus any liabilities owedby the business.retained earningsThe accumulated earningsfrom a firm’s profitableoperations that were keptin the business and not paidout to stockholders individends.

income statementThe financial statement thatshows a firm’s profit aftercosts, expenses, and taxes; itsummarizes all of theresources that have comeinto the firm (revenue), allthe resources that have leftthe firm, and the resultingnet income.net income or net lossRevenue left over after allcosts and expenses,including taxes, are paid.revenueThe value of what isreceived for goods sold,services rendered, and otherfinancial sources.cost of goods sold (or costof goods manufactured)A measure of the cost ofmerchandise sold or cost ofraw materials and suppliesused for producing items forresale.gross profit (gross margin)How much a firm earned bybuying (or making) andselling merchandise.

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Financial forecasting: A forecast of the expected financial position and

the results of operations and cash flows based on expected conditions– a prediction about how things will develop

Financial reporting The process of preparing and distributing financial

information to users of such information in various forms. The most common format of formal financial reporting are financial statements and financial statements are prepared in accordance with rigorously applied standards defined by professional accounting bodies developed according to the legal and professional framework of a specific locale.

Accounts Payable: a file or account that contains money that a

person or company owes to suppliers, but has not paid yet (a form of debt). When you receive an invoice you add it to the file, and then you remove it when you pay.

Accounts Receivable:: one of a series of accounting transactions dealing

with the billing of customers who owe money to a person, company or organization for goods and services that have been provided to the customer. The total amount owed to a company due to debts arising from sales on credit or on account.

Order Entry: The first part of data processing to enter an

order or pickup in the computer system. A computerized relational database that, at a minimum, generates, schedules and maintains estimates, sales orders, and backlogs. Invoices may also be created automatically if linked to Accounts Receivable. More advanced order entry systems are usually fully integrated with the accounting system.

Procurement: The combined functions of purchasing,

inventory control, traffic and transportation, receiving, inspection, store keeping, and salvage and disposal operations.

The accounting dictionary will need to be read and the one online can be found at

http://www.ventureline.com/Glossary_A.asp

I have not covered all terms but ones which will need to be known. I strongly suggest knowing as much as possible about each department.

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http://www.ventureline.com/Glossary_A.asp


operating expensesCosts involved in operatinga business, such as rent,utilities, and salaries.statement of cash flowsFinancial statement thatreports cash receipts anddisbursements related to afirm’s three major activities:operations, investments,and financing.cash flowThe difference betweencash coming in and cashgoing out of a business.depreciationThe systematic write-off ofthe cost of a tangible assetover its estimated useful life.first in, first out (FIFO)An accounting method forcalculating cost ofinventory; it assumes thatthe first goods to come inare the first to go out.last in, first out (LIFO)An accounting method forcalculating cost ofinventory; it assumes thatthe last goods to come inare the first to go out.

ratio analysisThe assessment of a

firm’sfinancial condition andperformance throughcalculations andinterpretations of

financialratios developed from

thefirm’s financial

statements.

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Sample Fiberrific Balance Sheet and Income Statement

SAMPLE FIBERRIFIC BALANCESHEET➀ Current assets: Itemsthat can be convertedto cash within oneyear.➁ Fixed assets: Itemssuch as land,buildings, andequipment that arerelatively permanent.➂ Intangible assets:Items of value such aspatents andcopyrights that don’thave a physical form.➃ Current liabilities:Payments that are duein one year or less.➄ Long-term liabilities:Payments not due forone year or longer.➅ Stockholders’ equity:The value of whatstockholders own in afirm (also calledowners’ equity.

SAMPLE FIBERRIFIC INCOMESTATEMENT➀ Revenue: Value ofwhat’s received fromgoods sold, servicesrendered, and otherfinancial sources.➁ Cost of goods sold:Cost of merchandisesold or cost of rawmaterials or partsused for producingitems for resale.➂ Gross profit: Howmuch the firm earnedby buying or sellingmerchandise.➃ Operating expenses:Cost incurred inoperating a business.➄ Net income aftertaxes: Profit or lossover a specific periodafter subtracting allcosts and expenses,including taxes.

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Fiberrific Statement of Cash Flow

FIBERRIFIC STATEMENT OFCASH FLOWS➀ Cash receipts fromsales, commissions,fees, interest, anddividends. Cashpayments for salaries,inventories, operatingexpenses, interest,and taxes.➁ Includes cash flowsthat are generatedthrough a company’spurchase or sale oflong-term operationalassets, investments inother companies, andits lending activities.➂ Cash inflows andoutflows associatedwith the company’sown equitytransactions or itsborrowing activities.

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The Income Statement

The formula used to prepare an income statement is as follows:

Revenue – Cost of goods sold= Gross Profits

Gross Profit – Operating expenses= Net Income before taxes

Net Income before taxes – Taxes = Net income (or loss)

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Key Financial Statements of a

Business1. Balance Sheet - reports the firm’s

financial condition on a specific date2. Income Statement - summarizes

revenues, cost of goods, and expenses(including taxes), for a specific period of time and highlights the total profit or loss the firm experienced during that period

3. Statement of Cash Flows - provides a summary of money coming into and going out of the firm that tracks a company’s cash receipts and cash payments

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Fundamental Accounting Equation

Basis for the balance sheet Assets=Liabilities+Owners equity $80,000 = $30,000 + $50,000 The assets are equal to or are balanced

with the liabilities and owners’ (stockholders’) equity.

Complicated part is determining what is included in the asset account and what is included in the liabilities and owners’ equity accounts

Sample’s provided simplify and explain the process 118

Three Categories of Assets

1) Current Assets are items that can or will be converted into cash within one year. Current assets include cash, accounts receivable, and inventory

2) Fixed Assets are long term assets that are relatively permanent such as land, buildings, and equipment

3) Intangible assets are long term assets that have no real physical form but do have value. Patents, trademarks, copyrights, and goodwill are examples of intangible assets

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The Statement of Cash Flows

The statement of cash flows reports cash receipts and disbursements related to the three major activities of a firm:

1) Operations are cash transactions associated with running the business

2) Investments are cash used in or provided by the firms investment activities

3) Financing is cash raised from the issuance of new debt or equity capital or cash used to pay business expenses, past debts, or company dividends

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Liabilities and Owners’ Equity

The following are common liability accounts recorded on a balance sheet:

1) Accounts payable are current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid. If you have a bill you have not paid, you have an account payable

2) Notes payable are short term or long term liabilities ( ex loans from banks) that a business promises to repay by a certain date

3) Bonds payable are long term liabilities that represent money lent to the firm that must be paid back. If a firm sells someone a bond, it agrees to repay that person the money he or she lent the company plus interest.

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Analyzing Financial Statements: Ratio Analysis

Ratio analysis: the assessment of a firm’s financial condition and performance through calculations and interpretations of financial ratios developed from the firm’s financial statements.

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Ratio Categories

Liquidity RatiosLeverage (Debt) RatiosProfitability (Performance) RatiosActivity Ratios

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Liquidity Ratios

Liquidity Ratios measure a company’s ability to turn assets into cash to pays its short – term debts (liabilities that must be repaid within one year).

Types of liquidity ratios:1) Current ratio: a ratio of a firm’s current assets to its

current liabilities. Can be found on balance sheet2) Acid – test ratio: measures the cash, marketable

securities (such as stocks and bonds), and receivables of a firm, compared to its current liabilities

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Liquidity Ratios

Current Ratio

Current ratio = Current Assets divided by current liabilities 600,000 divided by 228000 = 2.08

Acid Test Ratio

Acid-test ratio= Cash + Accounts receivable + Marketable securities divided by Current Liabilities

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Leverage Debt Ratios

Leverage (Debt) Ratios measure the degree to which a firm relies on borrowed funds in its operations

Types of Leverage Debt Ratio:1) Debt to owners’ equity ratio measures

the degree to which the company is financed by borrowed funds that must be repaid

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Leverage (Debt) Ratios

Debt to Owners’ Equity ratio

Debt to owners equity = Total liabilities divided by owners’ equity

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Profitability (Performance ) Ratios

Profitability (Performance ) Ratios measure how effectively a firm is using its various resources to achieve profits. Management’s performance is often measured by the firm’s profitability ratios. The three most important ratios used are:

1) earnings per share2) return on sales 3) return on equity

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Profitability (Performance) Ratios

Basic earnings per share (basic EPS): helps determine the amount of profit earned by a company for each share of outstanding common stock.

Basic earnings per share = Net income after taxes divided by number of common stock shares outstanding.

Another reliable indicator of performance is obtained by using a ratio that measures the return on sales. Firms use this ratio to see if they are doing as well as the companies they compete against in generating income from the sales they achieve.

Diluted earnings per share (diluted EPS) ratio: measures the amount of profit earned by a company for each share of common stock, but also takes into consideration stock options, warrants, preferred stock, and convertible debt securities, which can be converted into common stock. For simplicity’s sake this power point will only discuss the basic earnings per share (EPS).

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Profitability (Performance) Ratios

Return on sales: calculated by comparing a company’s net income to its total sales. Risk is a market variable that concerns investors. The higher the risk involved in an industry, the higher the return investors expect on their investment.

Return on sales = Net income divided by net sales

Return on equity: measures how much was earned for each dollar invested by owners.

Return on equity= Net income after tax divided by total owners’ equity

Note: These and other profitability ratios are considered vital measurements of company growth and management performance.

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Activity Ratios

Activity Ratios measure the effectiveness of a firm’s management in using the assets that are available. One of the activity ratios is the inventory turnover ratio.

The Inventory turnover ratio measures the speed of inventory moving through the firm and its conversion into sales. Inventory sitting idly in a business cost money.

Inventory turnover = cost of goods sold divided by average inventory

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Human Resources

Human Resources: an increasingly broadening term that refers to managing “human capital” the people of an organization. The field has moved from a traditionally administrative function to a strategic one that recognizes the link between talented and engaged people and organizational success.

Human resources management: the process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to achieve organizational goals.

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Human Resources

Human Resources (HR) normally administers:

HiringPromotionTerminationCompliance (Personnel regulatory

requirements)TrainingBenefitsPayrollPerformance assessment

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Human Resources

Much of the data in a HR system revolves around job titles.

Job Title: Description Requirements Pay Grade (pay

range) FLSA status EEO category

HR manuals refer to: Policy and

procedures Employee

handbook Benefits Training

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Human Resources

Equal Employment Opportunity Commission (EEOC) involves:

Employee Demographics Gender Ethnicity Age

EEOC Report: EEOC category Gender Ethnicity

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Human Resources

Payroll refers to: Pay rate Benefits Medical, dental, vision Retirement (401K) Vacation Sick leave Family Medical Leave Act (FMLA) Taxes Federal State Local Federal Insurance Contributions Act (FICA) Medicare

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Human Resources

Chief Human Resource Officer: Will establish and enhance a world class human resources

team Should have at least a Bachelors Degree in Human

Resources or business administration or related field Experience desired but not required (depending on the

CEO’s and owners wishes) Must be able to define and implement a labor relations

strategy that will ensure a positive and productive work environment

Challenges HR leaders CHRO faces: Workforce demographics and global talent trends Corporate scandals and intensifying regulatory challenges Rising costs of health care and pensions Technology innovations enabling new ways of working Increasing globalization Endless pressures to boost workforce

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Categories of the CHRO’s roles and responsibilities

1) Workforce Strategist: Integrating business strategy and overall performance are increasingly important tasks. As well as supporting and implementing overall workforce strategy, CHROs also have a significant role in developing and informing HR strategy- helping the CEO and other senior managers design strategies that are consistent with global labor trends, available talent and next-generation leadership and employees

2) Organizational and Performance Conductor: How do businesses get the best performance from their employees? Organizations are increasingly complex and performance improvements can be required from departments involving:

operations across geographic boundaries virtual teams contingent workforces telecommuting job-sharing flexible hours workforce diversity

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Categories of the CHRO’s roles and responsibilities

Workforce Strategist: Integrating business strategy and overall performance are increasingly important tasks. As well as supporting and implementing overall workforce strategy, CHROs also have a significant role in developing and informing HR strategy- helping the CEO and other senior managers design strategies that are consistent with global labor trends, available talent and next-generation leadership and employees

Organizational and Performance Conductor: How do businesses get the best performance from their employees? Organizations are increasingly complex and performance improvements can be required from departments involving:

operations across geographic boundaries virtual teams contingent workforces telecommuting job-sharing flexible hours workforce diversity

Note:Modern CHROs need to be able to navigate all such options, acting as change masters and architects of organizational structures and rewards programs.

HR Service Delivery Owner: Despite the increasing focus on wider business issues, CHROs must still provide cost-effective, day-to-day HR administration and operations. But they need to devote less time to overseeing their own HR systems and processes and spend more time managing a complex mix of in-house, self-service and external resources. Internal and external services must be blended into a cohesive and seamless working operation..

Compliance and Governance Regulator: CHROs must work directly with their boards on employee issues directly related to the critical areas of: risk management regulatory compliance ethics integrity

Additionally, they are expected also to assist with a wide range of board-related issues, such as board member selection and orientation, executive compensation and succession planning.

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Human Resource Challenges

Challenges in Human Resources

o Shortages in people trained to work in the growth areas of the future.

o A complex set of laws and regulations involving hiring, safety, unionization, and equal pay requiring organizations to go beyond a profit orientation and be more fair and socially conscious

o Retraining of certain employees

o Increasing number of single parent and two income families resulting in demands for job sharing, maternity leave, and special programs


o Shift in employee attitudes towards work

o Continuous downsizingo Increased demand for

benefits being tailored to the individual

o A decreased sense of employee loyalty

o Recruiting employees from a diverse population

o Selecting productive employees

o Hiring competent workerso Training and Developing

Employeeso Management developmento Diversity in Management

Development

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Human Resource Challenges


o Networkingo Attracting and Keeping

the best employeeso Pay Systemso Compensating Teamso Fringe Benefitso Scheduling Employees to

Meet Organizational and Employee Needs

o Job Sharing Planso Promoting and

Reassigning Employeeso Termination of Employeeso Retiring Employeeso Laws affecting Human

Resourceso Effects of Legislation

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Employees Needed in Human Resources

CHRO Recruiter Employee Relations

Manager Compensation and

Benefits Manager Employee Relations

Specialist Administrative Assistant

(a secretary) HR Coordinator Human Resource

Assistance Human Resource

Administrator Director of Human

Resources Human Resource Manager Compensation Analyst Staffing Specialist Coordinator of Human

Resources

HR Assistant Payroll Specialist Workforce Planning

Specialist Human Resources

Cordinator Recruiter Human Resources

Specialist Human Resource Benefits

Administration HR Generalist More or not as many as

mentioned on here – depending on CHRO’s and CEO’s decisions 142

Software Programming

Each computer will have Microsoft Office Ultimate but the programming for Human Resources will be included in the ERP which is mentioned later in this power point.

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Information Technology Department

Information Technology:: The development, installation, and

implementation of computer systems and applications.

A major facilitator of business activities in the world today

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Chief Information Officer

Chief Information Office (CIO): Head of the Information Technology Department Expertise in computer science, software engineering,

and/or information systems Many CIO’s hold a Master of Business Administration or

Master of Science in Management as well as a technical background

Must also have leadership capabilities, business acumen and strategic perspectives as well as technical skills

Delegates responsibilities and answers to the CEO

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Chief Information Officer (CIO)

Chief Information Officer (CIO) will have significant Information Technology leadership experience and specialty expertise in one or more of the following areas:

ERP implementation and migration Instructional Technology Infrastructure and Networking Administrative systems design and development Excellent references Demonstrate superior communication skills Education in business management and Information

Technology 146

Information Technology Top Seven Occupations

1) Computer software application engineers

2) Computer support specialists3) Computer software systems

engineers4) Network and computer systems

administrators5) Network systems and data

communications analysts6) Desktop publishers7) Database administratorsNote: the corporation will rely on the Chief Information

Officer and CEO to decide which will be necessary within the IT department. Each department will need a secretary

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Information Technology

Information Technology is a catalyst of fundamental changes in the strategic structure, operations, and management of organizations due to the following capabilities:

Performing high speed, high volume, numerical computations

Providing fast, accurate, reliable, and inexpensive communication within and between organizations, any time, any place

Storing huge amounts of information in an easy-to-access, yet small space

Allowing quick and inexpensive access to vast amounts of information worldwide at any time

Enabling collaboration anywhere, any time Increasing the effectiveness and efficiency of people

working in groups in one place or in several locations

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Vividly presenting information that challenges the human mind

Facilitating work in hazardous environments Automating both semiautomatic business processes and

manually doing tasks Facilitating interpretation of vast amounts of data Facilitating global trade Enabling automation of routine decision making and

facilitating complex decision making Can be wireless, thus supporting unique applications

anywhere Accomplishing all of the above much less expensively than

when done manually

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Information Systems and Information Technology

Information Systems: Collects, processes, stores, analyzes, and disseminates

information for a specific purpose Includes inputs (data, instructions) and outputs(reports,

calculations) Processes the inputs by using technology such as PCs and

produces outputs that are sent to users or to other systems via electronic networks.

Information Systems also include people, procedures, and physical facilities and it operates within an environment

Not necessarily computerized although most of them are

Information Technology: The collection of computing systems used by an

organization The technological side of an information system including:

hardware, software, databases, networks, and other electronic devices

A subsystem of an information system

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Information Systems and Information Technology

Information Technology The organization’s collection of information systems, their

users, and the management that oversees them.

Difference in Computers and Information Systems

A computer provides effective and efficient ways of processing data and a necessary part of an information system

An information system involves much more than computers. The successful application of an IS requires an understanding of the of the business and its environment that is supported by the IS. For example, to build an IS that supports transactions executed on the New York Stock Exchange, it is necessary to understand the procedures related to buying & selling stocks, bonds, options, and so on, including irregular demands made on the system, as well as all related government regulations

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Information Systems & Information Technology

In learning about Information Systems, it is therefore not sufficient to just learn about computers as computers are only one part of a complex system that must be designed, operated, and maintained.

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The Information Technology Department is responsible for management, support and implementation of the technology architecture, hardware, software and the respective resources throughout the organization.

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Managerial Issues in IT

Recognizing opportunities for using IT and Web-based systems for strategic advantage

Who will build, operate, and maintain the information systems

How much IT How important is IT Globalization Ethics and social

issues Transforming the

organization to the digital economy

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Enterprise Resource Planning (ERP)

The ERP system will be discussed in the next few slides. The IT department should be or will be the creator and maintainer of the ERP

160

Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP): ERP is a way to integrate the data and processes of an organization into one

system A process or approach which attempts to consolidate all of a company’s

departments and functions into a single computer system that services each department’s specific needs.

It is a convergence of people, hardware & software into an efficient production, service and delivery system that creates a profit for the company.

A company –wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores

Typically has modular hardware and software units and “services” that communicate on a local area network

The modular design allows a business to add or reconfigure modules while preserving data integrity in one shared database that may be centralized or distributed

Has an integrated Accounting System Usually ERP systems will have many components including hardware and

software, in order to achieve integration Most ERP systems use a unified database to store data for various functions

found throughout the organization161

Enterprise Resource Planning Implementation

The steps of a data migration strategy help with the success of an ERP implementation:

1) Identifying the data to be migrated2) Determining the timing of data

migration3) Generating the data templates4) Freezing the tools for data migration5) Deciding on migration related setups6) Deciding on data archiving

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Enterprise Resource Planning

In order for a software system to be considered ERP, it must provide an organization with functionality for two or more systems

Most cover several functions although a few cover only two functions (ex QuickBooks: Payroll & Accounting)

Today’s ERP systems can cover a wide range of functions Examples of modules in an ERP which formerly would have

been stand- alone applications include: Product lifecycle management, Supply chain management (ex purchasing, manufacturing and distribution), Warehouse Management, Customer Relationship Management (CRM), Sales Order Processing, Online Sales, Financials, Human Resources, and Decision Support System.

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Ideally, ERP delivers a single database that contains all data for the software modules which would include:

Manufacturing: engineering, bill of materials, scheduling, capacity, workflow management , quality control, cost management, manufacturing process, manufacturing projects, manufacturing flow

Supply chain management: order to cash, inventory, order entry, purchasing, product configurator, supply chain planning,, supplier scheduling, inspection of goods, claim processing, commission calculation

Financials: general ledger, cash management, accounts payable, accounts receivable, fixed assets

Project management: costing, billing, time and expense, performance units, activity management

Human Resources: human resources, payroll, training, time and attendance, rostering, benefits

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Customer relationship management: sales and marketing, commissions, service, customer contact and call center support

Data Warehouse and various self service interfaces for customers, suppliers, and employees

Access control- user privledge as per authority levels for process execution

Customization- to meet the extension, addition, change in process flow

Note: This varies from each organization and more or less can be expected

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Enterprise Resource Planning Process Preparation

ERP vendors have designed their systems around standard business processes based upon best business practices

Different vendors have different types of processes Crucial organizations perform a thorough business

process analysis before selecting an ERP vendor and setting off on the implementation track

The analysis should map out all present operational processes, enabling selection of an ERP vendor whose standard modules are most closely aligned with the established organization

Redesign can then be implemented to achieve further process congruence.

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Enterprise Resource Planning Process Preparation

Research indicates that the risk of business process mismatch is decreased by:

Linking each current organizational process to the organization’s strategy;

Analyzing the effectiveness of each process in light of its current related business capability

Understanding the automated solutions currently implemented

ERP implementation is considerably more difficult in organizations structured into nearly independent business units, each responsible for their own profit and loss, because they will have different processes, business rules, data semantics, authorization hierarchies and decision centers.

For more on ERP it is advised to consult with an ERP specialist

167

Links on ERP

http://www.tech-faq.com/enterprise-resource-planning-erp.shtml

http://en.wikipedia.org/wiki/Enterprise_resource_planning

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Vendors of ERP & other integrated business information systems

Examples of integrated business information systems are:

Enterprise Resource Planning (ERP) Manufacturing Resource Planning (MRPII) Customer Relationship Management (CRM) Human Resource Management System (HRMS) Financial System

Some major system vendors are: Oracle SAP IBM

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Recommended Software

ERP setup as mentionedConsult with a professional Microsoft Office UltimateAlready discussed the accounting

software programsEach executive and others will need a

Blackberry phone from AT&TBarcode Planet Dolphin 9900 Mobile Computers from Honeywell Other products from Barcode Planet 1-888-875-7373 http://www.barcodeplanet.com/honeywell/dolphin-9900.htm

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Operations Management & Logistics

Operations form the base of every organization. Operations Management & Logistics comprises disciplines such as: product development (television show development- DVD’s- shirts- website content- etc), quality management, logistics, information systems and human resources management.

Operations extend from the performance management of a group of design engineers or building in quality feedback loops to the precise prediction of production and delivery performance (production of a show or movie). Supply chain management and the design of information architectures for e-business are also a part of operations management.

Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers.

Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and occasionally security.

Logistics is a channel of the supply chain which adds the value of time and place utility

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Operations Management & Production Management

Production Management has been the term to describe all the activities managers do to help their firms create goods. To reflect the change in importance from manufacturing to services, the term production has been replaced by operations to reflect both goods and services production

Production Management:

The term used to describe all the activities managers do to help their firms create goods.

Production Management & Operations Management includes the creation and managing of goods and services using the factors of production-land, labor, capital, entrepreneurship, human resources, and knowledge

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Operations Management and Production Management

Operations Management:

A specialized area in management that converts or transforms resources (including human resources) into goods and services.

Operations Management includes:

Inventory Management Quality Control Production Scheduling Follow up services Creating services/products Other services as well

Operations Management transforms:

Human Resources Raw Materials Supplies Other resources Operations

Management(for a production company):

Takes Inputs (information, actors, actresses, CEO’s, etc…), buildings, offices, & computer systems, etc.. and creates services that transform the shows, actors/actresses/camera ppl/etc… into a successful business

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Operations Management

Some organizations produce mostly goods and others produce goods and services. Production companies produce goods and services

Operations Management in Action Includes:

Hiring Specialists who study the latest in production techniques & can set up world class systems

Consultants Streamline processes Facility location Internet networking Facility layout Quality control Quality function deployment ISO Standards Measuring quality (satisfaction) Manufacturing processes Materials requirement planning Enterprise resource planning Other services and actions as

well

175

Operations Management

Operations Management in Action Includes:

Knowing Modern Production Techniques

Just in time Inventory Control Internet purchasing Flexible

Manufacturing(production of shows- not flexible to break the rules or act unethical)

Lean Manufacturing Mass customization Competing in Time Computer Aided Design and

Manufacturing Control Procedures: PERT and

GANTT Charts Preparing for the future

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Operations and Logistics

Operations and Logistics emphasize the following to capture the competitive edge:

Focusing on customers Maintaining close relationships with suppliers and other

companies to satisfy customer needs Practicing continuous improvement Focusing on quality Saving on costs through site selection Relying on the Internet Adopting new techniques such as enterprise resource

planning, computer integrated manufacturing, flexible manufacturing, and lean manufacturing

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Operations and Logistics

Operations and Logistics often focus on:

Production InventorySupply chainProcessesStrategic Planning

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Chief Operating Officer

Chief Operating Officer: The corporate officer responsible for managing the day to

day activities of the corporation and for operations management

Highest ranking employee in the Operations Department and is in charge of the Operations Department

Monitors the daily operations of the company and reporting to the board of directors and the top executive

Responsible or design, development, operation, and improvement of the systems that create and deliver the firms products and services.

Responsible for ensuring that business operations are efficient and effective and that proper management of resources, distribution of goods & services to customers, and analysis of queue systems is done

Needs to have domain knowledge of the business and industry, understand modern management theories, employ process/quality improvement techniques (business process reengineering, Six Sigma) and quality process standards

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Function of a Chief Operating Officer

1) Marshal limited resources as set out by the chief executive officer and board of directors to the most productive uses with the aim of creating maximum value for the company’s stakeholders

2) Lead by developing and cascading the organization’s strategy/mission statement to the lower ranking staff, and implementing appropriate rewards/recognition and coaching/corrective practices to align personnel with company goals

3) Plan by prioritizing customer, employee and organizational requirements

4) Maintaining and monitoring staffing, levels, Knowledge-Skill-Attitude (KSA), expectations and motivation to fulfill organizational requirements

5) Drive performance measures for the measurement of an operation’s performance and consideration of efficiency versus effectiveness, often in the form of dashboards convenient for review of high level indicators

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Sales and Marketing

Marketing vs. Sales: What is the difference?

Marketing is everything you do to reach and persuade prospective customers

Sales is everything you do to close the sale and get a signed agreement or contract

Marketing: the process of planning and executing the conception, pricing, promotion, and distribution of goods or services to facilitate exchanges that satisfy individual and organizational objectives. Selling and advertising are a part of marketing but marketing involves much more.

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Sales and Marketing Department

Sales and Marketing Department: Focuses on the needs of the buyer and the need to satisfy

the customer through products produced Marketing guides and controls the entire operation, with

manufacturing playing the role of a service activity and supplying the products needed by the customer as relayed to it by marketing

Monitors the competition and focuses on the customer Creates new ideas Sets the strategy, plans the attack, and executes Advertising and sells

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Chief Marketing Officer

Chief Marketing Officer The executive responsible for various marketing in an

organization Primary or shared responsibility for areas such as: sales

management, product development, distribution channel management, public relations, marketing communications (including advertising and promotions), pricing, market research, and customer service.

Must be knowledgeable in a range or disciplines Must be among many other things- highly analytical (ex- pricing

and market research) to highly creative (advertising and promotions)

Must have excellent leadership style Must possess areas outside of marketing such as production,

information technology, legal, and financing Educational requirements vary but a Master of Business

Administration is one degree which will make a good Chief Marketing Officer

Experience would be preferred but a educated and talented individual with no experience would do

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The Marketing Concept

1) Customer Orientation: Find out what consumers want and provide it for them (note emphasis on consumers rather than promotion or sales)

2) Service Orientation: Make sure everyone in the organization has the same objective- customer satisfaction. This should be a total & integrated organizational effort

3) Profit Orientation: Focus on those goods and services that will earn the most profit and enable the organization to survive and expand to serve more consumer wants and needs.

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Marketing Mix

Product

Price

Place

Promotion

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The Marketing Process with the Four P’s

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Find opportunities Conduct Research Identify a target market Design a product to meet the need based on research Do product testing Determine a brand name, design a package, and set a price Select a distribution system Design a promotional program Build a relationship with customers

The Marketing Environment

Sociocultural Population Shifts Values Attitudes Trends

Competitive Speed Service Price Selection

Technological Computers Telecommunications Bar codes Data interchange Internet changes

Global Trade agreements Competition Trends Opportunities Internet

Economic GDP Disposable income Competition Unemployment

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The Consumer Decision Making Process & Outside Influences

Marketing mix influences

Product Price Place Promotion

Psychological Influences

Perception Attitudes Learning Motivation

Sociocultural influences

References groups Family Social class Culture Subculture

Situational influences

Type of purchase Social surroundings Physical surroundings Previous experience

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Sales

Sales Projectiono Demand forecastingo Sales forecastingSales Trackingo Goalso Leadso Contactso ClosingsSales Reportso By companyo By regiono By departmento By teamo By salespersono By producto By consumero By source

Sales Comparisonso Year over yearo Quarter over quartero Month over month

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Marketing & Sales Department

The Marketing & Sales Department usually has the information listed below on hand:

Historical sales Files of past marketing research, marketing plans, and

design awards Sales database Production Records Profit and Loss Statements by Item and Group Marketing Budget Marketing Budget Anticipated Results Other information as well

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Marketing & Sales Department

The Marketing & Sales Department involves much more than discussed in this power point. The department will need a Chief Creative Officer and other talented and driven employees. The power point with this department and others introduces the department and discusses a few things about each department. Further research by the owner must be conducted.

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Legal Department

The legal department will require the best of the best. The attorneys must be sharks so to say. The attorneys must be aware of all laws ranging from tax laws to copyright laws and everything in between. Below are a few laws which influence business in America:

o Minimum wage lawso Environmental protection lawso Consumer protection lawso Worker safety laws (OSHA)o Discrimination lawso Union regulationso Local laws and licenses (as well as foreign )o Incentiveso Copyright and patent lawso Anti monopoly lawso Product litigation o Other laws as well

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Closing

This presentation does not go in depth and further research must be done before opening a corporation but this presentation briefly familiarizes the reader with the setting up and running of a corporation.

Knowledge is power and knowing as much as you can about the corporation you open enables you to run a successful business.

More departments might be required such as mailing, administration, and engineering.

Other chief officers will be required as well- ex: Chief Technical Officer- Chief Technology Officer- Chief Compliance Officer- etc….

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References

Understanding BusinessOrganizational BehaviorWikipediaNumerous Online Sources

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Running, Managing, And Operating A Corporation

Business

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