HOW COMPANIES WORK 10
8
Introduction
Business ownership 12
Sole proprietorships and partnerships 14
Corporations 16
Private and public companies 18
Multinationals 20
Franchises 22
Not-for-profit 24
Start-ups 26
Start-ups from concept to launch 28
Types of start-up 30
Business plans 32
Raising money 34
Business accelerators and incubators 38
Buying and selling business 40
Mergers and acquisitions 42
Divestitures 44
Vertical vs. horizontal integration 46
Management buy-ins and buy-outs 48
Who’s who 50
Board of directors 52
Company hierarchy 56
Stakeholders 60
Business cultures 64
Contents
Senior editor
Project art editor
Editors
Designers
US senior editor
US editor
Managing editors
Senior managing
art editor
Publisher
Deputy art director
Publishing director
Art director
Senior jacket designer
Jacket assistant
Jacket design manager
Pre-production producers
Producer
Georgina Palffy
Saffron Stocker
Anna Fischel, Alison Sturgeon,
Suhel Ahmed, Hannah Bowen,
Joanna Edwards, Alex Beeden
Natalie Clay, Stephen Bere,
Phil Gamble, Vanessa
Hamilton, Jemma Westing
Margaret Parrish
Christine Heilman
Stephanie Farrow, Gareth Jones
Lee Griffiths
Liz Wheeler
Karen Self
Jonathan Metcalf
Phil Ormerod
Mark Cavanagh
Claire Gell
Sophia MTT
Ben Marcus, Nikoleta Parasaki
Christine Ni
First American edition 2015
Published in the United States by
DK Publishing, 345 Hudson Street
New York, New York 10014
A Penguin Random House Company
15 16 17 18 19 10 9 8 7 6 5 4 3 2
002—196402—Mar/2015
Copyright © 2015
Dorling Kindersley Limited
All rights reserved.
Without limiting the rights under copyright reserved above,
no part of this publication may be reproduced, stored in or introduced
into a retrieval system, or transmitted, in any form, or by any means
(electronic, mechanical, photocopying, recording, or otherwise), without
the prior written permission of both the copyright owner and the above
publisher of this book.
Published in Great Britain by Dorling Kindersley Limited
A catalog record for this book is
available from the Library of Congress.
ISBN: 978-1-4654-2979-7
DK books are available at special discounts when purchased in
bulk for sales promotions, premiums, fund-raising, or educational use.
For details, contact: DK Publishing Special Markets, 345 Hudson Street,
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SEE ALL THERE IS TO KNOW
www.dk.com
US_001-009_Prelims.indd 4 05/08/2015 16:27
Financial reporting 100
The accounting cycle 102
Financial statements 104
Financial accounting 110
International accounting standards 112
Profit-and-loss statement 114
Balance sheet 116
Cash-flow statement 120
Environmental accounting 122
Depreciation 124
Amortization and depletion 128
Management accounting 130
Cash flow 132
Budgets 136
Assets and inventory 138
Costs 140
Product costing and pricing 142
Measuring performance 144
Key performance indicators (KPIs) 146
Financial ratios 148
Forecasting 150
Tracking fraud 152
Raising financing 154
Internal financing 156
External financing 158
Going public 160
Shares and dividends 164
The capital market 170
Gearing ratio and financial risk 174
Corporate structure 66
Functional structure 68
Divisional structure 70
Matrix structure 72
Network structure 74
Team-based structure 76
Human resources 78
The human resources cycle 80
Recruitment and selection 82
Evaluating staff 84
Motivation and rewards 86
Leadership strategy and styles 88
Leadership for team building 90
Employee relations and
communications 92
Project management 94
Negotiating strategy 96
HOW FINANCE WORKS 98
US_001-009_Prelims.indd 5 21/11/2014 14:26
Financial reporting 100
The accounting cycle 102
Financial statements 104
Financial accounting 110
International accounting standards 112
Profit-and-loss statement 114
Balance sheet 116
Cash-flow statement 120
Environmental accounting 122
Depreciation 124
Amortization and depletion 128
Management accounting 130
Cash flow 132
Budgets 136
Assets and inventory 138
Costs 140
Product costing and pricing 142
Measuring performance 144
Key performance indicators (KPIs) 146
Financial ratios 148
Forecasting 150
Tracking fraud 152
Raising financing 154
Internal financing 156
External financing 158
Going public 160
Shares and dividends 164
The capital market 170
Gearing ratio and financial risk 174
Corporate structure 66
Functional structure 68
Divisional structure 70
Matrix structure 72
Network structure 74
Team-based structure 76
Human resources 78
The human resources cycle 80
Recruitment and selection 82
Evaluating staff 84
Motivation and rewards 86
Leadership strategy and styles 88
Leadership for team building 90
Employee relations and
communications 92
Project management 94
Negotiating strategy 96
HOW FINANCE WORKS 98
US_001-009_Prelims.indd 5 21/11/2014 14:26
Marketing mix 178
Product 180
Product positioning 182
Product life cycle 184
Price 186
Place 188
Promotion 190
Market research 192
Market segmentation 194
Marketing approaches 196
Niche vs. mass marketing 198
Traditional marketing 200
Digital marketing 202
Engagement marketing 204
Sensory marketing 206
Relationship marketing 208
Outbound marketing 210
Traditional offline advertising 212
Online advertising 214
Direct mail 216
Telemarketing 218
Inbound marketing 220
Outbound vs. inbound marketing 222
Blogging 224
Social media marketing 228
Search engine optimization (SEO) 230
Business development 232
Branding and rebranding 234
Lead generation 236
Lead conversion 238
Customer retention 240
Return on marketing
investment (ROMI) 242
Intellectual capital 244
Information management 246
Business intelligence 248
Business analytics 250
Marketing and IT 252
Collecting consumer data 254
Data warehousing 256
Customer profiling 258
Big data 262
Customer relationship
management (CRM) 264
Compliance 266
HOW SALES AND
MARKETING WORKS
176
US_001-009_Prelims.indd 6 21/11/2014 14:26
HOW OPERATIONS
AND PRODUCTION WORK
268
Manufacturing and production 270
Job production 272
Batch production 274
Flow production 276
Mass customization 278
Continuous production 280
Hybrid processes 282
Management 284
Economies and diseconomies of scale 286
Lean production 288
Just-in-time 290
Total quality management 292
Time-based management 294
Agile production 296
Kaizen 298
Product 300
New product development 302
Innovation and invention 304
Design 306
Quality management 308
Product-process matrix 310
Control 312
Managing capacity 314
Inventory 316
Quality control 318
Six Sigma 320
Supply chain 322
Value chain 324
Outsourcing 326
Offshoring 328
Reverse supply chain 330
Benchmarking 332
Corporate social responsibility 334
Resources 336
Index 344
Acknowledgments 351
Dr. Julian Sims (consultant editor) entered academia
after a successful career in industry in the US and UK. He
is a lecturer in the Department of Management at Birkbeck,
University of London, UK; a Chartered Accountant (CPA Aus);
and a Chartered Information Technology Practitioner (CITP).
His work is widely published in academic journals.
Philippa Anderson is a business writer and communications
consultant, who has advised multinationals including 3M,
Anglo American, and Coca-Cola. She collaborated with
Lord Browne, former CEO of BP, on his memoir,Beyond
Business, and was a contributor toDK´s The Business Book.
Alexandra Black studied business communications before
writing for financial newspaper group Nikkei Inc. in Japan.
While in Tokyo, she was an editor at the Risk Analysis division
of investment bank JP Morgan. Now based in Cambridge,
UK, she covers subjects as varied as business, technology,
and fashion. She was a contributor to DK’s The Business Book.
Joe Stanley-Smith is a reporter at the International Tax
Review in London, UK, where he specializes in indirect tax
and tax disputes. He graduated in journalism with a business
specialty from Kingston University, UK, and has previously
worked in social media and local news.
Paul McDougall (US/Canada writer) is Deputy Technology
Editor for theInternational Business Times. He has written
forScientific American, InformationWeek,SHAPEmagazine,
and others. A native of Toronto, Canada, he currently resides
in New York City.
Contributors
US_001-009_Prelims.indd 7 21/11/2014 14:26
HOW OPERATIONS
AND PRODUCTION WORK
268
Manufacturing and production 270
Job production 272
Batch production 274
Flow production 276
Mass customization 278
Continuous production 280
Hybrid processes 282
Management 284
Economies and diseconomies of scale 286
Lean production 288
Just-in-time 290
Total quality management 292
Time-based management 294
Agile production 296
Kaizen 298
Product 300
New product development 302
Innovation and invention 304
Design 306
Quality management 308
Product-process matrix 310
Control 312
Managing capacity 314
Inventory 316
Quality control 318
Six Sigma 320
Supply chain 322
Value chain 324
Outsourcing 326
Offshoring 328
Reverse supply chain 330
Benchmarking 332
Corporate social responsibility 334
Resources 336
Index 344
Acknowledgments 351
Dr. Julian Sims (consultant editor) entered academia
after a successful career in industry in the US and UK. He
is a lecturer in the Department of Management at Birkbeck,
University of London, UK; a Chartered Accountant (CPA Aus);
and a Chartered Information Technology Practitioner (CITP).
His work is widely published in academic journals.
Philippa Anderson is a business writer and communications
consultant, who has advised multinationals including 3M,
Anglo American, and Coca-Cola. She collaborated with
Lord Browne, former CEO of BP, on his memoir,Beyond
Business, and was a contributor toDK´s The Business Book.
Alexandra Black studied business communications before
writing for financial newspaper group Nikkei Inc. in Japan.
While in Tokyo, she was an editor at the Risk Analysis division
of investment bank JP Morgan. Now based in Cambridge,
UK, she covers subjects as varied as business, technology,
and fashion. She was a contributor to DK’s The Business Book.
Joe Stanley-Smith is a reporter at the International Tax
Review in London, UK, where he specializes in indirect tax
and tax disputes. He graduated in journalism with a business
specialty from Kingston University, UK, and has previously
worked in social media and local news.
Paul McDougall (US/Canada writer) is Deputy Technology
Editor for theInternational Business Times. He has written
forScientific American, InformationWeek,SHAPEmagazine,
and others. A native of Toronto, Canada, he currently resides
in New York City.
Contributors
US_001-009_Prelims.indd 7 21/11/2014 14:26
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