Category: Class notes

Inventory Management

Inventory turnover ration = Cost of Goods Sold / Inventory

If the ratio is 6, for example, you can calculate the annual figures, such as:

365 / 6 = 60 days on the shelve of the store

 

Buying Direct – Buying goods and services directly from the manufacturer 

Food and services are  usually the types of products that can be purchased directly.

Advantages of the direct business model:

1. Relationship with customer = increases demand

2. anticipate demand = Better information = Better forecast

3. Improve margins

1 + 2 = customization, provide what consumers want = it’s good because it increases demand and allow the firms to increase its price

But customization or “cutting the middle man” will move the firm from economies of scale to dis-economies of scale

 

Operation – The making and delivering of any goods and services

Roles of Vice President of Operations

1. Inform strategies or goals to other departments under the company

2. How to get things done

Social entrepreneur  + Social mission + Social purpose venture = social entrepreneurship

Social entrepreneur: Someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change (social purpose venture)

They are…

Ambitious

Mission Driven

Strategic

Resourceful

Results Orientated

 

Social Economy

Non profit

Charities

Foundations

Cooperatives

Credit unions

social enterprises

Volunteer associations

Service associations

 

Social enterprise v.s. Charities

Business Approach: SE’s usually make profits than put the money back to the society

Legal Structures: SE’s have more cooperative or governmental structures

External Finances: SE’s have a wide range of investment resources

 

Social Enterprise Summary

SE is about FINANCIAL AND SOCIAL RETURNS

SE seek to achieve SOCIETAL CHANGE using INNOVATIVE approaches

SE have both SOCIALLY and ECONOMICALLY IMPACTS

• Shareholders’ Equity = Assets – Liabilities

Asset: Item with future value

• Current/Long term assets: liquidity (how fast it can be transferred into cash)
• Intangible asset: A RIGHT!
• How do you know it exist? Because you have a document to prove that

Financial Accounting:

• Produced for EXTERNAL STAKEHOLDERS
• Focus on the HISTORIC INFORMATION
• Tabulation of FINANCIAL STATEMENTS
• Comply with GENERAL ACCEPTANCE ACCOUNTING PRINCIPLES

Key statements:

• Income statement
• Balance Sheet
• Statement of Cash Flows

Balance sheet considers:

Assets: What company OWNS

• cash, equipment, property

Liabilities: What the company OWES

• Bonds, bank loans

Equity: What the company have RETAINED EARNINGS AND SHARES

Cash Flow

Current Ratio: CA/CL

 

• Two areas of accounting: one for managers and one for investors

• Management accounting:
• Produce for MANAGEMENT
• Focus on the FUTURE (therefore, there may be uncertainties)
• Tabulation of REPORTS
• Comply with NO GENERAL ACCEPTANCE ACCOUNTING PRINCIPLES

• The slope of the line is the estimate of your variable cost
• The intercept is the estimate of the fixed cost
• Break-Even = Fixed Cost / Contribution
• Contribution = Selling Price – Variable Costs
• Adding target profit: (Fixed Costs + Target Profit) / Contribution

• Relevant Costing: a cost that changes between alternatives.
• Sunk costs are not relevant to decision making.

 

 

• Porter’s Five Forces (Analyse industry as a whole)
• Evidence of High Level of Rivalry: Price War, Marketing, New Innovation/Advancement, High level of R&D investment
• Barriers to Entry: High Capital Investment, specialized investment, Government Barrier, Patents, Well established companies
• How you define the industry determines the way you will define the Porter’s Five.
• External environment (Opportunities) which may change the firm’s tastes of the market.
• Tactics (Short term) vs. Strategy (Long term)
• Porter’s Generic Strategy
• Operational efficiency does not equal to strategy. Because strategy is a sustainable competitive advantages which is its uniqueness that others cannot copy

1. Change activities
2. Change the way of doing
3. Choose what activities NOT to pursue
4. Fir the competitive advantage and sustainability

• Strategy process

1. Mission
2. Vision
3. Objectives or goals (SMART)
4. Strategies
5. Tactics
6. Strategy Levels

• Consumer Behaviour
• Why do some customers choose one brand over another?
• What factors affect consumers’ choices?
• What are the considerations that may change consumers’ expectations?

Ex Cookies

Shapes, sizes, ingredients, etc

• Ethnographic Research

• Importance of business plans
• Business plan for Burger King
• Business plans vs. Business models

B-plans: traditional can be seen as static and formulaic

B-Models: more dynamic, collaborative design of how the components of a business can be combined for competitive advantage

• Mind-mapping

• We infer a value upon money – this is caused by interest.
• Formula to calculate the value of the money (Compound interest):

$1,000 (Today) x 1.1 = $1,100 (Future) 1st year

$1,100 x 1.1 = $1,210 2nd year

• “Coke is back to bottling their products” (instead of having another firm to do that): they calculate the future profit value and the present value.
• Facebook share price is dropping
• Europe lending more money will only increase its debt since all the countries that lend the money desire a higher interest rates.

• Perceptual Mapping Exercise
• Sample Value Proposition

1. Segmentation and targeting

• Socio-demographics: Age, gender, income…
• Psychographic: Values, attitudes, lifestyles

2. Positioning

• Ladder

3. Perceptual maps

• Points of parity: Similarities
• Points of difference: Uniqueness

4. Value proposition

• Brands promises
• Frame: Goal consumers can achieve with the brand.

• Netflix increases price resulting losing consumers.
• The case preparation stages:

1. Identify issues
2. analysis
3. alternative generation
4. decision criteria
5. alternative assessment
6. recommendation
7. action and implementation
8. missing information and assumptions

• Went through the Lululemon case
• “My analysis shows…” > “I think…”
• Teamwork increases the accuracy of the recommendation and develops a stronger reasoning