Comment on Yue Dong’s blog: Sustainability in the Market

According to Yue Dong’s blog, business needs to be eco-friendly to achieve sustainability. I agree with her that it’s important for a business to be eco-friendly and being sustainable is a long term goal of a business.

Environmental issues are one of the most serious problems today, and this leads more companies to introspect their behaviors. We all know that papers are made of wood, this means we have to cut down trees. However, over deforestation can cause desertification. Do you want our country to become a desert instead of oasis? Of course not! This triggers us to come up with ideas to be more sustainable.

Being sustainable can be said the responsibility of the business to the environment. Refer to business ethics, a business has to shoulder its responsibility to the whole society which includes the environment. Additionally, to be eco-friendly can make the companies more famous. It can help to enhance the reputation of a company, and then leads to more customers and higher revenue which may bring higher profits. The main purpose of a business is to generate profit, so the procedure of reach sustainability can assist the business to achieve its final aim.

(blog link of Yue Dong:

https://blogs.ubc.ca/schnee/2013/11/17/sustainability-in-the-market/)

 

Comment on Jiazi Yang: Taobao – the biggest online shopping platform in China

I agree with Jiazi Yang that, online shopping has become one of the major ways of shopping among customers, and it is popular due to its convenience and variety types of goods offered. Since more and more people buy online, it generates a great amount of profit from the online market.

Online shopping is easier for consumers to choose the goods which they prefer because it is a highly competitive market, which means there are a lot of companies selling same products. In this case, customers can compare one type of goods from many sellers to pick the best one. Moreover, it costs less for online shopping. I think this is a double-edged sword since consumers will be satisfied with the lower price, and the sellers can earn more by attracting more customers with low price. Another advantage of online shopping is no need to walk around. People can be too busy to walk around to find what they want, but online shopping brings these people the benefit. Customers just need to click on their computer, after ordering, the sellers will deliver the goods to the consumers. If the sellers offer free shipping, it will attract more people to buy.

However, online shopping also has some risks. High integrity of sellers and customers is required. In addition, there may be some differences between the real products and the pictures; thus, some customers may be angry and can cause the conflicts between consumers and sellers. If this situation continues, it can seriously affect the revenue of the sellers due to large buyer power.

(blog link of Jiazi Yang: https://blogs.ubc.ca/chelseayang/2013/11/08/taobao-the-biggest-online-shopping-platform-in-china/)

Technology information and information system

Technology information is a set of tools and processes that encompass different types of technology to create, store, exchange and use information in various forms while information system is a combination of technical and human resources that store, compute, distribute and communicate for a company. One special form of information system is management information system which provides information to make decisions. There are many ways to collect and process data, and some of them are used in our daily life, such as sign in function, customer data tracking and i-clickers.

Sign in function is widely used in companies to see whether the employees are punctual to work or early to leave. Whenever they insert the card into the machine, the machine can type the current time on the card. This helps to regulate the phenomenon of being late and leaving early.

Customer data tracking is extremely useful for the companies have large group of memberships or very essential consumers. It’s really convenient to record and store the customer information by the automatic system instead of manual operations. It’s easier to recall the information as well.

I-clickers are mainly used in class to see the attendance and obtain the answers from large number of students. It’s easier for professors to check the answers and can directly give feedback to the students.

(source is from class notes.)

time value of money

Time value of money is a concept that the money you have today is worth more than future expectations. The present value of one item does not depend on the length of time, but also depends on the discounting factor which also can be called interest. There are two ways that can calculate the present value. One is single cash flow, it follows the formula of future value divided by the sum of one plus interest with power of the number of years. The other is multiple cash flows, it follows the formula: the total sum of cash flow for the year divided by one plus interest with power of years.

One good example using time value of money is the decision to buy fixed assets or not. As we all know that fixed assets like furniture, equipments have a certain time of use life. As they use for more years, the lower the net book value of fixed assets, this is why depreciation occurs. So it is necessary for a company to calculate the present value of the assets to see whether it is worth to buy. If the present value is larger than the profit can be earned after use life, then the company should buy.

(source is from class notes.)

How to be good managers?

The value of a business is mainly based on management; therefore, it’s essential for a company to have good managers. Managers are the core strength which plays an important role in business operation, and decisions made by them highly influence the performance of the companies in current status and future expansion.

The first capability for good managers is to understand what business they are in. They have to clarify the function of their companies and their position in market. At the same time, they need to think about methods to be differentiated between other similar companies or industries because understanding the value proposition of the business is the second ability that good managers should have. They have to come up their point of difference from other business to delivery their own companies’ value proposition, and distribute the task to their subordinates to achieve that purpose. Good managers should always have positive effects on their subordinates, so another requirement for them is not to take advantage of vulnerable people. Inversely, they should assist these people more carefully, this can increase the power of a leader among their subordinates, and then subordinates can put more effort into work. Finally, good managers should conduct business in a sustainable manner.

(source is from class notes.)

 

Customization

Customization is a good marketing strategy for a business to provide satisfying services for consumers. Customization means modify and offer services according to customers’ individual preferences and specifications. This makes the customers have a feeling of being well serviced, and can help them to convince their decision to choose services or products from the companies.

Customization provides products or services referring to consumers’ own interests; thus, this can help to develop the relationship between customers and companies. It’s a great opportunity for companies to understand the customer needs better, as well as getting more information about consumers during the process of self- relevant services. Due to this kind of communication, the companies and the customers can get to know each other better, and hence strengthen the relationship between them.

Furthermore, customization will increase the demand for specific services and products, so the companies can charge a higher price to earn more profit. In addition, the increased level of individual related services will help business to create a chain of customer loyalty. This is because the customers trust the companies more due to their excellent performance previously. So it’s wise for a company to use customization as its marketing strategy to attract more potential customers.

(Source is provided by Pedro S. Coelho, Jörg Henseler, “Creating customer loyalty through service customization.” http://www.emeraldinsight.com/journals.htm?articleid=17024515)

 

Ratios

Companies normally use ratios to judge its performance for current year by comparing with previous years. The ratios used are usually current ratio, net profit ratios, price earning ratio, earning per share, etc.

current ratios is the quotient of current assets divided by current liabilities. It shows the capability of a company to pay its debt over one year. The higher the current ratio, it’s more able for a company to pay its obligations. In addition, if any company has a current ratio that is below 1, it is a warning that the company is not in a safe situation.

Net profit ratio is calculated as the formula: net profit/ net sales* 100. It displays the capital left after paying expenses, so the larger the net profit ratio, more stable the business will be.

Earning per share illustrates the profitability per shareholder; thus, it’s a key factor to determine the share price, and this is an important component to calculate the price earning ratio.

Price earning ratio is calculated by dividing earning per share from market price. It shows how much a shareholder is willing to pay when they earn one dollar, and can reflect the potential dividend will gain for the business. The higher the P/E ratio is, the greater value creation for future.

(Source is provided by http://www.investopedia.com)

 

How do assets and liabilities affect cash flow?

Cash flow statement shows the cash inflows and outflows of a business from three aspects: operating activities, investing activities and financial activities. The net cash flow from the operating activities is generally the total sum of the change of assets and liabilities for adjacent two years; therefore, the assets and liabilities influence the cash flow in a business. Furthermore, the increase of trade receivables will do harm to cash flow of companies because trade receivables are the money that customers pay on credit when purchasing a good from them, which means the customer owe the money. If the customers don’t pay the companies, they will not able to collect more money, and then results in the stumble of cash flow in business. The other assets like inventory, prepaid expenses perform the same way like trade receivables, they hurt the cash flow when there is a rise. In the contrast, depreciation will help the cash flow of a business if there is an increase in it. Depreciation is the item that subtracted from the non current assets, so it reduces the net book value of assets. In this case, it recovers the amount lost from the conversion of fixed assets to cash, and hence it is a positive factor in cash flow statement. The current liabilities work in same pattern like depreciation does.

(Source is provided by

http://www.dummies.com/how-to/content/how-assets-and-liabilities-affect-your-businesss-c.html )

depreciation

According to AccountingCoach, “Buildings, machinery, equipment, furniture, fixtures, computers, outdoor lighting, parking lots, cars, and trucks are examples of assets that will last for more than one year, but will not last indefinitely. During each accounting period (year, quarter, month, etc.) a portion of the cost of these assets is being used up. The portion being used up is reported as Depreciation Expense on the income statement.” But there is one exception. It is land which is assumed that can be used forever, so it will not be depreciated.

The depreciation methods can be divided into two: straight-line depreciation and accelerated depreciation. The straight-line method uses the formulea that refers to costs minus the scrap value of that asset over the useful life of the asset. This method gives same depreciation expense  every year until “the value is listed as $0 on the books”(James Collins,eHow Contributer). Compared to straight-line method, accelerated method provides the companies with more depreciation in the previous years but less in the later years; therefore, the accelerated method is very attractive to  companies for income tax returns due to the immediate income tax savings in the early years. There can be many different types of accelerated methods that depend on the declining percentage.

(Source provided by

James Collins,eHow Contributer, http://www.ehow.com/info_7759900_depreciation-occur.htm

AccountingCoach,http://www.accountingcoach.com/online-accounting-course/11Xpg02.html )

advantages and disadvantages of Ecommerce

The rapid development of internet and more convenient online tools has resulted a new business field—Ecommerce. Ecommerce contributed a lot of advantages to companies and customers, but it also brought many problems.

As it is an advantageous way of business, customers can find what they exactly need easily. At the same time, it provides with faster buying and selling procedures. Through my analysis, it highly increases the market demands according to the ratio of buying and selling, which is 24:7(data provided by eSalesTrack). In theory, we all know that online services have no geographic limitations, so it has more available channels that the products can reach to the customers, as well as customers can easily choose the products they wanted from distinct suppliers without walking around the shops one after another.

However, we must understand that anyone who is moral or not can start the ecommerce. If you encounter a bad site or an unhonest business, your money may be “eaten up”. On the contrary, because of  no real interaction and contract between the customers and the companies, there can be doubts on the consumers’ loyalties. For the companies themselves, their owners can take a great risk of bankrupt because mechanical failure may result in unpredictable impacts on the entire process, and the companies may suffer from a huge loss.

(Source provided by

http://www.esalestrack.com/blog/2008/09/advantages-and-disadvantages-of.html )