AEM220FINAL_REVIEW1 - Introduction to Business Management...

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Unformatted text preview: Introduction to Business Management Final Review Session Final May 17th 9AM Barton What is management? Authority and bureaucracy Functions of management Management skills Functions of Management Planning Organizing Leading Controlling Functions of Management: Planning Setting organizational goals and strategies to attain those goals; Determining the resources needed to attain goals; Setting standards. Functions of Management: Organizing Allocating resources, tasks, and procedures for achieving goals; Preparing an organizational structure that defines authority and responsibility; Recruiting, selecting, training, developing and placing employees. Functions of Management: Leadership Guiding and motivating employees to work effectively to accomplish organizational goals and objectives; Giving and explaining assignments; Clarifying policies and giving feedback. Functions of Management: Control Measuring performance against corporate objectives; Rewarding outstanding performance; Taking corrective action. Management Skills Technical skills The ability to perform tasks in a specific discipline or department; Communication and motivation, the ability to work through and with people; Ability to picture the organization as a whole and the relationship among its various parts. Human relations skills Conceptual skills Operations Management The management of the conversion or transformation of resources (including human resources) into goods and services. Cost Structures of Craft Production and Mass Production Types of Operations Craft production High customization and variability in the product Eg. Glass blowing, fine musical instruments Mass production, assembly line High standarization and uniformity in the product Eg. Car manufacturers Mass production, process plant Undifferentiated products (ie. Chemicals) Marketing The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services (products) to create mutually beneficial exchanges. The Marketing Mix (or the 4Ps) Product - Defines the characteristics of a product or service that meets the needs of your customers. Price - Decide on a pricing strategy Place Route of distribution Promotion - marketing strategy such as advertising, sales promotions, PR The New Product Development Cycle Idea generation Product screening Product analysis Development Testing Commercialization Characteristics of Product Life Cycle Stages Business Decision making Breakeven point and payback time Time value of money and net present value Breakeven Analysis A means of finding the point, in dollars and units, at which costs equal revenues; Fixed costs Costs that continue even if no units are produced. Another name for fixed costs is indirect costs. Variable costs Costs that vary with the volume of units produced. Another name for variable costs is direct costs. Formulas for finding the breakeven point Breakeven point in units Total fixed costs / (Price Variable cost) Breakeven point in dollars Total fixed cost / (1 (Variable cost / Price) ) Multiproduct case Total fixed cost / (1 (Variable cost (i) / Price (i)) * w(i)) Time Value of Money Present value how much you have now Future value How much what you got now grows to when compounded at a given rate FV= PV (1 + i )^N N= time period (ie. 1 year, 10 years) i = interest rate Some important strategies Leverage By borrowing rather than investing, you can increase your rate of return substantially; BUT, paying back debts takes precedence over obtaining a profit. Cost of capital The lower the cost of your capital, the higher the NPV of potential business opportunities; Decomposition and real options By decomposing an investment into more self-contained parts, you can allocate capital expenses across time, and increase NPV. Strategic Management SWOT Analysis Core competencies and the BCG matrix Values and corporate culture "Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value" Michael Porter, "What is strategy?", HBR, Nov-Dec 1996 Strategy Some Elements of Strategic Management Planning Michael Porter's Five Forces Analysis SWOT Analysis Organizing Core competencies Leading Corporate vision Controlling Corporate culture The DuPont model SWOT Analysis Strengths Weaknesses Unique or distinct advantages that make your organization stand out in the crowd; What makes the customers choose your organization over the competition; Products or services which your competition cannot imitate (now and in the future). Operations or procedures in need of streamlining; Areas in which competitors are better, how and why. Areas that you or your organization may be avoiding; Market segments from which your organization is shut-out. Opportunities Threats Attractive choices within your marketplace: where and what; Emerging trends; Potential new products and capabilities. Areas in which competition is forcing action that is harmful to the organization; Changes in customer demand; Changes in technology. Diversity Concepts Organizational Secondary Marital Status Management Status Parental Status Race Geographic Location SocioEconomic Status Personal Habits / Style Primary Age Gender Content/ Field Union Affiliation Appearance Ethnicity Physical Ability Sexual Orientation Recreational Habits Seniority Smoker/ Non-smoker Work Experience Educational Background Religious Beliefs Language Accent Thinking Style Work Location Division Department Diversity Mixture: Any collection of tangible and intangible items characterized by differences and similarities Includes people, ideas, product lines, customers, strategies, locations, levels and geographic regions Are found in the workforce, workplace and marketplace Kondratieff Waves Definitions Technology The application of scientific and engineering knowledge to achieve a practical result. Research An orderly approach to the revelation of new knowledge about the Universe. Development The application, expansion and interconnection of scientific and engineering knowledge to generate technology. "Disruptive" Technologies Technologies and products that, while being "good enough", offer qualitative improvements in other areas of performance; Discount stores Internet PDA's Incremental innovation Innovation that expands on product characteristics and value propositions already in place; Radical innovation Fundamental changes in product characteristics or value propositions. The Four Principles of Disruptive Technology Companies depend on customers and investors for resources; Small markets don't solve the growth needs of large companies; Market's that don't exist can't be analyzed; Technology supply may not equal market demand. AEM 220 Final Exam Review Part Deux What we WON'T go over Final grades Project questions What we WILL go over Comprehensive review * Management cycle * Economies of scale, craft production and mass production * Break even point * Marketing mix * Product life cycle * SWOT analysis * Kondratieff cycles * Career development process * Entrepreneurial attitudes * Forms of exposure to international business * Human Resource management * Total quality management * Basics of accounting * Financial management, liquidity and profitability REMINDERS: Review the guest speaker presentations, i.e. Professor Clint Sidle, JGSM "The Leadership Wheel" Robert Waldman, Managing Director of Global Bonds - Salomon Smith Barney "Managing your career" Zomba Records / Barry Weiss Read Chapter 3, including its appendix, 4, and 11 Familiarity with Operations, Finance, Marketing, TQM, and Financial Mgmt know about the components of each Ethics and decision making, distinction between ethics and the law Concepts of: Core competency Corporate vision Corporate culture Career development process Super's Theory of Vocational Choice 1954 Donald Super has generated a life span vocational choice theory that has six life and career development stages. These six stages are: 1. The crystallization stage, ages 14-18 2. Specification stage, ages 18-21 3. Implementation stage, ages 21-24 4. The stabilization stage, ages 24-35 5. Consolidation, age 35 6. Readiness for retirement, age 55 Stages of Career Development Theory: 1. Confusion/Self-Assessment 2. Career Exploration 3. Decision Making 4. Making It Happen Entrepreneurial attitudes What does it take to become an entrepreneur? Attributes include being: Self-directed Self-nurturing Action-oriented Highly energetic Tolerant of uncertainty Field with HIGH RISK, but the potential rewards are great! Entrepreneurs do not enjoy risks, but they accept them and attempt to minimize them Pg. 176, text Forms of exposure to international business Human Resource management Career Management Recruitment Selection Training and Development Motivation Evaluation Compensation Scheduling Employee-union relations Text pg. 330 Total Quality Management philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction TQM Approach 1. Find out what customers want 2. Design a product or service that will meet (or exceed) what customers want 3. Design a production process that facilities doing the job right the first time 4. Keep track of results, and use those to guide improvement in the system 5. Extend these concepts to suppliers and to distribution MAIN elements of TQM 1. continuous improvement = philosophy that seeks to make never-ending improvements to the process of converting inputs to outputs kaizen = the Japanese term for continuous improvement 2. competitive benchmarking 3. employee empowerment 4. team approach 5. decisions based on facts rather than opinions 6. knowledge of tools 7. supplier quality TOOLS of TQM Be familiar with at least 2 tools-see lecture notes to help you. Quality function deployment Taguchi technique Pareto charts Process charts Cause-and-effect diagrams Statistical process control Accounting ASSETS= LIABILITIES + OWNER'S EQUITY, or A=L+SE *Income Statement Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Net Profit Before Interest and Taxes Interest Taxes Net Profit After Taxes Relationship between revenue and expenses Basics of accounting Misc. Inventories-FIFO, LIFO Depreciation-Straight line etc. GAAP Pro-Forma Balance Sheet Assets-current and fixed (know what fits under these headings) Liabilities-short/long-term Stock Equity-retained earnings and stock Financial management, liquidity and profitability When trying to value a security, you must consider its: Returns Growth Risk Current, Quick, Debt to Equity, ROE, ROA, etc. Increased diversity less risk Know the Ratios! Portfolio Diversification Leverage-relationship between debt and equity ...
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