to understand ourselves and others!

8/14/2019 To Understand Ourselves and Others!

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BusinessBusinessTo understand ourselves and others!


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Contents

The Fundamentals of Business Managing the Business Enterprise

Strategic Management Operation Management Human Resources Management

Marketing Management Finance and Accounting Information System


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What Is a Business?

Money MotiveMoney Motive Social ServiceSocial Service

EfficiencyEfficiency EffectivenessEffectiveness

Social ResponsibilitySocial Responsibility

Ethical ConductEthical Conduct

For-ProfitFor-Profit Non-ProfitNon-Profit


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Categories of BusinessCharacteristics of

Goods

Tangible product

Consistent product definition

Production usually separatefrom consumption

Low customer interaction

Characteristics ofService

Intangible product

Inconsistent product definition

Produced & consumed at sametime

High customer interaction

Often unique

Often knowledge-based

Frequently dispersed

Providing Services

Providing ServicesProducing Goods

Producing Goods

Capital Intensive Labor Intensive

Can be resold

Can be inventoried

Some aspects of quality measurableSelling is distinct from production

Product is transportable

Site of facility important for cost

Often easy to automate

Revenue generated primarily from tangible product

Reselling unusual

Difficult to inventory

Quality difficult to measureSelling is part of service

Provider, not product is transportable

Site of facility important for customer contact

Often difficult to automate

Revenue generated primarily from intangible service.


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Factors of Production

Goods Services

HumanResources

NaturalResources

Capital KnowledgeEntrepreneurs

Factors of Production

Scarce

Resources

Manufacturing

Construction

Mining

Agriculture

Finance, Insurance

Transportation, Utilities

Wholesale & retail trade

Banking, Entertainment

Health care, Repairs

Information


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Business StakeholdersMaintain stable employment in firm

Receive fair pay for work

Work in safe, comfortable environment

Receive asatisfactoryreturn oninvestments

Realizeappreciation instock value overtime

Receiverepayment of

loansCollect debtsand interest

Receive regular orders for goods

Be paid promptly for suppliesdelivered

Purchasinggoods fromcompetitors

Boycottingcompanieswhoseproducts areunsatisfactoryor whosepolicies areunacceptable

Receive quality goods in a timely fashionat reasonable cost

Offer reliable products that consumerstrust and value

Business

firm

Distributors,

Wholesalers,

Retailers

CreditorsCustomers

StockholdersEmployees

Suppliers


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Business Model

is the totality of How it will select its customers How it defines and differentiates its

product offerings How it creates utility for its customers How it acquires and keeps customers

How it goes to the market promotion strategy distribution strategy

How it defines the tasks to beperformed

How it configures its resources How it captures profit

is the mechanism by which a business intends to generate revenue and profits involves both strategy and implementation


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Growth Model


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Contents


Strategic Management Operation Management Managing Human Resources



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Business Management Process Planning

Develop strategies for success Set goals & objectives Develop action plans

Organizing

Employee activities Facilities and equipment Decision making Supervision Resource distribution

Leading Influencing people

Motivating people Controlling

Monitoring progress Resetting the course Correcting deviations


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Strategic Planning Market standing

Innovation

Human resources

Financialresources

Physical resources

Productivity

Socialresponsibility

Financial

performance

Clarity

of Vision

Clarity

of Vision11

ForecastingForecasting33

Goals

and Objectives

Goals

and Objectives55

Mission

Statement

Mission

Statement22

CompetitiveAnalysisCompetitiveAnalysis44

Action PlansAction Plans66

Strategy: Thebroad set of actionplans to achievecompany goals

Corporate Strategy

Business Strategy

Functional Strategy


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Organizing Make long-range

plans Establish policies Represent the

company

Office Manager,Supervisor, Foreman,

Department Head

Controller, MarketingManager, Sales Manager

President,CEO, VP

Implement goals Make decisions Direct first-line

managers

Implement plans Oversee workers Assist middle

managers


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Leading Leadership Styles

Autocratic Democratic Laissez-faire Contingency

Leadership Functions Coaching Managing Change Mentoring

Corporate Culture

Manager Sells DecisionManager Sells Decision

Manager Presents IdeasManager Presents Ideas

Manager Makes

Tentative Decision

Manager Makes

Tentative Decision

Manager Presents ProblemManager Presents Problem

Manager Sets Decision LimitsManager Sets Decision Limits

Employees Make DecisionEmployees Make Decision

Manager Makes DecisionManager Makes Decision Boss-CenteredBoss-Centered

Employee-CenteredEmployee-Centered

Authority of ManagersAuthority of Managers

Freedom for WorkersFreedom for Workers

EmployeeEmployee

PerformancePerformance

EmployeeEmployee

PerformancePerformanceCommuni-Communi-

cationcation

Communi-Communi-

cationcationCommunityCommunity

InvolvementInvolvement

CommunityCommunity

InvolvementInvolvement

PeoplePeoplePeoplePeople CompanyCompanyValuesValues

CompanyCompanyValuesValues

Continuum of Leader Behavior


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Controlling The Control Cycle Management

Skills Interpersonal

Technical

Administrative

Conceptual

Political

Time

management

Global

management

Information and

technology


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Value Based ManagementMethods, Models and Theories

Strategy -Value Creation

Business simulation

CompetitiveAdvantage

Core competenceCore groups

Cost-benefitsanalysis

Experience curve

Game Theory

Industry Life Cycle

MBO

Outsourcing

SWOT analysis

Theory of constraints

Value chain

Organization -Change - Culture

BPR

CMM

Change management

Corp. governance

Culture change

Expectancy theory

Growth phases

Hierarchy of needs

Learning org.

People CMM

Result orientedmanagement

Seven habits

System thinking

Valuation -Decision Making

Activity based costing

Balanced scorecard

Brainstorming

Break-even point

Business intelligence

Earnings per share

EVA

GAAP

IRR

Market value added

NPV

Operating cash flow

Payback period

ROI

Communication -Marketing

7 Ps marketing mix

BCG matrix

Brand asset valuator

Bricks and clicks

Corporate peputation

Distinctive capability

Groupthink

Innovation adoptioncurve

Marketing Mix 4/5P's

PEST analysis

Product/market grid

Profit pools

Theory of reasonedaction

Leadership -Management

Crisis management

Emotional intelligence

EnterpriseArchitecture

Human capital index

Just-in-time

Leadership styles

PDSA/PDCA cycle

Results-basedleadership

Root cause analysis

Seven surprises

Six sigma

Theory X Theory Y

TQM


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Contents





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Traditional StrategyDevelopment

FormalStrategic

Planning RealizedStrategyTotal

Realized

Strategy

10%

Emergent Strategies(unintended strategies due to a learned

pattern of behavior or unforeseen events)90%

Unreal

ized

Strategy

50%

Strategy without tactics is the slowest route tovictory. Tactics without strategy is the noisebefore defeat.

Sun Tzu [Wu] (BC 535 - 228)

Henry

Mintzb

erg


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Strategic Management Model

Evaluation

and Controland ControlStrategy

FormulationStrategy

Implementation

Mission

Objectives

Strategies

Policies

Feedback/Learning

Environmental

Scanning

Societal

Environment

General Forces

Task

Environment

Industry Analysis

Structure

Chain of Command

Resources

Assets, Skills

Competencies,

Knowledge

Culture

Beliefs, Expectations,

Values

Reason for

existence

What results

toaccomplish

by when Plan toachieve the

mission &

objectives Broad

Guidelines

for

decision

making

Programs

Activities

needed to

accomplish

a plan

Budgets

Cost of theprograms Procedures

Sequence

of steps

needed todo the job

Process to monitor performance

and take corrective action

Performance

External

Internal

Evaluation

and Control


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Strategic Decision Making


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Strategy Map


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Core Principles, OrganizationalValues and Corporate Culture

Core organizational values reflected inculture

Sensitivity to the needs of customers andemployees

Interest in having employees generate newideas

Willingness to take risks

The values placed on peopleOpenness of available communization options

Friendliness and congeniality of the employeestoward one another

Transmitting culture

Symbols: Objects that say more than meetsthe eye

Slogans: Phrases that capture organizational

cultureStories: In the old days, we used to...

Jargon: The special language that defines aculture

Ceremonies: Special events thatcommemorate corporate values

Statements of principle: Defining culture inwriting


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Contents





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Operations as aTransformation Process

Historicalevents in OM Industrial

revolution Scientific

management Human

relations Management

science Quality

revolution Globalization Information

age/internetrevolution


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Operations as theTechnical Core

Operations

Finance/Accounting

Human Resources

Ma

rketin

gS

upp

lie

rs

Production and

Inventory data

Capital budgeting requests

Capacity expansion and

Technology plans

Budgets

Cost analysis

Capital investments

Stockholder

requirementsOrders for materials

Production and delivery

Schedules Quality

Requirements Design/

Performance specs

Material availability

Quality data

Delivery schedules

Designs

Product/Service

Availability

Lead-time estimates

Status of order

Delivery schedules

Sales forecasts

Customer orders

Customer feedback

PromotionsPersonnel needsSkill sets

Performance evaluations

Job design/work

measurement

Hiring/firingTraining

Legal requirements

Union contract negotiations


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Strategy for Operations

Operations strategy

Process decisions Quality decisions Capacity, location, and layout decisions Operating decisions

Market analysis

Competitive priorities

Corporate strategy

Services Manufacturing Standardized services Assemble-to-order

Customized services

Make-to-stock Assemble-to-order

Make-to-order

Capabilities

Goals Core

competencies Environmental

responses New products/

services Global strategies

Segmentation Needs assessment

Operations Marketing Cost Quality Finance Time Flexibility Others

Current Needed Plans


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The Production Process

Pilot runand final tests

New product orservice launch

Final design& process plans

Ideageneration

Feasibilitystudy

Product orservice concept

Performancespecifications

Functionaldesign

Form design

Productiondesign

Revising and testingprototypes

Design

specifications

Manufacturing

or deliveryspecifications

Suppliers

R&D

CustomersCustomers

Marketing Competitors


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Products in the Life Cycle:Stages, Sales, Cost and Profit


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Processes at ManufacturingOrganizations

HighLow

Cus

tom

iza

tion

High

Low

Project process Selecting location for new plant in

Europe Installing ERP for a

manufacturing firms business

processes

Job process

Machining precision metal tubes Internal consulting team at

manufacturing firm

Batch process Forging process to make fittings for

pressure vessels access Producing a batch of textbooks at R. R.

Donnelleys plant

Line process Auto assembly King Soopers bread line

Continuous process Oil refining process Bordens pasta making process

Volume


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Processes at Service Providers

VolumeHighLow

Cus

tom

iza

tion

High

Low

Project process Real estate process for leasing

and constructing facilities for large

insurance company Student teams field project

Job process Customer service process at

financial services firm General medical practice

Batch process Order fulfillment process of importer/distributor Placing purchase orders at public relations

agency

Line process Cafeteria line Teller line at bank

Continuous process Power generation plant Providing telephone line access


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Project ManagementIntegration Management

Develop Project Charter

Develop Preliminary Project Scope Statement

Develop Project Management Plan

Direct and Manage Project Execution

Monitor and Control Project Work

Integrated Change Control

Close Project

CostManagement

Cost Estimating

Cost Budgeting

Cost Control

Time Management

Activity Definition

Activity Sequencing

Activity Resource Estimating

Activity Duration Estimating

Schedule Development

Schedule Control

ScopeManagement

Scope Planning

Scope Definition

Create WBS

Scope Verification

Scope Control

Quality Management

Quality Planning

Perform Quality Assurance

Perform Quality Control

HR Management

Human Resource Planning

Acquire Project Team

Develop Project Team

Manage Project TeamCommunicationsManagement

Communications Planning

Information Distribution

Performance Reporting

Manage Stakeholders

Risk ManagementRisk Management Planning

Risk Identification

Qualitative Risk Analysis

Quantitative Risk Analysis

Risk Response Planning

Risk Monitoring and Control

Procurement ManagementPlan Purchases and Acquisitions

Plan Contracting

Request Seller Responses

Select Sellers

Contract Administration

Contract Closure


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The Frameworks Quagmire ofQuality Standards


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Contents





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Human Resource ManagementFunctions and Process

Planning

Goals and standards

Rules and procedures

Plans and forecasting

Organizing

Tasks

Departments

Delegating

Authority andcommunication

CoordinatingStaffing

Hiring

Recruiting

Selecting

Performancestandards

Compensation

Evaluatingperformance

Counseling

Training anddeveloping

Leading

Getting the job done

Morale

Motivation

Controlling

Setting standards

Comparing actualperformance to standards

Corrective action


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Strategic Human ResourceManagement

Clarify the business

strategy

Realign the HR

functions and key

people practices

Create needed

competencies

and behaviors

Realization of business

strategies and results

Evaluate and refine

Linking HRM with strategicgoals and objectives to improve business

performance

to develop organizationalcultures fostering innovationand flexibility

HR helps strategy execution Functional strategies should

support competitive strategies Value chain analysis

Outsourcing

Strategy Formulation


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Human Resource DepartmentOrganizational Chart


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People CMM

Using P-CMM as a guide in

planning and

implementingimprovement

activities

as a standard

for assessingworkforce

practices.


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Food; Water; Shelter; Sleep; Rest; Air; Exercise; Sensory; Stimulation;Sex; Proper; Nutrition; Vitamins; Freedom from Disease and Pain

To Be Kind; To Express Affection; To Help; To Encourage;To Cooperate; To Be Responsible; To Share; To Give Love;

To Be Intimate; To Empathize; To Be a Good FriendTo Be Loved; To Receive Affection; To Belong; To Be Accepted;

To Have a Place in a Team; To Have Friends & Family; To Be Understood;

Hierarchy of NeedsSelf/Other/

Task-Actualization;Aliveness; Rightness; Simplicity;

Playfulness; Self-Sufficiency;Truth Beauty Order; Justice Uniqueness Unity;Creating Meanings & Values; Doing Ones Best;

Aesthetic; Appreciation of Nature; Art; Environment;Growth Development Challenge; Use of Potential; Discovery of Capacities;Learning and Knowing More and More; Striving for Quality; Improving Life

Archievement Mastery Competence;Confidence; Indepencence; Self-Acceptance;

Self-Trust; Usefulness; Self-WorthReputation; Prestigate; Status Admiration;

Appreciation; Recognition Importance; Autonomy Respect

Predictable Situation; The Familiar; Order; Stablility;Consistency of Relationship; Justice; Fairness; Freedom from Interpersonal

DangerPersonal Safety & Protection; Freedom from Illness, Danger & Pain; Job Security;Financial Security; Insurance; Retirement; Future Satisfaction of Physical Needs;

Basic Needs

Growth Needs

PhysiologicalNeeds

SafetyNeeds

SocialNeeds

EsteemNeeds

Self/OtherActualizationNeeds


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Seven Habits ofHighly Effective People

1. Be Proactive: Principlesof personal vision

2. Begin with the End inMind: Principles ofpersonal leadership

3. Put First Things First:

Principles of personalManagement

4. Think Win/Win:Principles ofinterpersonal leadership

5. Seek First toUnderstand, Then to be

Understood6. Synergize: Principles of

creative communication

7. Sharpen the Saw:Principles of balancedself-renewal


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Decision Style ModelDirective combines a high

need for problem structure with

a low tolerance for ambiguity.

Often these are decisions of a

technical nature that require

little information.

Analytical greatertolerance for ambiguity and

tends to need more

information.

Conceptual high tolerance

for ambiguity but tends to be

more a people person.

Behavioral requires low

amount of data and

demonstrates relatively short-

range vision. Is conflict-averse

and relies on consensus.


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Contents


Strategic Management Operation Management Human Resources Management Marketing Management Finance and Accounting Information System


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MarketingMix

Product

Functionality

Quality

Appearance

Packaging

Brand

ServiceSupport

Warranty

Price

List Price

Discounts

Financing

Leasing Options

Allowances

Place

Locations

Logistics

Channel members

Channel MotivationMarket Coverage

Service Levels

Internet Mobile

PromotionAdvertising

Public Relations

Message

Direct Sales

Sales

Media

Budget

7-Ps ExtendedMarketing Mix

People

Process

Physical Evidence


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Marketing Mix MeansRevenue Mix


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Market Research and theMarketing Process


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The Consumer Buying Process

Psychological Personal Social Cultural

Personal & Environmental FactorsPersonal & Environmental Factors

Marketing FactorsMarketing Factors

Problem(Need)

Recognition

InformationSeeking

Evaluation ofAlternatives

PurchaseDecision

Postpurchase Evaluation

Product Pricing Promotion Place People ProcessPhysicalEvidence


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Major Influences onIndustrial Buying Behavior


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Customer RelationshipManagement

Commu-nicate

Learn Acquire Fulfill Service

Strategic

Tactical

Operational

Execution

Who? What?Establish objectives, policiesand operation footprint

Segment Objectives Strategic design

How much?Deploy resources to matchopportunity with benefits

Levers Optimization Channel strategies

When? Where?Prioritize, deploy, control andadjust

Training Billing Scheduling

How?Interact with the customeracross various channels

Monitoring Escalation Resolution


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Brand Management

Mental maps

Competitive frame of reference

Points-of-parity and points-of-difference

Core brand values

Brand mantra

Mixing and matching of brand elementsIntegrating brand marketing activities

Leveraging of secondary associations

Brand Value Chain

Brand audits

Brand tracking

Brand equity management system

Brand-product matrix

Brand portfolios and hierarchies

Brand expansion strategies

Brand reinforcement and revitalization

KEY CONCEPTSSTEPS

Grow and SustainBrand Equity

Identify and EstablishBrand Positioning and Values

Plan and ImplementBrand Marketing Programs

Measure and InterpretBrand Performance


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Contents

The Fundamentals of Business Managing the Business Enterprise Strategic Management Operation Management Human Resources Management Marketing Management Finance and Accounting Information System


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The Firm and theFinancial Markets

Cash flowfrom firm (C)

Ta

xes

(D)

Firm

Government

Firm issues securities (A)

Retainedcash flows (F)

Investsin assets

(B)

Dividends anddebt payments (E)

Current assetsFixed assets

Financialmarkets

Short-term debt

Long-term debt

Equity shares


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Hypothetical Organization Chart

Chairman of the Board andChief Executive Officer (CEO)

Board of Directors

President and Chief

Operating Officer (COO)

Vice President andChief Financial Officer (CFO)

Treasurer Controller

Cash Manager

Capital Expenditures

Credit Manager

Financial Planning

Tax Manager

Financial Accounting

Cost Accounting

Data Processing


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The Balance-Sheet Modelof the Firm

Current Assets

Cash

Marketable securities

Account receivable

Inventory

Prepaid expenses

Fixed Assets

Tangible

Land

Building

Equipment

Intangible

Patents

Trademarks

Total value of assets

Owners Equity

Common stock

Paid-in capital

Retained earnings

Current Liabilities

Account payable

Wage & taxes payable

Long-Term Debt

Notes payable

Bonds payable

Total firm value to investors

Whatlong

-term

investments

shouldthe

firm

engagein?

Howcant h

efirm

raisethemoney

forthe

requiredinv

estment

s?Net

WorkingCapital

How much short-termcash flow does a companyneed to pay its bills?


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The Income Statement

Sales (Revenues)- Cost of Goods Sold

Gross Profit- Operating Expenses

- DepreciationOperating Income (EBIT)

- Interest Expense

Income Before Taxes (EBT)- Taxes (28%)

Net Income- Common Dividends Paid

Addition to Retained Earnings


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Financial Analysis

Solvency Ratios: Short-term: Liquidity ratio measures a firms ability to pay its immediate debts

Current Ratio = Current Assets / Current Liabilities Working Capital = Current Assets Current Liabilities

Long-term: Debt ratio measures a firms ability to meet its long-term debts Debt to Owners Equity Ratio = Debt / Owners Equity Leverage: DCL = DOL x DFL

Profitability Ratios: measure a potential earnings Return on Equity = Net Income / Total Owners' Equity Earnings Per Share = Net Income / # of Shares Outstanding

Activity Ratios: reflect managements use of assets Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

1. Analysis of the funds needs of the firm.

2. Analysis of the financial condition & profitability of the firm.

3. Analysis of the business risk of the firm.

Determining

the firm.

NegotiationsNegotiations

withwith

suppliers ofsuppliers of

capital.capital.

the financing

needs of


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Contents

The Fundamentals of Business Managing the Business Enterprise Strategic Management Operation Management Human Resources Management Marketing Management Finance and Accounting Information System

I f i A hi d


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Information Architecture andIT Infrastructure

A h t I f ti


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Approaches to InfomationSystems

SOCIOLOGYSOCIOLOGY

POLITICALPOLITICAL

SCIENCESCIENCEPSYCHOLOGYPSYCHOLOGY

COMPUTERCOMPUTER

SCIENCESCIENCEOPERATIONSOPERATIONS

RESEARCHRESEARCH

MANAGEMENTMANAGEMENT

SCIENCESCIENCE

TECHNICAL APPROACHESTECHNICAL APPROACHES

MISMIS

BEHAVIORAL APPROACHESBEHAVIORAL APPROACHES

M j T & I t l ti hi


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Major Types & Interrelationshipsof Systems in Organizations

IT I f t t f K l d


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IT Infrastructure for KnowledgeManagement

Th V l Ch i i th


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The Value Chain in theInformation Age


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Qualification for a CIO

Th E i Di it l Fi


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The Emerging Digital FirmElectronic Business

Customers

On-line marketingOn-line salesBuilt-to-order productsCustomer serviceSales force automation

SuppliersProcurementSupply chain management

Business partnersJoint designOutsourcing

Remote offices and work groupsCommunicate plans and policiesGroup collaborationElectronic communicationScheduling

FactoriesJust-in-time productionContinuous inventoryreplenishment

Production planning

Electronic Commerce


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