Class 7
University
Product/Service
Presentations
NBC1 2008, (c) 2008 Jay A. Smith
1
University Product/Service
Development Assignment

Create new valuable product or service

Target customer: university members

Students, faculty, admin, alumni, and/or researchers, etc.

Individual or Team Based – (1-2 people)

6/17 (火） 10分 Presentation & Demonstration
English Preferred

NBC1 2008, (c) 2008 Jay A. Smith
2
University Product/Service
Development Project (10分間)
1.
2.
3.
4.
5.
6.
7.
8.
Team Members:
Company/brand:
Customer problem target
Competition/Substitutes/Current Solution:
New Product/service/process:
Value message:
Diagram & PROTOTYPE
Demonstration
NBC1 2008, (c) 2008 Jay A. Smith
3
Class 8
Finance &
Accounting
Introduction
NBC1 2008, (c) 2008 Jay A. Smith
4
Finance Strategy Supports Business
Business,
Technology
Environments
Opportunity
Social,
Government
Environments
Business
Strategy
Marketing
Strategy
Operations
Strategy
• Organization
• Human Resource
• Production
• R&D
Finance
Strategy
• Cash Flow
• Asset Utilization
• Leverage
• Make/buy
• Lease/own
Do strategies support, fit each other, have flexibility, balance/manage risk?
NBC1 2008, (c) 2008 Jay A. Smith
5
Finance Provides Cash

Cash is good – “the food of business”
 Nearly

everything a business does uses cash
Salaries, building, equipment, supplies, taxes
 Insufficient

“you can’t eat an airplane” (can’t pay debts, etc.)
 Too

much cash is wasteful
should be invested or returned
 Cash


cash leads to bankruptcy
= Sales or Income
may receive cash before or after sale is recorded
accounting is on an “accrual” basis (finance is about cash)
NBC1 2008, (c) 2008 Jay A. Smith
6
Sources & Uses of Cash

Sources of Cash
 Sales
revenue collections
 Sales of assets of the company
 Outsider financing (financing via stock, loans)

Uses of Cash
 Expenses
(salaries, bills, supplies, taxes)
 Asset costs (plant, equipment, property, inventory)
NBC1 2008, (c) 2008 Jay A. Smith
7
Venture Companies Need Cash
Money
Potential
Profit
Reward
Time
Losses &
Investments
NBC1 2008, (c) 2008 Jay A. Smith
8
Timing – Cash Flow Management

Cash now is better than cash later
 Collect
from customer sooner
 Pay supplier later
 Conserve cash now (It is always “now”)
Partnering, lease, borrow, trade, buy used,
negotiate
 Making versus buying?


But don’t be too stingy on key success
factors
NBC1 2008, (c) 2008 Jay A. Smith
9
Revenue Models

Subscription/Membership


Volume/Unit-based


Google, Broadcast TV, Newspapers
Transaction Fee


Restaurant, hair salon, clothing shop, taxi
Advertising-based (user doesn’t pay or pays less)


Sports club, magazine, YahooBB, cable, NHK
Payment to conduct a transaction (Yahoo Auction, Ebay)
Licensing/Syndication/Royalty



Fee to use (or resell) product, service, or mark
Snoopy, Hello Kitty, AP, Star Wars, The Beatles, Incredibles
Software, Copyrights, Patents, Trademarks, Franchises
NBC1 2008, (c) 2008 Jay A. Smith
10
Yahoo 2004 Revenues

Marketing Services




$0.66 billion
Auctions
Travel, shopping
Fees

$0.45 billion
Classifieds
Transactions


Impressions
Clickthroughs
Listings


2005
$4.59 billion
Display Ads


2004
$3.12 billion
ISP, broadband
Premium mail services
NBC1 2008, (c) 2008 Jay A. Smith
From Form10K Filing with SEC
(www.sec.gov or www.yahoo.com)
11
2000年 Revenues
Died






Elvis Presley
Charles Schulz
John Lennon
Jimi Hendrix
Marilyn Monroe
James Dean
$35 million
$20 million
$20 million
$10 million
$4 million
$3 million
1977
2000
1980
1970
1962
1955
Licensing of image, name, music, artwork …
NBC1 2008, (c) 2008 Jay A. Smith
12
Licensing Revenues 1999
Property type
Art (famous images, Getty Images)
Character (Entertainment, TV, Movie)
Estimated licensing revenue
(in millions of dollars)
130
2500
College (college name goods)
180
Fashion (designer label)
830
Music (before iTunes)
105
Non-Profit (Museum, Charities)
30
Sports (Leagues, Individuals)
790
Trademarks/Brands (e.g. Harley Davidson)
900
Publishing
30
Other
25
NBC1 2008, (c) 2008 Jay A. Smith
(LIMA)
13
Key Financial Statements
(also called Accounting Statements, Statements of Accounts)
Balance Sheet
Income Statement
貸借対照表
損益計算書

Picture of
business at one
point in time



Business operations
during a period of time


End of Quarter
End of Year




 “Balance Sheet
as of March 31.”
NBC1 2008, (c) 2008 Jay A. Smith

Daily
Weekly
Monthly
Quarterly
三ヶ月間 / 年四回
Yearly
“Income Statement
for the Year Ending
March 31.”
14
MBA Hand Out – Balance Sheet

Assets
 Current
 Cash & Securities
 Accounts Receivable
 Inventory
 Long-Term
 Property
 Plant
 Equipment
 Long-term Securities
NBC1 2008, (c) 2008 Jay A. Smith

Liabilities - Current
 Accounts
Payable
 Notes Payable
 Current Long-Term Debt

Liabilities – Long-Term
 Long-Term
Debt
 Mortgages

Equity
 Paid-In
Capital
 Retained Earnings
15
Balance Sheet
• Assets: things the company owns
• Equity: ownership of the company (stock)
• Debt: what the company owes (loans, bonds)
ASSETS = DEBT + EQUITY
• EQUITY = ASSETS – DEBT
• DEBT = ASSETS – EQUITY
“LEVERAGE” = DEBT / EQUITY
BALANCE SHEET EQUITY
Short Term
Assets &
Investments
Long Term
Assets
Long-term
Investment
Assets
Debt & Equity
Short Term
Debt
Long Term
Debt
Equity
= Investments from outside + Retained Earnings (Cumulative profits/losses)
BALANCE SHEET EQUITY
NBC1 2008, (c) 2008 Jay A. Smith
Assets
== MARKET VALUE OF THE COMPANY (VALUATION)
16
MBA Hand Out – Income Statement


Sales (Net Sales = Gross Sales – Returns)
Expenses (product costs, indirect costs overhead)
 Marketing
 Research
& Development (R&D)
 (Selling), General & Administrative ((S)G&A)
 Depreciation (non-cash, usually small for Ventures)



Gross Profit
Operating Profit/Income (or Loss)
Net Profit/Income (or Loss)
NBC1 2008, (c) 2008 Jay A. Smith
17
デルコンピュータの財務指標（単位 100万ドル）
1992
1993
総売上
Sales
2,013.9
2,873.2
売上原価
Cost of Sales
1,564.0
2,440.4
売上総利益
Gross Profit
449.5
432.8
営業費用
Operating Expenses:
268.0
422.9
42.4
48.9
販売費・一般管理者
SG&A
研究開発者
R&D
営業費用合計
Total Operating Expenses
310.3
471.8
営業損益
Operating Income (Loss)
139.1
(39.0)
純利益
Net Income (Loss)
101.6
(35.8)
NBC1 2008, (c) 2008 Jay A. Smith
18
Example: Park24 Times Parking
NBC1 2008, (c) 2008 Jay A. Smith
19
Park24 Co. Ltd.
年間売上
￥４２６ 億
($420 million)
平成１４年１１月１日 － 平成１５年１０月３１日
(“fiscal” year)
NBC1 2008, (c) 2008 Jay A. Smith
20
Park24 Comparative Balance Sheet
AS OF DATE
Current Assets
Current Liabilities
Cash & equivalents
Long-Term Assets
PP&E
Long-Term Liabilities
Intangible Assets
Investments
Common Stock
Add’l Paid In Cap.
Revaluation
Retained Earnings
Shareholder Equity
Total Assets
NBC1 2008, (c) 2008 Jay A. Smith
21
Income Statement (P&L, Profit & Loss Statement)
Time Period
Net Sales
Cost of Sales
SG&A
Operating Profit
Interest Expense
Facility Closure Expenses
Pre-tax Income
Net Income
NBC1 2008, (c) 2008 Jay A. Smith
22
Income Statement
SUPERIOR SOFT CORP.
(P&L, Profit & Loss Statement)
2003
Total Sales
$4,000,000
100%
Cost of Sales
Materials/parts
Manufacturing
Commissions
Shipping
Total Cost of Sales
Gross Profit
$100,000
$150,000
$400,000
$80,000
$730,000
$3,270,000
3%
4%
10%
2%
18%
82%
Operating Costs
Salaries
R&D
Rents
Marketing
Other
Total Operating Costs
$800,000
$500,000
$100,000
$300,000
$100,000
$1,800,000
20%
13%
3%
8%
3%
45%
Operating Profit
Non-Operating Costs
Pre-Tax Profit
Taxes
Net Income
$1,470,000
$50,000
$1,420,000
426,000
994,000
37%
1%
36%
11%
25%
NBC1 2008, (c) 2008 Jay A. Smith
23
Compare to Other Companies
SUPERIOR SOFT CORP.
2003
Microsoft
Industry
100% $10,000,000,000
$150,000,000,000
Total Sales
$4,000,000
Cost of Sales
Materials/parts
Manufacturing
Commissions
Shipping
Total Cost of Sales
Gross Profit
$100,000
$150,000
$400,000
$80,000
$730,000
$3,270,000
3%
4%
10%
2%
18%
82%
Operating Costs
Salaries
R&D
Rents
Marketing
Other
Total Operating Costs
$800,000
$500,000
$100,000
$300,000
$100,000
$1,800,000
20%
13%
3%
8%
3%
45%
Operating Profit
Non-Operating Costs
Pre-Tax Profit
Taxes
Net Income
$1,470,000
$50,000
$1,420,000
426,000
994,000
37%
1%
36%
11%
25%
NBC1 2008, (c) 2008 Jay A. Smith
90%
80%
10%
15%
30%
25%
20%
24
Comparative + Percent Based Income Statements
デルコンピュータの財務指標（単位 100万ドル）
1991
1992
1993
総売上 (Net Sales)
889.9
2,013.9
2,873.2
売上原価(Cost of Sales)
607.8
1,564.0
2,440.4
売上総利益 (Gross Profit)
282.2
449.5
432.8
182.2
268.0
422.9
33.1
42.4
48.9
215.3
310.3
471.8
営業損益 (Operating Income)
66.9
139.1
-39.0
純利益(Net Income/Net Profit)
50.9
101.6
-35.8
100 %
100 %
100%
売上純利益 (Gross Profit)
31.7
22.3
15.1
マーケティングセールス (Marketing & Sales)
20.5
13.3
14.7
3.7
2.1
1.7
24.2
15.4
16.4
営業損益 (Operating Income)
7.5
6.9
-1.3
純利益 (Net Income/Net Profit)
5.7
5.0
-1.3
販売費・一般管理者 (SG&A)
研究開発者 (R&D)
営業費用合計 (Total Operating Expenses)
売上構成比 (% of Net Sales)
研究開発 (R&D)
営業費用合計(Total Operating Expenses)
NBC1 2008, (c) 2008 Jay A. Smith
25
Homework

Explore Park 24 Website http://www.park24.co.jp/ (J&E)
and Kyocera Websites www.kyocera.com (E) www.kyocera.co.jp (J)

Email the amounts below for both companies to NBC1-2008@bizsmith.com :
Net Sales
 Net Income
 Cash Balance
For Fiscal Year Ending October 31,2007 (Park 24)
For Fiscal Year Ending March 31, 2008 (Kyocera)


Check website for helpful links



http://www.12manage.com/
http://www.studyfinance.com/lessons/finstmt/index.mv
Find a good Japanese language finance/accounting website or book
NBC1 2008, (c) 2008 Jay A. Smith
26