WLU
BU111
FINAL EXAM
STUDY GUIDE
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BU111 Lecture 1 (Sept 11)
scarianapolous@
office 4th floor, elevator, right right
9:30-10:30 Fridays
extra pearson qizzes 0.25 pts
library sessions OR JDCC tech talks
So much change in business
• New models and rules
• Speed of obsolesce
• Compressed time
• Globalization
• Data—because of social media, AI,
• Demographics drive change
o Influences of social media on buyers
• Triple bottom line
o Not only how their choices influence, profit, but people and the environment
• Reduction in physical assets (sharing a car, house {Airbnb})
Lec 2 (Sept 13) – External Analysis Models
ROADMAPS
o You have to think about these factors and not only about making money. Make a
strategy
o To be able to hit your target as a company, you need a structure; the internal
features of the organization
o The environment is what can impede you from easily accomplishing your goa
and following your strategy.
Critical Success Factors
o Guide strategic and daily details
o Ensures holistic thinking. In models in general, it makes you think about how everything
fits together and not the pieces individually
o Ensure success over time
Why are these factors important?
o Achieving financial performance
o Max profit, reaching financial goals
o Profit increases overtime
o Return on investment
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o Decisions made for the future
o Meeting customer needs
o Identifying wants
o Price expectations
o Anticipating needs
o Gain employee commitment
o Employees make up your company
▪ Keep them happy, productivity, efficiency
▪ Reduces costs bc productivity
o Encourage innovation & creativity
o Competitive advantage, stand apart bc effectivity
o Explore new sectors and improves
o Can broaden your demographics
o Training and rewarding the employees
o Long term success
o Build quality products & services
o Consistency, good quality with a reasonable cost
o Reliability
o Brand recognition
o Customer loyalty, employee loyalty and long term success
o Building distinctive competitive advantage
o POI
o Its important to be unique
▪ Attract employee, investors, customers
▪ Innovation and creativity (APPLE)
▪ Lower employee turnover
why is a particular critical success factor i porta t a d how does it connect to other critical
success factors? EXAM
the ’re related, i di iduall affe t ea h other
back and forth relationship, specific to back and forth
SWOT can be any question, HR, MARKETING, FINANCE
SWOT ANALYSIS (SW are internal)
o PEST
o S/W
o Management preferences
o Organization
o Strategy
▪ What can you do (internal)
▪ What should you do (external)
o Resources
o Use of model e when ask to evaluate a strategy of product
o Generates more strategic proposals
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o HOW TO IMPLEMENT
o 1. Look at the e iro e t a d see hat ou a ork ith
ou a ’t ha ge
it
o 2. Look internally. Management Preferences.: vision, mission, preferences and
biases. They make the decisions so you have to figure out what they want.
o 3. Organization: culture, capability, structure  how the organization is divided,
marketing, finance, acc.
▪ Is it organized by product. BBI v consumer products
▪ Te way you stracture ur organization is the way you’re focused.
o 4. Resources. Human, capital and financial.
o These variables affect one another.
o What do u need to change in order for the strategy to work.
Diamond E Model
•
•
•
Good for u dersta di g the e iro e t a d the fir ’s i tera tion with it.
Principal logic- consistency or alignment
o consistency internally leads to performance
o alignment externally ensures strategy is right for the given environment
▪ P&G strategy 2000 (inconsistency)
▪ Ikea strategy (consistency)
▪ Kodak vs Canon (alignment)
o Right to left on diamond
First step: deal with strategy-environment linkage. Asses forces at work and their
implications, adjust internal or adjust strategy
Environment
• Includes Political, Economic, Social and Technological elements that are external to the
company as well as competitive dynamics
• Determines what opportunities and threats exist
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Managerial Preferences
• Vision, mission, preferences and biases
• These make the key decisions and determine organizational strategies
• Affects how management interprets the environment
• What perceives an opportunities vs threats
• Determine what is a priority
Resources
• Human, capital and financial resources
• Connected to strategy bc they determine what strategies the copany has the resources
to pursue. Same thing as to which resources are needed by the strategy.
• Influence management preferences and Organization bc they influence what capabilities
the organization can build and will bias management into using the resources that are in
abundance.
Organization
• Culture, capabilities, structure
• Culture, capabilities, structure and leadership of the company
• The organization must have the ability to execute all activities required for the strategy
• Influences how a strategy can be pursued
Strategy
• The plan the organization puts in place to pursue opportunities or avoid the threats in
the environment
• Critical linking between organization and environment
• The strategy must be consistent with the internal characteristics of the organization or it
will not be able to effectively execute it
• Strategy must be internally and externally consistent
Lec 3 (Sept 18)
External Analysis
• Process of evaluating the external environment, questioning it. Formal process
• Identifying threats and opportunities so you can adjust the strategy to ensure success
• Two levels of analysis:
o General environment which affects all businesses (unemployment, taxes,
exchange rate)
o Specific environment which affects industry participants
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•
Challenges of external analysis
•
Benefits of the analysis
o Forces managers to be proactive
o Provides info used in planning. The more info, more quality of plan
o Helps company get the resources it needs
▪ What’s the e te h olog , ho a I i pro e
o Helps company deal with uncertainty
o Improves consistency and performance
▪ If you notice change in the environment, then you look at strategy and
adjust it to avoid threats or take advantages of opportunities
o Co pa ies a d e e uti es do ’t do e ter al a al sis expensive and time
consuming, things changes
•
General environment:
o PEST model
o Identifies general trends and changes
Specific environment
o Porter’s Fi e Courses- analyzes competitive pressure; predicts industry
profitability
What are you looking for in external analysis
o Understand Current situations – Present
o Watch evolutionary changes and anticipate (what is changing over time in a way
that is predictable—people increasingly buying products online)- Trends
o Can be anticipated, predicted, so anticipate and plan contingency strategiesQuick Change (hurricane plans, safety mechanism, money on the side, safety
net)
•
•
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PEST Model
•
•
Political Legal Factors- gvt
o Laws and regulations
▪ Minimum wage, vacations
o Taxes
▪ Personal, sales
o Trade agreements or conditions
▪ NAFTA
▪ duties
o Political system
▪ Mixed or command economies
o Political stability
▪ Allows to predict the kinds of laws and regulations
▪ When trump was elected, businesses now anticipated a new bbi
environment
o Significance
▪ Gvt elected by people, so Protects the consumer
▪ Support/ protection and regulation of domestic businesses
▪ Creates opportu ities for our i’s i foreig
arkets
Economic Factors
o Inflation/deflation
▪ We can see the trends in inflation rates and we can plan
o Interest rates
▪ By Bank of Canada
▪ When they go up, cost of borrowing increases, consumer spending
decreases
o Employment rates
▪ Want: low unemployment rates. 3-4% is a healthy-ish level.
o Exchange rates
▪
o Balance of trade
▪ Net imports compared to net exports
▪ Money is leaving your economy
▪ If exporting more than importing, economy is stronger
o Productivity
▪ What is your output given the amount of input? Always want it to go up
o Significance:
▪ Affect economic stability, employment,
▪ economic growth
• producing more, employment rates are good, consumers spend,
quality of living goes up
▪ Measures: aggregate output, GDP, GNP
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•
•
Social Factors
o customs
▪ ale ti e’s da di er
▪ influences holydays and how we spend money
o values
▪
hat’s our alue of free ti e, ei g e plo ed
o attitudes
▪ attitude towards work, employers,
o demographic characteristics
▪ size of population, women number, percentage of seniors, education
level, what activities do they like to engage in
• we tend to purchase online more than grandparents
• more of u=our age group will be educated in uni
•
o significance:
▪ affect consumer preference
• what, how, how much money is spent
▪ work attitudes and behaviour
• vacation time as long as you give out a good performance
▪ standards of business conduct
• affects the decisions as business leaders
• how we treat employers, interaction with environment
▪ corporate social responsibility
• priorities
Technological factors
o internet
▪ Gvt has a big involvement in access of consumers in China. In North
America, it is much more open. Limited oversight
▪ Speed and quality of internet
o information technologies
▪ What kind of technologies we have available, what do they do
▪ Digital tech
• Invest in resources, research and development, technicians,
manufacturing plants
• Environment changes, canon created strategies towards success
• Swifter—technology
o not limited to computers and information
▪ technology changes the fastest
o significance:
▪ demands constant scanning and learning
▪ creates significant change and challenge
• lots of changes just for one change
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Key Words
• Aggregate Output:
o The total quantity of goods and services produced by an economic system during
a given period
• GDP: Gross Domestic Product. The total value of all goods and services produced within
a given period by a national economy through domestic factors of production
• GNP: Gross National Product. The total value of all goods and services produced by a
national economy within a given period regardless of where the factors of production
are located.
Lec 4 (Sept 20)
Porter’s Fi e For es
How the environment affects firm profitability
•
what affects industry profitability
•
Competitors
o Most powerful force
o rivalry in the market- who sells something similar to us
▪ most powerful force
o effects: price competition, lower volume, increased costs
o factors:
▪ many competitors of equal size/capability
▪ low industry growth rate
▪ low industry capacity of competitors (output capacity)
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• rivalry will increase and profitability will decline
low customer switching costs (not only money, value of things,
intelligence)
▪ products are commodities or perishable (product viewed as consumers as
non-distinguishable aka milk, gasoline)
• commodities compete on the basis of price
• perishability, if product spoils, get rid of it. Motivates intense
rivalry :. Reducing profitability
▪ exit barriers
o low; people leave, more room
o solutions
• growth
• acquisition of competitors
• create/increase consumer switching costs
o rewards cards.
• Differentiation
o Persuading consumers
▪
•
•
Substitutes (to automobiles is bicycles, bus)
o Products that do a similar job
o Effects: price ceiling; tend to be cheaper; increases marketing costs
o Demand changes if my price goes up
▪ The more substitutes, the more options
o Factor:
▪ Many good substitute
▪ Low switching costs
▪ High buyer propensity to substitute
• Depends on consumers as well
• Lowers profitability, more likely to have a price ceiling
o solutions
• Strong marketing/differentiation *** huge
• Lock in customers
o Cable companies with their contracts
• Quality
Potential Entrants
o New/future competitors
o Effects: can use big changes and intensify competition
o Factors: barriers to entry
▪ Lack of capital intensity- economies of scale
• How much does it cost to start and enter the business?
▪ No specialized assets – network, knowledge, tech, patents
• Pepsi campus; exclusive agreement
▪ No regulations/gvt policy
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• Banks, unis,
Lo switching costs / no brand loyalty or identity
• Easy to attract customers for new companies
o solutions
• Grow to achieve scale
• Control distribution network
• High barriers to entry
• Lobby government
• Differentiate; create brand loyalty and identity
• Lock customers in
▪
Lec 5 (Sept 25)
•
Suppliers
▪
•
influence how much it costs you to produce something. Higher costs,
profitability goes down
o Effect: cost of input
o Factors:
▪ Few suppliers  very few suppliers and they know that, increases
bargaining power, they will negotiate a better price for themselves
(alliance)
▪ Few good substitute suppliers/ inputs  increases your bargaining power
for me
▪ High switching costs  maybe good suppliers but costs me a lot of time,
money, so I might just switch to another supplier, but supplier had
bargaining power
▪ Threat of forward integrationproblem bc they have a cost advantage. I
am not only facing a new competitor but one that has access to cheaper
i puts. this i reases the supplier’s argai i g po er (form strategic
alliance)
• Form strategic alliance
• Internal supply
• Long run: redesign product or needed input
▪ identify the factors you can do something with and look at diamond-E
model
▪ you have to look at what you need if you are the supplier; facilities,
technicians etc
Buyers
o Who pays for the product
o Effect:
▪ Reduces price that you can demand; increases costs
▪ Factors:
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•
•
Few/ concentrated buyers  buyers have more bargaining
power, they want lower prices (oil and gas refineries)
• Discretionary purchase (buyer can say he doesn’t have to buy
hat I sell, I do ’t eed it. Aka auto o ile for e at Laurier 
buyer had power, they drive my prices down
• Standardized products similar to commodities aka chargers
• Low switching costs  easy for buyer to switch from me to
competitor, they have the power
o Form alliance w/ other sellers, wheat eggs and oil industry
o Strong marketing/ differentiation
o Create switching costs; lock in customers (razer, Keurig,
games. You can only buy these)
Power and influence varies by industry
what effects do the factors have on the company profitability
Why Five Forces?
• Predicts industry profitability
• Helps determine whether a firm should enter a particular industry
• Helps determine how a firm can carve out an attractive position in the industry
DABASE INFO: External analysis slide 43
Lec 6 (Sept 27 -- Entrepreneurship
New = less than 5yrs
Small= less than 100 employees
Entrepreneurship
• identifying an opportunity and accessing resources to capitalize on it
• importance:
o 98.1% of Cdn businesses are small
o contribute to 30% of GDP
o provide more jobs than large businesses
o lead in new products and services
• :. Gvt support:
o lower tax rate (reducing to help financially)
o resources- advice and maybe funding
o ease of establishment
Entrepreneurial Process
• entrepreneur-manager, also has skills needed for the bbi
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•
•
•
• identifying an opportunity
• access resources
influences by PEST
successful only when entrepreneur, opportunity, and resources fit
begins with entrepreneur identifying an opportunity then accessing resources
opportunity Recognition
• Idea Generation
o Often paradigm shifts
o Originate in events relating to work
▪ Or daily life, hobbies, chance happening
Screening
• Weeding out bad ideas
• Saves time, money
• Ensures you have a viable idea with a competitive advantage
Idea Generation
• Solve a problem and the solution sells itself
o Listen to complaints and frustrations
o Combine functions
o Simplify the product
o Offer a lower-priced or more convenient of a version of an existing product
o Ask what job are customers truly after
Three Component Screening Process
• Screening for Viability & Competitive Advantage
• Good idea when: valuable, unique, feasible
• Idea creates or adds value for customer
o Solves a problem, meets a need
o Customer willing to pay for it
• Idea is unique + defensible
o Different from products that already exist & substitutes
• Existi g fir s a ’t easil or o t a t to i itate
o Who are the competitors and how will they react?
• The idea is marketable and financially viable
o Are there enough customers willing to buy?
o Can I reach and win those customers
o Can I overcome barriers to enru
o Which forces affecr profitability
o Safety point: does the idea have low exit costs?
o Longer time to profitability or greater up-front investment needed = riskier
venture
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New Venture sample Analysis  evaluating business opportunity
Lec 7 (Oct 2)
Accessing Resources
• Bootstrapping (getting out of something using resources on hand )- doing more with less
▪ Start with being cheap
o Make do with as few resources as possible
o Usi g other people’s resour es here possi le
o Find/use free things
▪ Social media, fb, ig, tw
• Debt vs. equity financing
o Debt= interest and control
▪ Sources- financial institutions, suppliers
• No giving up of ownership
• Equity= no interest, less cost
o Part owner, like buying shares
o No equity or obligation to pay back loan or interest
o Give uo control
o Drago ’s de
▪ Sources- savings, love money, private investors, v.c
• Crowdfunding – initiator + backer+ platform
▪ Backer is the person willing to put in a little money and invest in bbi
o Rewards- based
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o Equity
Social Enterprise
•
generate value while operating with the financial discipline, determination and
innovation of private sector business
Key Factors of Social Entrepreneurs
• Help overcome market inequities/failures
o def’ : i effi ie t allo atio of resour es’ arkers do ’t address all societal needs
▪ often in areas of education, health, environment, food insecurity, poverty
▪ how do you continue to address these market failures; environment,
health care, education
• Social value is the primary objective BUT financial sustainability imperative
o donor and government funding not reliable
o implications:
▪ economic value not required priority
▪ dual stakeholders- those served & those supporting; one or both play
• Forms of business vary
o existing paradigm= legal purpose of corporation is to maximize profit
o some US states
▪ established organizational forms that are obligated to pursue public
benefit in addition to return profits to shareholders
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▪
▪
▪
Thrive within highly constrained and complex environments
Super entrepreneur
Bootstrapping
Social Enterprise
▪ Grameen Bank- providing (micro-credit) to women in impoverished areas of rural
Bangladesh
o Wicked problem: poverty, no access to reasonable small loans
o “o ial alue: o e start usi ess; a le to i est i hildre ’s education,
building their own homes, etc.
o Self-sustaining: loans are repaid, capital given to others
o Form: not-for profit
o Constraint: no collateral
▪
Students Offering Support (SOS)
o Wicked problem: poor access to education in Latin American Countries
o Social value: funds educational development projects in Latin America
o self-sustaining: volunteers run review sessions and student fees fund projects
in Latin America
o Bootstrapping: using university resources and volunteers
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o Dual stakeholder: students receiving support; developing country students
o Unique value to paying customer: provides assistance with exam preparation
Similarities and Differences Summary
Lec 8 (Oct 4) – Technology
•
•
•
•
Being able to leave Europe and coming to North America
Mass productions
Communication differences
Production technology changes the way these communities interacted
o Totem poles implicated lot of communicating, bonding
Industries radically changed by technology: GO TO LINK
1. Music
• Physical to digital
2. Travel
• Gps
• Planes
3. Transportation
• planes
4. Publishing
• Books are now digital
• cost of distribution
• retail
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•
online shopping, how u can customiza, change things
o amazon changed retail
▪ location, sales people, people putting things on shelves, delivery
ti es…. A azo ha ged that
▪ virtual reality?
5. Retail
Automobile industry example
Automobile industry example
PEST
Elements:
•
•
Internet
Information technologies
o cellphones, computers
o equipment and material advancements
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▪
▪
•
•
substitutes/magnify human effort
reduce cost, improve performance, increase flexibility
• ex: robots, swifter, the round vacuum, assembly lines
Not limited to computers and information
Significance: technology demands constant scanning and learning:. Big changes
and challenges
o technology changes society, how we live, what we do. Think about it in
general with PEST factors
▪ Kodak did ’t see a pro le
ith digital te h, a o ha ged its
strategy to take advantage of digital tech
What is technology?
• Equipment & material advancements
o Substitutes/ magnifies human effort
o Reduce cost, improve performance, increase flexibility
o Ex: robots
• Information Technology advancements
o Devices & software for creating, storing, exchanging and using information
o Ex: cloud; analytics; artificial intelligence
o amazon being able to track and predict what I will buy  may come to a model
where they just send u – chances of us are higher if sent to our house
Technology Shifts (chain)
• Power
o Electricity
o Steam
▪ once power was created and dominated, it allowed us to move into
making modes of transportation
• Build & move
o Assembly line
o Trains, planes, cars
• Communication
o Mass media
o Telecommunications
▪ kind of information we can get
• Information
o Computers
o Internet
▪ how was it used, connection, stories, analysis use, application
• Smart tech.
o Collect analyze, learn
o Connectedness; action
▪ nest thermostats – CO2, learns your patterns
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Opportunities
Growth in GDP,
• Products- innovation, uniqueness, value
o innovationo new vs old thermostats, downloading cellphone apps-customize
o value• Access to information/ improved use of information (what does that allow us to do)
o Better service through coordination
o Leaner organization (not need of as many people – CSF—financial performance,
less labour, things faster)
o Improved operations efficiency i.e. Computer Assisted Design (less amountt of
time to come up w automobile design, computer tells u if there is something
wrong), Enterprise Resource Planning (savings- Toyota; )
o Greater independence of company and workplace
▪ reduces costs,
▪ employee commitment—work from home, child can be sick,
• travel friendly
o Big data and better decisions
▪ companies are able to collect more info, apply it to take faster actions
▪ meeting customer needs—you know what customers want, collection of
data that knows what the customer might like
• Competitiveness
o Create barriers to entry; cooperation with other firms; reduce cycle times
▪ use this to lock in clients
▪ cooper--- switching costs, relationships to suppliers, intranet; automobile
manufacturers can connect to their suppliers efficiency, lowers costs,
improves financial performance, decreases substitute competitors
▪ cycle times means the amt of time it takes you to complete a process in
the org. / customer orders
• Communication and collaboration
o Within firm and with customer
▪ emails,
• Customization
o Cars; leather, colour
o Customers are sometimes afraid of it
o ho ’s does it help you meet CSF? Meet customer needs, distinctive competitive
advantage, reduces risk of returns :. Financial performance
Threats
• Imitation
o Information costly to develop but cheap to share
▪ music, movies
• New technologies in unfamiliar areas
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•
•
•
•
o e iro e t is o sta tl ha gi g, te h it’s hard to keep up
▪ buy phone, learn how to use it
o changes in tech, require us to change strategy, first, adjustment in diamond e
▪ Kodak did ’t ha ge this
▪ Little companies have advantage here, they can change easily
▪ VHS vs VCR
o Challenge organizational capabilities & resource
Unpredictable evolution
o USB ports vs others
Need for constant learning and scanning
Information overload; security
o customers are hard to reach, safe information
Greater independence of company and workplace
o some people need to stay within the workspace to stay productive
Some leading innovations
• Gamification- encouraging engagement through games
o word translations, is it correct?
o Games, train employees, employee commitment
• Online micro learning- Axonify
• E-commerce- shopify
• Omni channel
o temptation – augmented
• Virtual and augmented reality
• Chatbots- messenger
• Cloud- google
• Internet of things
o objects talking to each other
▪ nest thermostat talking to CO2 detector
▪
Think: Tech impact on CSF?
SLIDE 16
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Key Technology Concepts
• Complementary goods- needed for value
o Compatibility, plugs, technology standards
o soft are’s add alue to onsumers, useless w/o each other
o games systems without games
Availability of
complementary
o pen w/o paper
goods
▪ most companies cannot provide all the
compatible features; ads, word, excel,
• DIAGRAM
Attractiveness
Attractiveness
to producers of
o number of uses (installed base) of that product—
complementary
to users
goods
look at demographics
o attractive to producers – need to make it attractive
to consumers first
Number of
• Technology standards- enables compatibility of complementary
users (installed
base)
goods
o which language is the product going to be compatible with
(coding)
o phone manufacturers make sure they can talk to each other
• Installed base- # of users
• Network effect- value depends on users
o Solutions: compatibility, alliances, incentives for complementary goods suppliers;
build base
o Facebook, twitter, a club, a restaurant
▪ How do we break that circle to become the next Facebook
• Become the producer of that complementary good
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• Find or give incentives to producers
Solutions: compatibility, alliances, incentives for complementary goods suppliers; build
base
• Lock-in – size of investment
o Larger= greater resistance to switch (from customer perspective)
▪ What do I have to give up, to move form a product/service to another ($,
benefits)
▪ Requires new learning
• Switching costs- cost of moving
o Higher= makes lock-in worse
▪ Solution: lower switching costs, offer leap in performance
▪ How much am I gonna spend to buy that new game system
▪ Power point to keynote—learn to use it, also power point presentations
become useless
• How do you fix these high lock in and switching costs> what
pieces do I have control over, not the investment bc I was made,
reduce switching costs, make it easy to carry phone number over
to new network
Sustaining Technology
• Innovation focused on Improves existing products in expected ways
o Higher performance  higher price
• Target: mainstream, high margin customers with enhancements in product functionality
o You wanna protect them, especially those who provide you with the highest
margin
• Incumbents usually win
o Already has built out the capabilities, organization structure that makes it
efficient , money and physical aspects that make it better able to satisfy these
customers
• Different performance attributes not valued by mainstream
• Starts in lower performance segment, improves rapidly; enters mainstream market
• New, disrupting firms often win
o Apple was able to disrupt the computer industry
▪ They change the ruels bc can move quicly and change
•
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is AirBnB a disruptive innovation? Uber? If Uber creates a car-shining service, is it disruptive?
Key considerations:
• Initial target market
• Initial performance
• Later performance and market
o Air bnb is in the disruptive—disrupted the hotel industry, by cheaper
prices, more
o Uber as a supplier is disruptive, as consumer not really,
Why Large Firms Sometimes Fail
• Organization structure and capabilities slow response time/ability and influence choices
• Orga izatio al pro esses eed out ideas that do ’t address urre t usto er eeds
• Focus on satisfying mainstream customers
o Ignore technologies that do ’t eet those usto ers
o Move to higher margin opp.
•
Avoid small, uncertain, unfamiliar markets
o Niche markets small and financially unattractive
o Growth potential uncertain
o Lower profit margins
o Risk of being criticized if you fail
Link to Diamond E?
Strategy:
Meeting customers
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Capabilities
• Develop them, not uncertain areas
Resources:
• Human,- certain amt of human talent
• Harness my existing talent
• Financial- need to find high or low performance competitor
• Percentage increases according to profits
•
How to Avoid Failure
• Monitor outside of industry
o Look at amazon, retail
• Partner with young firms
o You u it, orro It, ou do ’t ha e to i e t it
o You have the resources and the network
o
• Establish venture units
• Design by JOB not customer
Market disruption video
• We hire a product, they get
• Identifying a job— akes it easier to hire a produ t
• They have the experience, the resources
How Small Firms Compete
E ter ith a produ t or arket large fir s do ’t are a out
• Not their mainstream- not interested or motivated
• Not what they are good at or can easily adjust to
• Margins are too small or market too small
Disruptive innovation video
• I need to pick a fight there the giant has the motivation to walk a a
• Toyota, Ryanair
o Disruptive and theres even more
o Koreans and Chinese come from the bottom
o They got disrupted
Technology in Five Forces
• How tech creates tech for me to improve my profitability or create a threat
• Barrier to entry to new entrants bc I need to know so much more
• Being able to overcome the facts that customers are locked in
Financial services disruptions
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Lec 13 (Oct 30) Social Factors
PEST- Social Factors
• Elements
o Customs
o Values
▪ How we treat the elderly
▪ Universal health care
o Attitudes
• Different attitudes towards work, in some countries work is firs, Japanese leaders have
killed themselves due to the stress
▪
o Demographic characteristics
• Affect customer preferences, and worker attitudes and
behaviours, standards of business conduct, and corporate social
responsibility
▪ Tha ksgi i g i O ot er i CAN, NOV i U“A, so e ou tries do ’t ha e
it
Ethics & Its Importance
• Ethics: individual standards/ beliefs regarding what is right and wrong or good and bad
• Business to managerial ethics: standards of behaviours that guide individual managers
in their work
• Corporate social responsibility
Corporate Social Responsibility
• Definitions
o What organizations does to & for stakeholders
o Organizational ethical conduct
o How bbis balances conflicting stakeholder interests
▪ Two opposing views – focus only on profits (investors) vs. actively
consider other stakeholders – which one?
▪ Balancing this is the hard oart,
Stakeholders, who are they?
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four Levels of CSR
proactive—dishes, you wash them
accommodating- you have to be asked first,
defensive- you do only what is required,
obstructionist- bare minimum
Why Focus on CSR?
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o CSF- Profitability- solar pa els, people do ’t pa h dro ith the pa els
Start With the Managers
Areas of Social Responsibility
Lec 14 (Nov 1)
Natural Environment
• What: Air, water, and land pollution
• Why?
o Paradigm shift in management thinking
o Quantification of impact
o Change in social attitudes
• There is a dollar effect, direct or indirect
o Oil spills- amt of animals
• 1
: Bru tla d ser e the prese t ut do ’t o pro ise the future
• 1 4: J. Elki gto Triple Botto Li e
o people
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▪
•
•
•
•
plante
• profit
qualifications of economic impact
o 2012 climate change costing $1.2 trillion per year, reducing GDP by 1.6%
• clean the water first
• employees and people are drinking the water
• its about creating financial incentive to encourage companies to
decrease pollution
• costs= amt of money put into repairs, changes be of the pollution
in the environmtne
societal attitude shift
business may be the primary cause of the problem but it will also likely be the solution
a tio : i reased orporate gree i g , NOT gree ashi g
o today we have blue bins everywhere & are more aware of toxic stuff and
products
o carpooling, everything is somewhat more focused in helping the environment
o action- is it e essar to fl e er o e out? Ma e ith toda ’s te h, ideo
conferences
▪ careful of greenwashing
Responsibility to Society
• areas: Poverty, Health and Education
• Human Development Index
• Economic growth not a complete solution
o Look beyond aggregate figures; consider income inequality
▪ Community abroad, those are the areas we are trying to solve
▪ Its bc they cant afford it or no resources to get these places
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▪
▪
▪
▪
▪
▪
▪
People with low education and poverty tend to not get very good jobs, no
healthy food
Wh are there people ho do ’t ha e a ess to these resour es, health
care or minimum wage (motivation is so people can maintain a livable
lifestyle)
If we grow the economy will everyone have more money? Ask: growth in
what areas
Why? 
• diffuse the issues of social decay, political chaos, terrorism
• affect human capabilities
o CSF- creating the more educated people, the more
diversity in creation
▪ When employees are better educated and less
concerned about money problems, they will be
more productive
• societal attitude shift
o makes us more productive
o those ho do ’t feel like the ’re ei g oppressed, te d to
not be chaotic (terrorism)
SOS- to help solve societal problems like building schools
BBI, it provides support, community- infrastructure and some of the pieces, combines
they can take parter, solve malnutrition and poverty
Innovative- companies like Toms, they provide significant amounts of resources and
charity to those who need it, also creating programs creating social development
o Solar panels, in PR to help the country retrieve power
Responsibility to Customers
▪ Areas: Pricing, Advertising, Rights
o Respecting price and fair advertising
▪ Why?
o Avoid adverse actions
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o Purchase goods and services thereby providing business with revenue
▪ 1st reason, boycotting, suing
o Avoid increased regulation
• Customers can form a customer interest group to change
regulatio s of usi esses, i do ’t like this regulatio s reate
compliance costs, takes time and effort
• Airline industry: some time ago, airlines became careless about
customer treatment -) lots of seats in the planes :. People felt rlly
uncomfortable, also, flight schedules changed, not arrivign or
leaving on time, losing luggage, overbooking, taking you off the
plane,
•
Now they take more care of you, hotel costs, compensations, vouchers
for meals
REVIEW
Critical success factors
• Achieving financial performance
• Meeting customer needs
o Satisfying the customer
• Building quality products and services
• Encourage creativity and innovation
• Gaining employee commitment
o If I’
eeti g usto er eeds, e el i a area the ill pa a d ill a hie e
fi a ial perfor a e, a d I’ll e happ as a e plo ee
o Job is customer service, base, employee likes job
o
• Creating a distinct competitive advantage
▪ Why are they important
o Hit the bulls eye of hitting financial performance
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o Interconnected in both ways
o Must pursue bc foundation to achieve financial
performance which is the goal of all businesses
1st pic--- defininf is 1 mk, another for how theyre related, important = 1 mk
• Break down the question into parts
• Pt 1= gaining employee commitment is having engaged employees in ur
company
• Pt 2= building quality products and services is building products and services that
are for the value, giving customers what they paid for.
• Pt 3= related people want to work for a company that gives customers value and
achieves financial performance
• Pt4= important to pursue to long term achieve financial performance
Vision and mission
• Vision – what you see
• Mission – ho ou’re go a get there
o Samsung• INNOVATION CYCLE—APPLE IS HORT BC COMPE UP W NEW PRODUCTS VERY
OFTEN, hp is longer cycle
Why is it important to know the inflation rates and economic factors—for a certain industry,
connecting it to other areas
Pest fator- evaluate industry and from that come up with strategy to see how u will achieve ur
CSF
GDP, aggregate output
PEST—what to consider
Important to consider its business implication. How ill change sin these factors affect your
business
P: is gvt in favour of company
E: what costs and financial uncertainty will I face
S: will I have customer? Employees?
T: how will I be able to run my company? How will I get information to consumers? (as tech is
lways changing)
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Select an element from econ. Factor of PEST , how can this represent an opportunity for a
busiess and a threat
- If a cmpany is selling oversees and exchange rate is high
- Threat is if exchange rate is against u and gives u less
Diamond E
-
Management preferences
o Risk tolerance, preference of direction, ethics, goals
o Vison is based on board of directors
- Organization
o Culture, structure, capabilities, leadership of organization
- Resources
o How much do u have, what do u have
o Human, capital resources
- Strategy
o Direction of the company and the rules and layout of what is needed to
chaieve that direction
o What guides u through ur vision
o Based on management preferences, what kind of decisions they will
make
- Environment
o PEST (general)
o Porters
▪ Consistency and alignment needed for strategy to be
▪ Possible and successful
▪ Variables in diamodnd e can either constrain or drive a strategy
Principle logic of diamond e framework, consistency internally leads to performance, u wanna
mbe consistent within the internal area of the 4 components and then after if u align the
strategy w the external environment its alignment, its taken into consideration the pest and
porters, consis is internal
How Kodak used to be the power house of the industry but only invested in film production,
their strateg as ot alig ed ith the e ter al e iro e t a d so that’s h the failed ,
canon was using digital image
PORters 5
Entrepreneurship
What is entrepreneurship
What is difference
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New venture
Small business
Accesing resources
Bootstrapping –using other ppls resources and doing best I can w resources around me
Debt vs equity fincnacin- loans vs giving equity of company
Crowdfunding – initiator + backer + platform
Social entr—be unique, have socialvalue and self sustainable
Meeting customers needs is about understanding your customer and their preferences
Proactive- doing more than whats needed
Defensive- legaly required-cigarrettes
Accomodative• Know what they are, exampls, do they look,, comply w opp
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Bank balance
Add:
Deposit in transit
8 819.50
1800
Deduct:
Outstanding Cheques 1 077. 20
book balance
Add:
d)error
9
a)Interest: 25.37
9 722.69
Deduct:
b)NSF
204.76
c)Service charge 10.00
SI Session
Going long means buying a stock
150 shares @ 10/share = 1500
purchase commission is 2%= 30
what you spent is= 1530
sell them @ 13/unit so = 1950
sale commission
= 39
what you received from sale = 1911
cap agin is 1911-1530 = 381
yield is 381/1500 = 25.4%
12 x 1800 = 21600
commission—432
= 22 032
sell them @ 17  30600
comm = 612
= 31 212
cap gain is 31 212 – 22 032 = 9180
yield  42.5
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XYZ trading at $30; you sell XYZ in 4 months for $40. You have $3000. There is no interest on
the loan
Minimum margin requirement is 60%
How much can I get to invest?
short selling—betting against the stock
advantages of stocks and bonds
•
disadvantages of stocks and bonds
• For bonds, coupon payments are the dividends
Preferred shares are higher in liquidity order
If a copany goes bank rupt, money goes like this:
Bonds, preferred and then common.
The do ’t ha e oti g rights
Common shares, vote per common share, less in order of liquidity preference, theyre the last
ones to get the dividends
Bonds—creditors are getting paid before person who owns the bond
425.82
ordinary annuity – you start at the end of the period
annuity due – you start today
1591.8
1705. 81
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