Lf Sep 6 Monday 8am class is not in person. Is meant for webinars and exams. Week 1 video notes ● ● ● ● ● ● ● ● ● ● To create a market, businesses need to understand a customers needs and demands ○ Create innovative solutions to problems Creating customer = creating market Walmart case study Walmart understood customers needs ○ Identified underserved communities ○ Offered low prices ○ Focus on lowering costs even more ○ Spend money on things that were need and not on things that customers didn't care for ○ Seeked out international markets Walmart innovation ○ Redefined discount stores ○ Had an efficient central distribution system ○ Early IT investment ○ Experiment -> learn -> improve ○ Profit shared with employees ○ Created supercenters that had retail items + food Walmarts continuously exceeds customer expectations ○ Acquire customers and retain old ones (which is more cheap) Walmart controls their expenses extremely well ○ Only put money into things that return more money Walmart defies the market norm Business essentials Basic ingredients for a business ○ Land, labor, capital, entrepreneurship, knowledge ● ● ● ● ● ● Sole proprietor businesses ○ Low capital, high risk ○ Represent 72% of businesses in the US ○ Represent 6% of all business revenues in the US Partnerships ○ “Joint sole proprietorship” ○ Risk spread across multiple partners ○ Represent 8% of businesses in US ○ Represent 13% of all business revenues in the US Corporation ○ Draw capital from investors with low personal risk ○ Represent 20% of businesses in the US ○ Represent 81% of all business revenues in the US ○ Complex governance structure ○ Owners/shareholders elect board of directors who hire officers who are in charge of managers and employees Why do governments limit the liability of business people ○ Good for society to protect assets of investors which supports entrepreneurship, innovation and risk-taking ○ ^ fuels societal growth and wealth Beyond for profit Triple bottom line = economic, environmental, and social Week 2 video notes ● ● ● ● Understanding business impact Ex: pear cups: Pears are grown in Argentina, transformed in Thailand, and consumed in the US. But why is it so complex? ○ Lower labor costs, regulations, environmental standards, and cost of oil/transportation ○ Consumers demand year round product for seasonal fruit ○ ^ list could go on and on Present day focus on change from profit maximization to triple bottom line ○ Economic: profit, environmental: planet, (ex: net zero), and social: community, education, diversity Corporate Social Responsibility (CSR) ○ Ex: supporting the communities in which we work ○ Imperatives for social programs ■ Protect and support local and global communities ■ Protect and renew the environment ■ Sustainable practices for business and planets future ○ Total CSR = Economic, legal, ethical, and philanthropic responsibilities ○ CSR examples ■ Xerox providing time for employees to engage in local community service ● ● ● ● ● ● ■ Twitter fledgling initiative to promote worldwide literacy Business case for CSR ○ Win new customers and increase customer retention ○ Differentiate oneself from competitors ○ Improve business reputation in media ○ Provide access to new types of investors CSR concern ○ CSR greenwashing to convey image of CSR while going on with business activities as usual ■ Make the public believe they are making change when they are not ○ CSR exists side by side instead of being within core DNA of a company Creating Shared Value and U.N. Sustainable Development Goals ○ CSV = Generating economic value in a way that produces value for society ■ Social activities are actually embedded within the rest of the activities of the business, both are equal priorities ○ Investments in long term competitiveness that also addresses social and environmental objectives ○ How to CSV? ■ Improve resource efficiency and reduce cost of of operations by redefining productivity in the value chain ■ Grow revenue through products and services that address social issues by recreating products and markets ■ Activating supply chain to enable growth and productivity by enabling local cluster development Unilever ted talk recap ○ Big emphasize on being responsible ○ Paradigm shift in leadership to think globally, act local ○ Value and purpose driven organization ■ About saving children lives with soap ■ Selling soups by sourcing ingredients that reduce greenhouse gas U.N. 2030 Sustainable Development Goals ○ 17 goals ○ Companies most focused on: ■ Goal 13 climate action is number 1 goal businesses are currently focusing on ■ Goal 12 responsible consumption and production ■ Goal 8 decent work and economic growth ■ Goal 5 gender equality How companies approach these goals ○ Understand SDG.s -> define priorities -> set goals -> integrate -> report and communicate -> define priorities etc. Week 3 video notes ● ● ● ● BRT statement on the purpose of a corporation ○ Move away from shareholder primacy ○ Include commitment to all stakeholders ○ “Each of our stakeholders is essential … we commit to deliver value to all of them” Edward Freeman described as father of the stakeholder approach Edward Freeman ted talk ○ Three major flaws of business ■ Money is the purpose ■ Business and ethics are contradictions ■ People are not simple beings of self-interest ○ Business is about creating value together ○ Change the story of business, put ethics and value in the center Nonsocial stakeholders are specifically entities that are not human ○ Ex: animals, environment, generations that have not been born yet Week 5 video notes ● ● ● ● ● ● Primary financial accounting audience ○ Stockholders ○ Creditors ○ Potentials of stockholders and creditors Capital (savings) -> investments -> businesses -> returns -> capital, etc. Equity is money owners put into a business to get it started Dividends are the distribution of company earnings to its shareholders, determined by board of directors US uses GAAP or generally accepted accounting principles Most of rest of world uses IFRS or international financial reporting standards Week 6 video notes ● ● ● Key fact 1 Goal of strategy: overall approach for ensuring long-term profitability ○ Develop and implement approaches to ensure that organizations achieve the highest possible rate of success, particularly relative to rivals ○ Strategy is brains of business and requires tradeoffs Strategy exists as a field of practice and research ○ Practice: goal to enable organizations to achieve great possible organizational performance ○ ● ● ● ● ● ● ● ● ● ● Research: goal to understand what are the determinants of long-term organizational performance Key fact 2 Strategy helps coordinate all internal firm activities by giving guideline to each function within the firm ○ Broad theme that drives organizational choices and policies Key fact 3 Strategy is based on rivalry ○ Require undertaking actions while activating their potential effects on rivals and rivals likely responses to those actions ○ Designing long-term unique and difficult-to-imitate advantages is necessary Key fact 4 Both external and internal environments affect profit Fundamental fact of strategy: is that profits vary across industry and within industry Key fact 5 Developing thoughtful and effective strategies require tradeoffs Basic Strategy Tools ○ SWOT Analysis: ■ Most basic too, easy to do and subjective, simple overview of strategic issues ■ Strengths, weaknesses, opportunities and threats ■ Identify internal/external and positive/negative factors -> categorize -> direct future strategic actions ○ Five Forces Analysis (michael porter) ■ Most well known external analysis framework ■ Goal to analyze expected industry average profits ■ When the 5 forces are weaker -> higher industry profit ■ Power of buyers and suppliers determine who gets the industries profit ■ Threat of new entrants and substitutes determine whether the industry will even generate profits ○ Competitive Positioning Analysis (michael porter) ■ Most well known internal analysis framework ■ Goal to understand firm strategy choices (trade offs) ■ Firm has competitive advantage when it achieves higher profitability than its industry average ● ● Done by achieving lower average costs OR higher prices and serving all segments of market OR just a few/one segments Firms that get stuck in the middle usually underperform Week 7 video notes ● ● ● ● ● ● ● ● ● ● ● ● ● Lessons from Segway ○ Innovation in marketing is essential ○ Customers must be willing to buy a product ○ A need can be solved by many types of products/services, marketing figures out which type will succeed ○ Innovation success is based on right product/service, right business model, and right go-to-market strategy People buy benefits, not features ○ Benefits are the basic ingredient in perceived value Brand ladder: values -> emotional benefits -> rational benefits -> product attributes ○ Benadryl itching cream ex: family values, nature love -> stops children crying, reduced parental anxiety -> acts quickly, can be used with young children -> no toxic ingredients, gel formulation Customer value = total benefits - total costs Marketing 5 C’s: Customers, Company, Competitors, Collaborators, Context Segmentation: identifying and describing groups of customers who share similar needs Targeting: selecting group(s) of customers to go after for bets potential return Market targeting strategies: Segmentation and targeting + differentiation = positioning Product: ○ Core: basic features/benefits ○ Actual: brand, quality, style, design, packaging ○ Augmented: extra service, delivery, installation, CSR, warranties Top 3 most valuable brands of 2020: amazon, google, apple IMC: Inform, persuade, remind Price has nothing to do with cost, rather is what people are willing to pay ○ Easiest and least costly adjustment in marketing mix Week 8 video notes ● ● ● ● ● ● ● ● ● ● ● Role of operations: create and deliver value for businesses ○ Operations is about realizing that value by producing goods and services to be purchased Operations management is the business function concerned with designing, controlling, and improving the process of producing goods or services Good Stuff Cheap ○ Good: effective product that satisfies customers needs ○ Stuff: goods and services ○ Cheap: products produced using the fewest resources necessary ^ achieved by knowing customer needs, understanding technology, innovation, and deploying and coordinating resources Throughput time: single unit start to end time Cycle time: time between completion of successive units, the task that takes the longest Capacity: how many units can be produced in a period of time Capacity utilization: percentage of capacity used ○ demand/capacity ○ Capacity required/capacity available 4 P’s of Operations ○ People ■ Workforce ■ Organization ○ Place ■ Facilities ■ Capacity ○ Partnerships ■ Supply chain ○ Processes ■ Technology/Innovation ■ Execution ■ Improvement Supply chain ○ Second-tier suppliers -> first-tier suppliers -> transformation process -> distributors -> customers Environmental issues with firm supply chain tiers can decrease environmental and financial performance ● ● ● ● ● ● ● ● McDonald’s supply chain ○ Loyal to suppliers ○ Franchise profit before McDonald's corp ○ High consistency, innovation levels, and industry leadership Walmart supply chain ○ Trailblazers in supply chain coordination ■ Sharing of demand data ■ Leader in logistic and supply chain technology ■ Point of use delivery ■ Vendor managed inventory ■ Delivery dot Quality is the ability of a product or service to consistently meet or exceed customer expectations Cost of quality = cost of poor quality + cost of good quality Rolled throughput yield (RTY) = (yield at step 1)(yield at step 2)...(yield at step n) Cost of quality to firm ○ Investment ■ Prevention ● Quality planning, design prototyping, training, supplier involvement ■ Appraisal ● Inspections, testing, destructive testing ○ Expense ■ Internal failure ● Scrap excess material, retesting, yield lost, defective materials ■ External failure ● Customer complaint and returns, warranty charges, lost business As appraisal costs and preventions costs increase, level of quality improves and internal and external costs decrease Operations management is essential in all business operations and fields Week 9 video notes ● ● 70% of leaders find themselves as inspiring and motivating, but 82% of employees find their leaders uninspiring and 65% of employees would forego a pay raise to see their leader fired Management structures ○ Incentive structure ■ How to motivate people and measure and reward performance? ○ Power structure ■ How is authority distributed within a group? ■ How can you influence group without authority ○ Communication structure ■ Whose voice is heard? ■ How to handle tough conversations and provide/seek feedback? ○ ● ● ● ● ● ● ● ● ● ● Organizational culture are the values and assumptions shared within an organization ■ Directs toward “right way” of doing things ■ Companies DNA Elements of organizational culture ○ surface ○ 1: physical structure, ex: how office is designed ○ 2: language, ex: words/slogans on office walls, mottos ○ 3: rituals/ceremonies, ex: employee of the month ○ 4: stories/legends, ex: started company in basement ○ deep ○ 5: shared values, ex: conscious beliefs ○ 6: shared assumptions, ex: not emailing on sundays Netflix culture ○ Visually appealing environment ○ Values of responsibility, freedom, trust, accountability Culture from managerial perspective ○ Degree of social control over employees ○ Social glue that connects employees together ○ Helps employees make sense of organizational events Culture from employee perspective ○ Understand what is expected of employees, and what their priorities should be ○ Establishes common language that all employees “speak” ○ Experience social belonging and feel comfortable enough to thrive When you are similar to peers: ○ Easier to communicate at first ○ Less potential for conflict ○ Drawing from similar knowledge base When you are different to peers: ○ Harder to communicate at first ○ More creative ○ Broader knowledge base to draw from Tokens: numerical minorities in an organization ○ Treated as symbols rather than individuals 3 levels of management ○ Top: president, ceo, execs, vp’s ■ Responsible for organizational wide goals and strategies ○ Middle: plant managers, department managers ■ Located in corporate headquarters ○ Bottom: foremen, supervisors, office managers ■ Supervise those whom are directly involved in firm's production of services As you move up in corporate hierarchy, managerial skills > technical skills Managerial responsibilities ● ● ● ● ● ● ○ Recruiting, training, motivating, compensating, retention People analytics is a data-driven approach to employe-related decisions and practices ○ Can help leverage data to evaluate whether new work practices are effective People data ○ HR Information Systems ■ Performance ratings, demographics, salary, turnover ○ Company operations ■ Revenue, assets, net income ○ Company surveys ■ Job satisfaction, commitment, team effectiveness ○ Communication platform ■ Chat, email, slack Teach for America example ○ Problem: limited HR staff to hire teachers ○ Solution: using algorithms in hiring decisions AMD example ○ Problem: eliminate performance evals ○ Solution: pilot a ratings-free eval system 3 critical competencies for managing people ○ Analytical thinking ○ Interpersonal skills ○ Strategic insight Contemporary questions on managers minds ○ How to recruit diverse top talent? ○ What training should we invest in? ○ What incentives motivate high performers? ○ How much should we pay people? ○ How can we prevent the best employees from leaving?
