Notesale: Turn your study into money

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Intro to Business
Rule #1: nothing happens in business until someone sells something
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Marketing
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Finance
(A business is cross-functional when it does all three well)
Kaizen – Japanese philosophy of improvement
Poke Yoke – Japanese philosophy of simplicity
Industries – companies who make similar products and sell to the same targeted audiences
Power – the ability/potential to get work done and solve problems
Power Levels
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E
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– top executive of a publicly held company (chosen by the executive board)
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Executives
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Managers
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Staff
 Privately held – stock ownership restricted by owner(s)
 Publicly held – stocks sold to anyone on a stock exchange
Starting a Company – Strategic Planning
Mission – what kind of product are you going to produce and to what market (now)
Vision – where a company plans to be in the future
o Executive’s jobs
Goal – something a group or organization wants to achieve (1-5 years)
Objective – something a group/organization want to achieve in a shorter amount of time
Market Share – the organizations percentage (share) of the industry/product’s sales
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Product life cycle
Start
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Lots of ideas
Pick one
Fund them

Mature
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Competition phase
Rivals notice
They launch their own versions

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Same goes for industries
We can use the product life cycle/ industry life cycle for products, industries, and
specific markets
Rolling Wave Development Plan – phases out older versions with new ones; keeping up a
competitive advantage
o Creating new value makes more money
Business Ethics
Rules of Capitalism
o The right to create wealth
o Right to own private property and resources
o Economic freedom; freedom to compete
o Right to limited government interference
What should an ethical company do?
o Try to establish a win/win relationship with customers
o Safety and trustworthiness (customer information/products advertised)
o Safe and affordable products
o Obey laws/personal codes of conducts
o Responsibility for actions/mistakes
o Efficiency
o Treat customers/employees fairly
Stakeholders – people impacted by the operation of the business
Pollution – can be anything
o Look – debris/equipment laying around
o Noise – loud, disruptive to community
o Water – polluting local resources/land
o Air – pollution of air/smell/ given off by certain company operations
 Companies should be able to address these environmental concerns
Deming – rebuilt Japanese economy
o “Quality is what the customer says It is”
o You must meet the expectations of the customers
o Customers care about benefits not features
Whose job is quality control?
o Everyone’s
Resource Pool – what’s needed to run a business
o Energy
o Operations – day to day
o People – skilled/nonskilled
o Facilities
o Raw materials
o Equipment
o Capital
o Projects – new stuff, making changes

Debt
o Over half of the debt in the united states is owed by the government
What does debt do to the business and customers?
o Tax issues
o Harder to get loans at fair rates
o Harder to launch new businesses/products
o Businesses end up charging more
Supply and Demand
Supply – number of units available for sale
Demand – number of units the market needs
o The interaction between supply and demand creates the equilibrium price point –
where the price of a product clears the supply of the product
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Buying an existing business
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Buying a franchise
Advantages to an Existing Business
o Current customers
o Supplies
o Name
o Facility
o Ownership/long-term lease on building
o Company is separate from owners/proprietor
o Previous records held secure loans
Disadvantages to an Existing Business
o Supplies/equipment could be outdated
o No room for individuality
o Customer loyalty to previous owner could discourage
o Not meeting customer expectations
o Previous business could have been failing (now your problem)
o May be hidden problems you then have to deal with
Startup Businesses
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Advantage – you can choose anything
Buying a Franchise
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 Ask yourself
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What level of skills/experience/education do founders have?
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Competition?
Unique Selling Position (U
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P
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The average business loses 10% of customers annually
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Revenue – the sum of all money coming in
o Money exchanged for products (goods/services)
Expenses – costs for resources; interest, materials, labor, facilities
o Money paid out
Profit – revenue minus expenses
Margins – dollars in revenue
Businesses should strive to do things better, faster, and cheaper than rivals in order to keep a
competitive advantage
Rivals – the companies which sell a similar product to the market
Managers vs
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Companies have two types of goals
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financial goals – you measure the dollar amount (Profit)
Learning Curve – the more times you do something, the better, faster, cheaper it becomes
Learning Organization – gather information from all employees about customers, problems,
tips, FAQ’s, and make information available through database – customer resource
management (CRM)
Transparency – seeing what happens and why, in a business
Entrepreneurs
Initial tests
o First test – excitement test; are people interested?

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Second test – orders; tells us there’s a pent-up demand
Will this new business pay the bills?
 Operational costs – pay roll/lease/materials, etc
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Identify your products opportunity
Market feasibility/potential
Market size (unit/dollars)
Competitive analysis (market share/loyalty)
Look for another opportunity (go/no go decision)

Forms of Businesses - advantages and disadvantages
Sole Proprietorship
o Advantages
 Easiest form of organization
 Easy to close
 The individual is their own boss
o Disadvantages
 Individual and the business are the same entity (holds all liability)
 Continuity (business after the individual) – you can’t sell it

 Problems getting money/loans
Partnerships
o Advantages
 There is a general partner (split liability)
 Partners keep all profits
o Disadvantages
 Difficult to get any prior investments back
 Continuity (if one partner dies, the other must take over)
 Must have a partnership agreement
Corporations
o Advantages
 Owners and businesses are separate entities
 Limited liability (individuals are protected)
 Continuity (easy to transfer ownership)
o Disadvantages
 Difficult to form (expensive)
 Government regulations (double taxation)
 Lack of secrecy (corporation must release internal info to public)
Small Businesses – Long-term Partnership
o Advantages
 Relationships with your clients and employees
 Interdependence (more profitable)
 Willingness and ability to change
 Simple record-keeping
o Disadvantages
 Risk of failure
 Limited potential (unlikely to grow into a big business)
 Limited ability to raise funds
Limited Liability Corporation (L
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C
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Quality goods and services
o Industrial Revolution – changing from craftsman to laborers
 Mass Production – focus was placed on repeatable quality
 Inspection to remove defects
 Goal was to catch problems/defects before being shipped out
o Problems with inspection
 Defects missed
 Limited time to inspect
 Scrap/waste created
 Bottleneck in production
 Conflict
 Difference in goals between production/inspection
Management Science – learning to produce more, better
o Good quality is having zero defects and functionality

Total Quality Management
o Functionality – does the job
o Reliability- functions every time
o Durability – lasts longer than expected
Span of Control
o How many people report to a manager
o How many new people do you have (put in the time to coach them)
o How many different jobs in the team
o Managers experience
o Number of locations
o Satisfaction issues/problems with employees
#1 reason people leave jobs – they don’t feel appreciated
o People want a personalized development program
Functional alignment
o Marketing, finance, operations (production)
o The managers understand the work (still, job experience, education)
o Respect for manager (shared function)
o Praise and discipline is easier by knowing work
o Recruiting and development
Other alignment options
o Organize by geographic units, cultural
o Product line (strategic business units)
o Matrix product management/product line/function
 The closer you are to the customer, the greater job satisfaction
Executives are the people who design and control the business
o Pick a business
o Products
o Suppliers
o Distribution
o Store front (selling point)
Supply and Demand
o Where there’s demand, there’s value; there’s money
When choosing what business – look for what customers are demanding
o Decisions about an industry are based on the market and on customer needs
Improvement Strategies
o LEAN Manufacturing – working on the business and waste management
 T – transport; Value chain (production process) each step in the process should
move you closer to a finished product
 I – inventory; work in progress (W
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P
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R
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J
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T just in time manufacturing
 O – over processing
 D - defects
 S - skills
o Project Management
 Focused on consumer value, efficiency, improvement, and forging/keeping
relationships
When forecasting marketing/sales/products you want details (this month, next month, quarter,
the year, etc
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Establish the problem; what exactly is it?
o What are the costs/consequences?
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Work on each problem based on that problems priority
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Implement your alternative/solution
o Test; is it fixed?
Key Factors to a Business
o Money (capital)
o Management
o Planning (details)
3 Functions of Management
o Marketing
o Finance
o operations



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