BU111 Final

Areas/Stakeholders of CSR

- Investors - Employees - Customers - Natural Environment - Society - First 3 are directly related to CSF (investors = FP) - Last 2 are where the other 3 are found

Stocks vs Bonds: Investor Perspective

Stocks (Equity) - repayment is not required - income through dividends (but discretionary) - have a claim on assets in liquidation - after all other creditors are paid (i.e. after bondholders); preferred ahead of common - have ownership rights (both) and voting rights (just common) - common shares have high price volatility - preferred shares have moderate price volatility Bonds (debt) - required repayment of principal paid on maturity date - income through coupons/interest (required) - have a claim on assets in liquidation (before shareholders) - no ownership/voting rights - low price volatility (good) Price volatility = a rate at which the price of a security increases or decreases for a given set of returns

Stocks vs Bonds: Company Perspective

Stocks (Equity) - repayment is not required - only residual claims on income (dividends) - dilutes ownership and management control - dividends are not tax deductible Bonds (debt) - required repayment of principal paid on maturity date = increased risk - Claims on income are regular, required, fixed (coupon) = increased risk - No affect on management control/ ownership - Interest paid to bondholders is tax deductible Debt is more attractive generally (don't give up control) Not using all debt financing because its riskier (need to pay them back) will eventually get to a point where you cannot repay it all How much debt does it make sense to carry? Depends on your revenues and size

Some leading innovations

- Gamification - encouraging engagement through games (ex. Microsoft) - Online microlearning - Axonify - E-commerce - Shopify - Omnichannel - Virtual & augmented reality - Chatbots - Messenger - Cloud - Google - Internet of Things (ex. NEST)

Technology Opportunity- What to do?

LINK TO CSF - Independence leads to employee commitment (can work from home to be with family, can work while travelling) - Big Data leads to meeting customer needs (can track what consumers want and recommend products, ex. Amazon)

Partnership

Two or more owners, max 50 business & owners = one legal entity Characteristics: 1) Ease of formation - partnership agreement - Outlines process of decision-making, what happens if someone leaves, how are profits and losses split 2) More managerial and financial resources compared to sole proprietorship 3) Lack of continuity, difficult to transfer ownership - if one owner leaves, need to register as new business 4) Few regulations; govt. support 5) Difficult to obtain outside financing 6) Taxed as personal income (advantage if business has losses) 7) Shared profits and decisions - conflicts 8) Unlimited liability*

Understanding Demographics: Cohorts

Cohort - a demographic group Key factors: Size of cohort = # people in each age group Activity participation rate Factors affecting size of cohorts fertility rate - avg. # children/woman birth rate - total # births/size of population (the 2 rates can be different)

Types of Stocks (Shares)

Common Stock - get voting rights - no fixed payment (dividends are discretionary) Preferred Stock - no voting rights - Promised but not legally required - dividends as % of par value; granted in exchange for silence Know when (why) companies would issue each

AirBNB vs Uber Disruptive Technology

- Air BNB started as letting people sleep on air mattresses in their home Was successful, got other people to join in and started taking a portion of each person's sales Therefore, disruptive technology, Air BNB targeted travelers (like backpackers) who didn't mind roughing it and didn't want expensive, high-quality accomodations They quickly evolved into the company they are today Uber: not disruptive because they have the same purpose and same target market, not much cheaper Tesla is not disruptive

S- Natural Environment: Definitions of sustainable development shift management thinking

1987: Bruntland - Serve the present BUT don't compromise the future - A lot of companies makes choices that will make them profitable and successful today but in the long-run are bad decisions - Business ex. By reducing marketing costs, in SR costs decrease & profits increase, but in LR sales decrease & profits decrease - Cutting down forests today isn't an issue today, but in future might be - Ex. We are eliminating plants that have the potential to be the base for life saving drugs 1994: J. Elkington 'Triple Bottom Line' - 3 parts = People, Planet & Profit - When managers make decisions, they always consider mainly the profit "bottom line" Elkington said don't stop thinking about profit but when you make decisions also consider people (customers, society, employees) and planet

S- Natural Environment: Quantification of Economic Impact

2012: Climate change costing $1.2 trillion (U.S) per year & reducing global GDP by 1.6 per cent - This study measured the cost of being not environmentally friendly - Too many cars, bad packaging, etc. - Reduces financial performance

What Impacts the Price of a Stock?

A stock is valued by looking at its future cash flows and looking at the present value of those cash flows. Therefore anything that affects the present value or the future cash flows will affect the price of a stock. What affects expected future returns? 1) General environment - bull vs. bear markets, economy, interest (especially preferred), PEST - Bull vs Bear market - Bull = investors are optimistic, want to buy stocks, drives prices up - Bear = investors are pessimistic, want to sell more than buy, drives prices down 2) Industry conditions - competitor moves; changing dynamics ie changes in Five Forces - Porter's 5 Forces will affect future cash flows 3) Organizational choices - strategies and changes in Diamond-E elements - Does a company's resources, organization, management, etc. set it up to earn more cash flows in the future

Financial System- Pillars #2 and #3

ALTERNATE BANKS Trust companies & Credit unions SPECIALIZED LENDING/SAVING INTERMEDIARIES - They invest your money in stocks and bonds - Massive investors to businesses - ex. Insurance co., venture capital firms, pension funds

Demographics Trends: Aging Boomers, Fewer Youth

Aging baby boomers influential demographic force but declining Shrinking youth group in comparison Population no longer reflects traditional pyramid Implications: Increased elder care needs Increased number of vulnerable seniors *Think of business ideas/implications

Key Technology Concepts 1

Complementary Goods: Add-ons that add value to the main product Ex. Software to computers; Game systems to video games, ex. Led and mechanical pencil Technology Standards In order for products to be complementary they have to be compatible If you produce a product that needs electricity in North America, need to be compatible with our outlets Apple and Android are 2 different standards but can coexist (enough demand for each that it's worth developers money to continue working on complementary goods; have created ways to communicate with customers who use the other type of technology, Apple users can text Samsung) Beta Max and VHS didn't work because they couldn't use either type of tapes in the systems (didn't cooperate with each other) Network Effect ex. Facebook, first thing you do when you create an account is add people Clubs/bars/parties

PEST - Social Factors

Customs, Values, Attitudes and Demographics Ex. Value health care in Canada vs valuing "choice" and less taxes in USA Significance - Affects customer preferences - Refuse to buy clothes made in sweat shops/ make up that harm animals - Want nutrition labels on food - Affects worker attitudes and behaviours - In China if an employee or CEO makes a bad decision, it is taken very seriously - Some leaders will commit suicide because it is shameful to be associated to that - In America work comes before everything, in Europe mental health, family, vacation time, etc. are seen as more important - Affects standards of business conduct - Because change in millennials attitudes and new millennial workers - Affects corporate social responsibility

S- Corporate Social Responsisbility

Definitions: 1) what an organization does to & for stakeholders - What information does it take from its stakeholders - What does it take from them/give to them 2)Organizational Ethical Conduct 3) How a business balances conflicting stakeholder interests - Ex. Paying employees above minimum wage - Costs rise, profits go down - Employees are happy, investors are unhappy - Paying just minimum wage and giving minimum break time - Investors are happy and employees are unhappy - Need to find balance

PEST - Political Factors

Elements: - Laws, regulations - Taxes - Trade agreements or conditions - Political system - Political stability Significance: - Protection of consumers - support/ protection and regulation of domestic businesses - opportunity creation in foreign markets *Government's job is to help consumers have opportunities to make right choices and help us make right choices - Protects businesses because they supply jobs and increases standards of living - Provides critical services necessary for health and wellbeing as individuals and business owners

PEST - Economic Factors

Elements: Inflation/deflation - measured through CPI (basket of goods) Interest rates - affects how much you will take out for large purchases - Less people will buy houses/cars - More people will save money - If businesses want to expand, it will cost more to borrow that money Employment rates - Can look at general employment rate or specific employment rates - Ex. Employment rate for high-skilled labor (engineers) is very high Exchange rates Balance of trade Productivity

The Canadian Financial System

Financial institutions facilitate flow of money Four legal areas /"pillars": 1) Chartered banks 2) Alternate banks 3) Life insurance companies 4) Investment dealers Lines between pillars have been blurred due to deregulation - They previously had to have separate roles, now they can mix functions - Ex. Banks can offer investment dealer services

2 Types of Partnerships

General partnership - all partners have joint and several liability joint liability - together share liability several liability - 1 may be liable for all Limited partnership - limited partners liability = investment - limited partners cannot be active in management - at least one general partner *Several liability The 4 of us sign onto a loan One can't pay, leaves (skips town)/ chooses not to pay Bank will make other 3 pay for the 4th person's portion Up to the other 3 to may the 4th pay

Government Roles #1

Government is a customer - needs buildings and supply to function and thrive - want to supply to gov. (big purchase and steady) Government is a competitor - Canada post competes with UPS - Don't want to compete- large and don't need to make profit therefore can charge products at a lower price

Government Roles #3

Government is a provider of services - provides free armies, police and firetrucks - provides free health care - free roads - free education

Why do Bond Prices Fluctuate?

IF YIELD GOES UP, PRICE PAID WILL GO DOWN (vice versa) Risk return trade-off: When taking a higher risk, you expect a higher return (vice versa) Therefore all bonds of the same risk should have the same yield In order to get a yield, the benefit has to be greater than just putting your money in the bank If the interest rate in the economy goes up, yield will also increase Can't change those factors because they're part of the contract To change the right side to equal the new higher left side you must change the price paid Must lower the price paid to make the capital return higher

Demographic Trends: Changing Geographic Distribution

Increasing urban concentration - four areas: Golden Horseshoe, Montreal, B.C. lower mainland + Vancouver; Calgary-Edmonton - more employment, restaurants, schools, grocery stores, etc. Donut effect - If you were to map population density in GTA, more people live around Toronto than live in the core of the city - Occurs because center is mainly businesses and VERY expensive - Want to live close to our job but can't afford it so we buy houses near the area (905 area) Rural living predominates in Atlantic Canada, Saskatchewan, territories Net exodus of youth from rural areas - once people leave small towns for university they won't come back because lack of job opportunities - Therefore average age in rural communities will decrease Implication: Affects median age in rural areas and access to goods and services Affects businesses in rural areas Ex. Mobile banks, bank on trucks that drive from area to area to allow people to do their banking (like an ATM)

Elements of T in PEST

Internet - Information technologies = cell phone, computers - Not limited to computers and information - Equipment and material advancements Ex. Swiffer - Because technology constantly changes, it is constantly demanding - Scanning - Learning - Creates significant change and challenge - P5F mentions how technology can be a barrier to entry - Can also break down barriers (ex. Stores on - Amazon don't need locations, as many workers, etc.) - Consider Cannon vs Kodak example- did/didn't take advantage of technological opportunities

5 Industries Dramatically Changed by Tech

MRPTT 1. Music 2. Retail 3. Publishing 4. Travel 5. Transportation

Strategic Stakeholder Categories

Measure Potential: - Threat = Ability and willingness to create challenge - Cooperation = Ability and willingness to offer support There are 4 Categories - Marginal Stakeholder (Low T, Low C) - (ex. Clothing store, clothes manufactured in India, workers at the factory) - Supportive (Low T, High C) - (ex. Parents to us) - Non-Supportive (High T, Low C) - Mixed Blessing (High T, Hight C) - (ex. Union employees, government) - They can shift - Need to pay the most attention to them - Are able and willing to provide you with needed resources and help you - Are also able and willing to harm your business if not happy

Threats of Technology 2

Need for constant learning and scanning Need to look at various industries Information overload; security Make decisions but based on not the best information Hard to stand apart from customers because they have so much information sent to them What data can be collected from you? What regulations do companies need to go through to keep it safe? Greater independence of company and workplace (opportunity and threat) Employees not on site, not being influenced positively, might not work well Like online classes, might not be motivated to work

Demographic Trends: Changing Households

One-person households growing faster than one-family households; Highest among seniors Lone parent & two-earner families - High Participation rate of marriage at a young age in millennials - High Participation rate of divorce in baby boomers - These 2 lead to more single-person households Implications: Lost economies of scale in living, shopping; - Lost economies of scale in living: more expensive to live alone than sharing - Shopping: less likely to buy in bulk (Costco) Aging seniors living alone + smaller support network - Aging seniors living alone; ex. Meals on Wheels, life alert Families face time constraints -Working, driving kids to school, extra-curricular activities -No time to cook, clean, workout, etc. -Businesses can step in to solve this problem for them (ex. Cleaners) *Think of business ideas/implications

Technology in Five Forces

Opp/Threat for each of 5 forces

Roles of the 4 Financial Pillars

Pillars 1 & 2- Banks & alternate banks - Make deposits, borrow - SME - primary lending sources - SME = Small and Medium Enterprises *For SME, because they are so small they cannot sell equity; other than family their only option is the bank Pillar 3- Specialized lending/saving intermediaries - Mid-large - Private equity financing/borrow Pillar 4 - Investment Dealer - Large & established - Going public; stocks & bonds

Sole Proprietorship

Owned & operated by one person, business and owner = one legal entity Characteristics : 1) Ease of Formation - Very simple to form a business - Pay $65 and fill out minimal paperwork - Government wants to encourage entrepreneurship 2) Few regulations 3) Complete control over profits and decisions 4) Government support (advice) 5) Taxed as personal income (advantage if business has losses) - income of the business is considered part of the owners' personal income - Benefit: can deduct losses from other income - Ex. Make $60000 at normal job, lose $15000 in business (net income is now $45000- taxed lower) - If you are a shareholder of Apple, can't report Apple's loss on personal income 6) Unlimited liability 7) Lack of continuity/Difficult transfer of ownership - Once you transfer ownership, your businesses does not exist anymore in the eyes of the government 8) Difficult to obtain outside financing - The value of a business is the expected value of future cash flows (valuation is difficult, make selling difficult)

T - relation to other PEST factors

P- online security laws E- increased productivity/GDP S- transportation has changed where we live

Stocks

Represents equity/capital for issuing company Characteristics: - voting rights - For voting rights, shareholders elect a board of directors who represent them - no fixed term - Stocks never expire/mature like bonds - variable return - No coupon rate - discretionary payment (dividends) - no legal obligation to pay dividends (after tax profits that can be distributed) Can choose to retain them instead - risk

Opportunities of Technology 1

Products: Due to new technology Can innovate new products (ex. Rumba) Uniqueness (ex. Customizing phones with apps) Adds value (ex. NEST products) Improved Use of Information: Coordination If you walk into a shoe store, not in stock, they can check where the inventory exists in right size, can order them for you Only possible because they have access to real-time information Leaner organization Need less people (ex. More than one administrative assistants writing exams by hand, sending to another to type) Improved Operations Efficiency Can design better, faster and with less waste CAD = Computer Aided Design (ex. Engineers with cars) ERP = Enterprise Resource Planning (Toyota implements ERP system, looked at # of nuts and bolts and noticed that there were a couple types that were very similar in size. They picked only one to use and were able to reduce costs because the more you buy, the lower your cost/unit) Helps us to achieve economies of scale- buy larger amounts of less products, save money (FINANCIAL PERFORMANCE) Greater Independence of Company and Workplace Don't need to be in workplace to do work or collaborate, you can be productive at airport/ you can work from home Big Data and Better Decisions Collecting data Ex. Amazon or the Bay collecting data on what purchases you like Valuable to customers and employees

Corporations

Separate entity from owners (shareholders) Types: - Public - starts with IPO - Private - Crown (government owned) Interests represented by board of directors - Inside directors - Outside directors

Public Corporation

Several owners, shares publicly available, business & owners = separate entities Characteristics: 1) Flat tax rates (lower than individual rates) 2) Limited liability 3) Continuity, ease of transferring ownership 4) Ease of raising money, unlimited shareholders 5) Double taxation 6) Cost and complexity of formation 7) Regulation 8) Lack of secrecy

Private Corporation

Shares not publicly traded, < 50 shareholders, owners & business = separate entities Characteristics: 1) Relatively flat tax rates, lower than public corp. & individual rates 2) Potential for limited liability if personal assets not used as collateral 3) Continuity, ease of transferring ownership 4) Up to 49 shareholders 5) Double taxation 6) Moderate complexity of formation 7) Relatively low regulation 8) Retention of privacy

Reading a Bond

SunLife 5.3 of 2021 at 91.75 SunLife = Company borrowing money 5.3 = Coupon rate (% of face value paid semi-annually) 2021 = Maturity date; Borrower pays back face value 91.75 = Price as a % of face value *always assume face value is $1000 therefore price was $917.50 face value = amount which is being borrowed/must be returned

Stakeholder Management Strategy: Supportive/Mixed Blessing

Supportive - Tell me what's going on and give me the chance to offer my opinion (like parents) - Won't show up, move in with you and walk you from class to class Mixed Blessing - Don't want to allow them to become non-supportive - Need to work more closely with them (collaborate with them) - Take similar actions as with supportive stakeholders but more closely and intense Actions to Take: - Customers & Suppliers: Involve in Product Design - Competitors: Joint R&D, Joint Market Development - Government: Invite involvement in setting safety/technical standards; Appoint to BOD - Community: Involve in Urban Renewal Projects - Activist Groups: Appoint to BOD; Seek input; Consult - Unions: Invite involvement in Joint Committees; Appoint to BOD; Profit-Sharing

Technology Shifts

Technology Revolutions over Time: Each one affects the next (ex. Power facilitated assembly lines, steam facilitated trains) Power - Factories created, homes having more power in them - Ex. Horse power Build and move - Modes of transportation - Left Europe and came to North America Communication - Who we can communicate with and how Information - Obtain it faster and easier - Collecting, storage, analyzing Smart technology - Can be used to make better decisions - NEST created a smart carbon monoxide detector and thermostat - Thermostat tracks when you turn temperature up and down - NEST detector connects with your thermostat that will shut off furnace when it senses Carbon Monoxide - Ex. Alexa by google- can order stuff on amazon by just talking to it

Copyright

WHAT - Any original literary, dramatic, musical or artistic work - Subject to copyright from the moment it is created (no registration necessary) - Some still choose to officially copyright for further protection - Owner is creator of the work - Created while at work = owned by employer - Ex. Jingle created by a marketing team: copyright is owned by the boss of marketing company - Duration - life of owner + 50 years - Becomes public domain CAUTION Doesn't cover ideas, only the form in which they are expressed, i.e. music, play, art - Ed Sheeran can't sue if another artist writes a song about an Irish girl - Can sue if they are performing the same song WHY - Receive credit for your work - Receive royalties for your work

Intellectual Property Rights

What: - Legal rights that result from intellectual activity in the industrial, scientific, literary and artistic fields. - - Grants exclusive rights to the creator - Most common types: patents, copyright, trademarks Why: - Creates incentive to innovate by allowing you to benefit

Demographic Trends: Changing Ethnic Composition

*Canada in becoming more diverse, opens opportunities for businesses (ex. Restaurants for specific cultures) Immigration increasing over past decades - Motivation for countries to allow immigration - Sympathy (ex. escaping war) - Labor gap (don't have enough labor, specific skills, etc.- have lots of doctors but need brick layers, plumbers, etc.) - Small cohorts (Want size of cohorts to decrease as age increases, if children cohort is small, countries may allow families to immigrate) Immigrants younger and more likely to live in city than average Canadian - young = don't want to move when kids are older - city = more jobs, easier to find their culture Interacting with marketplace difficult Implications: Many consumers having difficulty interacting with marketplace - Things like finding a family doctor, getting a license, opening a bank account can be difficult for families - Processes are very different - Ex. Sofy moving to Michigan, having to interview for doctors *Think of business ideas/implications - High demand for support services - Businesses can make it easier for immigrants to get used to living in new countries - Ex. ATMs now have more languages than just English and French

Why Large Firms Fail (Disruptive Tech)

- Organization, Structure and Capabilities Slow Response Time and Influence Choices What you are good at you tend to do more of Ex. Writing with left hand vs right hand Capabilities create efficiency, they have strengths and organization that are set up to perform certain ways Therefore it's hard to change when new companies bring innovations - Organizational structures weed out processes that don't address current customers' needs Leaving current, loyal clients to market towards another group usually is not successful Organizational processes are set up so companies work towards satisfying current customer IBM vs Apple - Focused on satisfying main stream customers (move to higher margin opportunities) Why would you go back to lower stream customers? Why would we make our product worse and sell it for less? - Avoid small, uncertain, unfamiliar markets Niche markets small and financially unattractive Growth potential uncertain Lower profit margins Risk of being criticized if you fail *however, innovation starts in niche markets*

Canadian Population in 2016

- Population is expected to steadily decline as cohort age increases - Baby boomers disrupt this (BULGE) - bulges create challenges - Bad for younger generation (need to pay taxes for health care of elderly people) - Businesses that will be happy: doctors, retirement homes - However, will be bad in the future because the next group is much smaller (Sandwich Generation) - Poses very large problems because small generation is supposed to take care of large generation

Risk with Stakeholders

- Stakeholders watch out for other stakeholders - Stakeholders can move from supportive to non-supportive on behalf of/in defence of other stakeholders CEO of Abercrombie refusing to sell larger sizes Very public and very rude about it (only selling to "popular, pretty" people) They also burned clothing that was damaged rather than sell it at a discount price Young man made a video, went out and bought A&F clothes from Salvation Army and gave it to homeless people Changed reputation that only rich, popular people can wear their clothing

Canadian Cohorts

- THINK OF ADVANTAGES/DISADVANTAGES OF BEING SMALL/LARGE COHORTS - Names of cohorts

Bonds

- Type of Investment - Represents debt for issuing corporation or government (form of debt financing) Characteristics - Legal, binding agreement - Fixed rate of return (often paid semi-annually) - Fixed term - principal repaid at maturity - company has promised to pay you back the face value - Pay it back at the maturity date (the date the bond matures) - Priority over stockholders - Bonds must be paid off before shareholders (need to pay off your debt before shareholders get dividends) How They Work Basically, a company/govt borrows money from you (investor). They pay interest (coupon) each year and pay off the debt (face value) on an agreed date (maturity date)

S- Responsibility to Society: What?

- Wicked problems we are trying to solve - Poverty - Lack of access to healthcare - Lack of access to education - How to measure - Life expectancy at birth (access to health care) - Mean/expected years of school (education) - GNI / capita (Standard of Living- Poverty) - All connected - Poor people have lower access to healthy food (McDonalds) or medicine; leads to poor health - Big problem in States - Even in Canada if healthcare is free, need to be able to afford medicine, going to the gym, eating healthy, etc. - Their poor health has to do with poor circumstances, not poor choices Growing the economy (GDP) will not entirely solve the problem; need to look at income distribution

What to look for in demographics

1) Current size and participation rate 2) Size and participation rate of cohort who will become this cohort in the future Ex. Children ages 5-10, what % go to elementary school (current). In 5 years, they will be replaced by a different group. How big is this new group compared to old group and what will their participation rate be? Currently 2million students, 100% rate (need enough services for 2million) Next group is 3million- need to hire more teachers, build more schools, etc.

S- Responsibility to Society: Why?

1) Diffuse the issues of social decay, political chaos, terrorism - Reduces environmental uncertainty (political and economic stability) - Can employees still come to work? Will my supplies be cut off one day? - Employees will be more productive (not worried about safety), increases supplies (more countries are supplying) - Customers not occupied with safety, more likely to buy your goods 2) Affect human Capabilities - Employees are more healthy and educated, can contribute more to your company - Ex. Maybe people in poorer countries could find the cure to cancer, don't have access to education 3) Societal Attitude Shift - Society expects businesses to help those who are not as fortunate as us If customers' incomes go up, new customers/ new markets I can expand into

2 Opposing Views of CSR

1) Focus only on profits -pay employees fair wages, pay taxes, make good products but will not give money to charity (keep investors happy) - more money goes to investors - up to them to make CSR (more time/money to volunteer/donate to charity) 2)Actively consider other stakeholders - Company comes from society, we have a responsibility to be good Corporate Citizens and make good decisions beyond just business Not one answer is right Retail is starting to move from the 1st towards the 2nd - maybe because they want to help the world - maybe because they want to attract customers and employees and believe they will be held responsible (lose money) if they don't

Why Focus on CSR?

1) Makes environment manageable - Avoids adverse actions/increases support by stakeholders - Thanks to technology, stakeholders can quickly and loudly voice opinions - Can easily lose stakeholder support - Promotes favourable legislation - If what you are doing is good, the government may make regulations that support what you do - Ex. Recycling, clean manufacturing - Overall example = Coffee beans, if deforestation, won't have any more coffee beans to make coffee (coffee shops will go out of business if they don't exercise CSR) 2) Helps you meet CSFs - Financial performance: ex. incorporating solar energy, no more carbon tac - Customers/Employees: improves their trust and loyalty - Innovation: Need to be innovated (ex. Grameen-Danone) - Comp. adv: Social responsibility CAN be your advantage

4 Levels on CSR

1) Proactive - Look for opportunities - When you see dishes that need to be washed, you wash them without waiting to be asked - See the mess and you clean it up (may be your mess or someone else's) - Will pay employees and encourage them to go volunteer - Ex. McDonalds with the Ronald McDonald House/Ben and Jerry's (never a 7x gap between highest and lowest paid employees) 2) Accommodative Approach - Go above and beyond the minimum but need to be asked first - Roommates have to tell you to wash your dishes, and you do it - Ex. Food bank asks for donations and then give/Tuna companies have labels that say their food was made sustainably (not their decision to do so, probably pressured by environmental groups) 3) Defensive Approach - Only what is legally required - Taking out the trash- only take out the trash that I have created - If asked for donations, they will say no, not legally required - Ex. Tabaco industry; cigarette companies do bare minimum (put on legally-mandated warning signs) won't go above and beyond 4) Obstructionist Approach - Play around with what can I get away with? What's the bare minimum I can do? - Ex. Pharmaceutical company increased prices drastically for life-saving drug - Ex. Car manufacturer produced a car that was unsafe (didn't know at the time) - Discovered that when it was rear-ended It would often catch on fire, lead to higher fatalities - Found out it would be a very costly recall order and fix them to no longer pose this threat - Did calculations that it would be cheaper to discontinue the model and allow the car to continue to be on the road and pay out lawsuits when people were hurt or killed

S- Responsibility to Society: How?

1) Social Entrepreneurship - Becoming one (ex. SOS) - Supporting them (Ex. In legal industry- Allows organizations to be legally set up with different tax levels and regulations for not-for-profit companies) 2) Business and Community Partnerships - ex. Grameen-Danone 3) Innovative Business Models and Leveraging Business Skills - contributes to social development

Determinants of Bond Value

1) What impacts the coupon rate at bond issue? - Prevailing interest rates - Credit rating of issuer - Features - ex. Being able to turn into a common share? 2) What impacts bond price when traded? - Coupon rate + prevailing rates of interest - Changes in credit rating - Economic/Market Risk - Inflation - would expect to high higher yield from bonds from riskier country

S- Business' Stakeholders

1) Who are they? - Groups (ex. students) - Individual (ex. customer) - Organization (ex. competitor) 2) Why are they important? - Provide capacity to operate - Therefore they expect reciprocity (something in return) - The importance of each type depends on the situation/ decision being made 3) What is the main challenge? - Conflicting or varying expectations - To solve it, need to find balance - Balance depends on your CSP approach

S- Natural Environment: Societal Attitude Shift

20 Years Ago: - paradigm was take, make, waste - Landfills were getting filled with harmful waste (ex. Batteries release toxins into water) Now: - recycle (58%), buy green (29%), eco. friendly commute (18%) Although businesses are the main cause of this problem, they can also be the solution by: - Corporate Greening: Look at your decision and see how you can reduce carbon footprint - ex. Allowing people to work at home, even sometimes, reduces pollution from commute - ex. Meetings online instead of flying people in - NOT by Greenwashing: stretching the truth in how environmentally friendly your products are - When the green "revolution" started, many companies started making their products the colour green to trick people into buying their products - However, their products were still just as harmful

Financial System- Pillar #1

CHARTED BANKS - Publicly traded, profit seeking companies - Largest and most important institution - Concentrated and highly regulated - The most highly-regulated industry in Canada - Similar in all countries - When the banks collapse, the entire economy does as well - Five largest account for 90% of total bank assets - Bank Act limits foreign-controlled banks to <8% of total domestic bank assets - Foreign banks can leave with money, no way for the government to get it back - Serve individuals and business - Major source of short-term loans for business

Technology- CYCLE

CYCLE Availability of complementary goods determines the value and how attractive a good is to consumers Ex. Phone calls, texts, cameras, calendars Most companies can't provide all of their own complementary goods Ex. Apps for phones, Microsoft word for laptops Therefore they try to attract producers of complementary goods Ex. Apple makes App store- platform to attract app makers Other people make products that will add value to their phone When creating apps you need to figure out which technology standard to be compatible with Apple or Android - look at number of consumers and demographics to decide which standard to use (ex. Business app, which types of phones do most business people have?) Therefore larger number of users will attract producers of complementary goods Cycle can work opposite way - Blackberry Playbook not popular, software producers choose iPads instead, no value is added, seems less attractive to users, cycle continues Break bad cycle by creating complementary goods Either by yourself or by using incentives to others Ex. Blackberry let people who make apps get a free Playbook (increased # of users and availability of complementary goods) Compatibility example- Blackberry recently changed software to be compatible with Apple apps (Compatibility, alliances, incentives for comp goods, suppliers, build base)

Millennial Cohort:

Characteristics: - Work-life balance - Important to find a way to be a successful and productive employee but also to enjoy life (travel, volunteer, etc.) - People will refuse jobs if they don't find it interesting, challenging or helpful/beneficial to society - Competitive Wages and Benefits (all educated and want to be paid well for what they do) - Feedback and recognition is important (want employees to tell them if they have done well) - Have grown up always knowing the internet / cellphones - In order to sell to millennials, need to have a strong online presence (not reading newspaper, watching commercials on TV, look for reviews online) - Look to their social network (friends, family) for recommendations, reviews, suggestions, etc. - Socially-minded (when making decisions about finding work, they will look up the company's CSR policies and pick companies based on their social responsibilities) (Factors are very important to GAIN EMPLOYEE COMMITMENT when your employees are millennials)

Demographics Trends: Large and Influential Echo Generation

Children of boomers = relatively large group More disposable income because parents provide essentials - Tend to return back and live with their parents - As a result, they have a lot of disposable income (no rent, mortgage, utilities) - Can spend more on luxury good (Electronics, vacations, etc.) Increasingly influence family purchases - Since they live at home, they can influence family decisions - Parents will consult kids - Help pick what TV to buy, what vacation to take, etc. - Must sell not only to baby boomers but to their children as well - Baby boomers are living on a pension, not likely to make big purchases vs Millennials Implications: Echo has a greater market impact *Think of business ideas/implications

Opportunities of Technology 2

Competitiveness Create barriers to entry Ex. Apple gets customers to purchase more Apple products (computer links to phone) therefore if a new company enters, customers won't be likely to buy from them Cooperation with other firms Ex. Automobile manufacturers can connect to suppliers through private internet to implement just in time inventory systems Also locks out other competitors, supplier is guaranteed to stick with you Can find the best suppliers, access to suppliers world wide (P5F decreases supplier bargaining power and increases profitability) Reduce Cycle Times Cycle time= time it takes to complete a process (Ex. Pay an employee, sell a product, hire and train a new employee, repair a new machine) Ex. Getting paid, used to have to do paperwork at payroll and send a physical pay-cheque to you where you'd have to walk to the bank, Now you record hours online and it gets sent to you bank account Communication and Collaboration Can relay information to entire company with a simple email in a second, to send a memo used to have to make 50 printed copies and send it Ex . Shopify hack days, let employees come up with ideas, employees pick projects to work on, 3 days a year they work on them and then pitch them to finals, semifinals, live stream the competition Gains employee commitment, encourages innovation and creativity Customization Ex. TimBuk2 Bags Machinery allows us to customize easier Machines in assembly line can be coded to read codes on products so it can change function (ex. Painting red vs blue) Hard in the past because it was difficult to get information from customers and also hesitation (would my car actually look good if it was painted a different colour?)

Key Technology Concepts 2

Create resistance to move from one product to another Lock-in creates resistance to move (I have to give something up) Ex. Switching game systems, means giving up system AND games (losing lots of money, entire previous investment is worthless) Also how long did it take me to set up, how much time/learning (people don't change banks because it's a hassle) Ex. Have a mac but won't use Keynote, learned and am experienced in PowerPoint already Switching costs Ex. Game system, how much do I need to buy the NEW game system PowerPoint, you lose all of your PowerPoint presentations if switching to Keynote Way to solve this is through switching costs (can't change the previous investments) Ex. Switching cable companies- People at Rogers don't want to call to cancel so they can switch to Bell (hassle) Bell can offer to make the call for them Can also offer leap in performance Ex. Game systems offer leaps in performance, therefore people will switch from Game Cube to Xbox

Technology and the Automobile Industry

Design and Testing -Used to have engineers, build parts, build prototypes and test the car -Today you can design and test a car without putting together the physical parts of the car Research and Purchasing -Online research and online purchasing of car parts, etc. is greatly growing Functions -Dash boards are all digital -Self-driving cars Service booking and Diagnostics -Service booking online -Tesla: don't have to bring car in to get a diagnostics test, they can do it and sometimes even fix it remotely 3D Printing -You can customize grills or other parts of your car using 3D printing Connected to User - connects to cellphones

P- Connection to rest of PEST

E: minimum wage S: corporate social responsibility, gov. reinforces laws (tax on tobacco) T: determines what type of internets we can use, determines what cellphones need to be compatible with

Technology- How Small Firms Compete

Enter with a product or market large firms don't care about 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 Don't target their consumers Don't do something they can copy; takes away competitive advantage When a multi million dollar company wants to improve sales by 10%, they need to find a large profitable industry with large margins Small companies can increase by 10% in a small industrfy

What is Technology?

Equipment and material advancements - Substitutes/magnify human effort - Ex. Rumba vacuums for you (can even control from phone)- substituted human effort - Ex. Assembly lines allowed us to produce more- magnified human effort - Reduce cost, improve performance, increase flexibility - Examples: Robots Information Technology Advancements - Devices & software for creating, storing, exchanging, and using information - Example: cloud; analytics; artificial intelligence Analytics ex. Amazon has enough data to analyze and predict what you are going to buy May get to the point that artificial intelligence will predict what you want, they'll send it to you and if you like it keep, if not return it Increases sales

S- Ethics and its Importance

Ethics - "individual standards/beliefs regarding what is right and wrong or good and bad" - can be clear or unclear Business/Managerial Ethics - "standards of behaviour that guide individual managers in their work" - When your leadership makes strategic decisions - Manager Preferences of the Diamond-E Corporate Social Responsibility (CSR) - Lives in the strategy box of Diamond-E

S - Ethics

Ethics is knowing the difference between what you have the right to do and what is right to do - Ethics can sometimes be clear - Murder is bad - Ethics can sometimes be controversial - Pharmaceutical companies charging a lot - unfair to people who need the medicine - companies need money to research and develop new medicines

Disruptive Technologies

Ex. cars to Horse-Drawn carriages Ex. AC to fan, cooled air instead of moving it around New and different ways of doing things that usually start off low quality and cheap New, simple, inexpensive cell phones come out, Apple won't care However, the improve quickly and will eventually begin to satisfy needs of mainstream customers Mainstream do the job of original technology in a totally different way therefore incumbents can't react easily Ex. First Apple computer was simple and much cheaper, used for storing phone numbers, recipes, games, etc. Not valued by high-end corporations, more so for domestic consumers Low margins, completely different target than IBM so IBM didn't interfere Rapidly improved and now is main competitor Have to improve rapidly so competitors cannot react Apple improved slowly enough that IBM could react (not completely disruptive) Businesses (IBM) wanted powerful computers with big memories Apple made simpler, user-friendly computers Size and bulk of incumbants (existing resources, management preferences, ,etc.) are the reason why it's hard for them to keep up once the new industries get ahead (speed boat vs cruise liner analagy)

P- Connection to CSF

Financial Performance: taxes; gov. imposes duties on supplies (increases cost, reduces FP) Customer Needs: labels on food Quality P&S: tax on input, choose to use a lesser quality input; gov. does no more trade with US, restricts input Innovation & Creativity: gives funds and subsidies (for R&D) to companies, intellectual property rights (patent/copyright) Employee Commitment: gov increased wage and parental leave; offer subsidies for when employees take vacation Distinct Comp. Advantage: Intellectual property rights

S- How to strategically manage stakeholders

For Each Decision: Identify Key Stakeholders (Who cares? Who is relevant?) Diagnose and categorize them into one of four categories Formulate strategy to enhance relationships Effectively implement theses strategies

Government Roles #2

Government is a tax agent - Collected by all three levels of government - encourages / discourages behaviours (by taxing them) - Types - business, personal - can be corporate income taxes or individual income taxes - Approaches - progressive, regressive, restrictive - Regressive tax example, sales tax (takes a bigger portion of your income, the less money you earn) - progressive tax example, income tax (takes a bigger portion of your income the more money you earn) - restrictive tax example cigarette taxes Government is a provider of incentives and financial assistance - gives subsidies to businesses who use renewable energy - gives tax breaks: charges less property tax to convince people to open up businesses elsewhere - offers advice and small loans/research funding to businesses - Bail outs: offers to save a business from going out of business (ex. automobile companies- because they were major employers with many employees)

Threats of Technology 1

Imitation ex. Music: how much it costs artist to make music vs how much it takes us to share it (expensive vs free) Information is so easy to share that it's hard to keep control of your products New Technologies in Unfamiliar Areas Hard to keep up with external environment due to technology Ex. Kodak didn't build capabilities in digital imaging Canon did reorganize and get new resources Unpredictable Evolution Can invest in all resources and have capabilities but still not succeed due to unpredictable changes Ex. Betamax and VHS, companies were building cassettes that only fit the one they believed was the best, movie companies had to build movies in both sizes of tapes Constant frustration of customers not having the size they need, stores frustrated that they have to buy double the inventory Companies in VHS started offering incentives to buy more VHS therefore Betas eventually disappeared Unpredictable change for Beta max

S- Influencing Managerial Preferences

Hiring criteria - Look at resumes and see people who have values that match up with yours - Put it in job description - Ask questions in interviews relating to value system Managerial role modelling - Demonstrate by example - If leadership behaves unethically, cannot expect other employees to perform ethically Mission Statement/Code of Conduct - Might not get hints or clue in that managers actions are those they should follow/mimic - Code of Conduct makes it clear what is allowed/expected - Student Code of Conduct is signed Ethics Training - Ex. Research Diagnostics in BU111 - Gym training - Doctors do ethical training (respect wishes of family or administer help to patient) Evaluation Criteria and Rewards - Reward what is good, punish what is bad - Ex. Punishing students who plagiarize Employee Protection Mechanisms - When employees notice ethical violations and bring them to your attention - How you react is VERY important - Need to protect employees that bring issues to your attention - Ex. Not okay to cheat on assignments/tests - Tell Sofy person next to you at midterm was cheating off notes, Sofy can quietly find student and punish them or say "What's your point" - Shows that you're not serious about the situation

Financial System- Pillar #4

INVESTMENT DEALERS Facilitate trade of stocks, bonds and other products in Securities Markets Primary markets Investment bankers/dealers advise, underwrite, distribute - stocks sold by I.D.s in IPO Secondary markets - Toronto Stock Exchange and other exchanges - any exchange after the IPOR

Disruptive Technology Link to Diamond-E

Management is focused on high-profit margins, low risk, certain consumers Organization is based around making certain products for certain people Human resources (their talent can become irrelevant or may need new talent- doesn't it make sense to use the talent I already have) Strategy Disruptive innovations change environment Strategy should change Because small businesses are not held down by these factors and they can easily change and adjust strategies Incumbents are held down so they often cannot keep up Ex. Blockbuster can't keep up with Netflix (Bought movies, stores, rights to films) Human resources were good at helping people find movies, knowledgeable Small business doesn't have a lot of capital resources (doesn't hold them back when making decisions)

Stakeholder Management Strategy: Marginal/Non-Supportive

Marginal- Just make ethical decisions - Monitor - satisfy needs and/or demands; no need to involve or collaborate with them Non-Supportive- Will harm you no matter what - - need to defend yourself using one or more of these 3: 1)Reduce interdependence - Either increase their dependence on you or decrease your dependence on them 2) Use media to promote/defend your actions 3) Encourage supportive stakeholders to voice their support

Sustaining Technologies

Meeting customer needs assumes a specific bundle of customers Sustaining innovations= improve existing products in expected ways Satisfies more and more customers Consumers expect value for their money Overtime as the product improves (through innovation and creativity and by building quality products and services) customers will be charged more Ex. Apple X now has a better camera and do face recognition Target- focus on mainstream customers Who do we sell the most to, who provides us the most revenue (achieving financial performance) Incumbents usually win (Firms that already exist in the industry) Ex. New phone company comes in with expected changes, Apple will out market and force new competition out, new company will not succeed/shut down

How to Avoid Failure

Monitor outside your industry Ex. TD executives recommended to look at amazon/retail industries Partner with young firms Don't need to create innovations They aren't held back by Diamond-E If it doesn't work, you only lose a small investment vs if you tried to develop it yourself They will be interested in partnering with you because you have the resources needed Establish venture units Independent units isolated from the main company Ex. TD Technology Lab / CT Innovation hub with communitech Can try innovations on a small scale at a low cost/risk If the challenge is that the company is unable to respond to new innovations, isolate a groups so that they are not biased or held back by Diamond-E factors; turns large company into a small company Design by Job not Customer We hire products to do things for us (Have to understand what job we need products to do) Fast food trying to increase sales of milkshakes Had done research, asked for feedback and would change milkshake and it would not increase sales What job causes them to come to the restaurant to hire a milkshake Surveyed what people ate, what time they ate it, were they alone, did they get food, stay there More than half were sold before 8am, alone, left straight away Job was long and boring drive to work, needed something to do while they drove If you eat a banana, eaten quickly, doesn't keep you hungry, not easy to eat bagels (dry, spreading jam), donuts get hands sticky and gone quickly Milkshakes take long time to drink, can drink with one hand while driving, keeps you full for long Therefore, adjust milkshakes to fulfill this job better (Clayton Christensen)

S- Strategic Stakeholder Management

Most challenging decisions are when there are conflicts of interest between stakeholders How do you decide which stakeholders to pay attention to? Don't need to pay attention to all stakeholders all the time Certain stakeholders won't care about certain decisions 1) Importance of stakeholder varies by issue 2)Importance determined by: - ability & willingness to act - Ex. If Sofy doesn't like Laurier she is able to damage the reputation of the university but not willing to do it (she works here and gets paid by Laurier; doesn't want to get fired, she wants Laurier to have a good reputation so more students will come and she can continue to have students to teach) - relative power/ dependence or interdependence - Ex. University should keep Sofy happy because they need her as well 3) Stakeholders can be: - Threatening: willing & able to create uncertainty - Cooperative: willing and able to support

How business influences the government

Political is the one area of PEST that the government has control over Lobbyists - Hired to represent company's/group's interest - Ex. Rogers and Bell have lobbyists that go to Parliament and convince them to keep high barriers to entry for telecommunications - Lobbying Act - must register and follow rules - ex. Must be honest about what company you work for and that you are a lobbyist - Rules on what gifts can be given (avoid bribery) - Trade associations - Small businesses/individuals join and lobby as an industry lobby group - Collaboration with government/decision input - CRTC consults with industry members - Advertising - Can lobby through ads: put out an ad saying what you want and at the end telling them to contact MPs and say you're not in favour of the legislation - Influencing the government through voters Using a SUPPORTIVE stakeholder to prevent the government from becoming an UNSUPPORTIVE stakeholder - Corporations influence voters Want to collaborate with the government so they can give you favourable legislation AND so it will get to the point where the government will ask for your opinions when making decisions Ex. Rogers and Bell and Tellus sit in on meeitng about internet services

S- Responsibility to Customers: How?

Provide safe products - Ex. Toaster is expected to not catch fire - Ex. Child-safe medicine bottles Provide Information - Ex. Expiry dates on food - Ex. Nutritional Labels, can make educated decisions on which product to buy Opportunity for consumers to voice opinions - Ex. Sofy voicing opinion about mud run (unsafe obstacle) - Were respectful and considered her opinion The right to choose - Governments try to avoid monopolies - Competition Act ensure consumers have choice Courtesy - Right to Be Treated with Respect - Treat all consumers equally despite race, gender, etc. Education - Educate consumers on how to use their product - Ex. Tylenol bottles tell you on bottle how to safely use their medicine (this many tablets, don't mix with this) Fair Pricing - Gauging = D exceeds S so you jack the prices up - Ex. Venezuela's food is so expensive Ethics in Advertising - Being honest about what your product can and cannot do - Ex. Car companies advertising cars using racecar drivers (going fast, sharp turns but car can't actually do that with normal drivers)

Government Roles #4

Regulator/law maker - Regulates business activity; influences technology standards - CRTC - CRTC decides who can provide radio stations, television stations, internet providers, etc (ensures people do not limit news we are exposed to) Purpose - Promotes competition - Competition Act, small business support - Promotes innovation - intellectual property rights Protects consumers - i.e. Hazardous Products Act (ensures hazardous products are properly labelled) - Achieve social goals - i.e. universal health care, education - Protect the environment - Canada Water Act, Fisheries Act

Technological Factors- example

Totem Poles

Forms of Ownership

Traditional forms of ownership 1) Sole Proprietorship 2) Partnership 3) Corporation (Public & Private) Form of ownership will likely change over life of business (usually start as sole, move up to corporation) What distinguishes the three: - Tax implications - Liability implications - # of owners

Technology- How Small Firms Compete Part 2

Use time in small market to improve and build Once you are strong, move up to bigger markets Ex. Toyota didn't start off with Lexus Came in with Corona (bad car) serving customers Upgraded to Turcel, Corolla, etc. Big guys would send down models to compete with Toyota Profit margins of smlal cars didn't make as much profits as their trucks or popular cars would The probability that I can kill a giant as a little boy increases if I can pick a market that the giant won't be interested in/motivated to win All profitable industries came in with projects that were much lower quality than what competitors were selling After that, a new disruptive innovation comes in Big companies look down, don't see money (Toyota to Korean car companies); would rather compete with Mercedes, bigger companies Korean companies look up and see money opportunities to compete with Toyota

Patents

WHAT - Government grants that give inventors exclusive rights to their inventions - Must be new (first in the world), useful (functional and operative), and show ingenuity (i.e. is not obvious to someone skilled in that area) - Hard to patent (difficult to meet all 3 criteria)] - Can be a product, composition, apparatus, process, or improvement on any of these - Apparatus ex. Hospital equipment (MRI machine) - Protection = 20 years - Patent Protection is not renewable - If someone comes along with a better invention and patents it, your patent is useless - For this reason in technology, patents are usually only held for 5 years WHY - Provides protection for owner - Can license/receive royalties - Provides valuable information and inspiration for further research and innovation - Details disclosed to the public after 18 months Government makes the information public so that those who want to make a new/better product and can see the current process and move forward from there Ex. For drugs and medicine' For this reason, some people choose to not patent Ex. Coca Cola (if they did patent, in 20 years anyone would be able to copy the recipe)

Trade Marks

WHAT - Word(s),design, symbol, shape or a combination of these - represent a brand - Used to identify the goods or services of one person or organization - Protection for 15 years; renewable - Can renew an infinite number of times - Legislation = Trade-marks Act WHY - Establishes and protects reputation/brand - can be one of your most valuable assets - Facilitates licensing your trademark *(Reputation takes a long time to build (say Apple and they know it's a high quality, innovative technology company) Took them a lot of time and money to get to that place Could damage Apple's reputation if another company started putting the Apple symbol on their computers Makes other companies want "license" with them A good new shoe company may come to Nike and ask to use their logo on their shoes to increase sales Nike gets a portion of each sale)

P- Connection to 5 Forces

What are all the things the gov. can do to create advantages or disadvantages for us ? - Suppliers through trade agreements (what foreign countries we can achieve supplies from at a cheap cost - Substitutes, what substitutes can we use - Buyers- anti-trust legislation

S- Natural Environment

What is it? - Pollution/waste is land, air or water - ex. Emissions/ wasting water in production Why? - Paradigm Shift in Management Thinking - Shift in thinking: from short-term to long-term, (understanding that you're handing off the world to next generations, want to give them something clean and healthy) - Quantification of Impact - There's a cost to being environmentally friendly - More cleanup (ex. Oil spills), clean up is expensive - Cost of losing customers* - Change in Societal Attitudes - Society now expects CSR from businesses

S- Responsibility to Customers: What & Why?

What? - Areas = Pricing, advertising, rights Why? : Increases Profits Increases profits - Avoid adverse actions - Consumers can leave to competitors if not happy - Can spread bad reviews about your company - Customers can sue you (ex. Volkswagen) - Protest (ex. Nestle, gave women in poor countries formula for their babies, by the time they realized they couldn't afford formula, own milk had stopped) - Purchase goods and services providing businesses with revenues (increased revenues and profits) - Avoid increased regulations - Customers can lobby the government for increased regulations - Regulations can be expensive for companies to comply with - Ex. Airlines not respecting customers (smaller seats, delayed flights) - Group of consumers created "Consumer Bill of Rights" for airlines to fly - Demanded flights and arrivals on time, - Companies started compying with regulations, offering people hotels if flight is delayed a certain amount

S- Responsibility to Employees

What? - Hiring - Not being prejudiced - Nepotism Promotion - Promotions not prejudiced - Give everyone opportunities to promotions Compensation - Paying them fairly Training - Need proper training to be successful, safe and have opportunities for promotions - Ensures Work-place safety Why? - *Employees provide businesses with talent, skills, labour - Employees make a business - Need their efforts, ideas, skills to run your company - Want to gain employee commitment How? - Responsible Hiring and Promotion - Limiting yourself (likely not picking best candidates) - Reduces reputation as employer - Safe working conditions - Opportunities for advancement - Respectful treatment - Protection of Whistle Blowers - Protecting people who come to you with issues about the company - Don't expose those people for trying to better the company - Part of respectful treatment

S- Responsibility to Investors: What?

What? Financial management, reporting - shareholders allocate decision making to managers - often results in problems: - Conflict of Interest - Managers make decisions that benefit themselves rather than those that benefit investors - Shirking - avoiding or neglecting responsibilities (ex. Taking longer breaks)

Demographics

Who? Based on David Foot's Work What? Study of human populations Why? powerful predictor of behaviour/trends - Demographics are a blessing- environment is always changing bur demographics are for certain certainty and simplicity of age data - We know how people are going to age (in 5 years, I'll be 5 years older) changes significantly impact business - Can compare relative sizes: creates changes in demand and supply ex. Education participation rate of 7 years olds is 90%, at 16 years 80%, ex. What percentage of 30 year olds own a house, work out, are vegetarian, buy online, etc.

S- Responsibility to Investors: Why & How?

Why? 1) investors provide businesses with CAPITAL 2) new regulations due to repeated irresponsibility (When financial crises are happening because of poor management choices, the government steps in and creates new regulations) - more independence, new practices, new disclosure rules - required to have an audit in which accounting firms go over financial statements to ensure they are accurate companies would be the same as those who made financial statements needs to be separate company now - different social attitude - Cdn. Coalition for Good Governance - watch dog group that watches what big corporations do, what they report, how they report, what kind of decisions they make They hold companies accountable when they are not responsibly handling things - legal action against directors and managers - Managers used to just be fired with no punishment if they misused business assets - Now they are held accountable; can even go to jail How? - Make decisions that will help you in the long term (reduce marketing/ R&D costs example) - focus on long-term return on investment (ROI) - responsible management, reporting, transparency - no insider trading