BUAD 201x Midterm

How do you calculate Customer Acquisition Cost (CAC)?

(Cost of sales + cost of marketing) / New customers acquired

What are the 5 customer segments in the business model canvas?

- Mass Market - Niche Market - Segmented - Diversified - Multi-sided Platform (i.e., uber, need both driver and platform)

How is corporate culture set?

- Set by founder(s) and leaders - Set by what gets rewarded, punished, or tolerated - Set by the best and the worst people in the company

What does SWOT stand for? Which are internal or external?

- Strengths (internal) - Weaknesses (internal) - Opportunities (external) - Threats (external)

What are some characteristics of market size?

- Usually easy to find - More than 2 dominant players <70% market share - Growing faster than rate of inflation, ideally 2x+

What is the value proposition within a business model?

- What your product or service does for customer/user - Benefits/features of a product

What are the four basic 'operations management' theories?

1. Business process redesign (BPR) 2. Six sigma 3. Reconfigurable manufacturing systems 4. Lean manufacturing

What are the three key things to write well in business?

1. Clear 2. Simple 3. Persuasive CSP

What are the three ingredients for leadership? (According to Bennis)

1. Guided vision 2. Passion 3. Integrity (candor, maturity, curiosity, daring) GPI

What are the 5 hierarchy's included in Maslow's Hierarchy of Needs theory?

1. Self-actualization: - Desire to become the most that one can be 2. Esteem: - Respect, self-esteem, status, recognition, strength, freedom 3. Love and belonging - Friendship, intimacy, family, sense of connection 4. Safety needs - Personal security, employment, resources, health, property 5. Physiological needs - Air, water, food, shelter, sleep, clothing, reproduction SELSP

What are the two types of operation management decisions?

1. Strategic 2. Tactical

According to Chap 9 of Bennis' book, corporate vision focuses on three levels:

1. Strategic 2. Tactical 3. Personal

What are the 6 types of business models?

1. Subscription 2. Freemium (free app w in-app purchases) 3. One-time payment (retail purchase) 4. Razor/razor blade (2 part model, i.e. you sell a razor but you have to buy specific blades from same co.) 5. Retail 6. Franchising (i.e. fast foods co's, give company % of total revenue to own a branch for expansion)

What are the three major motivational theories?

1. Theory X vs. Theory Y 2. Expectancy theory (pygmalion effect) 3. Maslow's Hierarchy of Needs

What are the four levels of management?

1. Top management - (CEO, Chief Marketing Officer, Chief Sales Officer, President, Managing Director, etc) 2. Middle management - (marketing manager, purchase head, sales manager, finance manager, etc) 3. Lower management - (Supervisor, foreman, junior manager, inspector, clerk) 4. Workforce

What are Porter's 5 forces?

1.) Bargaining power of suppliers 2.) Bargaining power of buyers 3.)Threat of new entrants 4.) Threat of substitutes 5.) Rivalry within the industry BBTTC

How many pricing strategies are there? What are they?

9 1. Skimming (hi-low): high prices when product introduced, then gradually reduced 2. Bundle pricing: grouping items; sell for less than individual 3. Premium: for high quality items marketed to high income customers 4. Demand (surge): ride share, airline companies 5. Competition: what do competitors charge? 6. Cost plus: 7. Freemium: 8. Penetration: undercut competitors to take over market, then raise prices 9. Psychological: i.e, $9.99, or "lucky"

How many sections are in the business model canvas?

9 Sections

What is the definition of a business model?

A company's plan for making a profit

What is the bonus operations management theory of JIT (Just In Time) Inventory System?

A management strategy that aligns raw-material orders from suppliers directly with production schedules - Minimizes inventory and increases efficiency - Invented by Toyota in 70s - Relies on steady production, high-quality workmanship, no machines breakdowns, and reliable suppliers

What is the definition of elevator pitch?

A short, description of an idea, product, or company that explains the concept in a way such that any listener can understand in a short period of time - Can also be used in sales or to describe yourself

What is the definition for deflation?

A sustained decrease in the general price level of goods and services in the economy for a period of time - Usually a result of a rapid tightening of the money supply into the economy or an inability/lack of desire of consumers to spend it - Typical of a depression or severe recession

What is the definition for inflation?

A sustained increase in the general price level of goods and services in the economy for a period of time

What is a tariff?

A tax imposed by one country on the goods and services imported from another country

What is sunk costs def?

Already incurred; can't be recovered

What is the definition of a mission statement?

An action-oriented statement declaring the purpose an organization serves to its audience - ALWAYS IN PRESENT TENSE - Roadmap for company's vision statement

What is the definition of business?

An entity which makes, buys, or sells goods or provides services in exchange for payment

At what point is a business's ROI at 0%? What does it mean if their ROI is negative?

At the breakeven point. If ROI is negative, business has lost money.

How is inflation tracked?

By the Consumer Price Index (CPI). Released by the government monthly.

What is pro forma def?

Calculating financial results using certain projects or presumptions

In the operations management theory of Reconfigurable Manufacturing Systems, components are typically ______ and ______.

Components are typically "modular" and "interchangeable"

According to Bennis, what are the four ingredients to generate and sustain trust? (chap 8)

Constancy Congruity Reliability Integrity

What conventional learning versus innovative learning? (All 5 points)

Conventional learning: 1. Maintenance learning (most common, preserves status quo) 2. Shock learning (keeps people obedient; overwhelms) Innovative learning: 1. Anticipation 2. Listening to others 3. Participation

What is the difference between debt versus deficit?

Debt is OVERALL while deficit is ANNUAL

What does the Six Sigma roadmap DMAIC stand for?

Define Measure Analyze Improve Control

What is operations management theory of Reconfigurable Manufacturing Systems?

Designed to incorporate rapid change in structure, hardware, and software components in order to adjust productivity capacity and functionality. - "Exactly the capacity and functionality needed, exactly when needed"

What is the customer segment section of the business model canvas?

Each customer segment has corresponding value proposition Focuses on: For whom are we creating value? Who are our most important customers?

T/F: Accounting is math and art.

F, finance

How do you calculate Return on Investment (ROI)?

Final value or sale / initial value = return

What is the main difference between finance and accounting?

Finance is forwards looking. Accounting is backward looking.

What is the operations management theory of Business Process Redesign (BPR)? What is the goal?

Focused on analyzing and designing workflow and business processes within a company. Goal is to help companies dramatically restructure the organization by designing the business process from the ground up

What does GAAP stand for?

Generally Accepted Accounting Principles

What is GDP?

Gross Domestic Product. It is the total market value of all finished goods and services within a country's borders in a specific time period.

What does the Cash Conversion Cycle help do?

Helps evaluate the efficiency of a company's operations and management.

What is the purpose of Porter's five forces?

Helps organizations survey industry appeal, how patterns will influence industry rivalry, which businesses an organization ought to contend in, and how organizations can situate themselves for progress

What is the Cash Conversion Cycle?

How long is takes (in days) to convert investments in inventory and other resources into cash flow from sales

What is the most important in the strategy roadmap diagram?

IMPLEMENTING/EXECUTING STRATEGY - action is greater than planning

What is risk analysis def?

Identifying factors that may jeopardize the success of a project

Where is profit and loss recorded?

Income statement

Defining the function of management - Leading

Inspiring workers to achieve goals

What is operations management theory of Lean Manufacturing?

It is a systematic elimination of waster within the manufacturing process. This theory sees resource use for any reason other than value creation for customers as wasteful. Seeks to eliminate wasteful resource expenditures as much as possible.

Chapter 10 "forging the future", of Bennis' book focuses on leadership. Fill in the following. Leaders manage the _______ Leaders embrace _____ Leaders encourage ______ Leaders see the ____ ____

Leaders manage the dream Leaders embrace errors Leaders encourage reflective feedback and dissent Leaders see the long view

What are the key differences to leadership vs. management?

Leaders: - Set company direction; develop other leaders - Do the right thing; strategic/big picture Managers: - Make operation run smoothly - Tactical/detail oriented

What is the def for macroeconomics?

Looks at decisions of countries and governments

What does 'operations management' do?

Manages people, equipment, technology, materials, and information

What is opportunity costs def?

Money sacrificed when other opportunities are chosen

Defining the function of management - Controlling

Monitor progress; adjust if no progress

What are the four functions of management?

POLC 1. Planning 2. Organizing 3. Leading 4. Controlling

Define elastic price

Price change causes a substantial change in demand or supply (nearly horizontal line; many substitutes available)

Define inelastic price

Price change does not cause demand or supply to change very much (almost vertical line; typical of monopoly)

What is the def for demand curve?

Price determines how many goods or services a consumer is willing to buy. - At higher prices, consumers buy fewer - Lower prices consumers buy more

What is cost/benefit analysis?

Process to estimate strengths and weaknesses of alternative

What do you get if you have value proposition and customer segment from the business canvas model?

Product-market fit

What is hyperinflation?

Rapid, excessive, and out-of-control general price increases in an economy, typically measuring more than 50% per month

Are accounts receivable an asset or liability? Accounts payable?

Receivable is an asset. Payable is a liablility

What is the formula for revenue?

Revenue = Quantity x selling price

What does SOM stand for?

Serviceable Obtainable Market (SOM is more geographic)

What does SAM stand for?

Serviceable available market (e.g. fast food industry?)

Defining the function of management - Planning

Set goals; determined how to achieve them

What is operations management theory of Six Sigma? What are some tools it makes use of?

Six Sigma focuses on quality. The word "six" references control limits which are placed at six standard deviations from the normal distribution mean. Tools used within the Six Sigma process include: - trending charts - potential defect calculations - other ratios

What do businesses DO?

Solve a problem for customers or.... create an opportunity which previously did not exist

In Chap 9 of Bennis' book, he stated that, "All organizations, especially those that are growing, walk a tightrope between _____ and _____, _____ and ______."

Stability; change Tradition; revision

What are characteristics of the strategic type of operation management decisions?

Strategic: - Broad in scope - Long-term in nature - All-encompassing (i.e., What are our unique product features which make us competitive?)

What are characteristics of the tactical type of operation management decisions?

Tactical: - Narrow in scope - Short-term in nature - Concerns a small group of issues (i.e., Who will work 2nd shift tomorrow?)

Define operations management. What are the 3 responsibilities?

The business function responsible for planning, coordinating and controlling the resources needed to profitably produce a company's products or services

What is the supply and demand curve?

The equilibrium point is where the supply and the demand curve intersect

What is the def of pricing strategy?

The method or methods companies use to optimize the price of their products and services

What is the def for supply curve?

The more a consumer is willing to pay, the more a supplier wants to sell. - Low price = lower quantity producer - High price = higher quantity produced

Define gross profit.

The profit a business makes after subtracting all costs related to manufacturing and selling its products or services

What is the def for microeconomics?

The study of individuals and business decisions

What is the expectancy theory? What is the other name for it?

The theory that individuals are motivated to perform if they know that their extra performance is recognized and rewarded. Otherwise known as pygmalion effect. **Problem is it assumes everyone is going to react the same

What is the definition of corporate culture?

The values, beliefs, and behaviors that determines how a company's employees and management interact, perform, and handle business transactions.

What is Theory X vs Theory Y?

Theory X: people dislike work; must be coerced and directed toward company goals (avoids responsibility) **Best in predictable, repetitive work environments Theory Y: people have intrinsic interest in their work, a desire to seek responsibility and a capacity to be creative in solving business problems (seeks responsibility) **Best for uncertain tasks and extensive problem solving

What is the primary purpose of SWOT?

To identify factors that impact a company's functioning and offer useful information during the strategic planning process. It can lead to more careful and informed decision-making.

What does TAM stand for?

Total available market.. (Every dollar spent on a retail basis in a certain segment)

T/F: A longer CCC means it takes a longer time to generate cash

True

T/F: Action > Planning. A good plan executed now is better than a perfect plan executed next week.

True

What is the definition of a vision statement?

What a company desires to achieve long term - ALWAYS WRITTEN IN FUTURE TENSE

What is the value proposition section of the business model canvas?

What value do we deliver to the customer? Which customer problem will we solve? Which customer needs are we satisfying? What are we offering each Customer Segment? Characteristics: newness, performance, customization, "getting the job done", design, brand/status, price, cost reduction, risk reduction, convenience/usability, accessibility

What is product-market fit?

When a company's target customers are buying, using, and telling other's about the company's product in numbers large enough to sustain that product's growth and profitability

Define the breakeven point.

When costs and revenue are equal

What does the term "dumping" refer to?

When products are sold below cost

Defining the function of management -Organizing

Where decisions are made; who does what; who works for whom

What are the two parts to the business model?

costs and pricing

What is the definition of working capital?

current assets - current liabilities

In Bennis' book, he quoted author Peter Drucker stating, "The chief object of leadership is the creation of a _______ held together by the work bond for a ________. ~Peter Drucker"

human community; common purpose

Definition of strategy?

long-term plan created by a company to reach their desired, future state

Revenue - costs =

profit or loss

The best pricing strategies maximize both _______ and _______

revenue; profit

Define net profit.

the gross profit minus all operating, interest, and tax expenses over a given period of time