My own MGT FINAL LECTURE

Difference between international and global company

International companies export goods foreignly, but have limited foreign investment. Global companies operate in many different countries, heave headquarters and manufacturing in foreign countries, lots of foreign investment, top managment from different nationalities.

Why trade? examples with countries

companies have excess recourses to use up and cost reduction, companies have absolute and comparative advantages, so they can get goods for less opportunity cost. saudi arabia has lots of oil, manufacturing is cheap in china. Some things also can only be produced in one place, champagne in champagne france. parmesean cheese in parma italy

risks of trade

data leaks, exchange rate volatility, regulations, social cultural differences can lead to mistakes, some domestic groups and companies may lose

canadian dollar affect economy

if canadian dollar depericates, we buy less from foreign countries, but foreign countries buy more form us. So net exports increases, GDP increases

why care about cultur during trade? - examples

different cultues act differently, do not want to offend others, but instead build good relationships with them. understand how they do business, understand their language. japan drink didn’t do well in usa since it had word sweat in it; Chevy nova did bad in mexico because it means no go in spanish

Some examples of cultural differences

china: gift giving is part of culture and building relations, but watch means your death is coming, green hat means your being cheated on. India touching elders food is sign of respect. signing in red pen in Korea means misfortune. in greece high five is middle finger. in UK peace sign is middle finger. in dutch people ask for money when they feed their kids friends

international business ethics - why important

dont want to be exploiting children or standards in other places, its a bad look. child labor - shein, nike, zara, nesley.

why are trump tarriffs bad

the goods are more expensive for consumers. despite new jobs created, each job costs a lot. steel tarrif, world demand for US goods go downs from resentment, downstream industries are hurt and there ar job losses since price of steel goes up for all the downstream industries. there is political tensions

specfic bads for tarrifs for USA and Canada

increased political resentment, demand for canadian dollar decreases, higher costs for companies in canada, consumer prices go up,

potential goods from tarrifs for USA canada

usa political leverage, usa less reliance on canadian goods, helps develeop protected industries, canada can expand its trade partners

why are tarriffs dificult to remove

you can use them as bargaining tool, there is reduced competition, domestic companies might retaliate and start lobbying

explain care > commerce

if you are too focused on profit you can lose the company and the companies sight for being and purpose

leadership principles

1. care > commerce

2. culture eats strategy

3. ask why five times

4. take your jobs seriously, but not yourself

5. authority = respect - make sure every decisions you have the responsibility to explain yourself

6. optimism wins

how often strategy is talked about?

almost daily now, set 12 month strategy, and also long term 10 year plan

little s strategy

continuous imporvement and finding ways to do things better on a daily basis.

Big s strategy

bigger decisions, like a new product or changing locations

five different stages / crisis of companies

1. creativity / leadership crisis: company becomes big enough where one leader cannot make all deciisons

2. direction/autonomy crisis: middle managers struggle to have freedom to make decisions

3. Delegation/control crisis: more employee power but top level management loses control over consistency and strategy

4. Coordination/Red Tape crisis: rigid procedures and regulations stifle growth

5. Collaboration/Internal Growth crisis: burnout and inability to further innovate lead to demand of new growth strategy such as new alliances

issue of always keeping same execucitve team?

they only have the same solutions, so you need new people to have new ideas and solutions and make new decisions

why do strategies fail (KNOW THIS)

1. lack of clear vision - top level management must translate ideas into actionable steps, not just ideas

2. poor execution - no discipline in company

3. resistance to change - employees do not like change, and so companies dont invest in change enough

4. insufficient resources, skills, tools - not enough money or not the right team

5. (BIG ONE) Failure to adapt to changing conditions - most people dont change strategies even when things change, if there is a 3 year strategy but after year 1 big change, cannot keep the same strategy, but people have COMMITMENT BIAS, so they reject new information coming in.

6. weak preformace measurement

7. too much at once

biggest mistake for early founders

not the right mentors or advisors

strategy cycle

strategy <-> Operating Plan <-> Results - this is the cycle, constantly changing and adapting

S curve strategie

early phase- company doesnt grow much, then hits the markets and the strategy grows, and then mature phase not much growth

jumping s-curve - example with shoppers

instead of stopping when you become mature, you add new big things to company to keep having new s-curves: shoppers was pharmacy, then added health and beauty, then added groceries and food, now looking to do healthcare services for the community (rehab, mental health). Use M&A to help with this

why is pace important in company

is the pace is too fast, people burn out and the growth fizzles out

Practical Framework to execute Strategy (IMPORTANT)

1. Right Team: trust one another → engage in conflicts with decisions → commit to decisions → hold one another accountable → focus on achieving collective results

2. Discpline: Exec is healthy, everyone is aligned with same goal, good communication so info is moves quickly and accurately, always look at feedback, all employees have good reflection

3. Buy in: culture of performance (no C players all A players), celebrate wins!, its ok to fail, ceo always open for communication

what is the foundation of strategic analysis

your competitve advantage, what makes you better than other, also is it sustainable so are you valuable and rare

internal vs external analysis - examples for apple and amazon

internal = company streagnths, for apple its tech, for amazon its distribution. external analysis is for the outside world and market, USA is more obese than canada, government or wars going on

analysis of industry environemnt

resource suppliers, competitors, customers

TESLA SWOT ANALYSIS

Strengths (internal): Loyal customers, eco friendly, brand recognition

Weaknesses (internal): Some people dont like Elon Musk, high costs

Opportunites (external): Growth in EV Market, oil prices going up from war is good for them

Threats (external): New chinese EV’s coming to market

three types of strategies

growth, concentration, and diversification

types of diversification strategies

related diversification (google buys out a new tech startup), unrelated diversificaition (rogers buys sky dome), vertical integration (pepsi buys customer or supplier)

AVIS - how did they restructure, what went wrong

during covid, no one was travelling so no one was renting cars, so they ended up selling cars, but when the economy reopened, they had no cars left so they were at a huge loss

how to formulate restructuring and divestiture strategies / opportunites for competitive advantage!!!

1. cost and quality - toyota has low cost good quality

2. knowledge and speed - rogers being only to support iphone in canada so they have advantage

3. barriers to entry - pfizer (patents)

4. financial resources - cross subsidizing (tim hortons in US)

what happened to eatons?

they were like macy’s, but wanted to be higher class, so they brought in upscale items and renovated stores, but failed since in the eyes of the customer they were old school

what happened to ashley madison rebrand?

after data breach, they tried to change and become normal dating app, but failed since in the mind of the consumer they are a cheating app

strategy vs tactic

strategy is high level, tactic is low level (td closing a branch is tactic, but general electric creating a new service is a strategy)

Porters Five Forces

1. new entrants/ threat of new competitors - how easily can others enter the market

2. suppliers - how much ability do suppliers have to raise prices and lower quality

3. substitute - risk of customers switching to product in different industry

4. customers - how much ability the customers have to drive down prices based on demand (high if there are many alternatives)

5. industry competition - level of competition against similar companies in the same industry

BCG Matrix

• dog = poor position in low growth industry

• cash cow = dominant position in low growth industry

• question mark = poor position in high growth industry

• stars = dominant position in high growth industry

TARGET CASE STUDY - why did they fail in canada

• they tried to open 133 stores in one year very quick

• they had poor locations

• they thought Canadians and americans were the same, but Canadians more diverse, less obese, improper french labeling

• prices were not competitve

• they didn’t think about how less concentrated canada is than the united states, so the warehouse locations and ratios for stores was off

• this with poor logistics and IT was causing many supply chain errors, so they had overstocked warehouses and empty stores

• they didn’t control the location and layout of their stores

• they didn’t differentiate, they didnt’t bring their own private label to canada

what could’ve target done better?

• take their time and expand more slowly

• hire more canadian top management

• bring their own unique brands into stores

• better research on canadian consumers and competitors in canada

what did walmart do better than target

• bring their own brand

• cheaper prices

• be precise and planned better

• very efficient with systems

costco tactics to make profit

• no isles or signs so you get lost shopping

• maze like - treasure hunt pyschology

• always has brings in new products at low price to create urgency that you need to buy it now before its gone (artifical scarcity)

  • big families and small companies buy lots of their stuff

• turns shopping into a hobby - look forward to new items

• bulk for cheap - they make 92% of revenue from membership

• nice workers and free samples

• SUNK COST FALLACY to make up for membership you feel like you need to buy a lot and benefit from cheap prices

threats / advice for costco

• amazon is a threat since its all online more convenient

• treasure hunt method harder to replicate online, and everything is going digital

• they should be on uber eats

• cater more to organic

• better online presence

• they should provide student discounts and appeal to new generation

• move to other markets

three ways companies hire

• knapsack - knowledge, skills, experience

• heart - values and interest

• head - behavioral drives and cognitive ability

personality impact on job preformance

20 - 25% of an individual employees effectiveness on the job is attrituable to their persoanlity,.

personality. isthe dynamic organization within the individual of those psychophysical systems systems that determine his or her unique adjustment to his or her environemnt

personality is what permits a prediction of what a person will do in a given situation

how many people thought they are self aware vs how many people are

95% thought they were, 15 % are

predictive index measurements

• A drive -  dominance: how independent or collaborative with respect to instructing others

• B drive - B - Extraversion: how social or how reserved

• C drive - patience: how steady or how driving

• D drive -  formality: how precise and detailed, or how flexible

three graphs for predictive index

top graph tells us core drives

second graph is based on how you present in environment

third graph is decision making style

what is anthropogenic climate change

climate change caused by human activity

how to respond to anthropogenic climate change

individual level - turn off lights

government level - enforcing recycling

provincial level

federal level

global level

connection between economy, society, and environment (draw old vs new graph)

can’t have healthy economy without a healthy society, and can’t have a healthy society without a healthy environment.

drawing is (environment outer circle, society middle circle, economy inner circle)

industries at risk from climate change

• agriculture and food production from droughts and changes to ecosystems

• energy and utilities - extreme heat can impact electrical grids

• insurance companies - hard to put a price on insurance when you can’t predict possible huge hurricanes and natural disasters

• real estate and infrastructure - flooding affects houses and resorts

• tourism and travel - people dont visit icebergs or go skiing as much, or beaches get washed away

• construction - people can’t work as well in the extreme heat, limits hours, people have to do construction only at night

industries that could benefit from global warming

• Renewable energy companies

• EV companies and battery manufactures

• carbon capture and hydrogen technology

• critical minerals like lithium and cobalt

• wind turbine component companies

importance of financial statements

• investors use them

• ceo uses them to track progress

• regulators can scan for laws and compliance

• CRA uses it for taxes

• Banks look at it when deciding to give loans

• shareholders care about profit

• suppliers want to see if u can pay them back

bookkeeping vs accounting

bookkeeping: source documents and record transactions in journals

accountants: prepare financial statements and use it to make business decisions

balance sheet

snapshot what we own vs what we owe, assets = liabilities + equity

income statement

how much money made over the last year - reveneu, ebit, net profit

cash flow statment

how much cash came in vs how much cash came out

relevant vs reliable for accounts recievable - exmaple

khan saying how much he will recieve in textbooks - 10,000 in class but some people drop, so based on history he says it will 8,000. 8000 is more relevant but not as relliable

deprication in accounting

allocation of an asset over time - life span of a UPS truck (maybe 10 years)

when should revenue be recorded

when the service is done or the product is delivered, not when the money actually hits the bank.

matching principle

expenses should be recorded in the same period that the related revenue is recorded

types of ratios

• liquidity - measures how much you can meet obligations in short term

• Solvency - how much you can meet obligations in long term

• Profitability - how much money your are making 

• Activity bases - level of operational performance

liquidity ratios

current ratio : current assets / current liabilities

quick ratio : (Cash + marketable securities + receivables ) / current liabilities OR (current assets - inventory) / current liabilities

- want to be higher, but if its too high it could mean you are sitting on too much cash and not investing enough back into company. if its too low, you owe too much. (samsung’s was higher)

Solvency / leverage ratios -

debt to equity and debt to assets

total liabilities / total assets

total liabilities / total equity

you want both to be lower, lower means you can pay long term debt, higher means its riskier since you have lots of long term debt.

if its too low it means you might not be investing enough

(samsung was lower)

profitability ratios

return on sales: net income / net sales

return on equity: net income / owners equity

want this to be higher, means you make more for how much sales or how much equity you have, higher means you provide more from an investment. if its too high though got to look at the context of how much was sold, and could signal future volatility

(apple was higher)

activity ratios -

inventory turnover ratio: cost of goods sold (cogs) / average inventory

how quickly you sell inventory, higher is better means you are selling things faster, but if its too high it could signal you can run out of stock and run into supply issues

RBC and BMO profit loss case study - what happened

loan provisions is how much you think you are not going to get from loans, the higher this is the less profit you make. bmo and RBS loan loss provisions went up 500% during covid

amazon key factors of for operational management

• very fast shipping because of lots of fullfilment centers

• rates for employees

• using data to know what you want to buy

cheetah and gazelle and amazon

cheetah and gazelle is whne big comany and small company agree to terms and a deal, then the big company makes them dependent on them and switches the terms and makes them go out of business. amazon gets weakest gazelles hooked on them

strategic decisions amazon did well

• didn’t make profit for 20 years - focused on long term - knew they needed big logistics network to be successful - when they started their cheap shipping lost them money, but now they can do it bc they have so many people

• they cross subsidized using amazon web services to be able to do this

reasons for YES canada charge amazon for antitrust lawsuit

• bought lots of companies to have monopoly

• squeezing out smaller companies (cheetah and gazzelle) is anti competitve

• lower prices to drive others out of market

reasons for NO canada charge amazon for antitrust lawsuit

• they deserve the money after taking risk and losing for 20 years

• provide good value to customers - quick shipping and people trust it

reasons amazon is bad for new startups

• amazon takes out startups through cheetah and gazelle

• hard to compete with them when they change terms

reasons amazon is good for new startups

• smaller companies have a chance to be on a big website like amazon and gain exposure

• gives smaller company opportunity to compete

• people can copy their website design and data tactics

Should amazon continue their international sector? for NO

• current war is making International business harder and more expensive

• rising oil makes shipping prices go up

• lack of travel in middle east makes it hard to move goods

• established competitors around the world in other countries (like JD in china and Flipcard in India)

• lots of Anti US sentiment in the world

Should amazon continue their international sector? for YES

• their international sales and profit have had a general upward trend

• its their history to lose money for a period of time before making big profits - they could continue to build the operations and infrastructure

• fluctuations are only short term (revenge shopping from covid, or lower profits from war and shipping costs from oil)

possible bonus: time is a ______ not a _______

time is a feeling, not a measurement

possible bonus: tony robbins how to change ur life with focus

change your life by changing your focus

dont focus on wrong things and reactions - like focusing on stress, or instant gratification

possible bonus: know the difference between _________ and _________ your future

know the difference between enjoying your youth and destroying your future

possible bonus: OPA

Outcome comes first, then purpose and why you want to do it, then the action.

possible bonus: three dimensions / Time targets

dimensions of delusion - urgent but not important - random text

dimensions of demand - urgent and important

dimensions of fulfillment - non urgent but important

possible bonus: four parts of IKIGAI

what do you love

what are you good at

what does the world need

what can u be paid for

six steps of accounting cycly

1. analyze source documents

2. record transactions in the jounral

3. post it to the ledger

4. create a trial balance

5. create financial statments

6. analyze financial statements

difference between ledger and jounral

jorunal transactions are in chronological order but ledgers are grouped by accounts

why did target want to move to canada

• they were doing very well in USA

• canadians spoke same language

• zellers was going out of business and selling all their locations, rent was cheap

• their colors match canadian flag

explain coal to new castle

coal is easy to extract in newcastle (England) so they have the qbsolute avantage, but during insutrial revolution the workers went to work better jobs, so England had the comparative advantage in manufactured goods, so france and germany exported coal to england

How to cook books

Late recognition of expenses or early recognition of revenue or inadequate reserves