24F RSM100 Lecture Remember – Lecs 1-5 [Pre-Midterm]

3Ps of Success

Planning, Preparation, Perseverance

Sean Mullin’s Quote

“Networking isn’t about who you know, it’s about who knows you.”

Networking 2 Rules

#1 Show Up, Be Seen
#2 Give by asking questions

4 Things for Wealth creation

1. Combination of inputs

2. Supportive environment

3. Means of production

4. Someone willing to pay for more than costs

Diamond of Sustainable Growth

1. Entrepreneurship

2. Managerial capabilities

3. Political systems

4. Financial systems

Wealth Creation Example

Khan’s house flipping – Refurnish for $ but sell for $$, massive ROI

4 Forms of Business Ownership

1. Sole proprietorship

2. Partnership

3. Corporation

4. Not-for-profits

Pros & Cons for Sole Proprietorship

Pros:

• Easy to form & dissolve

• Easy Decision-making

Cons:

• Unlimited liabilities

• Not separate legal entity – lawsuits.

Pros & Cons for Partnership

Pros: Still relatively easier to form; decision-making.

Cons: Harder to dissolve; unlimited liability unless LLP.

Pros & Cons for Corporations

Pros:

• Funding

• Larger scale

• Can exit

• Less financial liability

• Perpetual life

Cons:

• Double taxation

• Complicated decision-making

• Complex structure

• Governmental regulation

• Inflexible

Types of Preferred Shares

1. Convertibles – Can convert to common shares

2. Redeemables – Stockholders can ask for refund

3. Participating – Stockholders can participate in claiming residual assets

4. Cumulative – Stockholders can receive dividends for previous years without dividends

5. Callable – Company can buy back share at the time indicated on the share.

Franchising examples

Subway, Tim Hortons ($500K net worth; $100K liquid assets)

Franchises: There are XXX franchises operating under XXX brand names. They employ more than XX Canadians and generate more than $XXX in sales each year.

There are 76,000 franchises operating under 900 brand names. They employ more than 1 million Canadians and generate more than $100B in sales each year.

Franchisee Adv and Disadvs

Advantages:

• Prior performance record

• Proven business model

• Name value

• Tested management program

• Savings through volume purchases

Disadvantages:

• Initial franchising fees

• Royalties

• Strict franchising agreements

Small business fail rate for 1,3,5 years?

• 3% → 1 year

• 15% → 3 years

• 30% → 5 years

3 Reasons Why Small Businesses Fail

1. Management inexperience

2. Inadequate financing

3. Meeting government regulations

Business plans are beneficial because they ensure that entrepreneurs…

1. Prepare resources

2. Stay focused on key objectives

Key components of a Business Plan

• Executive summary – 5W1H

• Introduction – concept, purpose, and objectives

• Financing & marketing plan

• Résumé of principals

What does “entrepreneur” mean to different people?

1. Working for oneself

2. Bringing innovation/improvements

3. Operating a firm that is not separated from its owners

4. Discover/evaluate/exploring opportunities

5. Creating new organizations

Characteristics of entrepreneurs

1. High energy

2. Vision

3. Need to achieve

4. Self-confidence

5. Tolerance for failure

6. Creativity

7. Tolerance for ambiguity

8. Internal locus for control

Why entrepreneurs?

1. Be your own boss

2. Job security

3. Financial success

4. Improve quality of life

Pros and Cons of Entrepreneurship

Pros:

• Appeal of ringing inventive ideas to life

• Enjoyment during launching a business

Cons:

• Difficulties in raising funds

• Reality is often different than what is planned

• High failure rate

3 Differences Between Small Businesses and Entrepreneurial Businesses

1. Size – SB remains small; EB are expected to grow rapidly

2. Age – SB does not usually develop with time; EB “grows up”

3. Growth goals – SB owners might not WANT to grow; EB prioritizes growth (will even sell stakes)

David Birch Model

• Mouse: Small, agile.

• Gazelle: Seeks rapid growth, should double in 4 years; might have radical strategies/innovations.

• Elephant: Forbes 500, not very adaptive.

Starbucks Case Study: List the Issues

1. Long wait times

2. Incomplete mobile orders

3. Consumers are price-conscious

4. Oversea’s market: China ↓14%

5. Falling stock prices

6. Shops wants to unionize

7. Social issues – Israel-Hamas war

8. Change in brand image

Starbucks Case Study: Goals & Solutions

Goals: Experience & Value

Solutions:

• “Coffee-forward innovation”

• “Experiential, not just transactional”

• Building connections

• Not just a “hang-out” spot

• Promotions to lower prices

• Siren-craft system to shorten wait times

  • Automate ingredients

  • Streamlining in-store operations

• “Play caller” to help during busy hours – hire more people and pay them better

• “Digital production manager” (iPad) to re-order drinks logically.

Starbucks Case Study: What does Brian Niccol bring?

Innovative menus.

“Human element to lead a CULTURE CHANGE VALUE-DRIVEN enterprise.”

Starbucks Case Study: Potential Solutions

1. Streamline operations (Efficiency ↑ but connections ↓)

2. Renegotiation supply contracts (lower inputs but time-consuming and can look like bully)

3. Close underperforming stores (Price ↓ but more firing and what if performances increase back?)

4. More digital/mobile offerings (Efficiency ↑ but alienates non-digital customers)

5. Addressing labour union issues

6. Diversifying product offerings (more customers but also more costs and dilutes brand)

7. Global expansion (access new markets, but need to localize)

5 Industries for Small Businesses?

1. Retail trade

2. Construction (Forestry)

3. Professional, scientific, and tehnical services

4. Healthcare and social services (Non-institutional healthcare, accommodation & food)

5. Other services

Contributions of small businesses

• Create new jobs (2/3 of employment)

• >29% of GDP

• Create new industries

• Offer customized services

• Encourage inovation

Pros and Cons of Home-Based Businesses

Pros:

• More control of business

• More control of personal time

• Lowers start-up and operating expenses

Cons:

• Owners can feel isolated

• Less visibility to customers

Industries with Co-Op?

1. Agriculture – farmer co-ops

2. Retail – consumer co-ops (e.g. REI, Coops UK)

3. Finance – credit unions (e.g. Vancity Credit Union)

4. Energy – energy co-ops (e.g. Co-Op Power USA)

5. Healthcare – healthcare co-ops (e.g. Health Partners USA)

6. Real Estate – housing co-ops.

Who creates wealth?

• Entrepreneurs

• SMEs

• Large corporations

• Government institutions

Assistances for small businesses

• Investors, government (subsidies, supply infrastructure, tax incentives)

• Business Development Bank of Canada (BDC) – financial, advice, consulting

• Canadian Small Business Financing Program (CSBFP) – can help pay back 85% of loan if SB fails to pay; back up for loaning

• Business Incubators – shared facilities (Canadian Acceleration and Business Incubation, CABI)

Management with Purpose Example

McKinsey & Company: 10% of companies create 90% of total economic profits

6 Key Responsibilities as CEO

1. Setting the direction

2. Aligning the organization

3. Mobilizing through leaders

4. Engaging the board

5. Connecting with stakeholders

6. Managing personal effectiveness

Setting Vision & Ethical Standards Examples

Medtronic: Not focused on revenue, but rather how long it takes until someone is helped by their product: 100 sec → 7 sec

Levi’s: Reduced waste, recycled clothing, incentive for repeat customers

3 Benefits of Setting High Ethical Standards

1. Stable workforce

2. Job satisfaction

3. Customer loyalty

4 Managerial Functions

• Planning

• Organizing

• Leading/Directing

• Controlling

[Definition] Planning

Anticipating future events and decision making

Types of Planning, Time frame, and Levels

Strategic	Long-term	Top
Tactical	Short-term	Middle
Operational	Day-to-Day	Supervisory
Contingency	Crisis	Mostly Top but all contribute

Importance of Planning Example

Mastercard: Competing with 85% cash instead of 15% of other credit card companies.

Vision: Long-term strategies; things aren’t what they seem.

6 Steps of Strategic Planning

1. Define the mission

2. Assess competitive position

3. Set objective

4. Create strategies to differentiate

5. Turn strategy into action

6. Evaluate & refine plan

SWOT Analysis

• Leverage Strengths & Opportunities

• Problems are Weaknesses & Threats

• Weaknesses Constrains Opportunities

• Strengths are Vulnerable to Threats

Strategic Planning Example

BestBuy: What did they do?

1. E-Commerce

2. Higher base pay

3. Corporate culture – enriching people with technology

4. “Conference” for vendors to showcase their products.

5 Steps to Decision-Making

1. Seeing the problem/opportunity

2. Assessing possible courses of action

3. Evaluate options

4. Select & carry-out plan

5. Evaluate result

Tendencies in Decision Making (and examples)

J.P. Morgan: Preparation. Meetings are only for decision-making.

People like to avoid making uncomfortable decisions.

DBS: Rewards and encourages risk-taking, thinking & making choices.

5 Steps for Organizing

1. Determining required activities

2. Grouping activities into logical patterns / structures

3. Assigning activities to individuals

4. Coordinating between groups & individuals

5. Evaluate results

3 Key Elements of Organizational Chart

1. Human interaction

2. Goal-driven activities

3. Structure

5 Types of Departmentalization

1. Product

2. Geographical location

3. Customers

4. Function

5. Process

4 Types Organizational Charts

1. Line

2. Line and Staff – Staff supports line

3. Committee – Groups

4. Matrix – Columns are functional departments; Rows are projects.

Organizing Example

Cleveland: “I’m a Caregiver” – focused on service. Everyone was part of the team, no one could do it alone.

3 Traits of a Leader

1. Empathy

2. Self-awareness – knowing their impact

3. Objectivity – setting precedents

3 Sources of Influence for a Leader

1. Position

2. Experience/Expertise

3. Personality

3 Styles of Leadership

1. Autocratic

2. Democratic

3. Free Rein

Leadership Example

NVIDIA: “I wish pain and suffering upon all of you.” Resilience builds greatness in characters and leads to success.

Engaged, flat organization, “no task is beneath me”

4 Things that Strengthen Corporate Culture

• Symboles

• Rituals

• Ceremonies

• Stories

3 Things that Shape Corporate Culture

• Leadership Style

• Communication

• Work Environment

Corporate Culture examples

Adidas: Help athletes achieve their dreams

Westjet: People & culture, guest experience, revenue & growth, costs.

4 Steps in Controlling

1. Set performance standards

2. Monitor performance

3. Compare standards with actual performance

4. Make corrections if needed

Katz’s Skills Needed for Managerial Success

1. Technical Skills – technique, knowledge, tools, equipment for a specific task.

2. Human Skills – Interpersonal skills to work effectively with people.

3. Conceptual Skills – Seeing the organization as a whole and how each department acts as a unit within. Think analytically & achieve integrated problem-solving.

Mintzberg’s 10 Managerial Roles – Types

• Interpersonal Roles

• Informational Roles

• Decisional Roles

Mintzberg’s 10 Managerial Roles – Interpersonal

• Figurehead

• Leader

• Liaison

Mintzberg’s 10 Managerial Roles – Informational

• Monitor

• Disseminator

• Spokesperson

Mintzberg’s 10 Managerial Roles – Decisional

• Entrepreneur

• Disturbance handler

• Resource allocator

• Negotiator

Productive Matrix

Effectiveness: Goals achieved

Efficiency: Resource Used

Organization as open systems:

• Environment supplies

• Organization creates

• Environment consumes

• Consumers & clients give feedback

Strategic Human Resource Management Example

Google: Airy, comfortable, natural lighting → creativity, high morale.

“Eccentric, academic, no limit.”

Values output over input.

Strategic Management

• Analyzing a company’s competitive situation

• Developing the company’s strategic goals

• Devising a plan of action and allocating resources that will increase the likelihood of achieving these goals.

HR Management is ... employees?

1. Attracting

2. Developing

3. Retaining

3 Main Objectives of HRM

1. Job search

2. Work performance

3. Employee needs

5 Core Responsibilities of HR

1. Planning for Staffing Needs

2. Recruiting and Selecting Employees

3. Training & Evaluating Employees

4. Employee Compensation & Benefits

5. Employee Separation

Recruiting Examples

Monster.ca: Internet recruiting, quick, efficient, inexpensive

Employers look at unfiltered Facebook page. Is it legal? Is it ethical?

7 Steps to Selecting & Hiring

1. Perform job analysis

2. Choose source of candidates (internal v.s externals)

3. Screening

4. Interview

5. Test employees & check references (background check)

6. Follow Up Interview

7. Select candidate & negotiate offer.

Performance appraisals…

• Multiple times a year

• Linked to organizational goals & culture

• Based on objective measures

• 2-way conversation

Peer reviews or 360˚ performance review

4 Parts of a Balanced Scoreboard

1. Financial: profitability & sales

2. Customer: new customers & customer satisfaction

3. Internal Process: efficiency improvements & cycle time

4. Learning & Growth: training & conferences attended

Downsizing Example

AVIS: Car rental company that had a downsizing due to decreased profitability and rising operational costs post-COVID.

5+1 Things Companies Use to Decide Compensations

1. What other companies are paying

2. Government regulation

3. Costs of living

4. Profits

5. Productivity

6. Expectations

Compensation Examples

UAE: Paid by citizenship because that implied the expectations and cultural differences they had for compensations.

Loblaw CEO: Massive salary º should there be a cap?

Examples of Required Employee Benefits

• Canadian Pension Plan

• Unemployment Insurance

• Workers’ Compensation Programs

Types of Flexible Benefits:

• Medical, dental, vision, life, disability insurance

• Flexible PTO

• Flexible Work

  • Flextime

  • Compressed work week

  • Job sharing

  • Home-based work – employers use softwares to monitor employees like Hubstaff

Process of Motivation

Needs produces motivation which leads to goal-directed behaviour resulting in need satisfaction.

3 Types of Job Design that Leads to Motivation

1. Job Enlargement – More responsibilities

2. Job Enrichment – More decision-making

3. Job Rotation – More types of job

4 Forms of Incentive Compensation

1. Profit sharing

2. Gain sharing

3. Lump-sum bonus

4. Pay for knowledge

Maslow’s Hierarchy of Needs

Needs depend on what they have; only unsatisfied needs motivate.

1. Physiological

2. Safety

3. Social

4. Esteem

5. Self-actualization

Hertzberg’s Two Factor Model

• Hygiene – external, tangible, basic “why am I here?”

• Motivation – internal, intangible, extra “why work harder?“

Goal setting theory

Motivated by setting challenging goals and getting feedback in process in achieving them.

Expectancy theory

1. Can results be achieved?

2. Is the result worth it?

Equity theory

Comparing effort & rewards with other people’s; perception of fair and equitable treatment.

Self-determination theory & current trends

1. Autonomy: 63% said they like flex time

2. Relatedness: 65% said they prefer face-to-face interactions.

3. Competence: 80% said they prioritize personal growth

4. Growth

5 Steps of Management by Objectives (MBO)

1. Set series of related organizational goals & objectives

2. Set specific individual objectives

3. Participative decision-making

4. Set time period to accomplish

5. Evaluation & feedback

XYZ Theories

• X Theory: Assume employees don’t like their job – must be forced.

  • Motivated by lower needs ($, job security)

• Y Theory: Assume employees like work – seek responsibility.

  • Motivated by higher needs (self determination)

• Z Theory: Working involve, mix of X & Y.

WFH Case Study: Bay Street Current Trends

• 2% vacancy rate pre-COVID → 7.2% in 2021.

• Shrink: TMX, Finastra, Kingsdale

• Growing: Amazon, Shopify, Google

• Most are working on a hybrid model

WFH Case Study: 3 Must Do’s when WFH

1. Get comfortable – chairs, desks, well-being

2. Build boundaries – separating work and life

3. Team interaction – reaching out casually

WFH Case Study: What will happen to the office?

• Might reshape purpose of cities

• Gender equality: women have more face-to-face jobs; moms get disturbed more than dads.

• Office came from Industrial Revolution factories. Are we going back to before that?

• Shift back to paying for function and output, not hours.

• 5 jobs depend on one knowledge gob → influence on local economy

Future of Remote Work Case Study: Advantages

• More productive

• Better mental health for some

• Sustainability

• Lower cost

Future of Remote Work Case Study: Disadvantages

• Distractions for some

• Worse mental health for some

• No corporate culture

• Those who weren’t working in-person got overlooked during promotions – two-tier jobs.

Future of Remote Work Case Study: Strategies

Mandatory in-house hours or socials

Future of Remote Work Case Study: Issues

Modern buildings that aren’t good to be turned into residence buildings

Future of Remote Work Case Study: Age Group Trends

• Young people want in-person for mentorship

• Older people have obligations and prefer hybrid/remote for balance & flexiblity