Untitled Flashcards Set

▪ areas of management financial manager, production & operations manager, human resources manager, marketing manager, information technology manager, administrative manager 2 party value chain and multi party value chain (or extended value chain): both the firm and buyer can capture value, WTP - C 2 types of competitive advantage temporary and sustained accounting recording, measuring, and understanding financial information. Many people and organizations rely on this information to analyze how a business operates accounting equation assets= liabilities + owner's equity accounting involves broader and interpreting those records to make financial decisions adam smith the value of goods and services is determined by the amount of labor required for their production, the process of "adding up" an information works in 3 simple steps input, processing, output, feedback annual report document prepared by the company at the end of each fiscal year that summarizes its financial performance, position, and overall activities during the year, aimed at shareholders and investors, gives a snapshot of a company's financial health and strategic direction apple's profit price they sell to stores-cost of assembling the phone assets things a company owns that have value including cash, inventory, land, equipment, buildings, tangible things assets are broken into cash, inventory, equipment audits systematic examination and evaluation of a company's financial statements by an external auditor to ensure that they are accurate, fair, and align with accounting standards, provide external assurance that the financial statements balance sheet lists what the company owns (assets) and owes (liabilities) bookkeeping keeping daily records of financial transactions broad cost leadership selling to many customers at low prices broad premium price selling to many customers at higher prices Budget shows excepted money coming in and going out over a specific period of time business analytics the use of data, information technology, statistical analysis, quantitative methods, and mathematical or computer based models to help managers gain improved insight about their business operations and make better, face based decisions business analytics is a combination of data, statistics, and optimization techniques to help businesses make better decisions business intelligence facilitating the collection, management, analysis, and reporting of data, answers questions like "how many units did we sell last month" "what products did customers buy and how much did they spend" buyer end consumer buying marketer must understand buyer's needs and desires to determine what products to make available capacity maximum load that an organizational unit can carry or operate certified public accountant work for the public, they help prepare financial reports, file tax returns, and check the accuracy of financial statements, either work for themselves or big firms communication system provides the interface necessary for the user to interact with the data and model management components companies can increase value by 2 things raising willingness to pay, and lowering costs competitive advantage doing things better than your competitors, charging less for superior products, and responding to customers and suppliers in real time all add up to higher sales and higher profits that your competitors cannot match computer assisted design (CAD) used to develop 3D image, then the CAD file is sent to the printer and the printer is able to use layers of liquid, powder, paper, or metal to construct a 3D model computer assisted manufacturing (CAM) monitor the transformation process gathering information about the equipment used to produce the products and about the product itself and it goes from one stage of the transformation process to the next computer hardware physical parts you can touch- like computers, keyboard, screens, storage drives, and devices that help computers talk to each other. They handle input (typing), processing (calculating), and output (displaying results) computer software set of instructions (programs) that tells the hardware what to do- like how to open a document or run a game. It makes sure all the hardware works together smoothly Concentration approach approach where a company develops one marketing strategy for a single market segment (focus only on customers who want top quality, durable bikes for serious mountain biking allowing them to specialize and build a strong reputation within that niche) considerations associated with the operations process standardization, modular design, customization, capacity consumer benefit WTP - Price (how much of a deal the buyer got) Consumer surplus WTP - P, the maximum amount buyer is willing to pay and the actual price the buyer pays consumer's benefit difference between wtp and price contingency planning preparing for emergencies or disasters so the company knows how to respond quickly and effectively if something goes wrong controlling process of evaluating and correcting activities to keep the organization on course cost the money a company spends to make the product cost what the seller pays or producer pays to produce or acquire product cost leadership focuses on minimizing costs to offer lower prices than competitors cost of goods sold total cost to produce or buy the products that a company sells during a specific period customer and supplier intimacy when a business really knows its customers and serves them well, the customers generally respond by returning and purchasing more, the more a business engages with its suppliers, the better the suppliers can provide vital inputs customer segregation identifying key customer groups in retail and insurance customization making products meet a particular customer's needs or wants data management databases to store and manipulate data data management technology special software that organizes and manages data on storage devices 9like hard drives) so it can be easily found and used when needed data mining uses statistical and analytical tools to identify patterns in large datasets david ricardo agreed with smith, eventually introduced the theory of comparative advantage debt investors they lend money to the company and expect regular interest payment and repayment of the loan Decision Making recognizing & defining the decision situation, developing options, analyzing options, selecting the best option, implementing the decision, monitoring the consequences Decision support systems combined business intelligence concepts with operation research and management science models to create analytical based computer systems to support decision making decisions support systems include 3 components data management, model management, communication system depreciation when a company slowly reduces the value of something expensive it bought (like equipment or a vehicle) over time, instead of counting the full cost all at once. Shows how the item loses value as it gets older or wears out descriptive understanding past performance Descriptive analytics use of data to understand past and current business performance and make informed decisions, it categorizes, characterizes, and consolidates data to transform it into useful information, summarizes data into reports and charts, and helps identify problems, and opportunities digital firm company where most of its important interactions with customers, suppliers, and employees happen through digital tools and technology directing motivating and leading employees to achieve organizational objectives, good directing involves telling employees what to do and when to do it through the implementation of deadlines and then encouraging them to do their work Direction in which goods and payment flows in the Industry Value Chain: goods flow from left to right in the value chain while money flows from right to left disadvantage of debt investors their returns are limited to the agreed interest payments unlike equity investors who might earn more if the company does well disadvantage of equity investors take more of a risk but if company does well, they earn higher returns through increased prices, they get their earnings from what is left after the company pays all its expenses and debt double entry booking system of recording every business transactions in two accounts to keep the accounting equation balanced economic order quantity model identifies the optimum number of items to order to minimize the costs of managing (ordering, storing, and using) them economic value which is how much something is worth in terms of money based on what people are willing to pay efficient inbound logistics Efficient inbound logistics can reduce costs and improve quality of inputs which can contribute to buyer willingness to pay efficient marketing and sales Effective marketing and sales strategies can boost demand, drive brand loyalty, raise barriers to entry for rivals, and affect product price and willingness to pay efficient operations Effective operations can enhance product quality and reduce production costs efficient outbound logistics Efficient outbound logistics ensures timely delivery and enhances customer satisfaction efficient service Effective service can increase customer satisfaction and repeat business while also affecting firm average costs. equity investors they buy shares in a company and become part owners. They expect profits in the form of dividends or an increase in the value of their shares example of operations management in a service business Airline transforms inputs (employees, time, money, equipment through processes such as booking flights, flying airplanes, maintaining equipment, and training crews) The outputs of these processes is (flying passengers and packages to their destination) facts about strategy The goal of business strategy is to improve long term performance, help a company maximize long term success Strategy helps coordinate different parts of a company, a company has different teams each with its own priorities Strategy requires an explicit consideration of rivals, strategists must consider how competitors might react to their actions The fundamental fact of strategy: the fact that profits vary significantly across industries and within industries, some industries offer higher profit potential due to their structure and there are fewer competitors Tradeoffs in business strategy: a good business strategy requires choosing what a company will not do as much as what it will do, firms must accept tradeoffs because they cant do everything at once feedback where the system uses results to improve itself (adjusting restocking based on customer buying pattens) financial accounting annrefers to the application of financial accounting information to meet the needs of external users, such as investors, creditors, analysts, and government authorities, goal is to provide transparent, reliable, and comparable financial information to these stakeholders to make informed decisions financial statements these documents summarize the company's financial health Financing marketer arranges credit to speed up the purchase (helps people buy something by offering payment plans or credit so they can pay for it over time instead of all at once making it quicker and easier for people to make purchase firm profit price and cost (how much the company makes her item) first line managers oversee the workers and daily tasks, make sure the plans from middle managers are followed and help employees do their jobs well by giving direction and feedback five competitive forces that affect industry profits powerful suppliers, powerful buyers, substitutes, industry rivalry fixed position layout brings all resources required to create the product to a central location For a firm to successfully use a concentration or multisegment approach: Customer's needs for the product should be different from each other The market segments need to be easy to identify and separate The market should be divided in a way that allows you to estimate sales, costs, and profits for each segment At least one segment should be profitable enough to create and maintain a specific marketing plan The firm (company) must be able to reach the chosen market segment with a targeted marking approach Formula for value creation Value created= WTP - Cost functions of marketing buying, selling, transporting, storing, grading, financing, market research, and risk taking Grading standardizing products by dividing them into subgroups and displaying/labeling them so that consumers understand their nature and quality (many products like meat are graded accordingly to a set of standards that often are established by state) gross profit is the amount of money a company makes from its core business activities after subtracting the cost of goods sold (COGS) from its revenue. health care improving scheduling, patient flow, and predicting health risks how can businesses succeed? when they create value and capture enough of it to make a profit how can firms capture value? Increase in WTP contribute to value creation but not necessarily value capture Firms can affect WTP and costs but only a decrease in costs while maintaining WTP will lead to value captured Not all increases in WTP lead to an increase in prices so value from WTP increase can benefit buyers as consumer surplus rather than improving firm profitability (even if people are willing to pay more for a product, it doesn't always mean the price will go up, if price stays the same, extra value people are willing to pay benefits the buyers instead of the company. The extra benefit is called consumer surplus which is the difference between what consumers are willing pay and what they actually pay) WTP increases can lead to greater sales volumes, lowering average costs enabling value capture How can firms create value? Increase average WTP:Product innovation, Improved marketing, Better services Decrease average costs: Process innovation, Cheaper materials, Efficient logistics how do you implement marketing concept? firm must have good information about what consumers want, adopt a consumer orientation, and coordinates its efforts throughout the entire organization how to lower costs Use cheaper materials without hurting quality Make production more efficient- automate tasks and find better suppliers Reduce waste and unnecessary expenses Tesla makes cars with fewer parts which lowers production costs how to raise wtp Make the product more useful- better ingredients, new feature Make the product more desirable- cool branding, greater customer service Sell to people who value it more- luxury brands charge high prices Nike shoes are just rubber and fabric but because of branding, people are willing to pay a lot more if a company raises prices captures more value but might lose customers If apples costs $5 to produce, the store sells them for $8, and people would have paid up to $10, what is company profit? 8-5=3 Price-Cost If apples costs $5 to produce, the store sells them for $8, and people would have paid up to $10, what is consumer benefit? 10-8=2 WTP-Price If apples costs $5 to produce, the store sells them for $8, and people would have paid up to $10, what is value created 10 - 5=5 WTP-cost if company lowers prices consumers get more value if company lowers prices customers get more value but the company makes less money if company raises price keeps more value improved decision making information systems and technologies have made is possible for managers to use real time data from the marketplace when making decisions inbound logistics receiving, storing, distributing inputs. Includes material handling, warehousing, inventory control, returns to suppliers income statement shows profit or loss over a specific period of time independent directors not a part of company's management provides unbiased oversight to ensure ethical practices and accountability industry rivalry the intensity of competition between businesses within the industry. If there are too many competitors, profits decrease due to price wars and marketing costs information asymmetry when managers know more about the company, and have better and more information than the investors information system a smart tool that helps a business work better. It collects data, processes it into useful information, stores it safely, and shares it with the right people. This helps managers make good decisions and keep things running smoothly in the organization information technology consists of all the hardware and software that a firm needs to use in order to achieve its business objectives input collecting raw data: scanning barcodes instrumentally valuable meaning they are only useful because they help us get something like money or education International organization for standardization ISO 9000: a series of quality assurance designed by the ISO to ensure consistent product quality under many conditions intrinsic (objective) william petty and richard cantillon intrinsically valuable meaning they are good on their own, like happiness or love Investment in IT huge sums are spent not just on equipment but also on services that help businesses adapt to new technologies. Between 1999 and 2019, over 40% of US capital spending went to IT investors provide the money needed to start, grow, and keep the business running is marketing a systematic apporoach? yes, to satisfying customers, focuses on the many activities: planning, pricing, promoting, and distributing products that foster exchanges john stuart mill argued that value of goods are not inherent, intrinsic, or objective but rather shaped by a combination of the usefulness of a product or service to its potential buyers and by the preferences of those buyers just in time inventory management popular technique that eliminates waste by using smaller quantities of materials that arrive "just in time: for use in the transformation process and therefore requires less storage space and other inventory management expense karl marx in his work Das Kapital (1867), he makes the claim that the value of a product can be measured objectively based on the average number of hours of human labor required for its production labor theory of value items have a value fully determined by their objective features (the more time, effort, and resources spent creating something, the more valuable it is) Labor theory of value (Adam Smith, Karl Max) Something is worth the amount of work that went into making it, if making a shirt takes twice as long as making a hat, then a shirt would be worth twice as much Leon Walras and William Stanley Jevons Employed tools of math to develop formal theories in how to determine economic value, Focused on the utility: the usefulness of a product or service to who might use it liabilities debts a business owes to others. Includes loans from banks or government programs, money owed to suppliers or creditors for purchase liabilities include bank loans, supplier credit, and other debts location determining optimal locations for services like bank branches management process designed to achieve an organization's objectives by using its resources effectively and efficiently in a changing environment management functions planning, organizing, directing, controlling managerial accounting helps manager and business owners plan and control activities. They focus on tracking cash flow daily, weekly, or yearly. Poor cash flow management is a common reason businesses struggle financially. Managers create budget to plan future expenses and income over a certain time, helping guide the organization from one financial goal to another. Managing inventory: after purchasing the items needed for the product, some provision has to be made for them until they are needed managing quality critical element of operations management because defective products can quickly ruin a firm, quality reflects the degree to which a good or service meets the demands and requirements of customers Many operations research and management science use modeling and optimization techniques for translating real problems into math, spreadsheets, or various computer languages, and using them to find the best solutions and decisions Marginal Revolution (new approach to value) Economists like Jevon and Walras said that value depends on how useful or desirable something is to a person at that moment, A thirsty person will pay a lot for the first bottle of water but not much for the tenth bottle Market segment: collection of individuals, groups, or organizations who share one or more characteristics and have relatively similar product needs and desires (targeting teenagers who love sport when selling sneakers. This group has specific interests and needs so companies might create ads and products just for them "sporty and trendy sneakers") Marketing group of activities designed to expedite transactions by creating, distributing, pricing, and promoting goods, services, and ideas marketing and sales inform buyers about products, induce buyers to purchase, and facilitate the purchase process. Includes advertising, pricing, channel selection, promotions, and sales force management Marketing concept idea that an organization should try to satisfy customer's needs through coordinated activities that also allow it to achieve its own goals marketing mix refers to four marketing activities, product, price, place, and promotion Marketing orientation requires organizations to gather information about customer's needs, share that information throughout the entire firm, and use it help build long term relationships with customers Marketing research by gathering information, marketers can detect new trends and changes in consumer tastes Marketing strategy plan of action for developing, pricing, distributing, and promoting products that meet the needs of specific customers material requirements planning a planning system that schedules the precise quantity of materials needed to make the product merchandising deciding what brands to buy and quantities to order middle managers take the big picture plans from top managers and figure out how to make them happen, focus on specific departments or projects and spend a lot of time organizing and planning model management statistical tools and models to analyze and solve problems modular design involves building an item in modules (self contained units) that can be combined or interchanged to create different products money moves left from customer to business to supplier, You pay the grocery store, the grocery store pays the farm, and the farm pays for the seeds, water, and workers Most businesses don't just buy from one supplier and sell to one customer. They are a part of a bigger value chain Apple buys screens from a supplier- apple assembles the iphone- apple sells it to stores- stores sell it customers Each step in the chain adds value and takes profit Multisegment approach approach where marketer aims its efforts at two or more segments developing a marketing strategy for each (car manufacturer might use its approach by offering economy cars for budget conscious customers, luxury cars for high income consumers, and SUVs for families needing space) narrow cost leadership selling to a specific customer group at low prices narrow premium price selling to niche market at higher prices net income profit after all taxes and interest are deducted net working and telecommunications technology includes the hardware (like cables and wifi routers) and software that connects computers, allowing them to share information, even across long distances (like the internet) new products, services, and business models information systems and technologies are a major enabling tool for forms to create new products and services as well as entirely new business models. A business model describes how a company produces, delivers, and sells a product or service to create wealth objective of operations management Ultimate objective is for the produced outputs to be worth more than the combined costs of the inputs (make sure the products they create are worth more than what it costs to make them) Objective value (early economist) Some economists thought value was based on land and labor used to produce it, This worked when economists were simple but as businesses got more complex, this idea didn't always apply operating income profit before taxes and interest operational excellence businesses continuously seek to improve the efficiency of their operations in order to achieve higher profitability, information systems and technologies are some of the most important tools available to managers for achieving higher levels of efficiency and productivity in business operations operational plan daily or weekly plans that guide what individuals or teams need to do to complete the tactical plans operations transformation of inputs into final products. Includes machining, packaging, assembly, maintenance, and testing operations management the development and administration of activities involved in transforming resources into goods and services operations management in a service business Different types of transformation processes take place in organizations that provide services such as airlines, colleges, and most nonprofit organizations opportunities Expansion of charging station network Supportive from environmentally friendly regulators Potential advancements in battery technology opportunities positive external factors organizing structuring of resources and activities to accomplish objectives in an efficient and effective manner, managers organize by reviewing plans and determining what activities are necessary to implement them outbound logistics distributing final products to customers. Includes order fulfillment, transportation, and distribution management. output shares the useful information with the right people or system: telling staff which shelves need restocking outsourcing hiring other companies to do certain tasks or make products instead of doing them in house, a company might hire outside company to handle manufacturing, customer service, marketing rather than doing the tasks themselves which helps save money, focus on strengths owner's equity owner's share of the business after all debts are paid. Includes the money the owner has invested in the business, can also come from profits that were reinvested owner's equity reflects owner's share in the business place the distribution, making products available to customers in the quantities desired, this includes transporting, warehousing, materials handling, and inventory control, as well as packaging and communication planning the process of determining the organization's objectives and deciding how to accomplish them is the first function of management planning and designing operation systems Before company can produce product, must decide what it will produce and for what groups of customers, must then determine what processes it will use to make the product as well as the facilities it needs to produce them Planning facilities companies must decide where to locate their operations facilities, what layout is best for producing their particular product, and what technology to apply to the transformation process porter's competitive positioning matrix porter created a framework to help firms gain a competitive advantage, it consists of 2 key tradeoffs that companies must consider Porter's five forces framework strategic tool used to analyze how competitive an industry is, helps businesses understand what drives profits and competition within an industry Porter's Value Chain highlights the internal choices made by a firm and notes how those relate to the economic actors outside of the firm's boundaries (how choices connect or affect people or businesses outside of the company such as customers, suppliers, or competitors) powerful buyers customers can demand lower prices or better products. If buyers have too much influence, businesses may struggle to maintain profits Powerful suppliers suppliers can increase price for raw materials or goods. This raises costs for businesses and reduces profit margins predictive forecasting future trends predictive analytics seeks to predict the future by examining historical data, detecting patterns or relationships in these data, and then extrapolating these relationships forward in time, can predict risk and find relationships in data not readily apparent with traditional analyses Helps detect hidden patterns in large amounts of data, premium price means offering unique products or services that justify higher prices prescriptive recommending optimal decisions and actions, each component plays a vital role in helping businesses make informed, data driven decisions prescriptive analytics uses optimization to identify the best alternatives to minimize or maximize some objective, determines the best pricing and advertising strategy to maximize revenue price setting prices for goods, contracts, services price value placed on an objected exchanged between a buyer and a seller, can also be changed quickly to stimulate demand or respond to competitor's actions, can also be changed quickly to stimulate demand or respond to competitor's actions price what the buyer pays price what the customers actually pay primary activities inbound logistics, operations, outbound logistics, marketing and sales, service primary and support activities The activities will be most effective in enabling value creation and capture when they fit together and fit the demands of the firm's competitive environment principal agent problem where investors trust managers to act in their best interest but managers might have their own goals that don't always align with the investor's goals private accountant works for one specific company or organization, manage the company's financial records and helps make important decisions. Some private accountants can become certified management accountants by passing a special exam private firms raise money from small group of investors through methods like private placements, venture capital, or private equity funds. They raise funds privately, involve investors more directly, and face higher borrower costs becusae of the risks and lack of public financial information process layout a company organization using a fixed position layout because it is typically involved in large, complex projects such as construction or exploration processing organizes and analyzes the data to make it meaningful: counting total sales Producer surplus (known as profit) difference between what a producer is paid for a product and the minimum amount they would be willing to accept to produce the product. If a company is willing to sell pencil for $50 but they sell it for $70, their producer surplus is $20 product complex mix of tangible and intangible attributes that provide satisfaction and benefits product layout a layout that organizes the transformation process into departments that group related processes (one department might handle assembly, another might handle quality control, another can handle packaging and they are all arranged to make the production process more efficient) Product orientation new technologies such as electricity, railroads, internal combustion engines, and mass production techniques made it possible to manufacture goods with ever increasing efficiency products move right from supplier to business to customer, An apple farm sells apples to a grocery store then the grocery store sells apples to customer (you) profit difference between price and cost profitability ratios measure how well a company is generating income compared to its assets, owner's equity, and sales project organization company using a fixed layout position might be called project organization because it is typically involved in large, complex projects such as construction or exploration promotion persuasive form of communication that attempts to expedite a marketing exchange by influencing individuals, groups, and organizations to accept goods, services, and ideas public firms have access to higher capital markets, can sell shares to the public through initial public offerings or issue more shares later to raise money. They can issue more shares if they need money, loan from investors instead of just relying on banks, and have more options to raise money from the public and borrow money cheaply because they are more regulated and trusted Purchasing: part in procurement involved in the buying of all the materials needed by the organization, aims to obtain items of the desired quality in the right quantities at the lowest possible cost quality control processes an organization uses to maintain its established quality standards ratio analysis way to calculate and measure a company's financial health. It uses data from the income statement (profit or loss) and balance sheets (assets, liabilities, and equity). It helps answer the question "how much did profit or loss did the company take" "what is the company worth based on its financial data" raw materials supplier revenue sales richard cantillon argued that the value of a good depend on land alone (resources or raw materials from the land are used to produce) risk and return investors know that higher risk can lead to higher returns but they also know that they can lose money, they must decide if the potential reward is worth the risk Risk taking loss associated with marketing decisions, hit or miss routing sequence of operations through which the product must pass rules for successful diversity recruiting involve employees, communicate diversity, support diversity initiatives & activities, delegate resources, promote your diversity initiatives Sales orientation viewed sales as the primary means of increasing profits, believed marketing activities were personal selling and advertising scheduling the assignment of required tasks to departments or even specific machines, workers, or teams selling helps speed up the process of exchanging goods or services between buyers and sellers, marketers usually view selling as a persuasive activity that is accomplished through promotion (advertising, personal selling, sales promotion, publicity, and packaging) service activities that maintain and potentially enhance a product's value after purchase. Includes installation, training, repair, and supply of replacement parts simulation and risk analysis assess uncertainty and predicts outcomes using statistical models Skills needed by managers technical expertise, conceptual skills, analytical skills, human relations skills, leadership, employee empowerment staffing ensuring proper staffing levels and hiring the right talent standardization making identical, interchangeable components or even complete products statement of cash flows tracks cash movements statistical methods allow us to gain a richer understanding of data that goes beyond business intelligence reporting by not only summarizing data succinctly but also finding unknown and interesting relationships among the data store profit price they sell to customers-cost of buying from apple Storing part of the physical distribution of products and includes warehousing goods, time utility has to do with being able to satisfy demand in a timely manner (this means like seasonal goods such as orange juice as oranges are only available for a few months but consumers demand juice throughout the year, sellers must arrange for a cold storage of orange juice so they can maintain a steady supply all the time) strategic plan big picture plans that set long term goals and outline how a company will achieve its mission over time strengths postitive internal factors stuck in the middle the danger of not choosing a strategy, porter warns against not making clear choices between premium price and cost leadership, if a company fails to choose, it ends up with average prices and costs making it hard to be profitable subject approach john stuart mill Subjective value (modern economics) People realized that value depends on how much someone wants something, not just how much work went into making it, A rare baseball card can sell for a lot of money even though it takes little effort to print substitutes if customers can switch to alternative products or services, businesses may lose sales supplier profit cost of making parts - price they sell to apple suppliers anyone that the firm pays money to and they sell inputs to a firm at some cost to the focal firm, and then the focal firm incurs some expenses to produce an output, a final good which they sell at a final price to some buyers supply chain design optimizing sourcing, transportation and delivery routes supply chain management making sure products move smoothly from one place to another, handling everything that gets them fro the manufacturer to the customer support activities firm infrastructure, human resource management, technology development, procurement survival business firms also invest in information systems and technologies because they are necessities of doing business, sustained competitive advantage when a company stays more profitable than competitors for a long time (3-10 times) swot analysis simple and widely used tool for analyzing business strategy. Often used by interns, entry level employees or non experts discussing company strategy. It helps broad thinking but does not directly provide solutions for increasing profits swot analysis has strengths, weaknesses, opportunities, threats tactical plan short term plans that break down the strategic plan into specific steps and actions to reach those big goals target market specific group of consumers on whose needs and wants a company focuses its marketing efforts temporary competitive advantage when a company earns higher profits than competitors for a short term (1-2 years) the board of directors ensures the company is run in the best interest of shareholders. They oversee management, ensures transparency, and aligns goals with long term goals the core of business analytics consists of 3 disciplines business intelligence and information systems. Statistics, and modeling and optimizations the process of business analytics It is the process of transforming data into actions through analysis and insights in the context of organizational decisions making and problem solving The second step in developing a marketing strategy is to create and maintain a marketing mix threats Competition from major automakers The risk of competitors developing better technology faster Government policies that may hurt electric vehicle sales threats negative external factors top managers highest level leaders like CEO or president who make big decisions and are responsible for the overall success of the company total quality management belief that consistently focusing on quality in every part of the organization will create a culture that meets what customers expect as "high quality" total target market approach in which they try to appeal to everyone and assume that all buyers have similar needs and wants transformation of business information systems and technologies are reshaping how businesses operate globally. Companies spend billions on IT and related services to stay competitive transformation process Inputs (resources such as labor, money, materials, and energy) are converted into outputs (goods, services, and ideas) Transporting process of moving products from seller to the buyer, marketers focus on transportation costs and services two types of investors equity, debt types of management top management, middle management, first line management utility and marginal revolution Leon Walras and William Stanley Jevons Value something people care about, some people think of value in terms of money while some people see it as morality, happiness, or usefulness Value capture A company also needs to capture value meaning it keeps some of the money as profit instead of giving all the value to customers Value captured by the average buyer WTP - P, the difference between what the buyer would have been willing to pay for the product and the price they actually pay Value captured by the average firm known as profit= P - C, equal to the average price the firm receives for each product sold and the average cost of the product Value captured by the average suppliers (in the multi party case) portion of the overall value created by a product or service that is received by the average supplier involved in the process meaning that each supplier in the supply chain whether they provide raw materials, parts, or services gets a share of the value generated by the final product Value chain journey of a product from the raw materials to the customer Value created by an individual step in the value chain Raw material supplier: creates value by providing the material Manufacturer: adds value by assembling these materials into a functional phone Distributor: creates value by getting the phone to the stores or customers Value created by the entirety of the value chain total worth added to product from the beginning of production to the final delivery to customer: Inbound logistics Operations Outbound logistics Marketing and sales Service Firm infrastructure Human resources management Technology development Procurement Value created= WTP - Cost If a bag of apples costs $5 to produce and people are willing to pay $10, then the vale created is $5 value creation a business creates value when it sells something that people want to buy for more than what it costs to make value stick how businesses create and capture value, to understand how businesses make money, we use this tool views on economic value adam smith, david ricardo, karl marx visualization key for communicating insights and identifying patterns, Zoo: for example, has used this on an ipad to display hourly, daily, and monthly reports of attendance, food and retail location revenues and sales, and other metrics for prediction and marketing strategies visualization of data is crucial for understanding trends, patterns, and performance metrics in business operations weaknesses Complex sales and service process (relies on direct sales instead of local dealers like ford or toyota, longer process) Limited product range Unpredictable leadership (can be both a strength or weakness) weaknesses negative internal factors what are the 4 types of planning? strategic plan, tactical plan, operational plan, contingency planning what do economists meausre? value based on the prices people are willing to pay what does marketing focus on? a complex set of activities that must be performed to accomplish objectives and generate exchanges which includes buying, selling, transporting, storing, grading, financing, marketing research, and risk taking what does the porter value chain provide? provides insights regarding whether a firm's choice are likely to create substantial value especially compared to rivals and can be used to make predictions on whether a firm's activity choices are likely to yield high margins, if they DON'T FIT TOGETHER, they are poor fits for the competitive environment what if analysis examines how changes in assumptions or data affect outcomes what is analytics used for? pricing, customer segregation, merchandising, location, supply chain design, staffing, health care what is business analytics essential for? or informed decision making across all sectors, improving efficiency, reducing costs, increasing profitability. Nearly all large companies use some form of business analytics what is business strategy a concise, clearly articulated, and internally consistent plan for how an organization will create and capture economic value what is new in management information systems? Continuous change MIS is constantly evolving with new technologies that change how businesses are managed and organized Exciting field: the dynamic nature of MIS due to advances in technology, management, and business processes make it a key area to study what is not business strategy? IT IS NOT an extensive, detailed instruction manual. It is more like a concise roadmap that identifies the organization's most important tradeoffs and guides its overall direction and choices. what questions do descriptive analytics ask? how much did we sell in each region? What was our revenue last quarter? Which factory has the lowest productivity? what questions do predictive analytics ask? what will happen if demand falls by 10% or if supplier prices go up to 5%? What do we expect to pay for fuel over the next several months? what questions do prescriptive analytics ask? how much should be produce to maximize profit? What is the best way to ship goods to minimize cost? Should we change plans if a supplier's factory is closed due to a disaster? what was modern evolution of analytics? began with the introduction of computers, early computers provided the ability to store and analyze data in was that were either very difficult or impossible to do manually where does business strategy come from? military strategy, which focused on outsmarting opponents and winning battles Famous military thinkers like Sun Tzu and Carl von Clausewitz influenced strategic thinking why does porter call firms that fail to make these choices stuck? because it is hard to change their competitive position later Why it matters for managers as a future manager, you need to know how to invest in IS wisely. Smart decisions can give your company an edge while poor decisions can waste resources william petty the natural value of products would reflect the amount of land and labor required for their production WTP depends on two factors: productive utility of a product/service, features of the product/service that appeal to the buyers wtp highest price a customer would be willing to pay