COMM 1800 Foundations of Commerce Fall 2024 Lecture Slides (PDF)

COMM 1800 Foundations of Commerce Fall 2024 Professor David Costanza Getting Started A little about me I/O Psychologist University of Virginia (B.A.) George Mason University (M.A. & Ph.D.) Five years in private sector Organizational Sciences at GW Sr Consorti...

COMM 1800 Foundations of Commerce Fall 2024 Professor David Costanza Getting Started A little about me I/O Psychologist University of Virginia (B.A.) George Mason University (M.A. & Ph.D.) Five years in private sector Organizational Sciences at GW Sr Consortium Fellow – US Army Research Institute Research and Teaching areas Generational differences Organizational leadership, culture, and adaptation Stats and methods COMM 1800 – FOUNDATIONS OF COMMERCE 2 Getting Started COMM 1800 explores fundamental business concepts in a global context, emphasizing their interconnected and multifaceted nature and how they contribute to organizational success. COMM 1800 – FOUNDATIONS OF COMMERCE 3 Syllabus Review Highlights Textbook – complimentary Office hours and communication Technology expectations Grading Honor Code AI Well-being and Accommodations Canvas review – course slides posted weekly under Syllabus COMM 1800 – FOUNDATIONS OF COMMERCE 4 Business Basics What is a business? Come up with your own 1-2 sentence definition “A business produces products that satisfy people’s needs and does so to earn a profit.” Ferrell, Hitt, & Ferrell “A business is a complex and dynamic system that creates value by strategically allocating and managing resources to meet its customers’ needs and achieve organizational objectives.” Compiled from sources, including Gemini COMM 1800 – FOUNDATIONS OF COMMERCE 5 Business Basics Fundamental concepts? complex and dynamic creates value strategically allocating…resources meet customer needs achieve organizational objectives COMM 1800 – FOUNDATIONS OF COMMERCE 6 Business Basics Who does all this? COMM 1800 – FOUNDATIONS OF COMMERCE 7 Why Organize? 1. Division of labor – durability, reliability, accountability COMM 1800 – FOUNDATIONS OF COMMERCE 8 Why Organize? 2. Leverage large scale technology COMM 1800 – FOUNDATIONS OF COMMERCE 9 Why Organize? 3. Power & Control – limit non-conforming behavior COMM 1800 – FOUNDATIONS OF COMMERCE 10 Why Organize? 4. Legal benefits – contracts, ownership, liability COMM 1800 – FOUNDATIONS OF COMMERCE 11 Some other considerations Why are you interested in business? Join, Start, Build, Manage, Fund, Track, Market, Change What’s your background? Mgt, Acct, Fin, Mkt, Psych, Econ, Tech What’s your philosophy Subjectivist – interpretation Objectivist – measurement COMM 1800 – FOUNDATIONS OF COMMERCE 12 Some other considerations What’s the economic context? Capitalism, Socialism, Hybrid (most are) What’s the role? People, Governments, Academics, Ethicists COMM 1800 – FOUNDATIONS OF COMMERCE 13 Questions/Reflections #1 Objectivist vs. Subjectivist UVa as non-profit with endowment Social enterprise vs. profit/non-profit Bankruptcy questions (GM; liquidation vs. re-org) Legal benefits of organizing Capitalism, Socialism, and Communism COMM 1800 – FOUNDATIONS OF COMMERCE 14 Example Quiz Question Businesses strive to create value for their customers. Which of the following were used as examples of things customers might value? a) Low cost b) Convenience c) Familiarity d) All of the above e) “a” and “b” only COMM 1800 – FOUNDATIONS OF COMMERCE 15 Some other considerations Many different kinds of organizations For-profit businesses Non-profit organizations Social enterprises COMM 1800 – FOUNDATIONS OF COMMERCE 16 Some other considerations Many different kinds of organizations Governmental agencies Social organizations COMM 1800 – FOUNDATIONS OF COMMERCE 17 Some other considerations Many different kinds of businesses 1. Sole Proprietorships ▪ Max flexibility, max risk ▪ Example – David Costanza Consulting 2. Partnerships ▪ General (shared mgt) and Limited (less risk for some investors) ▪ More resources, tied to partners COMM 1800 – FOUNDATIONS OF COMMERCE 18 Some other considerations Many different kinds of businesses 3. Corporations – Private ▪ One person/family-owned ▪ Very small to very large 4. Corporations – Public ▪ Stock sold to public ▪ Board of Directors ▪ Extended life, legal, financial implications COMM 1800 – FOUNDATIONS OF COMMERCE 19 Some other considerations Many different kinds of businesses 5. Joint Venture ▪ 2+ businesses combine for specific project ▪ Usually only for biggest, riskiest projects 6. S-Corporations ▪ Works like an extended partnership ( Legal Can vs. Should COMM 1800 – FOUNDATIONS OF COMMERCE 54 Ethics – CSR Corporate Social Responsibility (CSR) “Actions which appear to further some social good, beyond the interests of the firm and that which is required by law” CSR > Ethical > Legal Profit vs. Broader Social Impact COMM 1800 – FOUNDATIONS OF COMMERCE 55 Ethics – CSR Employment Practice Environment Legal (letter of the law) Not legally discriminating Not violating EPA regulations Ethical (spirit of the law) Fair treatment of all Reducing environmental impact Socially Responsible Actively creating inclusive Cleaning up other’s environment pollution COMM 1800 – FOUNDATIONS OF COMMERCE 56 Ethics Models of Ethics Utilitarian – greatest good for greatest # of people Moral rights – maintain fundamental rights Justice – distributing benefits and harms COMM 1800 – FOUNDATIONS OF COMMERCE 57 Ethics Sources of Ethics Local Human history Context Laws Religion/Philosophy Societal Individual Morality Ethics Professions Society/Culture COMM 1800 – FOUNDATIONS OF COMMERCE 58 Ethics Ethical issues in business Bribery – cultural differences Misuse of company time – e.g., shopping online Misuse of company resources – e.g., laptops for streaming Abusive/intimidating behavior – what is bullying? Conflict of interest – what if personal/company interests overlap? COMM 1800 – FOUNDATIONS OF COMMERCE 59 Ethics Why behave unethically? Individual values Self-interest Outside Pressure Ill-conceived goals COMM 1800 – FOUNDATIONS OF COMMERCE 60 Ethics Creating an ethical organization Leaders matter Buffet’s newspaper (Grandma) test Build ethical structures and controls Code of Conduct Create ethical culture Honor system part of admissions Support all stakeholders Shared decision-making COMM 1800 – FOUNDATIONS OF COMMERCE 61 Ethics Shareholders vs. Stakeholders Shareholder – profit maximization (moral duty) Stakeholder – serve interests of involved parties Internal Leaders Employees Owners (shareholders) COMM 1800 – FOUNDATIONS OF COMMERCE 62 Ethics Shareholders vs. Stakeholders Stakeholder – serve interests of involved parties External (parallels environments but different) Customers Suppliers/Distributors Unions Community COMM 1800 – FOUNDATIONS OF COMMERCE 63 Ethics Stakeholders – Revisiting CSR Stakeholder – broader view, creating shared value Triple bottom-line People Planet Profit COMM 1800 – FOUNDATIONS OF COMMERCE 64 Creating a Business New businesses and opportunities come from… Environmental change that creates opportunities Organizational Evolution – Aldrich Drawn from biology Integrated with open systems Assumes rationality but allows for bounded (Simon) COMM 1800 – FOUNDATIONS OF COMMERCE 65 Questions/Reflections #4 Models of ethics Local context on ethics Shareholders v. Stakeholders Triple bottom line Org evolution Great reflections – connecting concepts to work! Quiz review = TA office hours Quiz #3; Sears case COMM 1800 – FOUNDATIONS OF COMMERCE 66 Ethics and CSR COMM 1800 – FOUNDATIONS OF COMMERCE 67 Creating a Business Organizational Evolution 1. Variation – competencies and routines Internal v. External Intentional v. Blind COMM 1800 – FOUNDATIONS OF COMMERCE 68 Creating a Business Which of the following is a “real” Dorito flavor? ▪ Corn Soup ▪ Sausage Roll ▪ Roast Turkey ▪ Seaweed ▪ Tuna Mayo COMM 1800 – FOUNDATIONS OF COMMERCE 69 Creating a Business All of them! ▪ Corn Soup ▪ Sausage Roll ▪ Roast Turkey ▪ Seaweed ▪ Tuna Mayo COMM 1800 – FOUNDATIONS OF COMMERCE 70 Creating a Business Organizational Evolution 2. Selection Some work, some don’t Internal vs. External Organization decides Market decides COMM 1800 – FOUNDATIONS OF COMMERCE 71 Creating a Business Organizational Evolution 3. Retention - Institutionalizing Within orgs Between orgs COMM 1800 – FOUNDATIONS OF COMMERCE 72 Creating a Business Organizational Evolution Struggle for resources Within business – finance v. marketing Between businesses – Between populations – Equifinality COMM 1800 – FOUNDATIONS OF COMMERCE 73 Creating a Business – Life Cycles 1. Emergence Environments constantly changing Lower capital requirements = more new firms Selection is cruel – 50% restaurants < 5 years Retention favors existing forms COMM 1800 – FOUNDATIONS OF COMMERCE 74 Creating a Business – Life Cycles 1. Emergence Environmental change! Recognition Strategic analysis/business plan Go/No-go R v. K strategies COMM 1800 – FOUNDATIONS OF COMMERCE 75 Creating a Business – Life Cycles 1. Emergence – facilitators Social networks Knowledge/experience $ Niches and density COMM 1800 – FOUNDATIONS OF COMMERCE 76 Creating a Business – Life Cycles 2. Midlife Differentiation and Institutionalization Functional Geographic Product/market Divisionalization Mergers & Acquisitions COMM 1800 – FOUNDATIONS OF COMMERCE 77 Creating a Business – Life Cycles 2. Midlife Stabilization of sub-systems Develop Move toward similarity Can stay here indefinitely (theoretically) COMM 1800 – FOUNDATIONS OF COMMERCE 78 Creating a Business – Life Cycles 3. Decline & Death “Reduction in internal worth over time” Age – how old Period – what’s happening Cohort – competition? COMM 1800 – FOUNDATIONS OF COMMERCE 79 Generative AI Competition How will you use GenAI to solve a pressing societal issue? Teams with the top three (3) ideas will present to Zack Kass (formerly of OpenAI) and executives from Google & WillowTree Finalists receive feedback Winning idea receives a $1,500 prize! COMM 1800 – FOUNDATIONS OF COMMERCE 80 Creating a Business – Life Cycles 3. Decline & Death Kinds of D&D Intentional v. unintentional Strategic v. random Partial v. complete COMM 1800 – FOUNDATIONS OF COMMERCE 81 Creating a Business – Life Cycles 3. Decline & Death – stages Environment changes, then: Erosion – active, rebuild Contraction – defend, protect Collapse – experiment, substitute COMM 1800 – FOUNDATIONS OF COMMERCE 82 Creating a Business – Life Cycles 3. Decline & Death – the spiral Environmental change Recognize Respond Avoid the death spiral ? COMM 1800 – FOUNDATIONS OF COMMERCE 83 Creating a Business – Life Cycles 3. Death Bankruptcy Chapter 7 – liquidation Chapter 11- Reorganization Merged/Acquired Reborn? COMM 1800 – FOUNDATIONS OF COMMERCE 84 Sears – study in decline (and death?) Environmental changes? Response? Successful or not? Entropy & Homeostasis Source and response? Successful or not? Successful or not? Lampert Ethical or not? Examples? COMM 1800 – FOUNDATIONS OF COMMERCE 85 Creating a Business – Life Cycles A study in business death Founded 1949 Grew with home electronics boom In 2000, 600+ locations and 60k employees High-margin, educating, commissioned sales #151 on Fortune 500 / “Good to Great” CarMax and DIVX COMM 1800 – FOUNDATIONS OF COMMERCE 86 Creating a Business – Life Cycles A study in business death Best Buy (1983) low margin, centralized checkout, “not a threat” Dropped appliances (2000) Eliminated commissions and fired 3900 employees to facilitate change (2003) Acquisitions, closures, buybacks (2003-08) Recession and Liquidation (2008) What happened? COMM 1800 – FOUNDATIONS OF COMMERCE 87 Exam I Review Definitions – what’s a business? Why organize - costs and benefits History – the arc and connections Open systems – know the model Environments – general, specific, and impacts Ethics and CSR Creating a business – org evolution Lifecycles – birth, midlife, decline, and death COMM 1800 – FOUNDATIONS OF COMMERCE 88 Exam Instructions Format 50 multiple-choice questions, randomly pulled from a question bank 75 minutes Taken in-class, in person, via Canvas Closed book, closed notes Canvass if and for how long you leave the test administration tab in your browser. So don’t. Students who leave the test administration tab may receive a 0. Logistics Bring your laptop! Make sure it is fully charged Arrive on time You must take the exam in your assigned section. If you take it in a different section, you will get a 0. Nothing on your desk except your laptop Phones turned off and away, smart watches off and away COMM 1800 – FOUNDATIONS OF COMMERCE 89 Exam Instructions Logistics No hats or hoods No one in the back row Wait until everyone in the previous section is finished before entering the classroom If you need to use the restroom during the exam, take nothing with you. The timer will continue to run. Use the restroom before the exam starts! Honor Code The UVA Honor Code applies and you must answer “Yes” to the Honor Code question affirming you have neither given nor received aid on this examination. Not pledging your work will result in a 0. If you retrieve or look at your phone, smart watch, or any other materials during the exam, you may be asked to end your exam, leave the room, and you may receive a 0. Keep your eyes on your own exam. If you look at another student’s computer screen, you may be asked to end your exam, leave the room, and you may receive a 0. COMM 1800 – FOUNDATIONS OF COMMERCE 90