ABWL Introduction to Business PDF

ABWL Introduction to Business Learning business by doing busines...

ABWL Introduction to Business Learning business by doing business... Prof. Dr. Antje Bruesch, ABWL, TEC - IPE, HS Reutlingen, Alteburgstraße 150, 72762 Reutlingen, www.reutlingen-university.de, 1 T. +49 (0)7121 271-7040, [email protected] First lecture - Introduction - Expectations a) who attended already business classes? b) who did an apprenticeship already? c) who has already commercial experience in a company (internship e.g.)? d) who is native in English? Technical checks  MS Teams  RELAX (Moodle)  Topsim Homepage (Chrome Browser)  Further tools for your studies: Untis (timetable) 2  Roles - My expectations: * bring your device, use feedback tools as immediate feedback * actively attend the classes and prepare your homework: learning business by doing business * be active (read, discuss, give peer feedback...) From: Sage on the stage to Guide on the side Source: https://srhsprincipalsblog.blogspot.com, accessed on 11/03/2019 3 Table of Contents – Learning business by doing business F1) Macro-economics F2) Mgmt & F4) Marketing Mosaic GmbH Organisation F3) Accounting 4 Learning objectives At the end of this course, students should be enabled to - have a general idea about the vocabulary and main topics with regard to the focus topics presented - apply and be able to solve basic challenges with regard to the respective focus topic chosen - have a general idea about some general functions of a company: set basics for further business lectures and get basic vocabulary for business discussions (also based on preparatory reading) and get used to making important business decisions - have a more holistic view of business decisions and their financial impact; be able to judge which impact will be generated on the financials by basic decisions - understand and apply basic concepts of accounting in order to be able to build up on knowledge in 2nd semester In addition, the business game experience and the additional tasks are are supposed to enable the student to: - apply academic writing (for the first time) - apply giving and receiving feedback - apply presentation skills in English (online) - apply group work skills 5 F1) INTRODUCTION F1) Macro-Economics 1) Intro 2) Economics 3) Competition 4) Measuring the economy 5) Economic forecasting 6) Summary 6 F1) INTRODUCTION 1) Introduction Macroeconomics The study of the economy as a whole Microeconomics The study of the economic choices made by individual consumers or businesses Source: Collins (2012), p. 20 / 46 www.scottadamssays.com 7 F1) INTRODUCTION 1) Introduction – why needed? Source: topsim business game 8 F1) INTRODUCTION 1) Learning objectives After this lecture, you should be able to... a) Define economics and identify factors of production. b) Describe perfect competition and explain how supply and demand interact to set prices in a free market system. c) Describe polypoly, oligopoly and monopoly. d) Describe the key goals of the economy. 9 F1) INTRODUCTION 2) Economics Economics Is the study of the production, distribution and consumption of goods and services. Resources are the inputs used to produce outputs. Resources are also called factors of production: ‐ Land ‐ Labour ‐ Factory and equipment (capital) ‐ Entrepreneurship skills Source: Collins (2012), p. 20 10 F1) INTRODUCTION 2) Circular flow of inputs and outputs Economists ask: a) What goods and services should be produced to meet consumer needs? b) How should goods and services be produced? c) Who should receive them? Source: Collins (2012), p. 22 11 F1) INTRODUCTION 3) Competition: supply and demand Perfect competition: It exists when there are many consumers buying a standardised product from numerous small businesses. Demand: is the quantity of a product that buyers are willing to purchase at various prices. You are typically willing to buy less of a product when prices rise and more of a product when prices fall. => demand curve Supply: is the quantity of a product that sellers are willing to sell at various prices. Businesses are more willing to sell a product when the price rises and less willing to sell when prices fall. => supply curve Source: Collins (2012), p. 27-29 12 F1) INTRODUCTION 3) Competition: supply and demand curve Source: Collins (2012), p. 30 13 F1) INTRODUCTION 3) Polypoly, oligopoly and monopoly Polypoly: Many sellers supply similar products. Oligopoly: Few sellers supply a large portion of all the products sold in the marketplace. Monopoly: Market in which there is only one seller supplying products at regulated prices. Source: Collins (2012), p. 33-34 14 F1) INTRODUCTION 3) Polypoly, oligopoly and monopoly Natural monopoly: Include public utilities, such as electricity and gas suppliers. They inhibit competition but they are legal because they are important to society. In exchange, they must adhere to government-controlled prices. Legal monopoly: When a company receives a patent giving it exclusive use of an invented product or process. Patents are generally issued for twenty years. During this period, other companies cannot use the invented product without permission from the patent holder. Source: Collins (2012), p. 33-34 15 F1) INTRODUCTION 3) Polypoly, oligopoly and monopoly Market power Best price for supplier Price war Polypoly Best price for customer One supplier Oligopoly Danger of trust building No competitors Monopoly Many suppliers offer the same product No competition High profits Few suppliers Many competitors Source: www.wirtschaftundschule.de 16 F1) INTRODUCTION 4) Measuring the economy Goals of the economy: 1) Growth Provide people with goods and services => measured by total output, i.e. gross domestic product (GDP); GDP is the market value of all goods and services produced by the economy in a given year; GDP growth / decline is the most important measure The ups and downs of an economy are called business cycle - prosperity: economy expands - recession: when GDP goes down for two consecutive quarters - depression: severe, long-lasting recession - recovery: economy starts growing again Source: Collins (2012), p. 36 / 37 18 F1) INTRODUCTION 4) Measuring the economy Goals of the economy: 2) High employment Full employment: Condition under which about 95 % of those who want to work are employed. The unemployment rate: Percentage of the total labour force that‘s currently unemployed and actively seeking work. Source: Collins (2012), p. 38 19 F1) INTRODUCTION 4) Measuring the economy Goals of the economy: 3) Price stability Conditions under which the prices for products remain fairly constant. Inflation: rise in the overall price level Deflation: decrease in overall price level Source: Collins (2012), p. 39 20 F1) INTRODUCTION 4) Measuring the economy Goals of the economy: 3) Price stability Consumer price index (CPI): index that measures inflation by measuring the prices of goods purchased by a typical consumer. Source: Collins (2012), p. 39 / 40 21 F1) INTRODUCTION 5) Simple economic forecasting Source: topsim business game 22 F1) INTRODUCTION 6) Summary - In perfect competition, the law of supply and demand applies and an equilibrium price will be achieved. - Markets can be classified as polypoly, oligopoly and monopoly; perfect competition is rarely the case. - Goals of the economy are: growth, high employment and price stability - Economic indicators can be lagging or leading; leading indicators are more interesting. - The government intervenes in terms of monetary policy, fiscal policy and national debt. 23 F2) MANAGEMENT F2) Management / organisation 1) Intro 2) Wrap-up 3) What do managers do? 4) Organisational chart 5) Summary 24 F2) MANAGEMENT 1) Introduction Source: www.dilbert.com 25 F2) MANAGEMENT 2) Wrap-up a) Consider the things that the project leader of the Caipi night has to do to ensure that the party meets the needs of the students. Identify these activities and group them by the four functions of management: planning, organizing, directing, and controlling. b) Consider the things that the CEO of mosaic GmbH has to do to ensure that the tents meet the needs of the customers. Identify these activities and group them by the four functions of management: planning, organizing, directing and controlling Source: www.caipi-night.de, www.topsim.de 26 F2) MANAGEMENT 3) What do managers do? Activities according to Henri Fayol – functional management approach: Planning: setting goals Organizing: allocating resources Directing: motivating employees Controlling: comparing actual to plan and taking corrective actions if necessary Source: Collins (2012), p.271 28 F2) MANAGEMENT 3) What do managers do? Levels of management: Source: Collins (2012), p.284 29 F2) MANAGEMENT 4) Organising - example Organisational chart purely functional: incl. quality control Source: Collins (2012), p.290 30 F2) MANAGEMENT 4) Organising - example Organisational chart – example of combination geographical / functional: - lines of authority - chain of command - span of control: flat vs. tall organisation; narrow vs. wide Source: Collins (2012), p.292 31 F2) MANAGEMENT 4) Organising - example Organisational chart – example of matrix: Source: Collins (2012), p.293 32 F2) MANAGEMENT 4) Organising a) Design an organisational chart for the Caipi Night? b) Design an organisational chart for mosaic GmbH? 33 F2) MANAGEMENT 5) Critical summary and outlook Management in today‘s world is challenging: - work can be very political - may have duties that are more bureaucratic than managerial - often have to work with limited resources - motivate employees in chaotic and uncertain situations - success depends on performance of the team which is frequently not self- chosen But also has some ups: - have the opportunity to think creatively - create positive work environment - support and coach others - work with a variety of people and personalities - play a role in influencing organisational outcomes - receive a potentially higher compensation based on salaries, bonuses, company cars Source: Robbins / Coulter (2016) 34 F3) ACCOUNTING F3) Accounting 1) Intro 2) Learning objectives 3) Your financial statements 4) Mosaic GmbH + financial statements 5) Summary 35 F3) ACCOUNTING 1) Introduction Source: www.dilbert.com (Scott Adams) 36 F3) ACCOUNTING 2) Learning objectives At the end of this module/class, students should be able to answer the following questions and to apply it to the business simulation: a) How is a cashflow statement structured and what does a company need it for? b) How is a balance sheet structured and what does a company need it for? c) How is a P&L/income statement structured and what does a company need it for? d) What is the difference between cash and accrual accounting? What are the respective needs? e) What is a depreciation in simple terms? 37 F3) ACCOUNTING 3) Basics of financial statements Look at the following three pages: You can find Joe’s financial statements as a student. a) What does each statement represent? b) Is there something surprising in the statements? c) Prepare financial statements for you as a student (if you don’t like to share your figures, please slightly modify): * Prepare a list of all your “belongings and debt”: how is this statement called? * Prepare an overview with regard to your liquidity: how is this statement called? * Prepare an overview with regard to your taxable income / performance? How is this statement called? 38 F3) ACCOUNTING 3) Basics of financial statements Joe Cash Flow Statement: liquidity on bank account to pay Joe‘s bills Source: Collins (2012), p. 785 39 F3) ACCOUNTING 3) Basics of financial statements Joe Balance Sheet: What Joe owns vs. what he owes Source: Collins (2012), p. 783 40 F3) ACCOUNTING 3) Basics of financial statements Joe Income Statement: [TUSD] for steering purposes or tax reasons (here: Wages 18,7 [Revenues] Joe‘s tax declaration) - utilities / services 0,7 [Operating expenses] - communication 0,9 - interests loan - transportation 2,8 - tuition 5,5 - books 1,0 - insurance 1,9 - depreciation 0,9 Net income (profit) 5,0 => income only tax relevant above ~10 TEUR per year in Germany (2023) Source: own evaluation 41 F3) ACCOUNTING 3) Wrap-up main equations of financial statements Golden rule: Wrap-up: basic equations of financial statements: No booking without a receipt! Balance sheet: [point of time] Assets = Liabilities + shareholder’s equity Cashflow statement: [period of time] Cashflow = beginning cash balance + inflows – outflows P&L: [period of time] Profit = income – expenses Surplus = value of output generated - value of inputs required 42 F3) ACCOUNTING 4) Exemplary balance sheet 43 F3) ACCOUNTING 4) Exemplary CF statement 44 F3) ACCOUNTING 4) Exemplary P&L 45 F3) ACCOUNTING 4) Mosaic GmbH - simulation tool For the upcoming business game, you will be asked to take six rounds of decisions. In order to weigh up the impact or pros/cons of certain decisions, it is useful to dispose of an Excel tool, which simulates the impact of your decisions on the performance of your company and the impact on: -P&L -Cashflow -Balance Sheet For this aim, please start establishing a calculation tool in Excel which disposes of these simulating qualities. It is considered useful to interlink the different tabs used and to have: -Input sheet (according to the decisions in the topsim simulation) -P&L -Cashflow and financial planning -Cost of sales calculation 46 F3) ACCOUNTING 5) Summary - Financial accountants are more focused on external accounting whereas management accountants provide data needed for internal decision making - Financial accounting works with three main financial statements * cashflow statement (management accounting) * income statement / P&L (management accounting) * balance sheet (more financial accounting) - As a future manager, one should have a basic understanding of financial statements and their interdependencies. Decisions taken by management will be directly reflected in the financials statements. - It is also important to be knowledgeable in the correct accounting vocabulary and not to mix up terms. => Focus on these skills in 2nd semester 47 F4) MARKETING F4) Marketing 1) Introduction 2) What is marketing about? 3) Learning objective questions 4) Marketing strategy 5) Exercise 6) Summary 48 F4) MARKETING 1) Introduction HR Legal Source: based on Collins (2012), p.18 49 F4) MARKETING 2) What is marketing about? https://www.youtube.com/watch?v=FaJa_gJ_axk Source: Collins (2012), p.18, www.scottadamssays.com 50 F4) MARKETING 3) Learning objective questions At the end of this class, students should be able to: a) Define the terms marketing, marketing concept, and marketing strategy. b) If you were developing a marketing campaign for mosaic GmbH, what group of consumers would you target? What if you were marketing Harley Davidson? c) Identify the four Ps of the marketing mix. d) Identify pricing strategies that are appropriate for new and existing products. What about mosaic GmbH? How could their pricing strategy for a new upscale headphone look like? e) Marketing for Vallenberg Inc.: Develop the 4P of Marketing for Vallenberg Inc.. Which P is most critical for the business game? 51 F4) MARKETING 3) Marketing mix – the 4 Ps Source: Collins (2012), p.457 52 F4) MARKETING 4) Definition Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have values for customers, clients, partners and society at large. => Marketing is not just selling => Marketing is a team effort The marketing concept: basic philosophy of satisfying customer needs while meeting organisational goals Source: Collins (2012), p.448-449 53 F4) MARKETING 4) Marketing strategy Source: Collins (2012), p.451 54 F4) MARKETING 5) Product lifecycle Marketing mix strategies will shift as the product moves through its lifecycle Source: Collins (2012), p.501 55 F4) MARKETING 5) Exercise Please classify the examples below according to the 4Ps of marketing. Please fill the relevant P in the line below the example. Iphone is also offered Clothes company Vacuum cleaner Perfumery Douglas producer Vorwerk offers fragrance on the internet H&Moffers without contract discount sells his products samples to mainly by direct customers (besides provider of 5% for a Contract In shop) 100 EUR purchase sales reps going from door to door The new tablet Vodafone proposes an The company Sports equipment Xxx disposes of autograph session Kaufhof producer adidas a new camera y with the national organises now also offers megapixel team an open day fragrances 56 F4) MARKETING 6) Summary - Marketing is a basic tool to push sales and thus turnover. - It is one of the most powerful functions in a company together with sales to drive positive results. - Defining the marketing mix and thus the 4Ps is a critical process and needs to be well structured. - Further input will follow in later semesters in your marketing seminar and the advanced business game. 58 ABWL Good luck with the application in mosaic GmbH 59