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Summary
This document is an overview of the future of work and business, covering topics such as globalisation impact on businesses and workers. It also includes details on the importance of digital literacy, entrepreneurial abilities, and social intelligence. The document also highlights the considerations for companies in international business, ethics, and CSR.
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Unit 1: Future of Work 1.1 —The future of work: Looking ahead to 2030 Tasks/responsibilities of jobs today are changing bc of tech innovations → job loss concerns “It’s estimated that 85% of the jobs in 2030 haven’t been invented yet” Ex. CD collection → online music streaming services, USB...
Unit 1: Future of Work 1.1 —The future of work: Looking ahead to 2030 Tasks/responsibilities of jobs today are changing bc of tech innovations → job loss concerns “It’s estimated that 85% of the jobs in 2030 haven’t been invented yet” Ex. CD collection → online music streaming services, USB key → google drive Newer technologies are adopted much faster over last few hundred years Ex. amazon uses fully automated robots to streamline picking/packing steps → creates different jobs for better robots, facility layouts, and operations Won’t necessarily displace jobs 1.2 – Impact of the business environment: Considering international business and ethics and Corporate Social Responsibility (CSR) International business: companies need to observe what’s happening around them 1. Competition for customers: local and global 2. Business decisions: where to source raw materials, talent, and locate facilities to be closer to resources and customers 3. Employment: how/where you work (dependent on tech enabling us to communicate with peers worldwide) Setting yourself apart from peers: take international studies/language courses, coop/summer/volunteer experiences, and do international exchanges Ethics and corporate social responsibility Ethical behaviour: extending values/expectations to ppl they’re linked w/ like suppliers Sustainability: sustainable business practices leave positive impacts on the environment What company stands for: stance on social/political issues managing risk (insurance, operations) Ex. starbucks emails customers detailing the “good” they’ve done ○ 500k donated to canadian charities, 500k meals donated ○ Seems performative (greenwashing/socialwashing)-- pushing out marketing material ○ Think about actual operations– food waste, fair hiring processes/wages (are they sharing more of these stories instead of monetary figures??) 1.3 — Your toolkit to become future-proof To become futureproof: digital literacy, entrepreneurial abilities, and social intelligence Digital literacy: comfortable w/ digital tools + manipulating data thru spreadsheets/code Entrepreneurial abilities: manage uncertainty, take risks, be creative, problem solving ○ Intraentrepreneurship: being entrepreneurial within corporate setting one helps company grow by being creative to evolve processes/launch new products using existing resources/reputation Social intelligence: EQ/EI, soft skills (self awareness/control) ○ EQ: emotional quotient, focuses on strength of soft skills Involves developing greater self-awareness/control, empathize, and see variety of POVs Factors affecting future of work: innovation/technology, environment/sustainability, ESG (environmental, social, and governance) reporting, impact investing the use of professional judgement can't be replaced by technology 1.4 — Mindset for upcoming units CPA commercial: pokes fun at world we used to live in and how accounting profession challengesus to be on right side of change Go beyond traditional financial reporting: Sustainability, reporting on social matters, making most out of human capital Include info that drives long-term success for a company (which may not be captured in financial reporting) ○ Ex. RBC future launch: has 10 year initiative to help canadian youth prepare for jobs of tomorrow ○ As we play more with tech, RBC number of employees have been increasing since 2012 (no significant decrease in employment after ATMs and AI) Unit 2: Overview of Business 2.1 — Understanding business as a financial leader Being in tune with the business world Understand changes transforming industry Anticipate future developments Capitalize on new opportunities Role of CFO: financial reporting, control, and compliance Additional responsibilities: company operations, HR, info tech, etc Need ability to interpret trends, think ahead, multitask, and understand interconnectedness b/w pieces Should have digital literacy, entrepreneurial mindset, and social intelligence Air canada’s experience during pandemic: shifted from passenger travel to cargo 4000th all-cargo flight: still maintain cargo business while also doing passenger business 2.2 — Introduction to business Canada has mixed economy: some allocation of resources made by market and some made by diff levels of government Crown corporation: company owned by federal/provincial gov (ex. LCBO, canada post) ○ Privatization: sale of publicly-owned corporation (like crown corp) Reduces role of gov, source of cash → reduce debt/fund gov activities, and promote competition in that industry→ improve efficiency and reduce cost for consumers Ex. sale of canadian national railway, air canada, and part sale of hydro 1 Business: activity that you intend to carry on for profit Small business: organization that is independently owned/operated, not dominant in its field, and meets certain standards of size History of business in CA: in country’s infancy, business activity/trade of G/S was difficult bc of Large land mass → travel and transport of goods is difficult Low and spread out population ○ Many of immigrants settled along border → N to S trade with US easier than E to W trade within canada ○ High tariffs on imports from US encouraged trade within canada Lack of infrastructure to connect country from coast to coast ○ Built railway to expand settlements, facilitate trade, and communications Forms of business ownership: sole proprietorship, partnership, corporation Sole proprietorship: owned/operated by 1 person ○ Pros: easy to set up, lower start-up costs, freedom/control for owners, and less regulatory requirements ○ Cons: unlimited liability, business continuity, and raising funds (need to pledge personal assets as security to take on small loans) Partnership: created by 2 or more ppl, have partnership agreements ○ Ex. law or accounting firms ○ Pros: easy/inexpensive to form, shared start-up costs/resources, shared management, less regulatory requirements ○ Cons: unlimited liabilities, conflict b/w partners, business continuity (has definite life, doesn’t survive beyond partners) Corporation: separate legal entity, ownership thru shared capital (shareholders not liable for debts/acts of corp) ○ Pros: limited liability, indefinite life (ownership transferable), greater access to financing, taxes may be lower ○ Cons: higher startup costs to incorporate (need lawyer), greater regulatory requirements 2.3 — Learning from failure: Why small businesses fail Businesses that are easier to start tend to have least growth potential and greater failure rates Ease of entry → lots of competition, larger supply in marketplace, and lower prices Conversely, businesses that are hard to start (more expertise and investments needed) are more likely to be successful/generate more profit ○ Difficulty to enter/maintain business keeps competition away, lowers supply, and allows business to charge higher prices ○ Usually includes places where professional training is required (ex. medical/dental practices, vet services, and consulting) Causes of small business failure: poor management and execution Money: not enough, lack of planning Decisions: under/over pricing, lack of record keeping (impacts decision making) Lack of knowledge: not understanding business (industry/market, business cycles, costs of doing business) Critical elements of business management Planning business (conduct research, have business plan/strategy) Understand your customers (bg, interests, behaviours → determines design of product and marketing initiatives) Manage employees (recruiting, onboarding, talent development, compensation, performance appraisals) Maintain good records to make informed decisions (all transactions recorded thru accounting system Finance business (obtain cash to start/maintain business, budget spending, and know where/how to get more funds) Failure of large company: business like amazon may fail in long term Depends on if they understand their customer base, maintain their profits… Sears was a former retail giant: got too big to change (didn’t think about customer base, didn’t make use of tech improvements, leaned on past success) ○ Started with catalogue purchases (mail + phone) with delivery to home → shifted to retail store ○ They had the infrastructure to support online sales but didn’t fully utilize Target Canada: a lot of selection and low prices in the US ○ After fast expansion into canada, there were concerns about lack of selection and good prices ○ Business perspective: canadians are more spread out/lower population → underestimated complexity of market (what ppl want) and geography lead to higher prices and inventory management issues 2.4 — Impact of globalization on stakeholders Consider various POVs when conducting business in global market Consumers: benefit when world is more connected as more options are available Employees: tech connects employees with customers, flients, or business partners in diff countries and across time zones ○ Access to global employees could mean sourcing resources to make product/market company’s products in another country for business operations Business owner: internet access, tech, and increased connectivity expand businesses’ reach beyond own city (access to customers/suppliers globally) ○ Small businesses can consider how to appeal to customers in foreign market ○ Large companies may outsource menial functions to focus on what they do best Participating in global market could mean having international customer/supplier while operating from canada, doesn’t necessarily mean that business needs to set up locations worldwide Has the pandemic killed globalization videos: What issues/trends will businesses have to manage post-pandemic Ongoing slowbalization when global disruptions occur Rethinking of long/complex supply chains (manage supply chain risk to help get ahead of any future global challenges, consider sustainability) Countries building own skills/tech capacital, revival of manufacturing ○ Manufacturing evol. → automation and creation of new high-skilled jobs ○ Flow of data and tech → can grow/hinder information How can each company be more resilient and make interdependence work ○ Building wall/fully stopping immigration isn’t the solution Labour cost of product is higher for clothing industry bc it requires more human input ○ Clothing sales fell by ~75% Hyperglobalization in 1990s → slowbalization in 2010s (lots of protectionism) Zara: shorter supply chain help it deliver supply easier than other high-fashion brands 2.5 — Why we trade Reasons for trading with other countries: diff resources, environmental conditions, populations, knowledge, and expertise No country can produce all goods ppl want/need → importing provides us w/ more options to satisfy wants and needs Countries produce beyond ability to consume → can sell excess products to nations that need it Balance of trade: relationship b/w importing and exporting for country to prosper over long term, it should sell more than it buys from other nations There is trade surplus when exports > imports and trade deficit when imports > exports Ex. we have trade surplus with US (energy products, motor vehicles, consumer goods) Ex. trade deficit with Japan (export energy products, consumer goods, and agriculture) Free trade: goods traded b/w countries w/out political or economic obstruction, trade in mutually beneficial manner (level playing field) Challenge: each country wants to maximize revenues and protect workers ○ Countries w/ more access to resources than others → greater bargaining power Theory of comparative advantage: countries should export what they can produce most effectively/efficiently and import when they can’t, works best in free market economy ○ Free market economy: market (supply and demand) determines what goods to produce/who gets them without government intervention ○ Theory is thwarted by trade barriers set by gov to protect domestic businesses/ industries → imports more expensive → inhibits free trade/flow of goods Trade agreements: NAFTA, CETA, CPTPP, Canada-ASEAN North american free trade agreement: free-trade area b/w canada, mexico, and US ○ Reduced trade barriers with each other while maintaining independent trade agreements w/ other countries ○ Promoted fair competition and improved working conditions in north america ○ Might’ve contributed to employment losses and unrealized economic benefits Canada-European Union comprehensive economic and trade agreement: removed 98% of tariffs with EU ○ Consumers: imports cheaper in canadian marketplace, more supply ○ Canadian businesses: dairy industry concerned that it can’t compete against larger european dairy market Comprehensive progressive agreement for trans-pacific partnership (for asia-pacific region): trading bloc of 580 million consumers and 15.6% global GDP ○ Eliminates tariffs and reduces barriers for 98% of exports to CPTPP members ASEAN: trade and investment in southeast asia ○ Investment in: extractives, clean tech, agriculture… Ex. import quotas on Canadian softwood by US to protect domestic lumber industry Barriers to trade: trade protectionism limits import of goods through use of gov regulations Advocates for trade protectionism: believe it allows domestic producers to survive/grow Opponents to protectionism: suggest it inhibits free trade and market competitiveness → drives down innovation Tariffs: taxes on imports → makes domestic products seem more competitively priced Import quota: limit on quantity of products imported ○ ensures domestic production takes place/is competitive while allowing more to be imported to meet needs of ppl and provide more options Embargo: ban on import/export of specific products ○ Also means stopping all trade w/ particular country (used for political purposes) Ex. countries stopping trade with North Korea to pressure it to abandon all existing weapons of mass destruction programs Non-tariff barriers: regulations like restrictive standards detailing how product must be sold in a country ○ Ex. nutrition labelling of food products in canada required to show calories, have larger font size, etc. ○ Sometimes see label slapped on imported food products to align with our standard Trade war: restrict imports in attempt to boost domestic business Reduces competition at the start → leads to higher prices → lower demand → decreases production → decreases innovation in the sector Who is affected in trade war: producers (local manufacturers, factory workers, farmers) and consumers 2.6 — Entering global markets: Canada’s perspective Canadian exports: canadian companies export by selling directly to foreign customers or indirectly through intermediary like foreign distributor Small businesses: account for 90% of canadian exporters ○ Have advantage in global markets bc they react faster to changes in marketplace to meet needs of customers, provide more tailored/customized attention ○ Might lean on intermediary like foreign distributor if they have minimal experience and understanding of foreign country Multinational corporations: manufacture/market products in many diff countries where they also have physical presence ○ Ex. lululemon, four seasons, blackberry… ○ Lululemon: unlike canada goose, they don’t own/operate manufacturing facilities Rely on suppliers to provide fabrics/produce profits (most vendors from APAC and China mainland → could have risks in terms of supply chain) Canadian imports: canadian companies import by directly purchasing from foreign suppliers or indirectly through intermediary Import materials used in businesses to produce goods ○ Ex. equipment and machinery like phones, computers, and construction equipment are manufactured in countries worldwide and imported for use in CA Canada border services agency (CBSA) monitors imports to keep country/canadians safe 2.7 — Strategies to enter global markets Licensing: domestic company (licensor) allows foreign company (licensee) to make its product in exchange for a fee Ex. disney: licensing rights of characters for products like mattel Pros: licensors have ability to generate additional revenues ○ costs to produce/promote product in foreign market covered by foreign licensee Gives product exposure in new market w/ minimal additional investment Cons: if product experiences large growth in foreign market → foreign licensee gets bulk of revenue and you only get royalties from agreement ○ risk that you could lose trade secrets if licensee sells competing product ○ hard to control quality of goods Exporting: selling products to another country Requires more coordination in shipping, duties (taxes), and other regulations Pros: huge market potential and lower cost than having presence in foreign country Cons: hard to identify global customers when you don’t have home base in other countries (esp in places where customers prefer to work w/ local suppliers) Franchising: someone w/ business concept (franchisor) sells rights to use business name and sell its product to another party (franchisee) Ex. coffeetime: get assistance with training program, food/equipment sourcing, pricing/quality controls… Offers more control than licensing bc franchisor has ability to dictate certain standards/processes as part of franchise agreement Franchisor able to earn more revenue through franchise fees, start-up fees, and other consulting resources provided to franchisees Franchisor has to adapt to preferences of countries they operate in to be successful Contract manufacturing (AKA outsourcing): finding foreign manufacturer to make product → have own brand name/trademark attached Ex. nike selecting factory in foreign market to make shoes for them Contracted manufacturer doesn’t have right to sell your product (just supplier, you retain ownership of products made) Allows you to test new market in cost-effective way bc don’t need to invest in facility in new market, but can have goods produced there ○ If experiment is successful, you’ve alr established market for product before incurring significant capital costs to set up own production facilities ○ If not successful, contract relationship can end Can also help with capacity challenges (business can meet growing/excess demand by outsourcing when domestic facilities are at capacity) Cons: quality control, public image, expanded capabilities/access to talent, and employment standards Activities that shouldn’t be outsourced: core human resource/accounting functions Joint venture: 2+ companies form partnership to take on major project Ex. BMW and daimler combine efforts on car sharing Pros: shared resources and risk → lower costs, shared expertise, access to market where foreign companies can’t operate unless goods are locally produced?? Cons: becoming too large to function efficiently, trade secrets exploited by other party Strategic alliance: 2+ companies form long-term partnership to support each other in building competitive market advantages Doesn’t usually involve sharing costs, risks, management, or profits (not formal partnership, more relationship) Foreign direct investment (FDI): buy property/business and operate in foreign country most risky, but also the most potentially profitable way to enter global market Typically becomes foreign subsidiary (company located in another country owned by u) Pros: can bring jobs, additional revenue, and new knowledge/tech to local community Challenges: have to follow legal/regulatory requirements of both parent company (home country) and foreign subsidiary (host country), expropriation 2.8 — Future opportunities and challenges Opportunities: Canada expanding its trading relationships beyond US Tap into emerging markets w/ large populations and growing middle class ○ They’re places where Canadian small businesses/multinational corps can find customers or suppliers ○ Locate resources or international talent Emerging markets showing promise: brazil, russia, india, china, and south africa (BRICS) ○ Evaluate global “opps” using PEST (political, economic, social, and tech factors) ○ Opportunities with working with BRICS Global GDP of BRICS makes up 40% of world’s population → Large economic growth potential of biggest emerging markets To get better, BRICS becoming more industrialized, support health social spending, conserving environment There may be other countries interested in joining the blocs ○ Risks: countries have diff values, infrastructure, business practices, etc Not on equal level playing field (diff political, economic, and social positions for their goals) Varying levels of risk to consider when doing business Challenges: not many products are only produced in one country in cost-effective/efficient way Ex. products like smartphones are designed in one country, but manufactured in another country using 100s of component parts sourced from other countries Consider: political, economic, social, and technological environment to thrive on the global stage Unit 3: Scanning the business environment 3.1 — Background and tools Environment scan: assessment of business environment to see what factors could impact growth and success of organization in achieving its goals Factors: political, economic, social, technological, and competitive environments ○ Analyzed domestically and in global business environment ○ Influences relationship an organization has with its stakeholders (customers, suppliers, employees, banks, government, and unions) PEST: political, economic, social, and technological factors Porter’s 5 forces: assesses competitive landscape by looking at current/potential competitors, substitutes, bargaining power of suppliers/buyers SWOT: assessment of strengths, weaknesses, opportunities, and threats 3.2 — PEST Looking at the political environment Gov can impact business environment through laws, taxes, and trade relationships managed Ex. canada has mixed economic system (some allocation of resources made by market, some made by gov) ○ Economic system: suggests how factors of production (land, labour, capital, entrepreneurship, and knowledge) are managed 3 levels of government: federal, provincial, and municipal govs Federal government: oversees canada’s overall economic performance/issues impacting all canadian citizens ○ Plays a role w/ international trade regulations, nation’s banking and monetary system, national defense, and immigration Provincial government: plays role in regulation of trade/commerce, employment standards, healthcare, and education Municipal government: plays role w/ water, sewage, garbage collection, roads/sidewalks, and public transportation Laws and regulations: created by legislative/lawmaking branch of gov Deregulation: removal of laws/regulation to allow for more competition and buyer choice ○ Has occurred in industries like transportation, telecommunications, financial services, and energy ○ Ex. ontario gov eased laws/regulations to allow sale of wine/beer in grocery stores → supports greater competitive environment while allowing more convenience/choice for consumers Consumers: canada’s anti-spam legislation (CASL) protects consumers from unsolicited online communications ○ Companies must obtain consent for future messages, be transparent with their identification/contact info, and provide unsubscribe mechanism Businesses: gov provides supports for competitive/innovative marketplace ○ Competition bureau helps administer/enforce acts like competition act mergers of large corporations don’t restrict competition and how consumers can have competitive prices/product choices (ex. loblaws wanted to merge w/ shoppers drug mart) Fiscal policy: how gov keeps economy stable through changes in taxes and gov spending Taxes: all levels of gov collect taxes to fund services/programs, they’re cost of doing business that can be passed down to consumers through higher prices Corporations: profits earned are subject to canadian corporate income taxes ○ Countries strive to have low corporate tax rate → businesses have more money → helps grow economy/increase productivity thru investing in tech/people or launching new products ○ Other taxes: property tax, tariffs, or sales tax Sales tax: ontarians pay harmonized sales tax (HST), a combination of federal goods/services tax (GST) and provincial sales tax (PST) Gov can spend collected taxes to support economy esp during economic downturns ○ Increased spending → job creation, infrastructure development, and new/improved services for canadians National debt: accumulation of gov deficits over time ○ High debt → country needs to manage debt/pay interest on it (more costly when interest rates rise) → opportunity cost as money is taken away from gov spending to cover interest payments → possible economic instability Can use higher tax on demerit goods like cigarettes ○ Higher tax on products like sugary drinks/alcohol could allow gov to tax other stuff → gov shouldn’t be dictating what we should/shouldn’t be eating Businesses can get tax relief through tax credits if they participate in activities encouraging growth/innovation like hiring coop students or participating in R&D Trade relationships: how ez it’ll be to conduct business could be influenced by free trade agreements (country has market open to foreign competition) or barriers impeding trade (country protects domestic businesses) Looking at the economic environment Microeconomics and macroeconomics Microeconomics: studies decisions made by individuals/businesses within economy ○ Looks at supply, demand, and allocation of scarce resources Macroeconomics: broader look at what impacts economy as a whole ○ Includes employment levels, interest rates, inflation, and GDP ○ Also looks at role of gov and how policies on international trade can impact economy Business cycle: trough → recovery → expansion → peak → contraction… Trough: lowest point of economic activity Recovery: economic activity begins to rise again w/ increased demand for goods Expansion: rise in economic activity– products being sold, jobs created, demand continues to grow (can be slow or boom) ○ Economic growth → low unemployment → ppl have more spending power Peak: highest point of econ activity Contraction: decline in econ activity → decreased demand and profits ○ Can result in recession if there are 2+ quarters of decline in GDP ○ Prolonged recession → depression with longer period of declined econ activity that can result in higher unemployment levels ○ Low econ growth and high unemployment levels → reduced consumer spending Firms could change production levels, find ways to cut costs (like reducing the workforce) Monetary policy: (central) bank of canada manages money supply and interest rates Key priorities for CB include keeping inflation low/stable/predictable, managing complex financial system, and preserving value of money (protecting from counterfeit to ensure confidence in currency) ○ Bank of canada: special type of crown corporation that conducts research on what’s happening in Canada and international economic environment (scanning business environment) ○ Interest rate announcements 8 times a year ○ They raise/lower/maintain interest rates to heat up or cool down economy During 2008/2009 recession, interest rates were low Currently seeing high interest rates to cool down economy Inflation: rise in price of goods over time, measured by looking at CPI ○ Can reduce purchasing power of money → canada maintains inflation at ~2% by adjusting interest rates Benchmark/overnight interest rate: rate at which CB loans money to major financial institutions (low rate → banks encouraged to borrow more → more money available for individuals/businesses to borrow from) ○ Financial institutions like TD and CIBC base lending rates off benchmark interest rate as they make loans to businesses Low interest rates: consumers borrow more, businesses take on short/long-term loans to fund expansionary activities High interest rates: consumers save more Fiscal policy vs. monetary policy Fiscal policy: political party leader promises to provide additional funding for social programs, budgets for gov programs increased to stimulate economy, reduction of tax Monetary policy: interest rates rise given concerns of overheating economy Canada’s Gross Domestic Product (GDP): looks at total value of final goods produced within country in a year (within Canada’s borders) Measure of economic and social progress for country GDP per capita: looks at GDP per person in that country Takeaways: consider insights from deloitte canada economists Bank of canada remains focused on returning inflation to its 2% target consumer confidence is low, there is reluctance to make major purchases and housing affordability remains a challenge Lower interest rates should encourage households to spend and businesses to invest Looking at the social environment Demographic trends: companies should monitor trends like population growth/changing demographics (age, education, income levels, and diversity of population Age: impacts consumer spending and demand for certain products ○ Ex. baby boomer generation makes up ~30% of canadian population, has money/time to spend on travel/entertainment… and others like children/ grandchildren → might be target market for products they don’t even use directly Education: OECD measures education/skills for countries worldwide ○ Higher education levels → country has high economic growth potential bc educated workforce can be more productive/innovative Income: country may want to examine its middle class as potential target market ○ Important to look at emerging economies (BRICS) in global environment where there is growing middle class w/ spending power Diversity: diverse workforce has potential to bring in broader range of perspectives and talent/skills → makes it easier to understand how to satisfy needs of target customers Changing social attitudes: assess attitudes/values on issues like employment conditions and environment Public opinions can impact how firm evolves its business practices and how laws evolve Firms should reflect on role in society, driven by how they want to shape brand and consumer expectations ○ Can do good by considering social responsibility/sustainability ○ Triple bottom line reporting (AKA reporting around ppl, planet, and profit): company reports on performance w/ social, environmental, and economic factors Looking at the technological environment Technology shapes way we work through: employees have convenience of using laptops/tablets to work and can video conference w/ colleagues around the world Software used more to process/assess large volumes of data → better manage repetitive tasks or perform analytics on customer data Automation of processes/use of computer-aided design/manufacturing reduces operating costs while increasing productivity → more efficient on factory floor Growth and prevalence of biotech, nanotech, advanced manufacturing, and electronics Future of work: tech could replace low-skilled and middle-class jobs as routine tasks are automated and use of AI increases Connecting with customers: businesses w/ online presence leverage internet and social media to build strong connections w/ customers Firms benefit from increased connectivity/reach they have w/ customers and from data collected from them → able to better customize interactions with them Ex. amazon tracks what customers order to recommend what next purchases should be, indigo can remind you to complete purchase Challenges of having sm data: time commitment for effective engagement, managing customer feedback, and considering privacy of data collected/how they use data ○ Companies have to strengthen cybersecurity practices to protect systems, networks, and programs from online digital attacks 3.3 — The competitive landscape: Porter's five forces Think about: are there others who can replicate your product, how many choices do customers have b/w what you offer compared to other companies, why should they choose your product, and how does globalization increase # of competitors? Ex. alibaba increased competitive landscape for online shopping and expanded into other to industries like financial tech/online payment services with Alipay Porter’s 5 forces: takes a look at industry and firms already in industry to determine attractiveness of working within it ○ Informs how new company makes decisions on how to operate, achieve goals, and compete for success Current competitors (existing rivalry) Consider how many competitors there are, dyk who they are, what do they offer, and what resources do they have Think about industry and location of competition Potential competitors (threat of new entrants): examines barriers to entry Existing dominance in marketplace: fierce brand loyalty makes it difficult for new firm to launch competing product/service Capital requirements: money required to start new company Laws and regulations: gov policies may encourage/impede new entrants ○ patents/trademarks can protect existing companies from new entrant wanting to offer new product/service Economies of scale: existing companies grown over time benefit from lowered cost of units as units produced increases Substitutes: alternatives and choices available Switching costs (monetary or psychological): to change from one supplier to another → if low costs, there are opportunities for new entrants to draw away customers Strength of incumbent companies and their influence on buyers: loop customers into ecosystem that makes it harder over time for them to switch ○ become more comfortable → time, money, and energy to switch becomes factor in decision making process Industries must adapt to changing tech to survive: ex. Newspaper companies mostly adapted to online platforms → decreased paper news sales but increases in online subs Bargaining power of suppliers: suppliers of raw materials and tech have more power Supply and demand of raw materials/tech impacts price of what firms need to buy How many options for inputs: less suppliers → can command higher price (more bargaining power → less motivation to be efficient/innovate) Isn’t a barrier to entry for potential competitors (entrants) Ex. grocery retailers purchase from many suppliers to stock fruits/veggies → grocery producers have less bargaining power over retailers Bargaining power of customers Multiple supplier options: buyers have more bargaining power bc they can shop around to get best price/quality Bargaining power of customers is low → industry is more attractive to get into Strengths Limitations useful for new entrant to better may focus more on current power understand competitive environment relationships they’re entering/how to differentiate ○ may not be helpful in themselves fast-changing industry company alr operating in industry can dominance of resources/size of firm in assess how they fare amongst industry may not be clearly captured competition to maintain competitive doesn’t deal directly w/ tech changes advantage that could upend entire industry Ex. Lululemon’s examination of porter’s 5 forces View of competitors and substitutes 6 11 ○ Competition in the athletic apparel industry is based principally on brand image and recognition as well as product quality, innovation, style, distribution, and price ○ They think they’re doing a good job ○ Even tho they’re doing well, market is highly competitive (Nike, Inc., adidas AG, PUMA, Under Armour, Inc., and Columbia Sportswear Company) ○ Risks: highly competitive market, loss of market share, decrease in net revenue and profitability Bargaining power of suppliers 6 14 ○ A relatively small number of vendors supply and manufacture a significant portion of our products, and losing one or more of these vendors could adversely affect our business and results of operations. Bargaining power of customers 11 ○ If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative, and differentiated products, we may not be able to maintain or increase our sales and profitability. 3.4 — Building on your toolkit to assess an organization: SWOT Internal perspective: examines what you control/manage within company, considers tangible and intangible resources Strengths: being a dominant player in market, having well-respected/proven management team, or having cost advantages ○ Watch for competitive advantages (special skills/experiences or resources) Weaknesses: lack of awareness of marketplace, old facilities/equipment, or management team without depth/talent required ○ Watch for potential issues with personnel or management of resources (spending frivolously etc) External perspective: looks at factors that you may/may not be able to control but will have to respond to as organization (can be identified in PEST/porter’s 5 forces is performed beforehand) Opportunities: changing consumer demand, evolving gov policies (deregulation, lower corporate taxes), and reduced trade barriers allowing entry into international market ○ Consider PEST factors and potential for industry growth Threats: changing economic conditions (like recession), competitor introducing substitute product, costly regulatory requirements, or entry of foreign competitors ○ Consider PEST factors and insights from Porter’s 5 forces analysis After conducting SWOT analysis, it’s important to reflect on how to capitalize on strengths, improve areas of weakness, take advantage of opportunities, and mitigate any threats Unit 4: Ethics and social responsibility 4.1 — "Doing good": Ethics and social responsibility Consumers may question businesses and business decisions Why does business exist? ○ How’re they fulfilling needs/wants of customers ○ how do they support communities around them? How does business operate? ○ Impact on community/environment, how they obtain raw materials/select supplier Who do they associate with: how they’re connected to other businesses/influential figures like politicians and celebrities What do they believe in: stance on social/political issues prevalent today Beyond readings: think back to unit 3 and consider role of gov in business (regulations to ban harmful single-use plastics and hold them responsible for plastic waste) ○ Single use plastic items like checkout bags, cutlery, and ring carriers prohibited by regulations Tentree and TOMS: for every item purchased tentree plants 10 trees, toms gives away 1 pair of shoes for every pair sold ○ Toms: ethical issues regarding supply-chain transparency etc (using unsustainable materials, preventing job opportunities within communities they’re donating to) Ethics: resources to guide you in decision-making School: support and resources about academic integrity Work: shared values to uphold, enforced through code of conduct Professional associations: expected to hold yourself/those around you to higher standards to serve positive professional role in society (in professions like finance, legal, health…) Social responsibility: businesses held to higher standards today and are expected to be responsible in how they make decisions/find opportunities to give back to society 4.2 — Understanding ethics Social media lets users build/maintain relationships while collecting lots of data from users Concerns raised about facebook’s planning/decision-making wrt user info ○ Have they protected user info from unauthorized use by others?? Legality vs. ethics: laws are established rules/regulations within jurisdiction that governs actions while ethics are guiding principles that help us navigate decision-making in given context Laws aim to recognize/protect basic rights and freedoms to support order within societies ○ Ppl who violate laws can be penalized thru enforcement of laws Making ethical decisions can be complicated in global business environment because: ○ There aren’t global standards/prescribed guidelines dictating what’s right/wrong ○ Cultures and associated values/beliefs can impact these judgements Respect, integrity, reliability, and fairness transcend all cultural beliefs Examples of things that are legal but not ethical for businesses: raise price of product, tax loopholes, and use of child labour Examples of unethical/not legal things individuals do: speeding/running thru red traffic light in emergency, protests/social movements impeding rights of ppl, assisted death Business case for ethics: good ethics = good business (society more vocal w/ sharing bad business practices publicly and instantly online, could take business elsewhere if believe that company is ethically/socially irresponsible) Benefits to having ethical practices: keep/attract customers, maintaining strong rep in competitive marketplace, retain/attract employees, avoid gov intervention, and avoid legal action How businesses can support ethics: Tone at the top: management sets tone by embracing/modelling actions they wish to see ○ Managers should model ethical behaviour as employees watch for cues from their leaders on what behaviours are acceptable. can influence design of processes supporting ethical decision making like evaluation, compensation, and rewards Influence communication around the importance of ethical decision making (sharing policies, best practices, and enforcement) Support for code of conduct: management should support creation/communication/ adoption of code of conduct → employees have guidance to make best decisions training/retraining: there should be regular/ongoing training on ethical decision making for new and seasoned employees Ethics resources: opportunities for employees to ask questions or communicate concerns Inform stakeholders: pressure to act unethically can come from the outside (e.g., from customers, suppliers), so informing external stakeholders about your code of conduct and values can reduce these pressures. Whistleblower legislation: whistleblowers step up to report illegal/unethical behaviour There is some legislation to protect whistleblowers from retaliation/harm in the workplace, but not all workers are protected across all industries/jurisdictions Companies can step up to create policies so employees can share concerns in confidential/protected manner Ex. CBC’s whistleblower policy shares details on protecting the whistleblower from harm (reprisals) while also ensuring fairness in the process for both the whistleblower and the accused until the appropriate investigations have occurred. 4.3 — Navigating ethical dilemmas Ethical dilemma: problem where difficult choice has to be made w/ (potentially) no desirable alts Ex. ethical considerations of bringing new drug to market: go thru rigorous tests/trials to assess effectiveness and examine potential side effects ○ Many drugs fail steps to make it to market → could result in large financial losses → added pressures around business activities → ethical dilemmas Ethical dilemmas created around ○ Pressures to release product early: might minimize/hide certain side effects/accept lower level of safety to release drug early and make profit ○ Testing practices: is toxicology testing on animals humane? When does company determine it’s safe enough to test on humans considering risks for injury/death? ○ Pricing: pharmacies invested in making profit → when is it fair for them to pass costs on to consumers vs. making the drug more accessible to those that need it? Framework to navigate ethical dilemmas: ask following questions 1. Does the dilemma violate any laws/policies? 2. Are alternatives fair for all parties involved? (is one party favoured over another?) 3. How will you feel about the decision? Would friends/family support your decision? CPA Way: ethical behaviour video notes CPA Ontario emphasizes the importance of acting in a professional manner to earn and maintain the public trust 4.4 — Corporate Social Responsibility (CSR) Corporate social responsibility (CSR): how a company steps up to take care of those around them in society Critics of CSR argue that main responsibility for company is to maximize profits and shareholder value → when company dedicates resources to be socially responsible, it could be considered as stealing from investors Supporters of CSR argue that acting responsibly can generate more money for investors in the long run (companies strengthen brands by attracting more customers, retain loyal/dedicated employees, and enhance value of company overall) Business case for social responsibility: company that acts irresponsibly/isn’t in tune/engaged with customers can deter investors → hurts profit potential for company Socially responsible companies w/ high sustainability practices outperform those w/ low sustainability by stock performance Benefits for investing in socially responsible behaviours ○ Financial: increased market and shareholder value long term, avoid market losses from crises ○ market/sales: increased revenue and price premium by up to 20% ○ HR: reduced turnover rate by up to 50%, increased employee productivity/engagement How businesses can be socially responsible Corporate philanthropy: donating money/time/skills to various causes ○ Ex. mcdonalds’ support of ronald mcdonald house, air canada offering to transport refugees to canada during crisis Revision/adaption of policies to be responsible: hiring of diverse workers, having gender-balanced leadership opportunities, supporting safe work environments at home/in facilities, or take position on social/political issues ○ Ex. microsoft supporting equal rights for love and marriage in US Integration of social responsibility directly into business strategy ○ Ex. tentree commits to planting 10 trees for every article of clothing purchased Company associates with ppl (like international suppliers) who uphold similar standards on workplace safety/labour conditions Incorporate fair trade into operations: ensures that producers in developing countries are paid fair price for goods purchased from them ○ Results in increased living standards and building stronger communities in other parts of the world ○ Customers actively seeking out fair trade goods are willing to pay premium to benefit society and support objectives Considering sustainability: sustainable development looks at business operations and whether they can support needs for current/future generations w/out negative consequences UW named home for sustainable development solutions network (SDSN) canada ○ Connects with ppl/organizations to mobilize around UN SDGs (17 goals) ○ Procurement practices: minimize unnecessary purchases, consider lifecycle costs, buy credibly certified products, buy circular/from green suppliers Circular economy: encourages us to rethink linear economy of take, make, and dispose given finite resources and growing populations Strategies to keep sustainability in mind: planned spending in annual budgets, recognition/reward systems, monthly accountability meetings, and regular reporting of progress and next steps Consider plastics video: setting the stage for the circular economy, need regulations/innovation Zero plastic waste by 2030 (keep plastics out of environment and in use in economy Existing single-use plastics ban, to set min % of recycled content in new plastic products Need collaboration/innovation to get to zero plastic waste and circular economy ○ Chemical and manufacturing industries, municipalities investing in sorting/collecting/recycling tech ○ companies/retailers bringing in reuse and refill models 4.5 — Responsibility to stakeholders Stakeholders include: employees, customers, investors, and lending institutions (banks, credit unions…), communities, and governments Investors: By being socially responsible in the first place, companies can benefit financially. Ethical and responsible behaviour drives shareholder wealth, adding to profitability, not taking away from it. Consider the rise of socially conscious investors. 4.6 — Future opportunities and challenges Social audit: evaluating/reporting on how company makes progress towards social responsibility priorities (not a requirement, but companies might feel like it’s their duty to conduct one) Might use triple bottom line (TBL) reporting: voluntary reporting progress on social, economic, and environmental results for reporting period ○ Bottom line: refers to net income (revenue - cost of goods sold/expenses) TBL equally addresses people, planet, and profit Challenges of TBL: no widely agreed upon measurement standards to compare TBL across companies, too subjective and self-serving Stakeholders strongly advocating for companies to report on social/environmental performance: socially conscious investors, environmentalists, and customers Lululemon impact report: be human, be well, be planet Tentree: carbon credits (net 0 carbon impact), ethical manufacturing, full circle traceability B corp certification: designation that business meets high standards of verified performance/accountability/transparency on factors from employee benefits and charitable giving to supply chain practices and input materials ○ governance, workers, community, environment, and customers ○ Standardized and consistent way to evaluate companies Tentree’s overall b impact score is 136.2 Key takeaways Ensuring strategic alignment of decision-making – tied to purpose/values of an organization Can organizations continually improve with 3Ps– new initiatives or tracking progress Making commitments to being accountable ○ More transparency in operations and in reporting ○ External certifications (RCC, ISO certification Role of accounting and finance professionals: accounting standards to sustainability standards More consistency and comparability in measurement/reporting on ESG matters? Needs more harmonized standards, consider audit/assurance services Unit 5: Management 5.1 — Management today Success of organization based on management’s ability to adapt to fast-changing business environment around them involves proper planning and management of resources including money, assets, information, and people Management functions: plan, organize, lead, and control Great manager: based on professionalism, ability to rally you/your colleagues to work towards common purpose, creating fun/friendly work environment, supporting you w/ your responsibilities, and providing positive/constructive feedback to help grow as professional and as individual Beyond digital panel perspectives (pivoting during pandemic and future of work) RBC: empty offices but the work continues, can still remotely add value for clients and serve 15 million ppl in 46 countries (organize/lead remotely) ○ Can collaborate, innovate, and problem solve remotely Long term concerns: impacts organizational culture and relationships (can we effectively organize, lead, and control w/ distributed teams?) Microsoft: saw more digital transformation in 2 months than in last 2 years globally and across industries ○ Need partnerships across governments, academia, and businesses to collab on dev of in-demand skills 5.2 — Plan Following questions should be considered within established organization/launching new firm Where are we now? (current situation of organization– what you’re good at/can improve ○ Assessment of external environment: contexts impacting success of organization, current opportunities/challenges to keep eye on Where do we want to be? (where you want to head as organization → shapes desires and goals for the future) How can we get there from here? (address/close any gaps to meet its goals, ex. Might require obtaining additional resources like funding/people or changing processes) Planning process helps organization answer these questions (highlights why these questions exist and identifies where to head w/ business strategy to gain competitive advantage in marketplace What’s decided in planning stages then cascades to other core management functions (how to organize, lead, and control) Vision and mission statements Vision describes why organization exists and where it wants to be by articulating attractive future ○ Inspires all employees to make decisions/take actions to drive towards vision ○ Considered w/ every decision made (might need to reconsider/revise decision to better align with the vision) Organization can develop mission statement to help achieve vision ○ Mission statement: describes current purpose and what they do ○ Typically addresses why business exists and what makes business unique Vision is long term goal for organization, mission statement highlights current purpose Core values: fundamental beliefs that can guide decision making Important when employees have to make decisions w/ incomplete information, uncertainty, or time restraints Ex. core values for microsoft include respect, integrity, accountability … To ensure values are embraced and employees follow values, leadership must ask following questions ○ Are these values communicated to all employees, especially new hires? ○ Are they prominent? ○ Are they modeled by leaders within the organization? SMART (specific, measurable, attainable, relevant, and timely) goals Specific: clear and not ambiguous Measurable: monitor and quantify how you’re making progress towards goal Attainable: achievable given people and resources involved? Relevant: align with vision/mission statement? Timely: can goal be met within specified time frame Contingency plan: recognize courses of action to take when og plans don’t go as anticipated Recognizes how future is uncertain → highlights importance of having plans in place to stay flexible as organization and mitigate risks Ex. If sales are not growing as anticipated towards a goal (such as the SMART goal specified above), a contingency plan could involve increased spending on advertising or changing prices to stimulate sales. Should create robust contingency plans in consideration of low vs high severity and low vs high likelihood 5.3 — Organize Organizing is management function that puts plans into action (arranges resources/ppl to work towards company goals) Starts by designing structure of organization → certain questions need to be asked to… Allocate resources and assigning tasks: how to align ppl/finance/materials/equipment/info to work towards organization’s goals ○ How to assign what to do and who should do it Design processes and procedures: how info flows within organization, how to manage relationships, or how to make products or provide services Skills/knowledge employees should possess: conceptual, technical, human skills From first-line management → middle management → top management there is a lesser need for technical skills and greater need for conceptual skills Human skills: interpersonal skills needed to interact w/ internal/external stakeholders and maintain/develop relationships Technical skills: knowledge/ability to perform tasks Conceptual skills: seeing big picture thru analytical and critical thinking skills Allocating resources and assigning tasks Organizational chart details number of employees and various functions, shows positions and relationships ○ Supports how work/info flows (is it vertical or horizontal) ○ Might not suggest how info flows (how departments/teams share info w/ each other) and doesn’t detail key skills/responsibilities of ppl in roles C-Suite of roles: CEO, CFO, COO, CIO, and CMO Drives company towards its vision while supporting strong company culture Beyond C-Suite, organizations have middle management levels and supervisory management roles (current trend of reducing levels of middle management by collapsing hierarchies/reorganizing) ○ Employees are more educated/skilled (require less supervision), can be empowered to make decisions to work towards company goals ○ Companies collapsing to organize around customer (w/ fewer layers of management/levels of approvals, they can be more responsive and adapt quickly to ever-changing customer needs) Continuing evolution of C-suite: new role Chief People Officer (CPO) at CPA Canada Design processes + procedures Emphasis today on use of teams and how that impacts info sharing/decision making ○ Growing use of cross-functional teams (supported thru robust info systems and design of office spaces) ○ Revamping workplace spaces: traditional office layout → open-concept spaces ○ Rewards: encourage/support desired behaviours and attract/retain top talent 5.4 — Lead Traits of successful leaders: ambition, cognitive ability (integrate and interpret large amounts of information), self-confidence, honesty/integrity, and leadership motivation Motivating your ppl is necessary for leading → maslow’s hierarchy of needs suggests we are constantly motivated to fulfill unmet needs ○ Once base needs are met, we move onto next level of needs up pyramid ○ Physiological → safety → love/belonging → esteem → self-actualization ○ Company can satisfy needs thru compensation/employee benefits, creating positive work environments, and rewarding good work On campus professional dev opportunities to build leadership skills with leadership program (community leadership certificate) Leadership styles: autocratic, democratic, and laissez-faire leadership Autocratic: making decisions without consulting others (effective when ppl need to follow directions like in emergency) ○ Also effective when managing new employees who need more direction and supervision with first set of responsibilities ○ Challenges: reduces employee morale and job satisfaction, employees not empowered to become self-directed/take responsibility Democratic: managers and employees work together to share perspectives/make informed decisions ○ Helps build consensus and increase job satisfaction ○ Effective when it comes to idea generation/creativity ○ Might slow down decision-making process Laissez-faire: managers set goals/targets that employees are free to accomplish in the manner they wish ○ Works well when managing experienced designated pros with prerequisite knowledge/training to handle certain responsibilities Effective leaders can use a variety of these approaches depending on who is being lead and the situation at hand. ○ This reinforces how employees need to be flexible and adapt to work towards company goals. McClelland’s motivation theory: we all have 3 motivators– a need for achievement, a need for affiliation, and a need for power Achievement: ○ Has a strong need to set and accomplish challenging goals. ○ Takes calculated risks to accomplish their goals. ○ Likes to receive regular feedback on their progress and achievements. ○ Often likes to work alone. Affiliation ○ Wants to belong to the group. ○ Wants to be liked, and will often go along with whatever the rest of the group wants to do. ○ Favors collaboration over competition. ○ Doesn't like high risk or uncertainty. Power ○ Wants to control and influence others. ○ Likes to win arguments. ○ Enjoys competition and winning. ○ Enjoys status and recognition. Empathy is most important leadership skill according to research Empathy contributes to positive outcomes including… ○ Innovation, engagement, retention, inclusivity, and work-life balance Leading with empathy: ○ considering someone else’s thoughts through cognitive empathy ○ Focusing on person’s feelings using emotional empathy ○ Expressing concerns and inquiring about challenges directly → listen to employees’ responses ○ Be aware of employees’ mental health ○ Take action to create solution 5.5 — Control You monitor your progress through control, which aims to collect feedback to determine if goals/targets have been met Step 1: establishing clear standards includes key accounting ratios, budgeted vs actual figures, customer growth, customer satisfaction, and service time Steps 2-4: looks at how you compare performance against standards → communicates the results (with positive feedback/rewards) Step 5: considers if corrective action is needed if goals/targets haven’t been met ○ Could include implementing contingency plan/revisiting standards to assess if they were realistic/need to be adjusted Control should be continuously evolving process The balanced scorecard: it’s important to take holistic view of organization to fully assess health/long-term success of it 4 metrics of balanced scorecard: financial, customers, business processes, and learning/growth ○ Financial: look at key figures like sales numbers or ability to meet key ratios/targets like current ratio Assessed through review of internal reports/analyzing financial statements ○ Customers: are they happy/loyal? Metrics on customer satisfaction, retention, and market share ○ Business processes: what company excels at operationally (time to fulfill orders, amount of defects/returns, how quickly customer complaints are resolved) ○ learning/growth (L&G): how you support/develop your employees (employee satisfaction, retention rates, and level of skills) Challenge of implementing balanced scorecard: too many measures for each of 4 categories → too much time spent measuring and not acting on what measures reports Unit 6: Entrepreneurship 6.1 — What it takes to be an entrepreneur Being entrepreneurial means being able to manage uncertainty, take risks, be creative, and problem solve– applies to launching own venture or climbing up ladder in corporate environment Waterloo: entrepreneurship course at Conrad School of Entrepreneurship and Business — Undergraduate ○ Might consider furthering entrepreneurial studies through graduate programs such as Waterloo’s Master of Business, Entrepreneurship and Technology you may want to get involved in extra-curricular activities that tap into Waterloo’s innovative spirit such as Velocity or the Problem Lab Velocity: startup incubator, supports students from idea to product creation to commercialization ○ Provides knowledge, space, tools, funding opportunities, and network that startups need for success ○ Hosts workshops on topics like business models, finding customers online, and setting up a business for UW students and community members The problem lab: designed to help students identify and understand important problems to create innovations of great economic/social consequence ○ Relevant for aspiring entrepreneurs and established organizations Coop and e coop: consider summer jobs/coop opportunities at a startup ○ Might decide to pursue Enterprise Coop (E Coop) → allows you to use coop work term to launch own business while earning coop credit Beyond the readings: Ian pitching SPATULA foods on dragon’s den Spatula’s value proposition: high quality frozen food that can be cooked in short amount of time (not just a foodbox) Inspiration for idea: experiences in france during pandemic with frozen foods Background of founders: collaborating with michelin-trained chef and dietician Start of your career: many careers start by working for others thru part time, summer, or coop Might learn what you’re passionate about, build technical abilities, expand your skills, and gain exposure to variety of organizational cultures supporting how employees connect/get work done Traits of an entrepreneur: passion/motivation, tolerant of uncertainty, learning/growth mindset, and confidence 6.2 — Entrepreneurship vs. intrapreneurship Why become entrepreneur: want to be own boss, have flexibility, and define own success Education, tech, social acceptance, and support systems have pushed entrepreneurship mainstream and increased support for innovative endeavours Intrapreneurship: being entrepreneurial within corporate setting One can exercise creativity to launch new products or evolve processes using company’s existing resources/reputation Tech companies encourage intrapreneurship through promoting hackathon competitions → encourages employees to get creative to think about new features/products in short time frames Ex. hasbro “hacks” process of developing ideas for toys in matter of days which traditionally takes years of research and costs billions of dollars Ex. manulife recognized how changing digital tech can meet needs of customers and better serve them ○ now have products that allows customers to track healthy living habits and can provide them reduced insurance premiums/rewards for meeting certain goals Intrapreneur’s mindset: safety net of intrapreneurship For intrapreneurs to success, corporate innovation focuses on ○ creating value (moving beyond innovation theatre and turning ideas into value for customers/company) ○ Building collaborative relationships with ppl in key functions that will help deliver value proposition sales/marketing, operations, legal/compliance, fiance ○ Turning innovation into repeatable processes CPA canada news: intrapreneurs are the new entrepreneurs How can companies look within to reimagine how they operate ○ Intrapreneurship all about taking entrepreneurial approach to problem solve internally Top tech trends to keep in mind: AI, data privacy, and internet of things 6.3 — New venture creation Entrepreneurial venture stages 1. birth/introduction: define business model, focus on survival Potential challenges: getting customers, managing time, and abiding by local rules Risktaker leadership needed 2. breakthrough/growth: focus shifts to managing growth– effectively managing customer relationships and financing Caretaker leadership needed 3. maturity/exit: focus on maintaining/growing market share and maintaining financial sustainability May consider exit strategy Surgeon leadership needed Plan your growth: essential advice from an entrepreneur Develop a growth strategy to streamline processes Map out growth plan: road map to define next steps Invest for growth (plant, equipment, materials) Increasing productivity: hiring the right ppl, strive for continuous improvement Become a better leader: delegate more, train, recognize, and reward employees ○ Do this while focusing on the big picture Get advice/guidance: work with consultants as needed Other ways to get into business: buying an existing business or franchising Buy an existing business: chances of success increase as you may begin with established customer base, supplier relationships, and existing reputation ○ Might happen when employee is in position to take over and eventually own/manage the business ○ Considerations when buying existing business Why it’s up for sale (opportunities/challenges) Due diligence (verify info of business): letter of intent b/w current owner (seller) and potential buyer– addresses privacy/confidentiality concerns Buyer able to access financial records and agreements Buyer gets outside advice from accountants and lawyers Assess any potential issues that could cause future problems (identified through news, online, or thru chats with existing customers) ○ What price to pay: value of company is based on what business owns (assets like building/equipment), what it currently earns + future profit potential, and what makes it unique (reputation or quality of employees Franchising: failure rates for franchises can be lower than starting a business from scratch ○ Benefits: franchisor’s experience and reputation and proven product/service Franchisor can provide franchisee with ongoing management support, assistance in setting up location, training, marketing, and managing supply chain to get best prices ○ Should consider relationship with franchisor and sign franchising agreement Agreement stipulates day-to-day responsibilities, standards to follow, and royalty/fee payments from your profits ○ Drawback of franchising: potential lack of control Franchisor may dictate look or have final say in product/service offerings and operational decisions ○ Initial investment to start franchise/ongoing royalty fees can vary Payments typically cover ongoing management support and initiatives franchisor will undertake to benefit all franchise locations 6.4 — Resources to start a business Resources can include innovative work locations, government support to learn about planning/managing business, and various forms of financing to launch/grow the business Incubators: supportive environments that provide working space and support to grow ideas and manage business Includes coaching, management/operations assistance, networking opportunities, access to financing Advantage of launching idea within incubator: Provides community (support system to get creative minds together) and structured environment Benefit to cities by creating jobs, stimulating local industry, allows Canada to compete globally Beyond the reading: velocity and greenhouse (united) at UW are incubators Supports of greenhouse incubator include… ○ key workshops and opportunities to help turn ideas into action ○ support in setting up a business (e.g., marketing, building a website, doing taxes) ○ networking opportunities — introduction to key players in industry ○ overall, support for projects that build social ventures that can make an impact to both local and global communities United college social innovation and impact (INNOV electives) Industry and government supports: various levels of canadian gov support innovation and small business creation Business development bank of canada (BDC) helps small and medium-sized companies launch and grow ○ Devoted to entrepreneurs and provide financing and advisory services on how to manage business, increase revenues, and optimize operations ○ Value of targeted mental wellness support for entrepreneurs Online resources from Innovation, Science and Economic Development Canada ○ federal government initiative that consolidates all information on starting a business and is accessible to many Canadians online Checklists and guides for starting a business Tools and tips for conducting research and drafting a business plan Tips on financing your new business Details on registering your business, considering any permits, licenses, and regulations that may apply to your business Resources on managing employees, payroll, and taxes ○ Under ”Planning a business”, take note of the business plan resources and resources to research your target market Financial considerations: angel investors, venture capitalists, crowdfunding Capital funding required to start a business: one of the largest sources of funds is personal savings → then bank loans ○ Other sources include borrowing from family and friends/accessing gov grants Angel investors: rich ppl investing in early-stage businesses ○ In return for investing money into business, they want control in how business is run in addition to seeking return on investment ○ Also act as mentors and provide suggestions on running business Venture capitalists: rich ppl/companies investing in businesses that are alr established and also expect return on investment ○ Ppl receiving venture capital can use the funds to expand and grow business Crowdfunding: raising capital from ppl online ○ Platforms like kickstarter allow new companies to set financial goal, pitch ideas, and hopefully catch attention of enough ppl (backers) willing to provide funds to grow business ○ Backers usually contribute small amounts to get smth in return like early access, reduced price for unique product, or additional perks/benefits ○ Added benefits of crowdfunding: being able to gauge customer interest in idea or product before you commit too many resources/operations around it ○ Projects associated with the Arts (from theatre to games) have seen the most success on platforms like Kickstarter; Technology has been the least successful ○ Canadian backers pledge $87 on average ○ Most successful campaigns ask for $10,000 or less ○ Globally, Canada is the 3rd biggest country to use Kickstarter (behind the United States and Great Britain) 6.5 — Entrepreneurship toolkit Series of tools helpful for business: value proposition, business model canvas (BMC), and business plans Value proposition: benefits customers can expect (what company offers that they will value) Profile of customer: their jobs (tasks customers wanna accomplish), pains (obstacles in getting job done), and gains (what customers want) Ex. Retail and grocery stores highlight survey opportunities at the bottoms of receipts ○ Questions usually ask about purpose of trip to understand job and how you’d rate experience based on what you liked and what you’d want improved ○ They can use knowledge to evolve value proposition as customer wants/needs change over time Business model: captures how you create/deliver value to customers (value proposition) thru products and capture value as company (earn money thru revenue streams) Business model canvas (BMC): tool that helps new/existing businesses design and map out business models ○ Customer segments → value propositions → channels → customer relationships → revenue streams → key resources → key activities → key partnerships → cost structure Business plan: summarizes idea and how business will operate, can be shared with banks/investors to request funding Aims to capture following details… ○ Nature of business: vision and mission of business ○ Target market: who you’re reaching (need to understand their wants/needs, background, and decision-making process) ○ Understanding competition and industry: how business fits within external environment and assessment of competitive landscape/opportunities/challenges they may face Business should be able to describe what makes them unique ○ Qualifications of ppl involved (key players): their education, experiences, and resources that they bring Common mistakes in writing business plan ○ Ignoring competition, relying on a few customers, procrastinating, and being too optimistic Beyond the readings: business plans advise entrepreneurs how bank looks at their business Bank’s risk evaluation to determine whether to grant loan, interest rate, and conditions Look for detailed business plan to… ○ Highlight business opportunity (backed up by statistics) ○ Introduce team ○ Clearly outline plans for the future Banks will evaluate ability to repay a loan ○ Analyze financial strength of business + personal finances ○ Assets ○ Management credibility ○ Industry, economy, and competition Record keeping: help you know where your business is going to help make informed decisions Making informed decisions through data Accounting systems: capture financial transactions to know how much money company has, how much is being spent, how much is borrowed, and if more funds are required ○ Transactions include buying supplies, paying employees, or taking on bank loan Inventory management: do you have enough materials on hand to make products/deliver services? Track materials you have on hand, what gets used, and what comes in ○ Could cost time/money to stop/delay production → lost sales, unhappy customers customer records: keep customer info up to date, capture additional data in terms of past purchases/prior communications ○ Communications: emails sent, previous touch points w/ customer, and transcripts of past conversations → help tailor future engagement efforts like targeted marketing and promotional efforts Employee records: data company maintains about employees include contact info, roles, responsibilities, performance, and compensation records Test your knowledge Compared to contract manufacturing, following strategies to enter global markets have lower amount of commitments and risk EXCEPT Licensing, franchising, joint ventures, exporting Unit 7: Business models 7.1 — Business models: An introduction Business model suggests how company plans to make money Decisions and considerations that company reflects upon to make money include… ○ What are you providing? Who are you providing the product to? How do you survive and thrive as a company? Business Model Canvas: describe how business model captures how company creates/delivers value (by providing product meeting needs of customers) and captures value by being profitable Example of business model: freemium (free + premium) ○ Apps like pokemon go or fortnite can be downloaded/played for free, but customers have option to download premium features through in-app purchases 7.2 — Business Model Canvas Business model canvas (BMC): helps new/existing businesses design + map out business models Starts from basis of understanding your customers, what they value, and how to manage relationships with them Creating value: value propositions, customer relationships, channels, and customer segments Delivering value: key partners, key activities, key resources, and value propositions Capturing value: cost structure and revenue streams Creating value: when business successfully creates value for its customers, it generates revenue Customer segments: who you plan to reach and serve profitably (grouped into segments if have similar needs/interests, characteristics, or can be reached thru distinct channel) ○ Business segment vs consumer segment (individuals): to assess consumer segments, might want to research demographic factors (age, income, education) ○ Geographic segments: look at customers by city, country, or region (NA, E, A) Value proposition: describes features/benefits offered thru company’s products that customers will value (answers why customer would purchase this product) ○ Should be distinguishable from what’s offered by other competitors + be enticing to customers ○ What customers value may include: product/packaging, quality of service, convenience, brand name, design, and price ○ Ex. Uber ‘s value proposition: convenience and price Channels: how company connects w/ its customers ○ Marketing channels: create awareness about products ○ Sales channels: how customers purchase products ○ Distribution channels: how to deliver products to customers ○ Service channels: provide support to customers after a sale ○ Direct vs indirect channel: direct channel is when company has own stores and indirect is when products are provided thru intermediary like retailer Indirect channels useful to reach larger base of customers– good for new companies/those that want to take advantage of retailers w/ more experience, reach, and previous success w/ distributing products Customer relationships: attract customers and keep them long-term (encourage customers to come back for more– continue to purchase product or buy related one) ○ Company interacts w/ customer to develop relationships: customer support, timeliness of support, and convenience Delivering value: company must acquire/use resources to perform activities and will incur some costs as a result Key resources: tangible and intangible assets that company has ○ Human resources (# of employees and knowledge/skills), physical resources (ex. inventory), financial resources, and intellectual property (intangible) ○ Patents protect new inventions or improvements to existing inventions Key activities: what company does to operate successfully/deliver value ○ Ex. auto manufacturer’s key operational activities include quality production (supplier selection and quality control procedures) Key partners: collaborate to operate successfully ○ Supply chain: company works w/ another company (suppliers) in supply chain ○ Sales: rely on others like retailers to help sell products Retailers: marketing intermediaries that help move products from producer to consumers ○ International expansion: company teams up w/ another company thru joint venture or strategic alliance Capturing value: to capture value, company must aim to be profitable thru efforts to create/deliver value– profitability supports entrepreneur in maintaining/growing new venture or for large public company to please shareholders Revenue streams: examine cash inflows from selling product (current and future) ○ Can be transactional (1 time payment) or recurring (like monthly subscriptions) ○ Transactional revenue streams: product sale ($/unit sold), usage fee ($/night at hotel), advertising revenue ($/click) ○ Recurring revenue streams: subscription fees ($/user per month), renting ($/sqr foot per month), licensing ($ or %/user) Cost structure: costs incurred to operationalize business model– company can make changes to product if constrained by resources and have to budget/manage costs ○ Cost types: from financial reporting perspective (salaries, cost of supplies) ○ Cost behaviour: types of costs that might change if production levels increase Fixed costs: stay same even if production increases (salaries, rent) Variable costs: change if production increases (additional need for raw materials) 7.3 — Introduction to business stages Birth/introduction → breakthrough/growth → maturity/exit Major business functions examine how company creates, delivers, and captures value Marketing creates value, operations/HR/finance deliver value, and accounting captures value Marketing for product: product may be priced high at beginning to capture early adopters and make most profit early in lifecycle of product ○ Price may be subsequently reduced at maturity Unit 8: Marketing 8.1 — Introduction to marketing Marketing: process of creating, communicating, and delivering offerings that have value for customers, starts by knowing how to identify/anticipate needs of market Market: customers w/ wants and needs that have both interest and resources to make purchase Trends in marketing today: importance of data, emphasis on customer relationship management, rise in cause marketing, and prevalence of social media marketing Importance of data: companies collect/analyze customer data to understand current needs/anticipate future ones (ex. Thru loyalty programs, can capture what customers buy, if they used promo offers, when they buy, how often they buy…) Emphasis on customer relationship management: build long-term customer relationships → more cost-effective way to grow bc it can be costly to find new customers Rise in cause marketing: companies take action on issues that matter to ppl (whether it’s directly part of business model, done thru annual initiatives, or how they react to social issues) → customers pay attention to social responsibilities Prevalence of social media marketing: directly/conveniently connect with customers ○ Companies can also benefit from consumer generated marketing (customers freely share experiences) ○ Social media = relationships ○ return on investment of social media is that business will still exist in 5 years ○ 93% of buying decisions are influenced by social media 8.2 — Understanding the customer Market research: process of collecting info to understand customers and make informed decisions on how to satisfy their needs w/ product offerings Helps business to understand who customers are and their preferences, assess business environment (state of economy and competition), and identify opportunities to pursue Secondary research: examines info and stats already available (published surveys, research studies, datasets, or existing company records) ○ Useful in collecting demographics, trends, and current economic conditions ○ Helpful for companies wanting to perform environmental scan of business environment examining PEST Primary research: gather own info directly (surveys, interviews, or observation) – require additional investment of time and money to collect info required ○ Can get more specific info like what products/features customers want, what factors influence buying decisions, and who competitors are (their strengths and weaknesses) ○ Info can be analyzed to find trends/opportunities, further evolve idea/product offering, and make decisions on how to design marketing/promotion mix Effective market research ensures you can align customer needs w/ needs of company (to be cost-effective and profitable) Customer markets: business-to-consumer (B2C) and business-to-business (B2B) B2C: company sells directly to consumers who are usually end users for product ○ More focus on promotional techniques like advertising B2B: company sells to other companies that might be end users for product ○ Personal relationships need to be established– personal selling may be involved (account manager assigned to each large customer to develop long-term relationship to support large ongoing purchases) Market B2C B2B Customers? consumers organizations Customer wants? Products for personal Products to use or sell to consumption others Decision-making process Quick, fewer ppl involved, Longer, more ppl involved, little to no negotiation, can be negotiation can occur, logical emotional approval process Size of purchasing pool Larger pool, makes smaller Smaller pool, makes larger purchases purchases Mass marketing: company attempts to reach wider audience with single product offering Hard to make every customer happy when considering various backgrounds and preferences → companies can focus marketing efforts on specific groups to be profitable Market segmentation: dividing total market into customer segments that have similar characteristics/needs ○ May segment by geographic, demographic, psychographic, or behavioural ○ Target market: segment that is sizable, reachable, and potentially profitable Product may have more than 1 target market Ex. pharmaceutical company promoting a cholesterol lowering drug could have two target markets (consumers seeking out the product, and doctors prescribing/recommending to patients over other competing products) Consumer decision making-process 1. Initial consideration: what they need 2. Active evaluation: what info is available to evaluate alternatives (product details, online reviews…) 3. Purchase decision: deciding on product best meeting their needs 4. Postpurchase experience: assessment on whether product met their needs and how they may continue to engage/interact w/ brand 3 types of influences: social, psychological, and situational influences Social: ⅔ touch points are consumer-driven activities → companies encouraged to target early adopters w/ launch of new products since they’re more likely to share excitement/experiences on social media (which can influence others) Psychological: attitudes/perceptions drive decisions (ex. Hotels may provide eco-friendly options that travellers can choose to reduce impact on env) Situational: coffee shop may have social atmosphere, comfy seating, or convenient access to WiFi 8.3 — The marketing mix (4Ps) Product: good/service offering targeted to customers Design and development: test ideas w/ potential customers before investing lots of effort/money ○ Concept testing: sharing idea w/ potential customers to obtain feedback (what features would be popular, suggestions on how to improve proposed product) Conducted thru primary research sources like surveys Avoids investing time/money in ideas that won’t be successful + obtains additional data to better meet customer needs ○ Test marketing: opportunity to lau