COMM 1800 - Foundations of Commerce Slides (PDF)

Organizational Structure COMM 1800 – FOUNDATIONS OF COMMERCE 97 Organizational Structure All businesses have a structure “The arrangement or relationship of positions within an organization...that guide activities and contribute to obtaining organizational objectives”...

Organizational Structure COMM 1800 – FOUNDATIONS OF COMMERCE 97 Organizational Structure All businesses have a structure “The arrangement or relationship of positions within an organization...that guide activities and contribute to obtaining organizational objectives” Follows from division of labor (Smith) Results in a hierarchy (Weber) Includes rules & regulations to control behavior COMM 1800 – FOUNDATIONS OF COMMERCE 98 Organizational Structure Sources of structure Design – businesses choose structure Context – environments affect structure COMM 1800 – FOUNDATIONS OF COMMERCE 99 Organizational Structure Assigning tasks Specialization (aka Differentiation) Horizontal – how many different jobs Vertical – how many levels Departmentalization Functional – Marketing, HR, Operations Product – Snacks, drinks, sports Geographic – U.S., Europe, Asia Market – luxury, business, leisure COMM 1800 – FOUNDATIONS OF COMMERCE 100 Organizational Structure Assigning responsibility Centralization Delegation of Authority Responsibility v. Accountability Who makes the decisions? Span of management – wide vs. narrow Larger – generally more decentralized COMM 1800 – FOUNDATIONS OF COMMERCE 101 Organizational Structure Assigning rules Formalization Follows from bureaucracy de facto vs. de jure Handbooks, rules, procedures COMM 1800 – FOUNDATIONS OF COMMERCE 102 Organizational Structure Teams in organizations Groups vs. Teams Committees – generally permanent Task Forces/Project Teams – specific change Product Development Teams Quality Assurance Teams Self-Directed Teams Topic is worthy of an entire course COMM 1800 – FOUNDATIONS OF COMMERCE 103 Organizational Structure Conclusions about structure Inherent tensions Specialization vs. Integration Formality vs. Flexibility Impacts many other business functions Driven by design and context Equifinal COMM 1800 – FOUNDATIONS OF COMMERCE 104 Exam/Case feedback Cases were good – application and diagnostic Exams not curved , μ = 83%, high = 98% Will go over harder questions now TA Office Hours for individual review starting Wed Fixed Bookings bug, more slots available COMM 1800 – FOUNDATIONS OF COMMERCE 105 Questions/Reflections #6 Inherent tensions Structure effectiveness and how do businesses choose? Appropriate spans Groups v. Teams Figuring out de facto rules COMM 1800 – FOUNDATIONS OF COMMERCE 106 Marketing Definition “Identifying, anticipating, and satisfying customers’ needs and wants while achieving business objectives. Involves researching, communicating and delivering offerings that bring value to customers.” Part of the broader system Driven by exchange COMM 1800 – FOUNDATIONS OF COMMERCE 107 Marketing Marketing basics Creating value – definition of business Marketing Concept – establish relationships Product – industrial revolution Sales – as supply exceeded demand (20s) Market – meeting customer needs (50s) Value – quality for the money (00s+) COMM 1800 – FOUNDATIONS OF COMMERCE 108 Marketing Marketing basics Market – B2B and B2C Segmentation – subgroups Target Market Positioning COMM 1800 – FOUNDATIONS OF COMMERCE 109 Marketing Developing a marketing strategy Segment →Target →Position Segmentation & Targeting Total/undifferentiated Segmented/differentiated Niche/concentrated Micro/customized COMM 1800 – FOUNDATIONS OF COMMERCE 110 Marketing Positioning How brand is perceived vs. Maintain and improve brand equity COMM 1800 – FOUNDATIONS OF COMMERCE 111 Marketing The marketing mix – the 4 Ps Value Proposition – why buy from you? Not buying, but solving a problem COMM 1800 – FOUNDATIONS OF COMMERCE 112 Marketing The marketing mix – the 4 Ps 1. Product – creating value Goods, services, and ideas that satisfy demand 2. Price – capturing value Is the exchange reasonable Money, time, energy COMM 1800 – FOUNDATIONS OF COMMERCE 113 Marketing The marketing mix – the 4 Ps 3. Place – creating convenience & comfort Availability Supply Chain 4. Promotion – communicating value Design Advertising COMM 1800 – FOUNDATIONS OF COMMERCE 114 Marketing The marketing mix – the 4 Ps Product Price Place Promotion COMM 1800 – FOUNDATIONS OF COMMERCE 115 Survey Time When poll is active respond at PollEv.com/davidcostanza996 COMM 1800 – FOUNDATIONS OF COMMERCE 116 Marketing The marketing mix – the 4 Ps Product Price Place Promotion COMM 1800 – FOUNDATIONS OF COMMERCE 117 Marketing Factors affecting the 4 Ps Marketing research – a lot here Demographics on product reviews Data brokers Consumer behavior Individual psychology Social factors General and Specific environments COMM 1800 – FOUNDATIONS OF COMMERCE 118 Marketing Product strategy steps Develop and screen ideas (variation/selection) Business analytics (internal selection) Describe, predict, prescribe Product development Test market (external selection) Commercialization (possible retention) COMM 1800 – FOUNDATIONS OF COMMERCE 119 Marketing Other marketing issues (connections) Product lifecycle/dynamism Distribution/logistics Push vs. Pull COMM 1800 – FOUNDATIONS OF COMMERCE 120 Marketing Ethics and marketing (connections) Promotion Data privacy Misleading product information Pricing Bait and switch pricing Hidden fees Predatory marketing Mortgages and car loans CSR + marketing Satisfy consumers and enhance well-being COMM 1800 – FOUNDATIONS OF COMMERCE 121 Marketing Conclusions about marketing Key business function Exchange Create value Equifinal COMM 1800 – FOUNDATIONS OF COMMERCE 122 Questions/Reflections #7 Push vs. Pull marketing Marketing ethics and enforcement Four P’s Can marketing overcome a bad product? Targeting – more and more focused Quiz #4 – Canvas issue IP and online research studies this week W-F Case #2 available on Canvas tomorrow COMM 1800 – FOUNDATIONS OF COMMERCE 123 Accounting Definition “Accounting is recording, classifying, summarizing, and interpreting financial transactions and events to provide accurate information about an organization's financial status and performance.” Part of the broader system Point in time Interpretation COMM 1800 – FOUNDATIONS OF COMMERCE 124 Accounting Who uses accounting? Internal stakeholders Executives Managers Owners/investors Managerial Accounting Planning perspective Timeliness for control Formats can vary COMM 1800 – FOUNDATIONS OF COMMERCE 125 Accounting Who uses accounting? External stakeholders Governments, suppliers/distributors, customers Competitors Financial accounting Historical perspective Precision and verifiability Standard rules and procedures COMM 1800 – FOUNDATIONS OF COMMERCE 126 Accounting Equation Assets = Liabilities + Equity Assets – all resources owned/owed COMM 1800 – FOUNDATIONS OF COMMERCE 127 Accounting Equation Assets SC Plant = $12.5 billion Net Inventory = $34 billion Airplanes = $48.5 billion Cash = $111 billion Accts Receivable = $49 billion COMM 1800 – FOUNDATIONS OF COMMERCE 128 Accounting Equation Assets = Liabilities + Equity Liabilities – all obligations owed Taxes Debts Wages COMM 1800 – FOUNDATIONS OF COMMERCE 129 Accounting Equation Assets = Liabilities + Equity Equity – assets claimable by owners Personal investments Accumulated profits Stock held COMM 1800 – FOUNDATIONS OF COMMERCE 130 Accounting Double-entry bookkeeping Record every transaction twice Debit to one, credit to another Examples Buy supplies with cash? Increases assets and decreases assets Buy supplies with debt? Increases assets and increases liabilities Exercise on Canvas – Assignments, Exercises/Practice COMM 1800 – FOUNDATIONS OF COMMERCE 131 Questions/Reflections #8 Accounting and AI Managerial v. Financial Accounting Double-entry – Canvas A=L+E GAAP and IFRS Case #2 – Oct 24th Exam II – Oct 29th Know Chapter 16 Guest Speaker – Oct 31st is Cancelled COMM 1800 – FOUNDATIONS OF COMMERCE 132 Accounting Financial Statements Income Statement: Revenue - Expenses = Net Income (Loss) COMM 1800 – FOUNDATIONS OF COMMERCE 133 Accounting Financial Statements Income Statement: Revenue - Expenses = Net Income (Loss) Gross Profit Margin: Gross Profit/Sales For every $1 of sales, 0.xx of gross profit Net Profit Margin: Net Income/Revenue (sales – adjust) For every $1 of revenue, 0.xx of income Reported in SEC 10-Q COMM 1800 – FOUNDATIONS OF COMMERCE 134 Accounting Financial Statements Balance Sheet: A = L + E Profitability – profit from ops Liquidity – cover short-term obligations Solvency – cover long-term obligations Efficiency – ITO to generate revenue Leverage – amount of debt to finance operations COMM 1800 – FOUNDATIONS OF COMMERCE 135 Accounting Financial Statements Statement of Cash Flows Operating activities Investing activities Financing activities COMM 1800 – FOUNDATIONS OF COMMERCE 136 Accounting Financial Statements Statement of Owner’s Equity Changes due to investments/withdrawals Supplemental to balance sheet COMM 1800 – FOUNDATIONS OF COMMERCE 137 Accounting Financial Statements Limitations Does not capture non-financial factors Position, brand equity, cust sat Many estimates (e.g., depreciation) “Creative accounting” possible Industry, country limit comparability COMM 1800 – FOUNDATIONS OF COMMERCE 138 Accounting Standards GAAP (IFRS) – relevant, reliable Compare companies SEC – transparent, accurate Protect investors COMM 1800 – FOUNDATIONS OF COMMERCE 139 Accounting Ethics Accounting Fraud Future sales in current quarter Keep debts/obligations off balance sheet Faked invoices to inflate revenue COMM 1800 – FOUNDATIONS OF COMMERCE 140 Accounting Conclusions about accounting Key business function Reporting financial transactions Accuracy is key Interpretation and ethics COMM 1800 – FOUNDATIONS OF COMMERCE 141 Money & Finance American Financial System – basics The Federal Reserve Bank (1913) 12 regions Four responsibilities 1. Monetary policy 2. Regulate institutions 3. Manage check clearing 4. Supervise deposit insurance COMM 1800 – FOUNDATIONS OF COMMERCE 142 Money & Finance American Financial System – basics The Federal Reserve Bank 1. Monetary policy Buy/sell t-bills Reserve requirement Discount rate Credit controls COMM 1800 – FOUNDATIONS OF COMMERCE 143 Money & Finance American Financial System – basics Treasury bills short-term (< 1 year), pay interest at maturity, sold @ discount. Treasury notes mid-range (2-10 years), pay interest every 6 months, $100 increments. Treasury bonds long maturities (20-30 years), pay interest every 6 months, sold @ discount. COMM 1800 – FOUNDATIONS OF COMMERCE 144 Money & Finance American Financial System – basics The Federal Reserve Bank 2. Regulate institutions Rules and policies Mergers 3. Check clearing 4. FDIC - $250,000 COMM 1800 – FOUNDATIONS OF COMMERCE 145 Money & Finance American Financial System – basics Banking Institutions Commercial banks Savings & Loans Credit Unions Non-banks COMM 1800 – FOUNDATIONS OF COMMERCE 146 Money & Finance American Financial System – future Cashless society Cryptocurrency Robo/AI investing Non-bank funding sources COMM 1800 – FOUNDATIONS OF COMMERCE 147 Finance Definition “How businesses raise capital, invest in assets, and manage financial risk.” Facilitates financial transactions Interdisciplinary Considers assessment of risk (tolerance) COMM 1800 – FOUNDATIONS OF COMMERCE 148 Finance Finance basics Capital structure Debt (loans) vs. equity (cash, stock) D/E ratio – how risky is the borrowing practice Factors Lifecycle stage – e.g., startup vs. midlife Industry – e.g., energy vs. tech Leadership/firm preference – risk tolerance COMM 1800 – FOUNDATIONS OF COMMERCE 149 Finance Finance basics Capital budgeting Long-term investments Strategic direction – growth vs. stability Alignment w/ long-term goals COMM 1800 – FOUNDATIONS OF COMMERCE 150 Finance Small differences add up Example #1 – You invest $1000/year in the stock market starting at age 25 and stop at age 35. Your friend waits until 35 and invests $1000/year for the rest of their lives. Assuming 10% (historical) return, when will your friend catch up to you? Example #2 – You borrow $500,000 at 6% for 30 years to buy a house. What is the total you will pay the bank? COMM 1800 – FOUNDATIONS OF COMMERCE 151 Survey Time When poll is active respond at PollEv.com/davidcostanza996 COMM 1800 – FOUNDATIONS OF COMMERCE 152 Case #2 – H&M and Gucci Make your pitch Gather in small groups, discuss your ideas, and come up with the best ones to make your case. (5-6 minutes) Pitch it to the jury. All groups contribute. (+/- 10 minutes) Jury decides which side more compelling. (2- 3 minutes) COMM 1800 – FOUNDATIONS OF COMMERCE 153 Exam Instructions Format 50 multiple-choice questions, randomly drawn from question bank, randomly presented 75 minutes Taken in-class, in person, via Canvas Closed book, closed notes Canvass records if and for how long you leave the test administration tab in your browser. So don’t. Students who leave the test administration tab may receive a 0. Logistics Bring your laptop! Make sure it is fully charged Arrive early You must take the exam in your assigned section. If you take it in a different section, you will get a 0. Nothing on your desk except your laptop Phones turned off and away, smart watches off and away COMM 1800 – FOUNDATIONS OF COMMERCE 154 Exam Instructions Logistics No hats or hoods No one in the back row Wait until everyone in the previous section is finished before entering the classroom If you need to use the restroom during the exam, take nothing with you. The timer will continue to run. Use the restroom before the exam starts! Honor Code The UVA Honor Code applies and you must answer “True” to the Honor Code question affirming you have neither given nor received aid on this examination. Not pledging your work will result in a 0. If you retrieve or look at your phone, smart watch, or any other materials during the exam, you may be asked to end your exam, leave the room, and you may receive a 0. Keep your eyes on your own exam. If you look at another student’s computer screen, you may be asked to end your exam, leave the room, and you may receive a 0. COMM 1800 – FOUNDATIONS OF COMMERCE 155 Exam II Review Structure Sources Characteristics – tasks, responsibilities, and rules Teams Tensions Marketing Exchange and creating value Segment, target, and position 4 Ps Market research and consumer behavior Accounting Managerial and Financial A=L+E Double-entry bookkeeping Statements, standards, and limitations COMM 1800 – FOUNDATIONS OF COMMERCE 156 Exam II Review Money The Federal Reserve Banking basics Finance Capital, budgets Case #2 Chapter 16 Managing current assets and liabilities Managing fixed assets Financing businesses Ethics throughout COMM 1800 – FOUNDATIONS OF COMMERCE 157