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Bu121 Final Review
Bu121 Final Review
Out of every $1 taken in, $0.467 will be gross profit. Out of gross profit, the store must still pay
rent, utilities, insurance, and all other costs.
• Discuss pricing strategies that are used in different competitive situations and identify
pricing tactics that are used for setting prices
Pull strategy: A promotional strategy in which a company appeals directly to customers, who then
demand the product from retailers, which then demand the product from wholesalers
• Understand the five components of the promotional mix (advertising, personal selling,
direct/interactive marketing, sales promotion, publicity & public relations)
• Identify common distribution strategies and which types of goods they are appropriate
for
Intensive distribution: occurs when a product is distributed through as many channels and
channel members as possible. Doritos chips flood the market through many different outlets.
Intensive distribution is normally used for low-cost consumer goods, such as candy and
magazines.
exclusive distribution: occurs when a manufacturer grants the exclusive right to distribute or sell
a product to one wholesaler or retailer in each geographic area. For example, Maserati luxury
automobiles are sold by only a single dealer servicing a large city.
Selective distribution falls between intensive and exclusive distribution. A company that uses this
strategy selects only wholesalers and retailers that will give special attention to the product in
terms of sales efforts, display position, and so on. This method is usually embraced by companies
such as Black+Decker, whose product lines do not require intense market exposure to increase
sales.
• Understand the implications of using nondirect distribution channels and how producers
maintain control of the consumer price
Using nondirect distribution channels in a business can have implications such as reduced control
over pricing, dependence on intermediaries, and limited access to direct consumer feedback.
Producers can maintain control of consumer prices by setting a Manufacturer's Suggested Retail
Price (MSRP) or negotiating pricing agreements with intermediaries. However, it can still be
challenging to maintain complete control over pricing in nondirect distribution channels, as
intermediaries may add markups or other costs that can affect the final consumer price.
The various responsibilities of the financial manager in increasing a firm’s wealth fall into three
broad categories:
cash-flow management- Managing the pattern in which cash flows into the firm in the form of
revenues and out of the firm in the form of debt payments.
financial control- The process of checking actual performance against plans to ensure that the
desired financial status is achieved
financial planning- A description of how a business will reach some financial position it seeks for
the future; includes projections for sources and uses of funds.
• Understand how to develop and use a sales forecast from both a top-down and bottom-up
perspective, and why doing so is important
Top-down: Market Analysis from TAM(Total available market), SAM(Serviceable available market),
SOM(Serviceable obtainable market)
Bottom-up:
• Use internal company capacity data
• Review your Channels, Key Activities and Key Partners business model building blocks
• Identify what you, your channel members and/or your partners are ‘actually capable’ of doing
Operations/Human Resources capacity
• If you make products, how many products can you produce?
• If you outsource finished products and/or supplies, what is your supplier’s capacity and lead
time?
• If you offer digital products, how many customers could your server handle? How much would
push notifications/user analytics cost? What level of customer service support is required for
each new customer acquired?
• Understand how to create and use a cash budget, and why doing so is important
1. Set up budget template
2. Determine beginning cash balance
3. Determine projected receipts from sales revenues
4. Determine projected purchase disbursements
5. Enter total receipts into budget and calculate total cash available
6. Enter disbursements into budget and calculate total disbursements
7. Determine cash excess/deficiency
8. Enter target cash balance, compare excess/deficiency to target to determine if cash surplus
exists or financing is required, and calculate ending cash balance
Why important: Cash budgets are useful tools for business managers and especially
critical for startup companies. A cash budget helps you estimate how much cash
your business will be receiving and how much it will need to spend over a specific
period of time. Anticipating the flow of cash will help you determine if you can meet
your financial obligations and stay afloat! Recall that one of the key responsibilities
of the financial manager noted in text chapter 15 is cash-flow management.
• Understand how to determine and use/interpret a breakeven point, and why doing so is
important
1. Identify fixed costs: Fixed costs are expenses that do not change regardless of the level of
production or sales, such as rent, utilities, salaries, and depreciation. These costs are incurred by
the business regardless of its sales volume and are typically considered in determining the
breakeven point.
2. Determine variable costs: Variable costs are expenses that vary based on the level of
production or sales, such as raw materials, labor, and sales commissions. These costs are directly
tied to the volume of sales and production, and are typically considered in determining the
breakeven point.
3. Calculate the contribution margin: The contribution margin is the difference between the sales
revenue and the variable costs. It represents the portion of sales that contributes towards
covering fixed costs and generating profit. The contribution margin is calculated as: Contribution
Margin = Sales Revenue - Variable Costs.
4. Calculate the breakeven point: The breakeven point is calculated by dividing the total fixed
costs by the contribution margin per unit or per dollar of sales. The formula for breakeven point
in units is: Breakeven Point (in units) = Fixed Costs / Contribution Margin per Unit. The formula
for breakeven point in sales dollars is: Breakeven Point (in sales dollars) = Fixed Costs /
Contribution Margin Ratio (contribution margin as a percentage of sales revenue).
Forecast HR supply:
(Internal: Relates to the number and type of employees who will be in the firm at some future
date.
=Replacement chart: lists each important managerial position, who occupies it, how long they
will probably stay in it before moving on, and who is now qualified or will soon be qualified to
move into the position.
=Employee information systems: Systems that contain information on each employee’s
education, skills, work experience, and career aspirations
External:Relates to the number and type of people who will be available for hiring from the
labour market at large.
=Much harder (especially now that some jobs can draw on employees from
anywhere)
= Study population and demographics statistics)
Math HR d&s: If a shortfall is predicted, various strategies can be implemented such as hiring new
employees, retraining and transferring existing employees, persuading individuals approaching
retirement to stay on, or installing productivity-enhancing systems. If overstaffing is expected,
options include transferring employees, not replacing individuals who leave, encouraging early
retirement, and laying off workers.
2.Sourcing Candidates: Once the job analysis is completed, companies need to find potential
candidates through different sources like job boards, social media, career fairs, employee
referrals, and recruitment agencies.
3.Screening Resumes: After sourcing candidates, companies need to screen the resumes and
cover letters of the applicants to determine their qualifications, skills, and experience.
• Describe internal and external recruiting methods and discuss how to improve the
likelihood of success
Internal recruiting: means considering present employees as candidates for openings. Promotion
from within can help build morale and keep high-quality employees from leaving.
External recruiting:means attracting people outside the organization to apply for jobs. External
recruiting methods include advertising, campus interviews, employment agencies, executive
search firms, referrals by present employees, and hiring “walk-ins” (people who show up without
being solicited).
• Describe different selection methods and discuss their strengths & weaknesses
Application Form: An application form is an efficient method of gathering information about the
applicant’s previous work history, educational background, and other job-related demographic
data. Strength: Efficient Low cost. Weakness: Limited information and lack of context.
Interviews: The interview is a popular selection device, but it has become increasingly evident
that it is a poor predictor of job success because of biases inherent in the way people perceive
and judge others when they first meet them. Strength: provide more information. Weakness:
Subjectivity, stressful for candidates, Lack of standardization
Training: The starting point in assessing training is a needs analysis, which determines the
organization’s needs and the training programs necessary to satisfy those needs.
On-the-job training: Development programs in which employees gain new skills while performing
them at work.
Off-the-job training; Development programs in which employees learn new skills at a location
away from the normal work site.
Networking: Informal interactions among managers, both inside and outside the office, for the
purpose of discussing mutual problems, solutions, and opportunities.
Mentoring: Having a more experienced manager sponsor and teach a less experienced manager.
Salary: Dollars paid at regular intervals in return for doing a job, regardless of the amount of time
or output involved.
Benefit programs: Benefits are rewards, incentives, and other things of value that an organization
gives to employees in addition to wages, salaries, and other forms of direct financial
compensation.
Challenges:
Complex, generational changes take time.
Cost: Implementing and maintaining a workforce EDI program can require significant investments
in hardware, software, and IT staff resources.
Data quality and integrity: EDI data must be accurate and complete to ensure the reliability of the
system. Ensuring data quality can be a challenge due to data inconsistencies and errors
• Discuss the use of contingent and temporary workers as important changes in the
contemporary workforce
A contingent worker is one who works for an organization on something other than a permanent
or full-time basis.
Normally used during uncertain economic times and Increased scrutiny and debate about their
treatment and use.
• Describe the current state of employee relations, discuss what burnout is, and what
impacts it has on employees and organizations/economies
The current state of employee relations suggests that there is a growing recognition of the
importance of employee morale, but also a need for organizations to develop tailored
approaches to monitoring and improving morale, rather than relying on a one-size-fits-all
solution.
Burnout: Burnout is a state of emotional, physical and mental exhaustion caused by excessive and
prolonged stress.
When employees experience burnout, it can result in decreased productivity, lower quality of
work, and increased absenteeism and turnover rates.
Impact on organizations/ economies: $1 trillion in lost productivity globally each year, $190
billion spent in health-care outlays, 120,000 fatalities in U.S. alone.
1.Ensure the team is realigned, focused on shared goals, that the norms previously established
are still working and that there is psychological safety
2. Survey your employees (anonymously) to understand their preferences
3. Offer hybrid models with choice/flexibility
4. Upskill everyone on remote work and digital-mindset competencies “Remote work and
virtuality have shifted our norms of working and what’s appropriate: How do we make decisions?
How do we problem- solve? It’s shifted all of that.”
Resource transformation process: operations managers bring raw materials, equipment, and
labour together under a production plan that effectively uses all the resources available in the
production facility. As the demand for a product increases, managers must schedule and control
work to produce the amount required. Meanwhile, they must control costs, quality levels,
inventory, and plant and equipment.
• Identify factors to consider in an operations ‘make vs. buy’ decision
Cost, Capacity, Expertise/skills, Funding, Impact on operations process, Availability of drop
shipping, Strategic importance
• Identify the characteristics that distinguish service operations from goods production
Both service and manufacturing operations transform raw materials into finished products. In
service operations, however, the raw materials, or inputs, are not things like glass or steel. Rather,
they are people who have either unsatisfied needs or possessions needing care or alteration. The
output of service operations is not physical products, but people with needs met and possessions
serviced. Service operations are more complicated than goods production in four ways: (1) the
interaction with consumers, (2) the intangible and unstorable nature of some services, (3) the
customer’s presence in the process, and (4) service quality considerations.
goods producing processes: At the most general level, operations processes for the production of
physical products are either make-to-order (producing custom-designed products for special
order) or make-to-stock (producing standard items in large quantities for consumers in general).
More specifically, operations processes in manufacturing firms can be classified on the basis of
(1) the kind of transformation technology that is used and (2) whether the operations process
combines resources or breaks them into component parts.
• Recognize the link between business strategy and operations capabilities(textbook 288)
Over time, excellent firms learn how to achieve more than just one competence. For example, in
addition to dependability, FedEx is also noted for world-class service quality and cost
containment. To reduce costs, the company eliminates jobs that become unnecessary with
advances in technology; sells off its older, inefficient airplanes; and reduces the number of flights
by careful scheduling.
Outsourcing: Strategy of paying suppliers and distributors to perform certain business processes
or to provide needed materials or services.
• Discuss new trends and examples of supply chain management
New trends:
1.Allows companies to follow products as they move through value chain
2.Consider traditional objectives of reliability and efficiency with new objectives of resiliency and
sustainability not to mention consumer demands for speed and customization!)
3.Seek opportunities to create new business models.
Examples:
Walmart: The retail giant has invested heavily in digital transformation, using technologies such
as AI and machine learning to optimize its supply chain and improve inventory management.
Walmart also aims to reduce emissions and increase the use of renewable energy in its supply
chain.
Zara: The fast fashion retailer has built a highly agile supply chain that allows it to respond quickly
to changing consumer trends and preferences. This involves using real-time data analytics to
track sales and adjust production accordingly.
Amazon: The e-commerce giant has built an omnichannel distribution network that allows
customers to receive products through a variety of channels, including same-day delivery, pickup
at Amazon lockers, and delivery by drone in select locations.