Ten Day MBA by Steven A. Silbiger

Posted by Matthias Günther
  • Shortcuts
    • POP = Point Of Purchase
    • PLC = Product Line Cycle
    • SP = Selling Price
    • SKU = Stock Keeping Unit
    • ADIs = Areas of Dominant Influence
  • p 6: "Buyers many times are different from users" (e.g. women make the purchases for mens underwear in many cases)
  • p 6: buying process: Awareness ("might need something") => Information Search ("sounds good, lets find more about it") => Evaluate Alternatives ("which one is the best for me") => Purchase => Evaluate
  • p 10: Consumer Behavior Matrix: High Involvement and Low Involvement
  • p 14: criteria to evaluate possible marketing segments
    • Measurability: identify the segment, quantify the size of the segment
    • Accessibility: reach the segment through advertising, transportation, warehousing, …
    • Substantially: is the segment large enough to deal with it
    • Profitability: are there enough potential profits there to make it worth to be a target
    • Compatibility with Competition: Competitors interest in the segment, are they currently investigating in the segment or is it not worth their trouble?
    • Effectiveness: does the company have the capabilities to adequately service this segment
    • Defendability: can you defend yourself against a competitor's attack
  • p 16: Market Analysis
    • What is the relevant market??
    • Where is the product in its PLC?
    • What are the key competitive factors in the industry?
  • p 17: "Only marketable products make money!"
  • p 20: key competitive factors: 1. Quality, 2. Price, 3. Advertising, 4. Research and Development, 5. Service
  • p 21: use SWOT for competitive analysis
    • Strength, Weakness (internal factors)
    • Opportunities, Threats (external factors)
  • p 22: "If in an industry the barrier to entry are low, the playing field becomes crowded"
  • p 25: blocking strategy: Depth (company has many products within a category) and breath (company has many products in a variety of product classes) of product lines can be used to prevent competitors from gaining access to the channels of distribution. If they are not on the shelf, your competition can't make any sales.
  • p 25: "What consumers believe is their reality" => image of a product
  • p 28: "Everyone who touches the merchandise takes a cut, which is called margin"
  • p 31: Four C's of Internet marketing: commerce (allows sales 24/7 per week), content (the content of Web site is an extension of the product), customer care (customers access their accounts, check deliveries), convert leads (convert leads from your Internet and other marketing efforts, such as television, radio, and PR)
  • p 36; cooperative advertising: when manufacturers shares the cost of advertising with retailers
  • p 39: GRP = Reach x Frequency => this formula deals with advertising
    • GRP = gross rating points
  • p 51: sunk cost => dollars sunk in the ocean of the TV land
  • p 63: Forms of relativism: reasons to avoid making ethical decisions
    • native relativism: every person has his own standard that enables him to make choices
    • role relativism: distinguish between our private and public roles, example is fishing company who has to kill fishes to earn money but his personal feelings are against it
    • social relativism: people refer to social norms to render ethical judgments
    • cultural relativism: holds that there is no universal moral code by which to judge another societies moral and ethical standards
  • p 66: steps to make stakeholder analysis
  • p 71: in biblical times the accountants kept track of how much grain was stored in the communities silos
  • p 72: Accounting answers the following questions about a business:
    • What does a company own?
    • How much does a company owe to others?
    • How well did a company operations perform?
    • How does the company get the cash to fund itself?
  • p 73: Accounting GAAP = Generally Accepted Accounting
  • p 87: Networking Capital = Current Assets – Current Liabilities
  • p 89: Income = Revenue – Expenses
  • p 101: Increases in current assets use cash while decreases in current asset produce cash
  • p 101: Increases in current liabilities increase cash while decreases uses up cash
  • p 105: Liquidity Rations: Current Ratio = Current Assets/ Current Liabilities => Can the company pay its bills? A ratio greater than 1 means liquidity
  • p 121 – 123: The Organizational Behavior Problem-Solving model: Defining gaps and causal chains of the problem
  • p 124: APCFB Model to describe the behavior of people in organsations: Assumption => Perceptions => Conclusions => Feelings => Behavior
  • p 126: Expectancy theory outlines the factors that produce motivation with individuals
  • p 127: Motivation = Expectation of Work will lead to Performance x Expectation Performance will lead to Reward x Value of Reward
  • p 127: Hertzberg, Maslow and McCloud have theories to explain behavior; so behavior is motivated by the urge to satisfy needs
  • p 129: employee happiness is quality of work life and when the employees are given the chance to be all they can be, this can be described as empowerment
  • p 130: Leadership VCM Model => Vision, Commitment, Management Skills
  • p 136: managing upwards => managing your boss
  • p 138 Five powers on the MBA job: Coercive, Reward, Referent, Legitimate, Expert
  • p 139: MBO = Management by objective, so the boss delegates tasks to subordinates and was invented by Peter Drucker
    • MBWA = Management by walking around, was used at Hewlett-Packard
  • p 140: 6 elements of organizations: Climate (emotional state), Culture (mix of behaviors, beliefs, symbols that are conveyed to peopöe throughout an organization, Strategy (plan for success in the marketplace), Policies & Procedures (formal rules captured in a handbook), Structure (functional, line, matrix, Systems (for allocating, controlling, monitoring different aspects of the organization like money, things and people)
  • p 148: RIF = reduction in force (means firing people)
  • p 151: System theory = think of organizations as living systems
  • p 153: evolution and revolution as organizations means that after ever period of growth (Evolution) a crisis (revolution) => this is explained by a nice example with Apple
  • p 155: Change Management Strategies: Situation => Action Needed for Change
  • p 166: Cash Flow Analysis: "What does the investment cost and how much cash will it generate each year?"
  • p 172: Net Present Value: A dollar today is worth more than a dollar received in the future
  • p 207: Capital Asset Pricing Model (CAPM): Determines the required rate of return of an investment by adding the unsystematic risk and the systematic risk of owning this asset
  • p 214: Duration of a bond: Is the time the bond makes to return half of its market price to the investors
  • p 216: junk bond: is a bond that has high risk of default and they pay higher rates to investors
  • p 218: How to value Internet firms? These firms have no earnings and no dividends; see pages 218 – 221 => they are very theoritical but it is possible to use them
  • p 219: *Prices-to-Sales Ratio *- In this formula stock price are divided by sales
  • p 219: *Asset Value per Share *- when a company's assets value divided by the outstanding shares is more valuable than the prices of the stock indicates
  • p 221: options are contractual rights to buy or sell any assets at a fixed price on or before a stated date
  • p 222: calls and puts
    • calls are options to purchase stocks
    • puts are rights to sell a stock to somebody else
  • p 223: Black-Scholes Option Pricing Model is standard for options valuations and an option's values is determined by five factors
    1. Time until expiration: the longer the option time, the more chance of a desired price movement
    2. Different between the current stock price and the strike price: the closer the strike price is to the current price the more probable it is that the current price movements can meet or exceed it by the expiration date
    3. The price volatility of the stock: The more volatile the price movement of a stock, the more likely that a price movement could jump near the strike price
    4. Market rate of interest on short-term government securities: If the cost of financing the transactions is high, then the option price has to be higher to cover the handling costs of the transaction
    5. Dividend payments on the stock: Option owners do not collect the dividends on the underlying stock, but the stock price that influences the option price is affected
  • p 226: Hedging is buying an option to offset a possible decline in value in an owned investment
  • p 226: Hedging is the cause why many people view the options market as a way to shift risk from one inventor to another
  • p 228: Payback Period Method = Number of Years to recover initial investment
  • p 228: "By accepting projects with longer paybacks, management accepts more risk"
  • p 229: "The further in the future a dollar is received, the greater the uncertainty that it will be reveived (risk) and the greater the loss of opportunity to use those funds (opportunity costs)"
  • p 229: NPV = Cash to be Received x (1 + Discount Rate)^(Number of Periods)
    • the NPV is flexible in making calculations that are useful in comparing different projects
    • when the investment is risky, a discount rate of 15-20% is suitable
  • p 230 Profitability index (PI) = NPV of Future Cash Flow/Initial Investment
    • the NPV of Future Cash Flow is the sum of all NPVs
    • PI shows you the best group of projects
    • in situations where money is unlimited all PIs > 1.00 would be accepted
  • p 231 – 233: Five basic ways of financing a companys needs
    • 1. Supplier Credits: Companies buy staff and have a limited time to pay their bills
    • 2. Lease Financing: Leasing goods and equipment for short periods (operating lease) or for longer periods (capital leases)
    • 3. Bank Financing: Banks can loan money for long or short periods of time
    • 4. Bond Issuance: Bonds have fixed-interest-rate contractual payments
    • 5. Stock Issues: have non contractual, non-tax-data-deductible dividends payments
  • p 233: dividends are not tax-deductible
  • p 233: NASDAQ = National Association of Securities Dealers Automated Quotation System
  • p 233: When a stock is not limited on an exchange, but publicly traded, it is traded *over the counter *(OTC)
  • p 234: Investment bankers assist in the sale of new shares in companies
  • p 234 – 235: FRICTO is a useful checklist in sorting out capital structure issues
    • Flexibility: How much finance flexibility does management need to meet unforeseen events?
    • Risk: How much risk can management live with to meet foreseen events such as strikes an material shortages?
    • Income: What level of interest or dividend payments can earnings support?
    • Control: How much stock ownership does management want to share with outside investors?
    • Timing: Does the debt market offer attractive rates?
    • Offer: Many other factors affect the paths managers take
  • p 244: Type of Acquisitions
    • merge = two companies decide to join forces to become one company
    • acquisitions = if one company buys another company; if both parties agree to the purchase, it is called friendly acquisition, if not, it is called a hostile takeover
  • p 245: The total value of a company is called enterprise value (EV)
  • p 255: Production and Operation Management (POM)
  • p 256: Frederick Taylors invented a process called job fractionalization => beating down a job in smaller components
  • p 257: Gilbreths => seventeen types of body movements that cover a factory workers motion
  • p 257: Mayo discovered the Hawthorne effect: changes in light have influence in the workers productivity
  • p 258: McGregor Theory X and Theory Y
  • p 259: The problem solving framework for operations:
    • Capacity, Scheduling, Inventory, Standards, Control
  • p 260: M's of capacity: Methods, Material, Manpower, Machinery, Money, Messages
  • p 270: Kanban => Factory line workers request parts as needed and not before to have them stored in stock
  • p 272: Economic Order Quantity: Is a formula to order the right quantity your need for your business
  • p 279: Genichi Taguchi: "Society does not lose anything from a thief as it is a redistribution of wealth, but everyone loses when poor-quality products are made."
  • p 311: Okuns Law: Higher Levels of economic growth are accomplished by lower unemployment
  • p 315: exchange rate between different currencies depends on supply-and-demand relationship
  • p 318: Description how to perform Country Analysis
  • p 325: Seven S Model for strategy as part of an organization
    • Structure, System, Skills, Staff, Style, Superordinate Goals, Strategy
  • p 336: Ansoff Matrix = classifies routes for business expansion
  • p 337:Michael Porter: "Five Forces Theory of Industry Structure" to help companies survive in a competitive environment
    • Threats of Substitutes
    • Threat of New Entrants
    • Power of Suppliers
    • Power of Buyers
    • Rivalry Among Competitors
  • p 341: Generic Strategies for Organizations
    • Cost Leadership: Achieving the lowest cost of production in an industry, so the industry can either reduce its prices or keep the increased profits to invest in research to develop new and better products
    • Differentiation: The product appears different in the mind of the consumer like better design, reliability, service and delivery
    • Focus: A company concentrates on either a market area, a market segment, or a product
  • p 342: economics of scale = of one produces more, the costs per unit fall
  • p 349 – 355: Portfolio Strategies
    • BCG: Cash Cow, Dog, Question Mark, Star (4 fields in a matrix)
    • McKInsey Multifactor Analysis: Business Positions, Industry Attractiveness (9 fields in a matrix)
    • Arthur D. Little Systems: Industry maturity level and competitive positions (24 fields in a matrix)
  • p 388: "If you knew that you could handle anything that came in your way, what would you possibly have to fear? All you have to do to diminish your fear is to develop the trust in your ability to handle whatever comes in your way." Susan Jeffers