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91 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Name all 6 critical success factors |
1) Achieving financial performance 2) Meeting customer needs 3) Building quality product and services 4) Encouraging innovation and creativity 5) Gaining employee commitment 6) Creating a distinctive competitive advantage |
A Mom Begs Eyeore Grumpy Cat AMBEGC |
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Name the elements to achieving financial performance |
- maximizing profit - utilizing debts - high return on investments - achieving growth |
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Name the elements to meeting customer needs |
- making sure customers are satisfied - keeping them loyal - anticipating customers' wants and needs |
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Name the elements to building quality products and services |
- building a product that gives you the best value for your dollar |
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Name the elements to encouraging innovation and creativity |
- being creative can encourage new customers |
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Name the elements to employee commitment |
- they are what make a company move forward - if you don't create employee commitment, your best employees will leave |
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Name the elements to creating a distinctive competitive advantage |
- you get to name your price bc customers can only get it from you |
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Why is each important? Why must you pursue all of them? |
A chain is only as strong as its weakest link |
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Name how achieving financial performance connects to the other five critical success factors |
Meeting customer's needs: satisfied customers are more likely to purchase your products Building quality products: spend less money on repairing faulty products Encouraging innovation and creativity: Create a better product that costs less to produce Gaining employee commitment: Employee commitment leads to efficiency Creating a distinct competitive advantage: A unique product is allowed to name its price and doesn't have to adhere to typical competitive pricing standards |
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Relate gaining employee commitment to each of the critical success factors |
Achieving financial performance: committed employees are more efficient Meeting customer needs: committed employees want to make sure you're meeting customers' needs Building quality products and services: Committed employees consider their work a representation of themselves and want to create something of quality Encouraging innovation and creativity: with every pair of hands you buy, you get a mind free of charge Creating a distinct competitive advantage: employees that want to build better products are going to work collectively to build something unique that sets you a part with a combination of quality, innovative thinking and passion towards meeting customer needs |
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Relate encouraging innovation and creativity to building quality products and meeting customer needs and creating a distinctive competitive advantage |
- you can create a product that's considered different and thus perceived to be better quality. - customers are always looking for the next best thing. you're satisfying their needs by giving them a new product. - having a unique product will mean you offer something that no one else does |
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Name the factors to maximizing profit |
You need: vision -> mission -> strategy (with internal organization aiming the bow). Make sure you take your external environment into account (PEST & Five forces) |
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What questions does a mission ask? How does it guide strategy? |
-How will you achieve your vision? -Guides strategy by listing goals to reach Eg. What do we do? How do we do it? Who do we do it for? Samsung: Why? To inspire the world. How? Innovate technologies, products and designs that benefit and enrich |
Who? What? How? Why? |
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What does a vision do? How does it guide strategy? |
- Reflects your purpose & values. - Keeps your focus - Guides strategy by keeping focus on your desires future (Aka where do we aim to be?) Eg. Samsung: "Inspire the world, create the future" |
Where |
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Diamond-E Framework 1) What does it do? 2) Why do we use it? 3) What are the factors? |
1) helps us develop a strategy by taking key variables into account 2) to assess current strategy, create new strategy and evaluate strategic proposals 3) Management preferences, Organization, Resources, Strategy |
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Management Preferences: |
- Biases, desires, objectives that are personified in the vision and mission statements |
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Organization: |
Structure, culture and capabilities of the company. How they divide and mange themselves. |
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Resources: |
Financial, human, and capital resources the company has. (eg. the skill sets, money, machinery, engineers, marketing) |
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Strategy: |
The vision and mission determine strategy along with the environment |
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Which element in the Diamond-E is the most critical? |
Strategy |
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Resources -> MP |
If you have a lot of money, that management will be influenced to pursue different options. Alternatively, if you have no money, they'll be inclined to figure out bootstrapping techniques like retasking resources you have |
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O -> MP |
What capabilities we currently have will determine choices the MPs will make |
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Resources -> Strategy |
What resources we have will determine what strategy will work for us |
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Organization -> Strategy |
Our capabilities will help focus us on developing a strategy that utilizes what we're good at |
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Strategy -> Organization |
Depending on our strategy, you'll alter your organization in terms of resources or capabilities, or acquire them to fulfill your strategic move "reorganize" |
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Strategy -> Environment |
Strategy will need to adapt to the environment. Companies who don't take this into account will fail. |
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Why do you need to take all of the diamond-E variable into account? |
Any variable can either drive or constrain a strategy from being effective
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What is the principal logic behind the Diamond-E Model? |
- sometimes you need to alter your strategy (small or big) - consistency internally leads to performance - alignment externally ensures strategy right for given environment |
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What is an external analysis? |
- Process of scanning and evaluating the external environement - How managers determine opportunities (positive external trends or changes) and threats (negative external trends or changes) |
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What are the pros and cons to conducting an external analysis? |
Pros: Makes managers proactive, provides useful info used in planning, helps organization get resources, helps organization cope with uncertainty, improves consistency and performance cons: forecasts and trend analyses are imperfect, rapidly environment, time consuming |
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General vs Specific environment analysis. What does each do? With what known analyses? |
General affects all businesses (PEST model). Identifies general trends and changes. Specific affects industry participants (Porter's 5 forces). Predicts industry profitability, helps determine whether and/or how a firm can create an attractive position in that industry |
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(PEST) Political elements and their importance |
- Laws, regulations: makes it easier/more difficult for businesses (e.g. illegal to smoke in buildings) - Taxes: lower taxes -> more money to spend - Trade agreements: freetrade -> canadians innovated and wound up better off - Political system: less regulation - Political stability: liklihood they'll follow certain trends like types of laws or taxes |
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Political analysis business implication? |
affects uncertainty, risk, and constraints/costs faced by firm |
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How to do an external analysis? |
Analyze general environment (PEST) and its trends and changes, and specific environment (5 forces) Look for data, statistics, trends, forecasts, expert opinions, etc. |
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Why are the political factors important to asses? |
Protection of consumers, support for and protection and regulation of domestic businesses, opportunity creation in foreign markets |
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(PEST) Economic factors. Why? |
Affect economic growth, measures: aggregate output, GDP, GNP, economic stability, employment) |
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(PEST) Economic factors: elements |
- Inflation: debt + interet - Deflation - Employment rates - Exchange rates (high CAD better for importing, low CAD for exporting bc their good becomes cheaper abroad) - Balance of trade: you want to sell more than you guy - Productivity: promotes growth |
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(PEST) economic business implication: |
affects costs, sales, financial uncertainty |
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(PEST) social factors: elements and their importance |
- Customs (eg christmas in canada) - Values (eg Canada values healthcare) - Attitudes (eg the change in smoking) - Demographic characteristics: how many immigrants? men vs women in the workforce? |
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(PEST) social factors: why? |
affect customer preferences and worker attitudes and behaviors: what they want and how they want it |
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(PEST) social factors: business implication |
affects how we live, work, consume and produce. (eg. millennials take the time to analyze the social responsibilities of a company we'll potentially work for). |
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(PEST) technological factors: Why? |
Demands constant learning and scanning bc you never know where the next breakthrough will come from |
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(PEST) technological factors: Elements and their importance |
- Internet: being to share info has affected buying, selling, and communication (eg international business w/o fees) - Information tech: they affect information access since the seller and consumer has access to this data (eg work closely with suppliers). Also affects inter-firm cycle times (eg. direct deposit) - not ltd. to computers and info. (eg mechanical pencil is a tech advancement) |
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(PEST) technological factors: business implication |
affects what we produce/what it can do. & how we produce/how we sell. |
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What ultimately affects the price of a product? |
Competition |
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(5 forces) Name min. 3 factors, its effect, and the solution for substitutes |
- HQ substitutes -> prices will go down bc you can't let your product stray far from the substitutes' price, and increases marketing costs -> strong marketing/differentiation - Low switching costs -> increases marketing costs to convince them your product is better -> strong marketing/differentiation - High buyer propensity to substitute -> the more you need to spend to keep your customers -> lock in customers with brand loyalty |
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(5 forces) Name min. 3 factors, its effect, and the solution for buyers |
-Few/Concentrated market -> few buyers = buyers have more power -> form alliance with other sellers -Discretionary purchase -> they don't need what you're selling and you'll be forced to reduce prices -> spend on marketing to convince customers they need your product -Standardized -> have to offer competitive pricing -> create brand loyaty and spend more on marketing -low switching costs -> offer competitive pricing -> create switching costs and create brand loyalty |
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(5 forces) Name min. 3 factors, its effect, and the solution for suppliers |
- Few suppliers -> increases costs -> form strategic alliance like a partnership where you buy each other's shares - few good substitute suppliers -> main supplier can negotiate the price bc they know you don't want that shitty substitute -> form that alliance brah - high switching costs -> you have a working relationship and you're less willing to leave which mean you'll pay higher prices -> ALLIANCE. BUY THOSE SHARES. maybe even in the long run you can redesign your product so you won't need that supply no more! - threat of forward integration -> your suppliers would become your competition with the advantage of supplying themselves -> well then backwards integrate and beat them at their own game |
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(5 forces) Name min. 3 factors, its effect, and the solution for industry competitors |
- More competition -> downward pressure on prices bc the market is divided among more competitors -> growth, acquisition of competitors. gobble em up - Small number of suppliers -> inreases competition b/n industries for those supplies -> form partnership with supplier - Industry growth -> low growth + more customers = less rivalry. high growth + less customers = more rivalry -> differentiation - capacity -> if people are at their capacity it'll decrease competition (opposite does the opposite) - low consumer switching costs -> increases rivalry -> create switching costs - products are commodities or perishable -> increases rivalry -> marketing/differentiation |
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(5 forces) Name min. 3 factors, its effect, and the solution for potential entrants |
- regulations and patents -> higher barriers of entry - absolute cost advantages (another company's ability to produce more for cheaper) -> drives prices down -? competitive pricing/differentiation - lack of capital intensity -> more money = higher barriers -> grow to achieve scale - no specialized assets (network, knowledge, tech) -> lower barriers to entry -> create relationship with distribution networks which makes it harder for new entrant to gain access to them - regulations/gov't policy -> gov't policy create high barriers to entry -> lobby gov't - low switching costs -> drives prices down -> differentiate/create brand loyalty/indentity, lock customers in |
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What can a firm do to reduce the impact of each force? |
- Create a competitive advantage, be innovative, and make their product better - gain customer loyalty, customers loyalty program, discounts, contracts - potential entrants: by being innovate & creative, by gaining lots of capitals - threat of substitutes: reduce this by creating a distinctive competitive advantage - bargaining power of suppliers: making deals with suppliers to make sure that you can buy their products aka strategic alliance - Bargaining power of buyers: eliminate substitutes from the market, cheaper costs or more affordable for people to buy, create your own competitive advantage by differentiating yourself |
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What is entrepreneurship? |
Identifying an opportunity and accessing resources to capitalize on it |
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What's a new venture? |
Recently formed organization that sells good/services |
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Why is entrepreneurship important? |
- contribute 30% to GDP anually - provide more jobs than large businesses - NVs lead in new products and services |
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List the entrepreneurial process |
1) Entrepreneur 2) Identify opportunity 3) Access resources |
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How can the government support and help entrepreneurs/NVs/Small businesses? |
- lower tax rate - offer resources (like advice or funding) - ease of establishment |
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How is the entrepreneurial process similar to Diamond-E? |
- Just like Diamond-E, if one of the elements isn't there you won't be successful - Components critical to success - Entrepreneur is similar to the MP (likes/dislikes) - The entrepreneur is to a degree the capability - A lot of the skillset (resources) are determined by the entrepreneur - the Environment portion of Diamond-E is a lot like identifying opportunity, because the environment inspired it |
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What is opportunity recognition? How does it happen? |
- coming up with an idea and making sure it's worth pursuing - idea generation (often paradigm shifts (eg fan to A/C), an idea that originated from a problem, combining functions, offering a lower-priced or more convenient version of an existing product |
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Screening for viability: Why & How? |
Why? Weeding out bad ideas saves time and money and ensures you have a good idea How? 3 component process. 1) idea creates or adds value for customer (solves a problem they'll pay for) 2) provides competitive advantage (it's unique) 3) the idea is marketable and financially viable (are there enough people willing to buy it? is the market growing/shrinking? who are the key competitors and what forces affect the profitability?) |
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Accessing resources: what and how? tradeoffs? |
- Bootstrapping: make do with as few resources as possible/ use other people's/get free sh*t - Debt vs equity financing: debt = interest + control equity = sell shares (and control) of your company. sources = your savings (creates equity), love money, private investors (angel investors), venture capitalists - Crowdfunding: initiator + backer + platform -> reward's-based + equity |
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Social entrepreneurship: what is it? Stakeholders? |
-Primary motive is creating social value rather than financial value - Economic value is a by-product - They help overcome market inequalities/failure by seeking innovativesolutions to the world’s toughest problems often in areas of education, healthand environment - They have accountability to community stakeholders rather than onlyinvestors/shareholders - A charity relies on… charity while a social business relies onself-sustainability |
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Comparing Social and Traditional entrepreneurs. Similarities? |
- They both require economic success to continue to function - Both of them acknowledge their CSRs - They both need to be self-sustainable |
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Comparing social and traditional entrepreneurs. Differences? |
- Social has social benefit as their primary motive while traditional focuses on high-net profit. - Traditional considers social benefit as a by-product, while social focuses around it. - Traditional serves markets who can afford new products, while social targets underserved populations - Social considers economic wealth as a by-product to allow self-sustainability |
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Name the 4 pillars of the Canadian Financial System |
1) Chartered Banks 2) Alternate Banks 3) Life insurance companies (specialized internediaries (eg. finance companies, VC firms, mutual & pension funds)) 4) Investment dealers |
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List at least 3 characteristics of chartered banks |
-Publicly traded and for-profit - Largest and most important institution - Concentrated and highly regulated - Serve individuals, businesses and other |
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List at least 3 services a chartered bank offers |
- Major source of short and long term loans - 3 main international services: 1) exchange currencies 2) issue a letter of credit 3) draw up a banker's acceptance - EFT (ATMs, direct deposit/withdrawals, point-of-sale transfers (tap on debit), Smart cards) - financial advisement - debit and credit cards - savings and chequing accounts |
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What is a reserve requirement? |
Banks are required to keep a portion of their chequable deposits with the Bank of Canada (aka not spend all the money you give them) |
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Name 3 changes in banking |
1) Deregulation: process of eliminating and simplifying laws that apply to banks to allow them to offer more diverse financial services and open up new revenue streams for Canadian banks 2) Changes in consumer demands: consumers are turning to electronic banks which means traditional banks are offering more services 3) Banks are getting more involved in selling services related to the other pillars, like selling insurance, which is blurring the lines between the pillars 4) Changes in international banking: foreign banks are now allowed to do business in Canada, and Canadian banks have become stronger by strengthening acquisitions overseas and improved inefficiencies in Canada |
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The Bank of Canada: How can they increase money supplies? |
They can increase money supplies by buying gov't securities and lowering the bank rate, which inspires people to take out more loans at the lower rate. (opposite does everything opposite) |
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What is a trust company? |
A trust company safeguards property, like funds and estates, entrusted to it. They may also serve as a trustee, transfer agent and registrar (keeper of records) for corporations |
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What is a credit union? What's its french name? |
Cooperative savings and lending association formed by a group with a common interest. "A nonprofit-making money cooperative whose members can borrow from pooled deposits at low interest rates" Caisses populaires |
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Define life insurance |
Mutual or stock company that shares risk with its policyholders for payment or premiums |
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Define factoring company |
buys accounts receivables (amount due from credit customers) from a firm for less than their face value and then collects the face value from receivables (there's a risk that the account is uncollectable) |
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Define financial corporations |
Sales finance company: specializes in financing installment purchases made by individuals or firms (like paying installments on furniture). The item you bought is the security for the loan. Consumer finance company: makes unsecured personal loans to consumers |
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Define venture capital firms |
provides funds for new or expanding firms thought to have significant potential |
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Define pension funds |
accumulates money that will be paid out to plan subscribers in the future |
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Describe gov't financial institutions and granting agencies' functions |
- supply funds to new and/or growing companies (established firms can also use some of them) - provides equity financing and management counselling services in hopes these companies can provide people jobs |
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Who borrows from international sources of funds? |
Canadian provinces borrow extensively and so do Canadian corporations |
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What does the value of a dollar reflect? |
The value of a given currency reflects the overall supply and demand for the currency both at home and abroad |
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Do exporters want a higher or lower dollar |
They want a lower dollar. A higher dollar makes their product more expensive abroad and people will be less likely to buy it |
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Differences between an overvalued vs undervalued currency |
Overvalued: its exchange rate is warranted by its economic conditions, and its high costs make it less competitive. Undervalued: low costs and prices |
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What happens to products abroad if a gov't devalues/revalues the nations currency |
Devalues: it'll be cheaper in other countries Revalues: more expensive in other countries |
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What is the law of one price? |
the principle that determines if a country is over or undervalued by the concept that identical products should sell for the same price in all countries |
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What is the international bank structure? |
worldwide banking relies on a loose structure of agreements among individual countries or groups of countries where local standards and laws vary greatly |
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What is the World Bank? |
A UN agency that provides a ltd. scope of financial services like funding national improvements in undeveloped countries |
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What is the IMF |
(International Monetary Fund) A UN agency consisting of 188 nations that have combined resources to promote stable exchange rates, provide temporary short-term loans, and serve other purposes |
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What pillar are the primary and secondary markets a part of? What are they? |
They're investment dealers. Primary markets are investment bankers/dealer who advise and underwrite Secondary markets are places like the Toronto Stock Exchange and other exchanges |
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Why would you go to pillars 1 & 2? |
You would do go to chartered banks or alternate banks if you want to borrow money and don't want them to buy pieces of your company. They offer smaller sums. More for smaller companies. |
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Why would you go to pillar 3? |
You would go to (eg insurance companies, venture capitalists) when you don't want to make your shares public, but you're still willing to sell equity (little pieces of control). Best for medium/large private companies. |
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Why would you go to pillar 4? |
You go to investment dealers when you want a large sum of money (tens of millions of dollars for a long period of time). Only very large businesses will go to investment dealers. You will be going public with your stocks and bonds. |
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How do critical success factors apply to different kinds of businesses? |
- You have to alter your strategy to appeal to different demographics (meeting customer needs) - Type of innovation you encourage will depend on the business sector you're in - Financial performance is a loose concept in relation to NFPs and NGOs |
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