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42 Cards in this Set
- Front
- Back
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What are some financial ratios that will show the financial position of the firm? |
1. Liquidity Ratios - shows the ability of the firm to meet short term obligations 2. Leverage Ratios - shows the ability of the firm to meet long term obligations |
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What is the idea of liquidity? |
-- Assets are said to be liquid if they can be sold easily be converted into cash |
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What is the importance of a liquidity ratio such as the current ratio (page 390)? |
current ratio = Current Assets / Current Liabilities
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What is the main idea to keep in mind in any financial ratio? |
A financial ratio does not stand alone |
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What should we compare a financial ratio to? |
Past Ratios Industry averages Rivals that are public companies |
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Four key perspectives with the balanced scorecard: |
1. Customer Perspective 2. Internal business perspective 3. Innovation and learning perspective 4. Financial perspective |
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What is the idea behind the balanced scorecard? |
To put together some specific, measureable goals that relate to a firm’s stakeholders. |
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Are company resources and capabilities enough for it to seize market opportunities and nullify threats? |
SWOT analysis answers that question Strengths Weaknesses Opportunities Threats |
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What are some examples of potential internal strengths? |
Product innovation capabilities Proprietary technology / important patents Alliances with other firms that provide access to valuable resources Strong brand name image / company repuation |
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What are some examples of company resource weaknesses and competitive deficiencies?
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High debt loads Too narrow a product line relative to rivals Behind on product quality, R & D, and / or technological know-how Short on financial resources to grow the business and pursue promising initatives
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Why are market opportunities a big factor in shaping a company's strategy? |
-- need to ID each market opportunity and assess each growth potential and profit potential to be able to tailor the strategy to the firm’s situation |
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What are some examples of potential opportunities? |
Acquiring rival firms with attractive technological expertise or capabilities
Serving additional customer groups or market segments
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What makes some opportunities more appealing than others? |
Estimated profit potential and growth rate The opportunity matches up well with the firm’s resources and capabilities |
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How do we know if an event is a potential external threat? |
Reduction of profits or elimination of the firm (hostile takeover) |
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What are some potential external threats to a company's future prospects? |
A shift in buyer needs and tastes away from the industry’s product
Slowdowns in market growth
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What are the next steps after a SWOT analysis is performed? |
Draw a conclusion on the company’s overall situation Making sure that the strategy is in step with the SWOT analysis |
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What is the impact on developed economies from intellectual assets and intangible people skills? |
Over 50% of GDP is knowledge based |
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What is included as intellectual capital? (Exhibit 4.1) |
Human capital Social capital Intellectual property |
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What is human capital? How do you increase human capital? |
Knowledge, skills & abilities increased by formal schooling, on the job training, experience |
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How would social capital increase when you go from working from home to working from the office? |
-- + your network of both formal and informal relationships
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How do we know the difference between explicit knowledge and tacit knowledge? |
· Explicit knowledge Easy to write down and capture · Tacit knowledge Knowledge built over over time, in the minds of employees |
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What is intellectual property? |
ideas, innovations and creations that protected by law (copyrights, patents, trademarks) |
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What is the main benefit of the protection given with intellectual property? |
Exclusive rights to to extract value from a creation or invention for a long period of time |
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How do leadership, culture and trust play a central role in the creation of knowledge? |
Create an environment where employees want to share their ideas and work together. |
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According to Tom Stewart from Harvard Business Review (HBR), how do firms protect their human capital? |
Diversifying ownership of vital knowledge by having employees work in teams Keep knowledge and skills current with learning programs Contracts and financial incentives that keep an employee with the firm (golden handcuffs) |
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What are the three interdependent activities of human capital? (Exhibit 4.2) |
1. Attracting Human Capital 2. Developing Human Capital 3. Retaining Human Capital |
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What is the 'lock and key' mentality? |
Fit the key (job candidate) to fit the lock (the job) |
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How can the 'lock and key' mentality present a problem? |
Focuses on task specific skills (candidates can learn these skills quickly) Should focus on key employee mindsets, attitudes and social skills |
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How does Southwest Airlines hire for attitude? |
found that people are either “other focused” or self-focused - 90% of customer complaints from self-focused employees |
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What is the most common hiring mistake? |
Hiring people that have the right skills but not the right mindset all based on the belief that “we can change them” |
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What is one of the best sources of new employees? |
Employee referrals |
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People are going to fit in better and faster, less need for rules, regulations and monitoring |
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What is Motorola's return on training?
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For ever $1 spent on training returns $30 in productivity gains over the following 3 years
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Why is it important to have leaders from all levels of the organization involved in developing human capital? |
Shows the importance of this area, becomes part of the organisational culture, so it’s everyone's responsibility not just HR |
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Why is monitoring progress and tracking development essential to developing human capital? |
-- helps employees know how they are doing -- what they need to work on -- where else in the company they may thrive |
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Why is retaining Human Capital such an important topic? |
feedback from peers, subordinates, managers, external clients * time to take these surveys |
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Three ways to promote retention of human capital: |
1. Identifying with an Organization's Mission and Values, 2. Challenging Work and a Stimulating Environment, and 3. Financial and Non-financial Rewards and Incentives.
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Why are employees who identify with an organization's mission and values less likely to bolt to a rival firm? |
-- helps form a stronger bond w/ the firm + enjoyment working since you believe in what the firm is doing |
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Having challenging work and a stimulating environment promotes intrinsic motivation. What is intrinsic motivation? |
-- Motivation from within because you enjoy what you’re doing |
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According to employee surveys, how important is money to employees as a reason to take or leave jobs? |
-- Not an important factor, in some surveys it didn’t even make the top 10 |
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Why did Tandem Computers (now part of HP) never offer jobs to candidates who kept asking questions about salary? |
Because they only cared about $$$ not the work place. |
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What are some of the benefits that Google employees have? |
Free food, Gyms, Sleeping pods, Doctor on site, Massages, Free haircuts, 20% time |
