Transcript PowerPoint プレゼンテーション

Workshop on
Business/Management
Studies
Last Updated: June 6, 2002
Instructor:
Hirao KOJIMA
*Doctor of Economics, Kyushu University,
Fukuoka, Japan, 1995.
*Doctoral Student, UCLA, Graduate
School of Management (Finance
Department), Los Angeles, USA, 1979-1982.
*Master of Business Administration
(M.B.A.), Carnegie Mellon University,
Pittsburgh, USA, 1979.
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Corporation in a
Society/Environment


Society/Environment, surrounding a corporation
Corporate system:
– Input -> Manufacturing Process -> Output ->
Customers/Stockholders, etc.
– Input here includes managerial resources (see the next
slide), etc.
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Managerial Resources of a
Firm

Three Tangible Resources
– Physical:
 Buildings, etc.
– Financial:

Cash, etc.
– Human:


Workers, Managers
Intangible Resources: Informational Resources
– Marketing Know-how
– Research and Development Capabilities, etc.
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Functions/Departments of a
Manufacturing/Nonmanufacturing
Firm

Marketing
Research and Development
Production
Accounting and Finance
Personnel
Information Technology/System
Legalities

Note: We’ll proceed from here roughly in this order.

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Marketing Management <1>:
What is Marketing?

Bidirectional information flows in a marketing
system:
– Market information from market to company:


Very initial information flow
Market research to discover unmet needs in the market
– Product information from company to market:



Subsequent information flow
Sales promotion and advertising of products newly manufactured to
meet the needs
Application: Convenience for who?
– The convenience store market
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Marketing Management <2>:
Marketing Analysis - The 3C’s

Before research and development of a new product, a
company must analyse three factors in its marketing
environment:
– Customers(/Consumers/Stockholders): Three questions to
investigate are …
– Competitors in all the related industries: Three main areas to
study are …
– Company itself: Three major items crucial for the internal
analysis are …


A rigid analysis should lead to a better understanding of
the SWOT (strengths, weaknesses, opportunities,
threats).
Application: PC war
– The personal computer industry
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Marketing Management <3>:
Segmentation, Targeting,
Positioning

Segmenting a maket into several customer groups, based
on:
– Demographic/geographic/lifestyle-related differences
– Product-related differences


Target marketing: Three factors to consider when
choosing and targeting one or more of the segments are
…
Product positioning : Three factors to consider when
positioning a product are …
– Positioning map for PC market

Application: Fly me!
– The airline industry
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Marketing Management <4a>:
The Marketing Mix - The 4P’s

A company’s marketing program consists of the
marketing mix of four elements (= 4P’s ):
–
–
–
–

Product
Place
Promotion
Price
Note that cutomrer needs are in the center
surrounded by all these 4P’s: See the diagram on
p.62 of the text.
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Marketing Management <4b>:
The Marketing Mix - The 4P’s

Product: A set of benefits provided to the customers
– Tangible features:

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Physical item
Packaging
– Intangible features:

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

Customer service
Company reputation
Brand name
Place: Distribution channels
– Wholesale channel: Company -> wholesalers -> Retailers
– Retail channel: Retailers -> Customers
– Direct channel (Internet, etc.): Company -> Customers
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Marketing Management <4c>:
The Marketing Mix - The 4P’s

Promotion
– Objective

To increase the awareness of the product and create interest in
purchasing it
– Advertising (see “Marketing Management <1>: What
is Marketing?”)
– Sales promotion (same as above)
– Public relations
– Personal selling
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Marketing Management <4d>:
The Marketing Mix - The 4P’s

Price
– The pricing strategy takes into account:


A company’s goals
The actions of competitors
– Examples of pricing strategies

Penetration pricing strategy (low initial price leading to higher sales)
for:
– Company’s goal=To establish a strong market share quickly

Skimming pricing strategy (high initial price leading to higher profits)
for:
– Company’s goal=To maximize profits in the short-run

Application: Let’s go tropical!
– The marketing mix of a package tour to a tropical island targeting
young single working women
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Research and Development

After analysing those 3C’s in its marketing
environment, the company starts working
on the research and development of new
product(s) that would meet customer needs.
– 3C’s = Customers, competitors, company

See “Marketing Management <2>: Marketing Analysis - The
3C’s.”
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Production Management
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
Once a product has been newly developed that
will most likely satisfy customers’ unmet needs,
the company moves on to its production.
Technical/Quantitative Features of Production
Mgmt.:
– Japanese Style of Manufacturing Process

Just-in-time method (Kanban method)
– Quality Control (Kaizen)
– Computerized Manufacturing System

Production Abroad (For outsourcing abroad, see
p.38 of the text, for instance)
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Financial Management:
Accounting and Finance <1>

Three crucial pieces of financial information
– The income statement = The profit and loss (P/L) statement
– The balance sheet (BS)
– The cash flow statement (CF)

P/L = A set of flow data = profit, revenue generated and
expesnses incurred for a certain period of time
– Profit = Sales Revenue - Costs

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To be maximized (for stockholders)
BS = A set of stock data = assets, etc. accumulated until a given
point in time
– Assets=Liabilities + Owners’ Equity
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Assets are financed through “debt” and ”equity.”
Liabilities: Debt capital
Owners’ Equity: Equity capital
CF (See <4>.)
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Financial Management:
Accounting and Finance <2>

P/L
–
–
–
–
What does it look like?
Sales
Expenses
Four levels of profit

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
Gross profit
Operating profit
Ordinary profit
Net profit
– Example(s)

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Matsushita
Application: Not all profits are created equal!
– What is the most important profit number?
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Financial Management:
Accounting and Finance <3>

BS
– What does it look like?
– Assets

Financed through “debt” and ”equity.”
– Liabilities
– Owners’ equity
– Example(s)
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Matsushita
Application: Is your company healthy?
– The company should be liquid enough:

How liquid? Measure it by (net) working capital = current assets - current
liabilities.
– The company should not rely too much on debt to finance its assets: Its leverage shold
be low enough.

In other words, equity ratio should be high enough to minimize the default risk!
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Financial Management:
Accounting and Finance <4a>
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The cash flow statement
– A list of the cash inflows and outflows observed for a certain length of period
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Cash inflows=Decrease in assets; increase in liabilities or equity
Cash outflows= Increase in assets; decrease in liabilities or equity
– Why bother with cash flow?? How much cash a company has
determines its repayment ability, i.e., its default/bankruptcy risk.
– Divided into 3 sections: operating; investting; financing

1st section: Cash inflows and outflows that occur in
the company’s operating activities
– Inflows=Net profit; depreciation (=non-cash expense item);
decrease in inventory; increase in accounts payable; etc.
– Outflows= Increase in accounts receivable; decrease in current
portion of long-term debt; etc.
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Financial Management:
Accounting and Finance <4b>

2nd section: Those that occur in the investting
activities
– Outflows=Purchases of property, plant and equipment (PP&E);
acquisitions of other businesses; etc.

3rd section: Those that occur in the financing
activities
– Inflows=Sale of stock; etc.
– Outflows=Decrease in long-term debt; dividend payment; etc.
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What does it look like? See p.116 of the text.
Example(s)
– Matsushita

Application: Cash flows -- In and out!
– “Profit and yet negative cash flow,” “Loss and yet positive cash
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flow”: This is partly due to non-cash expense items( like
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depreciation).
Financial Management:
Accounting and Finance <5a>
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The time value of money for investment decisions
– Thinking of investing money in a project (like purchasing a new
equipment), a company expects a cash flow from the project during
a future period of time (like over the next 10 years).
– Investment decision=Should the firm invest money in the project?
– The decision requires computing the time value of money, since a
dollar tomorrow is worth less than a dollar today.

How to make investment decisions: Three things to
take into account
– Initial cost=Cash to be paid today for the new equipment;
costs associated with starting out new hiring, training ,etc.
– Future cash flow=A series of cash inflow/outflow at evry
future point in time
– Discount rate (to discount the value of future cash flow)
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Financial Management:
Accounting and Finance <5b>

How to make investment decisions <a>: Net
present value (NPV) method
– NPV = Discounted value of future cash flow - Initial cost
– If NPV > [<] 0, then the project is accepted [rejected].

How to make investment decisions <b>:
– Internal rate of return (IRR) method: To compute the discount rate
that lead to a zero NPV.
– Payback period method: To compute the number of periods required
to revover the initial cost of the project.

Application: Back to the present!
– An example of NPV method
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Personnel/Organizational
Management: Human Resources
and Organization <1>
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Corporate culture
– Recognize and create strategies to deal with cross-country or
inter-firm differences with respect to:
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Degree of risk-taking:Risk-lovers; risk-averters; risk-neutralists
Speed of decision-making: Fast (risk-taking); slow (risk-averse)
How to delegate authority: Based on ability?; seniority?
– Application: Mission completed

Imagine you’re a Japanese employee of a company that has been
recently acquired by an American company. What is its corporate
culture like?
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Personnel/Organizational
Management: Human Resources
and Organization <2>

Performance-based system (= Merit system)
– Seniority system versus performance-based system
– Pros and cons (advantages and disadvantages) of performancebased system are …
– Application: A mixed bag?

While many Japanese companies are now moving more
towards a performance-based system, some are instituting a hybrid
(performance/seniority) system to gradually introduce change into
the firm.

Such a hybrid system is difficult to implement and maintain,
though: Confusion and conflict.
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Personnel/Organizational
Management: Human Resources
and Organization <3>

Discrimination in the workplace regarding:
– Sex
– Age
–
–
–
–
Race
Disability: The disabled (with physical or mental disabilities)
Drawbacks of discrimination are …; how to prevent it includes …
Application: Illegal and expensive!

“Working to alleviate (=ease) discrimination throughout the
organization makes good business sense.”
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Personnel/Organizational
Management: Human Resources
and Organization <4>

Business ethics
– Ethical dilemmas: To choose between:
 Doing what is morally right (=operating within the rule of ethics)
 Versus doing what is expedient (=operating within the rule of law)
– expedient=useful in a particular situation, but sometimes not morally
acceptable
– Two key principles for companies to be ehtical: Transparency and
accountability (Be responsible for the stakeholders! -- See Slide
“Innovative Vision <3a>: Corporate Governance.”)


Making secretive decisions behind closed doors -> Less transparent
Symbolic resignation -> Less accountable for illegal or unethical actions
– Application: Doing the “right thing”

Is it profitable to be ethical in business?: Short run vs long run.
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Strategic Management:
Strategy <1>

Industry analysis
– Five basic forces that, combined together, determine both the
profit potendial of an industry as well as the stragey of a
company in that industry:





If you are a supplier, your bargaining power is strong if …see p.222.
If you are a buyer, your bargaining power is strong if …see p.222.
Threat of new entrants: Barriers to entry include …see p.224.
Threat of substitute products: Mobile phones with Internet
capability vs portable PCs …see p.224.
Excisting competition in the industry is keen if …see p.224.
– Application: PC war--A second look

Five forces at work in the personal computer industry are …
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Strategic Management: Strategy <2>

Competitive advantage
– Establish a clear point of “differentiation” between your company and the
competitor for strategic positioning (=to position your company in a unique
or different way from your competitors. (See “Positioning Map” on p.46.)
– Differentiation with regard to:

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Brand image
Unique features
Proprietary technology (the one which is developed and used solely by a
company which can legally do so and whose name is attached to the
technology)
Superior customer service
Product/customer niche: For niche, see p.30.
– Competitive advantage must be sustainable for it to be successful in the
long run.

Sustainability = In the long term, the competitors should find it difficult to copy
you. (Otherwise, competitive advantage would be lost after a while.)
– Application: Going direct


Direct from company to customers: See p.60, too.
Direct vs traditional (=indirect) channels: Pricing conflicts, etc.
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Strategic Management:
Strategy <3>

Global strategies: Two key questions to be addressed
– Which foreign markets should we enter? For example, what would induce
you to enter the Chinese market rather than the German market? Consider:




Geographic/psychic proximity
Market potential
Competitive advantage
Risk
– How should we enter the markets?
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Exporting
Licensing-in, -out (technology transfer)/joint venture (NUMMI in US,
1983=Toyota and GM)
Direct investment
–
Establishing a manufacturing/marketing subsidiary(ies) abroad
– Adaptation of the marketing mix (see pp.57-71) to the local (foreign) market may be
needed.
– Application: Growing “fast”

Three reasons for successful business in Japan by the Western fast-food companies are …27
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Strategic Management:
Strategy <4a>

Diversificaiton/synergy: Three questions to
be addressed
– Is the targeted industry attractive enough?

Conduct the detailed industry analysis to study those five basic forces that,
combined together, determine both the profit potendial of an
industry as well as the stragey of a company in that industry.
See pp.222-224.
– Is the cost of entry reasonable?

Cost of entry includes
– Initial start-up costs
– First few years’s working capital/operating losses (working capital=net w.c.=
p.106, operationg loss=p.80)

Ironically: Higher cost of entry => more attractive industry
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Strategic Management:
Strategy <4b>

Diversificaiton/synergy:
– Is the company better off as a result of the diversificaiton?


Is there a synergy effect? Diversification => Reduced costs? Improved
efficiencies?
Consider an external diversifcation in which firm A acquires an outside
firm B), would it be true that Value of Firm A + Value of Firm B < Value of
Firm Diversified?
– Two basic methods of diversificaiton


Internal diversification within the company: Costly and time-consuming.
External diversifcation = Acquiring an outside firm: Results are quickly
obtained, but corporate- culture problems arise.
– Application: Hard, soft orboth?

Synergy between electronics (hardware) and entertainment (software)?:
Sony acquired CBS Redords (1988), Columbia Pictures (1989); Matsushita
MCA (1990).
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Innovative Vision <1a>: IT and
Business (IT Management)

Direct channels (see ps. 60, 248)
– Online selling: B2C (business to customer)
application of the Internet
Prices fall; products may be customized to meet customer
needs.
 B2C e-business (by UCLA Anderson’s alumni): Online
university textbook sales site=http://www.bigwords.com/;
wine auctions=http://www.winebid.com/
 Luxury-type products, however, are better suited for
traditional retail channels: Quality comes first.

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Innovative Vision <1b>: IT and
Business (IT Management)



Online bidding for supplier contracts: B2B
(business to business) application of the Internet
– The network of available suppliers is expanded from a local
to a global basis.
– B2B e-business (by UCLA Anderson’s alumni): Global
business consulting (PricewaterhouseCoopers)=http://www.pwcglobal.com/; Web-centric language
services=http://www.stanleymaria.com/
Pros and cons of the Internet strategy: p.294 of the text
Application: Cyber shopping
– Most successful online ventures tend to be service-oriented or
commodity-based.
– Customers enjoying cyber shopping are more price-sensitive (than
traditional shoppers).
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Innovative Vision <2>: Entrepreneurship

Successful entrepreneurs in the past:
– Edison, Matushita
(http://www.matsushita.co.jp/corp/company/person/en/index.html), Ibuka, Morita,
etc.

Entrepreneurial traits: What makes for a successful
entrepreneur?
– Risk-takers; Thinking outside of the box; being unconventional and innovative

Nurturing entrepreneurship
– A societal focus is needed on rewarding high achievers and encouraging
independent thinkers.
 At schools; performance-based reward system at companies.

Harold Price Center for Entrepreneurial Studies (at UCLA
Anderson)=http://www.anderson.ucla.edu/research/esc/
– MBA course “Corporate
Entrepreneurship”=http://www.anderson.ucla.edu/research/cmie/track/mg
mt_295c.html

Application: Can you judge a book by its cover?
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Innovative Vision <3a>:
Corporate Governance

Q1=Who owns the company? Q2=Who controls the
company?
– Japan:



A1=shareholders. (Recall that “Owners’ Equity” is equivalent to “Stockholders’
Equity” in the balance sheet – see p.98 of the text.)
A2=managers
Management’s objective = NOT really to maximize shareholders’ (short-term) wealth,
but rather to continue to grow (=expand the market share) over a long period of time,
with short-run profitability being most likely sacrificed for long-run growth.
– Western nations: A1&A2=shareholders. That is:



Ownership = control
Management’s objective = To maximize shareholders’ (short-term) wealth
Strategy tends to be formulated on a short-term basis: Qurterly profit projections are
more important than long-term (like 5-year or longer) prosperity
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Innovative Vision <3b>: Corporate
Governance

Shareholders vs. Stakeholders
– Stakeholders = Any group that is in some way affected by the
company’s decisions:


The company employees, customers, suppliers, the people who live in the
community, etc.
Board of Directors
– New board members are elected by the shareholders at the
annual shareholders meeting.

The board has the authority to make management changes as they see needed.
– Made up, idieally, of key individuals from “outside” the
industry. One or two “inside” management members like the
CEO or president of the company are on the board.

Application: Open sesame!
– Business ethical responsibility and globalization both most
likely force Japanese boards to open up.
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References






Text of the Workshop: 英語で学ぶMBAベー
シックス＝Learning MBA Basics in English
(March 2002, NHK): 藤井正嗣，リチャード・
シーハン.
“Business Ethics – Not an Oxymoron” (UCLA
Anderson Assets, Spring 2002).
Trends in Japanese Management (2001,
Palgrave): T. Kono and S. Clegg.
Business Word Power Simply 400 (March 2002,
NHK): 増澤史子.
最新英和経済ビジネス用語辞典（1997, 春秋
社）: 長谷川啓之.
和英経済キーワード事典（1999, 研究社）:
日本経済新聞社英文グループ.
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“Business Administration” vs
“Management”

Business Administration
– Administration of profit-oriented
organizaitons

Management
– Management/Administration of either profitor non-profit-oriented organizaitons
– Public administration, art management, etc.
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Undergraduate/Graduate
Business Programs Abroad

Hong Kong
– Hong Kong Universtity of Science and Technology

U.S.A.
– Carnegie Mellon University

France
– Bordeuax Business School
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Firms in an Economic
Perspective


What is a Firm?
– A Microeconomic View by R. H. Corse,
“The Nature of the Firm,” Economica,
November, 1937)
Managerial Economics: An Economic
Analysis of Corporate Decision-making
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