Business Acumen Flashcards
Value
Refers to an orgz success in meeting its strategic goals
Value Chain
Represents the process by which an orgz creates the product or service it offers to the customer
Value Chain Members
R&D>Operations>Marketing/Sales>Fullfillment>Customer (Primary)
*Customer is the one that gives the Value
Mgmt/Finance/Legal/HR/IT/Supply Mgmt (Secondary)
Orgz Life Cycles
- Introduction: revenue is low, little market awareness, must create an identity with customers.
- Growth: revenue begins grow, focus on creating processes.
- Maturity: growth occurs only through intro of new products or customers, profit margins are narrow, efficiency is important, greater formalization.
- Decline/Renewal/No Growth: demand will decrease, orgz can renew by changing their offering OR take no action.
Porter’s 5 Forces
Used to identify opportunities and threats, forsee possible changes in the competitive landscape and plan strategy.
- Bargaining power of suppliers
- Bargaining power of buyers
- Threat of entry
- Threat of substitution
- Competitive Rivalry
Business Intelligence
The ability to use information to gain a deeper understanding of an orgz and its parts, to see how the whole orgz and its parts are performing and to make sound business decisions that are grounded in relevant and accurate facts rather than assumptions.
Three parts: Data Gathering, Data Warehousing, Query and Reporting Capabilities
Data Gathering
Data is routinely gathered through different computer systems in all parts of the orgz.
Data Warehousing
Data gathered from different systems is translated into a standard format, cleaned of errors and duplications, and then stored in databases related to specific uses.
*ERP (Enterprise Resource Planning): are able to integrate these distinct databases. Connects finance, HRIS, supply chain, customer relationship.
OLAP (Online Analytical Processing)
Enhanced Business Analysis because of the way the data is stored, OLAP can analyze the data faster and in more ways than traditional relational databases.
Incremental Budgeting
Traditional form of budgeting
The prior budget is the basis for the next budget, the prior budget is increased by a set %
Zero-Based Budgeting
All objectives and operations are given a priority ranking
Each unit is ranked, and then available funds are given in order
Budget starts at zero and all expenses must be justified
Activity-Based Budgeting
Recognizes the interrelationships among the various activities required to create value in an orgz
Funding may be allocated based on the strategic significance of the activities
Formula-Based Budgeting
Different units or operations receive varying percentages of the budget.
HR Budget
Talent Aquisitions, Training, Development, Compensations, Benefits, Employee & Labor Relations
Business Case
A presentation to mgmt that establishes that a specific problem exists and argues that the proposed solution is the best way to solve the problem in terms of time, cost, and probability of success.
Statement of need>Recommend solution>Risks/Opp>Estimated Cost/Time frame
Balance Sheet
A statement of the orgz financial position, its assets, liabilities, and equity–at a particular time.
The financial health of an orgz.
Assets=Liabilities+Equity
Income Statement
Compares revenues, expenses, and profits over a specified period of time–usually a year or a quarter.
AKA P&L. P&L= the bottom line and provides key information about the orgz performance.
Net Income=Revenue-Expenses
Gross Profit Margin & Net Proft Margin
GPM: net sales minus the cost of producing what is sold. Gross profit/net sales
NPM: what is available for reinvestment or distribution to owners/stakeholders. Net income/net sales
Cash Flow Statement
Illustrates the effect of all orgz activities–activities that both consume value and produce value–on how much cash or cash equivalents the orgz has on hand.
Financial Ratios
Important tool that can be used to analyze an orgz performance.
Current Ratio= current assets/current liabilities
Debt to Asset Ratio= total liabilities/total assets
ROI, EPS, Profit Margin, Debt to Equity Ratio
What Does a Strategic Plan Start with?
A broad strategy–>that strategy trickles down to business units that work to help with the strategy.
*From Orgz>Business Unit>Operational
Impact of Life Cycle on HR Strategy
Introduction: TA, create a culture, controlling risk associated with HR
Growth: Get the right talent, increase complexity of structure and policies, help leaders redefine their roles, formalize JDs, manage changes caused by growth
Maturity: Build and retain productive workforce, succession planning, reinforce policies and culture, consult other parts of the orgz to solve problems
Renewal: reduction in workforce, change in leadership
No Growth: maintain engaged workforce, increased TO, shrinking budgets
Decline: reduce workforce, manage stress, attract necessary talent
Improving Environmental Awareness
Information gathering must be used regularly and expanded as new sources of information channels develop
*HR to expand their channels of information inside and outside of the orgz
Query and Reporting Capabilities
Users can access the data they need and use stand alone ERP business application to sort, describe, and analyze data in many ways to create reports or charts
The Budgeting Process Requires Understanding the Orgz Practices, Strategy, and Environment, What Questions Should You Ask?
How does the orgz allocate costs?
Which costs are variable and fixed?
When do costs occur?
What orgz strategic plans will affect HR?
What risk factors affect the budget?
What Are Assets Liabilities and Equity
- Assets: what an orgz owns (tangible and intangible accounts receivable)
- Liabilities: what an orgz owes (accounts payable)
- Equity:what a company owes to the owner or its shareholders–what is left over of a company assets after its liabilities have been discharged
Non Financial Measures
Share of Market Reputation Level of brand awareness EE retention and Job Satisfaction EE engagement
