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COMM 1800 > Final Exam Flashcards > Flashcards

Final Exam Flashcards

1
Q

What are the 9 components of the business model canvas?

A

Value proposition, channels, customer relationships, customer segments, revenue streams, key partnerships, key activities, key resources, cost structure

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2
Q

fixed cost vs variable cost structure

A

fixed: cost remains the same despite production volume change
variable: cost changes with production volume change

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3
Q

economies of scope vs economies of scale

A

scope: cost advantages that a company receives due to a large range of operations
scale: cost advantages that a company receives due to increased sales

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4
Q

generic strategies

A

cost leadership and differentiation

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5
Q

cost leadership (low cost provider)

A

striving to achieve lower overall costs than rivals and appealing to a broad range of customer usually by underpricing rivals

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6
Q

focused low cost

A

concentrating on a narrow buyer market (niche) and outcompeting rivals by having lower costs and being able to serve at a lower price

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7
Q

broad differentiation

A

seeking to differentiate product or service from rivals in ways that would appeal to a broad spectrum of buyers

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8
Q

focused differentiation

A

seeking to differentiate product or service from rivals while concentrating in a narrow market niche

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9
Q

best cost strategy

A

hybrid of differentiation and cost leadership. companies aim to target a mass of value conscious consumers looking for a good to very good product at an economic price

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10
Q

arenas

A

tell where a firm will be active and with how much emphasis

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11
Q

economic logic

A

how a firm makes money above its cost of capital

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12
Q

ethics vs compliance

A

ethics: principles or standards of behavior to which we hold ourselves
legal compliance: the baseline min compliance with laws and regulations

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13
Q

fraud triangle and components

A

pressure, opportunity, and rationalization

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14
Q

expected vs standard practice

A

“everyone does this”

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15
Q

materiality

A

“there’s no negative material impact so does it really hurt anyone”

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16
Q

locus of responsibility

A

“i dont want to do this, but im just following orders”

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17
Q

locus of loyalty

A

“ik this isnt fair but i dont want to hurt my team/company”

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18
Q

giving voice to values (GVV) seven pillars

A

values: find common ground based on values shared
purpose: what is important to me?
choice: do i have a choice in voicing and acting on my own values
normalization: are value conflicts the exception or are they normal in our lives
self knowledge and alignment: am i the kind of person who can effectively voice and act on my values
voice: how can i find my voice to act on my own values?
reasons and rationalization: what are typical objections or pushback i may get when i try to voice or act on my own values

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19
Q

seperation fallacy

A

the tendency to separate business cases from ethical cases

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20
Q

integration thesis

A

conducting ourselves and our business to benefit others as if we would have a long term relationship rather than a single transaction

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21
Q

shareholder theory

A

a company’s sole purpose is to benefit the shareholders who want more profits

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22
Q

stakeholder theory

A

firm should create value for all stakeholders not just maximize profit– Ed Freeman

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23
Q

stakeholders def

A

individuals or groups outside the business who have an interest in how it brings products or services to the market for profit

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24
Q

examples of stakeholders

A

customers, suppliers, employees, investors, communities, etc

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25
Q

bethany mclean– what does business do right

A

creates socially and individually beneficial products
make profits and products
driver of a better world
create jobs

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26
Q

tom gardner– what wins in the marketplace

A

taking responsibility of the well being of all stakeholders

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27
Q

impact of stock options on ceos and companies

A

try to maximize share price
stock options are valuable
executives could buy future stock at current prices = executives incentivized to maximize profit

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28
Q

short term vs long term

A

short term: wall street incentivizes firms to focus on quarterly profits
long term: everyone will do better if you look out for all stakeholders

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29
Q

corporate social responsibility

A

practice where a business views itself within a broader context as a member of society with certain implicit social obligations
companies engage in ethical practices beyond legal standards
values all stakeholders, not just shareholders

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30
Q

triple bottom line

A

social: employee well-being, fair trade, community stakeholder
economic: revenue, growth, costs
environmental: land use, carbon footprint, waste

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31
Q

greenwashing

A

carrying out superficial CSR efforts to cover up systematic ethics problems
publicity scheme

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32
Q

shareholder primacy

A

the sole responsibility of a business is to increase its profits

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33
Q

esg

A

environmental social governance

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34
Q

incremental innovation

A

making small scale improvements to existing services, products, processes, and business models

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35
Q

disruptive innovation

A

when a new product or service, drawing on new technology, engages the existing market

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36
Q

architectural innovation

A

when new products or services use existing technology to create new markets and or new consumers who didnt purchase that item before

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37
Q

radical innovation

A

when new products or services are created using new technology that opens up new markets

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38
Q

objects of innovation

A

product, service, process, business model

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39
Q

product (innovation)

A

development of a new product, improvement in the performance of an existing product, or a new feature to an existing product

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40
Q

service (innovation)

A

introducing new services or improving the delivery of existing services, enhances utility of an existing offering

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41
Q

process (innovation)

A

internal benefits such as reduced production costs which lead to increased revenue

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42
Q

business model (innovation)

A

creating, adapting, or fundamentally changing the way a company delivers value to its customers and/or generates revenue

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43
Q

design thinking

A

empathize: develop a deep understanding of the challenge
define: clearly articulate the problem you want to solve
ideate: brainstorm potential solutions and develop one
prototype: design a prototype to test all or parts of your solution
test: engage in a continuous short-cycle innovation process to continually improve your design

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44
Q

active interia

A

tendency to follow established patterns of behavior even when the competitive environment shifts

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45
Q

strategic frames become

A

blinders, mindsets of how managers see the world are not open to new opportunities

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46
Q

processes harden into

A

routines, prevent new ways of working

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47
Q

relationships become

A

shackles, when conditions shift company’s relationships prevent them from being flexible

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48
Q

values harden into

A

dogmas, rigid rules and regulations thats legitimacy comes from precedent

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49
Q

marketing concept

A

satisfy customer needs while meeting organizational goals of profit and growth

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50
Q

target market

A

specific group of customers who are very interested in your product, have access to it, and the means to buy it

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51
Q

market segments

A

groups of potential customers with common characteristics that influence their buying decisions

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52
Q

demographic segmentation

A

divides groups into age, marital status, gender, ethnic background, income, occupation, and education

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53
Q

geographic segmentation

A

divides market based on region, climate, and population density

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54
Q

behavioral segmentation

A

divides consumers by variables as attitude, behavior, and status

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55
Q

psychographic segmentation

A

classifies consumers based on individual lifestyles that reflect their interests, activities, and values

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56
Q

marketing mix

A

product, price, place, promotion

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57
Q

product (marketing mix)

A

using primary and secondary data
what unique problems does your product help this segment solve?
what benefits or capabilities are critical for this segment?
What would make the ideal product for your target segment?

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58
Q

price (marketing mix)

A

What price(s) are your target customers willing to pay for your product?
How much is too expensive? How much is too cheap?

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59
Q

place (marketing mix)

A

Where does this segment look or shop for your product?
What is the best way to get your product to your target customers?

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60
Q

promotion (marketing mix)

A

What are the best ways to get your target segment’s attention?
What do you want this segment to remember about your product?

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61
Q

primary data

A

newly collected info that addresses questions curated by secondary data conclusions

62
Q

ways to collect primary data

A

surveys, focus groups, personal interviews

63
Q

secondary data

A

information already collected, by the organization or by other means, that pertains to the target market

64
Q

brand equity

A

added value generated by favorable customer experiences with a product

65
Q

private branding

A

private labeling, company makes a product and sells it to a retailer who resells it under its own name

66
Q

generic branding

A

maker attaches no branding information to a product except a description of its contents (brand name vs generic)

67
Q

manufacturer branding

A

a company sells 1+ products under its own brand names

68
Q

multiproduct-branding

A

sells many products under one brand; company assigns different brand names to products covering different segments of the market

69
Q

brands (def)

A

“an intangible asset” that is intended to create “distinctive images and associations in the minds of stakeholders, thereby generating econ benefits/values”

70
Q

managerial vs financial accounting

A

managerial: provides internal reports used by managers to evaluate current and future operations
financial: external reports used by outsiders to assess financial strength

71
Q

annual report

A

yearly document that discusses firm’s financial status
discusses firms activities for the past year and prospects for the future
balance sheet, income statement, cash flow statement

72
Q

accounting equation

A

assets - liabilities = owner’s equity

73
Q

balance sheet

A

summarizes firm’s financial position at a specific point in time

74
Q

assets

A

tangible or intangible, things of value owned by firm

75
Q

current assets

A

assets that can be converted into cash within the next year, provide funds to pay current bills

76
Q

current asset examples

A

cash, marketable securities, accounts receivable, notes receivable, inventory

77
Q

fixed assets

A

long term assets used by a firm for more than a year
ex: machinery, equipment, land, buildings

78
Q

liabilities

A

debts the firm owes its creditors

79
Q

current liabilities

A

short term claims that are due within a year of the balance sheet due date

80
Q

current liability examples

A

accounts payable, notes payable, accrued expenses, income taxes payable, current portion of long term debt

81
Q

long term liabilities

A

due more than one year after balance sheet due date
ex. bank loans, mortgages, bonds sold

82
Q

owner’s equity

A

net worth, total amount of investment in the firm minus liabilities

83
Q

owners equity examples

A

owners’ investment, stock purchases, retained earnings

84
Q

income statement

A

summarizes the firm’s revenues and expenses, shows total profit/loss over a period of time

85
Q

cost of goods sold vs operating expenses

A

COGS: total expense of producing the firm’s goods
operating expenses: expenses from running a business that aren’t related to producing its products

86
Q

gross sales

A

total dollar amount in company sales

87
Q

net sales

A

amount left after deducting sales discounts and returns and allowances from gross sales

88
Q

sales discounts

A

price reductions to customers for paying their bills early

89
Q

returns and allowances

A

dollar amount of merchandise returned by customers due to dislike or damage

90
Q

gross profit

A

amount earned less production costs but before operating expenses

91
Q

net profit

A

all revenues less expenses

92
Q

statement of cash flows

A

summarizes money flowing in and out of the firm (sources and uses of cash) during a period of time to identify cash flow problems and assess the firm’s financial viability

93
Q

operating activities

A

cash flow related to production of firm’s goods or services

94
Q

investment activities

A

cash flow related to purchase and sale of fixed assets

95
Q

financing activities

A

cash flow related to debt and equity financing

96
Q

liquidity ratios

A

measure firm’s ability to pay short-term debts as they’re due

97
Q

current ratio

A

total current assets over total current liabilities

98
Q

acid quick test

A

total current assets excluding inventory over total current liabilities

99
Q

net working capital

A

measures firms overall liquidity– total current assets - total current liabilities

100
Q

profitability ratios

A

measure how well a firm uses its resources to generate profit and how efficiently its managed

101
Q

net profit margin

A

ratio of net profit to net sales; measures percentage of each sales dollar remaining after deducting all expenses and taxes

102
Q

return on equity (ROE)

A

ratio of net profit to total owners’ equity; measures return owners receive on their investment in the firm

103
Q

earnings per share (EPS)

A

ratio of net profit to number of shares of common stock outstanding; measures number of dollars earned by each share of stock

104
Q

activity ratios

A

measure how well a firm uses its assets; reflect speed resources are converted to cash or sales

105
Q

inventory turnover ratio

A

measures speed inventory moves through firm and is turned into sale

106
Q

debt ratio

A

measure degree and effect of firm’s use of borrowed funds to finance its operations

107
Q

debt to equity ratio

A

measures relationship between amount of debt financing and amount of equity financing

total liabilites / total equity

108
Q

accounting flow of information

A

A business entities undergoes activities → internal accountants codify info about the activities → external accountants (auditors) verify the info is prepared correctly → external decision makers access and use info

109
Q

corporate finance: in flows

A

cash sales, owners’ investment, borrowed funds, sale of fixed assets, collection of accounts receivable

110
Q

corporate finance: out flows

A

purchase of fixed assets, payment of dividends, purchase of inventory, payment of expenses

111
Q

key activities of finance

A

planning, investment, financing

112
Q

planning

A

preparing the financial plan, which projects revenues, expenditures, and financing needs over a given period

113
Q

investment

A

investing the firm’s funds in projects and securities that provide high returns in relation to their risks

114
Q

financing

A

obtaining funds for the firm’s operations and investments and seeking the best balance between debt (borrowed funds) and equity (funds raised through the sale of ownership in the business)

115
Q

risk-return tradeoff

A

risk: the potential for a loss or the investment not achieving expected level of return
return: opportunity for profit
tradeoff: the higher the risk, the greater the return that is required

116
Q

liquidity

A

how quickly individual/firm can quickly purchase/sell asset w/o causing drastic change in asset’s price

117
Q

capital expenditures

A

investment funds in physical assets (land, machinery, building, etc)
unlike operating expenses, benefits from capital expenditures extend beyond 1 yr
paper, ink, supplies = expenses
mergers and acquisitions = capital expenditures
reason to make capital expenditures: to expand, replace or renew fixed assets, or to develop new products

118
Q

capital budgeting

A

analysis of long-term projects and select those that offer the best returns while maximizing the firm’s value

119
Q

short term expenses (operating expenses)

A

are outlays used to support current production and selling activities
result in current assets (ex cash and other assets (ex: accounts receivable and inventory) that can be converted into cash within a year)

120
Q

long term expenses

A

typically for fixed assets
ex: capital expenditures

121
Q

debt financing

A

No say in management
payment of interest and principal is a contractual obligation
stated maturity date
interest is tax deductible

122
Q

equity financing

A

common stockholders have voting rights
have residual claim of income (dividends) but no obligation
no maturity date
dividends aren’t tax deductible and are paid from after tax income

123
Q

dividends

A

payments to stockholders from a corporation’s profits

124
Q

retained earnings

A

profits that are reinvested into firm

125
Q

SEC

A

1934 Act: regulate securities exchanges and authority over the dealer markets

126
Q

accounting vs finance (principles/purpose)

A

accounting: communicate financial position, prepare financial statements, oriented in the past and on results. focus on rules and accuracy

finance: determine how and where to add value, analyze financial statements, oriented in the future and on projections, focus on analysis and insights

127
Q

time value of money

A

idea that money in the present is worth more than money in the future due to potential for earning interest and inflation

128
Q

discounting

A

finding present value based on future value
PV = FV / ((1+r)^n)

129
Q

compounding

A

finding future value based on present value
FV = PV * ((1+r)^n)

130
Q

net present value

A

allowed firms to compare value of investments considering different costs, returns, and time frames (goal: inflows > outflows)

131
Q

NPV

A

PV cash inflows - PV cash outflows
future cash flows each occur over different times thus must be discounted individually to different present values–
sum those discounted cash flows to find NPV

132
Q

primary market

A

new shares are issues and sold once
amount received from the issuer of shares goes to the company for their business expansion
securities are issued by the companies to the investors
securities are all issued at one price for all investors participating in the offering

133
Q

secondary market

A

existing shares are sold and traded an unlimited number of times
amount invested by the buyer of shares goes to the seller
securities are traded between buyers and sellers which is facilitated by the stock exchange
securities are exchanged at market price

134
Q

IPO

A

first time being able to sell stock on exchange
Pros:
Yields optimally high price for company
Allows you retain part of the company
Cash to yourself
Market liquidity
Makes exiting market easier

Cons:
need board of directors
- pro: looks after public interest
- con: less flexibility
disclose information to investors and SEC

135
Q

ways to innovate (3)

A

configuration: behind the scenes
offering: product or service
experience: customer experience

136
Q

price skimming

A

introducing a new product at a high price then lowering the price over time
- prestige created and customers may think they are getting a bargain

137
Q

penetration pricing

A

offering products at lower prices with hopes of achieving a large sales volume

138
Q

leader pricing

A

pricing products below normal mark up costs to attract customers to stores to increase sales volume

139
Q

bundling

A

grouping two or more products together and pricing them as a single product

140
Q

odd-even pricing

A

odd prices connotate a bargain, even prices connotate quality

141
Q

Duolingo

A

mix element: promotion

142
Q

Mars

A

mix elements: all

143
Q

LV

A

mix elements: product and price

144
Q

tesla

A

mix elements: price and product

145
Q

san fran

A

mix elements: product and promotion

146
Q

nike

A

mix elements: place, promotion

147
Q

exploration vs exploitation

A

exploration: high uncertainty, focusing on new ideas, search for new opportunities, for the long term

exploitation: low uncertainty, focusing on efficiency and improvement, refining existing knowledge, for the short term

148
Q

perpetual search trap

A

only focusing on exploration no focus on exploitation, no chance to grow

149
Q

success trap

A

only focusing on exploitation, no chance to, susceptible to be overtaken by competitors who explore

ex. blockbuster

150
Q

linked chain

A

exploring should be the search of something to do, and once that thing is found exploiting should be the growth of that thing, balance between the two is necessary

151
Q
A

COMM 1800 (3 decks)

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