Introduction to Business Administration Flashcards
Operational performance and utilization
1.The company acquires the production factors on the procurement market.
2.In the production process, the production factors are converted into products or services.
3.Products or services are sold to private households or business customers.
4.The company receives payments from sales.
5.Payments to suppliers reduce the company’s financial resources.
6.To finance large investments, the company procures funds on the capital market.
7.the company pays dividends or interest on borrowed capital.
8.Possible state subsidies are paid in.
9.Taxes are paid to the state.
production factors
* labor
* resources
* materials
production
combination of product factors
Life Cycle of a Firm
Foundation phase
§ Market analysis for choice of business area § Choice of location
§ Choice of legal form
§ Provision of initial capital
§ Organizational structure
Operational phase
§ Performance and utilization
§ Releasing the company from the entrepreneur (going public) § Business combination
§ Restructuring
Liquidation phase
§ Corporate crisis
§ Insolvency
§ Liquidation
Economic, social and ecological goals
Economic goals (equity provider)
§ Long-term profit maximization
§ Shareholder value
§ Profitability
§ Long-term company existence
§ Corporate growth
Social goals (employees)
§ Fair wage
§ Motivating work conditions
§ Company-sponsored social
benefits
§ Job security
§ Co-determination
Ecological goals (general public)
§ Conservation of resources
§ Limitation of harmful emissions
§ Avoidance of waste
§ Recycling of waste
Stakeholder approach
🤣Stakeholder Groups
Equity providers
🤣Claim to the Company
Increase of invested capital (distribution of profit, (owner, stockholder) capital growth)
🤣Contribution to the Company
Equity capital
✅Stakeholder Groups
Debt capital providers
(lenders)
✅Claim to the Company
Repayment and interest payment of invested capital, fixed in terms of time and amount
✅ Contribution to the Company
Debt capital
✅Stakeholder Groups
Employees
✅Claim to the Company
Adequate wages, motivating working conditions, job security
✅ Contribution to the Company
Labor (executive activities)
✅Stakeholder Groups
Management
✅Claim to the Company
Salary, power, influence, prestige
✅ Contribution to the Company
Labor (dispositive activities)
✅Stakeholder Groups
Customers
✅Claim to the Company
Reasonably-priced goods of high quality
✅ Contribution to the Company
Purchase of goods and services
✅Stakeholder Groups
Suppliers
✅Claim to the Company
Reliable payments, long-term supply relationship
✅ Contribution to the Company
Supply of goods and services
✅Stakeholder Groups
General public
✅Claim to the Company
Tax payments, compliance with legal regulations, respectful treatment of the environment
✅ Contribution to the Company
Infrastructure, legal order, environmental assets
Profit Calculation
- Sales
- Increase or decrease in finished goods inventories+/-
- Own work capitalized +
- Other operating income +
- Cost of materials
a) Cost of raw materials, consumables and supplies and of purchased merchandise-
b) Cost of purchased service -
- Personnel expenses
a) Wages and salaries -
b) Social security and pension expenses -
- Depreciations and amortization
a) On intangible fixed assets and tangible assets as well on capitalized start-up and business expansion - expenses
b) Exceptional write downs on current assets -
- # Other operating expensesOPERATING PROFIT (EBIT)
OPERATING PROFIT (EBIT)
- Income from other participations, of which … from affiliated companies +
- Income from other investments and long-term loans, of which … relating to affiliated companies +
- Other interest and similar income, of which … related to affiliated companies +
- Write downs of financial assets and short-term investments -
- Interest and similar expenses, of which … to affiliated companies -
- # Taxes on income +/-
- PROFIT AFTER TAXES
- # Other taxes +/-
- NET INCOME / NET LOSS OF THE YEAR
Balance sheet
balance sheet
noun [ C ]
UK /ˈbæl.əns ˌʃiːt/ US /ˈbæl.əns ˌʃiːt/
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a statement that shows the value of a company’s assets (= things of positive value) and its debts
Assets
A. Fixed Assets
B. Current Assets
§ Inventories
§ Receivables and other assets
§ Securities
C. Prepaid expenses
D. Deferred tax assets
E. Active difference resulting from asset offsetting
Equity and Liabilities
A. Equity B. Accruals
C. Liabilities
D. Deferred income
E. Deferred tax liabilities
What is the Balance Sheet?
The balance sheet is one of the three fundamental financial statements and is key to both financial modeling and accounting. The balance sheet displays the company’s total assets and how the assets are financed, either through either debt or equity. It can also be referred to as a statement of net worth or a statement of financial position. The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity.
As such, the balance sheet is divided into two sides (or sections). The left side of the balance sheet outlines all of a company’s assets. On the right side, the balance sheet outlines the company’s liabilities and shareholders’ equity.
The assets and liabilities are separated into two categories: current asset/liabilities and non-current (long-term) assets/liabilities. More liquid accounts, such as Inventory, Cash, and Trades Payables, are placed in the current section before illiquid accounts (or non-current) such as Plant, Property, and Equipment (PP&E) and Long-Term Debt.
A Functional View of Business Administration
Management
(Planning, Coordination, and Controlling)
Management as a coordination function
Management
designs the strategy and its control as well as the process of operational service creation and utilization in such a way that the company goals are achieved to the highest extent.
Key Areas
* Strategy & Corporate Goals
* Planning and Decision Making
* Leadership
* Organization – Structure & Processes
* Human Resources – Development & Mgmt. * Information Management
* Controlling
Production as a core function of operational activity
Supply & Production
a main operational function that can be broken down into four sub-areas: manufacturing, procurement, transport, and warehousing.
Key Areas
* Production Technology
* Manufacturing
* Procurement & Warehousing
* Delivery/Transport
* Integration of Planning, Optimization and
Controlling
Investment & Finance
Investments are made to achieve a return on money in the future (more back).
Finance is the provision and management of financial resources required to invest and keep the organization running.
Key Areas
* Investment & Firm Valuation
* Internal Funding
* Liquidity & Capital Management
* External Funding
* Financial Planning, Mgmt., and Controlling * Insurance
* Financial Optimization
Marketing & Sales
Marketing
is the planning and control of all activities aimed at improving one’s own market position through the targeted use of marketing instruments.
Key Areas
* Marketing Strategy
* Marketing Planning, Execution, and Controlling * Market Research
* Product Policy
* Pricing Policy
* Communication Policy
* Distribution Policy (Sales)
* Customer Management
Accounting
Accounting
provides information for planning, monitoring, and controlling operational states and processes.
Key Areas
* Bookkeeping
* Cost accounting
* Cash-Flow Monitoring * Financial Reporting
Airbnb & Finance
How to finance business development and growth?
* revenues:
demand & supply side (commissions, listing fees, refundable?)
* costs:
advertisements, onboarding of supply and demand, trust building, conflict
resolution
Þ network effects and regulation
* operational costs
human resources, i.e. employees and office
advertisement expenses
IT – software and servers
payment and trust service
(who pays/gets when and how the money)
legal costs
Airbnb & Taxes
Airbnb & Taxes
Taxes and licenses (tax, competition, and health issues)
* company (transfer of tax liability to low tax environment)
* hosts
* guests
Þ tax collection procedure
Þ rental law as a major issue
Þ ensure regulation compliance
Airbnb & Accounting
Airbnb & Accounting
Accounting (especially prior and subsequent to IPO)
* cost accounting (internal cash flow, self-financing potential, profit sharing)
* financial accounting (mainly for tax purpose)
* future revenues and growth
Þ valuation of equity and debt
Airbnb & Logistics
Airbnb & Logistics
- booking calendar and request handling
(instant vs. explicit confirmation) - access to property
(e.g. comydo.com guest lecture on Monday) - verification
(does the property exist? maintenance?, cleaning (even w/o Covid-19)) - ensure regulation compliance
(AirBnB might be liable for customer failures:
state, reputation, owner, customer)
As you just learned, every business model has to keep evolving.
Entrepreneurship is a challeng
