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Leadership Skills
Subtopic
ProfessionalTopic
Course Guidebook
Professors Thomas J. Goldsby, Ryan Hamilton, Clinton O. Longenecker, Michael A. Roberto, and Eric Sussman
Critical Business Skills
for Success
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The Teaching Company.
i
Michael A. Roberto, D.B.A. Trustee Professor of Management
Bryant University
Professor, Critical Business Skills: Strategy
Professor Michael A. Roberto is the Trustee Professor of Management at Bryant
where he has taught since 2006. Before joining
Everest Leadership and Team Simulationin the eLearning category at the 16th
Columbia’s Final Mission
ii
Professor Roberto is the author of two books: Why Great Leaders Don’t Know
What You Don’t Know: How Great Leaders Prevent Problems before They Happen Harvard Business Review, MIT Sloan Management Review California Management Review. Professor
Transformational Leadership: How Leaders Change Teams, Companies, and Organizations
iii
Thomas J. Goldsby, Ph.D.
Fisher College of Business
PMichigan State University.
Transportation Journal
of the Quarterly
Transportation JournalJournal of Business
The
iv
The Design and Management of Sustainable Supply Chains
Chain Management: Strategies for Gaining Competitive Advantage.
v
Eric Sussman, M.B.A.
University of California, Los Angeles,
Professor, Critical Business Skills:
Pthe state of California.
Bloomberg Businessweek
by Top Business Degrees
vi
vii
Clinton O. Longenecker, Ph.D.
Professor, Critical Business Skills:
P
MIT Sloan Management Review, Industrial Management, Business Horizons, The European Business Review,
The Wall Street Journal Investor’s Business Daily
viii
Getting Results: Five Absolutes
languages. His latest book is The Two-Minute Drill: Lessons for Rapid
Continuous
Ryan Hamilton, Ph.D.Associate Professor of Marketing
Professor, Critical Business Skills: Marketing
Professor Ryan Hamilton is an Associate
Poets & Quants, an online
, the Journal of , the Journal of Marketing,
The New York Times, The Wall Street Journal, TIME, USA TODAY, Times, New York
Table of Contents
INTRODUCTION
LECTURE GUIDES
Professor Biographies ......................................................................... i
Critical Business Skills: Strategy
Scope .................................................................................................1
LECTURE 1Strategy Is Making Choices ................................................................3
LECTURE 2How Apple Raises Competitive Barriers ...........................................10
LECTURE 3The Danger of Straddling .................................................................17
LECTURE 4What Trader Joe’s Doesn’t Do ..........................................................24
LECTURE 5First Movers versus Fast Followers ..................................................31
LECTURE 6 ..........................................................38
LECTURE 7Anticipating Your Rival’s Response ..................................................44
LECTURE 8..............................................................51
Table of Contents
LECTURE 9 .............................................................58
LECTURE 10Forward and Backward Integration...................................................65
LECTURE 11Mergers and Acquisitions—The Winner’s Curse ..............................72
LECTURE 12Launching a Lean Start-Up...............................................................79
Critical Business Skills: Operations
Scope ...............................................................................................89
LECTURE 13The Power of Superior Operations ...................................................91
LECTURE 14Leaner, Meaner Production ..............................................................98
LECTURE 15 ...........................................................106
LECTURE 16Matching Supply and Demand .......................................................114
LECTURE 17Rightsizing Inventory ......................................................................122
LECTURE 18Managing Supply and Suppliers .....................................................129
LECTURE 19The Long Reach of Logistics ..........................................................136
Table of Contents
LECTURE 20Rethinking Your Business Processes .............................................143
LECTURE 21Measuring Operational Performance..............................................150
LECTURE 22Keeping an Eye on Your Margins ...................................................157
LECTURE 23Leveraging Your Supply Chain .......................................................164
LECTURE 24Reducing Risk, Building Resilience ................................................171
Critical Business Skills: Finance and Accounting
Scope .............................................................................................181
LECTURE 25Accounting and Finance—Decision-Making Tools .........................183
LECTURE 26How to Interpret a Balance Sheet...................................................190
LECTURE 27Why the Income Statement Matters ...............................................198
LECTURE 28How to Analyze a Cash Flow Statement ........................................206
LECTURE 29Common Size, Trend, and Ratio Analysis ......................................213
LECTURE 30 ...........................................................220
Table of Contents
LECTURE 31Understanding the Time Value of Money ........................................228
LECTURE 32 ........................................236
LECTURE 33How Investors Use Net Present Value ...........................................244
LECTURE 34Alternatives to Net Present Value ...................................................252
LECTURE 35 ..........................................259
LECTURE 36How to Value a Company’s Stock ..................................................267
Critical Business Skills: Organizational Behavior
Scope .............................................................................................279
LECTURE 37Achieving Results in Your Organization..........................................281
LECTURE 38The Value of Great Leadership .......................................................288
LECTURE 39Emotional Intelligence in the Workplace .........................................295
LECTURE 40The Art of Effective Communications .............................................303
LECTURE 41The Motivation-Performance Connection .......................................310
Table of Contents
LECTURE 42Winning with Teamwork ..................................................................317
LECTURE 43Coaching—From Gridiron to Boardroom ........................................324
LECTURE 44Understanding Power Relationships ..............................................331
LECTURE 45 ..........................................................338
LECTURE 46 .............................................345
LECTURE 47Leading Real Organizational Change.............................................352
LECTURE 48Lifelong Learning for Career Success ............................................359
Critical Business Skills: Marketing
Scope .............................................................................................369
LECTURE 49.........................................................................371
LECTURE 50How to Segment a Market ..............................................................377
LECTURE 51Targeting a Market Segment ..........................................................384
LECTURE 52Positioning Your Offering ................................................................391
Table of Contents
LECTURE 53Identifying Sources of Sales Growth ..............................................398
LECTURE 54Deriving Value from Your Customers ..............................................405
LECTURE 55...........................................412
LECTURE 56The Tactics of Successful Branding ................................................419
LECTURE 57Customer-Focused Pricing .............................................................426
LECTURE 58Marketing Communications That Work ..........................................433
LECTURE 59The Promise and Perils of Social Media.........................................439
LECTURE 60Innovative Marketing Research Techniques ...................................446
....................................................................................454
SUPPLEMENTAL MATERIAL
by law.
Disclaimer
Critical Business Skills: Strategy
Michael A. Roberto, D.B.A.
1
Critical Business Skills: Strategy
Scope:
S
Scop
e
2
Strategy Is Making ChoicesLecture 1
A
The Field of Business Strategy
an ancient Chinese military treatise, The Art of War, written by Sun
th
Lect
ure
1: S
trat
egy
Is M
akin
g C
hoic
es
Organizational Performance
investors are getting attractive returns, others will try to imitate
Strategic Planning
effect on the weather that follows, but it makes those who engage in
In many corporate strategic planning processes, discussions focus more on
6
Lect
ure
1: S
trat
egy
Is M
akin
g C
hoic
es
sustain it.
but you must begin with a clear set of choices. You must know the
7
The authors of Playing to Win
Competition
the management team or how great the strategy.
8
Lect
ure
1: S
trat
egy
Is M
akin
g C
hoic
es
Industry Structure and Competitive Advantage
9
Playing to Win.
The End of Competitive Advantage.
1.
2.
3.
Suggested Reading
Questions to Consider
10
Lecture 2
R
The Five Forces
11
Applying the Framework: Airlines
12
forces framework is
in a systematic fashion.
tastes or technology are changing in a substantial way, the framework
You can also use the framework to think about how you
centers have been seen as an attractive business, but in fact, overall, this
The Spectrum of Competition
social welfare.
Steps in a Five Forces Analysis
Crafting Strategy with the Five Forces
Common Mistakes with the Framework
the future. Some managers might also ignore the full range of substitutes.
the wine business, while in France, there are more than 200,000
16
Co-opetition.
Porter, Competitive Strategy.
1.
2.
3.
Suggested Reading
Questions to Consider
17
The Danger of StraddlingLecture 3
Creating Economic Value
create more economic value than your rivals.
that they get.
18
Lect
ure
3: T
he D
ange
r of S
trad
dlin
g
Fundamental Strategy Choices
, offering a
Competitive Advantage
19
to achieve.
or low cost may be able to
to sell a vehicle at a high
achieve lower costs than the
vehicles. Similarly, another A high-end clothing store might generate high gross margins, have higher expenses, and
than a more mainstream retailer.
20
Lect
ure
3: T
he D
ange
r of S
trad
dlin
g
categories. Target has lower inventory turns because it sells
Competitive Strategies
strategies:
a much narrower target market than major airlines.
21
Competitive Advantage as a System
22
Lect
ure
3: T
he D
ange
r of S
trad
dlin
g
environment changes.
judo strategy
Threats to Competitive Advantage
Montgomery, The Strategist.
Porter, Competitive Advantage.
Judo Strategy.
1.
2.
3.
Suggested Reading
Questions to Consider
Lect
ure
4: W
hat T
rade
r Joe
’s D
oesn
’t D
o
What Trader Joe’s Doesn’t DoLecture 4
S
The Importance of Trade-Offs
Preventing Imitation
Mitigating Negative Forces
26
Lect
ure
4: W
hat T
rade
r Joe
’s D
oesn
’t D
o
The Growth Trap The growth trap
sales aggressively.
27
A Dual Advantage Strategy?
28
Lect
ure
4: W
hat T
rade
r Joe
’s D
oesn
’t D
o
confuse the term differentiation with the general notion of being
generic strategies framework, differentiation meant creating a larger
Blue Ocean Strategy
29
Homogenization
but in the end, the products are just commodities; they’re not truly differentiated.
Lect
ure
4: W
hat T
rade
r Joe
’s D
oesn
’t D
o
.
Moon, Different.
1.
2.
3.
Suggested Reading
Questions to Consider
Lecture 5
F
Sources of First-Mover Advantage
however, the lower costs are not the result of more units being
value to offer.
array of customers.
Countering Conventional Wisdom
Such costs are known as
Fast followers
begins to evolve.
. They
if the cost of imitation is high.
Economies of Scale
believe that bigger is better because that has
much of the 20th century.
Large companies may sometimes overestimate the importance of economies of scale and fail to realize the disadvantages they have relative to start-ups and entrepreneurs.
Learning Curves
what scholars call
Network Effects
starts to turn negative.
Diminishing First-Mover Advantage?
freemium business model
Free.
Information Rules.
1.
2.
3.
Suggested Reading
Questions to Consider
Lecture 6
Disruptive versus Incremental Innovation
.
disruptive innovation
from 1976 through 1992, watching as a series of technological
one generation of technology often were not able to maintain
Challenges in the Face of Disruption
research focuses on gathering
make to increase customer
think in terms of totally new
criteria for allocating their As Blockbuster learned, conducting market research
result in incremental innovation; it doesn’t help you foresee disruptive innovation.
strongly resistant to giving this new technology the resources
The Long Tail The long tail
of Wired
any song or movie available even if there is only one customer who wants it.
same network effect.
Reacting to Disruptive Innovation
The Long Tail.
Christensen, The Innovator’s Dilemma.
1.
2.
3.
Suggested Reading
Questions to Consider
Lect
ure
7: A
ntic
ipat
ing
Your
Riv
al’s
Res
pons
e
Anticipating Your Rival’s ResponseLecture 7
Analyzing Competitors
Economic Motives
to move into the market or not. The incumbent also faces a choice:
Lect
ure
7: A
ntic
ipat
ing
Your
Riv
al’s
Res
pons
e
the incumbent will retaliate aggressively, then entering the market
. Ask yourself what
of customers.
Rynair and British Airways
for the incumbent.
Lect
ure
7: A
ntic
ipat
ing
Your
Riv
al’s
Res
pons
e
such situations.
aggressively to one segment of customers but maintain higher
NutraSweet and Holland Sweetener
Lect
ure
7: A
ntic
ipat
ing
Your
Riv
al’s
Res
pons
e
The Art of Strategy.
1.
2.
3.
Suggested Reading
Questions to Consider
Why Did Disney Buy Pixar?Lecture 8
T
Horizontal and Vertical Integration
refers to a situation in which a
Lect
ure
8: W
hy D
id D
isne
y B
uy P
ixar
?
Forward integration
economists call
leveraging them to enhance the value of its television
Put another way, economies
business unit enjoys either a
or lower costs because of its Disney believes that its theme
as part of the Disney family than
company.
its own.
of businesses.
Lect
ure
8: W
hy D
id D
isne
y B
uy P
ixar
?
Transaction Costs Just looking at synergy alone is not enough in thinking about
Lect
ure
8: W
hy D
id D
isne
y B
uy P
ixar
?
Toy Story
Corporate Strategy.
.
1.
2.
3.
Suggested Reading
Questions to Consider
Lecture 9
C
in focus.
its market value to its breakup value
A results when the whole is worth less than
60
classify its business units by looking at two basic measures:
mainstream business.
Low Market Share High Market Share
Slow Growth Dog Cash Cow
Fast Growth Question Mark Star
61
Governance Economies
using a common management system across all the businesses. The
so on.
th
but each of its businesses was in manufacturing, each was in a fairly
62
institutional voids
Intermediaries are economic entities that insert themselves between
Consumer Reports, may enable
the U.S. economy bore a closer resemblance to an emerging
Competing for Advantage.
Winning in Emerging Markets.
Stewart, The Quest for Value.
1.
2.
3.
Suggested Reading
Questions to Consider
Lecture 10
C
economic sense.
Types of Vertical Integration
66
Disney’s Integration Decision
st century, the chain
67
Rationale for Vertical Integration
information that they might otherwise not have access to, such as
68
Costs of Vertical Integration
Partial Integration
chosen tapered or partial integration
69
Declining Trends in Integration
Case Study: Zara
small batches for its stores.
70
71
Harrigan, .
1.
2.
3.
Suggested Reading
Questions to Consider
72
Lect
ure
11: M
erge
rs a
nd A
cqui
sitio
ns—
The
Win
ner’s
Cur
se
Mergers and Acquisitions—The Winner’s CurseLecture 11
M
Overview of Mergers and Acquisitions (M&A)
Valuing Target Firms
Lect
ure
11: M
erge
rs a
nd A
cqui
sitio
ns—
The
Win
ner’s
Cur
se
The Winner’s Curse
acquisition of a business—inevitably pays more than the underlying real value of the asset up for sale.
Cost versus Revenue Synergies
brought together.
76
Lect
ure
11: M
erge
rs a
nd A
cqui
sitio
ns—
The
Win
ner’s
Cur
se
Herd Behavior
77
those three.
78
Lect
ure
11: M
erge
rs a
nd A
cqui
sitio
ns—
The
Win
ner’s
Cur
se
Bruner, Deals from Hell.
Thaler, The Winner’s Curse.
1.
2.
3.
Suggested Reading
Questions to Consider
79
Launching a Lean Start-UpLecture 12
MThe Marshmallow Challenge
80
Lect
ure
12: L
aunc
hing
a L
ean
Star
t-Up
to a taller structure.
Peter Skillman, the creator of the marshmallow challenge, once
in launching new ventures, as well.
The Lean Start-Up
81
about it.
82
Lect
ure
12: L
aunc
hing
a L
ean
Star
t-Up
The MVP Strategy in Large Firms
Lean Start-Ups in Today’s Environment
launch your business. Further,
has generally become easier.
research over the years on
start-
launching new ventures.
Yelp pivoted from its initial incarnation as a system for emailing recommendation requests to
of restaurants and local businesses.
Lect
ure
12: L
aunc
hing
a L
ean
Star
t-Up
Gaining Investors
.
Breakthrough Entrepreneurship.
Ries, The Lean Startup.
Suggested Reading
1.
2.
3.
Questions to Consider
Critical Business Skills: Operations
Thomas J. Goldsby, Ph.D.
89
Critical Business Skills: Operations
Scope:
T
Scop
e
90
91
Lecture 13
Vision and Market Strategy
market strategies from which a business might choose: low cost,
92
Some high-end carmakers employ a differentiation strategy, seeking to distance themselves from competitors based on higher levels of comfort, performance, and aesthetics.
Operations Strategy
age of the business. Businesses in their infancy usually start with
behalf (
96
97
Operations Management in the Supply Chain.
Operations Rules.
1.
2.
3.
Suggested Reading
Questions to Consider
98
Lect
ure
14: L
eane
r, M
eane
r Pro
duct
ion
Leaner, Meaner ProductionLecture 14
Aactivity in all of business, transforming the useless into the useful.
The “Make-vs.-Buy” Decision
charge for its services.
investments with the increasing sales volume, but you might
99
It’s estimated that the global market for contract manufacturing in electronics is more than $450 billion.
100
Lect
ure
14: L
eane
r, M
eane
r Pro
duct
ion
Outsourcing Considerations
offshoring
Manufacturing Strategies
, or a strategy
101
.
by with lower inventories.
assemble-to-order, , or
102
Lect
ure
14: L
eane
r, M
eane
r Pro
duct
ion
their cars.
The fourth manufacturing strategy is the make-to-order strategy.
the buy-to-order strategy
investments other than inventory.
having more than enough inventory to cover any shortfalls or
Developments in Production Operations
form-on-the-spot.
Lect
ure
14: L
eane
r, M
eane
r Pro
duct
ion
nearshoringreshoring
to serve.
Nearshoring
Reshoringback home.
1.
2.
3.
Suggested Reading
Questions to Consider
106
Lecture 15
Services The term
concrete.
107
Assessing Services
108
Process Improvement: Lean Thinking
has
Arguably, building relationships is of much greater importance in service
109
standard work. This involves
takt time. Takt
refers to the amount of time
110
customers in 8 hours.
services knows is that if you have to staff a business at all times
heijunka
111
will be variation in outcomes.
Service-Dominant Logic (SDL)
is
112
outcomes reliably.
.
.
Suggested Reading
1.
2.
3.
Questions to Consider
Lect
ure
16: M
atch
ing
Supp
ly a
nd D
eman
d
Matching Supply and DemandLecture 16
SBackground on Sales and Operations Planning (S&OP)
S&OP suggests, the key function
The goal of the monthly S&OP team meeting is for all parties to arrive at
116
Lect
ure
16: M
atch
ing
Supp
ly a
nd D
eman
d
Sales Forecasting
one to three months. Sales forecasts come in one of two varieties:
117
absence of this information, they might use historical sales of
simple average
The moving average
Exponential smoothingalpha
value, or
The regression analysis
118
Lect
ure
16: M
atch
ing
Supp
ly a
nd D
eman
d
Capacity Planning
the sales forecast.
119
Integrated S&OP
,
Demand
InventoryPlan.
120
Lect
ure
16: M
atch
ing
Supp
ly a
nd D
eman
d
of integrated business planning
Demand
Capacity
InventoryPlan
planning; in the event of increases in Demand, moving the Plan closer to
Capacity and Inventory.
121
B Time Series Analysis.
Sales and Operations Planning.
1.
2.
Suggested Reading
Questions to Consider
122
Lect
ure
17: R
ight
sizi
ng In
vent
ory
Rightsizing InventoryLecture 17
Inventory Management Metrics
of , or . The more inventory a
inventory turns. This measure can be
generate more sales on lower inventory has a higher number of
as gross margin return on inventory
Product Proliferation
Lect
ure
17: R
ight
sizi
ng In
vent
ory
Inventory Management Strategies There are four basic inventory management strategies. These
With today’s inventory-tracking technologies, many companies monitor inventory at all times and manage accordingly.
.
, or P-system, where P period of review. This strategy is also
.
Q-system,
is known as the
just-in-time strategy.
126
Lect
ure
17: R
ight
sizi
ng In
vent
ory
kanban
versions of these systems are known as e-kanbans.
Choosing the Best Strategy
127
Finally, C items are those that are on their way out. They
becoming .
Innovations in Inventory Management
128
Lect
ure
17: R
ight
sizi
ng In
vent
ory
about inventory.
RFID.
.
1.
2.
3.
4.
Suggested Reading
Questions to Consider
129
Managing Supply and SuppliersLecture 18
The Evolution of Supply Management
Lect
ure
18: M
anag
ing
Supp
ly a
nd S
uppl
iers
outsource activities that they no longer view as their strengths,
Centralized and Decentralized Supply Management
locations controlling the buying actions. Such arrangements try
Supplier Relationship Strategies
Lect
ure
18: M
anag
ing
Supp
ly a
nd S
uppl
iers
Selecting Suppliers
Total Cost of Ownership
known as the
Keeping Suppliers Engaged
Lect
ure
18: M
anag
ing
Supp
ly a
nd S
uppl
iers
customer. Such assessments
supply
Providing a scorecard for supplier performance should serve as a conversation starter, enabling both parties to see the potential for improvement and
relationship.
Chain Management.
Tate, .
1.
2.
3.
4.
Suggested Reading
Questions to Consider
Lect
ure
19: T
he L
ong
Rea
ch o
f Log
istic
s
The Long Reach of LogisticsLecture 19
L
Distribution
The business of logistics is substantial: About $1.4 trillion is spent each year in the United States alone to support the storage and transportation of goods.
intensive distribution
distribution
Logistics Networks The term refers to the locations from which a
Lect
ure
19: T
he L
ong
Rea
ch o
f Log
istic
s
just science but art.
to customers by establishing a store or warehouse location
greatest reach with the fewest facilities. The goal here is the
gravity from military strategists.
of vulnerability.
locations to a logistics network. For instance, more facilities means
its network.
, which is
The
a market is
Lect
ure
19: T
he L
ong
Rea
ch o
f Log
istic
s
Operational Factors
to customers or store locations. Here, the focus is on the , or lead time
intermodal transportation.
Lect
ure
19: T
he L
ong
Rea
ch o
f Log
istic
s
2014.
.
.
1.
2.
3.
Suggested Reading
Questions to Consider
Rethinking Your Business ProcessesLecture 20
use
defensible value
The Voice of the Customer and the Voice of Business
voice of the business. The voice of the customer tells us what
therefore, value
Lect
ure
20: R
ethi
nkin
g Yo
ur B
usin
ess
Proc
esse
s
Process Mapping
a
swim lane
Cus
tom
er
Research Ticket
Buy Ticket
Prepare and Pack
Get Luggage
PT: 10 minWT: 2 daysFTQ: 80%Avail.: 98%Value: NO
PT: 10 minWT: 3 wksFTQ: 95%Avail.: 99%Value: NO
PT: 1 minWT: 0–30 minFTQ: 98%Avail.: 98%Value: YES
Tick
et C
ount
er Get Boarding Pass
PT: 5 minWT: 0–1 hrFTQ: 98%Avail.: 95%Value: NO
Secu
rity
Clear Security
PT: 2 minWT: 0–1 hrFTQ: 95%Avail.: 95%Value: NO
Con
cour
se
Walk to Gate
PT: 10 minWT: 0–2 hrFTQ: 99%Avail.: 95%Value: NO
Boa
rdin
g G
ate Board
PlaneFly to
DestinationPT: 3 minWT: 0–30 minFTQ: 99.9%Avail.: 99%Value: NO
PT: 2 hrWT: 0FTQ: 100%Avail.: 99%Value: YES
c
DD
Lect
ure
20: R
ethi
nkin
g Yo
ur B
usin
ess
Proc
esse
s
Process Time, Wait Time, and Cycle Time
for
FTQ refers
refers to the
availability suffers somewhat at the ticket counter, the security
Lect
ure
20: R
ethi
nkin
g Yo
ur B
usin
ess
Proc
esse
s
is not out of the norm for such an analysis.
value stream map
future state map
.
Martichenko, Everything I Know about Lean I Learned in First Grade.
Learning to See.
1.
2.
3.
Suggested Reading
Questions to Consider
Lect
ure
21: M
easu
ring
Ope
ratio
nal P
erfo
rman
ce
Measuring Operational PerformanceLecture 21
A
The Balanced Scorecard
that
Financial Performance
of inventory, on average, then you achieve 10
inventory while still serving the customer well allows you to
in the business. Retail
a similar measure for
insights, both for those outside and inside a business.
Lect
ure
21: M
easu
ring
Ope
ratio
nal P
erfo
rman
ce
Customer Assessment Customer satisfaction is the most common measure for the
.
to others.
these measures almost always involve asking the customer how
of satisfaction.
Internal Business Processes
Lect
ure
21: M
easu
ring
Ope
ratio
nal P
erfo
rman
ce
that seeks to eliminate waste in its various forms throughout the
DMAIC method
measure
million opportunities
Learning and Growth
Cannibals with Forks
to sustain itself economically.
Lect
ure
21: M
easu
ring
Ope
ratio
nal P
erfo
rman
ce
Making Sustainability Work.
1.
2.
Suggested Reading
Questions to Consider
Keeping an Eye on Your MarginsLecture 22
T
is what marketers call
marketers may still have a customer count that numbers in the
Lect
ure
22: K
eepi
ng a
n Ey
e on
You
r Mar
gins
80-20 rule
not sales.
Differential Resource Consumption
out which customers force a business to consume what resources. To
arrive at an average cost.
Cost-to-Serve Analysis
160
Lect
ure
22: K
eepi
ng a
n Ey
e on
You
r Mar
gins
activities consume resources.
Activity-Based Costing
follows suit.
161
the cost object went away.
162
Lect
ure
22: K
eepi
ng a
n Ey
e on
You
r Mar
gins
Using the Analysis
where your business is
transaction for which you
unless you have other
waiting in the wings. A better solution is to make
the service more cost effectively.
memberships represent one approach to offering differential pricing in business-to-consumer marketing.
.
.
1.
2.
Suggested Reading
Questions to Consider
Lect
ure
23: L
ever
agin
g Yo
ur S
uppl
y C
hain
Leveraging Your Supply ChainLecture 23
A
Supply Chain Management as a Team Sport
reach the market until almost two years after Truvia.
Understanding the Network Structure
of its customers.
166
Lect
ure
23: L
ever
agin
g Yo
ur S
uppl
y C
hain
PAB BA
167
Forming Strategic Relationships
whether to work with Starbucks, the coffee giant was a small, local
168
Lect
ure
23: L
ever
agin
g Yo
ur S
uppl
y C
hain
but into the future.
returns management.
involvement of all business functions if an SCM team is to make
169
makes internal integration more challenging. However, they may
that warrant the investment.
customers include improved economic returns, innovation,
170
Lect
ure
23: L
ever
agin
g Yo
ur S
uppl
y C
hain
Lambert, Supply Chain Management.
1.
2.
3.
Suggested Reading
Questions to Consider
171
Reducing Risk, Building ResilienceLecture 24
A
Internal Risks
business strategists often use a SWOT analysis
failure
172
Lect
ure
24: R
educ
ing
Ris
k, B
uild
ing
Res
ilien
ce
failure mode
is an outcome or
factors that call for the greatest attention.
three scores is the risk priority number
risk factors.
Your Organization
Supplier 1 Customer 1
Customer 2
Customer 3
Customer 4
Customer 5
Customer 6
Customer 7
Supplier A
Supplier A
Supplier BCustomer ACustomer B
Customer A
Customer A
Customer B
Supplier ASupplier BSupplier C
Supplier 2
Supplier 3
Supplier 4
Lect
ure
24: R
educ
ing
Ris
k, B
uild
ing
Res
ilien
ce
these materials here.
in China, where environmental laws are not so stringently
176
Lect
ure
24: R
educ
ing
Ris
k, B
uild
ing
Res
ilien
ce
tier 2.
Environmental Risks
177
The name of the game in risk management is usually to offset an
1.
2.
3.
Suggested Reading
Questions to Consider
Critical Business Skills: Finance and Accounting
Eric Sussman, M.B.A.
181
Critical Business Skills: Finance and Accounting
Scope:
A
Scop
e
182
Accounting and Finance—Decision-Making ToolsLecture 25
T
Lect
ure
25: A
ccou
ntin
g an
d Fi
nanc
e—D
ecis
ion-
Mak
ing
Tool
s
more.
Standard Accounting Disclosures
.
In addition to public companies, many other organizations, including
186
Lect
ure
25: A
ccou
ntin
g an
d Fi
nanc
e—D
ecis
ion-
Mak
ing
Tool
s
Although the income statement tells us about an
be material.
187
also serves as a crucial link to valuation.
Accounting Myths
accounting rules.
Unfortunately, there is no single measure that allows an overall
188
Lect
ure
25: A
ccou
ntin
g an
d Fi
nanc
e—D
ecis
ion-
Mak
ing
Tool
s
sheet entirely.
189
in life.
Analysis
Valuation
1.
2.
recent year.
Suggested Reading
Questions to Consider
190
Lecture 26
Balance Sheet Overview
statements, can be
website, in the investor relations section.
Even individual households should have a sense of their assets and debts to
appropriately, and plan for the future.
191
the .
of the balance sheet.
Current Assets
192
from a bank, or a U.S. treasury bill.
sheet.
as a reserve against those receivables.
Long-Term Assets
is greater than current liabilities.
196
Analysis
Valuation
1.
2.
Suggested Reading
Questions to Consider
197
Consolidated Balance Sheet: IntelDecember 28, 2013 and December 29, 2012 (In Millions, Except Par Value) 2013 2012
AssetsCurrent assets:
Cash and cash equivalents $ 5,674 $ 8,478 Short-term investments 5,972 3,999 …
accounts of $38 ($38 in 2012) 3,582 3,833 …Other current assets 1,649 2,512
Total current assets 32,084 31,358 Property, plant and equipment, net 31,428 27,983 …
10,513 9,710 5,150 6,235
Other long-term assets 5,489 4,148 Total assets $ 92,358 $ 84,351
Liabilities and stockholders’ equity
$ 281 $ 312 2,969 3,023
…Total current liabilities 13,568 12,898 Long-term debt 13,165 13,136 …Stockholders’ equity:
…Retained earnings 35,477 32,138
Total stockholders’ equity 58,256 51,203 Total liabilities and stockholders’ equity $ 92,358 $ 84,351
Intel’s consolidated balance sheet combines all of the company’s operations
198
Lect
ure
27: W
hy th
e In
com
e St
atem
ent M
atte
rs
Why the Income Statement MattersLecture 27
announcements that often focus on a few key metrics: revenue, gross margin,
Measuring Income
accounting in generating income statements. As a result, the
revenue when:
199
later time.
200
Lect
ure
27: W
hy th
e In
com
e St
atem
ent M
atte
rs
Organization and Structure of Income Statements
Revenues
201
earnings before interest and tax expense
202
Lect
ure
27: W
hy th
e In
com
e St
atem
ent M
atte
rs
Street analysts.
Key Questions
EBITDA From the numbers on the income statement, we are able to calculate
earnings before
of your mortgage, the answer here is generally no. This is an
Lect
ure
27: W
hy th
e In
com
e St
atem
ent M
atte
rs
Analysis
Valuation
1.
Suggested Reading
Questions to Consider
2.
Income Statement: Apple Inc.
September 28, 2013
September 29, 2012
Net sales $ 107,910 $ 156,508Cost of sales (1) 106,606 87,846
Gross margin 64,304 68,662
Research and development (1) 4,475 3,381Selling, general and administrative (1) 10,830 10,040
15,305 13,421
Operating income 48,999 55,2411,156 522
50,155 55,76313,118 14,030
Net income $ 37,037 $ 41,733
Earnings per share:Basic $ 40.03 $ 44.64Diluted $ 39.75 $ 44.15
type of disclosure.
206
Lecture 28
T
really is king in valuation.
the sale.
although the actual cash from the sale will come later. But what if
207
to collect their receivables.
208
Operating Cash Flow
209
Investing Cash Flow
All companies need to make some investment in capital expenditures, such as
210
reinvest at least some amount of cash into the business to maintain
valuation of stocks.
own a right to or an interest in.
211
Financing Cash Flow
in the market.
Reviewing the Statement of Cash Flows
from year to year.
212
Analysis
Valuation
1.
2.
Suggested Reading
Questions to Consider
Common Size, Trend, and Ratio AnalysisLecture 29
Common Size Analysis
Lect
ure
29: C
omm
on S
ize,
Tre
nd, a
nd R
atio
Ana
lysi
s
operating leverageit mostly consists of
sales commissions.
Trend Analysis
Line ItemReported in 2013
Converted to Percentage
Revenues $ 84.2 B 100.0%COGS $ 42.4 B 50.4%*Operating income (operating margin) $ 14.5 B 17.2%Net income (net margin) $ 11.3 B 13.4%
Line Item P&G 2013 P&G 2012Colgate-
Palmolive 2013Gross margin 49.6% 49.3% 58.6%Operating margin 17.2% 15.9% 20.4%Net margin 13.4% 12.9% 12.9%
because costs were growing faster than sales revenue.
Applying Analyses to Other Financial Statements
216
Lect
ure
29: C
omm
on S
ize,
Tre
nd, a
nd R
atio
Ana
lysi
s
billion in 2011, an increase of about 12%.
.
.
or (turnover ratios
Leverage or , measuring the overall riskiness
obligations.
Market ratios, which serve as a link between accounting
217
current liabilities.
, which
receivables from customers.
The inventory turnover ratio turns over or sells its inventory. The formula is similar to that for
The
return on investment return on assets
218
Lect
ure
29: C
omm
on S
ize,
Tre
nd, a
nd R
atio
Ana
lysi
s
Leverage and Market Ratios
219
, which is
market value to total revenues, known as the .
Analysis
1.
2.
Suggested Reading
Questions to Consider
220
Lecture 30
Bor offering a new service, managers must ask: How many units of
because the goal of any business is not just to break even,
Types of Costs
changing levels of activity.
221
or loss
222
formula is:
margin
contributions that every sale makes.
much business each month.
night, you have some available rooms. A traveler walks in, asks
226
Recall the breakeven formula:
target ticket sales at about 8,200 fans, but we know that concert
Breakeven Analysis.
Cost Management
Suggested Reading
227
1.
2.
Questions to Consider
228
Lect
ure
31: U
nder
stan
ding
the
Tim
e Va
lue
of M
oney
Understanding the Time Value of MoneyLecture 31
A Dollar Today versus a Dollar Tomorrow
229
Compounding
on your original investment but on any return that investment has
present value future value
Lect
ure
31: U
nder
stan
ding
the
Tim
e Va
lue
of M
oney
Single Cash Flows
follows:
by CF i
t.
t
Annuities
formula is shown below:
Amount of annuity ×
Lect
ure
31: U
nder
stan
ding
the
Tim
e Va
lue
of M
oney
consistently over time. The formula is:
Growing Annuities
useful life.
formula is shown below:
g
g
ti
the numbers, we get:
1 (1+ .05)5
(1+ .1)5
(0.1 0.05)
make the investment.
Perpetuities and Growing Perpetuities
th century known as a
owners forever.
Lect
ure
31: U
nder
stan
ding
the
Tim
e Va
lue
of M
oney
Amount of constant annuityi
CF1
.
A piece of real estate that is likely to stay fully leased in perpetuity, such as an
an asset is 8%.
,
,
1.
2.
Suggested Reading
Questions to Consider
Lecture 32
A
Historical Asset Performance Data
Equity and Bond Market Returns, 1926–2013
Asset ClassAverage
Annual ReturnStandard Deviation
of ReturnsLarge-cap domestic stocks 12.1% 20.2%Small-cap domestic stocks 16.9% 32.3%
6.3% 8.4%5.9% 9.8%3.5% 3.1%3.0% 4.1%
other category of investment.
higher risk, the fact that you assume greater risk in an investment
answer is no.
.
market risk.
Beta Beta (
have a
x
about the historical returns of the overall market, we can estimate
Capital Asset Pricing Model
overall market.
overall market, which means it has a
.
or 6%.
Using CAPM
investors try to match the market, not beat it, while active investors
alpha.
value size
,
Valuation
Suggested Reading
1.
2.
Questions to Consider
Lecture 33
Structure of Investment Opportunities
of net present value
X
generally make sense.
Accounting or Book Rate of Return
NPV Formula
.
formula:
CFtCF0
Assessing an Investment
Year Robot MRI Dialysis0 ($1,500,000) ($1,500,000) ($1,500,000)1 $200,000 $300,000 $500,0002 $300,000 $400,000 $500,0003 $400,000 $600,000 $500,0004 $500,000 $650,000 $500,0005 $650,000 $750,000 $500,000
Surgical RobotYear
0 1 2 3 4 5($1,500,000) $200,000 $300,000 $400,000 $500,000 $650,000
Present value @ 10% ($1,500,000) $181,818 $247,934 $300,526 $341,507 $403,599NPV ($24,616)
is less than 0, the investment is not worth making because it will
Rules for Calculating NPV
MRIYear
0 1 2 3 4 5($1,500,000) $300,000 $400,000 $600,000 $650,000 $700,000
Present value @ 10% ($1,500,000) $272,727 $330,579 $450,789 $443,959 $434,645NPV ($432,698)
DialysisYear
0 1 2 3 4 5($1,500,000) $500,000 $500,000 $500,000 $500,000 $500,000
Present value @ 10% ($1,500,000) $454,545 $413,223 $375,657 $341,507 $310,461NPV $395,393
,
Mayo,
1.
Suggested Reading
Questions to Consider
2.
Steps for Applying the NPV Formula
1.
2.
3.
4.
5.
6.
Lect
ure
34: A
ltern
ativ
es to
Net
Pre
sent
Val
ue
Alternatives to Net Present ValueLecture 34
NPV and IRR
CFtCF0
for the missing variable, i.
Calculating IRR
You estimate that the investment will generate net income
Lect
ure
34: A
ltern
ativ
es to
Net
Pre
sent
Val
ue
Limitations of IRR
than the former.
reinvestment risk.
Lect
ure
34: A
ltern
ativ
es to
Net
Pre
sent
Val
ue
Equity Multiples
Project NPVInvestment Required PI
A $90,000 $900,000 0.100B $125,000 $1,100,000 0.114C $65,000 $500,000 0.130D $25,000 $500,000 0.050E $60,000 $400,000 0.150
Lect
ure
34: A
ltern
ativ
es to
Net
Pre
sent
Val
ue
,
Analysis
Valuation
1.
2.
Suggested Reading
Questions to Consider
Initial Investment Year 1 Year 2 Year 3
$25,000 $2,000 $3,000 $27,000
Weighing the Costs of Debt and EquityLecture 35
or a combination of the two can, in fact, affect the overall value
260
Lect
ure
35: W
eigh
ing
the
Cos
ts o
f Deb
t and
Equ
ity
investor might earn.
less risk.
261
262
Lect
ure
35: W
eigh
ing
the
Cos
ts o
f Deb
t and
Equ
ity
Kd
formula: Kd i t i t
Ke
follows: Ke Rf
Weighted Average Cost of Capital
mortgage has an interest
some stocks, which you investment decision, both in business and in our personal lives.
such transactions.
Lect
ure
35: W
eigh
ing
the
Cos
ts o
f Deb
t and
Equ
ity
Ke = Kd E D V E + D t
Using WACC
,
Mayo,
Suggested Reading
266
Lect
ure
35: W
eigh
ing
the
Cos
ts o
f Deb
t and
Equ
ity
1.
2.
Questions to Consider
267
Lecture 36
A
Reviewing Terms
might have.
268
Fundamental Analysis fundamental
analysis
an accounting metric. Some common valuation metrics involve the
269
Discounted Cash Flow Analysis
270
routinely emerge.
271
Dividend Discount Model
272
Plugging in the numbers, we get:
.
Computing Free Cash Flows
that it will continue to grow at a rate in line with the overall
Here, g
,
Analysis
The Little Book of Valuation.
Valuation
1.
2.
Suggested Reading
Questions to Consider
Critical Business Skills: Organizational Behavior
Clinton O. Longenecker, Ph.D.
279
Critical Business Skills: Organizational Behavior
Scope:
make going to work a blessing or a curse.
Scop
e
280
the 21st century.
281
Achieving Results in Your OrganizationLecture 37
HThe Field of Organizational Behavior
st century.
The Busyness Continuum
282
Lect
ure
37: A
chie
ving
Res
ults
in Y
our O
rgan
izat
ion
ongoing activity
st
to be doing to succeed in your position.
S.T.O.P. Being So Busy
S
T
Oreally matter.
Pto make sure that you are meeting your goals.
Strategic S.T.O.P.
Lect
ure
37: A
chie
ving
Res
ults
in Y
our O
rgan
izat
ion
critical channels of communication with him or her. Most bosses
Daily S.T.O.P.
what activities you can take off your list.
286
Lect
ure
37: A
chie
ving
Res
ults
in Y
our O
rgan
izat
ion
Make Planning Routine
Lencioni, The Advantage.
Getting Results.
Suggested Reading
287
1.
2.
3.
4.
Questions to Consider
288
Lect
ure
38: T
he V
alue
of G
reat
Lea
ders
hip
The Value of Great LeadershipLecture 38
The Importance of Leadership
289
Two Components of Effective Leadership
290
Lect
ure
38: T
he V
alue
of G
reat
Lea
ders
hip
balance their concern for the task of getting results with a genuine
affect their followers.
This school embraces the The Seven
This school cites a
291
Focusing on the Mission and Results
292
Lect
ure
38: T
he V
alue
of G
reat
Lea
ders
hip
shoe business. But because of his uncanny ability to get scientists to
Preparing Followers
that everyone knows what is coming.
late 19th th centuries.
Integrity and Transparency
The Work-Life Balance, Passion, and Mojo
Lect
ure
38: T
he V
alue
of G
reat
Lea
ders
hip
are changing.
Managing for Results.
Results-Based Leadership.
1.
2.
3.
4.
Suggested Reading
Questions to Consider
Emotional Intelligence in the WorkplaceLecture 39
The Importance of Good Relationships
296
Lect
ure
39: E
mot
iona
l Int
ellig
ence
in th
e W
orkp
lace
Organizational Networking
Effective 360-Degree Working Relationships 360-degree working
relationships
a healthy, sustainable way. The 360-degree
297
Research for the book Getting Results
First, there is the relationship
working
Analyzing Your Work Relationships
using the following categories: Non-working relationships
298
Lect
ure
39: E
mot
iona
l Int
ellig
ence
in th
e W
orkp
lace
Strained working relationships
Positive working relationships involve folks we get along
Great working relationships are strong connections where we
working together.
beginning of something that only gets uglier. More often, though,
299
Developing Emotional Intelligence
.
Dimension 1: Self-Awareness
Lect
ure
39: E
mot
iona
l Int
ellig
ence
in th
e W
orkp
lace
Dimension 2: Self-Management
of success.
Dimension 3: Social Awareness
Dimension 4: Relationship Management Skills
sustainable ways.
working together.
Primal Leadership.
Suggested Reading
Lect
ure
39: E
mot
iona
l Int
ellig
ence
in th
e W
orkp
lace
1.
2.
3.
4.
Questions to Consider
The Art of Effective CommunicationsLecture 40
L
work altogether.
Lect
ure
40: T
he A
rt o
f Effe
ctiv
e C
omm
unic
atio
ns
Getting Through
on our job satisfaction,
any of these three basic
focus from getting things
seeking out the information
someone who will listen to their concerns.
Ironically, the sheer number of communication technologies available today can make it more
communicate effectively with one another.
genius to establish a highly effective communication system.
Lect
ure
40: T
he A
rt o
f Effe
ctiv
e C
omm
unic
atio
ns
information they want
Lect
ure
40: T
he A
rt o
f Effe
ctiv
e C
omm
unic
atio
ns
Lessons for Effective Communication
as a communicator:
everyone you work with, from your boss, to your colleagues,
Carnegie, .
The Art of Engagement.
1.
2.
3.
4.
Suggested Reading
Questions to Consider
Lect
ure
41: T
he M
otiv
atio
n-Pe
rfor
man
ce C
onne
ctio
n
The Motivation-Performance ConnectionLecture 41
M
The Importance of Motivation
motivation:
Key Motivational Practices
Lect
ure
41: T
he M
otiv
atio
n-Pe
rfor
man
ce C
onne
ctio
n
The Performance Equation
, which is: f
Strategies for Workplace Motivation
Lect
ure
41: T
he M
otiv
atio
n-Pe
rfor
man
ce C
onne
ctio
n
they treat it much better than if it belongs to someone else.
teamwork throughout your
you not only create a climate for effective motivation, but you also increase the
great job of clarifying goals
One of the hallmarks of high-performance organizations is
promote and encourage
the way.
1001 Ways to Reward Employees.
Suggested Reading
Lect
ure
41: T
he M
otiv
atio
n-Pe
rfor
man
ce C
onne
ctio
n
1.
2.
3.
4.
Questions to Consider
Lecture 42
Cooperation and Teamwork
work together to get there.
teamwork
interests together.
The term teamwork team, which just might
make them one.
th century, when the teme
toom
team
complement each other’s.
turnover is lower, commitment to fellow workers is greater,
th
States, Abraham Lincoln.
A Team of Rivals
Critical Gateways to Cooperation and Teamwork
job, as well.
team members learn how to communicate more effectively with one
Team of Rivals.
Lencioni, .
1.
2.
Suggested Reading
Questions to Consider
3.
4.
Lect
ure
43: C
oach
ing—
From
Grid
iron
to B
oard
room
Coaching—From Gridiron to BoardroomLecture 43
Effective Coaching Research shows that Pat was on to something: A survey of U.S.
that effective coaching was critical to their success. An even larger
But the most telling result of the survey was the following: 80% of
make the time for coaching.
Pat’s Solution
coaching sessions with a consultant. Pat was smart enough to
change his own behavior.
winning
a work unit.
Lect
ure
43: C
oach
ing—
From
Grid
iron
to B
oard
room
f (talent × motivation ×
Going Forward
not going well.
Coaching on the Individual Level
If you don’t understand an employee’s role in an organization, coaching can
Lect
ure
43: C
oach
ing—
From
Grid
iron
to B
oard
room
your coaching role as being that of a nurturer. That is to say, as a
means termination.
this action.
Pat’s Conclusion
successful coach.
Lect
ure
43: C
oach
ing—
From
Grid
iron
to B
oard
room
1.
2.
3.
4.
Suggested Reading
Questions to Consider
Lecture 44
actions have on the
A high-ranking executive might have
Types of Power
position power, because they
category of personal power
Increasing Your Power
Understanding Your Boss
with the boss.
you know that your boss has overly aggressive goals to meet, an
Managing Your Boss
Take the initiative to make alignment sessions with your boss a
.
Behavior in Organizations.
1.
2.
3.
4.
Suggested Reading
Questions to Consider
Lecture 45
several reasons for this increase.
emotional, or both at all three of these levels, with each
of challenges.
can be challenging in some situations.
Negotiating Rationally.
.
Suggested Reading
1.
2.
3.
4.
Questions to Consider
Ethics and the Bathsheba SyndromeLecture 46
The Practicality of Ethics
Lect
ure
46: E
thic
s an
d th
e B
aths
heba
Syn
drom
e
The Origins of Ethics
Dealing with Ethical Issues
One test to see if an action is ethical is to consider its legality.
Lect
ure
46: E
thic
s an
d th
e B
aths
heba
Syn
drom
e
your instincts.
“I Don’t Know What I Was Thinking”
even illegal things if we are not vigilant.
Bathsheba syndrome
Protecting Your Ethics
temptation mapping
Lect
ure
46: E
thic
s an
d th
e B
aths
heba
Syn
drom
e
Leading at a Higher Level.
1.
2.
3.
4.
Suggested Reading
Questions to Consider
Lect
ure
47: L
eadi
ng R
eal O
rgan
izat
iona
l Cha
nge
Leading Real Organizational ChangeLecture 47
M
Drivers of Change
central challenge of change is not strategy or systems or culture. The
Lect
ure
47: L
eadi
ng R
eal O
rgan
izat
iona
l Cha
nge
the rollout.
make more money because
workforce.
resistance to change, however.
Strategy
Driving Meaningful Change
kaizen
Employees confused by a change may become resistant to it.
which is a sobering thought. That means that 80% of the time,
Change or Die
are trying to make.
Lect
ure
47: L
eadi
ng R
eal O
rgan
izat
iona
l Cha
nge
A Study on Change Initiatives The Two-Minute Drill
in charge often just going through the motions of the change effort.
against the challenge.
Still more vital elements of a successful change initiative are
their best efforts.
Leading Change.
The Two-Minute Drill.
1.
2.
Suggested Reading
Questions to Consider
Lect
ure
47: L
eadi
ng R
eal O
rgan
izat
iona
l Cha
nge
3.
4.
Lifelong Learning for Career SuccessLecture 48
Tovercome them.
The Essentiality of Learning
or her career.
Lect
ure
48: L
ifelo
ng L
earn
ing
for C
aree
r Suc
cess
Breaking through with Learning
to work.
relevant to our jobs.
Lect
ure
48: L
ifelo
ng L
earn
ing
for C
aree
r Suc
cess
Breaking through with Professional Practices
Just as in the case of your ongoing learning, once you have taken
Lect
ure
48: L
ifelo
ng L
earn
ing
for C
aree
r Suc
cess
Mentoring
mentor in our lives for the same reasons.
your success.
Blauner, .
Training Camp.
Suggested Reading
1.
2.
3.
4.
Questions to Consider
Critical Business Skills: Marketing
Ryan Hamilton, Ph.D.
Critical Business Skills: Marketing
Scope:
T
have a marketing strategy.
Scop
e
What Is Marketing?Lecture 49
The term marketing
value that customers seek.
Marketing marketing as the function of a business that creates
Lect
ure
49: W
hat I
s M
arke
ting?
creating value into something that actually creates value for the
imitation. The success of the
Types of Value
your customers will, too.
The manufacturer of the PalmPilot
complex than other personal digital assistants on the market at the time.
allows consumers to connect with others.
feel better. Sometimes, all customers are looking for from
Understanding Customers
target customers may be among them.
Lect
ure
49: W
hat I
s M
arke
ting?
marketing efforts.
naturally consonant with certain sources of value.
seek monetary value.
reasons the customer is likely to generate for his or her choice.
Key Marketing Questions
become overwhelming.
Lect
ure
49: W
hat I
s M
arke
ting?
How can you give them what they value better than
Chernev,
1.
2.
Suggested Reading
Questions to Consider
Lecture 50
segmentation analysis, each of which results in a list of customer segments
Principles of Segmentation Analysis
with any others.
Case Study in Psychographic Segmentation
Approaches to Segmentation
you start with the offering itself rather than the customers. Think of
stores to better serve these segments.
Chernev,
1.
segments, is there a way to combine insights from these segmentation
2.
Suggested Reading
Questions to Consider
Lect
ure
51: T
arge
ting
a M
arke
t Seg
men
t
Targeting a Market SegmentLecture 51
Selecting a Single Target
that by creating value for one segment, you will almost certainly
who your customer is not.
segment gets what it wants, but the customers have nowhere
However, if other manufacturers come along that are willing
will lose everyone.
remains the same: You must have one target. Targeting is at least not as it is about
Lect
ure
51: T
arge
ting
a M
arke
t Seg
men
t
the offering.
Making an Offering with Value
target customer actually wants.
Lect
ure
51: T
arge
ting
a M
arke
t Seg
men
t
versa. But that may not always be the case.
Customer Segments Competitors/Company
Attributes GamersNon-
Gamers Xbox PS3 WiiCutting-edge graphics H L H H LHighly involved games H L H H L
H L H H LHigh skill levels H L H H LRealistic graphics H L H H L
Ease of interface L H L L H
An attribute-by-segment matrix is a valuable tool for identifying targets that may be underserved by current offerings.
into one.
with the game system, concentrating on the one attribute that
its offering to serve that segment.
Lect
ure
51: T
arge
ting
a M
arke
t Seg
men
t
Chernev,
1.
2.
Suggested Reading
Questions to Consider
Positioning Your OfferingLecture 52
Amarketers, but because the marketers themselves fail to communicate the
in creating value for the customer, then clearly communicating that value.
The Positioning Process
Lect
ure
52: P
ositi
onin
g Yo
ur O
fferin
g
about just one of those attributes.
Unfortunately, by that time, many consumers were using their
the solution.
Creating Value for the Target Customer
Lect
ure
52: P
ositi
onin
g Yo
ur O
fferin
g
your customer is.
purchase decisions, such as parents of young children.
break an offering.
Differentiating from the Competition
Lect
ure
52: P
ositi
onin
g Yo
ur O
fferin
g
Positioning statements are not taglines or slogans. They are
Chernev,
Suggested Reading
1.
2.
Questions to Consider
Lecture 53
Harvard Business Review
in which a business sells its current customers more of its current
Current Offerings New OfferingsCurrent Customers Market Penetration Product Development
New Customers Market Development
Market Penetration
involves selling more of
your current customers. This
risky means of increasing
avenue for growth that is
marketers seeking to increase sales. Selling a little more
increase sales.
your current customers to
and exploited a cultural opportunity to sell more of its current product—Dockers—to current customers.
Product Development
in 20 years.
Market Development
serve new customers.
of customers. This is obviously the riskiest strategy because it
Gap Analysis
your efforts.
Chernev,
1.
your solutions.
2.
Suggested Reading
Questions to Consider
Deriving Value from Your CustomersLecture 54
Acommunication value.
Loyalty Value
customer to be loyal if he or she has bought more than a certain
Lect
ure
54: D
eriv
ing
Valu
e fr
om Y
our C
usto
mer
s
that someone buys from you out of habit. Behaviorally, habitual
Triscuits. Loyal customers, in contrast, are more likely to view
marketing researcher from Boston University, is among a growing
color the way we engage in economic transactions.
thinking they relate to loyalty.
Lect
ure
54: D
eriv
ing
Valu
e fr
om Y
our C
usto
mer
s
customer base.
Information Value
Further, customers can give you valuable information about your
them. But you may also be able to get many of these insights for
Guinness Book of
the country.
Communication Value
Lect
ure
54: D
eriv
ing
Valu
e fr
om Y
our C
usto
mer
s
mouth communications.
customers you serve. Some
as those who have large
in their communities, or If you sell to teenagers, then you probably have many customers
Chernev,
1.
2.
Suggested Reading
Questions to Consider
Lect
ure
55: C
reat
ing
Gre
at C
usto
mer
Exp
erie
nces
Creating Great Customer ExperiencesLecture 55
U
marketing strategy.
The most famous framework for remembering all the marketing
Promotion
Marketing Management
the marketing mix.
consume them.
Lect
ure
55: C
reat
ing
Gre
at C
usto
mer
Exp
erie
nces
treating every offering as if it were a service.
peak-end rule
Lect
ure
55: C
reat
ing
Gre
at C
usto
mer
Exp
erie
nces
market transactions. Therefore, one way of tackling the
Recognize the level of service your customers are likely to expect based on the
will be felt as a fresh injury.
Lect
ure
55: C
reat
ing
Gre
at C
usto
mer
Exp
erie
nces
Chernev,
1.
2.
Suggested Reading
Questions to Consider
The Tactics of Successful BrandingLecture 56
Bthe customer.
Lect
ure
56: T
he T
actic
s of
Suc
cess
ful B
rand
ing
Case Studies in Branding
inhibit others.
Center, the basketball arena of the Los Angeles Lakers. This
Branding and Customer Value
Lect
ure
56: T
he T
actic
s of
Suc
cess
ful B
rand
ing
signal refers
functional value or as a reference frame to boost monetary value for
of a consistent message.
lifestyle branding
you’ve experienced the social value of brands.
Lect
ure
56: T
he T
actic
s of
Suc
cess
ful B
rand
ing
The Branding Ladder There is a common belief among marketing managers that it is
branding ladder.
unassailable as they might seem.
Taken together, these three insights suggest that there are
Chernev,
1.
2.
Suggested Reading
Questions to Consider
Lect
ure
57: C
usto
mer
-Foc
used
Pric
ing
Customer-Focused PricingLecture 57
Pricing Information
but costs tell you nothing about how your customer will evaluate
be substitutes.
your customer thinks that what you are selling is worth what you
they see in your offering.
Lect
ure
57: C
usto
mer
-Foc
used
Pric
ing
Pricing Variations
.
Competing on Price
new customers, but this
failing somewhere else in your marketing. You may not
to attract customers, you are paying customers to buy your product.
Lect
ure
57: C
usto
mer
-Foc
used
Pric
ing
Evaluating Prices
even though it was the same in both cases.
Chernev,
Suggested Reading
Lect
ure
57: C
usto
mer
-Foc
used
Pric
ing
1.
2.
with which you are familiar.
Questions to Consider
Marketing Communications That WorkLecture 58
S
communications well.
Case Study: “Got Milk?” Campaign
Only after you have a strategy in place does it make sense to start designing an ad campaign, posting billboards, or sending out direct-mail catalogs.
Lect
ure
58: M
arke
ting
Com
mun
icat
ions
Tha
t Wor
k
strategy, but sometimes, the target is a subsegment of the total
warning not to let the same fate befall the viewer.
Lect
ure
58: M
arke
ting
Com
mun
icat
ions
Tha
t Wor
k
Commanding Attention
To ensure that you always have new information to share, you might try the strategy of trivial innovation
Communication Templates
while remaining consistent.
to the average consumer.
Lect
ure
58: M
arke
ting
Com
mun
icat
ions
Tha
t Wor
k
Summing Up Communications
sure you have a goal for your communications, whether you are
Chernev,
1.
2.
Suggested Reading
Questions to Consider
The Promise and Perils of Social MediaLecture 59
getting information to consumers.
or customers.
Lect
ure
59: T
he P
rom
ise
and
Peril
s of
Soc
ial M
edia
Slate
Viral Marketing
whole market.
That value comes from sharing content that is funny, emotionally
message. The key here is to give customers content that they will
Lect
ure
59: T
he P
rom
ise
and
Peril
s of
Soc
ial M
edia
Destination Content Another change in marketing communication over the last few
TIME The New York Times.
must create something worth seeking out.
same as throwing money away.
marketing messages.
Lect
ure
59: T
he P
rom
ise
and
Peril
s of
Soc
ial M
edia
Social Media As a communication tactic,
you can learn as much from your
as your customers are learning
strategy on the larger marketing
overall marketing strategy.
your product or post something about it on Facebook can be
and costs you very little.
all of them.
Chernev,
1.
about by customers.
2.
Suggested Reading
Questions to Consider
Lect
ure
60: I
nnov
ativ
e M
arke
ting
Res
earc
h Te
chni
ques
Innovative Marketing Research TechniquesLecture 60
Qualitative Research
of customers.
starting over again.
of your customers in situ
Focus Groups
customers who are in the target segment.
Lect
ure
60: I
nnov
ativ
e M
arke
ting
Res
earc
h Te
chni
ques
must be met if the data are to be valid, interpretable, and generalizable.
Lect
ure
60: I
nnov
ativ
e M
arke
ting
Res
earc
h Te
chni
ques
Ethnographies
in a new light.
Projective Techniques
Lect
ure
60: I
nnov
ativ
e M
arke
ting
Res
earc
h Te
chni
ques
Companywide Marketing
.
Why We Buy.
1.
Suggested Reading
Questions to Consider
2.
own research.
Bib
liogr
aphy
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