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Terms in this set (96)
- includes the financial projections of the new venture.
A summary of the projected sales, The cost of goods sold, General and administrative expenses of the business
Financial plan must provide
- it must anticipate the amount and timing of expected cash inflows and outflows over a period of several years.
- it must provide a summary of the assets the business will own, its projected liabilities, and the potential retained earnings.
projected income statement
A sales forecast and an operating budget will feed into the ____
Projected income statement
- summarizes the profit or loss the company expects to generate within the year. It also includes an estimate of the cost of goods sold.
Rent, Utilities, Insurance, Depreciation
Operating expenses are assumed to remain constant in the next ___.
Projected Balance Sheet
- summarizes the assets, liabilities, and net worth of the business
- refer to everything that the business owns that can be used to create value
- include cash and other things that can be easily converted into cash or consumed in the operation of the business in less than a year.
- land, building or equipment, which the business can use over a long period of time.
- everything that the business owes to banks and other creditors.
- are liabilities that must be paid within a year.
- those that must be paid beyond one year.
If they purchase raw materials or supplies on credit, If they borrow money to cover a shortfall in working capital, If they borrow money to finance the purchase of fixed assets needed by the business, If they fail to pay the salaries or wages of their employees on time, If they are unable to pay rent or utilities on time
Businesses incur liabilities:
- or shareholder's equity, also known as the het worth of the business, is the excess of all assets over all liabilities.
- refers to the volume of sales which the business neither makes a profit nor incur a loss.
Breakeven sales point
- indicates how many units of the product the business must sell to cover both variable and fixed cost and expenses.
Salaries, Rent, Utilities, Sales expense, Insurance, Depreciation
Operative needs or wants, Their past experiences, Personal values
Customer preferences are influenced by:
Recognizing a need or want, Seeking or retrieving information, Evaluating choices, Making a purchase, Assessing the product or service experience
Stages before a potential customer makes a purchase:
- assume that the customer is trying to satisfy a need, is looking for certain benefits from the product...
- is something one accepts as true or real; a firmly held opinion or conviction. It is a state of mind in which a person thinks something to be the case, with or without evidence of facts. It serves the purpose of guiding action and not necessarily of indicating truth.
- is a settled way of thinking or feeling about someone or something, typically one that is reflected in a person's behavior. It put individuals into certain frame of mind that could make them like or dislike something.
Making a purchase
- stage where the consumer becomes clearer about his preference from among the items in his choice set
- deciding not to buy the product again
- warning others not to buy the product, or seeking redress from the company that sold the product
- refers to the total lifetime value (or estimated lifetime revenues less expenses) a company can generate from all of its customer.
- the customer's objective assessment of the utility of a product or service based on his perception of what he is giving up for what he is receiving.
- customer's subjective and intangible assessment of the brand above and beyond it objectively perceived value.
- the customer's tendency to stick with the brand, above and beyond his objective and subjective assessments of the same.
Price, Quality, Convenience
To improve value equity, the business must find ways to address issues related to:
Advertising, Public relations, Social media campaigns, Free media exposure
Things that can be done to increase brand awareness, to improve the customer's attitude towards the brand:
Loyalty programs, Community-relations programs, Knowledge-building programs
To improve relationship equity, the business can introduce:
Frequency programs, Personalize customer relationship, Add structural ties with the customer
Ways to increase customer loyalty:
- category of products that are made by a particular company, all having a particular name.
- unique design, sign, symbol, words, or a combination of these employed in creating an image that identifies a product from its competitors.
Brands associated with quality and dependability can result to ___.
It must choose brand elements that will serve to identify and differentiate the brand, It must engage in marketing programs aimed at building the brand
To build brand equity:
- are those things that make a brand distinct. This include:
Brand names, Logos, Symbol, Mascots, Jingles, Slogans
Memorable, Meaningful, Likeable, Humorous
When choosing brand elements, companies must ensure that this elements are:
- for a brand element to be meaningful, it must be credible and must also communicate the distinction of the brand
- for a brand to be likeable, it must be visually and verbally appealing to the customer
- allows consumers to be more actively involved with the brand by creating opportunities for the company to interact with existing or potential consumers beyond the commercial interaction
- a viral marketing technique that is focused on maximizing the word of mouth potential of a particular campaign or product.
- triggered by organizing an event around a show or stunt of some kind
Online buzz marketing
- driven by influencers, or early adopters of the product, who eagerly share what they think about the product and start conversations about it.
- is a component of management that deals with planning, implementing, and monitoring the process of producing goods and services
An operations manager plans the structure of production by:
Identifying the output to be produced, The resources needed, The procedures on how these resources are mixed to produce a good or service
Effectiveness, Efficiency, Quality, Timeliness, Dependability, Flexibility, Cost
The manager assesses the performance of the production in terms of:
Warehousing, Maintenance, Inventory, Quality control
Related business activities:
- ensures continuous productivity of the firm's capital investment
Management - crucial in narrowing the gap between the proximate future demand and the next production round
Quality Control Mechanisms
- are instituted to assure customers of the firm that its product are consistent and reliable
- indicates how the output of the firm was able to achieve the objective set by the business enterprise.
Quality, Speed, Dependability, Flexibility
PErformance Effectiveness can be also assessed in terms of:
- refers to the punctual delivery of the product to its customer
- is the adaptability of the company to changing market environment
- denotes how the output of the firm was realized through the use of resources
- involves the monetary outlay in the use of inputs to produce a good or service.
- the structure of production is understood as an arrangement of relationships between inputs and outputs.
Input Process Outputs framework
- production relationship
- first component of IPO
- are semiprocessed goods that will be subjected to further transformation in the production process.
- the human resource input used in the production process. This also includes:
- all man-made physical capital used in the production process. This includes:
Machines, Tools. Durable equipment, Physical plant
- the process of combining raw materials and how these are going to be transformed using other factor inputs of production
- a financial resource used to purchase all the resources needed by the firm for its operations.
- are also called technology or techniques of production, since it prescribes the intensity in the use of factor inputs.
- are semiprocessed materials that need further transformation to produce a finished product
- are the transforming inputs
- second component of the IPO framework. It refers to the various forms of transformation that factor inputs perform in materials
- when the processing of raw materials convert them into significantly altered new product.
- when a product changes its location through various means of transportation and communication.
- happens when knowledge and specialized skills of providers are transmitted to their customer.
- takes place when a commodity is transmitted from the supplier to its buyer
- when a natural resource is taken out from its habitat.
- the third component of the IPO framework, refers to the results of the production process.
Value Chain Approach
- traces the value of raw materials and the value of commodity in terms on how factor inputs are adding value to the raw materials.
- a concept of measuring output relative to the value of inputs used in production.
Volume of output, Monetary value
Output can be measured in terms of:
Physical units, Monetary value
Inputs can be measured in terms of:
Average productivity of labor
- value of total production per unit of labor input
Average productivity of capital
- value of total production per unit of capital input
Marginal productivity of labor
- additional output per additional unit of labor input
Marginal productivity of capital
- additional output per additional unit of capital input
- total cost of production per unit of output
- additional cost of production per additional unit of production.
Increase output per unit of input, Reduce the cost of production, Reducing cost
Ways of improving firm's productivity
Kaplan and Norton
- proposed a balanced scorecard
Learning and growth perspective, Business process perspective, Customer perspective, Financial perspective
4 perspective of a firm
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