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SM131 Midterm 1

Terms in this set (87)

Triple Bottom Line
people, planet, profit
C Corporation
legal entity with state authority to act and have separate liability from its owners
common stock
the most basic form of ownership, including voting rights on major issues, in a company

get money last in bankruptcy
preferred stock
owners are given preference in the payment of company dividends before common stock

no right to vote

usually venture capital investors
dividends
part of a firms profit that they may distribute to the shareholders as either cash or additional shares

preferred stock gets it first
stock
shares of ownership
Pros of c-corp
1. limited liability
2. ability to raise money fro shareholders who are owners
3.size
4. ability to last forever
5. ease of ownership can change
6. ease of attracting talented employees
7. separation of ownership from mgmt.
Cons of a C-Corporation
1. initial cost
2. extensive paperwork
3. double taxation
4. size
5. difficulty of termination
6. possibility of conflict with stockholders and board
7. mandatory disclosures
SEC
-regulates
-protects investors
-maintains fair, orderly and efficient markets
Revenue
how much you sell NOT make
CVS Health
started in lowell in 1963 and it is currently the largest pharamacy chain in U.S
CVS purpose
improve healthcare and lives
cvs strategy
make human connections to transform the health care experience
cvs values
-innovation
-collaboration
-caring
-integrity
-accountability
cvs marketing
want to be known as a place to buy health products
- in 2014 they stopped selling tobacco prodcts to enhance their message
cvs retail segment
customers are individuals who either buy:
-prescription drugs/over the counter
-beauty products, cosmetics
-seasonal merchandise
-convenience foods
-photos
-greeting cards
cvs pharmacy services segment
customers are employers, insurance companies, health plans, medicare/medicaid plans
cvs health care benefits segments
customers are employer groups such as
-healthcare providers
-gov. sponsored plans that provide health insurance services
the 3 segments
how cvs builds values for the customers
PBM (Pharmacy Benefit Manager)
middlemen who negotiate with manufacters, pharmacy and insurance companies to keep drug costs low, reimbursement for drugs
how does cvs deliver value to consumers
4p's
1. people- employees (295k)
2. place- where their business is done
3. processes- how they deliver their product either through drive-thru or apps
4. partnerships- who are they working with (governance)
Carroll Pyramid
-profitable?
-does it follow the law?
-ethical?
-does it give back?
conflict of interest
two competing interests and you choose to go with whats more beneficial to you

cvs wants to lower costs but it also wants to make a profit
indirect business
put blame on 3rd party

cvs points finger at drug manufactuers for the issues
accounting
information system that
-measures business activities
-processes data into reports and financial statements
-communicates results to decision makers
who uses accounting information
primary audience
-financial accounting information
-people who are going to invest such as stockholders and creditors
goal of accounting
give the investors information to efficiently allocate capital
financial statements
understand business model
equity
money you put into the business
assets
what you own and stuff you buy
Liabilities
what a company owes
revenue
money you get from customers
expenses
money you spend
profit
what's left over from total revenues after all the appropriate costs have been subtracted
net income
the difference between total revenue and total expenses when total revenue is greater
balance sheet
where is the company now, a snapshot of a specific point in time
GAAP
Generally Accepted Accounting Principles. The standards and rules that accountants follow while recording and reporting financial activities.
A= L + E
Assets(own) = liabilities(owe) + Equity (worth)
three sources of money
1. money you borrow
2. money you put into the company
3. money you make and keep in the company
current assets
items that can or will be converted into cash within one year

-cash
-receivables
-inventories
long term assets
assets that are expected to be used in business operations for longer than one year

-investments
-property
-equipment
Current Liabilities
liabilities due within a short time, usually within a year

-accounts payable
-short-term notes payable
long term liabilities
liabilities owed for more than a year

-long term borrowings
-bonds payable
equity on balance sheet
-common stock
-retained earnings
income statement
tells a story over a period of time and at the end of the year all numbers go to zero and there is a new story
net income in depth
sales/revenue - cost of sales= GROSS PROFIT

gross profit- operating expenses = OPERATING INCOME

operating income - interest expenses and taxes = NET INCOME
question from income statement
1. what did you sell (gross profit)
2. what did it cost you (operating expenses)
3. where did that money go (operating income)
4. how much was left over (net income)
Marketing
the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return
what makes a business market successful
benefit outweighs cost
better than your competitors
customer value
total costs - total benefits
marketing insights
understanding and capturing the heart and mind of consumers
marketing strategy
get in the mind and heart of consumers
marketing success
triple bottom line
marketing analysis (5 c's)
Customers, Company, Competitors, Collaborators, Context
creating and delivering value
market segmentation
target selection
product positions
4 P's of Marketing
Product
place
promotion
price
sustaining value
customer acquisition, customer retention
2 ways to compete in any industry
1. cost NOT price
2. product differentiation
Marget Segmentation
who are your customers in order to isolate their needs
purpose- finding the right kind of market to maximize competitiveness for a given firm and market conditions
Segmentation
identifying and describing groups of customers with similar needs
market targeting
selecting a specific group because they will give you the best return
market positioning
best at something not everything
product
bundle of features and services
-core
-actual
-augmented (Where companies compete most)
Brand
captures the essence and tells the companies story
3 roles of promotion
inform
persuade
remind

you want your consumer to keep coming back
operations mgmt
realizing value by producing goods/services that customers can purchase and the purpose is to produce GOOD STUFF CHEAP
how to achieve good stuff cheap
1.know peoples needs
2. understanding tech
3. innovation
4. deploying and coordinating resources (process design and process execution)
process analysis
show steps in a process to communicate on how things get done
task analysis
steps in the process where information or material is transformed to one state to another
wait/queue
points in time where materials or people need to wait for the process to be available
decision analysis
determine if the product is good enough and if it has met the specifications and goes through quality control
flow
direction of flow of materials or information in your process
task time
Time required to complete a task.
Task Time = Run Time + Setup Time
throughput time
the amount of time required to turn raw materials into completed products
cycle time
the time needed to complete a process
capacity
how many units can be produced in a period of time

time available / cycle time
4 p's of operation
people
place
partnerships
processes
vertically integrated
firms perform several of the activities to add value, the more you do the more integrated you are as a company
company supply chain
1. inbound logistics
-second tier suppliers
-1st tier suppliers
-transformation process
2. SELL
-distributors
-retailers
-consumers
competition
supply chain vs supply chain
pros of making the product yourself
-more control
-easier integration
-fewer transportation issues
-rapid response to customer
-avoid safety and environmental blind spots
-fewer trade/tariff issues
advantages of not making the product yourself
-lower wages
-lower fixed costs
-it enables global coordination
-fewer regulations
-no/less investment required
-globalization expands markets
quality mgmt
ability of a product to meet customer needs
internal failures
failures discovered during production
external failures
failures discovered after delivery to the customer
prevention costs
costs associated with preventing defects before they happen
appraisal
meets satisfaction
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