Ten day MBA Chapter 3 (financial statement)

Financial Statements include three big parts:
the balance sheet, the income statement and the statement of cash flows.
The balance sheet
It presents the assets owned by the company, the liabilities owed to others, and theaccumulatedinvestment of its owners. The balance sheet is the foundation for all accounting records, and it includes assets(cash, inventory, customers receivables, equipment, buildings), liabilities (bank debt,amounts owed to suppliers, prepaid accounts, taxes owed and wages owed to employees) and owner's equity(common stock, additional paid, retained earnings)
Assets = liabilities + owner's equity
Some concepts I am not familiar with, such as
Liquidity: it means the ability of an asset to be converted to cash. Current liquidity includes cash, accounts receivable from customers and inventory. Long-term liquidity includes property, machine, equipment.
Working capital: current assets -current liabilies = net working capital
Owner's equity
The income statement, shows the flow of activity and transcations over specific period. There are revenues from sales and expenses relation to those revenues. When revenues and expenses are properly matched using accrual accounting, the difference is income.
Gross Margin=sales-the direct cost of the goods or services sold
Beginning inventory + newe purchases - ending inventory = cost of goods sold
Assets=liabilities+Owner's Equity
CA+NCA=CL+NCL+OE
NCA=CL+NCL+OE

Ten day MBA Chapter 3 (1)

I think accounting is the core of the business, sales make the company grow, and good accounting makes the company stay healthy. That is how important accounting is. All of your business activities are recorded, summarized and analyzed through accounting. We do business is for profit, and how much money does your company make? what does company own? and how much does your company owe others? how well did your company's operations perform? how does the company get the cash to fund itself? everything must eventually measured in dollars, and that is accounting coming from.
Accounting has many rules. Accounting's governing rules are called Generally accepted accodunting principles, GAAP. Before we enter into rules, we need familiar with concepts first.
1.The Entity. The whole business, or seperate individul unit.
2.Cash basis versus accrual accounting. Very small business can get all the accounting informaiton they need from registered checking account. Cah accounting tells you when and how much cash changed hands, but it doesn't try to match the costs of conducting business with their related sales. However, most big size companies use the accsdrual accounting method. accrual accounting recongnizes the financial effect of an activity when the activity takes place without regard to the movement of cash. Allocation and matching.
3.Transaction definition and objecgtivity. Accounting records only completed sales and have quantifiable"monetary value. Accountants have an objecitivity rule to guide them. There must be reasonable andverifiable evidence to support the transaction, such as contract.
4.Accounting conservation and historical costs. When companies incur losses that are probable and that can reasonaly be estimated, accountants record them, even if the losses have not actually been realized. when gains are expected, accsountants postpone recording them until they are actually realized. Accounting conservatism governs the preparation of financial statements. when in doubt, be conservative. Accounting records contain only measurable and verifiable properties, debts, sales and costs.
5.Going concern, Consistency concept, materiality.

Ten day MBA Chapter 2 (1)

This Chapeter is talking about business rules, which also called ethics. We know the collapese of Enron, Worldcom and other companys not too long ago. This chapter is intentd to make us awre of the importance of ethical implications in business decisions. Like you play a game with many people, and you need to follow the game rule if you want to stay, otherwise, you are out and punished. Many rules involved, including environmental issue, do your products carry potential hazard or toxic or pollution to the community? violate the human and animal rights? Corporte restrucuring, do your have any rules about layoff your employees? Employee privacy issues, do you give your employee regular health check, such aids and drug testing? what will you do if you find out the employee use the drugs? it should be included in company's policy or compliance book. Diversity issues, when you hire people, do you pay attention to the rece, ethnicity, gener and sexual orientaion?Any sexual harassement policy in your company's book? Conduct of multinational corportions, such as bribery, and other issues-antitrust actions, predatory pricing, insider trading. Those are all social responsibility approach related. There is core in the relations among the owner, the managers, the employees, the customers, suppliers, and local communities, even stakeholders, and it is rules. When it is very small start-up business, it seems talking about ethics is useless, but when the company starts hiring people and expanding, it starts really making sense. Relativism has four forms:
Navie ralativism, role relativism, social group relativism and cultural relativism. Many variables affect behavior that an outsider cannot possibly be privy to all the elements that went into making a decision.
Role relativism, Public roles call for a special morality that we separate from the individual making the choices.
Social relativism is akin to naive relativism.
Cultural relativism, there is no universal moral code by which to judge another society's moral code by which to judge another society's moral and ethical standards.
Stakeholder analysis give the guide to solve ethical dilemmas, including the harms and benefits, rights and responsibilities.

Ten day MBA Chapter 1 (6)

Economics. It actually talks about accouting. fixed cost or variable. The cost of materials and labor are variable costs, and fixed cost is such as rent or salary within a relevant range. Total costs are fixed plus variable cost. Break even is the point at which the fixed costs are recovered fromthe sale of goods but no profit is made. In this subject, I learned how to calculate the break even unit volume (dollar sales) and target volume (dollar sales), and how to get the payback periord on my investment? initial investment/annual profit?

Go back and revise the plan. Back to my dream business, I asked myself many question, imagine I start up my canvass painting business. Is my product marketable(profitable)? who is my target customer and market? Should I target another segment? what distribution chanel should I use? what price should I set?

Ten day MBA Chapter 1 (5)

Fifth: Development of the marketing mix. It talks about the relationship between product, place, promotion and price.
Product. Picking product or services are always the priorty in all the busienss. How does my product fit with my other products? how will I differential my product? and how does the product life cycle affect my plans, then differentiation, it might be due to features, fit , styling, reliability, packaging, sizes, service and brand naming.
Place. It means target markt, I have to choose an appropriate channel to fit with the product and the intended buyers. I learned I can use exclusive, selective or mass or intensive according to the size of my target market. After that, I can choose the channels of distribution, product specifics, need for control, and margin desired.
Promotion. We say sale. the promotion mission is inform about my product, prompt a need message, provide compelling message solve a need message, motivate action, increase usage, and reinforce brand or image, special promotions. Promotion is usually by advertising, personal selling, sales promotion(coupons, rebates, refunds, samples, premium, contests and sweepstakes and trade-directed sales promotions), public relations and publicity, direct selling.
Price. many ways to figure out your price, cost plus, perceived value to the consumer, skimming, penetration, the quality relationship, meet competition, meet profit goals based on the size of the market.

Ten day MBA Chapter 1 (4)

Forth, Distribution Analysis. This is critical! the choice of channel influences the price, and of course, the profit margins you will gain. There are many ways my product will reach the consumer, by mail order catalogs, internet ads. Commonly used channel intermediaries to the consumer are wholesalers, distributors, sales rep, sales forces, retailers. How do I set up the retail price, whosaler price and the manufator's price? For example, my canvas painting is $150 as retail price, so percent markup on selling price will be 50/150=0.33, then the distribution wholesale price should be 150*(1-0.33)=96, 96*(1-0.09)=87.36 So who has the power in the channels? it really depends what stage the products are. The new thing is about internet sell, from commerce, content, customer care and convert leads. I am still amazed by internet, and it must be a tech revolution to the world, it totally changed everybody's life and the business pattern. Now we see so many online store, and some people dreams to have their own online store. Internet definitely becomes one of main distribution source. Internet sale is powerful.

Ten day MBA Chapter 1 (3)

Third step: Analysis of company versus the competition. After step 2, I am thinking I might be able to beat my competition by designing a beautiful marketing plan. What is my products advatnages? what things do I do well? what are my weakness? how can my company capitalize on its strengths or exploit your competitors' weaknesses? SWOT(strengths, weakness, opportunities and treats. I found two competitors on google search,
http://www.wholesaleartsframes.com/, I found they are not only sell canvass paintings, but also frames, stretch bars, canvas, even canvas stretch machine, canvas plier, portraits, plexi glass and backing, artists paints and brushes, pencils, prestels, crayons, document tube... etc. They almost provide all the products canvass paintings related. full product lines are their advantage, and they are on the top of google search list. Advertising is good too.
http://www.oilpaintingsgallery.com/ , their website are fairly attractive, lowest price for highest quality paintings, 50% less than retail price, the only website that delivers huge framed paintings. they also list their own popular artist. They have special customer orders, and they clearly declare that they are only online art website to offer 90 days money back guarantee for all the orders.
At this time, I don't know what their market share in this canvas painting industry. My sense is larger company can produce more cheaply per unit because they can spread their cost over more units. A smaller company cannot afford to spend as much on either research or more effecient equipment because their sales cannot support it. The company wholesaleartsframes has wide breadth of line on their products, and oilpaintingsgallery has depth of line. so they cleverly use the blocking strategy to prevent competitors from gaining access to the channels of distribution. That is how they positioned themself in the market.

Ten day MBA Chapter 1 (2)

Second, I learned market analysis, which is to evaluate market sizes and trends, even your competitive and regulatory environment by asking three important questions, 1. what is the relevant market? I learned only marketable products makes money, not makable products. 2. where is the product in its product life cycle? PLC has four stages: introduction, growth, maturity and decline. and what are the key competitive factors in the industry (quality, price, advertising, research and developement, service)?
I always think to have my own wholesale business, and my dreamed business is selling paintings. My target cusotmer should be those between 25-50, who has high income, luxury life style, male or female. so what is my relevant market? Target, walmart, bed&beyond, arron brothers, joanne's fabric probably controls most shares, so I think it is not marketable. I can only sell to those big chain store, which is very difficult for a startup to enter into. With huge competitions and competitive, I don't think it is marketable unless I create something unique and new to this market. Who should I focusing and what market I should focus?

Ten day MBA Chapter 1 (1)

It talks about Marketing, which is the most important topic from my point of view. Marketing is a special blend of art and science. There is a gread deal to be learned under this Chapter. I learned 7 steps.

First, consumer analysis. No consumer, no business, no profit. consumer are god in business. I need to know what consumers needs, where the customers are, who are they? and why they needs my products. Uncover the potential market, identify the specific customers and target them are the beginning. Buyers many times are different from users. Determing the buyer as well as user provides the essential intitial insights to create a marketing plan. Then what is the buying process? I always doubt about marketing research, and I don't know how to do the market research. buying process is critical. awareness (I might need something), information serach (consumer reports), evaluate alternatives(is it best for me), purchase(big sale), evalute (did I make mistake). Research report turned out to be the more important than others, before we start the research, we need to know: what specific question do I need to answered? and how am I going to use the information? those are tow essential quesitions to start up. Once we found out it is doable, we need to degment the market, including Geographic, demographic(age, sex, income, marital status, family life cycle, education, ocupation, religion and race....) psychographic(life style and perosnality) and behavioral (usage, purhcase occasion, brand loyalty...) Learned to use the criteria to evaluate possible marketing segaments, measurability, accessibilty, substantiality, profitability, compatibility, effectiveness, defendability...

my first MBA day

Today is the first day I went back shool for my MBA program. It is amazing feelings. After so many years non-stop working, I feel I am so lucky that I can have chance to go back school and learn things, especially helps my career deifinitely. I can't wait! The teachers are wonderful with much experience and understanding.