b Fb Chapter 2 Powerpoint

Chapter Two

Business Processes in the Twenty-First

Century

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Go after your dreams

• http://www.youtube.com/watch?v=oNTTT3P7PV4

• Crumbs update

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Forces Affecting Business Today

• The Information Age – Economies worldwide have shifted from industrial

manufacturing to service-based, technology-focused companies (from physical capital to human capital dependence).

Example: IBM in 2000 vs. IBM in 1950

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Structural Forces

• Three structural forces drive much of the change in today’s business:– 1. Technological innovation

• http://www.youtube.com/watch?v=6p4blk7-sdM• Frito-Lay

– 2. Globalization• http://www.youtube.com/watch?v=6-ueOorEAQw

– Exercise 1 Page 56 (5 Groups)

– 3. Creating Customer Value

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The Information Value Chain

• Technology + Globalization = Competition

• Competition creates need for information

• The Information Value Chain highlights the difference between data and information.

• Essentially, this is Accounting

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The Information Value Chain

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New Accounting Equation

• Traditional Accounting EquationAssets = Liability + Equity

• Supplemental Accounting EquationData + Insight = Information

• The new accounting equation forces managers to use their analytical abilities and insights to assess value.

• “Untransformed” data is likely to be of significantly less use and of substantially less value in today’s market.

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Creating Value for the Customer

• The customer value imperative requires a company to create value for its customers that meets three main consumer expectations: 1. Cost2. Customization3. Service.

• Exercise 4 Page 57 (5 Groups)

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The Business Value Chain

• The chain of operations used to meet customer needs.• The business value chain is a set of interrelated tasks or

processes that companies execute to achieve their business strategy. The value chain can be described in terms of five core business processes:

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Managing the Value Chain

• Market Analysis

1. Do Customers exist?2. What products or services do customers need and

want?3. Are those needs being met by the market?

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Managing the Value Chain

• Product Development and Design

1. How do we develop and design products or services to meet the needs of customers?

2. Can a successful product be developed at a cost consistent within the target profit range?

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Managing the Value Chain

• Sales and Marketing

1. What marketing strategy is needed to sell the product?

2. What promotions are needed?1. Advertising2. Sales Promotions3. Physical Display

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Managing the Value Chain

• Procurement, Production, and Distribution

1. How will we get the materials we need to make our product?

2. What production processes are central to creating the product or service in a cost effective and timely manner?

3. How will the product or services be delivered to customers?

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Managing the Value Chain

• After-Sale Customer Service

1. What follow-up support do customers need?2. What do we need to do after the sale to keep our

customers happy?3. How do we get our customers to come back?4. How do we tell what our customers are thinking?

Practice!

• Chapter 2 Exercise 8

• Chapter 2 Exercise 9 part a

– Page 58

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Managing the Value Chain -Trade-offs

• Managers routinely make trade-offs between effectiveness and efficiency while managing the value chain.– Effectiveness can be described as “doing the

right things” to satisfy customers, whereas – efficiency means “doing things right” to ensure

the company’s profitability.

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Balance Scorecard

• Financial – Compare to Previous Years– Compare to Budget– Compare to Competitors

• Nonfinancial measures

• Gives a company a more complete picture of its progress toward meeting its strategies and goals.

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Balanced Scorecard Measures

For next time - Assignment

• Chapter 2 work in the packet

• Print Chapter 3 outline – (Available on E360 in Lesson 3 folder)

• Upcoming Ratio project in Chapter 3– Select financial statements (I/S and B/S) for 2

companies in same industry– Financial statements for 2 years– Walk through Nestle

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