10 day mba book pdf

Price Based on the Price Elasticity of the Buyer. Buyers with elastic demand do not readily accept price hikes. Their demand is greater or smaller depending on the price. Tobacco and crack cocaine smokers, for example, have absorbed many price increases and continue to buy because their addiction makes their demand inelastic to pressure to accept price in- creases. If elastic, buyers will not pay more than a given price point and will stop buying or buy much less based on the intensity of their desires, their personal disposable income, or their psychological price thresholds.

There are many avenues that may be taken with any given product. But what really tells the story is the eco- nomics. Can I do it and make money? This step may also send the marketing manager directly back to Go without collecting two hundred dollars.

The costs may be too high, the market price too low. Perhaps unrealistically high sales volume may be needed to break even. In those sad cases the entire circular process of marketing strategy must be restarted in an effort to find a profitable solution. To determine whether you have created a plan that is both profitable and reasonable you must address several issues.

What are the costs? What is the break even? How long is the payback of my investment? What are my costs? Fixed or variable? Variable costs are those that vary with the volume of products sold or manufactured.

As more units are sold or manufactured, the total costs of material and labor are higher. Fixed costs do not vary with volume even if no sales are made. As volume fluctuates neither rent nor supervisor salaries change—within a relevant range.

By that I mean that if sales triple, a new factory may have to be leased, and thus fixed costs will go up. Promotional expenses such as advertising are also seen as a fixed cost of a marketing plan, because if the product is a flop the advertising dollars are already spent. Total costs are a combination of both variable and fixed costs. When units are actually produced, variable costs are added on top of the fixed costs to equal total costs. What is my break even and is it reasonable?

Break even is the point at which the fixed costs are recovered from the sale of goods but no profit is made. Promotion and manufacturing are very ex- pensive. A way must be found to recoup those investments. Selling Price to Distributors 4. Coffee Beans Cost 1.

Variable Roasting and Processing. Variable Shipping Cost. The evaluation of the economics is always performed from the perspective of the present.

There should not be any crying over spilled milk. You need to decide if you can make money on the proposed marketing spending in the future. For example, if the coffee blend was the product of millions of dollars of research, that would be irrelevant to the decision to whether I should spend additional money to market it. The graphical representation of the marketing plan economics for the Mexican coffee looked like this: Gourmet Coffee Marketing Plan Economics Is my break even reasonable in relation to my relevant market?

Answering this question must be your next step. Imagine that—I could have reached my goal with only a. Unfortunately, a small target share can easily lead you to believe that it is easy to obtain. How would they react? Once in the supermarket, would my company have been willing to continue to support the coffee when a competitor went after my shelf space?

In my case, the company was not willing yet to make that kind of long-term com- mitment to coffee. What is the payback period on my investment?

This is another hurdle frequently used by companies to evaluate marketing projects when they have many to choose from. Companies want to know how long it will take just to get their investment back. Forget about profit. The payback formula is: In the coffee example, the calculation would be: If the yearly profit is not the same each year, there is no formula.

The break-even point is where the plan returns the initial investment. Seven years is a bit long for a risky venture. This may indicate that the whole marketing development process should start again. And unfortunately for me it did. In circumstances such as those I faced, you must either tweak or discard your plans entirely. You have to start by asking yourself tough questions.

In the case of the coffee project I tormented myself with: Should I target another segment? Is the mail order distribution channel an option? Should I not advertise and rely on a cheap price to move my product? As these questions indicate, the marketing process is not easily defined or executed. Consumer reactions cannot be easily predicted. It takes creativity, experience, skill, and intuition to develop a plan that makes sense and works together internally consistent and mutually supportive.

Marketing also requires close attention to the numbers to be successful. With this chapter you are armed with the MBA problem-solving structure and the MBA vocabulary to attack the marketing challenges that you may encounter. Figure the break even on that investment! I include the following notes that we all passed among ourselves at school to guide our case discussions and tests open notes. These are the key questions that must be addressed by a comprehensive marketing strategy.

Poor at? Fit with product? Skim, penetrate? Exclude sunk costs! Consumer analysis 2. Market analysis 3. Competitive analysis 4. Distribution channel analysis 5.

Develop the marketing mix 6. Determine the economics 7. Buy wisely. What ap- peared at first to be only a trendy elective course has now become institu- tionalized as part of the core MBA curriculum at Harvard, Wharton, and Darden. With the criminal convictions of insider traders in the s, business schools took notice and jumped on the ethics bandwagon in the s.

Ethical dilemmas make for a lively classroom discussion. It was revealing to see my fellow students deal with controversial topics. My more insecure classmates would not participate at all. I fell into this last group.

But I must admit, I took many unpopular positions just to liven up the class discussion. In any case, ethics is a good topic for speaker forums and great fodder for articles and dissertations. Since ethical problems often have no definitive answers, the area will remain fertile academic ground for years to come. The purpose of ethics in the MBA curriculum is not to make students model corporate citizens. Through casework and role playing, students confront ethical dilemmas similar to those they will face in the workplace.

The top business schools train their future champions of industry to deal with any challenge. It is argued that because corporations are so powerful, they have an obligation to assume social responsibilities. Cor- porations should be managed for the benefit of their stakeholders: their cus- tomers, suppliers, employees, and local communities, as well as their owners.

Corporate leaders bear a fiduciary responsibility to all stakeholders. A profitable business benefits society by creating jobs, increasing the standard of living of its owners and its employees. Although Friedman is exalted as one of the defenders of capitalism in economics courses, my school tended to discourage his views when it came to ethics class.

There are two major topics taught in the ethics curriculum: relativism and stakeholder analysis. Relativism examines why we often ignore ethics in our decision making, while stakeholder analysis provides a structure with which to confront ethical decisions. Things are rarely black or white. There are so many shades of gray.

Relat- ivists are not torn by ethical dilemmas since they do not believe that truth can be discovered through soul searching. Professors teach relativism so that students may guard against it.

So many variables affect behavior that an outsider cannot possibly be privy to all the elements that went into making a decision. Role relativism distinguishes between our private selves and our public roles. People refer to social norms to render ethical judgments. If a whole culture holds certain beliefs, how can an outsider sit in judgment? Multinational corporations often follow local laws and customs that may violate ethical standards in their home countries.

Discussions about apartheid revolve around issues of cultural relativism. In some countries it is ordinary business practice to pay bribes to get favorable treatment from businesses and gov- ernment. The Foreign Corrupt Practices Act of outlaws overseas bribery. The relativism concepts provide MBAs with an awareness of and a way to guard against inaction on ethical and moral issues. They provide a framework to go beyond currently held beliefs and patterns of behaviors.

These concepts are also great conversational ammunition when MBAs get together on social occasions. Other Ethical Frameworks. Relativism is not the only philosophical framework with which to approach ethical decisions. There is also natural law, utilitari- anism, and universalism.

Utilitarianism holds that an action is justified if it provides the greatest benefit for the greatest number of people. Stake- holder analysis provides you with the tools for weighing various elements and reaching a decision.

As a first step a list should be made of all potentially affected parties, then an evaluation of all the harms and benefits that a particular action will have on those involved. Employees, for instance, have the right to a fair wage and safe working conditions, but they also have the re- sponsibility to be productive for the company.

At the analysis stage the list is narrowed to the significant players, then a situational analysis is performed, and eventually a decision is reached. In order, these are the steps: 1. Get the main cast of characters. Determine the harms and benefits to each player. Determine their rights and responsibilities. Consider the relative power of each.

Consider the short- and long-term consequences of your decision altern- atives. Formulate contingency plans for alternate scenarios. Make a judgment. If you are interested in walking through the steps outlined above, take out a recent copy of Time or Newsweek and pick a topic with an ethical aspect. As an example, you might choose the debate regarding the need to preserve the habitat of the spotted owl by reducing logging on federal lands.

People can approach a situation differ- ently and feel other stakeholders need to be represented. With the tools of stakeholder analysis an MBA can tackle the issue of endangered owls as well as other ethical issues and make thoughtful and informed decisions.

Corporations need to communicate their results to the world. Their audience includes employees, investors, creditors, customers, suppliers, and communities. Within the company, ac- counting information provides a means to control, evaluate, and plan oper- ations. Whatever the audience or function, accounting is numbers.

How do you think King Solomon knew that there was only a thirty-day supply of grain during a drought? It was from the ac- countants. Throughout the ages accountants have kept track with their fin- gers, abacuses, and calculators. In modern times accounting has gone beyond the physical count of grain in storage.

How much does a company owe others? How does the company get the cash to fund itself? All corporate activities must eventually be measured in dollars, and that is where accounting comes in, like it or not. Although this area may appear tedious, you must have a working knowledge of accounting to function in the business world.

Because knowledge is power, MBAs need to be literate in accounting to understand its function; more important, they must be able to ask for and use accounting information for decision-making purposes.

Lawyers with accounting knowledge, for example, can interpret financial statements to get valuable information. In settlement negotiations, they be- come a force to be reckoned with. Because employee performance is often evaluated with accounting data, a knowledge of accounting is essential. Therefore, my aim here is to give you the basics, not to make you a CPA. You should not attempt to memorize them, but you should become sufficiently familiar with them to communicate with CPAs.

Accounting rules set the standards so that financial reports of companies may be compared on an equal basis. For example, FASB 90 was issued in because of the problems of faulty nuclear plant construction. The rules do not tell the whole story. The following seven concepts and vocabulary are not a set of laws, but rather a guiding set of policies that underlie all accounting rules and reporting.

A reporting entity can be a single grocery store, a production plant, an entire business, or a conglomerate. For example, General Mills prepared reports for each of its Red Lobster restaurants.

It also reported on the entire chain of Red Lobster restaurants, as well as its restaurant group, which also includes the Olive Garden chain.

Of course, there is an overall report for the whole corporation which includes Cheerios, Betty Crocker, Gold Medal flour, and Yoplait yogurt.

In , General Mills spun off its restaurants into a separate com- pany, Darden Restaurants. The operations were already segregated and ready to become their own independent entity. Using cash basis account- ing, transactions are recorded only when cash changes hands.

Very small businesses can get all the accounting information they need from their checking account register. When a small machine shop purchases a power tool, its cost would be recor- ded when it was purchased, not over the useful life of the tool. Get the idea? Most companies of any significant size use the accrual accounting method. Accrual accounting recognizes the financial effect of an activity when the activity takes place without regard to the movement of cash.

Allocations to Accounting Periods. Because profit and loss statements reflect activities over a specific period of time, the period of recognition is very im- portant. If IBM sold a large computer on credit to Ford Motor Company on December 31, , accrual accounting would record the sale in when the binding contract was signed, not when Ford actually laid out the cash in The sale could be recorded at that point, because it was then that Ford became legally bound to take delivery of the computer.

Ford, on the other hand, would recognize or accrue and allocate the cost of using the computer over its useful life. Using the same logic as in allocation, sales made in one period are matched with their related selling costs or cost of goods sold COGS in the same accounting period. By matching sales dollars with their related costs, you can figure the profit a company has actually made. Without established policies for allocation and matching, accountants could easily manipulate financial reports by choosing when to record sales or expenses in order to cover up or delay bad results.

Even if a trustworthy salesman from Navistar formerly International Harvester swears that farmer Jones is a sure bet to buy a combine, the accountant would say no.

Navistar has not delivered the machinery, nor has the farmer signed an enforceable contract. Accountants also have an objectivity rule to guide them when in doubt. There must be reasonable and verifiable evidence to support the transaction, or else it does not get recorded. For example, the goodwill generated by a public service campaign cannot be recorded on the books. What value could you put on it?

Patents and inventions are also hard to value. The patent has quantifiable market value. However, if a Du Pont scientist developed a new process in the lab, the accountants could not record the innovation until it was sold. The accountant would need to have a contract and a canceled check to substantiate the entry in the books. Accounting Conservatism and Historical Costs When companies incur losses that are probable and that can reasonably be es- timated, accountants record them, even if the losses have not actually been realized.

When gains are expected, accountants postpone recording them until they actually are realized. If in the management of International Paper Company anticipated a big profit in on the sale of their Manhattan corporate headquarters, they could not record their profit until Their move to Memphis was uncertain.

Management could have changed their minds, or the real estate market could have tumbled. Management would have to hire a consultant to estimate the cost of cleanup and record that cost in Accounting conser- vatism governs the preparation of financial statements. When in doubt, be conservative. Accounting records contain only measurable and verifiable properties, debts, sales, and costs.

Conservatism also dictates that transactions be recorded at their historical costs. The records continue to value the real estate at the cost of the beads given to Indians in exchange for the property.

Conservatism dictates that the loss be recognized today. To do otherwise could mislead the reader of a financial statement to believe that the assets represented are at least worth their historical cost.

The value of goods held in inventory is also stated at historical cost. Even if prices change, the objective price is that which the business paid historically. There must be verifiable purchase orders and bills to support the cost. Going Concern Financial statements describe businesses as operating entities. The values assigned to items in the accounting records assume that the business is a going concern. They use historical costs, as you already know. Steel rolling equipment, for example, is expensive to purchase.

It may have great value to an ongoing manufacturing company such as US Steel, but put up for sale at a bankruptcy auction, its value would be pennies on the dollar. Accordingly, accounting records use historical costs as- suming that the company is using its machinery productively.

Consistency The consistency concept is crucial to readers of financial statements. Account- ing rules demand that an entity use the same accounting rules year after year. That enables an analyst to compare past with current results. This rule, like the others presented earlier, tries to minimize the temptations of account- ing monkey business that businessmen like to engage in to cover up bad results.

The consistency rule insists that companies value their inventory the same way from year to year. The accounting method is independent of the physical movement of inventory. It is just an accounting method. As you might imagine, if you could change accounting methods at will, a crafty accountant could manipulate the financial statements from year to year. Consistency requires that the same accounting method be used from year to year. The cost of the first coin purchased was the first to be recorded as a cost of goods sold.

The last cost was used first. Which coin was actually sold, the or the acquisition, does not matter. That does matter. The footnotes must state the change and its justification. The footnote must also state how the change affected the profits and asset values that year. You can run, but you cannot hide from the accountants.

Materiality An important caveat of financial statements is that they are not exact to the penny, even though you would expect that tenacious accountants would produce such reports.

In fact, they are only materially correct so that a reader can get a fairly stated view of where an entity stands. Financial statements give a materially accurate picture so that a reasonable person can make in- formed decisions based on the report. In contrast, huge multinational companies like Coca-Cola may have million-dollar errors in their reports and not ma- terially distort the picture for decision making.

By now you can begin to develop an insight into how accountants think about businesses and possibly why they are, for the most part, conservative even as people. I found the cartoon on page 72 on the bulletin board at Arthur Andersen LLP, one of the Big Five international accounting firms, where I worked as a CPA for three years and had conservativism burnt into my psyche.

I still wear white button-down collared shirts out of habit. The financial statements are the summary of all the individual transactions recorded during a period of time. Financial statements are the final product of the accounting function. The balance sheet presents the assets owned by a company, the liabilities owed to others, and the accumulated investment of its owners. The balance sheet shows these balances as of a specific date. The following are the components of balance sheets.

Assets are the resources that the company possesses for the future benefit of the business. Their investment can be either in the form of cash, other assets, or the reinvestment of earnings of the company. Remember it! When the market opened up for business, Bob purchased a cash register. Assets increased on the left side of the scale, while bank debt, a liability, was also increased on the right to pay for it. The asset increase was balanced by an increase in liability.

When the store becomes successful, it will hopefully be able to pay off its bank debt for the register liabilities reduced on the right. The cash, an asset, would be reduced, thus balancing the transaction on the left. All transactions adhere to this balancing concept. There is no way to affect one side of the balance sheet without a balancing entry. If the records do not balance, an accountant has made a mistake. Accountants call their books the general ledger.

In all cases, journal entries have at least two lines of data, a debit and a credit. Entries to reduce assets are placed on the right, a credit, and reductions of liabilities and equity are placed on the left, a debit. Three things are worth noting. Second, the assets are on the left and the liabilities and OE are on the right, just like the journal entries of debits and credits.

Liquidity: Current and Long-Term Classifications An important aspect of the balance sheet statement is that the assets and li- abilities are listed in order of their liquidity, from most liquid to least. Liquid- ity means the ability of an asset to be converted to cash. Cash, Accounts Receivables from customers, and Inventory are labeled current and are listed first since they are easily transferred and converted into cash within the next operating period, typically in one year i. Equipment is not very easily sold, therefore it is classified as fixed, long-term, or a noncurrent asset NCA and listed below the current items.

On the liabilities side, the accounts payable to suppliers, wages payable to employees, and taxes payable are current liabilities. They are short-term obligations that will have to be paid within a year.

The bank debt is long- term or a noncurrent liability NCL because it will be paid off over a period of years. Working Capital A commonly used term in accounting as well as finance is working capital. Consequently, working capital items are the current assets and liabilities of the firm. Net working capital, a measure of solvency, is the total of current assets less the total of current liabilities.

Conversely, it could also show a corporate raider or opera- tions analyst that the store owner is mismanaging his inventory by holding too many goods on the shelves or too much cash in the registers.

An astute operator would reduce inventory levels and the cash on hand to more effi- cient levels and pocket the difference as a dividend. The proper amount of working capital depends on the industry.

Companies are obligated to pay the owners a return on their invest- ment based on the success of the firm. OE does not carry a set rate of interest or maturity like a bank loan, so it is segregated below the liabilities. Owners are paid only after all other debt payments are made. If debt repayments cannot be made, the firm can be forced into bankruptcy.

The inability to pay a dividend to investors has no such penalty. If the company is highly profitable, the owners win. If not, they can lose all of their investment. In the case of Donald Trump, the notorious real estate magnate of the s, he may have owned billions of dollars of property, but tempor- arily his net worth reportedly became negative in as his debts became even larger than the value of his properties in New York City and Atlantic City. Businesses buy and sell and provide and receive services.

Hopefully after a period of time, the company has increased its wealth with those activities. If the net assets in- creased over time then it must have increased its OE. The OE captions on the balance sheet can be affected in two ways. Dividends reduce their accumu- lated retained earnings. However, it may be very important for companies that have a great deal of owner activity. Large companies always produce this statement because it reveals many transactions that interest the public.

That period may be a month, a quarter, or a year. There are revenues from sales and expenses relating to those revenues. In the income statement, the classifications of expenses are extremely important because different types of income are calculated. Gross Margin. The top part of the income statement calculates gross margin.

In a manufacturing company it includes the costs of production, materials, and labor. A small electronics manufacturer would encounter this situation if it tried to compete with the Japanese video recorder manufacturers, Sony, Hitachi, and Panasonic.

A small U. Operating Profit. The next part of the income statement relates to the oper- ating profit of the company, the earnings before interest and taxes EBIT. The further we move down the income statement, the more expenses that are deducted. At the operating level of profit measurement, all the other corporate expenses directly related to the revenue process are deducted. Accrual accounting dictates that the allocated cost of fixed assets, also called depreciation, be charged to earnings.

Accountants divide the cost of equipment, tools, buildings, and other fixed assets by their useful lives to estimate the cost of using up assets needed in the revenue-generating process.

Net Income. The first is the interest expense for the period. A case can be made that corporate borrowing is used to support the operation. However, the method of financing the company is separate from the operating activities of the business. Owners pay dividends out of the net income at the bottom of the statement. If interest were to be included in operating income, similar companies could have vastly differing operating incomes just by the way they funded their cash needs.

A company under a different management could fund all its cash needs by additional investments from its owners. If the same company borrowed for all its needs, its operat- ing income would be reduced by the interest expenses.

Using the same logic that excluded interest from operating income, tax expenses are segregated to leave operating income free of nonoperating ex- penses. Different tax strategies can result in greatly different tax expenses.

Net income is the bottom-line profit of the company and it is the figure that is reported in the media as the measure of success or failure. Net income is the result of subtracting the expenses from the sales made during a defined period of time. Net income is also the net increase in assets for the same period of time. Accountants make the entries for the income statement at the same time as they prepare the balance sheet.

During the year, running totals are accumulated for each revenue and expense to calculate the final net income figure for the entire year. That accounting year, at times called a fiscal year, can begin in any month. It does not have to start in January. The journal entries look the same as those that you have seen used for the balance sheet. To track the income statement, revenues are recorded as credits on the right side and expenses are recorded as debits on the left. Income statement entries are combined with balance sheet entries.

A sale means that the business received something of value, an asset, in exchange for something else of value, an expense. Bob would have recorded that net change on the balance sheet as an increase to retained earnings. The income statement entries re- versed themselves, leaving the net income addition to retained earnings on the balance sheet.

There you have it. What is even more important than just the calculations of income is the understanding of how the income statement relates to the balance sheet.

The income statement is the result of many activities during the year. If Leonard, Inc. However, Leonard manufactured the equipment during the summer and Ralston paid for it in the fall when it was delivered. Because the cash is critical for operations, and most important in order to stay out of bankruptcy, the FASB wrote rule No. Many companies that measured their success by their net income have had a rude awakening when confronted with cash shortages and angry creditors.

This is just what happened to Chrysler in when it went hat in hand to the federal gov- ernment for a bailout. For example, McDonnell Douglas, the defense con- tractor, had healthy earnings in that masked an underlying corporate illness. But even a cursory glance examination of the numbers shows that earnings are shaky, if not ephemeral.

Start with cash flow. The leveraged buyout LBO phenomenon of the s used the principles of cash flow as its tool. Much of that information lies in the statement of cash flows. I will present the accounting math first so that you may understand the logic of what, at first glance, can be a confusing statement.

With the math out of the way, the cash flow statement example can be readily understood. The equations that follow are not included to impress, merely to inform. Con- versely an increase in an asset such as Inventory would mean a decrease in cash.

It makes sense; buying inventory requires cash. Silbiger delivers research straight from the notes of real MBA students attending these top programs today—giving you the tools you need to get ahead in business and in life.

Whether or not one agrees with his premise, this book will prove to be a handy desk reference for potential and current MBAs, along with business people in general.

Written in a clear and lively style, the ten chapters provide a basic framework for the essential business courses: marketing, ethics, accounting, organizational behavior, quantitative analysis, finance, operations, economics, and strategy. A useful lexicon of abbreviations leads the reader back to the explanation of each concept.

Recommended for public and academic libraries with business collections. Ebook description. Revised and updated to answer the challenges of a rapidly changing business world, the 4th edition of The Ten-Day MBA includes the latest topics taught at America's top business schools, from corporate ethics and compliance to financial planning and real estate to leadership and negotiation. With more than , copies sold.

The Ten Day Mba 4th Ed.