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ADM1300 notes for class 6- chapter 8

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University of Ottawa
Gerard Brathwaite- Sturgeon

Presentation- Mr. Farrell Personal Business Experiences from Various Corporate Structures Personal Fit: figuring out core strengths/ weakness and figuring what drives you Presentation Objectives  Share relevant business experiences to current studies  Review the pros and cons of various business/ work experiences  Examine the concept of personal fit Agenda  Personal Overview  1990 flashback  Key personal drivers  Career review- 1988 to present  Top 5 business lessons learned to date  Discussion / question *write down goals Personal Overview  An Entrepreneurial type o Enjoy pressure environments and  Enjoy teamwork and informal environment  Overly optimistic and sometimes ambitious  Often suffer from the “shiny ball syndrome” 1990 Flashback  The internet didn’t exist  Cell phones cost about $1000 and weighed a lot  Fax machines were a big deal  5 companies that didn’t exist o Facebook o Google o Youtube o Twitter o ITunes  These companies didn’t exist but now they are one of the most valuable companies in the world Key Personal Drivers  Important to understand your key drivers o Money o Independence: want to be their own boss o Power o Work/ life balance: want to be able to manage their own life  Need to weigh this against personal traits o Appetite for risks o Ability to deal w/ stress Career Overview 1988- Present  Original student franchise system  Started by Greg Clark 1971 at Western o Now part of First Service Brand  California Closes, Certa Pro Painters etc.  Franchising v. popular business model o 40% of retail sales in Canada o Over 75,000 franchises retail locations o Employees 7 mil Canadian  2 largest franchise industry in Canada o 10% GDP Franchise Pros and Cons Pros  Leveraging a proven products, service and brand  Predictable start-up costs and ongoing cash flow: a lot of people underestimate their cash flow and going bankrupts  Easier to finance Cons  High fees structure in many programs  Rigid operating environment: rub the wrong way for entrepreneur  Market saturation in many verticals o Franchisors experience a lot of lawsuits 1990-1995 Public Multi National  Sales, business development Eli Lilly, GD Searle and Thomson Corporation o Thomson: richest family in Canada  Large, well-known global corporation  Trusted products w/ large customer base Pros  Secure well-paying jobs w/ many benefits  Well known products that are trusted in markets  Well defines policies and procedures Cons  Little room for creativity, v. process driven  Career advancement is slow, structured process  Difficult to leave your market, “cog in wheel”. 1996-2000 Licensed Distributor, Mars Foods rd  3 largest private company in the USA  Still controlled by the Mars Family  11 products that are $1B+ brands  Launched a line of well-known products targeting non-professionals fundraising sector  Secured exclusive distributor for eastern on and western pg  Set myself as a sole proprietor Pros  Like franchise but no retail stores  Access to established brand w/ market awareness  High degree of operational independence Cons  Rigorous service level commitments can be costly to satisfy  Minimum sales quotas can be challenging to meet: if you don’t meet your quota the company could revoke your license 1999-2002 Franchise Sport & Social Clubs of Canada  Started in Vancouver in 1997 based in successful model in the US  Taps into gap in sporting/ social activities for young, urban professional  Fun, active, high margin business  Young franchise system w/ limited head office support  Difficult to justify franchise fees ate that time 2002-2007: Kids Future – Private Corporation  Cash based rewards program funneled into education savings account  Grew member base to over 700k  80+ retail, CPG, online service partners o Pizza hut, OK tire, Home Depot, Colour Your World, Crest Tide o Co. branded credits w/ Citibank MBNA  Company was also a licensed mutual fund dealer  Raise $12m in venture capital financing Pros  No personal financial liability  No requirement to share info w/ outside parties/ regulators  Operational independence Cons  More difficult to raise capital- max 50 shareholders  Difficult to incentivise staff w/ stock options/ equity Stock option?????? 2007-2012 Future Loyalty Group, Public Corporation  KidsFutures model was not scaling quickly enough  Moved to diversify the company Future Loyalty Group- Public Corporation  Landed Aeroplan as a strategic partner o Granted them exclusively in Canada  Partnered w/ American, Delta, United Continental in the US market  Sales cycle in the US market was longer than in Canada  Access to additional growth capital was impossible  Split the company into three division and sold them off Pros  Better access to venture capital  Credibility/ notoriety of trading on an exchange  Stock options are an attractive incentive to staff Cons  Reporting requirements are costly and time consuming  Competitors, clients, public have full access to company financial, operating info, pay rates  Small cap companies can be targets of predatory 3 partied *advice: wait until you have solid cash flow before going public 2012- Present, Inspire Developments, Partnership  Real estate investment, management and development  Own and manage nine income properties w/ 118 units  Small scale redevelopment, intensification of existing properties  Syndicate larger transactions Partnership Pros  Full control and decision making authority amongst parties  No outside reporting requirements  Cost effective to set up and maintain Cons  Existing/ selling personal stake is complicated  Greater personal liability than a corporation Top 5 lessons learned  Invest time to determine your “fit” w/ any job or business opportunity  Good ideas are the easy part o Capitalising and executing good ideas is more difficult part  If going into business for yourself, select partners or key staff who compliment your skill set  Do something that you are passionate about  Reinventing the wheel is most often not necessary o Look at ways to improve or an existing product or business model  Don’t be afraid to fail o Learn from your mistakes and capitalise them on the experience Business Ethics and Social Responsibility st Ethics: A 21 Century Perspective Human Resource Management Human Resources: The People behind the People  Human Resource Management: The function of attracting, developing, and retaining employees who can perform the activities needed to meet organizational objectives.  Three main objectives: 1. Providing qualified, well-trained employees for the organization. 2. Maximizing employee effectiveness in the organization. 3. Satisfying individual employee needs through monetary compensation, benefits, opportunities to advance, and job satisfaction. You want employees to be aligned w/ the goals of the organization Human Resource Management Functions it is service function w/in an organization 1. Planning for staffing needs: if you’re a small business you will do everything but when you get bigger you will need professional HR management and plan for your needs knowing what type of employees you need and for what level 2. Employee recruitment and selection: be aware of where you employees are; a. Recruitment: getting qualified pool of candidate b. Selection: number of processes you will go through to move that qualified pool through your system 3. Employee Compensation and Benefits: organization must pay people and understand how much a job is worth; understand how much your pay compared w/ others in industry a. Must pay people appropriately: there is minimum wage that must be kept b. Compensation must be met as well 4. Employee Training and Performance Evaluation: how do you know that your employees are meeting the standards are being set; how do you measure whether your employees are being effective 5. Employee Separation Recruitment and Selection Orientation, Training, and Evaluation  Newly-hired employees often complete an orientation program  Inform employees about company policies  Employee manuals  Describe benefits/programs  Training  Training programs  On-the-job training  Classroom and computer-based training  Management development Performance Appraisals  Performance appraisal: Evaluation of and feedback on an employee’s job performance  Effective performance reviews: o Take place several times a year o Are linked to organizational goals o Are based on objective measures o Take place in the form of a two-way conversation  Some firms conduct peer reviews (assess performance of co-workers).  May conduct a 360-degree performance review, a process that gathers feedback from a review panel that includes co-workers, supervisors, team members, subordinates, and sometimes customers. Compensation  Compensation: The amount employees are paid in money and benefits  Wage: Pay based on an hourly rate or the amount of work accomplished  Salary: Pay calculated on a periodic basis, such as weekly or monthly  Most firms base compensation decisions on five factors:  What competing companies are
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