General Managment Exam Notes.docx

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Business Administration
Business Administration 1220E
Kim Luton

Business 1220 General Management Exam Tips Exam Date:April 14, 2013 Exam Time: 9:00 – 1:00 Building Location: Thames Hall (gym) Elements ofAnalysis: • Strategic Decision Making o WantAnalysis- management references  Personal objectives and implications  Professional objectives and implications o Need Analysis- industry analysis  Pest analysis  Consumer analysis  Competitive analysis  Trade/distribution chain analysis o Key Success Factors o CanAnalysis- company analysis  Internal strengths and weaknesses  Finance, marketing, human resources and operations o Fit Between Can/Want/NeedAnalysis o CompetitiveAdvantages  Is it sustainable? • Evaluation of Alternatives o Firm Valuation  Net book value  Economic appraisal  Capitalization of earnings o Net Benefit and Payback o Breakeven Analysis o Projected Income Statement • Decision General Exam Tips: • Read the case carefully: o Read the first and last paragraph and headings o Read thoroughly and make notes/highlights • “Label” important sentences in the case margin o Complete exam in pencil o Label sentences and paragraphs in the case that help keep track of any important information- political, SP, VC, wants, consumer etc. • Be Concise o Be neat, clear and specific o Show all assumptions and calculations – don’t assume your grader knows or understands what you are talking about. o Use headings and subheadings to make it easy to follow and help organize your thoughts • Remember the “big picture” • Ask “so what” to help draw implications • Make your decision based on your analysis (consistency is key) • Finish all components of the exam • NO DECISION = NO PASS The Exam Structure: • The question:As ______, make whatever recommendations that you feel are appropriate • You get: The question, the case, the general management cheat sheet and a blank exam booklet To Get an “A” in WantAnalysis: • What do the business owners want to do? • Compare the alternatives to the goals and objectives that are being considered • What are their personal goals? o Case Fact + Implication- should be two to three points maximum • What are their goals for the business? o Case Fact + Implication- should be two to three points maximum To Get an “A” in Need Analysis: • PESTAnalysis- is it an attractive market to work in?  Side note: some sections may have more points then others but each section should have at least one point o Political implications:  What impact will government regulations have on the business?  How will this impact the presented alternatives? o Economic implications:  What impact does the state of the economy have on the business?  How will this impact the presented alternatives? o Social implications:  Considers social trends  What impact does consumer demands have on the business?  How will this impact the presented alternatives? o Technological implications:  How will technological developments impact the business?  How will this impact the presented alternatives? • Consumer Analysis: o Consider consumer segments and customer profiles  Who are they?  What do they want?  Why do they buy the product?  Where do they shop?  How are they influenced? o Ensure that strong implications are developed  Explain why the case facts are important  How do they influence your decision? Which options seem more appealing? o What does the company have to do to attract and sustain their target market? • CompetitiveAnalysis: o Direct competition  What are their strengths and weaknesses o Indirect competition  What are their strengths and weaknesses o What are the implications for the company and are their any threats or opportunities? o Explain what the company needs to do to remain a successful competitor • TradeAnalysis o Atrade analysis is only done if the industry sells tangible goods  I.E food, computers, clothing- anything that can be physically touched o Questions to consider  What kind of business is it? What does the trade chain look like? What role does the company play in the chain? Who has the power? What are roles and demands of suppliers and customers?  Questions will be case specific o For the implications focus on how the preceding characteristics may provide opportunities or threats for the decision when considering different options o What must happen to keep the system running successfully To Get an “A” in Key Success Factors: • Key success factors are the things that make the industry thrive • There should be 3-5 points maximum • Considering findings from your ‘need’ analysis o Look at the competitors and customers- what are the critical elements for success? o Consider findings from your ‘can’ analysis  Is your company doing what they need to be successful? To Get an “A” in Can Analysis: • For each component be sure to list the strengths and weaknesses along with implications • Finance: o Does the company have access to funding?Are they profitable? o What do the ratios say- in the case of not being given ratios; you will need to conduct your own ratio analysis. The following ratio notes are taken from finance o Profitability  Vertical analysis: SOE item/Sales  Return on average equity: earnings/total average equity • It is a good trend if COGS is decreasing and gross profit is increasing- exhibits better management at costs and expenses • Analyze the “biggest” number o Liquidity  Current ratio: total current assets/total current liabilities (2:1 ratio)  Acid test: cash + MS +AR/total current liabilities (1:1 ratio)  Working capital: current assets/current liabilities o Efficiency  Accounts receivable: accounts receivable*(sales/365)  Accounts payable: accounts payable*(purchases/365)  Inventory: inventory*(COGS/365) o Stability  Net worth: total equity/total assets  Debt to equity: total liabilities/equity  Interest coverage: EBIT/interest expense o Growth  Year #2 = year #1/year #1  Sales, net income, total assets and equity • Marketing: o What is the strategy? o What works vs. what doesn’t work o Who has the expertise and access to the funds? • Operations: o Consider whether the current process is as efficient and effective as can be o Are there any capacity issues? o Are there areas that can be improved? • Human Resources: o Are the right people and skill sets in place to be successful? • For the implications, do not only consider a fit between alternatives, but also if they can meet the industry KSF’s  Following ‘can’ analysis ask if there is a fit between the KSF’s and the internal analysis (can) o Implications should state what you need to do vs. what you can do o I.E if a key success factor is being reliable, write an implication for your can analysis and if there is a fit with your needs CompetitiveAdvantage: • Considering the findings in the want/need/can analysis • What is the company’s competitive advantage? o What single element lies at the core of the company’s success o What differentiates them from their competitors • Sustainability- can they sustain their competitive advantage o Is it right now or in the long term o What dimensions are not sustainable o What is preventing competitors from entering the market How to Get an “A” in Evaluating theAlternatives: • List all alternatives and ‘sub’ options • Remember to always do a status quo option even if it does not give it • Evaluate the qualitative pros and cons of each alternative o How does it impact the overall business o Does the option align with the management’s wants and findings from previous analysis o Provide new insight, implications and demonstrate integrative thinking • Financial Feasibility: o Projected Statement of Earnings o Net Benefit o Payback o Breakeven o Valuation- NBV, EconomicAppraisal, Capitalization of Earnings  What do your numbers mean? Discuss all findings! • Always evaluate a quantitative analysis for each option (pros and cons list) o Each pro and con should have an implication Alternative #1- Projected Statement of Earnings: • Even if the status quo isn’t g
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