Entrepreneurship - EPS (Class notes)

Entrepreneurship - Heidi Neck, Blank 208 (Neck), HNeck@Babson.edu;

Session 2, Sep 7, 2011
Assignment: Discussion on the book: Action trumps Everything

start: boat exercise
an economist: Daniel

Session 3: Sep 12, 2011
Why would you want to be an entrepreneur?
What's good about it?

• Self employed
• seeding own ideas
• fee creative
• rewarding to follow passion
• alignment
• develop stuff
• take risks
• more fulfillment 
• ok to screw up
• creating jobs
• solve outstanding needs
• change something
• freedom; do what you want, go where you want, shape your future

What's stopping you?

• too risky
• fear of failure
• confidence

What is the best idea you've had but never started?

Vera Bradley


Session 4: Sep 14, 2011
TED video
Steven Johnson - where good ideas come from

Brain Orientation:
1 -6 from left to right
Ideal realist or Ideal builder: 3

Rational or emotional: 5
Process oriented or ppl oriented: 5
Neat & organized or messy and chaotic: 2

Trust the facts or trust the gut instinct: 4
predictable or spontaneous: 4
Logical or visionary: 4
Total: 27

book recommendation: whole new mind

mind dumping exercise

Session 5: Sep 16, 2011


Session 7: Sep 21, 2011


Session 9: Sep 28, 2011
Case: Feed Resources
(in the book page 455)
anaerobic digestion

Session X: Oct 5, 2011
evaluation of the company

Question: What % equity to give away?
You need to know:
1) Future value of your company
2) Future value of your investment

Valuation example
NI in year 5 = $2.5M
(assume seed company PE ration = 15%)
PE (price to earnings) = 15 (It is based on the industry averages)
Investor = $2M
Hold period = 5 years
ROR = 50%

Calculation
FV of company = NIAT * PE
                         = $2.5M * 15
                         = $37.5M
FV of investment = PV (1 + IRR)^n
                           = $2M(1 + 0.5)^5
                           = $15.2M

So now what % of equity to give away
= FV of teh investment / FV of teh company
= $15.2M / $37.5M
= 41%

Post money valuation = $2M/41% = $4.9M
Pre money valuation = $4.9 - $2M = $2.9M

Strategy - STRAT (Class notes)

Professor: Sam Hariharan 307 Olin (Hariharan), X4306, shariharan@babson.edu 

Session 1: Sep 2, 2011
check slides

Session 2: Sep 6, 2011

Assignment:

In this session, we use the Wal-Mart cases to introduce basic building blocks for crafting a strategy from an "inside-out" perspective. The three building blocks are:

a)Value Creation

b) Value Delivery

c) Value Capture 

We will explore each of these three areas in turn.

Assignment Questions:

1. What are the distinctive features of Wal-Mart's strategy? Consider the following questions:

a. What does Wal-Mart offer to potential customers?

Price that they want and availability of products
convenience, low stockouts

b. Why would people shop at Wal-Mart on a recurring basis?

c. How, if at all, does Wal-Mart's strategy differ from that of its competitors, e.g., other mass merchandisers or the earlier variety and department stores.

d. Do these differences give Wal-Mart an advantage over its competitors? If so, how?

e. What about the scope of Wal-Mart's business, e.g., merchandise categories offered, location patterns? Why does Wal-mart differ from its competitors in these? Is there a strategic logic to these choices?

2. Compare Wal-mart's expense and profit ratios with those for the overall industry. Can you explain any of the differences in terms of what you know about Wal-Mart's strategy?

As we move from Value Creation to Value Delivery and Value Capture, we now focus on the complex delivery system (value chain) through which that strategy is enacted on a daily basis, and how this links to Wal-Mart's profitability.

1. Develop your own map of Wal-Mart's value chain. This map should (a) identify major clusters of activities which create value for customers and (b) indicate important linkages among value clusters.

2. Analyze Wal-Mart's profitability over the 1991-1993 period using the data in the case. Develop the financial footprint for Wal-Mart along the lines of what we developed for Dell in the first session.

3. Can you relate your value chain map to the comparative income statement ratios? In what way is Wal-Mart's strategy evident in its financial footprint?

As we move on to Wal-Mart's situation in 2007, we now focus on:

1. What has Wal-Mart done since 1994. Why?

2. What challenges has Wal-Mart encountered as it has expanded into new formats and new geographic markets?

3. How have these moves affected Wal-mart's financial performance?

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Wal-Mart Value Chain:
Procurement & Inbound logistics

• Hub & spoke system
• backhaul
• scale

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Session 3: Sep 8, 2011

Case: Cola wars

discussion on Porter's 5 forces.

The threats of entry - low

Industry rivalry - high

bargaining power of suppliers - low

bargaining power of buyers - low

threats of substitutes - medium (going from low to high)

Cokes growth:

International expansion

variety of products

Pepsi growth:

Non CSDs

Snack foods

buying food chains

sent 3 students outside for a blind test of pepsi and coke

Session 5: Sep 15, 2011


Economies of scale. Discussion of the article Competitive Cost Dynamics: The experience curve (Hax and Majluf)

There is another concept of experience curve which is different from scaled economies curve (drawn left) for the experience curve there is Cumulative volume on the x-axis (or the experience or time). So there are industries where early entrants have an advantage.




Vanguard
CVP (Customer value proposition)
- Low cost / low price
- High quality of customer service

Underlying assumption/logic
- you cannot beat the market consistently

types of investors
Self directed - 10%
deligators - 50%
validators - 40%

deligators are more inclined towards indexed funds

Structure
Investment Portfolio management:
- Little research investment
- management (passive)
- Funds activity, for actively managed funds they have external  advisers
- (They bargain with the external advisers, pay them on performance)

Marketing:
- Low advertisement
- Reputation from trust
- Direct distribution


Client service:
Lot of IT investment

Session 6: Sep 20, 2011
Apple 


comparison of Apple and Dell (exhibit 7)
Use the 5 forces model.
Use the ecosystem reading

Session 8: Sep 27, 2011


We have studied about identifying the strategy of a company:

1. Cost leadership
2. Differentiation
3. Platform

Session : Oct 4, 2011

Case: Circles

customer acquisition cost

life time value of teh customer (CLTV)

need to see if CLTV > CAC or not

Financial Accounting - FINACC (Classes)

Joanne Williams

(office # 301 - Luksic Hall , ext. 4278, williamsj@babson.edu)

Class 1 - Sep 1, 2011

SESSION 1: Overview of Financial Reporting

LEARNING OBJECTIVES

· Review the history of financial reporting, transaction analysis, and preparation of the income statement and balance sheet.

· Discuss the Financial Reporting environment, both US and International perspective, including regulatory requirements.

· Provide examples of the subjectivity of financial reporting results.

Note: Throughout FINACC, we will be using the Balance Sheet Equation (BSE), not journal entries or T Accounts. This course is designed for users of financial information, not preparers.

The balance sheet equation is: CASH + OTHER ASSETS = LIABILITIES + OWNERS’ EQUITY + REVENUE - EXPENSES

SESSION WORK

CASE: N/A

READINGS

· Easton, Wild, Halsey, McAnally Book (EWHM) – MOD 1

· Financial Reporting Basics Reading (FINACC 1 Stream folder)

· Coke/Pepsi Financials (FINACC 1 Stream Folder)

Class Notes

Started with a question:

Is accounting "True"? :p

Is accounting accurate?

Accountants would say - they (financial statements) represent the "economic substance" of the transaction.

There is a lot of subjectivity involved - which leads to different method choices. Standards like FASB and IAS.

Capitalizing the cost simply means "make it an asset".

Examples of the choice of depreciation and bad debts against accounts receivables. Subjectivity and Judgement.

These things are incorporated in the auditor report. So now the (new thing) report has a few paragraphs that comment on the choices and judgement.

Accounting also has behavioral implications for teh companies. E.g. pension policies and healthcare.

Search for 401K pension. A new form of pension that allows companies not to have a liability on the balance sheet against the pension promised.

Revenue recognition is another topic.

Example of what Bosch & Lomb when they did channel stuffing.

Another scandal - Worldcom: they capitalized the expenses. Manipulation of teh financial statements. The income statement benefits. Since no expenses show up. They were showing earnings not by business but by manipulating financial statement recording.

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Session 2: Sep 7, 2011
Points to takeaway:

• income flow ad income statement
• comparison to cash flow
• transactions translating into financial statements

Case: Sunbeam Corporation: Building Financial Statements

spreadsheet filled

Session 3: Sep 12, 2011
discussion on financial statements and cash flows

Solve problem B-39 .. page B-35 (from the book)

We are given income statement and balance sheet
(Indirect method) : Starting with Net Income
Operating activities
NI:                  85
Depreciation:   22
Amortization:   7
Loss:               5

Session 8, Sep 26, 2011
Case: Albert Dunlop and Corporation Transformation
application of ethical theories on the case
Utilitarianism - Stuart Mill: An action is right if it promotes the best consequences
*The greatest happiness for the greatest number*
Deontology - Immanuel Kant: An action is right if it is in accordance with  a correct moral rule of principle
*always treat people as an end in themselves, never merely as a means*
Character (virtue) ethics - Aristotle: An action is right if it is what a good person would characteristically do under the circumstances *Character: what virtues/vices are motivating the action?*

from all these perspectives Albert dunlop fails.
Radio clip: "should we get some ice tea"

Business ethics and selfishness - Thomas Hobbes: Man is a wolf to man

Data Models and Decisions - DMD (Class Notes)

Syllabus and course details link: http://ecommerce.babson.edu/DMD/Default.htm

Professor: Dessislava Pachamanova

Session 1: Sep 1, 2011

DMD_01_090111.ppt powerpoint presentation has all notes Link

IQR: Inter quartile range
Long discussion on "Displaying Numberical Data (Numerical Summaries)" It is important to understand what all these summaries represent and what idea they give you for the actual data.


Pareto charts are bar charts but the bars are organized in increasing order. On top of the bars is a line that tells you about the cumulative data. 


Session 2: Sep 6, 2011