1. Building Blocks
Balance Sheet
What is an asset?

2. Building Blocks
Balance Sheet
What is an asset?
Economic resources controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained.

3. Building Blocks
Balance Sheet
Assets are separated between:
Current Assets (Short Term) – cash or used within a year + Inventory
Non-Current Assets (Long Term)

4. Building Blocks
Current Assets (Short Term)
Cash and equivalents
Short-Term Investments
Accounts Receivable
Inventory
Prepaid Expenses
Other current assets

5. Non-Current (Long Term) Long-Term Investments
Building Blocks
Non-Current (Long Term)
Long-Term Investments
Property, Plan and Equipment (Fixed Assets)
Intangible Assets
Goodwill
Trademarks
Patents
Development Costs

6. Non-Current (Long Term) Long-Term Investments
Building Blocks
Non-Current (Long Term)
Long-Term Investments
Property, Plan and Equipment (Fixed Assets)
Intangible Assets
Goodwill
Trademarks
Patents
Development Costs

7. Building Blocks Balance Sheet What is a liability?
An entities debts and obligations arising from past transactions. They represent future outflows of assets (mainly cash) or services to the creditors that provided the entity with the resources needed to conduct its business.
Liabilities and obligations are often created but not recognized in financial statements.

8. Building Blocks Balance Sheet What is a liability?
An entities debts and obligations arising from past transactions. They represent future outflows of assets (mainly cash) or services to the creditors that provided the entity with the resources needed to conduct its business.
Liabilities and obligations are often created but not recognized in financial statements. (contracts, manipulation, financial instruments)
Separated between current and long term liabilities.

9. Building Blocks Current Liabilities (due within a year)
Bank indebtedness
Accounts Payable
Accrued Liabilities
Current Portion of Long Term debt
Other current liabilities
Long Term Liabilities (coming due beyond one year)
Notes and mortgages payable
Lease obligations
Bonds Payable
Other long-term liabilities

10. Building Blocks Balance Sheet Equity
Financing provided to the firm by both its owners and the operations of the business.
Owners invest to earn two types of return:
Dividends
Capital appreciation/Capital gains
What is realized and unrealized?

11. Building Blocks
Debt
Equity
Assets

12. Building Blocks
Debt is “preferred” over Equity
When the firm is no longer a “going concern” its creditors have first right to its’ assets.
With equity you have a high risk and reward position.
Investing through debt is low risk and a predictable reward.

13. Building Blocks Going Concern Not a Going Concern In the “black”
Government
Creditors
Employees
Owners
Going Concern
Not a Going Concern
In the “black”
In the “red”

14. Building Blocks
Value
Accounting – value in monetary terms
Economics (1) utility (2) worth of good or service to exchange for other items of value
Marketing/Consumption: Relative value placed on good or service. This is perceived.

15. Value Proposition Value Proposition
Relevant – how does it solve a problem or serve or a need?
Quantified – what benefits does it deliver?
Differentiated - how is it different than the competition (or no action)?
The key to any successful value proposition is that the perceived value of what you offer – be it a product, service – outweighs the perceived cost or alternatives.
Think of it as a question:
If I am customer why should I buy this rather than that (or buy nothing)?

16. Value Proposition Value Proposition (CVP)
Attributes of a product/service
Price
Quality
Speed of Delivery
Completeness of the service
Relationship customer experiences by interacting with the company
Service
Process
Systems
Emotional Appeal
How do you feel about the company or the product
Moral or ethical connection
How others’ perceive you

17. Value Proposition Thinking through it
Intended User – who is the predominant user of the product
The next best alternative - closest competitor
Value delivery – how does this product deliver a better, same or worse experience than competition
Measure – can the difference be quantified? Is the difference a range? Or is it an intangible?
Cost - Does it cost more, less or same for competition? If no competition, does it provide more value than not buying?

18. Value Proposition Value Proposition – a marketing statement
Relevant – how does it solve a problem or serve or a need?
Quantified – what benefits does it deliver?
Differentiated - how is it different than the competition (or no action)?
The key to any successful value proposition is that the perceived value of what you offer – be it a product, service – outweighs the perceived cost or alternatives.
Think of it as a question:
If I am customer why should I buy this rather than that (or buy nothing)?

19. Building Blocks
Your goal in business is to “create” value for your customers and business.
How do we create value?
Innovation
Efficiency
Culture

20. Value Chain Value Chain
A set of activities performed by one firm to bring a product of service to market.

21. Value Chain Industry Value Chain
A set of activities performed by a number of firms to bring products and services from creation to market.
What has happened to the music industry?

23. Industry Value Chain Music Industry Past Artist Publishers
Manufacturers
Distributors
Retailers
Customers
Music Industry Past

24. Industry Value Chain Music Industry Present Artists Publishers
Retailers
Customers
Music Industry Present

26. Risks Risks Strategic Risk Operational Risk Financial Risk
Brand/Reputation Risk
Compliance/Legal Risk
Amazon
Starbucks

27. The Core Competency Theorized in 1990
Completely revolutionized and changed management and strategy.
Before this theory, companies focused around core products and made variations of those products and wanted to achieve vertical integration.
Changed the theory to focus around core competencies which lead to core products.

28. The Core Competency Identify top strengths/assets/intangibles
Use competencies as building blocks
Develop strategies to become an industry leader focused around your core competencies
Develop products, systems, talent and businesses to leverage your core competencies.
Provides benefits to the customer
Hard to imitate
Provides access to a wide variety of markets

29. The Core Competency Identify top strengths/assets/intangibles
Use competencies as building blocks
Develop strategies to become an industry leader focused around your core competencies
Develop products, systems, talent and businesses to leverage your core competencies.
Provides benefits to the customer
Hard to imitate
Provides access to a wide variety of markets

30. The Core Competency Identify Competencies Develop Competencies
Structure organization around competencies
Involve competencies in all products
Evolve organization around competencies

31. The Core Competency

32. The Core Competency

33. The Core Competency

34. The Core Competency Identify the core competency Google Apple Netflix
Honda (1980)