BA 101 1st Edition Lecture 11 Outline of Last Lecture 1. Foundation2. Lecture: Financing your BusinessOutline of Current Lecture I. Deadlines and Peanuts & Crackerjacks II. Lecture: Product strategyCurrent LectureI. Deadlines: Foundation Round 2 due Thursday 12th at midnight. Quiz 4 is due before class on Tuesday 17th. Peanuts & Crackerjacks: An online resource (9 innings, go through all of them). There are question on this in Quiz 4 and during next class. Second Product? More challenging, higher risk. You need to meet the performance targets for all products. However, your potential profits are much higher, with the possibility of your company securing a greater market share. Also managing two products is good practice for yourfinal project. Using Information: You have a lot of information available to you from the reports and other sources for foundation. - Sales = revenue- EBIT = earnings before interest and taxes- Profit = net income- Cumulative profit = net income over time- S, G, A, and R&D = expressed as a percentage of sales (selling, general, admin, and R&D = period costs)- Contribution margin = sales – variable costs [materials and labor])II. Lecture: Product strategies These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Low tech strategy: keep it in the inner circle (pmf and size), only revise to manage the age, keep the age between 2-4 years, mtbf should be at 20000. For marketing, you want to build awareness and accessibility early and aggressively, then just maintain. For your production decisions, you want to automate early and aggressively to about an automation level of 7. Add capacity as needed. Finance these as you wish. High tech strategy: Revise it every year to manage performance/size and age expectations. Adding new products is fine. Build awareness and accessibility aggressively. The market is not as price sensitive as the low tech market. Keep your automation low, because the R&D time will be faster. Add capacity as needed, finance as you wish. Leverage: measures the amount of debt versus the amount of equity owned in an asset. It compares the amount you owe to the amount you own. The lower the score (or ratio) the more you own of that asset. Some Ratios to Know: - Current ratio: which is current assets over current liabilities- Quick or Acid Test ratio: current assets minus inventory over current liabilities- Debt to total assets ratio: Debt over assetsBe able to calculate these