A summary of business school courses and concepts in finance, accounting, cost management, marketing, organizational behavior, statistics, international business, management information systems, etc

1. A GUIDE FOR MBA STUDENTS
Key Business Concepts at a Glance
By Aditi Gupta

2. Copyright © Aditi Gupta
Aditi Publications, New Delhi
info@aditipublications.org
https://aditipublications.org

3. Table of Contents
Subject Page
Organizational Behavior 3
Financial Management and Accounting 12
Cost Management 41
Business Statistics 64
International Business 69
Management Information Systems 74
Marketing 77

4. ORGANIZATIONAL
BEHAVIOR

5. Managerial Roles
Interpersonal
Figurehead
Leader
Liaison
✓ Symbolic head who performs many routine duties
✓ Motivate and direct employees
✓ Maintain network of contacts who provide info
Informational
Monitor
Disseminator
Spokesperson
✓ Nerve center of external and internal info
✓ Transmit internal, external info to org members
✓ Transmit info to outsiders on org plans, policies
Decisional
Entrepreneur
Disturbance Handler
Resource Allocator
Negotiator
✓ Initiate new projects to bring about change
✓ Corrective action when org faces disturbance
✓ Allocate resources on projects or assignments
✓ Negotiate deals, new business opportunities
Managers are team captains. Think of MS Dhoni and the leadership qualities he
shows – staying cool under pressure, motivating the team, taking tough decisions on
the field – that’s who you should strive to be

6. Quiz Question
What are the key roles of a manager? Please pick the best
answer
• Leadership
• Communication of Information
• Decision Making
• All of the Above

7. Building Successful Teams
Context
Leadership - Dhoni, Kohli
Adequate Resources
Trust
Performance Evaluation and Rewards
Composition
Abilities – Bowling, Batting, Fielding, All Rounders
Personality
Allocating Roles
Diversity
Size, Flexibility
Process
Common Purpose – Win For India
Specific Goals
Team Efficacy
Managing Conflict
Successful team has good leadership, trust, people with different abilities, different
personalities – think Dhoni vs Kohli– but above all a common purpose – to win for India

8. Quiz Question
What are the important ingredients for building a successful
team? Please select the best answer?
• Leadership Only
• Leadership and Trust
• Leadership, Trust and People with Diverse Abilities
• People with Diverse Abilities Only

9. Group Decision Making
Brainstorming – You don’t have to storm your brain – Its just a way to encourage
everyone to share ideas and avoid conformity or group think
Nominal Group Technique
• Group members independently write down ideas
• Each member presents an idea
• Group discussion
• Each member ranks ideas silently
• Idea with highest ranking becomes the final decision
Electronic Meeting
• Group sits with their laptops
• Issues are presented
• Each member types their comments anonymously into laptop
• Comments and votes are displayed
The goal is to encourage sharing of different ideas and independent opinions
so that the best decisions are made; technology can facilitate this process.

10. Quiz Question
What habit should be avoided when it comes to group
decision making? Please pick the best answer
• Sharing ideas
• Sharing independent opinions
• Making the best decisions in the interest of the team
• Thinking alike i.e. repeating what your team mates say

11. Organizational Culture
• Innovation and Risk Taking
• Attention to Detail
• Results - Oriented
• People – Oriented
• Team – Oriented
• Stability
• Aggression and Competition

12. Quiz Question
What are the key elements of organizational culture?
• Innovation and Risk Taking
• Orientation to Results and Team
• Competition and Aggression
• All of the Above

13. FINANCIAL MANAGEMENT
AND ACCOUNTING

14. Profit and Loss Account – Example 1
P&L of Horizon Limited (Manufacturing Company) Rs Crores
Net Sales 701
Cost of Goods Sold (COGS) 552
Gross Profit 149
Selling General and Administrative (SG&A) Expense 30
Depreciation 30
Operating Profit 89
Interest 21
Profit Before Tax 68
Tax 34
Profit After Tax 34
• Net sales is also called net revenue. Net sales = price per unit * number of units sold
• Gross Profit = Net Sales – Cost of Goods Sold
• Operating profit = Gross Profit – SG&A – Depreciation
• Profit Before Tax = Operating Profit – Interest
• Profit After Tax = Profit Before Tax - Tax

15. Quiz Question
How is Gross Profit calculated? Please select the right
answer
• Net Sales – Cost of Goods Sold (COGS)
• Net Sales – COGS – SG&A
• Net Sales – COGS – SG&A - Depreciation
• Net Sales – COGS – SG&A - Interest

16. Key Ratios
Gross Profit
Sales
Gross
Margin
Operating Profit
Sales
Operating
Margin
Profit After Tax
Sales
Net
Margin
For Horizon Limited
149
701
= 21%
34
701
= 5%
89
701
= 13%

17. Quiz Question
What is Gross Margin? Please select the right answer
• Profit After Tax/Sales
• Profit Before Tax/Sales
• Gross Profit/Sales
• Operating Profit/Sales

18. Profit & Loss Account – Example 2
Profit & Loss Account of a Solar Plant 2019 (Rs Crores) 2020 (Rs Crores)
Net Sales
77 77
Operating & Maintenance Expense
8 9
Gross Profit
69 68
Depreciation
19 19
Operating Profit
50 49
Interest
27 25
Profit Before Tax
25 27
Tax
- -
Profit After Tax 25 27
Net Margin 32% 35%

19. Quiz Question
The Profit After Tax of a Company is 30 Crores and its Net
Sales are 100 Crores. What is its Net Margin?
• 30%
• 3%
• 10%
• None of the Above

20. Balance Sheet
Balance Sheet of Solar
Plant
2019 (Rs Crores) 2020 (Rs Crores)
Assets
Fixed Assets 511 492
Cash 13 28
Inventory 1 1
Trade Receivables 13 13
Total Assets 538 534
Equity
Share Capital 159 159
Retained Earnings 25 52
Total Equity 184 211
Liabilities
Long Term Loans 340 309
Short Term Loans 13 13
Trade Payables 1 1
Total Liabilities 354 323
Total Liabilities and Equity 538 534
Assets = Equity + Liabilities
Use of Funds = Source of Funds

21. Quiz Question
What is the golden rule that governs any balance sheet?
• Assets = Equity
• Assets = Liabilities + Equity
• Liabilities = Equity
• None of the Above

22. Cash Flow Statement
Solar Plant (Rs Crores) 2018 2019 2020
Profit After Tax - 25 27
Plus Depreciation - 19 19
Minus increase in current assets - 14 0
Plus increase in current liabilities - 14 0
Cash flow from operations - 44 46
Investment in Fixed Assets (530) - -
Cash flow from investing (-530) - -
Plus increase in LT Loans 371 -31 -31
Plus increase in Equity 159 - -
Cash flow from financing 530 -31 -31
Net change in cash - 13 15
Opening cash balance - - 13
Closing cash balance - 13 28
Net Change in Cash = Cash flow from operations + investing + financing
Cash is King -> Don’t Run Out of Cash

23. Quiz Question
What are the main sources of financing for a company?
• Loans from the bank only
• Equity (Money from friends, family, other sources) only
• Both Loans and Equity
• None of the Above

24. Financial Planning and Forecasting
• Sales Forecast
✓ Starting point of any forecast - We need to project quantity sold and unit price
• Asset Requirements
✓ Firms need to invest in plant and equipment (fixed assets). This determines
projected capital investments.
✓ Firms need to invest in working capital (current assets minus current liabilities). This
determines working capital forecasts
• Financing Plan
✓ Raising funds for investing in fixed assets via Long Term loans and equity (other
people’s money)
✓ Raising funds for investing in working capital through short term loans
• Economic Assumptions
✓ Interest rate on loans, inflation, taxes
These are major elements that go into forecasting the financial statements of a
firm

25. Quiz Question
What are the major elements that go into a financial
forecast? Please select the best answer
• Sales forecast
• Asset Requirements
• Financing Plan
• All of the Above

26. Time Value of Money (1/2)
• Determining the future value of an amount
• Example: If you invest Rs 1000 in a savings account for 3 years that pays 10% interest
per year your investment will grow as follows
Future Value = Present Value*(1+r)n = 1000*(1.1)3=1331
Note: r is the interest rate, n is number of years
Year 1 Year 2 Year 3
You invest Rs 1000 today.
Opening balance: Rs 1000
At end of Year 1, you earn
Interest of: Rs 100 (Rs 1000*0.1)
Closing balance: Rs 1100
Opening Balance: Rs 1100
Interest: Rs 110 (Rs 1100*0.1)
Closing Balance: Rs 1210
Opening Balance: Rs 1210
Interest: Rs 121 (Rs 1210*0.1)
Closing Balance: Rs 1331

27. Time Value of Money (2/2)
• Similarly we can determine present value of a future amount
• Example: If someone promises you Rs 1000, 3 years from now, what is its present
value today? Lets assume an interest rate of 10%
Present Value = Future Value/(1+r)n = 1000/(1.1)3= 751
Thus receiving Rs 1000 3 years from now, is worth Rs 751 today
Value
1000
Year 0 Year 1 Year 2 Year 3
Value
1000/(1.1*1.1)
Value
1000/1.1
Value
1000/(1.1*1.1*1.1)

28. Quiz Question
What is a measure of the time value of money? Please pick
the right answer
• Inflation Rate
• Interest Rate
• Exchange Rate
• None of the Above

29. Net Present Value (1/2)
• Similarly we can calculate net present value (NPV) of future cash flows of a new
project to help us make investment decisions
• If NPV of a project is positive, we usually invest in the project
Net Present Value = Present Value of all future cash inflows – Initial Investment
NPV= (200,000/1.1)+ (200,000/1.12) + (300,000/1.13) + (300,000/1.14)+(350,000/1.15) –
1,000,000 = -5,272
n
General Formula: Net Present Value = Σ Ct/(1+r)t - Initial Investment
t=1
Note: Ct is the operating cash inflow in year t. In our example t ranges from 1 to 5
r is the discount rate. Lets assume 10% for this example
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Cash Inflow
200,000
Cash Inflow
200,000
Initial
Investment
(1,000,000)
Cash Inflow
300,000
Cash Inflow
300,000
Cash Inflow
350,000
200,000/1.1 (200,000/1.12) (300,000/1.13) (300,000/1.14) (350,000/1.15)
Operating Cash Inflows

30. Net Present Value (2/2)
• Time Horizon for Analysis is important
• Time horizon is usually the minimum of the following
✓ Physical life of the plant
✓ Technological life of the plant
✓ Product market life of the plant
✓ Investment planning horizon of the firm
• Initial investment: After tax cash outlay on capital expenditure (property, plant and equipment)
• Operating Cash Inflows: After tax cash flows from operation of project during economic life
• Terminal Cash Inflow (Terminal Value): After tax cash inflow from liquidation of project at the
end of its economic life
• Discount Rate: 10%
• NPV is Rs 29,853
• Since NPV is positive, firm is likely to invest in the project
Terminal
Cash
Inflow
20,000
Cash
Inflow
20,000
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Cash
Inflow
10,000
Cash
Inflow
15,000
Initial
Investment
(150,000)
Cash
Inflow
30,000
Cash
Inflow
50,000
Cash
Inflow
50,000
Cash
Inflow
40,000
Cash
Inflow
30,000
Operating Cash Inflows

31. Quiz Question
What are the major drivers of the net present value (NPV)
of a new project? Please select the best answer
• After Tax Operating Cash Inflows
• Initial Investment
• Discount Rate
• All of the Above

32. Should we invest in this solar project?
• 100MW Solar Plant
• Initial investment of Rs 530 Crores
• Cash flows projected over 25 year time horizon from 2018-2043 since useful life of the
solar plant is 25 years
• NPV of Project is 113 Crores using discount rate of 9%
• NPV is positive and so ideally firm should invest in the project
Terminal
Cash
Inflow
53
Cash
Inflow
47
2018 2019 2020 --- 2025 2030 2035 2040 2043
Cash
Inflow
69
Cash
Inflow
69
Initial
Investment (-
530)
Cash
Inflow --
-
Cash
Inflow
66
Cash
Inflow
62
Cash
Inflow
58
Cash
Inflow
52
Operating Cash Inflows (All numbers in Rs Crores)

33. Quiz Question
When does a firm typically decide to invest in a new
project? Please select the right answer
• NPV is positive
• NPV is zero
• NPV is negative
• None of the above

34. Return on Investment - A simpler formula
• A quick and easy rule of thumb for evaluating return on investment (ROI) is:
• If I tell you that operating profit of solar plant is Rs 50 Crores in its first year of operation
• And we know Initial investment required is 530 Crores, then:
Operating Profit
Initial
Investment
Return on
Investment
50
530
Return on
Investment
10%

35. Quiz Question
The operating profit of a manufacturing business is 15
Crores and initial investment was 150 Crores. What is its
Return on Investment (ROI)? Please select right answer
• 10%
• 100%
• 5%
• None of the Above

36. Types of Transactions
Types of
Transactions
Acquisitions Divestitures
• Mergers
• Purchase of a unit
• Takeovers
• Leveraged Buyouts
• Business Alliances
• Demergers
• Partial Sell off
• Sale of Equity
Stake
• Equity Carve Outs

37. Quiz Question
Flipkart’s owners, Sachin and Binny Bansal, recently sold
their shares in the company to Walmart. What kind of
transaction is this? Please select the best answer?
• Sale of Equity Stake
• Demerger
• Merger
• None of the Above

38. Forms of Business Organization
Form of
Organization
Ownership Decision Making Govt Regulation Suitability
Sole
Proprietorship
Single Owner
Small ownership stake
Completely flexible None Small Business
Partnership Small to medium stake
Min 2, max 100 partners;
max limit does not apply
to professional practice
Largely flexible but
partners can
disagree
None Small-medium business
Professional practices
of CAs, consultants
(e.g. PwC, Deloitte)
Private Ltd
Company
Small to medium stake
Min 2 Max 200
Shareholders
Largely flexible but
directors can
disagree
Companies Act
(mildly applies)
Audit of FS by CA
Small to Medium
Public
Unlisted Ltd
Company
Min 7 Shareholders
No Maximum
Very Rigid as SH
approval needed
for major decisions
Companies Act
public disclosure
Audit by CA
Medium to Large
Public Listed
Ltd Company
Min 7 Shareholders
No Maximum
Very Rigid; SH
approval for big
decisions; Ind
directors can raise
questions
Companies Act,
SEBI Act
public disclosure
Quarterly reporting
Audit of FS by CA
Large – very large
businesses that need
huge public capital
Form of an organization varies with size. Larger public companies have to disclose more
financial information in line with Govt regulations.

39. Quiz Question
Large public companies have to disclose more financial
information in line with Govt Regulations compared to small
private companies. Is this statement true or false?
• True
• False

40. Corporate Organization Structure
Shareholders
Board of Director
President/CEO
Audit CommitteeInternal Auditor
Treasurer
Plans for cash needs,
invests surplus
Controller
Prep Fin Statements,
budget, tax returns
External Auditor
VP
Marketing
VP
Legal
VP Finance
& Accounts
VP
Operations
VP
HR

41. Quiz Question
Who sits at the very top of the organization structure of a
company? Please select the right answer
• Shareholders
• Board of Directors
• CEO
• None of the Above

42. COST MANAGEMENT

43. Cost Assignment – Why is it important?
• Cost accounting information systems are designed to assign costs to specific
cost objects. Cost objects may include
✓ Products
✓ Customers
✓ Departments
✓ Activities
Accuracy of cost assignments
• Vital to estimate and assign costs accurately to enable better decision making
• Example: A manager has to decide between producing power internally
using a captive power plant or purchasing power externally from a utility
• Accurate estimate of cost of both options is vital to making the best decision
Costs can be assigned to various objects including products, departments. Accuracy of
cost assignment is vital to successful decision making

44. Quiz Question
What are examples of cost objects?
• Projects
• Customers
• Activities
• All of the Above

45. Cost Assignment – How is it done?
Traceability
• Direct Tracing: Example in the power department – fuel cost and employee salaries
are directly traceable through physical observation.
• However, physical observation is not practical in most cost cases
• Driver Tracing: Lets estimate cost of electricity consumed in running sewing machine
• We can estimate cost using the formula: cost of electricity per hour*number of
hours machine runs
• If machine runs for 200,000 hours and unit cost is $0.1 per machine hour then
cost of electricity = 0.1*200,000 = $20,000
• Machine hours is the driver
Allocation of indirect costs that cannot be traced to cost objects
• Example: Cost of heating a manufacturing plant that produces 5 products
• Cost allocated to each product in proportion to direct labor hours used by each product
Three methods of cost assignment – Direct Tracing (most accurate, least practical),
Driver Tracing, and Allocation (least accurate and to be avoided where possible)

46. Quiz Question
What is the preferred method of cost assignment?
• Direct Tracing
• Driver Tracing
• Allocation
• None of the Above

47. Activity Based Management
Combines activity based costing and process value analysis
Cost View
• Activity based costing assigns cost to specific activities
• Traditional cost control involves assigning cost to org units and holding manager responsible
• Example: Moving raw material from one part of the factory to another
# moves required better estimate of raw material handling demand than # units produced
Process View
• Driver Analysis into what factors drive an activity’s cost - Why costs were incurred?
• What work was done?
• Evaluate how well activities were performed?
Cost View
Activities
What?
Performance
Analysis
How well?
Driver Analysis
Why?
Resources
Process
view
Products and
Customers

48. Quiz Question
What are the benefits of activity based costing?
• Driver analysis into what factors drive an activity’s cost
• Analysis in to Why costs were incurred
• Evaluation of how well activities were performed?
• All of the Above

49. Manufacturing Costs
• Production Costs
✓ Direct Materials
✓ Direct Labor
✓ Overhead (OH) – All other production costs
• Non Production Costs
✓ Selling, General & Administrative Expenses
Production Costs of Manufacturer of Cell phones USD
Direct Materials 150,000
Direct Labor 90,000
Variable Overhead 30,000
Fixed Overhead 450,000
Total Production Cost 720,000
Company produces a total of 30, 000 units. What is the cost per unit?
Direct material: $150,000/30,000 = $ 5 per unit
Direct labor : $90,000/30,000 = $ 3 per unit
Variable OH: $30,000/30,000 = $ 1 per unit
Fixed OH: $450,000/30,000 = $15 per unit
Unit Product Cost = Total Production Cost/Number of units = 720,000/30,000 = $24/unit

50. Quiz Question
A textile manufacturer produced 100,000 units of textiles.
Total cost incurred was USD 3,000,000. What is the total
cost per unit?
• USD 30 per unit
• USD 0.33 Per unit
• USD 10 per unit
• None of the Above

51. Cost of Goods Manufactured
+ Purchases of
raw materials
Raw Material (RM) inventory
Opening balance
- Raw material
consumed
Closing balance
Work in Process (WIP) Inventory
Opening balance
+ Raw material
+ Direct Labor & OH
Closing balance
- RM, Direct Labor
& OH Consumed
Finished Goods Inventory
Opening balance
+Cost of Goods
Manufactured
Closing balance
- Cost of Goods
Sold
Cost of Goods
Manufactured
• Cost of Goods Manufactured consists of raw material, direct labor and overhead costs
incurred in manufacturing goods present in finished goods inventory

52. Quiz Question
What is the flow of goods in a manufacturing set up?
• Raw Material -> Work In Process -> Finished Goods
• Work In Process -> Raw Material -> Finished Goods
• Finished Goods -> Work In Process -> Raw Material
• None of the Above

53. Cost of Goods Sold
Finished Goods (FG) Inventory
Opening balance
+Cost of Goods Manufactured
Closing balance
- Cost of Goods Sold
• Cost of Goods Sold (COGS) consists of all direct production costs (raw
material, direct labor and overhead) consumed in manufacturing units sold
• Cost of Goods Sold is posted on P&L Account of a manufacturing firm
Cost of Goods Sold = Opening Balance of Finished Goods + Cost of
Goods Manufactured – Closing Balance of Finished Goods

54. Quiz Question
Cost of Goods Sold comprises of direct costs incurred in
selling a good. These costs include:
• Cost of Raw Material only
• Cost of Raw Material and Labor
• Cost of Raw Material, Labor and Overhead Expenses
• None of the Above

55. Just in Time (JIT) Manufacturing
• Parts and materials arrive just in time for use in production to
minimize costs
• Assumption is that costs other than direct material costs are driven by
time and space
• JIT manufacturing reduces inventory levels
• Overhead costs are directly traceable to products
• This leads to more accurate estimates of product costs
Minimizing production costs and inventory levels through greater efficiency
in processes and ensuring required raw materials arrive just in time

56. Quiz Question
What are the benefits of Just In Time Manufacturing?
Please select the best answer
• Minimize Production Costs
• Minimize Inventory Levels
• Greater Process Efficiency
• All of the Above

57. Strategic Cost Management
• Customer realization includes basic & special product features, service, brand name
• Customer Sacrifice includes cost of purchasing the product plus effort spent in
learning to use plus post-purchase cost of use, maintenance
• Cost Leadership: Strategy to provide same or better value to customers at lower cost
• Differentiation: Strategy to increase customer value by increasing realization
• Focusing Strategy: Strategy to focus on specific markets or segments
• Strategic Positioning: Process of selecting an optimal mix of above three elements
Customer Value = Customer Realization – Customer Sacrifice
Competitive Advantage: Creating better customer value for same/lower cost or
creating equivalent value for lower cost relative to competitors
Cost Leadership Differentiation Focusing
Strategic Positioning

58. Quiz Question
What elements does strategic positioning comprises of?
• Cost Leadership Only
• Cost Leadership and Differentiation
• Cost Leadership, Differentiation and Focusing
• None of the Above

59. Value Chain Framework
Oil Exploration
Oil Distribution
Oil Distribution
Oil Refining
Gas Distribution
Service Stations
End Use Customer
Product Disposal
Firm
A
Firm B
Firm C
Petroleum Industry
Internal Linkages within a
firm’s portion of value chain
External Linkages between a
firm and its suppliers and
customers
Knowing costs and revenues of
different stages is vital for
driving decisions to improve
performance
Does a firm need to sell off a
part of the business that is not
profitable and thus narrow its
participation in value chain?

60. Quiz Question
What are the advantages of Value Chain Analysis?
• Awareness of position of a firm with respect to customers,
suppliers and competitors
• Knowledge of revenue and profits at different stages of
the value chain
• Better Decision Making
• All of the Above

61. Product Lifecycle Cost Management
Marketing Viewpoint
Consumable Lifecycle Viewpoint:
Customers want to maximize product
performance at a given price. Price is
in turn driven by cost - initial capital
cost and subsequent O&M costs
Production Viewpoint
Interactive Viewpoint: Maximizing
profits by optimizing design,
production, marketing and distribution,
operation & maintenance of product

62. Quiz Question
Interactive Viewpoint on Product Lifecycle Management
comprises, which of the following, perspectives
• Marketing Viewpoint Only
• Production Viewpoint Only
• Marketing, Production and Consumable Viewpoints
• Marketing and Production Viewpoints

63. Balanced Scorecard Framework
• Translates strategy into four perspectives – financial, customer,
process and structure – and specifies objectives and targets for each
Vision and Strategy
Objectives
Targets
Initiatives
Financial Customer Process Infrastructure
Financial: Revenue Growth, Cost Reduction
Customer: Maximizing customer value, increasing customer acquisition, retention
Process: Process quality and efficiency, Innovation (number of new products added)
Infrastructure: Improve employee capability, motivation, Info Systems

64. Quiz Question
Balanced Scorecard Framework translates strategy into,
which of the following perspectives
• Financial Only
• Financial, Customer, Process and Infrastructure
• Financial, Customer and Process
• Financial and Customer

65. BUSINESS STATISTICS

66. Basic Statistics to Analyze Survey Data
• Mode is the most frequent value in the sample set. Mode is 2.0
• Median is the value in the middle of the sample set. Median is 2.2
• Mean is the average value in the sample set. Mean is 2.3
Sum of all observations
Number of observations
Sample
Mean
How much are you willing to pay for fewer power cuts?
2.00 3.20
Value in Rs/unit
1.20 1.60 2.802.40
Frequency
(# people)

67. Quiz Question
What is Mode of a Sample Set? Please select right answer
• The value in the middle of the sample set
• The most frequent value in the sample set
• The average value in the sample set
• None of the Above

68. How do you select a survey sample set
Non Random Sampling based on factors like:
• Convenience or judgment of researcher
• Referrals by other survey respondents – Snow ball sampling
Random Sampling Approach
• Our goal is to obtain random samples reflective of the larger population
• To obtain such a sample we need to randomize location, time and date of
collection of observations
Stratified Sampling
• Population is stratified into two or more sub-populations called strata
• From each strata a sample is selected
• Our goal is to obtain samples that are reflective of the larger population
• This will ensure survey data is useful in drawing conclusions on trends
• Collecting random samples (random location, time) is key to achieving this

69. Quiz Question
What is the goal of random sampling? Please select the
best answer
• Goal is to obtain samples that are reflective of the larger
population
• Draw meaningful insights and conclusions on trends
• Both of the Above
• None of the Above

70. INTERNATIONAL
BUSINESS

71. Choosing Location for International
Business
Physical and Social
Factors
• Political Policies
• Laws & Regulations
• Economic Factors
Competitive Factors
• Cost: IT/BPO in India
• Competitor – numbers
and capabilities
Objectives
Strategy
Structure and
Implementation
• Choice of country
• Org Structure

72. Quiz Question
The main reason why many businesses choose to
outsource their IT operations to India is:
• Favorable Political Policies
• Low cost of labor in India, which helps companies gain
competitive edge
• Favorable Laws and Regulations
• None of the Above

73. Opportunity Risk Matrix
• Rate each country on a scale of 1 to 10 along dimensions of risk
and opportunity and place on the matrix.
• Goal is to maximize opportunity and minimize risk when deciding
which country to operate in. We want to be in top right quadrant.
Decreased Risk
Increased Opportunity
A
D
C
B
E
F
Most Desirable Quadrant

74. Quiz Question
The opportunity risk matrix helps companies in deciding
which country to operate in. Firms choose the option which:
• Maximizes Opportunity Only
• Minimizes Risk Only
• Maximizes Opportunity and Minimizes Risk
• None of the Above

75. MANAGEMENT
INFORMATION SYSTEMS

76. e-Commerce Systems – Amazon, Flipkart
• Selection and Value - Attractive product selection, competitive price,
• Performance and Service – Easy navigation through site, fast delivery
• Look and Feel – User friendly website, search features, product catalog
• Advertising and Incentives – Email promotions, discounts, targeted ads
• Personal Attention – Personalized product recommendations
• Security and Reliability – Secure customer info and web transactions
• Customer Communication – Customer service, online order status,

77. Quiz Question
What is an example of a Management Information System?
• Your Neighborhood Paan Shop
• Ecommerce System
• All of the Above
• None of the Above

78. MARKETING

79. 4Ps – Jio Example
PRICEPRODUCT
PLACE
Low Price (1/3rd of existing
data rates)
Shah Rukh Khan - Brand
Ambassador
Free home delivery of Sim
Reliance Retail: Dist pact
with top handset makers
Ecommerce site - AJIO
High Speed 4G Data, Voice,
and Bundled Apps
PROMOTION

80. Quiz Question
Let’s Apply the 4Ps Framework to an ecommerce business like
Amazon. Please select the most suitable option
• Product: Retail Service to facilitate sale of goods, Place: Online,
Price: Competitive, Promotions: Advertisements
• Product: Retail Service to facilitate sale of goods, Place: Physical
Stores, Price: Competitive, Promotions: Advertisements
• Product: Retail Service to facilitate sale of goods, Place: Online,
Price: High End, Promotions: Advertisements
• None of the Above

81. BreakevenAnalysis – Fixed vs. Variable Costs
Variable costs increase with production
If Production is zero, variable cost is zero.
However, fixed costs (interest, depreciation, cost
of admin employees) still have to be paid

82. BreakevenAnalysis for Textile Manufacturer
Cost of Goods Sold (COGS) Rs 3,000 per unit
Variable SG&A Expense Rs 625 per unit
Total Variable Cost per Unit Rs 3,625 per unit
Fixed SG&A Expense Rs 20 Lakhs in Year 1
Depreciation Rs 5 Lakhs in Year 1
Interest Rs 7 Lakhs in Year 1
Total Fixed Cost Rs 32 Lakhs
Manufacturer has to recover fixed cost by selling minimum quantity of textiles (Q)
Selling Price per unit Rs 5,000
Total Variable Cost per unit Rs 3,625
Contribution Margin per unit Rs 1,375
1375*Q = 32,00,000
Q= 32,00,000/1,375 = 2,327
Need to sell minimum of 2,327 units to recover fixed costs and breakeven
Contribution Margin per unit = Selling Price per unit – Variable Cost per Unit
Total Contribution Margin = Contribution margin per unit * number of units
Total Contribution Margin must equal total fixed costs in order to breakeven

83. Breakeven Analysis Summary
• Contribution Margin per unit = Selling Price per unit – Total Variable Cost per unit
• At breakeven point, total contribution margin is just enough to recover fixed costs
• In other words, at breakeven point, we are selling just enough to recover costs
• At breakeven point overall profitability is zero. Profit After Tax is Zero.

84. Quiz Questions
What is contribution margin per unit?
• Selling Price per unit – Total Variable Cost per unit
• Selling Price per unit – Total Fixed Cost per unit
• All of the Above
• None of the Above
At breakeven point, total contribution margin is just enough to recover
total fixed costs. Is this true or false?
• True
• False

85. Differentiation – How much will you pay?
How much will you pay for a product? What determines price of a product?
• Is price determined only by cost of production?
• Are customers willing to pay more for higher quality products with perceived benefits
or innovative features?
• Lets take the example of Hindustan Unilever, one of India’s top consumer goods
companies. It has several brands like Lifebuoy
• Lifebuoy brand has both low priced and high priced (premium) products
Product Price
Lifebuoy Total (Standard Soap) Rs 25
Lifebuoy Clini Care (Extra Germ Protection Soap) Rs 50
• Lifebuoy Clini Care promises customers extra protection against germs and they are
ready to pay more for it.
• The benefit of extra germ protection is an example of differentiation. This feature
differentiates this soap from others in the market. Customer willing to pay extra for it
Differentiation is a strategy to increase customer value via unique product features,
perceived benefits, improved quality. It enables a firm to charge more for such products.

86. Quiz Question
What determines the price of a product?
• Cost of production only
• Quality of the product only
• Cost, quality, unique features and perceived benefits to the customer
• None of the above

87. Thank You