NBC1 2008, (c) 2008 Jay A. Smith 1 Class 7 University Product/Service Presentations

NBC1 2008, (c) 2008 Jay A. Smith 2 University Product/Service Development Assignment  Create new valuable product or service  Target customer: university members  Students, faculty, admin, alumni, and/or researchers, etc.  Individual or Team Based – (1-2 people)  6/17 ( 火） 10 分 Presentation & Demonstration  English Preferred

NBC1 2008, (c) 2008 Jay A. Smith 3 University Product/Service Development Project (10 分間 ) 1. Team Members: 2. Company/brand: 3. Customer problem target 4. Competition/Substitutes/Current Solution: 5. New Product/service/process: 6. Value message: 7. Diagram & PROTOTYPE 8. Demonstration

NBC1 2008, (c) 2008 Jay A. Smith 4 Class 8 Finance & Accounting Introduction

NBC1 2008, (c) 2008 Jay A. Smith 5 Finance Strategy Supports Business Business, Technology Environments Opportunity Social, Government Environments Business Strategy Marketing Strategy Operations Strategy • Organization • Human Resource • Production • R&D Finance Strategy • Cash Flow • Asset Utilization • Leverage • Make/buy • Lease/own Do strategies support, fit each other, have flexibility, balance/manage risk?

NBC1 2008, (c) 2008 Jay A. Smith 6 Finance Provides Cash  Cash is good – “the food of business”  Nearly everything a business does uses cash  Salaries, building, equipment, supplies, taxes  Insufficient cash leads to bankruptcy  “you can’t eat an airplane” (can’t pay debts, etc.)  Too much cash is wasteful  should be invested or returned  Cash = Sales or Income  may receive cash before or after sale is recorded  accounting is on an “accrual” basis (finance is about cash)

NBC1 2008, (c) 2008 Jay A. Smith 7 Sources & Uses of Cash  Sources of Cash  Sales revenue collections  Sales of assets of the company  Outsider financing (financing via stock, loans)  Uses of Cash  Expenses (salaries, bills, supplies, taxes)  Asset costs (plant, equipment, property, inventory)

NBC1 2008, (c) 2008 Jay A. Smith 8 Venture Companies Need Cash Time Potential Profit Reward Money Losses & Investments

NBC1 2008, (c) 2008 Jay A. Smith 9 Timing – Cash Flow Management  Cash now is better than cash later  Collect from customer sooner  Pay supplier later  Conserve cash now (It is always “now”)  Partnering, lease, borrow, trade, buy used, negotiate  Making versus buying?  But don’t be too stingy on key success factors

NBC1 2008, (c) 2008 Jay A. Smith 10 Revenue Models  Subscription/Membership  Sports club, magazine, YahooBB, cable, NHK  Volume/Unit-based  Restaurant, hair salon, clothing shop, taxi  Advertising-based (user doesn’t pay or pays less)  Google, Broadcast TV, Newspapers  Transaction Fee  Payment to conduct a transaction (Yahoo Auction, Ebay)  Licensing/Syndication/Royalty  Fee to use (or resell) product, service, or mark  Snoopy, Hello Kitty, AP, Star Wars, The Beatles, Incredibles  Software, Copyrights, Patents, Trademarks, Franchises

NBC1 2008, (c) 2008 Jay A. Smith 11 Yahoo 2004 Revenues  Marketing Services  Display Ads  Impressions  Clickthroughs  Listings  Classifieds  Transactions  Auctions  Travel, shopping  Fees  ISP, broadband  Premium mail services $3.12 billion $4.59 billion $0.45 billion $0.66 billion From Form10K Filing with SEC ( or

NBC1 2008, (c) 2008 Jay A. Smith 年 Revenues Died  Elvis Presley $35 million 1977  Charles Schulz $20 million 2000  John Lennon $20 million 1980  Jimi Hendrix $10 million 1970  Marilyn Monroe $4 million 1962  James Dean $3 million 1955 Licensing of image, name, music, artwork …

NBC1 2008, (c) 2008 Jay A. Smith 13 Licensing Revenues 1999 (LIMA) Property typeEstimated licensing revenue (in millions of dollars) Art (famous images, Getty Images) 130 Character (Entertainment, TV, Movie)2500 College (college name goods) 180 Fashion (designer label) 830 Music (before iTunes) 105 Non-Profit (Museum, Charities) 30 Sports (Leagues, Individuals) 790 Trademarks/Brands (e.g. Harley Davidson) 900 Publishing 30 Other 25

NBC1 2008, (c) 2008 Jay A. Smith 14 Key Financial Statements (also called Accounting Statements, Statements of Accounts) Balance Sheet 貸借対照表  Picture of business at one point in time  End of Quarter  End of Year  “ Balance Sheet as of March 31.” Income Statement 損益計算書  Business operations during a period of time  Daily  Weekly  Monthly  Quarterly  三ヶ月間 / 年四回  Yearly  “Income Statement for the Year Ending March 31.”

NBC1 2008, (c) 2008 Jay A. Smith 15 MBA Hand Out – Balance Sheet  Assets  Current  Cash & Securities  Accounts Receivable  Inventory  Long-Term  Property  Plant  Equipment  Long-term Securities  Liabilities - Current  Accounts Payable  Notes Payable  Current Long-Term Debt  Liabilities – Long-Term  Long-Term Debt  Mortgages  Equity  Paid-In Capital  Retained Earnings

NBC1 2008, (c) 2008 Jay A. Smith 16 Balance Sheet Assets Debt & Equity Short Term Assets & Investments Long Term Assets Long-term Investment Assets Short Term Debt Long Term Debt Equity BALANCE SHEET EQUITY == MARKET VALUE OF THE COMPANY (VALUATION) BALANCE SHEET EQUITY = Investments from outside + Retained Earnings (Cumulative profits/losses) ASSETS = DEBT + EQUITY • EQUITY = ASSETS – DEBT • DEBT = ASSETS – EQUITY “ LEVERAGE ” = DEBT / EQUITY • Assets: things the company owns • Equity: ownership of the company (stock) • Debt: what the company owes (loans, bonds)

NBC1 2008, (c) 2008 Jay A. Smith 17 MBA Hand Out – Income Statement  Sales (Net Sales = Gross Sales – Returns)  Expenses (product costs, indirect costs overhead)  Marketing  Research & Development (R&D)  (Selling), General & Administrative ((S)G&A)  Depreciation (non-cash, usually small for Ventures)  Gross Profit  Operating Profit/Income (or Loss)  Net Profit/Income (or Loss)

NBC1 2008, (c) 2008 Jay A. Smith 18 デルコンピュータの財務指標（単位 100 万ドル） 総売上 Sales2,013.92,873.2 売上原価 Cost of Sales1,564.02,440.4 売上総利益 Gross Profit 営業費用 Operating Expenses: 販売費・一般管理 者 SG&A 研究開発者 R&D 営業費用合計 Total Operating Expenses 営業損益 Operating Income (Loss)139.1(39.0) 純利益 Net Income (Loss)101.6(35.8)

NBC1 2008, (c) 2008 Jay A. Smith 19 Example: Park24 Times Parking

NBC1 2008, (c) 2008 Jay A. Smith 20 Park24 Co. Ltd. 年間売上 ￥４２６ 億 ($420 million) 平成１４年１１月１日 － 平成１５年１０月３１日 (“fiscal” year)

NBC1 2008, (c) 2008 Jay A. Smith 21 Park24 Comparative Balance Sheet Current Assets PP&E Long-Term Assets Intangible Assets Total Assets Investments Current Liabilities Long-Term Liabilities Shareholder Equity Retained Earnings Common Stock Add ’ l Paid In Cap. Revaluation AS OF DATE Cash & equivalents

NBC1 2008, (c) 2008 Jay A. Smith 22 Income Statement (P&L, Profit & Loss Statement) Net Income Pre-tax Income Net Sales Cost of Sales SG&A Operating Profit Facility Closure Expenses Time Period Interest Expense

NBC1 2008, (c) 2008 Jay A. Smith 23 Income Statement (P&L, Profit & Loss Statement)

NBC1 2008, (c) 2008 Jay A. Smith 24 Compare to Other Companies

NBC1 2008, (c) 2008 Jay A. Smith 25 Comparative + Percent Based Income Statements デルコンピュータの財務指標（単位 100 万 ドル） 総売上 (Net Sales) ,013.92,873.2 売上原価 (Cost of Sales) ,564.02,440.4 売上総利益 (Gross Profit) 販売費・一般管理者 (SG&A) 研究開発者 (R&D) 営業費用合計 (Total Operating Expenses) 営業損益 (Operating Income) 純利益 (Net Income/Net Profit) 売上構成比 (% of Net Sales) 100 % 売上純利益 (Gross Profit) マーケティングセールス (Marketing & Sales) 研究開発 (R&D) 営業費用合計 (Total Operating Expenses) 営業損益 (Operating Income) 純利益 (Net Income/Net Profit)

NBC1 2008, (c) 2008 Jay A. Smith 26 Homework  Explore Park 24 Website (J&E) and Kyocera Websites (E) (J)  the amounts below for both companies to  Net Sales  Net Income  Cash Balance For Fiscal Year Ending October 31,2007 (Park 24) For Fiscal Year Ending March 31, 2008 (Kyocera)  Check website for helpful links    Find a good Japanese language finance/accounting website or book