BUS 516 Entrepreneurship - Leading Venture to Success

Following is what I plan as resources already in hands:
Focus on delivering the high knowledge-integrated service but relative low overhead cost.
This strategy will benefit the company and the customers most.
Target for the key reliability tests that no or only few reliability labs have the capability to deliver and focus on the consulting service.
These reliability test services including board mount interconnect reliability test and power temperature cycling test.
Any service items with profit gross margin less than 40% will be outsourced
Or establish the facilities at oversea. The oversea operation and field service can be established at Taiwan or China, which labor cost is only about a quarter or less of US operation.
Utilize the outside analytical service to deliver the final result to the customer.
All the equipment expense could be paid off in one year.
Tailored service that provide flexibility to the customer
For advance reliability simulation and forecast will be heavily rely on our high expertise and experience staffs.
The revenue that AimRel can generate can be either through itemized service or deliver the the turnkey result per project basis.

The key business is to provide the best value of customer-oriented reliability services to IC design houses with revenue between $50M to $200M.

The ethics for my company is to provide the greatest benefit our customers and do no harms to our sociality based on the uncompromising professional expertise and integrity.

BUS600 Foundation of BM - Operation

As most of the companies outsource the manufacturing to overseas, operation sounds like an unattractive topic for MBA. But the fact is: how to secure, deal with OEM, make sure the quality being safe guard and the finished goods to be delivered on schedule is a very complicated task. Use outsourcing approach sometimes is just like how to deal with bank / lender on determining the timing you want to cash out the equity: you will never get the capacity to build the products at the time you feel most, but instead during the down turn subcons provide more than enough capacity when you don't need to leverage anymore. How to deal with subcons is what we call Supply Chain Management.

To determine whether to open an operation line is related to the profit margin and risk management. Keep in mind that the subcons charge you at least 30% or more per their manufacturing cost. This is the threshold to consider whether to open a production line. Of course case is not that simple, because most of companies are afraid of shipment cycle time delinquency that could cause the lost the business opportunities. Therefore, they prefer to outsource certain portions of business to subcons and mean while keep maximizing the utilization rate of their own facilities to drive the highest profit. Besides, how to sign the legal agreement with subons and make sure the company trade secrets will not leak out and to be used by the other competitors also need to well consider.

Operation involves 6 M’s of Capacity. My prefer order are:

Manpower (without good talent staffs nothing can be executed)

Method (only good forecast, schedule and calculation can run the line with best efficiency)

Message (Good coordination and team build before start the line)

Money (Capital need to be ready before open the line)

Machinery & Materials (fine tuning the equipments for pilot run and order materials for mass production)

BUS600 Foundation of BM - Finance

The initial funding for a start-up company can be from venture capital or bank at beginning. As more money requires for expanding the business, following alternatives will be considered: issuing stocks, selling bonds, weighting tax benefit by setting oversea branches. All these fund raising and financial strategies only serve one common goal: check & balance debt and equity to ensure the company have enough capitals for future growth and keep cash flow consistent in the long term.

Two major items I always consider for the decision of the investment:

• What’s the rate of return in the mid term and long term? If it’s not more than 5% I would rather just purchase mutual funds to save the headache.
• How stable the business model is and will it survive from the competition and keep a steady growth rate?

After that I check the company's fundamental financial strength, such as: book value, profit margin, return on revenue, P/E, long term debt to Capital ratio, quarterly cash flow and total of liquidity asset to make sure it indeed is safe to invest. Up to this point if you just want to invest at corporate bond, the above study should be enough, which in general rate of return is about 6~8% for corporate bonds.

As try to target higher margin of return by investing in stocks, further stock technical chart analysis will be required. This in general is more complicated because it does require to identify the right purchase / sell price by breakdown the volume per price segment, accumulate of money flow, momentum, 50/200 days moving average, overall economy trend, figure out the resistance & support and be patient on waiting the opportunity comes. Options in general is not a bad strategy for hedging your own stocks.

Rule of thumb for financial management and how to make the decision is: borrow money as interest is low, then utilize it to get best of rate of returns. As leverage the investment, always think the worst about what may occur and ensure you are capable to take care of it.

BUS600 Foundation of BM -- Economics

Economics is the only field in which two people can get a Nobel Prize for saying the opposite thing.

What is economics? Economics includes the study of labor, land, and investments, of money, income, and production, and of taxes and government expenditures. Economists seek to measure well-being, to learn how well-being may increase overtime, and to evaluate the well-being of the rich and the poor. Economists try to figure out what’s the equilibrium point for supply and demand of money with considering all the factors as list above.

M1: The most narrative measure of the domestic money supply that includes only money to be used for spending on goods and services. M1 includes currency, checking account balances and travelers' checks. This money measure is closely watched by financial observers because it is a key indicator of past and future Federal Reserve

M2 are primarily household’s holdings of savings deposits time deposits, and retail money market mutual funds.

GNP is the value of all final goods and services produced in the country. GDP is the gross measure of economic activity and the major indicator of economic performance. GNP is sum of Personal Consumption, Private Investment, Government Purchases and Net of Exports over Exports

GDP also call gross domestic income (GDI), which is the annual amount of goods and services produced in a country

Money X Velocity = Price Level X Real GNP

Other key statistic economic indicators published at monthly basis are: Retail sales, Consumer confidence, Product Price Index (monitor inflation), Employment statistics, Personal income, Factory orders & Durable goods, Housing Starts, Purchasing Manager Index. Closely watch the trends of this index give very good indication of how healthy the economy is.

BUS 516 Entrepeurship -- Position Statement

Position Statement for AimRel Consulting Group

AimRel strives to provide the best value of our reliability and failure analysis to fully satisfy the need of our customers in semiconductor industry. We position ourselves on the following service categories:

IC design houses with revenue between $20M to $500M.

Provide the customer-oriented & Integrated Service in the following segments

Reliability Test & Risk Assessment

• Industry specific qualification, Wafer level reliability test, Simulation of device degradation
• Calculate and Explain Reliability Test Result for Risk Assessment

Failure Analysis Service

• Electrical signature analysis, physical analysis, reverse engineering and non-destructive analysis

Quality & Reliability Company System Level Service

• Proficient on Automotive, Telecom and Military product qualification procedures

AimRel’s ultimate goal is to provide the greatest benefit our customers and do no harms to our sociality based on the uncompromising professional expertise and Integrity. We believe the way to make AimRel great is our people and excellent knowledge on solving the customer concerns.

BUS600 Foundation of BM -- Quantitative Analysis

Quantitative analysis is the method to measurement a complicated case by assigning a numerical value to variables, build a model and further evaluate the potential outcomes and case performance through mathematical and statistical calculation.

Following steps should be included in the quantitative analysis.

Collect data and determine what’s the variables that will affect the outcome

• Draw a cause-effect fish bone diagram to identify key parameters or dominate variables
• Do the market survey and see if the market survey does agree with the identified variables.
• Plot the each data distribution and figure out what’s the largest population pool.

The statistical distribution could be normal, binominal, exponential or other kind of distribution shape. Base on the distribution we can figure out what’s the standard deviation (sigma). Using Weibull analysis to understand a more complicated distribution shape.

Figure out the dependency and correlation between variable and the outcome.

Sometimes variables are not independent from each others. Besides, different parameters mixed up together could have accumulate or negative effect. Factor relationship from 3 or more test groups can be revealed by ANOVA (Analysis of Variance). Linear regression analysis under normal or log normal scale can also easily find out the correlation from two variables (one to the other).

Build Mathematical Model

After understand all the correlation between variables and the affect to the outcome, we can further build the model for the future outcome prediction. Comparing with the actual result and we can further fine tune the module and make forecast with better accuracy.

To understand quantitative analysis, first we need to get familiar with statistical terms. Here is the website that is quite helpful

http://www.animatedsoftware.com/statglos/statglos.htm#index

Actually Microsoft EXCEL also provide basic and intermediate level quantitative tools. Such as Linear Regression Analysis and ANOVA analysis

http://www.cba.nau.edu/allen-d/Excel%20Regression%20Tutorial/excel_regression_tutorial.htm

http://www.aspfree.com/c/a/Microsoft-Access/TwoWay-ANOVA-Analysis-of-Variance-in-Microsoft-Excel/

If you do not feel dizzy yet after reading the article, following are some commercial softwares about statistical analysis.

http://www.spss.com/

http://www.reliasoft.com/

BUS 516 Entrepreneurship -- Business Plan Outline

Business Plan for AimRel Consulting Group

Opportunity

Semiconductor industry is the field with extreme high requirements on product quality and reliability to serve the end customers. Most of small and mid scale IC design houses dont' have the staffs with knowledge on dealing with reliability risk management as issue occurred. This is the opportunity for starting up a reliability consulting business in the semiconductor field.

Global semiconductor sales now are expected to amount to $302 billion in 2010. The global automotive electronic has about $106 billion business and the growth rate is ~7.5% annually. In general the amount spending to safeguard the product quality is about 1% to 2% of total revenue. This indicates the worldwide reliability service market just for semiconductor industry itself should have at least $3 billion US dollars. For advance reliability simulation and forecast will be heavily rely on high expertise and experience staffs. The revenue that AimRel can generate can be either through itemized service or deliver the turnkey result per project basis.

Comparing with other existing company, AimRel is not just providing the service only but to deliver the total solution to the customer. We advise the customers what’s need to improve and enhance. In addition, AimRel staffs can identify the cause of issue and help to fix it.

Product Develop & Operation

The initial stage the company would like to focus delivering the high knowledge-integrated service but relative low overhead cost. This strategy will benefit the company and the customers most. In parallel, AimRel will target for the key reliability tests that no or only few reliability lab have the capability to deliver and focus on the consulting service. These reliability test services including board mount interconnect reliability test and power temperature cycling test. We may also utilize the outside analytical service to deliver the final result to the customer. It is believed that all the equipment expense could be paid off in one year and start to generate over 50% of profit annually from the beginning of the third year. Any service items with profit margin less than 30% will be either outsourced or establish the facilities at oversea. The oversea operation and field service can be established at Taiwan or China, which labor cost is only about a quarter or less of US operationy.

Problem / Pain

Most of small or mid scale IC design houses don’t have the staff with knowledge enough on dealing with reliability risk management as complicated case occurred. This is the edge that AimRel can cut in and get the business.

Who is the major customer?

AimRel will provide the reliability solution for the semidoncutor companies, especially small or mid scale companies. The customers in this revenue segment already have certain flagship products that will make significant revenue and they are targeted for major industrial or consumer electronic application.

Market

Target to service IC design houses with revenue between $20M to $500M. There is a demand on how to deal with the reliability risk at the high volume and high quality business segment, such as automotive and telecommunication industries.

AimRel professional staffs has excellent knowledge on device physics, failure analysis, reliability modeling to help the customer make the best risk and reliability justification from the comprehensive statistical analysis.

Market context?

• Certification from ISO-9001 / 16949 / Delphi / Continental
• Member of IPC, ASM, iNEMI, IEEE, AEC, JEDEC
• Conform to local safety & building regulation

Market Search Analysis

• iSupply Market Search Analysis
• Competitor Strategy Study
• Option and solution comparison
• Service and price comparison

Resource

• Fund raising from Venture Capital
• List of top 100 venture capital firms http://www.entrepreneur.com/vc100/stage/early-1.html
• Tax and Legal consulting needed
• Open a LLC or Corporate at Delaware or oversea such as Bermuda for tax saving

Risk & Award

• Need to constantly update the knowledge
• Most of business may need through referral
• Recruiting knowledgeable staffs
• Funding for oversea and the 2^nd stage expansion

BUS 600 Foundation of Business Management --- Study of Apple Financial Statement

After reviewed Apple’s 2008 Q3 financial statement, my calculation shows Apple’s financial ratios as follow:

Current Ratio = 3.04

Financial Leverage = 1.62

Long Term Debt to Capital = 0

Asset Turnover per Period = 0.82 (annually basis)

Inventory turns per Period = 8.92 (turns per quarter)

Days Sale in the Inventory = 0.0012m

Return on Sale = 14.36% (quarterly basis)

Return on Equity =24.64% (annually basis)

Few key ratios cannot be simply figured out by just looking into quarterly statement. Extracting figures from 2008 annual financial report is required for certain financial ratio evaluation.

As we perform Apple’s financial benchmark comparison with Hewlett-Packard and Dell. Apple’s profitability, growth and financial strength ratios do outperform its competitors. However, Apple’s PE ratio is 23. This figure is at least twice higher than HPQ and DELL's P/Es, which are 12 and 18 respectively.

How Apple can further get the products accepted by the business users will be the key to its future growth.

Watch out competitors… iBoard and iMat are coming !

:D

BUS 600 Foundation of Business Management ---Chapter 4 Organization Behavior

Study of organization behavior is to understand the human interaction from the working environment and ensure the desired goal can be accomplished effective and efficiently. OB will help us to understand and rethink what’s our real inner value from the people we interface with, and further improving the communication, conflict solving skills and capable of assemble a team to deliver the result.

Change the motivation process for my current company………

Authority for sure will also get the result done but in general I prefer lead by group by example when I am not eloquent to motive others.

I like to set the higher target goals and challenge the higher talent staffs. All the staffs should also have “can do” mentality and are willing to work together as a team to ensure company will benefit most. I prefer to breakdown the whole department function into individual executable items. Shape each individual to have different expertise to empower them and have the sense of ownership. And further develop their career goal to ensure the staffs will advance their career in the long term. Mean while as a leader, I will allocate resources to help team accomplish the task and request the top management providing incentive (either company stocks or cash) as the project being accomplished ahead of schedule.

Here is an interesting quiz from Facebook I found that can help to know what kind of leader we are....

http://apps.facebook.com/quizcreate/quiz.php/27537/What-Military-rank-are-you/

BUS 516 Entrepreneurship --1st Assignment: Business idea & Reflection

Define business idea

AimRel Reliability Consulting Group targets to provide reliability services to IC design houses with revenue between $20M to $500M. In general the companies within this revenue range already have certain flagship products that ship to certain segment end customer that are highly demanding on the product quality and reliability, such as automotive, medical, networking and customer electronic industries. However, most of IC design houses in this revenue scale don’t have the staff with knowledge enough on dealing with reliability risk management as complicated case occurred. AimRel professional staffs has excellent knowledge on device physics, failure analysis, reliability modeling to help the customer make the best risk and reliability justification from the comprensive statistical analysis.

Define your mantra

Benefit our customers and do no harms to our sociality based on the uncompromising professional expertise and Integrity

Reflection on reading (Creating a Strategy & Innovation Strategy)

Customer selection:

• Provide Quality, Failure Analysis and Reliability service focus at the semiconductor industry.

Value proposition:

• Offer teleconference or direct on-site consulting service to the customer. We ensure the customer’s concern will be solved in timely manner.

Differentiation and control:

• We target our service in semiconductor IC industry. Each specific service group lead by a senior technical talent has more than 15 years of experience.

Scope of products and activities:

• Services can be either custom tailored in any of the following categories: IC failure analysis, IC reliability forecast estimation, and Quality system consulting services for specific industry application. AimRel can also provide a complete turnkey solution for the customer.

Organization design:

• Provide itemized services to allow the customers able to control the budget and leverage their own in-house equipments and expertise.Our specific expertise focus allow our technical talents can do cross functional consulting services.

Value capture for profit:

• Flexibility on providing itemized or integrated services. We can also utilize outside failure analysis and reliability service lab to expedite turnaround time as face capacity constrain.

Value for talent:

• High talents will be recruited by partnership. Company will offer profit sharing plan if they are not on of funders.

BUS600 Foundation of BM -- Ethics & Accounting

ETHICS

Business ethics is a form of scrutinizing the ethical principles, moral or ethical problems that occur in a business environment. All the stakeholders from the company should realize the social obligations and not just go beyond the maximizing profits. Unfortunately, under the high competitive industries and the trend of globalization, as any of competitors starts to drive the manufacturing cost lower by outsourcing to oversea, the business ethics will become a debatable item. All the firms run for the business would like to maximum the profit but only prefer to conform to the minimum requirement from the laws or regulations. The companies may think they actually create jobs and boost economy in oversea and believe the negative ripple effects on facilities to be established and transfered can be well mitigated. The increase of local layoff, the effect of regional environmental pollution and concerns of other cultural or social impacts all become unavoidable issues need to deal with as any transition occurred. A leading company should be more aware of short and long term benefit and consequence on any of decision making, because they are the ones setting up the example for other on how to do a critical ethical judgment.

I would like to use the company I work for as the example on how the ethical judgment being made.

Linear Technology Corporation - LTC, a leading analog IC solution provider, still keeps most of the major manufacturing sites in the US. LTC makes its best effort on retaining all the staffs locally to benefit the society.

Even LTC is in highly competitive semiconductor industry, it believe it's talents of human knowledge delivering the result instead of relying on machines or automatic systems. In fact

LTC did not adopt the high tech security check, automatic answering system or online ePaper on filing documents; instead, the company hires the local seniors or non-technical personnels for these job functions. LTC remains the non-technical job openings to benefit the local society.

The company never believes growing the business through merger, then cutting the unwanted business portion through laying off. LTC would rather reinvest itself and keep making high performance, high quality products that others cannot deliver to maintain the high profit margin. The key strategy for LTC long term success is through self-evolution. Trapping into the cost competitive loop will just drain out the creativities.

Regarding the practice of financial ethics, as so many competitors having endless back dating stock option scandals in year 2000 and SEC revealed most of top management ripped off the profit from investors, LTC is the one passed all the SEC investigation without paying a penny of penalty. LTC is not only the highest profit margin semiconductor company in the world but also have excellent business ethics that exceeds other competitors. Mentality of LTC is set up the standard to lead rather follow.

My principle of business ethics is: provide an unbiased professional judgment, do no harms to our society and benefit others.

ACCOUNTING

The key of MBA concept in accounting is to interpret the information that accountant generate. I would like to high light few items I think it’s important:

Cash Flow -- Cash flow is the key to differentiate how well the business runs verse competitors.

Asset = Liability + Owner’s Equity -- For the company did not pay dividend, we should check owner / stockholder’s equity increase in annual basis. OE is the net worth of the company. OE divided by outstanding shares is the company’s book value.

Net Working Capital is Current Asset minus Current Liability – Working capital need to maintain at a healthy level especially at the foreseeable downturns.

Ratios of Financial Statement -- be aware of that all the financial items are “industrial specific”.

1. Liquidity Ratio = Current Assets / Current liability -- how easy to convert current asset to pay the bill

2. Asset Turnover per Period = Sales / Total Assets – how actively the firm uses all of its assets

3. Inventory Turns per Period = Cost of Goods Sold (COGS) / Ave Inventory Held during Period

4. Days Sales in Inventory = Ending Inventory / Daily COGS

5. Returns on Assets = Net Income / Total Assets

6. Returns on Sales = Net Income / Sales – this is the real profit margin

7. Returns on Equity =Net Income / Owner’s Equity – higher means better financial leverage

Ratios #2, 3 & 4 are the activity measurements of the asset deployment.

Ratios #5,6 & 7 are for the the profitability measurements

BUS 600 Foundation of BM - 1st Wk Assignment 2 - What are competitors doing

At reliability consulting business market, the most well known one is ReliaSoft Inc, which provides software, education service for reliability professionals and refers consulting service to the end customers. The other type of individual consult groups, which in general is the company with one or two staffs and it offer very specific type of service. Their website links as follow:

http://www.reliasoft.com/

http://anirbanexpertconsulting.com/

My company focus will be on IC (integrated circuit) industry in automotive application. The automotive electronic application includes engine control unit, on board diagnose system, safety & security, panel display, parking camera, cruise sensor, convenience package (power door, moon roof & seats), navigation and entertainment systems. It's $106B per year world wide. This strategy will generate most of the company's revenue.

BUS 600 Foundation of Business Management ---Chapter 1 ideas

AimRel Consulting Service - Name of My Dream Company

Consumer Analysis:

Value to the customer

AimRel reliability consulting service strives to provide the right estimation of reliability forecast that can mitigate the end customer’s anxiety as issue occurred, save the customer's reputation by offering solutions and ensure risk always under the control level to maintain the company’s long term success. The best value of reliability engineering consulting is to not only to act as a fire fighter but also a gate keeper to implement a proper quality & reliability system to mitigate any potential impact.

AimRel Reliability Consulting Group target to service IC design houses with revenue between $20M to $500M. In general the customers in this revenue segment already have certain flagship products that will make significant revenue and they are targeted for major industrial or consumer electronic application. There is a demand on how to deal with the reliability risk at the high volume and high quality business segment, such as automotive industry.

Market Analysis

The Reliability Service Consulting Service for IC design house is a very unique market. This market combines the knowledge of device physics, failure analysis, reliability modeling and prediction of field failure estimation. Device physics, mathematical and statistical knowledge can be learned from classes offering at graduate school. However, the knowledge of isolating the failure node, identifying the failure mechanism and developing the right reliability model does require years of hands-on experience from work. This business is stable and secure because very few technical professionals are good at both domains. In general only company shipped large quantity of products and with annual revenue over $200M will consider to hire 3~4 staffs leading by a technical expert on dealing with the potential reliability related issue. To maintain such a group, it could cost the company ~$300,000 to ~$500,000 per year. This is why it is relative difficult for a small or mid size company to justify on forming such a technical group. For the same amount of money of investment most of the company would rather hire two more designer to create new products. In addition, for the small or mid-scale company, penetrating into high volume and high quality business sector does require help from the reliability consultant service as the reliability issue occurred.

Automotive industry is the field that required best service product quality and reliability. The global automotive electronic has about $106 billion business and the growth rate is ~7.5% annually.

Consulting service in general has no concern of product life cycle. But the staffs do require to attend 2~3 professional seminars to promote the consulting service and sharpen their expertises.

Marketing Mix and Products

My company will provide services that focus on the following sections

Automotive Supplier Qualification Preparation Procedures

Package Reliability (Conventional Package, Solder Joint Reliability, uModule, Design of Daisy Chain Board Mount Temperature Cycle test, Flip Chip Reliability Forecast and Simulation)

Product Reliability (Power Temperature Cycling Test, Burn-in, Humidity Bias Test, Infant mortality Stress Implementation, FIT and MTTF Calculation)

Process and Device Reliability (Device failure mode simulation, Gate Oxide, Electromigration, Hot Carrier Degradation Stress Test and NBTI Device lifetime forecast)

Failure mode and failure mechanism study (by case min charge $250 / hr)

Forecast of field reliability failures based on the identified failure mechanism.

Charge can be either by case ($20,000 mim) or by hourly basis ($250 per hour)

As we can cover the requirement from the automotive industry, diversify and penetrates the business at networking, telecommunication, storage and computer industry are relative easy as we well known the each individual qualification requirements.

Promotion and Advertising

Attending the technical seminars and conferences like IEEE IRPS, IEDM, ISTFA. Publishing the technical papers and setup the exhibition booths. Referral from the end customers and web seminars are all the networking can be used for promote the image of the company.

SWOT Analysis

Strengths

Semiconductor component level reliability estimation

AimRel can provide better and faster reliability risk assessment

Excellent knowledge on automotive and consumer electronic qualification spec, documentation and test setup

15 years of direct digital and analog IC failure analysis experience.

Proven experience on solving major IC reliability issues for end customers

Weaknesses

Need to find funding

Recruit device level reliability guru can perform software simulation may take time

Improvement of promotion and marketing channels

Revenue can only generate by contract basis.

Opportunities

Company in $20M~500M scale does requires help on reliability consulting group on solving issues.

China automotive market is huge and lots of IC design house like to penetrate in to automotive business. This is a good segment for my company making revenue.

Threats

One key competitor – Relisoft - provides software and education training.

Relisoft is good on provide system level reliability solution.

Other competitors already in Reliability business over 10 years and established certain reputation.