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.

BUS 600 Foundation of Business Management 1st Week Assignment

The vision for my personal career is to be the reliability guru at the semiconductor field I am good at. After gaining the knowledge from both analog and digital companies for over 15 years, my expertise and experience allow me to be an expert reliability consultant, who can provide the effective and economical solution to answer and mitigate customer’s concern. I can either keep working for the current company and advance my position thru MBA class training or forms a 4~6 members’ independent consulting group by providing professional technical consulting services. The services of company can provide including but not limit to items as follows:

Provide turn-key service to the IC design houses to pass the major automotive, networking & telecom companies’ qualification

Statistical Analysis and perform field failure assessment

Identifying the failure mode and failure mechanism

Product and device level reliability stress test condition

Life data analysis / Weibull analysis at devices and system level

Warranty prediction and forecasting

There are some areas I believe need to further improve before achieve the goal I set:

Communicate and social skills for the future business and/or promotion opportunity

Building the business relationship with other service providers

Marketing strategy on promoting service

Recruit the talent that can provide device level reliability simulation

Initial Funding (~$700k to 1.5M)

The company is to provide the knowledge services. The technical experts can provide onsite customer’s service to solve the issue. About ~400 to 500 sq business office needed at initial start up stage.