The Mainsail Capital Group MBA

The Mainsail Capital Group
Business and Management Concepts

Topics To Discuss:
 This element will cover the basic management skills that are necessary for a
business to grow in a competitive landscape. Topics under consideration will
include:
 Management
 Ethics
 Accounting
 Organizational Behavior
 Operations
 Strategy
 Marketing
 Effective Governance
Management Roles and Duties
The concept of Management:
 Five Functions of Management & Leading

 Effective management and leadership involves creative problem solving,
motivating employees and making sure the organization accomplishes
objectives and goals. There are five functions of management and leadership:
 planning,
 organizing,
 staffing,
 Coordinating, and
 controlling.
These functions separate the management process from other business
functions such as marketing, accounting and finance.
Management & Leadership Concepts . . .
 Planning
 The planning function of management controls all the processes that

allow the organization to run smoothly. Planning involves defining a goal
and determining the most effective course of action needed to reach
that goal. Typically, planning involves flexibility, as the planner must
coordinate with all levels of management and leadership in the
organization. Planning also involves knowledge of the company’s
resources and the future objectives of the business.
 Organizing
 The organizing function of leadership controls the overall structure

of the company. The organizational structure is the foundation of a
company; without this structure, the day-to-day operation of the
business becomes difficult and unsuccessful. Organizing involves
designating tasks and responsibilities to employees with the
specific skill sets needed to complete the tasks. Organizing also
involves developing the organizational structure and chain of
command within the company.
 Staffing
 The staffing function of management controls all recruitment and

personnel needs of the organization. The main purpose of staffing
is to hire the right people for the right jobs to achieve the
objectives of the organization. Staffing involves more than just
recruitment; staffing also encompasses training and development,
performance appraisals, promotions and transfers. Without the
staffing function, the business would fail because the business
would not be properly staffed to meet its goals.
 Coordinating
 The coordinating function of leadership controls all the organizing,

planning and staffing activities of the company and ensures all
activities function together for the good of the organization.
Coordinating typically takes place in meetings and other planning
sessions with the department heads of the company to ensure all
departments are on the same page in terms of objectives and
goals. Coordinating involves communication, supervision and
direction by management.
 Controlling
 The controlling function of management is useful for ensuring all

other functions of the organization are in place and are operating
successfully. Controlling involves establishing performance
standards and monitoring the output of employees to ensure each
employee’s performance meets those standards. The controlling
process often leads to the identification of situations and problems
that need to be addressed by creating new performance standards.
The level of performance affects the success of all aspects of the
organization.
 Details on management will be addressed

throughout this presentation and a comprehensive
analysis will be discussed at the conclusion of the
topical offerings.
Business Ethics
Ethics:
 Ethics in a business setting is defined as being aware of the moral principles

that govern our behavior regarding business decisions.
 Business Ethics relate to Social Responsibility vs. Maximizing Profits.
 Business Ethics covers those implications of our business activities that affect
topics such as:
 Environmental Decisions
 Corporate Structures (including layoffs and mobility)
 Privacy Issues
 Diversity
ethics continued . . .
 Social Responsibility relates to the considerations given to stakeholder

benefits.
 Stakeholder benefits involves evaluating the harms and benefits to any stakeholder
resulting from a decision being made.
 Stakeholders to a business enterprise are:
 Shareholders
 Customers
 Employees
 Communities
ethics continued . . . Stakeholder Analysis
 Stakeholder Analysis is the tool for weighing

various elements and reaching a decision.
 Stakeholder analysis is a seven step process:

 Step One:
 List all of the potentially affected parties to a decision.

 Step Two:
 Evaluate the harms and Benefits the action (decision) will have on
those involved.
 Step Three:
 Determine each of the affected parties Rights and Responsibilities.
For example:
Employees have the Right to a fair wage and safe working conditions but
they have a Responsibility to be productive for the company.
 Step Four:
 Consider the relative power of each stakeholder affected by the

decision being made.
 Step Five:
 Consider the short- and long-term consequences of the decision

alternatives.
 Step Six:
 Formulate contingency plans for alternate scenarios.

 Step Seven:
 Make a judgement.
Social Responsibility, Stakeholder Analysis and Scarcity

 Ethical awareness is important for many reasons:

 It is necessary because a business must contend with scarce resources and how the
use of these resources has an impact on our business surrounding.
 Scarcity refers to the basic economic problem, the gap between limited – that is, scarce –
resources and theoretically limitless wants. This situation requires people to make
decisions about how to allocate resources efficiently, in order to satisfy basic needs and as
many additional wants at possible.
 How Scarcity Affects a Business Executive

 Business executives have to deal with financial shortfalls, supply-chain disruptions, labor
shortages and declining consumer demand. Successful companies build cash reserves
during periods of strong economic growth so that they have a safety cushion for the
inevitable cyclical downturns. Controlling costs is a year-round obsession for seasoned
executives who know how to anticipate and effectively manage through resource
scarcities.
ethics continued . . . Scarcity
 Scarce Resources include the following four

primary elements:
 Cash
 Supply
 Demand
 Labor
 Cash
 Cash scarcity is common for small businesses. New companies usually

have to invest in equipment and supplies before generating meaningful
sales. A further complication for a small business is that banks and even
venture capital companies tend to avoid companies with no track record.
In addition to controlling costs, executives can use cash management
strategies, such as speeding up the collection of receivables and paying
for supplies on credit. Companies can collect receivables faster by
limiting the number of customers who can buy on credit and following up
with customers who are behind on their payments.
 Supply
 Executives often deal with supply chain disruptions, which can cause raw
material and component supply shortages. The reasons for these
disruptions include manufacturing equipment failures, fire damage and
natural disasters. For example, Japanese earthquake caused havoc in the
supply chains of automakers, computer manufacturers and other
industries. To protect from this, companies should consider diversifying
their supply chains to insulate against shortages and unplanned events.
Although sourcing from a single supplier can mean lower unit prices due to
volume discounts, a business executive may not have a viable solution if
his supplier has to suspend or close operations. In our case it is the
provider of clients to our ALW program.
 Demand
 Competitive pressures, changes in customer preferences and

economic downturns are some of the reasons for declining
consumer demand. The strategic response would depend on the
reasons for the decline. For example, if general economic
weakness is the main reason for falling demand, executives could
reduce staff and delay planned investments to conserve cash and
ride out the weakness. However, if competitive pressures and
changing customer preferences are causing the decline,
management could redesign products, change the product mix and
increase advertising budgets to stimulate demand.
 Labor
 Labor shortages may delay and drive up the cost of product

development. A company may not be able to respond to a
competitor if it does not have the right talent. Management can
try to bridge these talent gaps using training programs or forming
partnerships with other companies. Further complicating matters,
a small business may have difficulty attracting skilled workers
because of competition from established companies, who can offer
better pay and more security. However, start-ups can offer stock
options to attract and retain qualified employees.
ethics continued . . . The Mainsail Ethic
 As a conclusion to the topic on Ethics, we will

look at the Mainsail application of ethics to its
business and operations.
 The following element is taken from the Mainsail

business guide and covers the Mission and Vision
of The Mainsail Capital Group of Companies.
ethics continued . . . The Mainsail Ethic . . .
 Our Mission and Vision . . . . .
 The Mainsail Capital Group is an organization that creates safe and stable
living environments.
 The Company business and philosophy are rooted in creating access to
products and services that produce a pleasant lifestyle experience. Our
goal is to create the safe and stable living environments by solving problems
that exist in or industries. This is accomplished by supporting the four
pillars of business; (i) by providing clients with quality service; (ii) by
providing partners with superior returns; (iii) by providing associates with
fulfilling and dynamic careers; and, (iv) by providing the community with
service through active civic involvement.
 Our Approach and Philosophy . . . . .
 Our organization prides itself on being a business with a global vision in a

family enterprise setting. We believe that business practices must be
conducted in harmony with a certain need to help people while maintaining a
healthy environment. We believe that every person is governed by an internal
drive that sets their ambitions in relation to a goal to do good. Whether this is
derived from a moral and ethical basis or a religious conviction, the result is
the same; a person’s behavior is tied to their belief system.
 Everyone in the Mainsail Capital Group shares a belief that our efforts
need to be focused on providing safe and stable environments through
relevant services to our clients that are based on satisfying their
needs. Our organization prides itself on providing all its stakeholders
with relevant knowledge and understanding of everything that we do
and this belief will foster an environment that is safe and stable for
all involved.
 It is important that our belief system is made clear so that whoever

associates with us will know what to expect from an interaction with
us. We adhere to a vision governed by the notion that doing good and
working towards a higher purpose should be at the core of our
pursuits. Our behavior is aimed at interacting with others in the same
way that we wish to be treated ourselves. Our business exists in an
environment of community and inclusion where we all share the same
values and views. Our mission statement incorporates an interaction
between customers, owners, employees and community in all that we
do.
 We have seen that life is filled with difficult choices and varied
outcomes. Most people cannot rely on the certainty of food, health
and shelter; therefore, we have undertaken a business that starts
with providing these basic items so that people will experience
satisfaction through our communities. This will lead to a higher
quality of life and a focus on the value issues such as physical and
emotional wellness; interpersonal skills; contemplative behavior; and
personal growth. We believe that if we are able to bring meaning to
the lives of those whom we touch we will have achieved success. Our
mission is to create such an environment and to ensure that people
who affiliate with us can have an experience where they can grow
emotionally and spiritually. This will lead to the successful expansion
of our business because we understand that the fundamental nature
of people is to search for value and relevance. Our goal is to remain
a company that people seek out and want to join; whether it is as a
client, a shareholder, an employee or a member of the communities
we find ourselves settling in.
Accounting
Accounting:
Hello Holla Marhaaba Ni hao
Hallo Chao ban 2+2=4
Bonjour Namaste
What do all of the above represent?

Accounting . . .
 They represent different languages used by specific

groups.
 Accounting is actually the language of business.
 It is how a company communicates with the world.

Accounting . . .
 The information provided through Accounting provides a

means to control, evaluate and plan operations.
 This helps the business record, summarize and analyze its
activities.
 Accounting helps answer the following questions?

 How much does the Company own?
 How much does the Company owe?
 How well did the Company perform?
 How does the Company get cash to fund itself?
Accounting . . .
 A side note on Cash:
Cash is a homogeneous tool that is used to measure

the effectiveness of converting an effort into a
transmutable quantity that can be applied towards
needs and wants.
Accounting . . .
 There are certain concepts of Accounting that guide

policies; the following are the general concepts that you
must master to effectively account for your efforts:
 THE ENTITY
 CASH vs. ACCRUAL
 GOING CONCERN
 RULE OF MATCHING
 RULE OF OBJECTIVITY
 RULE OF CONSERVATISM
 RULE OF CONSISTENCY
 RULE OF MATERIALITY
Accounting . . .
 The Entity:
 This is the understanding that you must know what

entity is being accounted for and who it is reporting
to.
 This can include the entire enterprise; a subsidiary; a

division; a department; a particular investor,
employee, manager, etc….
Accounting . . .
 Cash vs Accrual Accounting:

 This is the understanding of how to account for activity.
 CashBased accounting considers transactions that are
accounted for only when “cash” changes hands.
 Accrual Based accounting considers transactions that are
accounted for when an activity takes place and a financial
effect is recognized, regardless of the movement of
“Cash.”
Accounting . . .
 Going Concern:
 This is the understanding that a company or enterprise is to be treated

as intending to continue to operate – therefore reasonable estimates of
value may be used (operating entity = going concern).
 For Example: Accounting presumes that companies will continue to

operate in the foreseeable future, therefore values assigned in the
financial statements are not “fire sale” prices but are accounted for
at historical cost. Even if equipment has outlived its useful life and
there would be no buyers if such equipment were to be offered for
sale.
Accounting . . .
 Rule of Matching:
 This rule states that matching is necessary in accrual accounting to
equate the activity with the cost of the activity, in relative terms, to
determine the actual impact (profitability) of the activity. If an activity
is not matched to its proper period we cannot know the true picture of
the operations and the impact on the enterprise (a real time COGS
analysis).
 For example: if we earned ALW revenue in December and did not receive
the funds until February, we would get a dismal portrayal of our activities
in December and an overblown portrayal of our activities in February.
Accounting . . .
 Rule of Objectivity:
 This rule requires that there be reasonable and verifiable evidence to

support the transactions being accounted for.
 For Example: We can budget growth but cannot account for activity until
there is reasonable certainty that is verifiable by generally accepted
standards to support the consummation of a transaction. i.e., title to a
property has transferred to us or an investor’s funds have cleared into our
bank.
Accounting . . .
 Rule of Conservatism:
 Thisrule simply requires that when in doubt be

conservative.
 Losses
(or potential losses) are to be recognized when
they become certain (even if not actually incurred).
 Profits can only be recognized when they are realized.

Accounting . . .
 Rule of Consistency:
 This is the understanding that the same method of

accounting will be used throughout reporting
periods. Cash based accounting will always be
presented on a cash basis while accrual based
accounting will always be presented on an accrual
basis. You cannot mix and match the two.
Accounting . . .
 Rule of Materiality:
 This is the understanding that financial statements

do not have to be penny accurate – they only need
to provide a materially accurate picture of the
activity.
 For Example: A $100 differential in a small shop would be

significant while a $1,000,000 differential in a multinational
would be immaterial.
Accounting . . .
Financial Statements
Accounting . . .
 There are three documents that form the backbone of financial reporting. These
are:
 The Balance Sheet,
 which shows the assets owned by a Company; the accumulated liabilities owed to others; and, the investment
of its owners, all of these represented as of a specific date. It is a snapshot of the company.
 The Income Statement,

 which shows the flow of activity and transactions over a specific period of time. This statement compares
revenues and expenses and matches them properly (accrual basis) to indicate income.
 The Statement of Cash Flow,

 which is a management tool to help management avoid liquidity problems. The income statement and the
balance sheet are used to form this statement. The statement of cash flows shows the relationship between
cash flow and earnings and is useful in establishing Operations Activities; Investing Activities and Financing
Activities
Accounting . . .
 The Balance Sheet:
 Considered the foundation for all accounting records. It has three components: (i) assets;
(ii) liabilities, and (iii) owners equity.
 Assets are the resources that the company possessed for the future benefit of the business;
these include: cash – inventory – accounts receivable – equipment – buildings
 Liabilities are the obligations owed by the company; these include: bank debt – accounts
payable – prepaid deliverables – taxes owed – salaries and wages.
 Owners Equity is the accumulated measure of the owners investment in the company; these
include: common stock – additional paid in capital – retained earnings.
 The fundamental accounting equation is: Assets (A) = Liabilities (L) + Owners Equity (OE)
Accounting . . . The Balance Sheet Example
Assets Liabilities
Current Assets Current Liabilities
cash $ 5,000 accounts payable $80,000
accounts receivable 10,000 wages payable 5,000
inventory 100,000 taxes payable 2,000
Total Current Assets $115,000 Total Current Liabilities $87,000
Long Term Assets Long Term Debts

equipment $30,000 bank debt $10,000
(less accumulated Total Liabilities $10,000
depreciation) ( 3,000)
Total Long term Assets $27,000
Owners Equity
Common Stock issued $15,000
Retained Earnings $30,000
Total Owners Equity $45,000
Total Liabilities and

Total Assets $142,000 Owners Equity $142,000
Accounting . . . The Balance Sheet
 Notes to the Balance Sheet:

 Current and Long Term Classifications: assets and liabilities are listed in the order of their
liquidity. Liquidity being the ability of an asset to be converted to cash.
 Cash, accouts receivable and inventory are labeled current – while equipment is not very easily
sold and is classified as fixed, long term.
 With liabilities, accounts payable, wages and taxes are current liabilities – while bank debt is long-
term or a noncurrent liability.
 Working Capital is the assets and liabilities that the company works with on a daily basis.
It is a measure of solvency (total of current assets less the total of current liabilities).
 Owners Equity is the long term obligation of a company to its owners. Also known as net
worth, it is dependent on the success of the company. Retained Earnings or Additional
Paid in Capital are two ways Investors can contribute to the company.
Accounting . . . The Income Statement
Income Statement
Sales to Customers $ 5,200,000
(less:Cost of Goods Sold) 3,900,000
Gross Margin $1,300,000
Less Selling, General and Admin Expenses:
Payroll $1,000,000
Rent 150,000
Utilities 75,000
Advertising 18,000
Allocated cost of store equipment 3,000
All other 10,000
$1,256,000
Operating Income (EBIT) $ 44,000
Less Interest Expense 1,000
Income Before Taxes $ 43,000
Less Federal and State Taxes 13,000
Net Income $ 30,000
Accounting . . . Statement of Cash Flows
Year End Statement of Cash Flows
Operating Activities:
Net Income $30,000
Add Back Expenses Not Using Cash
Depreciation 3,000
$33,000
Adjust for Changes in Working Capital
Increase and Decreases During the Year
Current Assets
Receivables (Increase) Decrease $ (10,000)
Inventory (increase) Decrease (100,000)
Current Liabilities
Accounts Payable Increase (Decrease) 80,000
Wages Payable Increase (Decrease) 5,000
Taxes Payable Increase (Decrease) 2,000
$(23,000)
Cash Flow From Operations $ 10,000
Investing Activities
Purchase of Equipment $(30,000)
Cash Flow From Investing Activities $(30,000)
Financing Activities
Proceeds from Borrowing $10,000
Proceeds from Sale of Stock 15,000
Payment of Dividends 0
Cash Flow from Investing Activities $ 25,000
Increase in Cash for the Year $ 5,000
Cash at Beginning of Year 0
Cash at End of Year $ 5,000
Ratio Analysis
Accounting . . . Ratio Analysis
 Ratio Analysis is a further tool to help interpret financial statements.

 By using ratios we can evaluate the relationship of one number to
another or one company to another.
 There are four major categories of ratios:
 Liquidity Measures
 How much is available to convert to cash to pay the bills?
 Capitalization Measures
 Is the company debt burdened; are investors carrying the company?
 Activity Measures
 How actively are the company’s assets being used?
 Profitability Measures
 How profitable is the company in relation to the assets and the sales that
made its profits possible?
 Liquidity Ratios:
 Can the company pay its bills.
 Current Ratio: Current Assets / Current Liabilities

(a ratio greater than 1 shows liquidity)
 Capitalization Ratios:
 Financial Leverage: (Total Liabilities + Owners Equity) / Owners Equity

(shows when a company is leveraged – when the company assumes a larger portion of
debt than the amount invested by the owners. A ratio greater than 2 shows excessive
debt)
 Long Term Debt to Capital: Long Term Debt / (Liabilities + Owners Equity)
(a ratio greater than 50% shows high debt or a risk of an inability to pay fixed obligations)
 Activity Ratios:
 Asset Turnover Per Period: Sales / Total Assets

(this ratio tells us how actively the company uses all of its assets – ratios vary per industry)
 Inventory Turnover Per Period: COGS / Average Inventory Held Per Period
 Days Sales in Inventory: Ending Inventory / (COGS / 365)

(The above two show how actively inventory is being used)
 Profitability Ratios:
 These “Return” ratios are used frequently since they calculate the return on any
part of the Balance Sheet and Income Statement.
 Return on Sales: Net Income / Sales
 Return on Equity: Net Income / Owners Equity

Valuation Analysis
Accounting . . . Valuation Analysis
 There are three common tools used to value an asset:
 Replacement Cost Approach
 Market Sales Approach
 Income Capitalization Approach

 COST APPROACH VALUATION
 The Cost Approach consists of an analysis of the property’s physical characteristics.

The Principle of Substitution, the underlying rationale for this approach, holds that
no prudent person will pay more for a property than the price of a site and the
cost of construction, without undue delay, of an equally desirable and useful
property.
 Performing a Cost Approach Valuation:
 In the Cost Approach, the following steps are typically employed to reach an opinion of
value:
Form an opinion of land value as if the site were vacant;
Estimate the improvement’s Replacement Cost New, including indirect costs
Estimate Developer’s overhead and profit for the type of property being appraised, (including profit,
overhead, and entrepreneur’s profit);
Add land value to the Replacement Cost New, and apply a profit rate to the cost new to calculate
the amount of profit. Add profit to the cost new to derive a total cost new for the structures;
Estimate accrued depreciation, if any, from physical, functional, and external causes, and;
Deduct accrued depreciation from the total cost new of the structure(s), plus the market value of
the site to yield an opinion of value by the Cost Approach.
 Note on Depreciation:
 In addition to the current replacement cost estimate, consideration must also be given to estimating the
amount of accrued depreciation categorized by three major types:
1. Physical Deterioration
2. Functional Obsolescence
3. External Obsolescence
 Depreciation as used in this context is different from the accounting term “book depreciation” which is
defined as the amount of capital recapture allowed to provide for the replacement of an asset.
 Physical Depreciation is the loss of value caused by deterioration resulting from wear and tear,
disintegration, use in service, and action of the elements. Physical depreciation is based upon the
condition of the property.
 Functional Depreciation is the loss of value caused by such factors as overcapacity, inadequacy and
technological changes that affect the property itself.
 Economic Obsolescence is the loss of value by economic forces external to the property itself, including
changes in optimum use, legislative enactments which restrict property rights, and changes in supply-
demand relationships.
 Market Sales Approach:
 Gross Profit and EBITDA Multiplier Analysis (Going Concern):

 The Market value of a p-roperty or asset can be estimated by using ratio models. Ratio
models convert a single year’s income estimate into an indication of value. The two most
commonly used ratio models are Gross Profit and EBITDA. Value is derived from multiples
as follows:
Market Value = Gross Profit Multiplier x Gross Profit

Market Value = EBITDA Multiplier x EBITDA
Note: EBITDA is Earnings Before Interest, Taxes, Depreciation & Amortization

 Performing the Market Sales Analysis:

 Multiples are extracted from the market using comparable data. The basic economic
rationale for this model is a variation of the one price rule – similar properties should sell for
the same multiple of gross income. If a pattern of consistency is found in the ratios among
the comparable properties, then the multiples can be said to be indicative of market
pricing. Procedures and issues in the application of the multiple methods are as follows:

 Find similar income properties that recently sold, i.e., comps.

 Verify prices, revenues, and other income, and assure that comps were sold in “market”
transactions.
 Calculate the multiples for each of the individual comps.
 Reconcile the multipliers developed from the individual comps to obtain an estimate of a “market”
multiplier for the property.
 Reconciliation involves a judgment of relative comparability of the comps.
 Income Capitalization Approach:
 This approach is based upon the theory that the value of property tends to be set by the expected
net income to the owner. It is in effect the capitalization of expected future income into present
worth. This approach requires an estimate of net income, an analysis of all expense items, the
selection of a capitalization rate, and the processing of the net income stream into a value
estimate.
 Industry Capitalization Rate Analysis (CAP): A Capitalization rate is commonly determined by a
survey of market activity to determine the rate of return the market will accept. A more
appropriate rate is determined as a result of an analysis of the certainty of the revenue stream; the
strength of the given industry; the size and stability of the enterprise and other factors.
 Discounted Cash Flow Analysis (DCF): This valuation tool is based on the current value of a stream
of future payments. The payments represent the anticipated future cash flows from the enterprise.
The Discount Rate is applied based on the certainty of achieving the anticipated cash flows. As an
example, if the cash flow is derived from a low volatility and stable business then the rate of the
discount is lower to reflect the relative certainty in realizing the revenue stream; conversely, if the
flow is derived from a risky and laborious endeavor then the rate of the discount is higher to reflect
the riskiness in realizing the revenue stream.
Organizational Behavior
Organizational Behavior . . .
 The simplest understanding of Organizational Behavior is the analysis and

methodology applied to dealing with the human element of a company. It
simply inquires: Can we all just get along…..
 Organizational Behavior is a problem solving tool with three-steps to resolving

organizational problems:
 Problem Definition
 Analysis
 Action Planning
As a tool, Organizational Behavior helps in Business Planning and Execution.
 Defining and Describing the Problem:
 The first step to solving an organizational problem is to know the source of the
difficulty. Real problems are generally hidden within or behind the symptoms (your
job is to work past the symptoms and concentrate on the origin of the problem – or
the root cause of the understood symptom).
Analysis:
 Tools used to identify the cause behind the symptoms can include the following:
 Want – Got – Gaps
 There is a problem when there is a gap between an organizational WANT and what it has GOT.
(I WANT _____problem exists________ I GOT)
 Generally, a problem will have one or more of the following sources:
 1.Within or between certain people
 2.Within or between certain groups
 3.Within the whole organization.
 The organizational goal is to find the most important source problems and identify causal
chains (Eliminate the source of the problem and you eliminate the problem).
 e.g., if there is a problem between the IT department and Accounting Department you should look at the issues
and draw out a causal chain of the issues.
 For the organization:
Contributing Problems Source Problem Business Problem
 For the Source Issue:
Lack of Interaction Lack of Respect Project Failures Personality Differences
 Once identified, a problem is attacked with an Action Plan.

The Action Plan:

 After defining the gaps and using causal chains, you need to link the problems to their causes. This
requires you to understand the causes; Why they exist? What environment factors play a role? This
is an important step to identify which causes can be corrected or cured and which are
insurmountable.

 The Analysis requires you to be decisive and proactive in analyzing the problem and crafting a
resolution. After thorough analysis you should formulate a plan. The Action Plan has six steps:
 1 Set Specific Goals,
 2 Define Activities, Resources Needed, Responsibilities,
 3 Set a Timetable for Action,
 4 Forecast Outcomes, Develop Contingencies,
 5 Formulate a detailed Plan of Action in Time Sequence,
 6 Implement, Supervise Execution, and evaluate Based on Goals in Step One herein.
Decision-Making Levels of an Organization
 Any organization faces making decisions on a daily basis. Organizations make some decisions after a great deal of research and
forethought, while making others on the spur of the moment in reaction to an emergency situation. The impact of organizational
decisions can be long-term and far-reaching, or it may be short-lived and practically unnoticed. No matter what results from a
decision, someone has to take ownership of it.
 Leadership
 Leadership in an organization can mean a business owner, a board of directors, company president or a chief executive officer. No
matter who represents the leadership of an organization, he will ultimately be responsible for a decision that is made at any level. An
organization's leadership team makes long-range, strategic decisions after weighing both internal and external factors. Industry trends,
economic swings, supply and demand, staff issues and liability are all considerations that leadership reviews. Once the team
determines the impact of those factors, it makes decisions it believes will benefit the organization in the long run.
 Management Teams
 Management teams are often responsible for decisions that affect daily operations of an organization. Items such as staffing needs,
work flow processes, resources and the handling of day-to-day events fall on the shoulders of managers. A business owner places his
trust in a manager to handle these types of decisions so that he is not bogged down with everyday operational issues. A good, well-
trained manager is confident in making decisions without conferring with leadership. He understands his decisions may have
consequences, but he has the knowledge to make the right decision that is best for the organization.
 Committees
 Committees are assigned decision-making responsibility for particular projects or issues. These are decisions that are not taken lightly,
and that require sufficient time for research and evaluation. An organization chooses committee members based on expertise in the
subject, as well as representation across the organization. The committee performs due diligence on the issue, prepares a report and
proposes a decision to leadership. The ultimate decision may revert to leadership, or it may be a consensus between the committee
and leadership. If the committee was granted autonomy, it makes the decision on its own. However, the leadership still retains
ultimate responsibility for decisions made on behalf of the organization.
 Group Consensus
 An organization that thrives on open communication will survey its constituents when
contemplating a decision. Feedback from all levels of the business can garner different
perspectives that will help leaders make a more educated decision.
 Individual
 A decision made by an individual in an organization can make someone a hero or be the cause
of his demise. Decisions made by an individual are often a reaction to a situation that is
perceived to be an emergency. If the situation is dire and the individual's decision results in
saving the day, it can have a positive impact on his stance in the organization going forward.
If the decision is incorrect, or is made in haste, the individual faces a loss of credibility
among his supervisors and peers. The adage "act now and ask for forgiveness later" can be a
risky undertaking, but there are times when the individual has no other choice.
 Three Main Theories of Motivation


 One of the most important factors to achieving success with your small
business is the ability to motivate your employees. No two workers are alike;
it can be a challenge to understand what makes each one tick so that you can
apply the appropriate motivational technique. A number of motivational
theories have been developed over time that can help you get the most out of
your workers.
 Hierarchy of Needs
 Psychologist Abraham Maslow developed this theory. It places human needs into five
categories ranging from basic survival needs like food and shelter to the need for self-
actualization. According to Maslow, once one need is satisfied, an individual seeks to
achieve the next level. When applied to work, the theory implies that you the employer
must understand the current need level of each employee to know what will motivate
them. A new hire who has been unemployed for an extended time will likely be
motivated by the need for basic survival. On the other hand, a worker concerned with
career advancement may be looking to achieve self-actualization, so assigning higher-
level tasks may be in order.
 Carrot and Stick

 This traditional motivational theory, attributed to philosopher Jeremy
Bentham, dates back to around 1800 during the Industrial Revolution. It
breaks down motivation into two basic components: incentives and fear. Some
workers are motivated by the desire to attain additional compensation, a
yearning to achieve status and power by "moving up the ladder," or the need
for praise. But some workers act out of fear: the fear of losing a job, being
reprimanded by a supervisor or not being able to adequately perform an
assignment.
 Motivation-Hygiene Theory
 Also known as the Two Factory theory, Frederick Herzberg developed this in
1959. It postulates that different factors in the work environment result in
either satisfaction or dissatisfaction; Herzberg referred to these as "hygiene"
factors. Factors that lead to satisfaction include achievement, recognition
and advancement, while those causing dissatisfaction include work
conditions, salary and peer relationships. In general, the theory puts forth
that supervisors must be able to effectively manage factors leading to
satisfaction and dissatisfaction to successfully motivate employees.
Management must look for ways to provide job enrichment for workers.
 How to Apply Motivational Theories in the Workplace


 Motivational theories attempt to explain what motivates people to behave

the way they do. Motivational theories can be applied to workplace settings
to shed light into why some employees work harder or are more committed
than others, which can lead managers to understand how to motivate each
employee to perform at peak levels. Understanding how to apply motivational
theories in the workplace can take your leadership skills to the next level.
 1. Use traditional and innovative compensation strategies to leverage the

expectancy theory. The expectancy theory puts forth the premise that for
each specific task, employees will put forth an amount of effort
commensurate with their perceived value of the compensation they will
receive. Employees who resist taking on new job duties, claiming “I'm not
being paid for this,” serve as an ideal example of the expectancy theory at
work.
 2. Tie compensation incentives directly into specific performance objectives

to push your employees to excel. Give out generous bonuses to top
performers, and use intangible rewards in additional to monetary
compensation to reach employees on a deeper level, soliciting a deeper level
of commitment to company goals.
 3. Institute employee development programs, employee recognition programs

and a positive, open company culture to tap into the acquired needs theory.
The acquired needs theory states that all people are fundamentally motivated
by three needs, with one need always being stronger than the others.
According to this theory, all employees subconsciously seek either personal
achievement, social acceptance or power. Employee recognition programs can
boost employees' self-esteem and feelings of achievement. A welcoming
company culture encourages employees to develop lasting friendships.
Employee development programs allow hard workers to move into positions of
leadership, fulfilling their ambitions.
 4. Gauge the intrinsic motivation of your employees to determine whether

McGregor's Theory X or Theory Y is more appropriate in your company. Theory
X sets forth the premise that employees are inherently averse to working, and
must be continually motivated by external sources. Theory Y sets forth the
opposite premise, stating that employees are internally driven to succeed at
projects that truly interest them. Put strict operational guidelines in place to
guide front-line employees through their day-to-day routines if you feel
Theory X is more appropriate in your company. Make sure employees
understand that they are free to try new things and learn from their mistakes,
while matching employees up with job tasks that truly interest them if you
feel Theory Y is the way to go.
Organizational Structure
Organizational Structure . . .
 Purpose of Organizational Structure:
 Organizational structure is about definition and clarity. Think of structure as

the skeleton supporting the organization and giving it shape. Just as each
bone in a skeleton has a function, so does each branch and level of the
organizational chart. The various departments and job roles that make up an
organizational structure are part of the plan to ensure the organization
performs its vital tasks and goals.
 Purpose continued:
 Organizational structures help everyone know who does what. To have an

efficient and properly functioning business, you need to know that there are
people to handle each kind of task. At the same time, you want to make sure
that people aren't running up against each other. Creating a structure with
clearly defined roles, functions, scopes of authority and systems help make
sure your people are working together to accomplish everything the business
must do.
 Function:
 To create a good structure, we have to take inventory of our functions. We have

to identify the tasks to be accomplished. From these, we can map out functions.
Usually, we translate these functions into departments. For example, we have to
receive and collect money from clients, pay bills and vendors, and account for our
revenues and expenditures. These tasks are all financial and are usually organized
into a finance or accounting department. Selling our products, advertising, and
participating in industry trade shows are tasks that you can group under the
umbrella of a marketing department. With differing ways to organize the tasks,
we can always choose something less traditional. But in all cases, organizational
structure brings order to the list of tasks.
 The Importance of a Good Organizational Structure:


 Businesses require structure to grow and be profitable. Designing an

organization structure helps top management identify talent that needs to be
added to the company. Planning the structure ensures there are enough
human resources within the company to accomplish the goals set forth in the
company’s annual plan. It is also important that responsibilities are clearly
defined. Each person has a job description that outlines duties, and each job
occupies its own position on the company organization chart.
 Communication:
 The flow of information is essential to an organization’s success. The

organization structure should be designed to ensure that individuals and
departments that need to coordinate their efforts have lines of
communication that are built into the structure. The financial planning and
analysis department might report to the Chief Financial Officer and the Senior
Vice President of Marketing, because both of these members of the top
management team depend on information and reports provided by financial
planning.
 Reporting Relationships:
 Reporting relationships must be clear so all members of the organization

understand what their responsibilities are and know to whom they are
accountable. These clear relationships make it easier for managers to
supervise those in lower organization levels. Each employee benefits by
knowing whom they can turn to for direction or help. In addition, managers
are aware of who is outside the scope of their authority, so they do not
overstep their bounds and interfere with another manager’s responsibilities.
 Growth And Expansion:
 Companies that grow rapidly are those that make the best use of their
resources, including management talent. A sound organization structure
ensures that the company has the right people in the right positions. The
structure may suggest weak spots or deficiencies in the company’s current
management team. As the company grows, the organization structure must
evolve with it. Many times more layers of management are created, when one
department head has too many individuals reporting to him at one time to
give each employee the attention and direction needed for the employee to
succeed.
 Task Completion:
 A well-designed organization structure facilitates the completion of projects.

Project managers can better identify the human resources available to them
if the scope of each department’s responsibility -- and each team member’s
capabilities--are clear. A project to develop a new product would require
market research. The project manager needs to know who in the organization
can provide this research, and whose permission must be obtained for the
research to be done.
 Lets Now take a look at the Mainsail Organizational Structure:

 The Mainsail Capital Group of Companies Organization:
 Determining what Mainsail does:

 We Finance and Invest
 We Design and Build
 We Operate and Manage
 Defining who Mainsail is:

 We are a Manager…
 We are an Operator…
 We are a Developer…
 We are an Owner…
Once we have an organization – it is the duty of the Executive Officers to Lead
Theories of Leadership
 The Ways Chief Executive Officers Lead
 There is no shortage of schools for businesspeople of every specialty: accountants,

engineers, financiers, technologists, information specialists, marketers, and, of
course, general managers, who have their choice of hundreds, if not thousands, of
M.B.A. programs. But where is the school for the person in charge of getting the
best results from all these members of the organization? There is no school for
CEOs—except the school of experience. Chief executives must learn on the job
how to lead a company, and they must learn while every stakeholder is
watching.
 The CEO’s job is like no other in the organization. It is infinite. Senior

executives are, by definition, ultimately responsible for every decision and
action of every member of the company, including those decisions and actions
of which they are not aware. CEOs—even new ones—are allowed few
mistakes.
 Not surprisingly, research shows that between 35% and 50% of all CEOs (if I go,
I’m taking you all with me – this applied to all Senior Management) are
replaced within five years. That is a costly proposition for any organization,
for no company can lose its leader without losing some sense, even
temporarily, of its identity and direction.
 No matter where a company is located or what it makes, its CEO must develop a
guiding, over-arching philosophy about how he or she can best add value. This
philosophy determines the CEO’s approach to leadership. By approach, I mean
which areas of corporate policy—for example, strategic planning, R&D, or
recruiting—receive the most attention, what kind of people and behaviors the
CEO values in the organization, which decisions the CEO makes personally or
delegates, and how he or she spends each day. A leadership approach is a
coherent, explicit style of management, not a reflection of personal style. This
is a critical distinction. In effective companies, CEOs do not simply adopt the
leadership approach that suits their personalities but instead adopt the approach
that will best meet the needs of the organization and the business situation at
hand. Is the industry growing explosively or is it mature? How many competitors
exist and how strong are they? Does technology matter and, if so, where is it
going? What are the organization’s capital and human assets? What constitutes
sustainable competitive advantage, and how close is the organization to achieving
it? The answers to questions such as these determine which of the following five
leadership approaches an effective CEO will adopt.
1. The Strategy Approach.

 CEOs who use this approach believe that their most important job is to create,
test, and design the implementation of long-term strategy, extending in some
cases into the distant future. Their position overseeing all areas of the
corporation, they explain, gives them the unique ability to determine their
organizations’ allocation of resources and optimal direction. On a day-to-day
basis, they spend their time in activities intended to ascertain their
organizations’ point of departure (the current business situation) and point of
arrival (the most advantageous market position in the future). These CEOs
devote approximately 80% of their time to matters external to the organization’s
operations—customers, competitors, technological advances, and market
trends—as opposed to internal matters such as hiring or control systems. It
follows, then, that they tend to value employees to whom they can delegate the
day-to-day operation of their organizations as well as those who possess finely
tuned analytical and planning skills.
2. The Human-Assets Approach.

 In marked contrast to CEOs in the above group, human-assets CEOs strongly
believe that strategy formulation belongs close to the markets, in the business
units. According to these CEOs, their primary job is to impart to their
organizations certain values, behaviors, and attitudes by closely managing the
growth and development of individuals. These executives travel constantly,
spending the majority of their time in personnel-related activities such as
recruiting, performance reviews, and career mapping. Their goal is to create a
universe of satellite CEOs: people at every level of the organization who act and
make decisions as the CEO would. Not surprisingly, these executives value long-
term employees who consistently exhibit “company way” behaviors, as opposed
to so-called mavericks, who do not always adhere to organizational norms.
3. The Expertise Approach.

 Executives who lead by using this approach believe that the CEO’s most
important responsibility is selecting and disseminating within the corporation an
area of expertise that will be a source of competitive advantage. Their schedules
show that they devote the majority of their time to activities related to the
cultivation and continual improvement of the expertise, such as studying new
technological research, analyzing competitors’ products, and meeting with
engineers and customers. They often focus on designing programs, systems, and
procedures, such as promotion policies and training plans, that reward people
who acquire the expertise and share it across the borders of business units and
functions. These CEOs tend to hire people who are trained in the expertise, but
they also seek candidates who possess flexible minds, lack biases, and
demonstrate a willingness to be immersed—indoctrinated is not too strong a
word—in the expertise.
4. The Box Approach.

 CEOs in this category believe that they can add the most value in their organizations
by creating, communicating, and monitoring an explicit set of controls—financial,
cultural, or both—that ensure uniform, predictable behaviors and experiences for
customers and employees. CEOs who use this approach believe that their companies’
success depends on the ability to provide customers with a consistent and risk-free
experience. As a result, these executives spend their days attending to exceptions to
their organizations’ controls, such as quarterly results that are below expectations
or a project that misses its deadline. In addition, they devote more time than the
other types of CEOs to developing detailed, prescriptive policies, procedures, and
rewards to reinforce desired behaviors. Finally, these executives tend to value
seniority within the organization, often promoting people with many years of service
to the corporate team and rarely hiring top-level executives from outside the
company.
 5. The Change Approach.

 Executives in this category are guided by the belief that the CEO’s most critical role is to
create an environment of continual reinvention, even if such an environment produces
anxiety and confusion, leads to some strategic mistakes, and temporarily hurts financial
performance. In contrast to CEOs who employ the strategy approach, these CEOs focus
not on a specific point of arrival for their organizations but on the process of getting
there. Similarly, their focus contrasts starkly with that of a box leader: Control systems,
written reports, planning cycles, policies, and rules do not seem to interest these so-
called change agents. Instead, they spend as much as 75% of their time using speeches,
meetings, and other forms of communication to motivate members of their organizations
to embrace the gestalt of change. They spend their days in the field, meeting with a wide
range of stakeholders, from customers to investors to suppliers to employees at virtually
all levels of the organization. Not surprisingly, the people they value are usually those who
could be called aggressive and independent—people who view their jobs not as
entitlements but as opportunities for advancement that must be seized every day.
Seniority matters little to the change agent; passion, energy, and an openness to a new,
reinvented tomorrow matter much more.
 If you were paying attention, would have recognized that I have used one or
more of these approaches over time; this is common – where leadership will
overlap different approaches, however, research suggests that in most
effectively run organizations, CEOs select a dominant approach, using it as
the compass and rudder that directs all corporate decisions and actions.
Research also suggests that a CEO’s approach can and should change over the
course of his or her tenure. As Edzard Reuter, CEO of automaker Daimler-
Benz, says, “A business is a living organism. There will always be a point
where the environment changes, the competition changes, something critical
changes, and you must realize this and take the leading role in meeting
change.”
Operations
Operations . . . Management Planning
The Basic Steps in the Management Planning Process
 Management planning is the process of assessing an organization's goals and

creating a realistic, detailed plan of action for meeting those goals. Much like
writing a business plan, a management plan takes into consideration short-
and long-term corporate strategies. The basic steps in the management
planning process involve creating a road map that outlines each task the
company must accomplish to meet its overall objectives.
Establish Goals
 The first step of the management planning process is to identify specific

company goals. This portion of the planning process should include a detailed
overview of each goal, including the reason for its selection and the
anticipated outcomes of goal-related projects. Where possible, objectives
should be described in quantitative or qualitative terms. An example of a goal
is to raise profits by 25 percent over a 12-month period.
Identify Resources
 Each goal should have financial and human resources projections associated
with its completion. For example, a management plan may identify how many
sales people it will require and how much it will cost to meet the goal of
increasing sales by 25 percent.
Establish Goal-Related Tasks
 Each goal should have tasks or projects associated with its achievement. For
example, if a goal is to raise profits by 25 percent, a manager will need to
outline the tasks required to meet that objective. Examples of tasks might
include increasing the sales staff or developing advanced sales training
techniques.
Prioritize Goals and Tasks
 Prioritizing goals and tasks is about ordering objectives in terms of their

importance. The tasks deemed most important will theoretically be
approached and completed first. The prioritizing process may also reflect
steps necessary in completing a task or achieving a goal. For example, if a
goal is to increase sales by 25 percent and an associated task is to increase
sales staff, the company will need to complete the steps toward achieving
that objective in chronological order.
Create Assignments and Timelines
 As the company prioritizes projects, it must establish timelines for completing

associated tasks and assign individuals to complete them. This portion of the
management planning process should consider the abilities of staff members
and the time necessary to realistically complete assignments. For example,
the sales manager in this scenario may be given monthly earning quotas to
stay on track for the goal of increasing sales by 25 percent.
Establish Evaluation Methods
 A management planning process should include a strategy for evaluating the

progress toward goal completion throughout an established time period. One
way to do this is through requesting a monthly progress report from
department heads.
Identify Alternative Courses of Action
 Even the best-laid plans can sometimes be thrown off track by unanticipated
events. A management plan should include a contingency plan if certain
aspects of the master plan prove to be unattainable. Alternative courses of
action can be incorporated into each segment of the planning process, or for
the plan in its entirety.
Operations . . . Making Decisions
What Are the Steps in the Decision-Making Process of a Manager?


 Small business owners and managers make decisions on a daily basis,

addressing everything from day-to-day operational issues to long-range
strategic planning. The decision-making process of a manager can be broken
down into six distinct steps. Although each step can be examined at length,
managers often run through all of the steps quickly when making decisions.
Understanding the process of managerial decision-making can improve your
decision-making effectiveness.
1 Identify Problems, Needs and Opportunities,
 The first step in the process is to recognize that there is a decision to be

made. Decisions are not made arbitrarily; they result from an attempt to
address a specific problem, need or opportunity. A supervisor in a retail shop
may realize that he has too many employees on the floor compared with the
day's current sales volume, for example, requiring him to make a decision to
keep costs under control.
2 Seek Information
 Managers seek out a range of information to clarify their options once they
have identified an issue that requires a decision. Managers may seek to
determine potential causes of a problem, the people and processes involved
in the issue and any constraints placed on the decision-making process.
3 Brainstorm Solutions
 Having a more complete understanding of the issue at hand, managers move

on to make a list of potential solutions. This step can involve anything from a
few seconds of though to a few months or more of formal collaborative
planning, depending on the nature of the decision.
4 Choose an Alternative
 Managers weigh the pros and cons of each potential solution, seek additional
information if needed and select the option they feel has the best chance of
success at the least cost. Consider seeking outside advice if you have gone
through all the previous steps on your own; asking for a second opinion can
provide a new perspective on the problem and your potential solutions.
5 Implement the Plan
 There is no time to second guess yourself when you put your decision into
action. Once you have committed to putting a specific solution in place, get
all of your employees on board and put the decision into action with
conviction. That is not to say that a managerial decision cannot change after
it has been enacted; savvy managers put monitoring systems in place to
evaluate the outcomes of their decisions.
6 Evaluate Outcomes
 Even the most experienced business owners can learn from their mistakes.
Always monitor the results of strategic decisions you make as a small business
owner; be ready to adapt your plan as necessary, or to switch to another
potential solution if your chosen solution does not work out the way you
expected.
Factors That Affect Planning . . .
Factors That Affect Planning in an Organization


 To help your organization succeed, you should develop a plan that needs to be
followed. This applies to starting the company, developing new product,
creating a new department or any undertaking that affects the company's
future. There are several factors that affect planning in an organization. To
create an efficient plan, you need to understand the factors involved in the
planning process.
 Priorities
 In most companies, the priority is generating revenue, and this priority can
sometimes interfere with the planning process of any project. For example, if
you are in the process of planning a large expansion project and your largest
customer suddenly threatens to take their business to your competitor, then
you might have to shelve the expansion planning until the customer issue is
resolved. When you start the planning process for any project, you need to
assign each of the issues facing the company a priority rating. That priority
rating will determine what issues will sidetrack you from the planning of your
project, and which issues can wait until the process is complete.
Company Resources
 Having an idea and developing a plan for your company can help your
company to grow and succeed, but if the company does not have the
resources to make the plan come together, it can stall progress. One of the
first steps to any planning process should be an evaluation of the resources
necessary to complete the project, compared to the resources the company
has available. Some of the resources to consider are finances, personnel,
space requirements, access to materials and vendor relationships.
Forecasting
 A company constantly should be forecasting to help prepare for changes in the

marketplace. Forecasting sales revenues, materials costs, personnel costs and
overhead costs can help a company plan for upcoming projects. Without
accurate forecasting, it can be difficult to tell if the plan has any chance of
success, if the company has the capabilities to pull off the plan and if the
plan will help to strengthen the company's standing within the industry. For
example, if your forecasting for the cost of goods has changed due to a
sudden increase in material costs, then that can affect elements of your
product roll-out plan, including projected profit and the long-term
commitment you might need to make to a supplier to try to get the lowest
price possible.
Contingency Planning
 To successfully plan, an organization needs to have a contingency plan in

place. If the company has decided to pursue a new product line, there needs
to be a part of the plan that addresses the possibility that the product line
will fail. The reallocation of company resources, the acceptable financial
losses and the potential public relations problems that a failed product can
cause all need to be part of the organizational planning process from the
beginning.
Strategy Development
Strategy . . .
 The question “What is strategy?” has spurred numerous doctoral dissertations,

countless hours of research, and hearty disagreement among serious
management thinkers. Perhaps this is why many executives also struggle with
it. Nonetheless, decision makers seeking to steer a business to sustained
success need a succinct and pragmatic response. After all, it can only help
executives to have a shared definition when they are creating,
communicating, and implementing a strategy for their business.
 So, what is a business strategy? Strategy is different from vision, mission,

goals, priorities, and plans. It is the result of choices executives make, on
where to play and how to win, to maximize long-term value.
Strategy . . .
 “Where to play” specifies the target market in terms of the customers and
the needs to be served. The best way to define a target market is highly
situational. It can be defined in any number of ways, such as by where the
target customers are (for example, in certain parts of the world or in
particular parts of town), how they buy (perhaps through specific channels),
who they are (their particular demographics and other innate characteristics),
when they buy (for example, on particular occasions), what they buy (for
instance, are they price buyers or service hounds?), and for whom they buy
(themselves, friends, family, their company, or their customers?).
Strategy . . .
Successful Examples of Where to Play:

 Having a differentiated approach to a target market can be a source of great advantage. Southwest
Airlines Company is a case in point. Early in its development, Southwest defined its target market
to include regular bus travelers — people who wanted to get from point A to point B in the lowest-
cost, most convenient way. In contrast to the industry’s hub-and-spoke standard, Southwest’s point-
to-point operations and hassle-free service model offered a compelling value proposition for people
who would otherwise choose bus travel. This gave the company a unique growth path compared to
the traditional airlines.
 Or consider Sir Brian Pitman, the former CEO of Lloyds TSB: He had a policy of defining the
company’s target markets at one level of segmentation lower than the competition did. For
example, Lloyds was the first “high street” (retail) bank in the U.K. to carve out “high net worth”
as a separate business with its own unique target customer, value proposition, and system of
essential capabilities. Similarly, it was the first British commercial bank to drop large companies as
a target customer (with a few “flagship” client companies as exceptions). Sir Brian’s insight — that
you could win by being sharper than the competition in choosing your target market — turned
Lloyds from the United Kingdom’s banking laggard to its leading bank.
 In both the Southwest and Lloyds cases, “where to play” was an essential part of what made the
company’s strategy so successful for such a long time.
Strategy . . .
 “How to win” spells out the value proposition that will distinguish a business
in the eyes of its target customers, along with the capabilities that will give it
an essential advantage in delivering that value proposition. Choices must be
made because there is at least one way to win in every market, but not
everyone can win in any given market. With good choices, a business gains
the right to win in its target markets. The target market, value proposition,
and capabilities must hang together in a coherent way. And good strategies
call for the right amount of “capabilities stretch”: not too much or too little
change from the capabilities a business already has.
Strategy . . .
 Every company faces innumerable options for where to play and how to win. Often
it has to sort out seemingly conflicting objectives, such as the need for both long-
term growth and short-term profitability, to choose which options to pursue. To
“maximize long-term value” means — when there are mutually exclusive options
— to select those that will give the greatest sustained increase to the company’s
economic value. We once heard a corporate leader ask, “But how can you ever
know when you have maximized value?” The fact is, you can’t, because you can
never know with certainty if there’s a better option than those you’ve considered
so far. To “maximize long-term value” is to never stop looking for those higher-
value options.
 It’s worth emphasizing that “maximizing long-term value” is not the same thing as
“maximizing share price” or “maximizing shareholder value.” Those objectives
typically represent the more short-term demands of current shareholders or their
advisors, and they do not always align with what is best for all shareholders,
particularly long-term owners. On the other hand, “maximizing long-term value”
does not mean forgetting about the short term. Economic value takes into account
growth and profitability, the short term and long term, and risk as well as reward.
Strategy . . .
 To define the fundamentals of your business strategy, you need only to answer
three questions:
 1. Who is the target customer?

 2. What is the value proposition to that customer?
 3. What are the essential capabilities needed to deliver that value
proposition?
 Without clear and coherent answers to these three questions, you may have
an exciting vision, a compelling mission, clear goals, and an ambitious
strategic plan with many actions under way, but you won’t have a strategy.
Strategy . . . The Mainsail Approach
 The Mainsail Capital Group Corporate Approach


 The Mainsail Capital Group is an organization that creates safe and stable living
environments. To achieve this Mainsail must perform specific functions. The
Mainsail Strategic Plan includes three basic objectives: (i) to identify and acquire a
qualified property; (ii) to Finance the development of the property; and, (iii) to
operate our business at the property.

 Mainsail has developed specific organizational tactics that outline the actions
required to achieve the strategic plan. Our management is the responsibility of
each person affiliated with Mainsail. Our success depends on Good Management.
Good Management is created when Good Strategy and Good Implementation are
combined at each level of our organization.

 Mainsail must be active in Finance, Development, Senior Housing, Hospitality and

Medical Services in order to achieve our mission. The Strategic Plan must
continually focus and build on these functions.
 Everyone affiliated with Mainsail should focus on the overall mission and act within
their specific operation/division in response to the following corporate question:
“What is our current business and what will it evolve to be?” Corporate Tactics
should be in harmony with this corporate question. This line of thinking allows each
operation within the enterprise to remain aware of the other elements in the
enterprise and the required harmony among all of the operations needed to achieve
the strategic plan of the business.

 We must also be aware of our challenges and immediately after a Strategic Goal is
reached, we must ask, “What other businesses are we in?” These are the additional
functions we have to master in order to succeed. Mainsail must master property
development (acquire, entitle and construct) and finance (venture capital, debt and
equity) in order to get to the operations stage of creating safe and stable living
environments. These additional activities consume the energy of our management;
consume a large chunk of the human and financial resources; and are the principal
focus of our efforts each day while we pursue the corporate mission of creating safe
and stable living environments.
The goals of management are to continuously and consistently:


 1 build upon the organization to carry out the strategic plan;

 2 develop strategy-supportive budgets and programs;
 3 maintain an organization-wide commitment to objectives and the
strategy implementation;
 4 reward results at every stage of the organization;
 5 install policies and procedures that facilitate strategy implementation;
 6 maintain an information and reporting system to track progress and
monitor performance.
 To define our business Mainsail must look at:


 What we do to obtain a customer (our business is not defined by the company

name, it is defined by what we do to satisfy a customer want or need). We
must deliver on what the customer sees, thinks, believes, and wants at any
given time.
 Our mission is driven along three dimensions: (i) satisfying our customer needs
(what is being satisfied); (ii) identifying our customer groups (who is being
satisfied); and, (iii) the technologies we use (how customer needs are being
satisfied).
The Mainsail Capital Group Strategic Plan
 The Mainsail Capital Group is an organization that seeks to create safe and
stable living environments.
 The Strategic Plan contains five elements:

ONE:
 To establish and maintain a financial capability that allows Mainsail to access

capital (and equivalent resources). This Strategic Goal requires an active
involvement in:
 Private Equity
 Institutional Finance
 International Markets
 Agency Finance
TWO:
 To establish and maintain a development capability that allows Mainsail to

envision, design, entitle, and construct properties and improvements where
we can operate our business. This Strategic Goal requires an active
involvement in:
 Project Development
 Architecture and Design
 General Construction and Building
THREE:
 To establish and maintain a Senior Housing capability that allows Mainsail to

offer and operate a living environment on a continuum of care platform. This
Strategic Goal requires an active involvement in:
 Independent Living
 Assisted Living
 Skilled Nursing
 Recovery and Hospice Care
FOUR:
 To establish and maintain a Hospitality capability that allows Mainsail to offer

quality lifestyle experiences through nutrition; healthy living; lifestyle
experiences and wellness. This Strategic Goal requires an active involvement
in:
 The Property Management

 The Foodservices
 The Amenities Management
 The Nutrition/Wellness/Education Management
FIVE:
 To establish and maintain a Medical Services capability that allows Mainsail

to provide health and care services. This Strategic Goal requires an active
involvement in:
 A Surgery Center
 An Urgent Care Center
 A Pharmacy
 A dedicated Medical Group
 The Strategic Plan Tactical Guidelines contain four elements:
 (I) To Grow by Partnering with Stakeholders to Physically develop

communities:
 by a joint venture with existing landowners to develop properties that they

own outright; or,
 by identifying qualified properties and creating an investor group to acquire
the land for the purpose of developing the property.
 (II) To Access Capital and/or the Creation of Value for the Development and
Operations:
 by working with non-resident Investors to obtain products and services

that will help develop the projects while helping to expand a business
opportunity in the United States for the non-resident Investor; and/or,
 by working with Investors to obtain investment capital, products and
services that grow our organization; and/or,
 by working with Government agencies to provide access to our projects,
our products and services in exchange for joint-development arrangements
and Governmental support.
 (III) To Integrate different Disciplines in a Simplified Model Resulting in a Relevant

Community:
 by developing a Residential community that provides a Safe and Stable environment; and,
 by delivering quality nutrition and activities that stimulate the mind and body; and,
 by providing access to healthcare and medical treatments.
 (IV) To Offer Communities to Users in an Efficient manner that Maximizes Value:
 by delivering quality Residences / Facilities at aggressive rates to create value; and,

 by delivering quality food and interactive amenities to promote a healthy lifestyle; and,
 by delivering access to relevant medical care and attention to promote a quality
lifestyle; and,
 by promoting a lifestyle that delivers an appreciation for life and a learning experience
for the users of the Community and the employees associated with the Community.
End of Presentation

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The Mainsail Capital Group

Business and Management Concepts

 Five Functions of Management & Leading

 The planning function of management controls all the processes that

 The organizing function of leadership controls the overall structure

 The staffing function of management controls all recruitment and

 The coordinating function of leadership controls all the organizing,

 The controlling function of management is useful for ensuring all

 Details on management will be addressed

 Ethics in a business setting is defined as being aware of the moral principles

 Social Responsibility relates to the considerations given to stakeholder

 Stakeholder Analysis is the tool for weighing

 Stakeholder analysis is a seven step process:

 List all of the potentially affected parties to a decision.

 Determine each of the affected parties Rights and Responsibilities.

 Consider the relative power of each stakeholder affected by the

 Consider the short- and long-term consequences of the decision

 Formulate contingency plans for alternate scenarios.

Social Responsibility, Stakeholder Analysis and Scarcity

 Ethical awareness is important for many reasons:

 How Scarcity Affects a Business Executive

 Scarce Resources include the following four

 Cash scarcity is common for small businesses. New companies usually

 Competitive pressures, changes in customer preferences and

 Labor shortages may delay and drive up the cost of product

 As a conclusion to the topic on Ethics, we will

 The following element is taken from the Mainsail

 Our Mission and Vision . . . . .

 Our Approach and Philosophy . . . . .

 Our organization prides itself on being a business with a global vision in a

 It is important that our belief system is made clear so that whoever

Hello Holla Marhaaba Ni hao

Hallo Chao ban 2+2=4

What do all of the above represent?

 They represent different languages used by specific

 Accounting is actually the language of business.

 It is how a company communicates with the world.

 The information provided through Accounting provides a

 Accounting helps answer the following questions?

 A side note on Cash:

Cash is a homogeneous tool that is used to measure

 There are certain concepts of Accounting that guide

 This is the understanding that you must know what

 This can include the entire enterprise; a subsidiary; a

 Cash vs Accrual Accounting:

 This is the understanding that a company or enterprise is to be treated

 For Example: Accounting presumes that companies will continue to

 This rule requires that there be reasonable and verifiable evidence to

 Thisrule simply requires that when in doubt be

 Profits can only be recognized when they are realized.

 This is the understanding that the same method of

 This is the understanding that financial statements

 For Example: A $100 differential in a small shop would be

 The Income Statement,

 The Statement of Cash Flow,

Long Term Assets Long Term Debts

Total Liabilities and

 Notes to the Balance Sheet:

 Ratio Analysis is a further tool to help interpret financial statements.

 Can the company pay its bills.