Instructor: Emer Dooley, Lewis 111 Phone: 206-369-7248

Other professors will do many of the class sessions as noted below.

Class web page http://faculty.washington.edu/emer/cse

Class Hours: Tuesday 6:30-9:20

Clasroom: EE1-045

The course provides a high-level view of business for non-business students. It will cover business principles relevant to the software industry in four areas: Competitive Strategy, Finance, Accounting and Human Resources. The course is organized as a series of case studies and lectures. It will progress from an emphasis on "tools" to a more high-level look at competitive dynamics in high-tech industries.

Grading: Grades will be awarded as follows

Understanding financial statements: Short quiz 20%

Understanding the numbers that drive the business. Take home assignment 20%

Take home assignment on human resources 15%

Three take-home assignments on technology strategy 30%

Class participation 15%

Proposed class Outline:

Lecture: Innovation, competition and competitive strategy in high-tech industries

This will cover the following issues

• How does rapid technological change alter the basis of competition in an industry and what are the implications for competitive strategy?
• The role of dominant designs in technology
• The evolution of competition
• Technology Paradigm Shifts

By the end of the first two sessions, participants should be able to:

• understand basic accounting definitions, concepts, and principles,
• read and interpret basic financial statements,
• analyze the effect of accounting transactions,
• understand the relationship between income and cash flow,
• perform ratio analysis,
• discuss the uses and limitations of financial reports,
• discuss the use of accounting measures in performance evaluation.

Teaching Methods: A combination of class discussion/lecture based on a primer entitled "Financial Accounting Tools for the Non-Financial Manager" as well as other materials and readings which will be handed out before these sessions begin.

Materials Used: "Financial Accounting Tools for the Non-Financial Manager" by S. Sefcik.

Text: "Analysis for Financial Management," Chapters 1 and 2. 6^th ed., by Robert C. Higgins.

By the end of the two sessions, participants should be able to:

• Define cost terms (e.g., fixed, variable, sunk, and opportunity cost)
• Estimate costs using account analysis or regression
• Perform cost-volume-profit analysis including calculation of the break-even point
• Discuss the meaning and use of the contribution margin (the increase in profit Explain why the percentage change in profit is generally greater than the percentage change in sales associated with a one unit increase in volume)
• Explain why the percentage change in profit is generally greater than the percentage change in sales
• Explain the circularity of setting product price by marking-up cost
• Use accounting information to analyze business decisions
• Use discounted cash flow techniques (including NPV) to evaluate investment decisions
• Explain why a balanced set of performance measures are needed to drive a company’s strategy for success

Teaching Methods: A combination of lecture/discussion and case analysis

Text: Managerial Accounting Chapters1,4,6,10 (John Wiley & Sons, 2001), by James Jiambalvo.

• The crucial role of leadership in creating and sustaining effective organizations
• Transformational Leadership: Tapping into the potential of the workforce
• Leadership Competencies
• Creating and sustaining effective teamwork
• Decision-making and Teamwork: Gaining insights about appropriately involving others in problem-solving and decision-making
• Decision-Making Guidelines designed to protect quality, enhance acceptance and balance the demands between time efficiency and team member development
• Conflict management

Lecture: Technology strategy

This will cover:

• How should technology and competitive strategy be integrated.
• How strategy drives technology investment decisions
• Managing the product development process

Case: Materials Technology Corporation

Reading: "Creating project plans to focus product development", Wheelwright and Clark.

1. How does Quinn's view of what business MTC is in differ from Bennet's view?
2. How would you characterize the various projects MTC has undertaken, in the framework proposed by Wheelwright and Clark?
3. Is it the right set of projects for MTC?
4. How many projects does MTC have the capacity to have underway at a given point in time?
5. If you were an MTC board member what would your primary concerns be? Which uncertainties would you like to see resolved? In what order of priority?
6. If you were advising Spencer Quinn on how to build MTC into a successful company what would you say?

Lecture: Competitive Strategy and New Product Introductions

This will cover

• The technology lifecycle in the marketplace
• How do you establish a new product in the marketplace
• What determines new-product introduction success?

Case Study:

Readings: Hill, C. W. (1997). "Establishing a standard: Competitive strategy and technological standards in winner-take-all industries." Academy of Management Executive XI(2): 7-25.

Moore, G. A. (2001). Crossing the Chasm -and Beyond. Strategic Management of Technology and Innovation, Mc-Graw Hill Irwin. P. 265-272.

Case: Red Hat and the Open Source Movement

Questions to prepare on the Red Hat case

1. Why has open-source software been so successful? What are the limits (if any) of its application?
2. How can Red Hat best exploit the opportunity created by open-source software? What are the biggest challenges it faces going forward?
3. What should Young do? Specifically, should he fund the development of Linux applications?

A whirlwind tour of entrepreneurship:

• Idea generation
• Defining the customer and the market
• Raising money: The role of friends and family, angels, banks, VCs, Corporate partners and Investment Bankers
• Shipping a product
• Exit strategy: Acquisition or IPO

Case: Axon Corporation

Questions to prepare on "Axon" business plan

1. What market discontinuity was Axon hoping to exploit?
2. How did they define their market? i.e. who is the customer and what problem is Axon going to solve?
3. What are the strengths and weaknesses of their market research and conclusions?
4. How would you assess the team?
5. How will this company scale?
6. Who is the competition?
7. How will this company make money? How much do they need now?