The University of Auckland Business School Course Outline 2012 COMENT 701 ACCOUNTING, FINANCE AND MARKETING FOR

SCIENCE AND TECHNOLOGY VENTURES Course Prescription The course focuses on the business dimensions of science and technology enterprises. Explains the core concepts and tools of accounting, finance, marketing and sales and how they can be drawn on and used in the commercialisation of science and technology and in the development of high-growth entrepreneurial ventures.

Accounting and Finance Components The accounting and finance components of the course cover the sources of and uses of accounting and financial information with reference to capital budgeting techniques and valuation theory, the concepts of risk and return and the impact this has on firm value. The course builds upon financial analysis and reporting of accounting and financial information in technology science and innovation based enterprises in an international context; the application of capital budgeting and valuation concepts to technology and innovation based global enterprises; and key financial bases for project and enterprise decision-making and the management of economic resources. Goals To introduce students to the major tools of financial management through the use of and interpretation of accounting and other market based information for the purpose of decision making. Learning Outcomes 1) To understand the structure and content of financial reports and to interpret and draw conclusions from their analysis 2) To understand the importance of cash flows and their link to financial reports and to understand and apply particular tools of analysis to science and technology based product development 3) To understand and apply particular tools of analysis to capital expenditure proposals and to make decisions as to how capital projects might be financed 4) To gain an understanding of various forms of risk, including financial and operating leverage and how this relates to share valuation 5) To utilise accounting, financial and marketing information for valuation purposes leading to commercialisation

Marketing Components The marketing components of the course define and examine modern marketing theory and practice in the specific context of science and technology based businesses with an international focus. This includes market analysis and selection, strategic marketing and the use of marketing tools and techniques. The course looks in depth at marketing issues especially relevant in each stage of the commercialisation process. Building on an understanding of marketing and a market orientation, criteria for market segmentation and initial targeting decisions are discussed; as commercialisation moves beyond launch to market penetration and growth; strategic growth options are explained and discussed. Competitive differentiation based on a market and customer insight lies at the heart of successful commercialisation. Value creation is reviewed through a market lens with particular focus on how value is created, delivered and communicated. The links between customer value and financial outcomes are explained and illustrated with case examples drawn from science based businesses. Goals To introduce students to the marketing discipline and the tools available to manage risk and facilitate successful market introduction and profitable growth through the use of and interpretation of market based information and appropriate marketing tools for the purpose of decision making throughout the commercialisation process. Learning Outcomes 1) To understand the principles and concepts of modern marketing in science and technology based businesses including problem structuring to guide data collection 2) To recognise their utility and application 3) To appreciate the techniques and tools of marketing and their appropriate use in the context of the different stages of the commercialisation process 4) To understand how to use market and customer insights to support business decisions and the business case

Content Outline
Module Dates 1 27/28 January Topic: Accounting and Finance The understanding and analysis of financial statements. Cash flows and their link to financial reports. Product cost development analysis. Analysis of capital expenditure proposals; financing of capital projects. Topic: Marketing Marketing defined; customer value creation; strategic marketing process. Market analysis; generating and using knowledge about the international marketplace; target market selection. Market strategy; positioning and differentiating science-based market offers in international markets; go- to- market marketing techniques and issues including communicating the value proposition (external marketing), delivering value (interactive marketing) and enabling value creation (internal marketing). Marketing implementation issues relevant to science based businesses; measuring performance. Marketing Future Practice; new concepts and thinking in marketing and their application throughout the stages of the commercialisation process; Course summary and Conclusions.

10/11 February

24/25 February

9/10 March

Understanding risk; valuation.

23/24 March

Integration. Summary and Conclusion.

Learning Resources for Accounting and Finance No specific text is prescribed, however the texts listed below are worthy adjuncts to the course notes provided. Chapters from the following text book: Atrill, P., McLaney, E., Harvey, D., Jenner, M., Weil, S., Accounting: an introduction (1st Edition), Pearson Education Limited, 2011
o o o o o o o Chapter 3: Measuring and Reporting Financial Position (Pgs 73 88) Chapter 4: Measuring and Reporting Financial Performance ( Pgs 129 138, 143 157, 175 176) Chapter 5: Measuring and Reporting Cash Flows (Pgs 201 217, 232) Chapter 6: Analysis and Interpretation of Financial Statements (Pgs 259 267, 269, 271 294) Chapter 7: Cost-Volume-Profit Analysis and Marginal Analysis (Pgs 317 327) Chapter 10: Projected Financial Statements (Pgs 451 468) Chapter 11: Capital Investment Decisions (Pgs 499 530)

Chapter 2 Accounting Framework: The Concept of Value o In: Riggs, H.E. (2004) Financial and Economic Analysis for Engineering and Technology Management, 2nd ed., Wiley, Hoboken, New Jersey, pp.17-45. Chapter 5 Cash Flow Statement o In: Riggs, H.E. (2004) Financial and Economic Analysis for Engineering and Technology Management, 2nd ed., John Wiley & Sons, Hoboken, New Jersey, pp.249-266. Chapter 11 Financing of University Spinoffs o In: Shane, S.A. (2004) Academic Entrepreneurship: University Spinoffs and Wealth Creation, Edward Elgar Publishing. Appendix A Financial Statement Analysis o In: Brealey, R.A., Myers, S.C. & Marcus, A.J. (2001) Fundamentals of Corporate Finance, 3rd ed., McGraw-Hill/Irwin, Boston, pp.133-162. Section 5 Project Analysis o In: Brealey, R.A., Myers, S.C. & Marcus, A.J. (2001) Fundamentals of Corporate Finance, 3rd ed., McGraw-Hill/Irwin, Boston. Chapter 11 Essentials of Risk Management o In: Corbett, R. (2004) Chapter 11 - Essentials of Risk Management, in Vinturella, J.B. & Erickson, S.M., Raising Entrepreneurial Capital, Academic Press, Boston, pp.331-347 Boer, F.P. (2000) Valuation of Technology Using Real Options, Research Technology Management, vol. 43, no. 4, pp.26-30.
The above text will either be provided in class or be available online. Further instructions to follow. To give life to the study of accounting and finance it is highly recommended that you read the business press in, for example, NZ Herald (www.nzherald.co.nz) , The National Business Review (www.nbr.co.nz) and The Independent (www.theindependent.co.nz). In addition the New Zealand Stock Exchange (www.nzx.com) website and Sharechat (www.sharechat.co.nz) will provide further resource material. This will enable candidates in this course to observe the working link between the various theories and its application to the market.

Learning Resources for Marketing The following texts are course specific readings: Chorev, S., & Anderson, A. R. (2006).Success in Israeli high-tech start-ups; Critical factors and process. Technovation, 26(2), 162-174 Day, George S. The Capabilities of Market-Driven Organizations (1994) Dolan, R.J. (1995). How do you know when the Price is Right? Harvard Business Review, 73(5): 10-17. Gardner, D. M., Johnson, F., Moonkyu, L., & Wilkinson, I. (2000). A Contingency Approach to Marketing High-Technology Products. European Journal of Marketing, 34, 10531077. Gronroos, C. & Ravald, A. (2011). Service as Business Logic : implications for Value Creation and Marketing. Journal of Service Management, 22(1), 5-22. Hughes, G. (1990). Managing High-Tech Product Cycles. Executive, 4(2), 44-55 Jolly, V. K., Alahuhta, M., & Jeannet, J. (1992). Challenging the Incumbents: how high technology start-ups compete globally. Journal of Strategic Change, 1(1), 71-82. Levitt, T. (2006). What Business are you In? Harvard Business Review, 84(10), 127-35. McKenna, R. (1985). Market Positioning in High Technology. California Management Review, 27(3), 82-108. Meldrum, M. J. (1994). Marketing High Tech tech Products: The Emerging Themes. European Journal of Marketing, 29(10), 4558. Nunes, P. F. & Cespedes, F. V. (2003). The Customer Has Escaped. Harvard Business Review, 81(11), 96-105. Prahalad, C. K., & Ramaswamy, V. (2004). Co-creation experiences: the Next Practice in Value Creation. Journal of Interactive Marketing, 18(3), 5-14. Roberts, C., & Alpert, F. (2010). Total Customer Engagement: Designing and Aligning Key Strategic Elements to Achieve Growth. Journal of Product & Brand Management, 19(3), 198-209 Schultz, D. E. (1996). The Inevitability of Integrated Communications. Journal of Business Research, 37(3), 139-146 Slater, S. F., & Narver, J. C. (1994). Market Orientation, Customer Value, and Superior Performance. Business Horizons, 37(2), 22-28.\ Von Hippel, E., Ogawa, S., & De Jong, J. J. (2011). The Age of the ConsumerInnovator. MIT Sloan Management Review, 53(1), 27-35.

Yankelovich, D., & Meer, D. (2006). Rediscovering Market Segmentation. Harvard Business Review 84(2), 122-131

The following texts are recommended readings: Business Market Management Anderson, J. C. & Narus J. A., (1999), Understanding, Creating and Delivering Value, Prentice Hall This book is highly recommended as a comprehensive and in depth assessment of the antecedents of superior marketplace performance including a market orientation. Aaker, D., (2011), Strategic Market Management (9th ed), John Wiley & Sons This reading offers a succinct understanding of the strategic marketing process. For those seeking a more granular general understanding of marketing management principles and application, the following is a useful reference: McDonald, M. H. B., & Christopher, M., (2003), Basingstoke Marketing: A Complete Guide, Palgrave MacMillan The final recommended reference texts provide an excellent overview of the foundations of technology commercialisation including marketing high technology. Allen, K. R., (2003), Bringing New Technology to Market, Prentice Hall Seba, T., (2006), Building a Winner, Seba Group

Teaching Staff The time allocated to the course will be split between accounting/finance and marketing. Course Director Professor Kenneth Husted, Room 4115, Owen G Glenn Building, Phone 09 3737599, extension 86829. Email k.husted@auckland.ac.nz Accounting and Finance Lecturer: Robert Wilton, Room 376, Owen G Glenn Building, Phone 09 3737599, extension 87170 or DDI 9237170; Office Hours: To be advised. Email: r.wilton@auckland.ac.nz Marketing Lecturer: David Shieff, Room 419, Owen G. Glenn Building, Phone 09 3737599, extension 86984; Office Hours: To be advised. Email: d.shieff@auckland.ac.nz

Assessment Based on a business case, you will be required to undertake and prepare a written feasibility study using financial, accounting and marketing principles. This will be worth 30% of your total grade and is to be submitted no later than Saturday 24 March 2012. You will also be required to attend a 40 minute oral test session to be conducted by Robert Wilton and David Shieff (20 minutes for preparation + 20 minutes oral test). This will be worth 40% of your final grade. This test must be passed in order to gain a pass in this course. Clear criteria will be made available to help you to prepare for this. This will be held at mutually agreed times during the week 26 31 March 2012 In addition you will be required to submit an assignment for each of accounting/finance and marketing based on work covered in the first 3 modules. These assignments are worth 15% for EACH of the 2 areas. Assessment Proportion Related learning outcomes to be assessed in accounting and finance 1, 2 and 3 Related learning outcomes to be assessed in marketing

Assignment (Acct & Fin) Assignment (Marketing) Feasibility study Oral test TOTAL

15% 15% 30% 40% 100%

1, 2 and 3 All All All All

Plagiarism Plagiarism is a form of cheating. In coursework assignments submitted for marking, plagiarism can occur if you use the work and ideas of others without explicit acknowledgment. Work can be plagiarised from many sources, including books, journal articles, the internet, and other students assignments. A students assessed work may be reviewed against electronic source material using computerised detection mechanisms. Upon reasonable request, students may be required to provide an electronic version of their work for computerised review.

Inclusive Learning Students are urged to discuss privately any impairment-related requirements face-to-face and/or in written form with the course convenor/lecturer and/or tutor. Student Feedback Student feedback on course content and process is welcomed. We use this information to continuously identify ways to improve the value students receive from the course. We will ask students to provide formative mid-course evaluations/fast feedback (timing to be confirmed).