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BU111 Study Guide - Midterm Guide: Southwest Airlines, Systems Theory, Human Resource Management

Course Code
Jim Mc Cutcheon
Study Guide

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Business 111 Lecture Notes
Preparation for first Lab
Read “What is a Case” in the Lab manual
Read the “Joe McBrine” case
Be prepared to discuss the case using the format outlines in the “What is a Case” reading
Get some thoughts down on paper in order to facilitate discussion
What is Business?
Business Defined The sum total of all activities involved in the creation and distribution of goods
and services for private profit
o Primary Activities of a Business
Creation In the older days, creation was defined as production, whereas it is now
defined as the Operations Function
Distribution Getting the goods or services to the end user. This is the Marketing
o Ancillary (Secondary) Activities Necessary to ensure we can perform the primary activities
Human Resources
Legal etc.
o Profit motive The fact that business does whatever it does for a profit separates it from the
other areas of economic endeavor
What is a model?
A representation of reality
Characteristics of a good model:
1. Simplification It helps to simplify our understanding of what would otherwise be a very
complex phenomena
2. Structure It structures or “frames” our thinking regarding a complex topic
3. Framework It provides a meaningful framework for analyzing and studying a complex
4. Interaction It helps to show how the various aspects of reality interact with or impact upon
one another (General Systems Theory)

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Our Course Model
Critical Success Factors Indicators of Business Success: It is not enough to do just one of these things,
we must do them all in order to be successful
o Achieving financial performance
o Meeting customer needs
o Providing quality products and services
This includes customer service
o Encouraging innovation and creativity
o Gaining employee commitment
How can you as a manager gain the commitment and dedication from the people that
work for you
Stakeholders Individuals or groups who depend upon a company for the realization of their
personal goals and upon whom the company is dependent for the realization of its goals. This
relationship is said to be one of mutual dependency
o Primary Stakeholders
o Secondary Stakeholders these stakeholders have a lower level of dependency compared with
the primary stakeholders

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Society as a whole
o Stakeholder Relationship
Stakeholders provide business with the capacity to operate
Owners provide capital
Customers provide sales
Employees provide labour
Stakeholders therefore have very legitimate expectations of a business
Owners expect a fair return on their investment (ROI)
Customers expect quality products and services
Employees expect to be treated fairly, to be paid fairly etc.
Therefore businesses must recognize its responsibility to address stakeholder
Failure to address the stakeholder expectations will result in:
Unmotivated and uncommitted employees
o Low levels of creativity and innovation
o Low levels of quality and customer service
o Poor financial performance
Dissatisfied and disappearing customers
Angry shareholders and falling stock prices
Potential bankruptcy of the firm
Management’s Primary Objective To devise and implement strategies that will allow the organization
to achieve the critical success factors in a manner that meets legitimate stakeholder expectations
In an attempt to achieve this primary objective, we must be able to analyze two very different sets of
environmental factors: The External Environment and The Internal Environment
Characteristics of the External Business Environment
o Extremely dynamic and constantly changing; the pace at which it is changing is rapidly
o Increasingly competitive
o Increasingly globalized
o Complex, interactive, two-way phenomena
At any point, there are all kinds of forces in the external environment that are
impacting your firm
Example: The airline industry’s pressure on Southwest airlines to charge for bags,
however, they did not cave to this pressure.
Southwest came up with a strategy in response to this outside pressure, that in turn,
further changed the environment
o Largely uncontrollable from the perspective of the individual firm or manager
We would like to be able to control many of the things in the eternal environment, but
there is nothing we can do. We must simply respond after the changes take place
The PEST model for analyzing an external environment
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