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Chapter 1

Chapter 1 - What is Business.docx

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Department
Commerce
Course
COMM 103
Professor
Gregory Libitz
Semester
Fall

Description
Chapter 1: What is Business? THE BIG PICTURE  Business – system of integrated actions designed to ensure organization develops/grows a market for its goods/services in manner that creates organizational value (wealth) on behalf of shareholders o To create wealth, organization must successfully identify solutions to right customers at for the right price/place/time  Efficient platforms assessed on three fundamental characteristics: o COMMERCIAL ENDEAVOURS :markets organization serves, products/services offered, needs it claims to meet in marketplace  Reflects results of understanding of existing supply/demand relationships in marketplace + capacity/capability of competitors to deliver to buyers  Key to profitable outcome o EMPLOYEE INTERCTIO:value-creating skills employees bring to marketplace as success lies with in their specialized skills  Leveraging these skills enables a business to create value/transactions, thus profit o ORGANIZATIONAL EFFICIEN/STRUCTUR: reflection of complexities of business activities that circulate the organization  Reflective of development of infrastructure, created by organization & transaction process developed to service target market WHAT IS BUSINE?S DEFINITIO:Mission focused activities aimed at identifying needs of particular market(s) & development of solutions to such needs through acquisition/transformation of resources into goods/services delivered to market for profit  Managers control/initiate activities in through development of business model/system most effective for marketplace  Business model built around four core fundamental resource areas: o ASSETS: Infrastructure/resource base of organization o LABOUR: human resource requirements of business o CAPITA: money needed to support asset-based expenditures, operating cash requirements, investing in products/services o MANAGERIAL ACUMEN : foresight, drive, knowledge, ability, decision making competency & ingenuity of organizations key individuals (owners/managers)  Combined four fundamentals with transformation/sale of goods & services, determines a company’s cost base & operating platform o BUSINESS MODE/SYSTEMoperational platform/structure a business uses to generate revenue/profit  ROLE OF MANAGEMENT:anticipate, recognize, sense opportunity to deliver unique/important/valuable products & services o Opportunity realized by application of other productive resources organization possesses (other 3 fundamental resources) o Management must conduct “ STRATEGY&3C ASSESSMENT” CAPABILITICOMPETENCY ,CAPACIT)  Strategy – specific objectives to achieve during planning cycle  3C Assessment – analyzing resources available & the capabilities/competencies it possesses, thus defining the capacity of what the organization can do  Enabling management to define what/how it can capitalize on strategic opportunities in a manner better than competition  Understanding “S&3C” allows management to develop a business plan using thBUSINESS PLANNING CYCLE o S&3C  Business Plan Development  Business Plan Execution  Company Performance/Profitability  Company Growth/Reinvention o Business planning cycle is the approach for creating valuable products/services, creating unique position in marketplace, thus aCOMPETITIVE ADVANTAGE  COMPETITIVE ADVANTAGE– advantage organization has over competitors, generating more sales, greater margins, lower cost base, attracting/retaining more customers  When it can offer customers products with more value than its competitors  Companies grow through the reinvestment of profits into the business + expansion of business opportunities  Profit generated through effective/efficient business plan (revenue > expenses) Businesses grow by executing SERIES OF BUSINESS PLANNING CYCLES  Planning cycle is designed to o Direct positioning of company with marketplace o Coordinate creation of business plan that will achieve objectives made for planning period o Ensure a connection with the vision & mission of the organization o Develop required operational tactics, leading to growth/profitability  Businesses want a defined position in the marketplace (using set objectives) o Objectives must be specific, measurable, actionable, controllable (SMAC) by management o Objectives must be achieved within a given planning cycle time frame  Management needs to assess success of company and determine adjustments to further growth in upcoming planning cycles  If company doesn’t achieve results, management must redirect the plan in a different direct  K EY IDENTIFIEas to whether a given plan is working are a flattening/declining revenue or reduction of profitability  FAILURE TO MEET OBJECTIVES OF PLANNING CYC= poor positioning/operational execution  PLANNING CYCLE STAGING:Direction/position  implementation  assessment  FOR PROFIT ORGANIZATIONS– objective is profitability/wealth on behalf of shareholders/stakeholders  NOT -FOR-PROFIT ORGANIZATION–objective to deliver services to people/groups/communities served via collective interest/social goals; however, still need business plan/model to fund ongoing delivery of services FUNDAMENTAL OBJECTIVES OF BUSINESS  SHORT TERM PROFIT-immediate need to pay bills, ensuring immediate survival of firm  LONG -TERM GROWTH /PROFITABILIT-Businesses must search for new markets/opportunities to further grow/focus organization; ensure ongoing profitability  SOCIAL/ENV
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