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Chater 3- What is Business.docx

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Department
Management
Course
MGM101H5
Professor
Dave Swanston
Semester
Fall

Description
September 27, 2013 Chapter 3: What is Business? The Big Picture  An efficient and effective operating platform can be assessed against three fundamental characteristics (Google as an example): 1. Commercial Endeavours (business system)- The markets that the organization serves, the products/services it offers, and the needs it professes to meet in the marketplace  Generation of revenue and profits from market offerings “point and click” 2. Employee Interaction- The value creating skills an organization’s employees bring to the marketplace; the success of many businesses lies with the specialized skills that exist within its labour force  Developers, engineers, and system designers with specialized skills employed 3. Organizational Efficiency and Structure- Reflection of the complexities of the business activities that circulate within an organization  Formal framework set in place to manage + deliver products and services What is Business?  A system if integrated mission based actions  Develop and grow markets for its goods and services  Create organizational value (wealth) on behalf of its stakeholders Factors of Production/Fundamental Resource areas:  Assets- Infrastructure and resource base of the organization  Labour- Human resource requirements of the business  Capital- Money needed by an organization to support asset based expenditures, meet operating cash requirements, and invest in development of new products/services which organization desires to introduce into the marketplace  Managerial Acumen- Foresight, drive, knowledge, ability, decision making competency, and ingenuity of the organization’s key individuals; its owners/top level managers  Visionary Leadership- Ability of managers to establish a direction for the organization based on the needs identified in the marketplace and the mission (reason for being) of the organization ->Translated into strategic plan = Business Model Composition- Operational platform/structure that a business uses to generate revenue and profit The role of the business manager/owner is to recognize, anticipate, and sense an opportunity to create a product/service that is unique, important and of meaningful value to targeted customers: Strategy and 3C Assessment:  Strategy- Specific objectives an organization hopes to achieve during the planning cycle  3c Assessment- Analyzing resources available to organization and the capabilities and competencies it possesses; defines capacity of what organization can and cannot do -> enables management team to define how and to what extent it can capitalize on its identified strategic opportunities in manner that is superior to competition = Business plan can then be developed via business planning cycle September 27, 2013  Competitive Advantage- The advantage an organization has over its competitors that enables it to generate more sales, achieve greater margins (on costs), achieve a lower cost base, and attract/retain more customers  Identify and set objectives that will enable them to achieve defined position in marketplace (SMAC): Specific, Measurable, Actionable, and Controllable but also achievable, allocate resources, and assessment must be done  The failure to meet objectives of a planning cycle can be the result of poor positioning, poor operational execution, or combination of the two  Both For-Profit Companies: Organizations whose overreaching objective is profitability and wealth creation on behalf of their shareholders and stakeholders, and Not-for-Profit- Organizations: Organizations whose overreaching objective is not profitability and wealth creation but to deliver services to the people, groups, and communities that they serve via a model of collective interest and social goal achievement, need competitive business models The Fundamental Objectives of Business 1. Short Term Profit  Ensures immediate survival of the firm  Necessary to pay bills and reinvest in the future 2. Long Term Growth and Profitability  New products and services need to be developed to ensure the organization remains healthy and continues to grow 3. Social and Environmental Responsibility  Customers want businesses to operate and act in a socially responsible manner with respect to product development, resource consumption and operating processes  Too much emphasis on short term profitability may result in decisions that are detrimental to long term market opportunities & fall short of social responsibility expectations; must be equal The Business Model and Profitability September 27, 2013 The Difference Between Profit and Prof
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