STEN 1000 Chapter 1: Intro to Business (04-75-100) Textbook + Lecture notes - Ch. 1
20 Jun 2018
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CHAPTER 1 – WHAT IS BUSINESS?
Business (on a macro-level) = a system of integrated actions designed to:
a. Ensure that an organization develops and grows a market for its goods and/or services
b. Create organizational value (wealth) on behalf of its stakeholders
- The mission-focused activities aimed at identifying the needs of a particular market or
markets, and the development of a solution to such needs through the acquisition and
transformation of resources into goods and services that can be delivered to the marketplace
at a profit.
3 fundamental characteristics of how a business operates:
1. Commercial endeavours
a. The markets the organization serves
b. The products and services it offers
c. The needs it professes to meet in the marketplace
2. Employee Interaction – the value-creating skills an organization’s employees bring to
the marketplace
3. Organizational Efficiency and Structure – a reflection of the complexities of the
business activities that circulate within an organization
Business
- Mission-focused activities aimed at identifying the needs of a particular market(s)
- Development of a solution to such needs through the acquisition and transformation of
resources into goods and services that can be delivered to the marketplace at a profit
Business model (TB fig 1.6 ) – the underlying operational platform or structure which a business
uses to position its approach to a given market, to generate its revenue and derive its profit
- Successful business model - enables a company to meet the needs of the marketplace in a
manner which is superior to that of its competitors
- The manner and structure by which business is conducted on a day-to-day basis;
conscious decisions about resources to develop revenue and drive profit
1. Company-centric side (business system) – underlying mechanics as to how the business is
structured
a. Activities – key processes an organization undertakes in order to deliver products and
services to the marketplace
b. Resources:
i. Assets – infrastructure and resource base of the company (land, buildings,
equipment, technology, raw materials, brand power…)
ii. Labour – human resource (talent) requirements of the business
iii. Capital – money needed by an organization to support expenditures, meet
operating requirements and invest in development of new products/services
iv. Managerial Acumen – foresight, drive, knowledge, ability, decision-making
competency and ingenuity of the organizations key individuals
c. Partners – dependencies or relationships with other organizations that are essential to
the design, development and delivery of products/services to the marketplace
(distributors, suppliers, manufacturers, service companies)
d. Cost Structure – expenses as a result of offering products/services to the
marketplaces
e. Portfolio of Products and Services – items, products or services which a company
offers for sale
2. Market-centric side – how the business connects to the marketplace
- Ability to assess potential market opportunities and determine where and how to
compete
- Ability to effectively develop and communicate a market position around which to
build a value proposition, revenue model and a way to outperform rivals
a. Opportunity Assessment – analysing the marketplace to determine which
demographic or markets are most likely to respond to and purchase their
products/services
b. Positioning – ability to develop a unique, credible, sustainable and valued place
in the minds of customers to their brand and products/services
c. Value Proposition Development (TB Fig. 10.18) – the proposition
communicates to customers how the company’s products/services are different
from competitors and the important benefits that they offer
- Value proposition* - statement that summarizes whom a product/service
is geared toward and the benefits the purchaser will realize as a result of
using the product or service
d. Revenue Model Development – the model focuses on the relationship between
the prices charged for their products/services, the volume of purchases they are
able to generate and
its profitability
* Value proposition = service
benefits + product benefits + brand
benefits + cost benefits +
emotional benefits
Document Summary
Business (on a macro-level) = a system of integrated actions designed to: ensure that an organization develops and grows a market for its goods and/or services, create organizational value (wealth) on behalf of its stakeholders. Mission-focused activities aimed at identifying the needs of a particular market(s) Development of a solution to such needs through the acquisition and transformation of resources into goods and services that can be delivered to the marketplace at a profit. Business model (tb fig 1. 6 ) the underlying operational platform or structure which a business uses to position its approach to a given market, to generate its revenue and derive its profit. Successful business model - enables a company to meet the needs of the marketplace in a manner which is superior to that of its competitors. Ability to assess potential market opportunities and determine where and how to compete.
