lecture 6

Business model

Definition:
Explains how a company creates, delivers, and captures value.

Key Questions:

• Who does the company serve?

• What does it provide?

• How does it make money?

• How does it deliver value?

• How does it sustain competitive advantage?

Value chain

Definition:
A linked set of activities that adds value as a product or service moves from raw materials to the final customer.

Flow:
Suppliers → Operations/Production → Marketing & Distribution → Customer → Value Added

Industry value chain analysis

• Upstream Activities → Closer to raw materials and suppliers.

• Downstream Activities → Closer to customers.

• Center of Gravity → Stage where the company creates the most value and where its core competencies reside.

• Vertical Integration → Ownership or control of multiple stages of the value chain.

Types of basic organization structures

🏢 Simple Structure

Owner-manager directly supervises employees.
Example: Local coffee shop or small family restaurant.

📊 Functional Structure

Employees grouped by functions (marketing, finance, HR).
Example: IKEA.

🏬 Divisional Structure

Organized by product, market, or geographic region.
Example: Samsung (phones, TVs, appliances) or Toyota (different regions/products).

🎯 Strategic Business Units (SBUs) / Subsidiaries

Semi-autonomous units with their own strategies and objectives.
Example: Google (YouTube, Google Cloud, Android).

🌐 Conglomerate Structure

A parent company owns multiple unrelated businesses.
Example: Virgin Group (airlines, hotels, mobile, health clubs) or Tata Group (cars, steel, hotels, IT).