Week 1 - Business Organisations & Strategy

Introduction to Business Models Study Guide Week 1 (Sept 2024)

1. Housekeeping and Syllabus

1.1 Objectives

  • Understand key principles governing the corporate environment

  • Learn about industry analysis tools and models necessary to comprehend the business environment

  • Gain a broad understanding of business operations and profitability

  • Understand main strategy concepts

1.2 Lecture Schedules

  1. Introduction to Business Models

  2. Entrepreneurship and Start-ups

  3. Industry Analysis: Structure, 5-forces, and Competitive Environment

  4. Resources and Capabilities; Introduction to the Resource-based View

  5. Developing Competitive Advantages

  6. Successful Product Portfolio Strategy (BCG, Ansoff and McKinsey Matrix)

  7. Market Types, Differentiation, and (Re)positioning

  8. Innovation in Organizations

  9. Organizational Design, Structure, and Dynamics; Leading Through Change

  10. Managing Human Capital

  11. Global Market Expansion

1.3 Logistics

  • Practical and technical details found in the syllabus

  • Class materials will be posted on Blackboard

1.4 Evaluation

1.5 Challenges and Expectations

  • Learn to connect concepts across different lectures

  • Read textbooks for clarification

  • Work autonomously on group projects

1.6 Professionalism

  • Performing at a high level with pride

  • Elements of Professionalism:

    • Etiquette: Expected norms of behavior in different situations

1.7 Being a Team Player

  • Contributions to a larger cause

  • Enhancing team effectiveness; loyalty to organization

1.8 Communicate Effectively

  • Active listening and providing practical information

  • Present facts clearly without misconstruing opinions as facts

  • Concise and efficient information delivery; clarity on expectations

1.9 Maintaining a Confident, Positive Outlook

  • Optimism as a trait of successful individuals

  • Resilience in the face of obstacles; energy's contagion

2. What Do Businesses Do?

2.1 Understanding What Businesses Do

  • Businesses are profit-seeking organizations providing goods/services to satisfy customer needs (also termed firms or enterprises)

  • They aim to sell goods for profit; assessing profitability for startups is essential (e.g., TikTok, Snapchat)

2.2 Ecosystem

  • Companies operate in chains impacting revenue generation decisions

2.3 Adding Value: The Business of Business

  • Revenue: Money generated through sales of goods and services

  • Business Model: A concise outline of how a business plans to earn revenue

  • Profit: Leftover capital after costs (Profits = Revenue - Costs)

2.4 Competing to Attract and Satisfy Customers

  • Competitive Advantage: Unique features that enhance product appeal to target customers

2.5 Nonprofit Organizations

  • Provide goods/services without profit motive; must operate efficiently to achieve goals

2.6 Identifying Major Types of Businesses

  • Goods-producing Businesses:

    • Create value by producing tangible goods (e.g., manufacturing, construction)

    • Generally capital-intensive

  • Service Businesses:

    • Create value by delivering benefits through activities (e.g., healthcare, finance)

    • Often labor-intensive; comprise 75% of a developed nation's economy

2.7 Risk and Reward

2.8 Business Sales Models

  • Sales can occur through:

    • B2B (Business to Business)

    • B2C (Business to Consumer)

    • C2C (Consumer to Consumer)

    • C2B (Consumer to Business)

2.9 Big Companies and Their Profits

  • Walmart (2020):

    • Revenue: $523.964 B

    • Profit: $20.568 B

    • Industry: Retail

    • Founded: 1962 by Sam Walton

    • Employees: 2,300,000

  • Apple (2020):

    • Revenue: $274.515 B

    • Profit: $104.926 B

    • Industry: Technology

    • Founded: 1976 by Steve Jobs and Steve Wozniak

    • Employees: 147,000

2.10 Positive and Negative Effects of Business

  • Potential Contributions:

    • Providing valuable goods/services

    • Employment generation

    • Tax contributions

    • Economic growth and stability

  • Potential Negative Effects:

    • Pollution and waste generation

    • Health and safety risks

    • Community disruption

    • Financial instability

3. Business Core Functions

3.1 Major Functional Areas in a Business Enterprise

3.2 Major Functional Areas in a Business Enterprise

  • Research and Development (R&D):

    • Responsible for new product design

  • Information Technology (IT):

    • Promotes communication and service offerings

  • Manufacturing/Operations:

    • Relates to production for goods/services

  • Marketing:

    • Identifies market opportunities, branding, pricing strategies

  • Finance and Accounting:

    • Manages company finances and resource allocation

  • Human Resources (HR):

    • Manages employee recruitment and support

  • Business Services:

    • Supports specific legal, banking, and real estate needs

4. The Economic Environment – Key Definitions

4.1 What Is This Thing Called The Economy?

  • Economy: Total economic activity in a region

  • Economics: Study of resource utilization for goods and services

4.2 Factors of Production

  • Natural Resources: Tangible assets in their natural state

  • Human Resources: Workforce of the organization

  • Capital: Funds and human-made elements for production

  • Entrepreneurship: Innovation and risk-taking to start businesses

  • Knowledge: Expertise attained from experience

4.3 The Economic Impact of Scarcity

  • Scarcity: Finite supply of any productive resource

  • Opportunity Cost: Value of the best alternative not taken

4.4 Economic Systems

  • Economic System: Policies defining resource allocation; includes free-market vs. planned systems

Applying What You've Learned

  • Define a business in your own words.

  • Explain the concept of adding value in a business.

  • Identify major types of businesses and their specifics.

  • Explain the purpose of the six major functional areas in a business enterprise.

  • Explain the factors of production.