(c) 2012 McGraw-Hill Ryerson Ltd.

Chapter 1 – Learning Objectives

LO1: A base-level understanding of what business is

LO2: Exposure to the 4 major components of the business model and their impact on an organization’s competitive advantage

LO3: An understanding of how businesses plan

LO4: An introduction to the difference between profit and profitability

LO5: Exposure to the importance of creating a well-differentiated value proposition as key to a business’s success

LO6: A cursory overview of the relationship between business strategy and tactics and the importance of successfully executing both for a business to achieve its identified objectives

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Chapter 1 – What is Business?

The “Big Picture” Explained Business = A system of integrated mission-based actions

designed to ensure that an organization develops and grows a market for its goods and services in a manner that creates organizational value (wealth) on behalf of its stakeholders Organizations must properly identify solutions to market place needs/desires

and deliver these solutions to the right customer, at the right place, at the right time, and for the right price creating a profit

Requires an effective and efficient operating platform assessed against 3 fundamental characteristics:1. Commercial Endeavors – Refers to markets the organization

serves, its products and services, and the needs it meets in the marketplace

2. Employee Interaction – Refers to the value-creating skills an organization’s employees bring to the marketplace; the specialized skills that exist within its labour force

3. Organizational Efficiency and Structure – Refers to the complexities of the business activities that circulate within an organization

(c) 2012 McGraw-Hill Ryerson Ltd.

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Chapter 1 – What is Business?

LO1

Basic Business Concepts BUSINESS refers to 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

4 Core Fundamental Resource Areas:1. ASSETS = The infrastructure and resource base of the organization

including land, buildings, equipment, raw materials and brand power

2. LABOUR = The human resource requirements of the business

3. CAPITAL = The money needed by an organization to support asset-based expenditures, to meet operating cash requirements, and to invest in new products/services in the marketplace

4. MANAGERIAL ACUMEN = The foresight, drive, decision-making competency, knowledge, ability, ingenuity of the organization’s owners and/or top level managers; visionary leadership

BUSINESS MODEL/SYSTEM = The operational platform or structure that the business uses to generate revenue and profit

(c) 2012 McGraw-Hill Ryerson Ltd.

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Chapter 1 – What is Business?

LO1, LO2, LO3