Business 101

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Business 101 by Mind Map: Business 101

1. Week 1

1.1. Marking criteria

1.1.1. Weekly Assessed Test: 10%

1.1.2. Mid-Semester Test: 10%

1.1.3. Team performance (Team Mark*): 30%

1.1.4. Final Examination: 50%

2. Week 2: Perspectives on Business

2.1. Purpose of a business

2.1.1. 3 main purposes

2.1.1.1. Value

2.1.1.2. Stewardship (wider responsbility)

2.1.1.3. Wealth Creation

2.1.2. READING "What is the Purpose of the Firm? Shareholder and Stakeholder Theories" - Michael D. Pfarrer

2.1.2.1. Shareholder Theory

2.1.2.1.1. The purpose of a business is to maximise shareholder wealth and generate profit. Friedman stated that "the business of business is business". When firms become involved in social or public policy issues wealth is diverted to issues outside the core expertise of their managers , which is an inefficient use of wealth. Friedman believed that corporate philanthropy was an inefficient use of money and can negatively affect society in the long run by assuming the roles of the democratically elected.

2.1.2.2. BRIDGING GAP - Growing profits should be a primary objective for a company; as if a business is not getting any returns then they cannot provide other functions. It has been thought that stakeholder theory is a more efficient way of reaching this goal, as it measures soft variables (firm reputation, quality of products and services, trustworthy suppliers, good employees, supportive communities, and cooperative financers), thus allowing the firm to establish a strong reputation with stakeholders.Therefore, “stakeholder theory is an extension of shareholder theory, and that its broader framework and understanding of the firms interactions with society can actually generate better performance for the firm and thus create more benefit for society at large”

2.1.2.3. Stakeholder Theory

2.1.2.3.1. A company should also expand their duty to other stakeholders, and not just owners. By taking the interests of all stakeholders into account, the firm will be far more successful than by simply focusing on the shareholders interests. If a firm creates value for its stakeholders, it will create value for its shareholders as well.

2.2. Creating and capturing value

2.2.1. Video 1 explains how commercial viability depends on value creation and value capture.

2.2.2. Video 2 tells you how businesses develop different business models even though they may seem to be delivering similar goods or services.

2.2.3. Video 3 explains why businesses need to keep innovating. It argues that businesses must keep renewing their business models by finding new ways to create and capture value. It also describes some generic business models.

2.2.4. READING "Business model innovation: coffee triumphs for Nespresso"

2.2.4.1. Business Model

2.2.4.1.1. Companies can only be successful in the long run if they sustain a competitive advantage. businesses need to align their product and services logic, added value logic, sales and marketing logic and revenue logic to create a system that delivers great returns.

2.2.4.2. Value Creation

2.2.4.2.1. The benefits the company creates for its customers (when making good or delivering service)

2.2.4.3. Value Capture

2.2.4.3.1. If the product of service cost is below its price, the company generates a profit. (Catering the product or service to fit what the customer wants)

2.2.4.4. → In order for a business to be economically viable it has to maintain a balance between creating value for customers and capturing value from its operations. Ideally, there will be "win-win" for both customers and the company, e.g. more overall value will be created for customers, and the company will be able to capture some of this added value as increased profit

3. Week 3: Sustainable Business

3.1. Sustainaibility and CSR

3.1.1. In recent decades the world has witnesses environmental, technological, and social changes that have had profound effects on individuals, families, communities, and governments.Although businesses create products and services there are also long term consequences that need to be addresses.These consequences are not going to disappear alone, or by a few businesses engaging in healthy habits. All businesses need to recognize and take on board social responsibility and sustainability, in order to reduce these consequences

3.1.1.1. Sustainability -The process of meeting present needs without compromising the ability of future generations to meet their needs

3.1.1.1.1. Three big reasons

3.1.1.1.2. Three pillars

3.1.1.2. CSR -A form of corporate self-regulation that builds sustainability and public interest into business decision-making. It has its roots in corporate philanthropy; it is now common for owners of companies and wealthy individuals to donate money to philanthropic organizations.

3.1.1.2.1. Four Approaches

4. Week 4: The impact of the general and market environment

4.1. Porters five forces

4.1.1. Five forces determines the long - run profitability of any industry . The five forces govern the profit structure of an industry by determining how the economic value it creates is apportioned.

4.1.1.1. Rivelry among existing competitots

4.1.1.1.1. If competitors are similar, growth is slow, exit barriers are high, want to take leadership or cannot read each others signals competition will be competitive, therefore, the business is at risk of entering a price war, or fighting for market share resulting in decreased profits.

4.1.1.2. Power of suppliers

4.1.1.2.1. If the supplier group is not fully dependent on industry, if there are switching costs, prodcuts are differentiated, no good substitutes then suppliers have the power to bid up prices.

4.1.1.3. Power of customers

4.1.1.3.1. If there are few buyers in the industry which require large volumes, or if the products are easily supplied, or a few switching costs. Buyers have the power to negotiate and bid down the price.

4.1.1.4. Threat of new entrants

4.1.1.4.1. If new businesses can set up easily and sell similar products, there will be a lot of competition and I probably cannot charge high prices.

4.1.1.5. Threat of substitute

4.1.1.5.1. If there is a more attractive substitute and buyers costs of switching to substitute is low, then the industry is at risk.

4.2. PESTE

4.2.1. The company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company.

4.2.1.1. Political

4.2.1.1.1. Shapes society by establishing laws, government agencies and pressure groups which influence and limit behaviour. However, laws do not cover everything and social codes/ rules of ethics are needed to fill the gaps.

4.2.1.2. Economic

4.2.1.2.1. looks at consumer purchasing power and spending patterns.

4.2.1.3. Social (cultural and demographic)

4.2.1.3.1. This looks at the study of population, analysing certain characteristics (e.g. size, density, location, age, gender, race and occupation). The cultural aspect of social looks at how the society in which we were raised shapes our beliefs and values.

4.2.1.4. Technological

4.2.1.4.1. Technology is developing at a rapid pace and is changing the world we live in. It affects how we learn, interact, eat and carry out tasks. There are both positives ( aiding learning) and negatives (e - waste).

4.2.1.5. Enviromental

5. Week 5: Understanding customers and markets

5.1. Understanding Customers

5.1.1. Video 1: Understanding consumers low involvement

5.1.1.1. EXAMPLE: Toothpaste --> need recognition --> Purchase --> Post purchase evaluation

5.1.2. Video 2: Understanding consumers high involvement

5.1.2.1. EXAMPLE: Iphone --> need recognition --> Information search --> evaluation of alternatives --> purchase --> Post purchase evaluation

5.1.3. Video 3: Understanding consumers organisational purchase

5.1.3.1. - Driven by economics less emotion - Formal buying process, no impulse purchasing - needs of majority are important - a number of people involved in purchase - established relationship between buyers and sellers

5.1.4. Reading: The buyer decision process

5.1.4.1. The process consists of five stages. However, in more routine purchases consumers often skip or reverse some of these stages.

5.1.4.1.1. Need recognition

5.1.4.1.2. Information search

5.1.4.1.3. Evaluation of alternatives

5.1.4.1.4. Purchase decision

5.1.4.1.5. Post - purchase behaviour

5.2. Segmentation, Targeting and Positioning

5.2.1. Reading: Market segmentation, targeting and positioning

5.2.1.1. Markets

5.2.1.1.1. Three Marketing strategies

5.2.1.1.2. Market Segmentation - should be tried alone and in combination

5.2.1.1.3. Requirements for effective segmentation

5.2.1.1.4. Market Targeting

5.2.2. Horticulture NZ Report

5.2.3. Video 1: Segmentation and Targeting

5.2.3.1. Dividing markets into segments - demographics, psychographics and geographics

5.2.4. Video 2: Differentiation and Positioning

5.2.4.1. Diferentiation strategies

5.2.4.2. 3 Positioning basics

5.2.4.2.1. Telling why its better

5.2.4.2.2. Getting on the customers shopping list

5.2.4.2.3. Having consistent brand communication