What is a Business? What does/should it do?

How does it do it?Simplified

Basic• A business is a group of people working together with a set of

processes to accomplish a specific goal in a specific and, often, dynamic market. These groups and processes are constrained and/or guided by dynamic organizational and governmental structures.

• The end goal in business is to produce the correct product such that value as seen by the customer is greater than competitions priced such that other stakeholders can be satisfied, including a profit sufficiently large to satisfy owners in the short and long term.

• Profit is obtained by producing and selling the correct product ethically and legally.

Words Defined • Process: a structured, measured set of activities designed

to produce a specific output. • Product: good and/or service (tangible and intangible

characteristics) • Correct Product: Provides more value to your targeted

customer than your competition at a price that provides enough revenue to satisfy the wants and needs of the other five stakeholders. Have to be stakeholder centric to achieve this balance.

• Value: what a person gives up for what they receive. Time, money, effort…

• Six Stakeholders: Owners/stockholders, employees, suppliers, customers, community, environment.

Organized HowPorter’s Value Chain

Alternative View

Correct Productto Customer

Operations Management

Finance

Information Systems

Marketing

Accounting HRM R&D/Engineering

Production, logistics, communicationSCM

High Level Management

Original by Tom Bundi

Success Rests On

• Having the correct adaptable Mission, Vision, and Strategy. (high level goals)

• Being able to operationalize MVS (process mgt, everything we do in the preceding slide)

• Operationalization occurs through goal congruency (lower level goals aligned with high level goals)

• Continuous Improvement

Questions to Answer to Achieve Continuous Improvement Relative to a

Goal • Where are we?• Why are we there?• Where do we want/need to be?• How should/do we get to where we

want/need to be? • Is it worth going to where we want to go?