Notesale: Turn your study into money

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Business Management
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...
For example Italy’s most exported
products are food, clothes, mechanics services, forniture
...
industrial components, raw
materials…)
• Consumer products: are products purchased for personal, family, or household use (eg
...
)
eg
...
The same is for Barilla, when it is sold to a restaurant, then
instead of a consumer product, it becomes a business product
...

Barilla can sell to the consumer, for example at the supermarket (business to consumer)
or it can sell to a restaurant which provides the service( business to business)
...


Business and Society: An interactive system
General system theory (GST): the theory
explains that the boundaries are not clear,
but business must be analyzed taking in
consideration the society where it is situated
...


Ownership Theory of the firm
• The firm is seen as the property of its owners (shareholders)
• Argues the owners’ interests are paramount and take precedence over the interests of
others
• The purpose of the firm is to maximize its long-term market value, to make the most
money it can for shareholder

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Stakeholder Theory of the firm
• Argues the corporation serves a broader purpose in order to create value for society
• Must make profit for owners to survive, however, creates other kinds of value too
• Corporations have multiple obligations, all “stakeholder” groups must be taken into
account
A stakeholder refers to persons or groups that affect, or are affected by, an organization’s
decisions, policies and operations
...


The Stakeholder of Business
Market Stakeholders
Internal Stakeholders

• Employees
• Managers

External Stakeholders

•
•
•
•
•

Nonmarket Stakeholders

Stockholders
Consumers
Creditors
Suppliers
Wholesalers and Retailers

•
•
•
•
•
•

Governments
Communities
Nongovernmental Organizations
Business Support groups
Media
Competitors

• Employees: are to take into account because they participate to the development of the
firm; if they are not satisfied they can produce less or protest against the firm
• Managers: are to take into account with firm’s decision (not always)
...
Cher are also expatriates, who are
supported by the firm because they need people abroad so they must convince them to
stay far away from home
...

• Wholesalers: importers buy big quantity of products and sell it to financial market (can
be also a distributor that buy from importers and sells to consumers)
...

• Retailers: they decide characteristics of stores, position, employees and they can sell
you a brand instead of another (they are independent from the company)
...
Apple Store)
• Government: influences business, for example with laws or with non-tariff barriers ( the
government influences markets with certifications and permits, or avoiding import
exports
• Nongovernmental organizations: eg
...
It’s important to talk with them in
order to create a good relation
...
When you starting a new business and you
create your image similar to a big competitor there is no way
...


Stakeholder groups can be divided into two categories:
• Market stakeholders: are those that engage in the economic transactions with the
company as it carries out its primary purpose of providing society with goods and
services
...

• Internal stakeholders are those, such as employees and managers, who are employed
by the firm –They are “inside” the firm, in the sense that they contribute their effort and
skill, usually at a company worksite
• External stakeholders are those who—although they may have important transactions
with the firm—are not directly employed by it

Stakeholder Analysis
It is a part of every manager’s job and it is a process whereby identify relevant
stakeholders and analyze their interest and power
There are 4 question to ask when you think about a stakeholder:
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...

3
...


Who are the relevant stakeholders?
What are the interests of each stakeholder?
What is the power of each stakeholder?
How are coalitions likely to form?

1
...
A certain stakeholder may not be relevant to a particular decision/
action
...
You have to analyze stakeholder interests and know what they want in order to create
a good relation with the firm
...
Stakeholder power is the ability of a group to use resources to make an event happen
or to secure a desired outcome
...
Coca Cola has a big
economic power on retailers)
...

• Political power: firms that are supported by the government
...
If you don't have the resources an
alternative solution is to develop and innovate your product without considering the
imitations
...


Stakeholders Map

A stakeholder map is a useful tool
because it enables managers to
see quickly how stakeholders feel
about an issue and whether salient
stakeholders tend to be in favor or
opposed
...


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The tremendous power of the world's leading corporations has both positive and negative
effects :
• Positives include commanding more resources, producing at lower costs, planning
further into the future, and bring new products, technologies, and economic
opportunities to developing societies
• Negatives include disproportionate influence on politics, shape tastes, dominate public
discourse, divide markets, and squash competition

The meaning of Corporate Social Responsibility
A corporation should act in a way that enhances society and its inhabitants and be held
accountable for any of its actions that affect people, their communities, and their
environment
...
g pampers in China )
You can do innovation for products in order to reduce the price, so these types of
products are available to everyone
...

It may require a company to forge some profits if its social impacts seriously hurt some of
its stakeholders or if its funds can be used to have a positive social impact

The Social Enterprise
This term refers to an organization that uses business strategies for the purpose of
improving human and environmental well-being (core mission)
...

It can be large and established or small and new
...
VISION, MISSION AND DEFINITION OF STRATEGY
• Vision statement: a very simple sentence or tagline (or slogan, is a memorable catch
phrase that captures the key idea of a business, its service, product or customer) that
expresses the fundamental goal of a firm
...
Main contents:
- Goals and intent
- Philosophy and ethics
- Rationale and target markets
- “Our business and what it should be”
In other terms:

- In the vision, you should find some general goals of a company
- In the mission, you should find the general reason why you should buy the company’s
products instead of competitive products

Vision and Mission in LEGO
Our Vision
‘Inventing the future of play’ We want to pioneer new ways of playing, play materials and
the business models of play - leveraging globalization and digitalization
...

Our Mission
Inspire and develop the builders of tomorrow’ Our ultimate purpose is to inspire and
develop children to think creatively, reason systematically and release their potential to
shape their own future - experiencing the endless human possibility
...
Not how these
are to be achieved
• Assets: stores, staff, locations, inventory system, customer database, online portal,
cash flow, international operations, brand
• Capabilities: inventory management, logistics management, multi-format food retailing,
enhancing shopping experience
• Core competences: retail inventory management, customer satisfaction management

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What is Strategy
“the determination of the basic long-term goals and objective of an enterprise and the
adoption of courses of action and the allocation of resources necessary for carrying out
these goals”

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• Political: These factors determine the extent to which a government may influence the
economy or a certain industry
...

Political factors include tax policies, Fiscal policy, trade tariffs etc
...

Economic: These factors are determinants of an economy’s performance that directly
impacts a company and have resonating long term effects
...
Adding to that, it would affect the purchasing power of a consumer and
change demand/supply models for that economy
...

Social: These factors scrutinize the social environment of the market, and gauge
determinants like cultural trends, demographics, population analytics etc
...

Technological: We all know how fast the technological landscape changes and how this
impacts the way we market our products
...
There are certain laws that
affect the business environment in a certain country while there are certain policies that
companies maintain for themselves
...
For example,
consumer laws, safety standards, labor laws etc
...
This aspect of the PESTLE is crucial for certain industries

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particularly for example tourism, farming, agriculture etc
...


Internal Analysis: the Value Chain
Is a process where a firm identifies its primary and support activities that add value to its
final product and then analyze these activities to reduce costs or increase differentiation
...
e
...


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Traditional Value Chain vs Service Value Chain

Combination of traditional value chain and service value chain

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The Value Network
Supplier value chains: for example, steel suppliers in the car industry
Channel value chain: for example, the value chain of a distributor / wholesaler
Customer value chain: for example, the value chain of a retailer (such as Carrefour)

SWOT Analysis
SWOT, which stands for strengths, weaknesses, opportunities and threats,is a method of
analyzing both the internal and the external factors that can affect a firm, and as such has
always been accepted as useful when assessing the current circumstances of a firm
and find its most promising new markets
...
Strengths for an organization may include
a significant market share, robust financial resources, innovative products or a strong
customer base
...

Opportunities and threats
Whether a particular factor is an opportunity or a threat depends on the specific
environmental factor
...


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SWOT in different organization levels

Strategic links in the SWOT analysis:

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SWOT Analysis and Competitive Advantage

(slides americano 1)

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Invest to maintain the position
Cash cow: mature market (Es
...
In most cases they will be eliminated

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The Ajax company has 4 SBUs, as shown in the table below:
a)prepare the BCG Matrix for Ajax SBUs
b)What are the strategic implications?

a)
B (star)

D (question
mark)

A (cash cow)

C (dog)

General Electric / McKinsey matrix

In this area the market is good and
there are a lot of possibilities
...

If the market is not attractive you have to
develop a selective strategy: you have to
make selection
Another solution is the wait and see
strategy(see what happens in the following
years)

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In the last area the market is not profitability and you have to drop

Factors in Market Attractiveness

Market attractiveness index
There are a lot of factors to consider in order to make the index
...

Finally you have to sum every value of the score and you obtain the index (final value)
...

Product match: the matching between the product and the final consumer(you have to
innovate your product)
...
Is something that is very important
...

In order to calculate is like the previous index
The difference between the 2 matrices is that BCG is not subjective instead McKinsey
matrix is more subjective, you can change the values
...
The portfolio takes into consideration different strategic
business units and makes different combinations
...


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As a
consequence you have to
adapt your production to this
strategy (increase production
capacity, volume of products)
Market development take your
product and sell it to other
markets(entry new markets)
...

Market diversification when you enter in a new market with a new product
Product development: when you have a strong recognition of your brand so you can sell
other products to people
• Concentration versus differentiation (demand based): is when a company is doing a
business focusing only in one segment of a business
...
Concentration is when a company targets
only one segment, on the other side differentiation is when a company targets two or
more segments of a business
...

Resources eg: know-how, labor, money

Ansoff Strategies
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More resources are dedicated to marketing offering price discounts
and better relationship with customers
...
Present markets/new products: new products to current markets
...
These products need to be accepted by
consumers and should not be too far away from the branding of the original product
because this is what has created the product image in the past
...
New markets/present products: New markets may be solely domestic or both domestic
and global
...
New markets/new products: With the increasing interest in emerging markets,
companies have begun to target the specific needs of the emerging consumer
...
Companies now begin
with their experience and knowledge of their customers in distant markets and use
information to conceive, design and make a new, locally appropriate product from the
ground up
...

• Distinct resources and capabilities underpin competitive advantage
...

• Strategy based on skilled diagnosis and creative solutions
...

• Distinct position in market underpins competitive advantage
...

• Strategy based competitive analysis and appropriate value creation

The Language of Resources and Capabilities
• Resources: inputs into a firm’s operations so as to produce goods and services
...
Examples?
• Strategic assets / Core competencies: resources and capabilities that can create value

Example of Resources and capabilities
• Distribution coverage
• Human resources
• Quality control
• Financial capacity
• Shared expertise with related businesses
• Low cost manufacturing
• Distribution network
• Production capacity
• Ownership of raw material sources
• Long-term supply contracts
• Trade relationships
• Customer service orientation
• Ability to utilize relevant technologies

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Core Competence

The underlying capability that is the distinguishing characteristic of the organization

Resource Leverage
To ‘leverage’ resources means to create conditions for competitive advantage to emerge
...
) that is required in order to accomplish one or more desirable business goals
...

Resources are linked to competitive advantage through key success factors
...
INDUSTRY ANALYSIS AND COMPETITIVE ADVANTAGE

Definition of Competitive Advantage
Delivering superior value to customers and in doing so earning an above average return
for the company and its stakeholders
Competitive advantage requires a firm to be sustainably different from its competitors in a
way that customers are prepared to purchase at a sufficiently high price
• Supply Side: how costs arise (cost advantage)
• Demand Side: how value is perceived and paid for by customers (differentiation
advantage)
• Market and Industry structure: market rivarly which tells us how competition takes place
in the industry (analysis of markets and competition)

Cost Analysis
Opportunity cost: the sacrifice of alternatives foregone in producing goods or services
Cost structure
• Fixed costs: do not vary with output (buildings, machinery, advertising)
• Variable costs: vary with output (labour, raw materials)
• Total cost: Fixed cost + Variable cost
• Average total cost: Total cost / Total output
• Average fixed cost: Fixed cost / Total output
Marginal cost: the cost of producing one extra unit of output

Economies of Scale
An economy of scale refers to the extent to which unit costs fall (cost per unit of output) as
the scale of operation (for example a factory) increases
Firm-level economies of scale:

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• Administrative economies
• Financial economies
• Marketing economies

Economies of Scope
Economies of scope arise when the average cost of a single product is lowered by its joint
production with other products in a multi-product firm
•Economies of scope refer to increased variety of operations, not higher volume of output
•Shared distribution, advertising, purchasing, etc
...

• Low price elasticity (insensitive to change in price): food, petrol
• High elasticity (sensitive to change in price): entertainment, fashion
• Final demand versus derived demand
• Industrial / Producer versus consumer goods

Analysis of competition: Porter’s Five Forces Framework

Porter’s Five Forces
Potential entrants: threat of entry
• Above-average profits attract investors to enter an industry
...
Coop is a retailer but also sells its own products)
...

•Low concentration: 5% to 50%
...

•High concentration: 80% to 100%

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