THEORY OF THE BUSINESS

According to PETER DRUKER states that A theory of the business has three parts. First, there
are assumptions about the environment of the organization: society and its structure, the
market, the customer, and technology.

Second, there are assumptions about the specific mission of the organization that tells us that it
should not be so ambitious.
Second, there are assumptions about the specific mission of the organization that tells us that it
should not be so ambitious.Third, there are assumptions about the basic competencies needed to
achieve the mission of the organization, which has to go out in an area to maintain its
leadership.

Environmental assumptions define why an organization is paid. Assumptions about mission

define what an organization considers to be significant results; In other words, they point out
how you see yourself doing a difference in the economy and in society in general. Finally, the
assumptions on core competencies define where an organization must excel in order to maintain
leadership. Of course, this all sounds deceptively simple. It usually takes years of hard work,
think and experiment to arrive at a clear, consistent and valid theory of the business. However,
to be successful, every organization must build one.
THE FOUR SPECIFICATIONS
Assumptions about the environment, mission and core competencies must be adjusted to reality.
the organization must design its products, their costs or other specifications.
The assumptions in all three areas have to fit one another
The theory of business must be known and understood throughout the organization, to have
better results.
Business theory must be constantly tested to have the ability to change itself.
DEFINITIONS OF OTHER AUTHORS:
According to Brandenburger and Stuart, A business model is aimed at creating total value for all
parties involved. Lays the foundation for capturing value for the focal company, by codefining
(along with the company's products and services) the total size of the "cake", or the total value
created in transactions, which can be considered as the upper limit for the capture of company
value.
according to Chesbrough and Rosenbloom A business model is to articulate the value
proposition; identify a market segment; define the structure of the value chain; estimate the
structure cost and profit potential; describe the company's position in the network of value and
formulate the competitive strategy.
according to Magretta “A business model tells a logical story that explains who its customers
are, what do they value, and how are you going to make money giving them that value?

In the following document we will have an example of the theory of the business in a
transport company