Business MBA 22-24

OPTS505 OMT
Suresh Venkatraman

• Who are the (minimal list of) stakeholders in a business entity?

• Customers, Entrepreneur, Investors, Employees, Managers,
• What does the business entity do?
• It uses inputs to generate value added outputs.
• How do we know that value addition has taken place?
• Because the customer is willing to pay a price which allows us to
make a profit (after deducting all the relevant costs).
• Hence what is the minimal articulation of Value Addition?
• Customer pays a price, for output we generate, such that we
make a profit.

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customer side Suresh Venkatraman

• What are the functions required for value addition?

• Find out
• what is it the customer is willing to pay for, and
• how much is the customer willing to pay for it
• Articulate (and keep fine tuning) the definition (specification) of
what the customer is willing to pay for
• Communicate to customer the offering.
• Get the customer to buy our offer.
• Collect the money for what we have delivered.
• Managing the above = Marketing Management
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generate outputs Suresh Venkatraman

• What is required to generate output?

• Inputs, Processes, Systems
• What are inputs?
• Resources that are required to generate the output.
• What is a process?
• A series of actions or steps taken in order to achieve a particular end.
• What is a system ?
• A set of entities things working together as parts of an
interconnecting network.
• Managing all the above = Operations Management

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make profit Suresh Venkatraman

• What are the ways to run a business and not make profit?
• Price is not high enough
• Cost of inputs is too high
• Cost of conversion is too high
• Compared to what?
• Others in the market!
• Is it possible that a profit is made but is low?
• Compared to what?
• Other investment opportunities in the market (for I = S)
• Managing all the above = Financial Management.

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 Basic Functions @ MBA 22-24
OPTS505 OMT
Suresh Venkatraman

Business

Marketing Finance

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 How Functions MBA 22-24
OPTS505 OMT

Overlap? Suresh Venkatraman

• Finance & Operations

– Budgeting
– Economic analysis of investment
proposals
– Provision of funds
• Marketing & Operations
– Demand data
– Product and service design
– Competitor analysis
– Lead time data

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 Operations MBA 22-24
OPTS505 OMT

Management Suresh Venkatraman

• What is Operations?

• The part of a business organization that is responsible for

generating and/or delivering goods and/or services

• How can we define Operations Management?

• The management of processes and systems that generate

and/or deliver goods and/or services

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 Processes and Systems
MBA 22-24
OPTS505 OMT
Suresh Venkatraman

• What is a process?
• A series of actions that generate /deliver outputs in response to
inputs.
• A simple process may have only one action.
• A process may or may not consume the input.
– E.g. Ticket booking process in the administration department

• If it consumes the input, then we say it is a “transformation”

process.
– E.g. Cooking Process (food)

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 Processes and Systems
MBA 22-24
OPTS505 OMT
Suresh Venkatraman

• What is a system?
• A set of people and processes
• that are codependent such that
• Together, they deliver value
• And the performance of the system is determined
• not just by the individual people and processes (taken
separately)
• But also by how interact or work together.

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 Why bother?
MBA 22-24
OPTS505 OMT
Suresh Venkatraman

• With Processes and Systems?

• There are 3 expectations of the business entity.
• Customers want Quality and Delivery.
• Investors want Profit
• That translates to Cost and Delivery.
• Q, C ,D
• Customers and Investors seek Consistency and Improvement
• On Q, C, D.

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OPTS505 OMT

difficult to achieve? Suresh Venkatraman

• Variation

• Customers seek different products and services or

combinations thereof.

• Demand is not constant

• Variability can be caused by any of the 6 M

• Man, Machine, Method, Material, Measurement, Milieu (or

mother nature)

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achieve improvement Suresh Venkatraman

• Inertia (why disrupt what is working & makes us comfortable)

• Resilience (tendency to bounce back to old way)

• Knowhow (lack of)

• Faith (lack of)

• Disgruntlement (motivation – WIIFM)

• Improvements can create disruptions and may adversely

affect consistency.

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