Third Edition

BUSINESS
STRATEGY • DEVELOPMENT • APPLICATION

Chapter 1

What is
Business?

GARY BISSONETTE
Copyright © 2020 McGraw-Hill Limited
 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Learning Objectives
1. A macro-level understanding of what business is
2. An overview of the major components of a business model and how their
successful development and execution determines business performance
3. An awareness of the overarching role of the business owner or “C-suite”
management team
4. An understanding of how businesses plan
5. Exposure to the concept of visionary leadership
6. Via a Management Reflection, an overview of the relationship between
business strategy and business model development, and the importance of
successfully executing both for a business to achieve its identified
objectives
7. Via an Appendix, an introduction to the difference between profit and
profitability
Copyright © 2020 McGraw-Hill Limited 1-2
 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.1: Business: The Big Picture

Copyright © 2020 McGraw-Hill Limited 1-3

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

The Big Picture Explained
• Business
– Mission-based actions
– Strive for growth and development
– Creates organizational value for stakeholders

• Requires an effective and efficient operating platform

assessed against 3 fundamental characteristics:
1. the commercial endeavours it undertakes
2. its employee interaction model
3. its organizational culture and decision-making structure

Copyright © 2020 McGraw-Hill Limited 1-4

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

What is Business?
• Business models - operational platform or structure
• Two primary parts:
➢ Company-centric side – “the business system” which
reflects the underlying mechanics as to how the business is
structured.
➢ Market-centric side - how the business is connected to the
marketplace.

Copyright © 2020 McGraw-Hill Limited 1-5

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.2: Company-Centric Slide

Copyright © 2020 McGraw-Hill Limited 1-6

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.4: Market-Centric Business Model

Copyright © 2020 McGraw-Hill Limited 1-7

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.6: The Full Business Model

Copyright © 2020 McGraw-Hill Limited 1-8

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

The Role of the Business Owner
or “C-Suite” Manager

• 3 C’s - Capability, Competency, Capacity

• Competitive Advantage
Copyright © 2020 McGraw-Hill Limited 1-9
 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.8: Business Planning Cycle

Copyright © 2020 McGraw-Hill Limited 1-10

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.9: Growth via Planning Cycle Execution

Copyright © 2020 McGraw-Hill Limited 1-11

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.10: Planning Cycle Staging

Copyright © 2020 McGraw-Hill Limited 1-12

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.11: Planning Cycle Outcome

Copyright © 2020 McGraw-Hill Limited 1-13

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Company Types

For-profit companies
vs.
Not-for-profit organizations (NFPs)

What’s the Difference?

Copyright © 2020 McGraw-Hill Limited 1-14
 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Thinking Across Multiple Horizons
1. Short-term Profit
• Necessary to pay bills and reinvest in the future

2. Long-term Growth & Profitability

• New products and services need to be developed to ensure the
organization remains healthy and continues to grow

3. Social & Environmental Responsibility

• Customers want businesses to operate and act in a socially
responsible manner

Copyright © 2020 McGraw-Hill Limited 1-15

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Thinking Across Multiple Horizons

• Stakeholders - direct or indirect relationship with an

organization
• Managers are expected to place society, the organization, and
its stakeholders ahead of personal gain when making decisions
and interacting with the marketplace.
• Overemphasis on short-term profits may result in decisions that
are detrimental to long-term market opportunities and fall
short of social responsibility expectations.

Copyright © 2020 McGraw-Hill Limited 1-16

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.13: Key Abilities of Visionary Leaders

Copyright © 2020 McGraw-Hill Limited 1-17

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Business IN ACTION

Visionary Leaders in Their Own Right

• Indra Nooyi (PepsiCo)
• Gillian Riley (Tangerine)
• Mary Barra (General Motors)
• Linda Hasenfratz (Linamar Corp)

Helena Foulkes
Hudson’s Bay Company

Copyright © 2020 McGraw-Hill Limited 1-18

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Management Reflection
Business Decision-Making Landscape

• What is required to develop and manage a business?

– Create a vision
– Confirm the market size of customers
– Confirm that market position is feasible
– Confirm that the market position will stay stable
– Confirm the availability of resources
– Execute the strategy

Copyright © 2020 McGraw-Hill Limited 1-19

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Figure 1.14: Business Decision-Making Model

Copyright © 2020 McGraw-Hill Limited 1-20

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Strategy & Tactics

• STRATEGY - The development of plans and decisions

that will guide the direction of the firm and determine
its long-term performance.
• TACTICS - The immediate term actions that a firm
executes to meet its short-term objectives as set forth
in the current planning cycle.
• The right product must reach the right customer, at the
right time, and at the right place for the right price.

Copyright © 2020 McGraw-Hill Limited 1-21

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Summary
• Businesses create profits while they meet the needs, wants, and
desires of targeted customers.
• Business is a commercial endeavour, guided by employee
interaction and supported by organizational efficiency and
structure.
• A business model is designed to deliver desired goods and services
to the marketplace.
• Businesses seek profit using productive resources from the sale of
goods and services and ensure long-term profitability and growth.

Copyright © 2020 McGraw-Hill Limited 1-22

 Third Edition

BUSINESS STRATEGY • DEVELOPMENT • APPLICATION

Summary
• The new requirement of social and environmental responsibility is
resulting in a significant emphasis on resource sustainability and
environmental initiatives.
• Visionary leaders create a shared vision and culture which inspires
employees to embrace the vision.
• The interrelationship between strategy and tactics is important,
businesses not only have to properly develop a plan for attacking the
marketplace, but also must be effective in the implementation of this
plan.

Copyright © 2020 McGraw-Hill Limited 1-23