business characteristics and dynamics-prince dudhatra-9724949948

8/8/2019 Business Characteristics and Dynamics-prince Dudhatra-9724949948

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CHARACTERISTICS OF BUSINESS

y Following are the characteristics of business:

y 1. Exchange of goods or services for Income: i.eexchanging income for satisfaction

y 2. Recurring Activities:

y 3. Profit Motive

y 4. Risks

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Dynamics of Modern Business

y The important characteristics of business in thedynamics of modern business are:

y 1. Strategic Orientation: Everyfirm has some

strengths and weaknesses . Theyoperate in anenvironment which presents certain opportunitiesand also poses certain threats. Based on theassessment of internal and external factors, a firm

defines its scope of business.



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Global orientation

y The liberalization has resulted in the competitionbecoming global. A business must have globalorientation if it is to survive. Domestic firms are

facing increasing competition from global firms. Thefirm must therefore be geared up for globalcompetition.



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Professionalism

y The growth of management education has led togrowing professionalism in business today. This inturn has contributed to growing social orientation of

business.y A professional manager must follow standard code of

ethics established in the society.

y Professionalism has also separated the task of

ownership from management. A manager todayneednot be the owner of the firm.He still has to dischargehis responsibilityas the owner would do.



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Strategic Operations Management

y A business firm has different phases and each phaseinvolves certain operations.

y Operations management encompasses all theseoperations.

y Operations management is to a large extent supplychainmanagement.

y Corporate strategymust view product flow as acompetitive necessityand as a source of competitive

advantage.y Supplychain is also the value chain .Value is the amount

buyers are willing to payfor what the firm has to offer.



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y A firm makes profits bycreating values that exceeds thecost.

y The value chain consists of value activities and margins.y Value activities are the different activities a firm

performs .y There are two types of value activities

y 1. Primaryactivities: Theyare the hardcore businessfunctions .

y 2. Support Activities: Theyare the facilitating functions

like technologydevelopment, human resources.y A firm gains competitive advantage bydoing these

activities better and cheaper than the competitors.



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Technologyoverlaps & integrated Systems

There is an increasing overlapping and integrationof technologies in business today.

y New products are being innovated and old products

are being made byintegrating different technologies.y Companies todayare collaborating with others to

gain efficiencybecause theyhave realized that nosingle companytodayhas all the capabilities.



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Restructuring

y Restructuring in firms is necessitated because of theconstantlychanging environment.

y The restructuring maybe organizational or financial.



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Focus and Diversification

y These days there has been an increasing trendtowards focus on one or veryfew businesses.

y In order to be more competitive, companies are

offloading manyproducts or businesses from theirportfolio.

y Having too manyproducts makes the companylosefocus and also the sense of direction.



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Coexistence of different sectors

y There are different sectors in an industry.

y Generallyanyindustrycan be divided into organizedand unorganized sectors.

y Both these sectors pose threats to each other.

y Both these sectors co-exist in anyindustry.



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Fast Changes

y Since the changes are taking place veryfast, productmodifications and systems improvement haveassumed great importance.



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Segmentation

y Market segmentation is becoming more and moreimportant.



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GOALS OF BUSINESS

y The goal of the business refers to the long term ,ultimate purpose of the organization.

y Mission leads to objective

y Objectives lead to goals

y Goals lead to targets.

y Vision and mission are often used interchangeably.

y

But when theyare used distinctly, vision leads tomission.



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Vision

y Corporate vision is a short and inspiring statement ofwhat your organization intends to become and toachieve at some point in future.

y It is the preferred future , a desirable state and anideal state.

y It is an expression of optimism

y It is a general statement encompassing the direction

an organization wants to take and the desired endresult onceyou get there.



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Mission

y It is the written expression of the basic goals,character, values and philosophythat shape theorganization and give its purpose.

y A mission statement is an enduring statement ofpurpose that distinguishes one business from othersimilar firms.

y An organizations mission is its reason for existence.

It answers such questions as whydoes thisorganization exist? Whom does it serve? Bywhatmeans does it serve them?



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y A mission is more focused on the specifics of what anorganization is to accomplish. It differs from the

vision in that it focuses on function, is

accomplishable and measurable.



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Requisites of a Mission Statement

y It should define what the organization is and what itaspires to be.

y It should limited enough to exclude some ventures

and at the same time should be broad enough toallow creativity.

y Should distinguish the organization from others.

y Should serve as a framework for evaluating both

current and prospective activities

y Should be stated in clear terms.



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y Answering the following questions help organizationsarrive at its mission

y 1. What is the purpose ofyour org?y 2. What is unique about your org?

y 3.What is likelyto be different about your business fiveyears down the road?

y 4.What is in your companythat will make it stand apart?y 5. Who are and who should be your principle customers?y What are and what should be your principle economic

concerns?y What are the basic beliefs, values and philosophical

priorities ofyour org?



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y Peter Drucker suggests three fundamental questionsthat serve to clearlydefine the business andformulate the mission-

y 1. What is our business?y 2. What will be our business?

y 3. What should our business be?



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OBJECTIVES, GOALS & TARGETS

y Objectives maybe defined as those ends which theorganization seeks to achieve byits existence andoperations.

y Theymayalso be defined as the long term resultsthat organization seeks to achieve in pursuing itsmission.

y These form the basis for the functioning of an

organization.y Theyhelp define the organization in its environment.

y Theyare important in strategyformulation.



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y A goal is defined as an intermediate result to beachieved bycertain time as part of the grand plan.

y Specific goals are sometimes referred to as targets.

y Theyare short term in nature and lead to theachievement of the objective.

y Goals must be SMART.

y Theyare important for implementation of thestrategy.

y Theyalso form the basis for allocation of resources.


business characteristics and dynamics-prince dudhatra-9724949948

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