Buss1001

3/11/2012 BUSS1001 Understanding Business Week 2 What is Business? Associate Professor Philip Seltsikas Associate Dean (Undergraduate) THE UNIVERSITY OF SYDNEY crease schooling Preview of todays lecture What is Business? Narrow view More complex view Assessment 1 2 What is line of business? The specify view Any activity that seeks to provide goods and operate to others while operating at a profit (Nickels, McHugh and M H h 2010 p. G 14) d McHugh 2010, G-14). 3 1 http//images. google. com/imgres? q=henry+fayol&hl=en&gbv=2&tbm=isch&tbnid=L07_nJsWisbAAM&imgrefurl=http//mariaavilla 4zKAcE9kM&w=131&h=173&ei=rrUvTvP0BJGmizar. logspot. com/2008/09/henry-fayol-vs-max-weber. html&docid=gigzs4 sAOJ9Lkd&zoom=1&iact=hc&vpx=287&vpy=150&dur=2276&hovh=138&h hovw=104&tx=81&ty=75&page=1&tbnh=128&tbnw=88& start=0&ndsp=35&ved=1t429,r1,s0&biw=1429&bih=723 Total returns on assets must exceed cost of capital required to finance assets http//en. wikipedia. org/wiki/Max_Weber http//en. wikipedia. org/ wiki/Scientific_ care Reinvestment Returns Reinvestment Returns Assets Debt Equity The Value Creation Equation A model of all businesses Assets 1841-1925 Henry Fayol Founder of Classical Management Theory 1856 1915 Frederick Taylor Developed scientific management 1864 1920 Max Weber Studied organizational bureaucracy Fayol, Weber, and Taylor All capital is a costly resource Debt Equity 3/11/2012 2 3/11/2012 What doesnt this model show us? WHAT? organizational building blocks Mission, Vision, Goal, Purpose Strategy Collection of assets Configuration of Assets into a structure (s) to enact business processes Management (decision making & control) using structure using policies & procedures using rewards & punishments DONT NORMALLY SEE DONT NORMALLY SEE Where did these companies bugger off from?WE SEE SOME OF THESE or ASPECTS OF THEM M 3 3/11/2012 Someone is at the controls Keeping it running and navigating the environment 10 What is a BUSINESS? Structure multiple me anings This is part of understanding Business Structure Organisational Structure will help us understand What is a Business? 11 Dimensions of organic lawal Structure Job specialization Departmentalization Span of control Chain of Command (c. f. hierarchy) Line functions and staff functions (front office/back office) Power and authority Divisionalization Centralization / decentralisation 4 3/11/2012 Organization ChartCEO CFO CIO COO Marketing Director IT Manager Sales Director Production Manager Marketing grouping A Marketing group B IT department Sales region A Sales region B Plant workers French & Raven 1959 5 bases of organizational power Coercive Power Reward Power http//www. carrollcoaching. com/coaching Legitimate Power Referent Power Expert Power Functional Organization Measures of Success? Profit Market Share KPIs (key performance indicators) 5 3/11/2012 Inside and Outside Perspectives Organisations are subject to external forces but may also influence the operation and effect of those same forces. Key aspects of the capacity of organisations to effectively shape their own destiny include the decisions that they make about k b t ? Strategy ? Structure and BUSS1001 Understanding Business ? Behaviour BUSS1002 The Business Environment Business key player in society Is a major change agent Has the potential to be a force for good g prosperity Drives growth and p p y ships company Impacts on business Is constantly changing and so, must business change Affects what businesses do and how they do it What is business? A broader perspective Transformation of inputs into outputs to produce goods and services that meet needs and wants in the society adapted from Wetherly and Otter 2011 For-profit businesses Private P i t sector t Types of business activity Public sector Non-profit organisations politics organisations 18 6 3/11/2012 Purpose of a For-profit business organisation Maximising returns on debt and equity This is achieved thr ough sustainable compe sorrel treeve titi advantage 19 Sustainable competitive advantage Outperforming your competitors in the long run How is this done? 20 Next week What? Why? Strategy 21