05/06/2015

Business Skills for e-Commerce

Week 2
Business Organisation

Learning Objectives
1. Explain the concept of adding value in a business and identify
the major types of businesses
2. List three steps you can take to help make the leap from a
consumer to a business professional
3. Discuss the five major environments in which every business
operates

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Understanding What Businesses Do

Business

Any profit-seeking organization that provides goods and services

designed to satisfy customers needs.

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Adding Value to Satisfy Customers

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Adding Value: the Business of Business

Revenue
Money a company brings in through the sale of goods and services
Business model
A concise description of how a business intends to generate revenue

Key elements
1. Value Proposition
2. Revenue Model
3. Market Opportunity
4. Competitive environment
5. Competitive advantage
6. Market strategy
7. Organizational Development
8. Management Team (LECTURE 6)

Adding Value: the Business of Business

Profit
Money left over after all the costs involved in doing business have been deducted from
revenue.

Gross profit (Gross profit= total revenue- the cost of goods sold)
Net profit

Net Profit = total revenue total costs

Total cost:
1. Cost of goods sold
2. Sales, general, and administrative expenses
3. R&D expenses
4. Other expenses

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Profit Ratios
Measures the efficiency with which the company use its resources.

Return on Investment Capital (ROIC)=

Invested capital( the amount that is

invested in the operation of a company)

1. Property
2. Plant
3. Equipment
4. Inventories
5. Other assets
Note: ROIC can be calculated before or after tax.

Competing to Attract and Satisfy Customers

Competitive advantage
Some aspect of a product or company that makes it more appealing to target
customers.

Brand
Price
Quality
Uniqueness
Innovation

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Major Types of Businesses

Not-for-profit organizations
Organizations that provide goods and services without having a profit
motive, these are also called nonprofit organizations

Examples include museums and charities

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Major Types of Businesses

Goods Producing Business Service Business

Capital Intensive Labor Intensive

Barrier to entry?

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Seeing Business from the Inside Out

Business mindset
A view of business that
considers the many
decisions that must be
made and the many
problems that must be
overcome before
companies can deliver
the products that satisfy
customer needs.

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Positive and Negative Effects of Business

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The Multiple Environments of Business

Economic

Technological Market

Social Legal

Recognizing the Multiple Environments of

Business
Social environment
Trends and forces in society at large
Technological environment
Forces resulting from the practical application of science to innovations,
products, and processes
Disruptive technologies
Those that fundamentally change the nature of an industry
Can be powerful enough to create or destroy entire companies.

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Recognizing the Multiple Environments of

Business (cont.)
Economic environment
The conditions and forces that affect the cost and availability of goods,
services, and labor and thereby shape the behavior of buyers and sellers
Legal and regulatory environment
Laws and regulations at local, state, national, and even international levels
Market environment
A companys target customers, the buying influences that shape the behavior
of those customers, and competitors that market similar products to those
customers

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SWOT Analysis

SWOT analysis basic questions

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Recommended Reading and References

Bovee, C., Thill J. ( 2013) Business in Action. Sixth
Edition, Pearson.
Schneider, G. (2015) Electronic Commerce, 11th
Edition, Cengage Learning.