BUSS1001 Understanding Business
Week 2: What is Business? Associate Professor Philip Seltsikas Associate Dean (Undergraduate) THE UNIVERSITY OF SYDNEY
Preview of today’s lecture
›What is Business? - Narrow view - More complex view ›Assessment 1
What is business? The narrow view
›‘Any activity that seeks to provide goods and services to others while operating at a profit’ (Nickels, McHugh and M H h 2010 p. G 14) d McHugh 2010, G-14).
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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_management
The Value Creation Equation A ‘model’ of all businesses
› 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
What doesn’t this model show us?
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 DON’T NORMALLY SEE DON’T NORMALLY SEE
Where did these companies come from?
WE SEE SOME OF THESE or ASPECTS OF THEM M
Someone is at the controls – Keeping it running and navigating the environment
What is a BUSINESS?
› ‘Structure’ – multiple meanings › This is ‘part of’ understanding Business Structure › Organisational Structure will help us understand: ‘What is a Business’?
Dimensions of Organizational 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 / Decentralization
Marketing group A
Marketing group B
Sales region A
Sales region B
French & Raven 1959 5 bases of organizational power
› Coercive Power › Reward Power
› Legitimate Power › Referent Power › Expert Power
Functional Organization Measures of Success?
› Profit › Market Share › KPIs (key performance indicators)
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
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
• 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...