Business Management and BCG Matrix Quiz

Introduction to Business Management

• Business is an entity providing goods/services to consumers for profit.
• Revenue = income.
• Profit = revenue - expenses.
• Entrepreneurs take business risks.
• Profit is the reward for taking risks.
• Business management is coordinating business activities.
• Key tasks include planning, organizing, directing, and controlling processes to maximize value for all stakeholders.

Stakeholders of a Business

• Service users, owners, managers, employees, funders, suppliers, policy makers, shareholders, and customers.

Business & Economics

• Economics is the study of production, distribution, and consumption of goods/services.
• Businesses produce and sell to households, buying inputs from them.
• Households buy products from firms and provide inputs to them.
• Key inputs include labor, capital, land, and entrepreneurship.

External Factors Influencing a Business

• Macro-environment factors:
  • Culture
  • Political/legal factors
  • Economy
• Micro-environment factors:
  • Customers
  • Competitors
  • Physical environment
  • Corporate partners

Functional Areas of Business

• Management: planning, organizing, leading, and controlling resources to achieve goals.
• Operations: designs and manages the transformation of resources into goods/services.
• Marketing: identifies customer needs and designs products/services accordingly.
• Accounting: measures, summarizes, and communicates financial and managerial information.
• Finance: plans, obtains, and manages company funds.
• Other functions include HR (human resources) and legal.

Production Factors in Business

• Elementary factors (pre-digital era): operating resources (e.g., machines, buildings, capital), materials, and work.
• Dispositive factor (digital era): management, operating resources (e.g., technologies & networking), and changes in work (problem-solving, human-machine interaction).

Business Strategy

• Learning objectives:
  • Understand the strategic management process.
  • Differentiate and apply different concepts to analyze a business's status in the planning stage.
  • Describe the BCG matrix as a controlling tool in the business management process.

What Does Management Do?

• Management involves planning for, organizing, leading, and controlling a company's resources to achieve its goals.
• The strategic management process involves planning, organizing, leading, and controlling.

Planning – What is the Business Mission?

• A mission statement describes a firm's objectives and activities in the future, addressing "What type of business are we?" and "What do we need to do to accomplish our goals?".
• Tesla's example shows acceleration of sustainable transport to market mass-market electric cars.

Planning – SWOT Analysis

• SWOT analysis is a tool used for planning.
• Internal strengths and weaknesses are assessed.
• External opportunities and threats are considered.

Planning – Competitive Forces (Porter model)

• Porter's model analyzes competitive forces:
  • New entrants
  • Rivalry among existing firms
  • Threat of substitutes
  • Bargaining power of suppliers
  • Bargaining power of customers

Controlling – Evaluating Performance: the Boston Consulting Group Matrix (BCG Matrix)

• BCG Matrix is a business management tool used to analyze the performance of a company's portfolio of products.
• Products are categorized as question marks, stars, cash cows, and dogs based on their market share and market growth rate.
• Strategies are determined for each product type — question marks to be funded and converted to stars and eventually cash cows; high-growth market-share products should be actively funded and their growth rate maintained; cash cows are "milked" or funded to keep market position; and dogs are eliminated if no synergy exists.

Marketing

• Marketing is the process of creating, capturing, communicating, and delivering value to customers while managing relationships.
• STP (Segmenting, Targeting, and Positioning) identifies target markets to capture value.

Marketing Strategy

• Marketing strategy identifies target markets and marketing mix (4 Ps).
• Strategy builds sustainable competitive advantage.

Developing Sustainable Competitive Advantages

• Customer, Operational, Product, and Locational excellence are key.

What is a Marketing Plan?

• A written document that analyzes current situation, identifies opportunities and threats, defines marketing objectives, outlines strategy around the 4 Ps, develops action plans, and projects financial performance.

STP: Segmenting, Targeting, & Positioning

• Segmenting: divides the market into subgroups.
• Targeting: selects the segments a business will pursue.
• Positioning: defines how products/services meet needs of chosen target.

The Marketing Mix (the 4 Ps)

• Product: creates value
• Price: captures value
• Place: delivers value
• Promotion: communicates value

Networking

• Networking is important for career success.
• Identifying and developing a professional network involves building connections, keeping in touch, and leveraging connections for opportunities.

Entrepreneurship

• Entrepreneurship involves creating and launching new businesses, often under risk and uncertainty.
• Intrapreneurship leverages startup methods within established organizations.

What is a Business Model?

• A business model describes how an organization creates, delivers, and captures value.

Developing Business Models

• A cyclical process of idea generation, implementation, and integration to adapt to customer needs.

Top 10 Startup Mistakes

• Building something nobody wants is the number one issue.

Developing Business Models - Business Model Canvas

• A tool for describing and documenting a business model.

Developing Business Models - Value Propositions

• A value proposition describes the value created for a customer segment.

Developing Business Models - Channels

• Channels represent how a company will deliver its value proposition to its customer segments.

Developing Business Models- Customer relationships

• Develop customer relationships by communicating and delivering value to each segment..

Developing Business Models - Revenue Streams & Pricing Mechanisms

• Pricing mechanisms used in different business models, varying by situation (fixed menu vs. dynamic (negotiated/bargained)).

Implementing a Digital Business Model

• Implement strategies in an iterative process to refine the business model based on collected data.

Idea Generation – Brainstorming

• Brainstorming is a method for generating ideas, encouraging wild ideas, and building on ideas of others during groups.

Digital Business

• Digital technologies (blockchain, AI, VR/AR) have a major impact on business processes.

VR/AR/MR In Business

• These technologies immerse users in virtual or augmented environments, offering various applications in business, changing the way companies interact with clients.

Blockchain In Business

• Blockchain is a distributed ledger technology making recording and transfer of assets (or information) more secure, decentralized (no single point of failure), and transparent.
• It is used to secure and store information/make payments (or transactions) between multiple parties.

Artificial Intelligence (AI) In Business

• AI uses computers and technology to mimic human thought to enable problem-solving and decision-making.

AI in Business – Use Cases

• Digital recommendation algorithms
• Dynamic pricing
• Generative AI for text, photos, audio, and video content.

International Management

• Assessing international markets involves understanding cultural, economic, and political environments.
• Evaluating and analyzing risks and opportunities.
• Strategies and methods for entering foreign markets, from exporting to indirect/direct investment.

Planning the Foreign Engagement

• Initial planning versus rational planning.

Country Market Assessment – PESTLE Framework

• Political environment
  • Taxation structures
  • Tariffs
  • Trade restrictions
• Economic environment
  • Economic growth
  • GDP, exchange rate, inflation rate, spending power
• Socio-cultural environment
  • Cultural values
  • Attitudes toward risk-taking
  • Masculinity/individualism
  • Uncertainty avoidance
• Technological environment
  • Speed of technological change
• Legal environment
  • Discrimination law
  • Consumer law
  • Labor law
• Environmental environment
  • Sustainability concerns
  • Climate change issues

Economic Environment Assessment

• Gross domestic product (GDP)
• Gross national income (GNI)
• Purchasing power parity (PPP)
• Trade surplus or deficit

Global Maps

• Various maps showing different aspects of the world - size, population, population increase, GNI, and trade deficits - used globally.

Forms of Market Entry

• Direct export, Indirect export, Licensing, Strategic alliances, Franchising, and Direct Investment are different steps of market entry.

Direct Export: Advantages & Disadvantages

• Advantages (for the exporter): Building relationships directly (potentially greater profit), know how, control over sales; also high returns if direct consumer interaction is involved.
• Disadvantages (for the exporter): Increased risks, especially currency risk, and the need to establish export capabilities within the company.

Why Do Firms Enter Global Markets Via Licensing

• Bypassing trade barriers
• Entry with limited capital expenditures
• Licensee's knowledge benefits the licensor
• Faster R&D amortization

Franchising - Advantages & Disadvantages

• Franchisee Advantages: Acquiring well-known brand names, operating and management skills, exclusive rights, benefiting from central marketing, bargaining power.
• Franchisee Disadvantages: Contracts requiring purchases from franchisors/specific vendors; potential for oversaturation; royalties based on sales, not profits.

Franchising - Characteristics & Formats

• Contractual agreement between franchisor and franchisee.
• Franchisee operates under established name and business pattern.
• Different models, including payment structure, for product/trademark and business franchising formats.

Strategic Alliances - Example: Airlines

• Collaborative relationships between independent firms, such as global airline alliances that offer broader networks using interconnected routes.

Internationalization Strategies

• Different strategies for entering foreign markets (multinational, global, and transnational).
• Each strategy has its own configuration of values, roles, typical industries, and industry requirements.

Globalization Strategies: Global Integration vs. National Differentiation

• The relative importance or emphasis of global integration vs. national differentiation is used to classify the different internationalization strategies.