Introduction to Management Study Guide Chapter 5 PDF

Dhruv Chaudhari 09/04/2024 Chapter 3: Growth, innovation, and Entrepreneurship A Business’s overall economic value depends mostly on Profitability and Growth. Profitability: the ability of a business to generate long-term net positive cash flows enough to provide an appropriate rate of return on e...

Dhruv Chaudhari 09/04/2024 Chapter 3: Growth, innovation, and Entrepreneurship A Business’s overall economic value depends mostly on Profitability and Growth. Profitability: the ability of a business to generate long-term net positive cash flows enough to provide an appropriate rate of return on employed capital. Growth: rate of increase in net cash flows of a business every year Growth, Innovation, and Entrepreneurship are key to doing the “right work” Managing Growth ○ Selling more of a business’s existing products and services to existing customers Expanded customer bases provide opportunities for the business to promote their existing products to the customers, providing a stable cash flow. Provide incentives like discounted services to get the customer into their ecosystem and then make them a customer that will pay the full price. ○ Gaining more customers while keeping the ones you already have Called a share-building strategy or market development strategy. Promote products to consumers who may be new to the product or use similar products from competitors ○ Selling new products to existing and new customers Products can be developed through R&D or bought from another company A company needs to jump several hurdles like legal capabilities and R&D capabilities for it to roll new products ○ Selling existing services to consumers in a different sector Requires the management to search for a good enough market where the product will sell ○ Entering a completely new market with new products and services Unique capabilities to cater to other industries and markets This can also be done with a joint venture with another firm. A business can also jump into this market because they may have extra cash to expand to this market Innovation: An idea that addresses a challenge that provides value for developers and users ○ Used to create new and improved products, or create improved business processes ○ What companies have in common for innovation  Artificial Intelligence: theory and development of computer systems able to perform tasks that usually would require human intelligence or intervention All companies use AI in some aspects like McDonalds using it to change the menu using computer systems. Machine Learning: application of AI that provides systems the ability to automatically learn and improve from experience without being explicitly programmed Use of Technology Platforms: provide the foundation for developing other business opportunities Examples include computing(like Android OS), Technology(like the cloud), Service(like Netflix using several services to provide video content), Content, and Marketplace( like Amazon allows shoppers to purchase from sellers on Amazon. Use Collaborative Ecosystems: multiple organizations working collaboratively to enable the rapid development of new technologies, products, and services. Collecting and using data: (different businesses use their products to make the data collecting and using process easier) Gaining access to IP: (know-how or creative content trademarked or copyrighted) Merging physical and digital marketing channels: digital marketing channels have an easy monopolistic nature because their products and services are easily available on the web. Physical marketing channels have it difficult because they have to sell their products that can not be done digitally. Advancing new technologies: pursuing and sharing results of research from different organizations develops new technology Entrepreneurship: acting to bring about new ideas and concepts that would eventually create value. Using urgency, in unorthodox, ways to address immediate problems, and create outcomes amidst uncertainties. ○ Large Companies Creating Ventures and What They Need: Leadership to be committed to the process Creating a few target areas and aligning them with the core business Recognizing and finding ways to overcome obstacles that would stifle internal new development Creating separately funded development organizations focused on external search Learning from successes and failures Having wisdom and courage