Download Product

Lecture 3
Crafting Strategy-based Business Models?
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Silk, Sword and SUV – Global Business
The interaction of enterprise, markets
and the environment.
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Providing value: need for high quality
products and services
1.
Why do business at all?
2.
What products should we make and where should we sell them?
3.
How do I get the most reward for my enterprising effort?
4.
How long can I/ should I continue in that enterprise?
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Why do business at all?
Profit
What is Profit?
Accounting profit versus economic profit
Opportunity cost
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
What products should we make and where should we sell them?
Demand
If you do not think that there is anyone out there who wishes to
buy the product under question, then it should not be offered
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
How do I get the most reward for my enterprising effort?
Determining which item should be sold where and when
Demand manipulation: Price setting, Advertising, Market generation,
Income, Wealth, etc
Supply management: Amount of supply, Competing Products,
Complementary products, etc.
Elasticity of Demand
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
How long can I/ should I continue in that enterprise?
Risk
Opportunity
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
The Value of Firm Model:
pt
rt  c t
V 
t 
t
t 1 (1i)
t 1 (1i)
n
n
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
r
Firms would have revenue if there was demand for their products.
There will be demand only if the product:
Satisfies a need or want
Represents an adequate level of quality
The required quality is offered at an acceptable price
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
INFORMATION
on
What products and, products that we contemplate offering in the future are (or will be) needed?
What level(s) of quality of products will be demanded by the market and where?
What is the quality level of the products we currently make and how much does it take to improve that quality?
What level of demand will there be for our products and when will that demand manifest itself?
What prices should the firm set for their products, and should the prices
be uniform or vary in their different markets?
use
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
c
Capability
Production
Quality
Technology
Resources
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
i
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
n
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Element
Concept
Information Category
Information System
Revenue
Demand
Market trends and marketing
Product quality
Pricing
Data Acquisition
Data Analysis
Control
Forecasting
Optimization
Cost
Production
Process capability
Technology
Forecasting
Estimating
Optimization
Control
Risk
Uncertainty
Economic Environment
Internal control
Forecasting
Control
Longevity
Sustainability
Environment
Integration and systemicity
Forecasting
Optimization
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Business Model
Aggregate Demand
and Aggregate Supply
Demand and Supply
Supply Side
Demand Side
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
The Product, Quality, Demand Stage
Aggregate Demand
and Aggregate Supply
Demand and Supply
Supply Side
Demand Side
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Product Orientation
Element
Revenue
Concept
Demand
Information Category
Market trends and marketing
Product quality
Pricing
Information System
Data Acquisition
Data Analysis
Control
Forecasting
Optimization
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Quality
- Design
- Meeting requirements
- Control
- Meeting specifications
- Delivery
- Meeting expectations
Example: Hospital
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Product Orientation
Element
Revenue
Concept
Demand
Information Category
Market trends and marketing
Product quality
Pricing
Information System
Data Acquisition
Data Analysis
Control
Forecasting
Optimization
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
The pitfall of Ceteris Paribus
• The demand side of the market can be represented by the demand curve
• The shape of the demand curve determines demand points (levels of demand)
• Demand points in turn determines supply levels needed to maximize revenues
However
The demand curve (function) changes and
shifts with respect to changes in consumer
taste, income, population, commodity
prices, availability of other products,
product quality, access, and price stability
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
Consumer taste,
We need to not only acquire data on
these but also to analyze and
present the information such data
might imply.
Income,
Population,
Commodity prices,
Availability of other products,
Product quality,
Access, and
Price stability
•
•
•
•
•
Data Acquisition
Data Analysis
Control
Forecasting, and
Optimization
applications are to be used.
MGMT 6180 - © 2012 Houman Younessi
Lecture 3
EXERCISE:
Pick a product (as if it is
yours) and position it, so that
you can estimate annual
revenue.
MGMT 6180 - © 2012 Houman Younessi