Basic Concept of Business

Credit to: University of Terhan,businessmodel3

 Business Logic
• Problem: Interpretation
Today •Positioning
of strategy •Objectives & goals
• Result: Re-inventing •Communication of strategy
strategy
Information &
Planning level Communication
Strategy Technology (ICT)
press
? ure

Implementation e-Business
level Business
Processes processes

e-Business Technology layer

 Business Logic
Tomorrow
Conceptual architecture
of a business strategy
Information &
Communication
Planning level Technology (ICT)
Strategy pressure

Architectural e-Business
level Business opportunities
Model &
c
Implementation e-Business
hange
level Business
Processes processes
e-Business Technology layer
 What is a Business Model
anyway?
 A business model is not a description
of a complex social system itself with all
its actors, relations and processes.
Instead it describes the logic of a
“business system” for creating value,
that lies behind the actual processes.
Strategy
 A business model is the conceptual and

Business Impact
architectural implementation of a
business strategy and represents the Business
foundation for Model
the implementation of business
processes
Business
Processes
 4 parts to the business
Part 1- The offeringmodel
– this is what the business
produces and sells
 Value proposition: The value proposition is a
description of the products and services the
business offers and why customers will be
compelled to buy them. The value
proposition describes the problem the
customers are experiencing and how the
products and services being offered will
help solve that problem.
 4 parts to the business
Part 2- Infrastructure– model
This is the part of the business
that creates expenses. This part describes the basic
facilities, skills, manpower, partnerships, and
production process needed to exploit the business
opportunity.
 Core capabilities: The capabilities and core
competencies necessary to operate the business. This
includes land, facilities, equipment, personnel and
their required skills needed to produce the products
or services described in the value proposition.
\
 Partner network: The business alliances needed to
operate the business. Most businesses need alliances,
agreements, licenses, or other third party assistance.
• Value configuration: The process by
which the products or services are
produced and presented to the customer.
The value configuration describes how
the materials, supplies, and other
required resources will be obtained and
transformed into usable products or
services and how they will be made
available to buyers.
 4 parts to the business
Part 3- Customers–model
this is the part of
business that generates revenue.
the
Target customer: The demographics, purchasing
patterns, and location of the potential buyers of
the products described in the value proposition.
Distribution channel: The means by which the
business delivers products and services to
customers. This includes the business's
marketing and distribution strategy.

Customer relationships: The process of

interacting with the business’s customers. It
includes communicating, selling, supporting,
and assisting customers purchase and use the
business’s products or services.
 4 parts to the business
• Part 4- Finances – thismodel
is the part of the business
determines its financial performance and profit
that

 Investment: The investment needed to obtain the facilities,

equipment, and working capital to begin or sustain
operations. This should include an itemization of these
expenses and sources of financing to obtain these funds and
when they will be required.
 Cost structure: The expenses required to produce the products
or services described in the value proposition. It should
include an itemization of the expenses required by expense
category and the assumptions made to estimate these
expenses.
 Revenue: The income a business receives from the sales of its
products or services. This includes sales volume and revenue
projections and the assumptions and logic used to make these

projections.
 Definition of Business
The word ‘Business’ is come from the English
words ‘Busi+Ness’. Business is the legal
process of production and purchasing and
selling to earn profit.
B.O Wheeler said , “Business is an institution
organized to provide goods and services to the
society under the incentive of gain.”
Skinner said , “Business is the exchange of
goods , services or money for mutual benefit or
profit.”
 Definition of Business
In a word, “Business means creation of
utility”.

From the functional point of view, the

business is related all kinds of legal works
of producing , marketing and exchanging
products and services with the intension to
earn profit .
 Functions of Business
There are many function need for running a business.
These are given below:-
Planning : To make a plan is so essential for
production, distribution and investment.
Without planning any business can’t achieve
their destiny.
Production : Production or creating utility is the
primary function. By producing goods and delivering
services business organizations try to fulfill the needs
of the people.
Purchase : To continue the process of production
businessmen purchase raw-materials from the
suppliers.
 Functions of Business
Sale : Sale means transfer of the ownership of
goods and delivery services to another person.
Insurance : In business there are many types of
risks such as deflation , price falling, fire and
accident etc . For that reason should take insurance
policy.
Market research : By market research
businessmen get the information about the
customer’s need , demand , purchasing power ,
expectation.
 Functions of Business
Grading & Standardization : Grading means
to classify the products according to their
criteria , quantity
, value and nature. Standardization means to
divide the product according to the quality.

Advertisement & Publicity : Business

organization should make advertisement and
publicity to create customer and inform them
about the shape ,size , quality and price of
production.
 Importance of Business
• Economic Imporantance
1. Proper Utilization
2. Division of Labor
3. Utilization of developed technology
4. Encouraging savings
5. Increase government revenue
6. Growth of personal & national income
 Importance of Business
Social Importance
1.Supply of goods and service
2.Create employment
3.Improvement of the standard
of living
4.Development of efficiency , culture and
industrial arts
5.Urbanization
6.Help to
industry
7.Development
 Is Business an Occupation ?
People are involved in various works for livelihood .
Involving in the different occupation people are try to earn
money . For that reason early stage of civilization people
are involved in business to earn money for livelihood .
But in this moment there arises a question that :

“Is business an occupation”?

 Is Business an Occupation ?
If we want to this question at first we should mention
difference between business and occupation . Difference in
below :-
A). Special knowledge is needed to be professional ,
But for businessman it is not essential .
B).Professional need to acquire knowledge by training
and experience . But in business it is not necessary.
C).To involve in any occupational organization is
needed to be a member of the representative professional
organization . But the persons who want to conduct
business need not do these activities.
 Is Business an Occupation ?

D).In profession; main objective is to deliver service

for livelihood. But in business earning money or profit is
main objective.
E).People of any profession should follow the ethical
codes for the guidance of conduct , but the businessman
has no certain ethical codes as guidance of conduct.

From the analysis , we can say business is not treated as

profession . But all types of occupational works are
treated as profession.
Six Components of the Business Model
 Value Proposition

• A description the
of problem customer
• The solution
that problem addresses the
• The value of this solution from the
customer's perspective
 Market Segment

• Recognizing that different market

segments have different needs
• Sometimes the potential of an
innovation is unlocked only when
a different market segment is
targeted
 Revenue Generation and Margins

• How revenue is generated

 (sales, leasing, subscription, support, etc.)
• The cost structure
• Target profit margins.
 Position in the Value Network

• Identification of competitors
• Identification complementors
• Identify network effects that can be
utilized to deliver more value to the
customer
• linking suppliers and customers
 Competitive Strategy

• How the attemptto

will
develop acompany
sustainable competitive
advantage?
• How it use that advantage
improve to the
will enterprise's
position incompetitive
the market?
Thank You