Developing a

Business
Mindset
BUS 179
Understanding What
Businesses Do
• Business
• Any profit-seeking organization that provides
goods and services designed to satisfy the
customers’ needs.
• Other synonyms: company, firm, enterprise
Adding Value…

Farmer

INPUT PROCESS OUTPUT Wholesaler

Lower Value Higher Value

Local Distributor
An apple at An apple at
the farm the food
market
5 TL/kg 15 TL/kg Retailer / Seller

Customer
Adding Value…

INPUT PROCESS OUTPUT

Lower Value Higher Value

• Cutting
• Moulding
• Assembling
• Polishing
Adding Value to Satisfy Customers

• A good way to understand what

any business does is to view it as
a system for satisfying
customers by transforming
lower-value inputs into higher-
value outputs

https://www.youtube.com/watch?v=v25zvj8su8M
Adding Value:
The Business of Business

• Revenue
• Money that a company brings in through the
sale of goods and services
• Profit
• Money left over after all the costs involved in
doing business have been deducted from the
revenue
Adding Value:
The Business of Business

• Business model
• A concise description of how a
business intends to generate
revenue
Businesses take
risk in
anticipation of
future rewards…
Competing to Attract and
Satisfy Customers
• Competitive advantage
• Some aspect of a product or company that makes it more appealing to its target
customers

PERFORMANCE LUXURY SAFETY

 Gaining a competitive advantage in today’s
marketplace is critical to a company’s success.
Choose a company that you are interested in and
identify the steps it has taken to create competitive
advantages for individual products or the company as
In-Class a whole.

Activity 1. What goods or services does the company

manufacture or sell?
2. How does the company set its goods or services
apart from those of its competitors? (e.g.,
price, quality, service, innovation, or other?)
 Example: IKEA

1. Furniture and home goods

2. Competitive advantages:
• Product design: Modernist and functional design,

In-Class eco-friendly, customizable, ready to assemble

models

Activity
• Cost leadership: Affordable prices (depending)
• Packaging: Flat-pack sustainable packaging, easy to
transport and store,
3. Customer Communication Efforts:
• Advertising: Advertising campaigns (IKEA evinizin
her şeyi/everything for your home) and product
catalogs
• In-store Experience: Store layout, large, immersive
showrooms, real-life settings
 Identifying Major
Types of
Businesses

•Not-for-profit organizations
• Organizations that provide goods and
services without having a profit
motive; these are also called nonprofit
organizations
• They must operate efficiently and
effectively to achieve their goals, and
successful nonprofits apply many of
the business-management principles
you’ll learn in this course.
https://www.youtube.com/watch?v=LLPvzieC7rw
Identifying Major Types of
Businesses
Goods-producing businesses create value by making “things,” from candy to school
furniture to spacecraft.
Most goods are tangible, meaning they have a physical presence; other goods, such as
software, music downloads, and similar digital products, are intangible.
Identifying Major Types of
Businesses
Service businesses create value by performing activities that deliver some benefit to the
customer, such as finance, insurance, transportation, construction, utilities, wholesale and
retail trade, banking, entertainment, healthcare, maintenance and repair, and information.
Many companies are both goods-producing and service businesses.
Seeing Business from the
Inside Out
• Business mindset
• A view of business that considers the myriad decisions
that must be made and the many problems that must
be overcome before companies can deliver the
products that satisfy customer needs
The
Business
Mindset
The Multiple Environments
Exhibit 1.5 of Business
Barriers to entry Any
resource or capability a
company must have
before it can start
competing in a given
market

Disruptive
technologies Those
that fundamentally Stakeholders Internal
change the nature of and external groups
an industry. Can be affected by a company’s
powerful enough to decisions and activities
create or destroy
entire companies.
Social Environment
Definition
• Trends and forces in society at large
• Values, attitudes, beliefs, wants, and desires of the consuming public
How does social environment affect businesses?
• Composition of the workforce
• Demand for goods and services
How does businesses affect the social environment?
• Stakeholders have expectations about the appropriate ways for businesses to operate
• Stakeholder: Internal and external groups affected by a company’s decisions and
activities
Technological
Environment
• Forces resulting from the practical
application of science to innovations,
products, and processes

•Disruptive technologies: Those that

fundamentally change the nature of an
industry. Can be powerful enough to
create or destroy entire companies
Economic
Environment
•Economic environment
• Definition: The conditions and forces that affect the
cost and availability of goods, services, and labor
and thereby shape the behavior of buyers and
sellers
• Growing versus shrinking economy
• Developed versus emerging economy
Economic Environment
• The economic and technological environments are closely related

• Reduce labor cost

• Improve labor productivity
• Technology created new jobs (gig economy - flexible, temporary, or freelance jobs,
often involving connecting with clients or customers through an online platform.)
Legal and Regulatory
Environment
• Definition
• Laws and regulations at local, state, national, and even international levels.
• Some businesses, such as electricity and other basic utilities, are heavily regulated, even to
the point of government agencies determining how much such companies can charge for
their services.

Examples
• Taxation
• Fees
• Speed of granting permits or licenses
• Labor Rules
• Environmental restrictions
• Roads and other infrastructure
 Market Environment
• Building Blocks:
• A company’s target customers, the buying influences that shape the behavior of those customers, and competitors
that market similar products to those customers.
• Nature of the market environment varies from industry to industry: stable versus dynamic
• Stability comes mainly from high barriers to entry:
• Definition: resources and capabilities a company must have before it can start competing in a given market
• Enormous amount of money to invest
• Huge facilities
• Complex production equipment
• Government testing and approval
• Tightly controlled distribution
• Strict licencing procedures
• Limited supplies of raw materials
• Highly skilled employees
 Barriers to Entry
Any resource or capability a company must have before it can start competing in a given market.
 Barriers to Entry
Any resource or capability a company must have before it can start competing in a given market.

High capital Product

costs Differentiation

Automobile
Manufacturing
(e.g., Toyota, General
Motors, Tesla)
Strict
Economies of
government
scale
policies
Market Environment

Markets with low • Example: Advent of low-cost digital recording and online distribution
significantly lowered the barriers to entry of the music industry which
barriers to entry are used to be a high-barriers-to-entry industry with small number of
highly dynamic record companies controlling the market

• Lowering barriers to entry

Two major themes of • Leaping over the boundaries that separate and define markets
business innovation • Example: Google (now Alphabet) that started out as a search engine
and turned into a giant company with diversified businesses
and disruption: (operating systems, driveless cars, healthcare, retailing)
 Choose a company that you are familiar with. Describe
the multiple environments of this business. Think
about any changes to these environments during the
pandemic period.
1. Social environment: What kind of consumer
trends exist related to the company’s products?

In-Class 2. Technological environment: What

opportunities might emerge for this business
given the changes in technology?
Activity 3. Economic environment: How do the cost and
availability of goods are influenced by the
current economic climate?
4. Legal environment: What is the extent of
regulation for this business?
5. Market environment: How competitive is the
market? Are there high barriers to entry?
Major
Functional
Areas in a
Business
Enterprise
 Identifying the Major Functional Areas in
a Business Enterprise
• Manufacturing, production, or
operations
• An area where the company makes
whatever it makes (for goods-
producing businesses) or does
whatever it does (for service
businesses)
• Purchasing, logistics, facilities
management
Identifying the Major
Functional Areas in a
Business Enterprise

• Research and development (R&D)

• Functional area responsible for
conceiving and designing new
products
Identifying the Major
Functional Areas in a
Business Enterprise

• Information technology (IT)

• Systems that promote
communication and information
usage through the company, or
that allow companies to offer new
services to their customers
Identifying the Major Functional Areas
in a Business Enterprise

• Marketing
• Charged with identifying opportunities in
the marketplace
• Working with R&D to develop the
products to address those opportunities
• Creating branding and advertising
strategies to communicate with potential
customers, and setting prices
Identifying the Major Functional Areas
in a Business Enterprise
• Finance and accounting
• Responsible for virtually every aspect of a firm’s
finances
• Ensuring that the company has the funds it needs
to operate
• Monitoring and controlling how those funds are
spent
• Drafting reports for company management and
outside audiences such as investors and
government regulators
Identifying the Major
Functional Areas
in a Business Enterprise

• Human resources (HR)

• Responsible for recruiting, hiring,
developing, and supporting employees
• Although managers in other functional areas
are usually closely involved with hiring and
training the employees in their respective
departments, HR usually oversees these
processes and supports the other
departments as needed.
• The HR department is also charged with
making sure the company is in compliance
with the many laws concerning employee
rights and workplace safety.
Identifying the Major Functional Areas
in a Business Enterprise

• Business services
• Exist to help companies with
specific needs in law, banking,
real estate, and other areas
• These services can be
performed by in-house staff,
external firms, or a
combination of the two.