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Unit 1 - Business organisation and environment by Jon Chen - Coggle Diagram
Unit 1 - Business organisation and environment by Jon Chen
1.3 Business objectives - Nike
Vision Statement: an organization's long-term goals and aspirations, stating what they want to become in the future
“do everything possible to expand human potential.”
Mission Statement: describes an organization's short-term goals of its operation, defining its values, culture, and goals.
“to bring inspiration and innovation to every athlete in the world.”
CSR: The consideration of ethical values related to its business activities.
Examples of CSR Initiatives: Nike Grind - reutilize materials by using recycled shoes and surplus manufacturing materials. Move to Zero - goal towards zero carbon and zero waste, protecting the future of sport.
Forcefield Analysis: Expand Sustainability Initiatives
Restraining forces Total: 12
High initial costs & increased price of products (5)
quality of products (3)
unready market (2
operation complexity (2)
Driving Forces Total: 13
Enhances Nike’s brand image (4)
Market differentiation(4)
increased product demands (3)
Early investment/first movers(2)
Nike Strengths: Strong global popularity and recognition; diverse product portfolio in many sports and clothing types, many brand representatives
Nike Weaknesses: High reliance on third party as many products are produced by them, high end pricing could deter price-sensative customers
Opportunities: emerging markets like Africa, South America, or other developing countries, exploring and utilizing eco-friendly products.
Threats: Intense competition from other sports brands like Addidas, Puma, UA; Sustainability calls for its manufacturing process.
STEEPLE
Social: Rising demand for personal health thus sportswear
Technological: invest in advanced technologies like Flyknit and enhancing footwear
Economic: rising costs of labor and raw materials
Environmental: There is an increased awareness in sustainable practices
Political: international trade policies such as the trade war between US & China
Legal: Compliance with labor laws in its Multiple national host nations
Ethical: increasing awareness of labor rights, working conditions, and increased transparency in its supply chains
1.2 Types of business entities
Public: Owned by government to provide large-scale services inefficient for the private sector
For Example, Shanghai Construction group is a public company. They are in charge of large-scale construction such as roads, buildings, transportation systems, and public utilities. It is state owned.
Private: Owned and controlled by private individuals - investors, founders, managers. They aim to make profit
Incorporated
sole trader: business owned and ran by one individual
Examples are individuals selling products on streets. They operate their own business in which are mobile, independent, and retain all profits for themselves but also take on all risks such as being scolded by police
partnership: profit-seeking business owned by multiple people
Hewlett-packard (HP) started as a partnership between Bill Hewlett and Dave Packard. They had a shared vision, complementary skills, while both having limited resources. This led them to share ownership by taking stake in their start-up.
unincorporated
private limited: a company that doesn't raise campital from public. Owned privately by family and friends
plumber, hairdresser, photographer, lawyer, dentist, accountant or driving instructor
public limited: Large businesses that sell shares to the general public
Barclays Plc., Rolls-Royce Holdings Plc., Tesla, or any on the stock exchange
Non-profit social enterprises
NGO: non-profit social enterprise that operates in the private sector
World Wildlife Fund: help local communities conserve the natural resources they depend upon. They are an NGO because they are operating in the private sector aiming to benefit society.
Non-profit social enterprises: businesses run in a commercial manner but without profit being the main goal. These companies use all of their surplus revenues to achieve their social goals.
Warby Parker: They donate millions of glasses each year to those who are in need. They are also provide free vision screenings and eye exams.
Charities: provide voluntary for good causes.
Feeding America is a large non-profit charity in USA that focuses on feeding more than 46 mill people through community kitchens. It is the largest US. charity by revenue. They don't profit but rather use all their revenues from direct food donations.
1.1 What is a business?
Role of business: combine resources to create goods and services
Mcdonalds
Inputs:
raw materials: beef, patties, potatoes, lettuce, tomatoes, cheese…
packaging material: wrappers, cups, bags
labors: cookers, cleaners, delivery drivers…
Process
potatoes are fried, patties grilled, using kitchen equipments like grills and fryers by chefs
delivered through dine in, drive thrus, and delivery driver for online orders.
products are placed in appropriate packaging
Output
Burgers, fries, beverages, salads, and other menu items
Functions of a business - Apple
Human Resource: hiring top-talents, deals with workforce planning and outsourcing Human Resources
Finance and accounting: reporting financial reports, maximizing revenue streams like apple music, icloud, and compkying to legal requirements
Marketing: apple youtube videos for product releases, huge apple billboards, and apple outreaches in different countries
Operations: manages stocks storage of each apple retailer, controls and contacts third party production, making them in charge of producing a final product
Ansoff Matrix
Market Penetration: Selling more of its existing products such as Macs, Iphones, and streamking services like Apple Music, and Apple TV because these are existing products in existing markets.
Product Development: Each new series of devices such as a new generation of Iphones, and watches. These are existing markets but with new products.
Market Development: Expand phones in new countries such as developing countries with its affordable models.
Diversification: Investing in Apple Car projects, Partnering with OpenAI's Chat GPT to enter the new AI market and create a new product.
BCG Matrix
Stars: iPhone, MacBook (high market share in growing market, making it greatly profitable)
Cash cows: iPad, Apple Watch (they have high market share but in low-growth markets so they generate consistent profits)
Question Market: Apple TV, HomePod (Low market share in high-growth markets; potential growth but uncertain for future)
Dogs: iPod( Low market share in low-growth markets)
Business Sectors
Primary sector: extraction and harvesting of natural resources. Examples: Agriculture, forestry, Oil - Shell, Diamond - Da Beers
Secondary Sector: Manufacturing by turning raw material to products. Examples: Luxshare, Foxconn, Tesla, Samsung
Tertiary Sector: Provides service to general population. Examples: Red Cross, Banks, barbers, Taxis
Quarternary Sectors: knowledge based activities. Examples: law firms, training and development firms, investments
Entrepreneur - Elon Musk
Reason for starting Tesla: to create affordable mass market electric vehicles, first movers in EV Market, Earnings, challenge himself, transition to sustainable energy. GETCASH
Steps taken
Business Plan, start-up capital, and marketing
Problems faced
Backlash from social media, political intersts, decling public interest, localisation
1.5 Growth and evolution
Economies of scale: as more is produced, the cost per unit is decreased because fixed costs are spread out
Example: Tesla shanghai Gigafactory has economies of scale. By having immense production volumes, they are able to spread out its expensive fixed costs of constructing the factory.
Diseconomies of scale: when a business has operations beyond minimum efficiency scale, the average cost per unit rises.
Example: The mass layoff of X.com employees is an example of diseconomies of scale. When Elon Musk deemed there were no need of having so many staff, they fired around 85% of staff to cut costs and revert diseconomies of scale
1.4 Stakeholders - Formula 1
Internal
the 20 competing teams: Team principles, drivers, engineers, team personells.
Formula 1 group: CEO
Stefano Domenicali & staff
FIA: CEO and Personals
External
Sponsors and partners for each team: Shell, Petronas, Kick, pirelli, MSC Cruise.
F1 Fans
Broadcasters: Sky F1, ESPN, NBC
Local government and local communities
Pressure groups: Environmental protection groups
1.6 Multinational companies (MNCs): a business that has operations outside of itshome country
Impact of MNC on host countries: Walmart
Advantages
Create jobs. In China alone, walmart provides jobs to ~100,000 employees
Contribute to host nation's GDP. In China, Walmart has contributed $4.6 Billion in revenues.
Introduce competition: By being a major retailor, it keeps the retail market in China competetive.
Competition brings a need to bring new technology and innovation to the industry to stay on top, and overall
Disadvantages
Despite making a lot of revenue, many of the revenues are sent back to the home country
Over-competition may cause local businesses to fail and cause unemployment. This is evident as there aren't many prominent large local businesses.
Low CSR: because this isn't their host nation, the business may exploits the country’s
natural resources. There are news alleging that there walmart utilizes the abusive and exploitive working environment in China.
