MN100 Business Environment

1
MN100 Business Environment

• The Internal Environment
• Dr. John Desmond
• Department of Management

2
Scope of (this part) of the course

• Analysing the Internal Environment
• The role of the value-chain in environmental
  analysis
• Adapting to External Change The role of SWOT
  analysis
• Class test
• Debrief

3
What well cover today

• Relations between personal worth and economic
  value
• Exploration of aspects of economic value
• Michael Porter Value strategies
• Introduction to the Value-Chain

4
The Firm (organism) in Relation to Its Environment
Firm A
Firm A
Firm B
Firm B
Firm C
Firm C
T 1
T 2
5
Fail to adapt and.
Firm A
Firm B
Die ...
T3
6
ENVIRONMENT TYPES
Political
Economic
Conventional Competitors
Environ- mental
Buyers
Internal
Suppliers
Social
New Entrants
New Substitutes
Legal
Technological
7
Relations between worth and value

• Scenario
• You have to flee your house due to some imminent
  catastrophe.
• You have time to take only one precious item
• Which item do most people report taking with them

8
Worth Value

• Worthwhile objects
• Mementoes
• Photos
• The broken token
• Other worthwhile objects
• Salt - essential for life
• Paradox Objects of worth often have little value
  and vice versa
• salt and diamonds

9
Economic value

• Forms the basis of the market system
• Value is not intrinsic but created through
  exchange
• Firms which add most value survive
• In market economies worth is reduced to the
  common denominator of economic value
• This enables equivalence between different
  objects to facilitate exchange
• Raises moral issues

10
Two ways of looking at value
_
Perceived benefits
Perceived price
Customer perceived value

_

Costs
Revenues
Profit
Productivity
Volume x Price Growth
11
Two Ways to Add Value

• Reduce costs - become a cost leader
• Increase revenue - through differentiation

12
Inexorable Pressure to Raise Value

• speedup
• the growth imperative
• survival of the fittest - competitive advantage
• customer driven

13
The Value-Chain Analysing Value Creation

• Porters argument
• Firms need a systematic way of examining how all
  of their activities interact to provide
  competitive advantage
• Must identify key primary and support activities
  as the basis for considering value
• Value Chain analysis structures existing
  knowledge in a new way, which can provide novel
  insights

14
The Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
M a r g I n
Procurement
Inbound logistics
Operations
Outbound logistics
Marketing/ sales
Service