1. (c) 2012 McGraw-Hill Ryerson Ltd. Chapter 1 – Learning Objectives LO1 : A base-level understanding of what business is LO2 : Exposure to the 4 major components of the business model and their impact on an organization’s competitive advantage LO3 : An understanding of how businesses plan LO4 : An introduction to the difference between profit and profitability LO5 : Exposure to the importance of creating a well-differentiated value proposition as key to a business’s success LO6 : A cursory overview of the relationship between business strategy and tactics and the importance of successfully executing both for a business to achieve its identified objectives 2 of 30 Chapter 1 – What is Business?

2. The “Big Picture” Explained Business = A system of integrated mission-based actions designed to ensure that an organization develops and grows a market for its goods and services in a manner that creates organizational value (wealth) on behalf of its stakeholders  Organizations must properly identify solutions to market place needs/desires and deliver these solutions to the right customer, at the right place, at the right time, and for the right price creating a profit Requires an effective and efficient operating platform assessed against 3 fundamental characteristics: 1. Commercial Endeavors – Refers to markets the organization serves, its products and services, and the needs it meets in the marketplace 2. Employee Interaction – Refers to the value-creating skills an organization’s employees bring to the marketplace; the specialized skills that exist within its labour force 3. Organizational Efficiency and Structure – Refers to the complexities of the business activities that circulate within an organization (c) 2012 McGraw-Hill Ryerson Ltd. 4 of 30 Chapter 1 – What is Business? LO1

3. Basic Business Concepts BUSINESS refers to the mission-focused activities aimed at identifying the needs of a particular market or markets, and the development of a solution to such needs through the acquisition and transformation of resources into goods and services that can be delivered to the marketplace at a profit 4 Core Fundamental Resource Areas: 1. ASSETS = The infrastructure and resource base of the organization including land, buildings, equipment, raw materials and brand power 2. LABOUR = The human resource requirements of the business 3. CAPITAL = The money needed by an organization to support asset- based expenditures, to meet operating cash requirements, and to invest in new products/services in the marketplace 4. MANAGERIAL ACUMEN = The foresight, drive, decision-making competency, knowledge, ability, ingenuity of the organization’s owners and/or top level managers; visionary leadership BUSINESS MODEL/SYSTEM = The operational platform or structure that the business uses to generate revenue and profit (c) 2012 McGraw-Hill Ryerson Ltd. 6 of 30 Chapter 1 – What is Business? LO1, LO2, LO3