Business and Management

BUSINESS and MANAGEMENT

I SLIDE : The Corporation and its stakeholders

26.02.18

BUSINESS :Any organization engaged in making a product or providing a

service for a profit.

Marketing guarantee a profit for the company and satisfy the consumers.

Satisfaction and Profit are not always related. Ex. We want to satisfy buyers: we

invest on quality. It is a cost for the company? Yes, so we have a decrease in

profitability.

When you run a business you have to keep an equilibrium between the

satisfaction of costumers and profitability.

SOCIETY : Human beings and the social structures they collectively create.

Business and society are highly interdependent. For example Italy’s most

exported products are food, clothes, mechanics services, forniture.

Relation between business and the society:

• -General System Theory: born in biology applied

on business. This theory says that organism

cannot be understood in isolation; they can be

understood in relationship to their surroundings.

A business must be analyzed by taking in

consideration the society where it is situated. It

has not to be considered as isolated point of our

reality because a business strategy interacts with

.

the society of the territory

Business and society form an interactive system.



Business model: 88% of the stores are managed by an ownership

12% franchising: I give you the rules to manage my store but the owner of the

franchising store takes the risk.

There are two types of products:

 Business products: are products and services that companies purchase to

produce their own products or to operate their business (eg. industrial

components, raw materials...)

 Consumer products: are products purchased for personal, family, or

household use (eg. coffee, shoes..) Eg. A car is a consumer product, but if

you sell a car to a renting company, we are talking about a business

1 product. The same is for Barilla, when it is sold to a restaurant, then

instead of a consumer product, it becomes a business product.Actually it

could be both, but it depends on who is going to purchase the product.

Barilla can sell to the consumer, for example at the supermarket

(business to consumer) or it can sell to a restaurant which provides the

service (business to business). If you do not provide consumer

satisfaction, you have a profit in the short term but you will have a loss in

the future.

• What is the purpose of the modern corporation?

Is really the company responsible of the society?

Two positions:

- Ownership Theory of the Firm(shareholders): The firm is seen as the

property of its owners (shareholders). The owners’ interests take precedence

over the others’ interests. The purpose of the company is to make the most

money it can to satisfy the shareholder.

If you invest in a company and you are a shareholder, the company has to deal

with you.

- Stakeholder Theory(stakeholders): The firm has a broader(wider) purpose:

creat value for society. Of course it must make profits for its own owners, but it

also creates other values. Corporations have multiple obligations, ALL

stakeholders groups must be taken into account.

Stakeholder: a person or a group that affected, or it is affected by,an

organization’s decisions, policies and operations.

Shareholder: a person who owns part of a company through stock ownership,

while a stakeholder is interested in the performance of a company for reasons

other than just stock appreciation.

Different groups of stakeholders: Market

First we know that there exist Market and Nonmarket stakeholders.

stakeholders have an impact on a business

(employees,managers,stockholders,creditors,customers etc). They are involved

in economic transactions with the company in order to achieve its primapry

nonmarket

purpose of providing goods and services to society.While the

stakeholders,even if they do not interact directly with the business and they

are not engaged in direct economic exchange with the firm, they can affect its

decisions.

Then we have to consider another division: Internal and External

Internal stakeholders

stakeholders. are employed by the company and must be

2 External stakeholders

considered when the company takes decisions. are those

who, even if they have an important impact on the firm, they are not employed

by it.

• Market and Internal: Employees, Managers

-Why employees are internal stakeholders? If they are protected, work in a safe

place, they are more productive. They are very important, the business must

protect them, train them in order to create a nice environment.

-Why managers are internal stakeholders? They are like employees but they

also take decisions.

Sometimes managers find difficulties in taking a decision ex.Family company.

• Market and External:Stockholders,customers,creditors,suppliers,wholesalers

and retailers.

stockholders

-Why are involved in the company? Because they can invest on

the firm.

-Customers have an impact on revenues. If companies do not satisfy

customers, then they can buy products from another company; that’s why they

have an impact on business, so is better to consider thei willingness to pay.

Business to business activity is when a company sells to another company.

Business to consumer, the company interacts with the consumer.

-Creditors: Suppliers may provide product inventory on account, which a

business than pays down the road. Current creditors basically expect that a

business meets its payment deadlines responsibly and consistently. Doing so

helps your business maintain

good relationships with creditors

and also makes you more likely

to get quality financing in the

future.

suppliers

-Can have an impact on

profitability? Yes, if they don’t

like you they can go to another

company. They can increase or decrease the price of the product. have an

impact on competitive capacity and they are important because they sell you

raw materials (or if you open a new business you need suppliers that sell you

the quantity you need)

Wholesalers retailers:

and wholesalers are importers that

- buy big quantity of

products and sell it to financial market (can be also a distributor that buy from

importers and sells to consumers). You need the collaboration of them in order

to combine the price-quality. While retailers decide decide characteristics of

stores, position, employees and they can sell you a brand instead of another

(they are independent from the company). There exist also the directly

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operated stores (DOS): when the owners of a firm want to organize by

themselves the stores in order to control the sale activity (eg. Apple Store)

• Nonmarket and External:government,communities,media,competitors

-Government: does it have an impact? Yes, it gives money to local companies

(foreign companies are disadvantaged). Government can allow or not a

company to take place and start its own business. It can allow or not a

company to sell a specific product. It influences businesses with laws or non-

tariff barriers.

-Media: are independent, but advertising costs. Moreover, media can write

about a business and have a great impact on it. It’s important to talk with them

in order to create a good relation.

-Competitors: ex coca cola,water are different products, but if I drink coca, I

don’t drink water(Indirect competitors). Competitors are not directly involved,

but you have to consider what they do. When you’re starting a new business

and you create your image similar to a big competitor there is no way. They can

convince suppliers (stores) to do not sell to that company.

Multinational vs global company:

Multinational: policentric company, with companies in different countries that

are independent.

Global:A company that have subsidiaries, but when they take decisions they

take them globally.

Everything, even the small things, are decided by the central company.

Moreover, the market of the subsidiares is not considered; everything is global.

Motivation is higher in a multinational company.

A company operates in a complex system and has to deal with a lot of

stakeholders, since they have an impact on the business.

1.03.18

Stakeholder analysis: It is part of every manager’s job.

Process that consists on the identification of relevant stakeholders and on the

analysis of their interest and power. In order to do this analysis we have to

answer to 4 questions.

Ask 4 questions:

1. Who are relevant stakeholders?

4 We answer to this question by drawing a market or a nonmarket

stakeholder map.

Certain stakeholders may be relevant but not powerful.

They can be relevant in different ways and not to all the situations.

Examples: Some businesses sell directly to the public and will not have

retailers, or a certain stakeholder may not be useful in a particular

situation.

To determine if a stakeholder is relevant or not, you have to do an

analysis.

2. What are the interests of each stakeholders?

Analayzing stakeholder interests includes addressing:

What are groups concerns?

 What does the group want/expect from their relationship with the

 firm Examples: 1) Stockholders have an ownership interest,

they expect to receive dividends and capital appreciation

2)Customers are interested in gaining fair value and quality in

goods and services they purchase

3)Public interest groups advance broad social interests

3. What is the power of each stakeholders?

Stakeholder power is the ability of a group to use resources to make and

event happen or to secure a desired outcome. Every stakeholder has a

different power.

Power can be seen for different aspects:

Voting power: some stakeholder have the power to cast a vote

 proportionate to the amount of stock they hold to influence a

business’s future actions

Economic power: suppliers,customers,employees and other

 stakeholders have economic power within the company. They can

influence a business’s profits or losses. If you have an economic

power you can make a price war (lower price in order to constrain

your competitors to go out of business); you can also take decisions

and impose them.

Political power: Some firms are supported by government so in that

 case they have a political power. Having to deal with them needs a

lot of cautiousness, since the state can revenge

Legal power: you can go against companies that are copying

 (imitated) your product, but you have to have lots of money and a

strong legal power(if a company has a strong legal power wins the

legal fight because of it). If you don't have the resources an

alternative solution is to develop and innovate your product without

considering the imitations.

Informational power: stakeholders have informational power when

 they gain access over valuable data. Information must be kept

private since they have a great power and they can be dangerous.

4. How are coalitions likely to form?

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Stakeholder map: A graphical representation of the relationship between

stakeholders. It is a useful tool because it enables managers(for example) to

see quickly how stakeholders feel about an issue and whether stakeholders

tend to be in favor or against.

X axis=Position on the issue

Y axis=Stakeholder Salience

When you know the position of

them you have to deal with them.

In the figure of the slide, we can

see that even if employees are

against you have to negotiate with

them and try to find a solution.

While, even if we know that local

government is against, is not important to interact and find a solution(it

depends on the issue):

Stakeholder salience: Stakeholders are “salient” when they have

power,legitimacy and urgency.

II SLIDE: Vision, Missions, Goals and Strategy

Every company has a vision and a mission.

When we are talking of a strategy, we talk about goals, which resources you

have.

Vision statement: It is a very simple sentence/tagline that expresses the

fundamental goal of a firm. A tagline is a slogan.

Mission statement: It is the procedure to make the vision true. Moreover, in the

mission statement,you should find the general reason why you should buy the

company’s products instead of competitive products and the main actions. It is

a paragraph the firm’s goals and competitive advantages. The main contents

are goals, ethics, rationale and target markets(what are you selling), “our

business and what it should be”.

In other terms:

In the vision, you should find some general goals of a company

 In the mission, you should find the general actions of the company(to

 make the mission come true) and the reason why you should buy the

company’s products instead of competitive products

13.03.18

6

Vision and Mission on the COCA COLA group

Our Vision: our vision serves as the framework for our Roadmap and guides

every aspect of our business by describing what we need to accomplish in

order to continue achieving sustainable, quality growth.

People: Be a great place to work where people are inspired to be the best

 they can be.

Portfolio:Bring to the world a portfolio of quality beverage brands that

 anticipate and satisfy people's desires and needs.

Partners: Nurture a winning network of customers and suppliers, together

 we create mutual, enduring value.

Planet: Be a responsible citizen that makes a difference by helping build

 and support sustainable communities.

Profit: Maximize long-term return to shareowners while being mindful of

 our overall responsibilities.

Productivity: Be a highly effective, lean and fast-moving organization.



Our Mission: our Roadmap starts with our mission, which is enduring. It

declares our purpose as a company and serves as the standard against which

we weigh our actions and decisions.

To refresh the world.

 To inspire moments of optimism and happiness.

 To create value and make a difference.



Common objectives, their performance criteria and main measures

Profit and financial Profitability Profit

 %Profit/sales



objectives Contribution

 margin

ROI



Contribution to owners Earnings per share

Utilization of fixed assets Capacity utilization

Growth % yearly growth Sales and profits

objectives/marketing

objectives Competitive strength Market share

Brand awarness and

preference

Contribution to Price/quality ratio

 Costumer



costumers satisfaction

7 Costumer loyalty



Social responsabilities Contribution to

objectives employees

Contribution to society

Goals, Assets, Capabilities and Competences

Goals: What is to be achieved and when results are to be accomplished.

 how

Not these are to be achieved.

It is important to set a basic goal in a company: measure the

performance of the company.

Quantitative goals:

- Sales (in quantity and in value=revenues)

- Profit: (revenues-expenses)

- Market share: in quantity and in value, it is the percentage of

market controlled by the company, and relative it is the position of

the company in relation to other companies and in that case it is an

index.

- Volume market share:brand sales in volume or quantity (quantity of

products)/(market size in volume)

- Value maket share:brand sales in value (price of the products)/

(market size in value) — market share in value can be lower, equal

or higher than market share in volume

- Relative market share: position of the company in relation to other

companies; it’s an index, not a percentage — if brand A is leader

the relative market shares is sales of brand A/sales of second

competitor (always higher than 1); if brand A is not the leader the

relative ms is sales of brand A/sales of the leader (always lower

than 1)

Qualitative goals:

- Customer satisfaction: degree of satisfaction provided by goods or

services of a company and it’s usually measured with surveys

- Brand awareness: it is the extent to which a brand(or product) is

recognized by potential consumers and is one of the key goals in

advertisment.

- Spontaneous: list of brands on top of mind of the customer

- Solicity: given list of brands

Assets: Stores, staff, locations, inventory system, customer database,

 online portal, cash flow, international operations, brand. The means to

achieve goals

8 Capabilities: Are the capacity to do something. means the degree of skill

 in the task’s performance.

Competences: Degree of skill in using capabilities and assets to reach the

 goals of the company.

Strategy:The determination of the basic long-term goals and objective of an

enterprise and the adoption of courses of action and the allocation of resources

necessary for carrying out these goals”

19.03.18

Revision 8 March

groups of stakeholders-economist article on “robot taxi”

Are these stakeholders in favor (+) or against (-) autonomous vehicles?

Market Stakeholders Nonmarket

Stakeholders

Internal Employees: + - (more -); job losses;

not much power

Managers: + +;a lot of power

External Suppliers: + +; powerful Transport: +

Dealers: + -; they can be powerful Ministry of Environment:+

Clients: + - Associations (victims of

accidents): -

Economist/ Urban

planners/Taxi drivers

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III SLIDE:External and Internal Analysis

The External Environment When we refer about environment, we

talk about a macroeconomic variable.

Tha macroenvironment is where the

company operates. Then I have to

analyse competitors, substitues,

clients, suppliers etc.

When Barilla sells pasta to different

retailers, Coop is a client of Barilla and

it is a competitor to Barilla (Pasta

Coop); they’re clients but also

competitors.

Clients can become competitors.



Clients and suppliers can influence the

strategy of a company.

When I develop a strategy, I have to

take in consideration the

characteristics of my company(money,

brands etc.)

PEST(EL) analysis :P political, E economic, S socio-cultural, T

technological, E environmental, L