Business Modeling Quarter

Business Modeling Quarter (hereinafter, the Quarter) is the first of four lectures of Operations Quadrivium (hereinafter, the Quadrivium):

• The Quarter is designed to introduce its learners to enterprise discovery, or, in other words, to concepts related to obtaining data needed to administer the enterprise effort; and
• The Quadrivium examines concepts of administering various types of enterprises known as enterprise administration as a whole.

The Quadrivium is the first of seven modules of Septem Artes Administrativi, which is a course designed to introduce its learners to general concepts in business administration, management, and organizational behavior.

Outline

The predecessor lecture is Feasibility Study Quarter.

Concepts

1. Business model. The core part of one or more enterprise strategies that suggests how an enterprise is going to make money in one or more of its businesses. The business model usually answers two key questions: how the enterprise is going to earn and how it is going to spend in a particular business or a group of them.
   • Model. An abstraction of reality, a simplified representation of some real-world phenomenon.
2. Enterprise. (a) An endeavor undertaken in order to create something or develop somebody, or (b) an undertaking that includes several endeavors and may or may not represent an entire business or organization. The enterprise assumes some level of enterprise effort.
   • Legal entity. Any entity such as an legally-adult individual or a corporation to which the law grants property rights and responsibilities. Particularly, the rights include capacity to buy and sell, enter into agreements or contracts, assume obligations, incur and pay debts, sue and be sued, as well as be held responsible for its actions.
   • Business. Either an individual's regular occupation, profession, or trade, or the practice of making one's profit by engaging in commerce.
   • Departmentalization. The basis by which jobs in an enterprise are grouped together.
3. Value chain. The entire series of organizational work activities that add value to each step from raw materials to finished product.
   • Value. The performance characteristics, features, and attributes, and any other aspects of goods and services for which customers are willing to give up resources.
   • Service profit chain. The service sequence from employees to customers to profit.
   • Technology. The way in which an organization transfers its inputs into outputs.
   • Cloud computing. Refers to storing and accessing data on the Internet rather than a computer's hard drive or a company's network.
   • Internet of things. Allows everyday "things" to generate and store and share data across the Internet.
   • Sharing economy. Business arrangements that are based on people sharing something they own or providing a service for a fee.
4. Enterprise strategy. A strategy that determines the behavior of the enterprise. This strategy defines the enterprise portfolio, its business models and may or may not include related competitive strategies.
   • Growth strategy. An enterprise strategy that's used when the enterprise wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es).
   • Innovation strategy. An enterprise strategy that emphasizes the introduction of major new products and services.
   • Stability strategy. An enterprise strategy in which an enterprise continues to do what it is currently doing.
   • Cost-minimization strategy. An enterprise strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting.
   • Imitation strategy. An enterprise strategy that seeks to move into new products or new markets only after their viability has already been proven usually by competitors.
   • Sales-oriented strategy. An enterprise strategy used by an enterprise's various functional departments to support the competitive strategy.
   • Harvesting. Exiting a venture when an entrepreneur hopes to capitalize financially on the investment in the future.
5. Competitive strategy. A formulated strategy for how a strategic business unit is going to compete. This formulation usually states which one of four types of competitive strategies the strategic business unit is going to pursue, what it considers as its competitive advantage or advantages, and may or may not include (a) what products, (c) resulted from what production, (d) at what price, (e) using what presentation and promotion, (f) on what market or markets with regard to the region or regions and/or segment or segments of customers, (g) with what front-end office personnel, (h) with what level of enterprise's support this enterprise is going to offer, as well as (i) what financial results and/or competitors' actions would trigger what changes in those decisions. Rarely, a mature enterprise formulates just one competitive strategy; usually, there are several competitive strategies in the enterprise portfolio since different strategic business units are supposed to have their own competitive strategies.
   • Cost leadership strategy.
     1. Mass production. The production of items in large batches.
     2. Mass customization. Providing customers with a product when, where, and how they want it.
     3. Exporting. Making products domestically and selling them abroad.
     4. Importing. Acquiring products made abroad and selling them domestically.
   • Differentiation strategy.
     1. First mover. An enterprise that's first to bring a product innovation to the market or to use a new process innovation.
     2. Innovation. Taking change ideas and turning them into new products, product features, production methods, pricing strategies, and ways of enterprise administration.
     3. Sustaining innovation. Small and incremental changes in established products rather than dramatic breakthroughs.
     4. Disruptive innovation. Innovations in products, services, or processes that radically change an industry's rules of the game.
   • Focus strategies.
   • Competitive advantage. What sets an enterprise apart; its distinctive edge.
6. Strategic plan. A plan that applies to the entire enterprise, formalizes its enterprise strategy, and establishes the enterprise's overall goals.
   • Strategy. The plan for how the organization will do what it's in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goals.
   • Strategic flexibility. The ability to recognize major external changes, to quickly commit resources, and to recognize when a strategic decision was a mistake.

Instruments

1. Business Model Canvas.

The successor lecture is Chief Execution Quarter.