FYBCOM SEM I

COURSE TITLE:
BUSINESS AND ENTREPRENEURSHIP

Syllabus
 Module 1 – Introduction to Business

Synopsis:
1.1 Business: Concept, Characteristics of Contemporary
Business, Significance of Business,

1.2 Business Models: Standard Business Model and

Disruptive Business Model, Vision, Mission,

1.3 Objectives –Concept, Role, Characteristics,

Hierarchy of Objectives, Steps in Objective Formulation,
Economic and Social Objectives- Comparison and
Reconciliation
A quiz on General Understanding of
Business
 Vision, Mission and Objectives
Vision
A vision statement describes the long-term
goals and aspirations of a company. It
provides a clear picture of what the company
aims to achieve in the future and serves as a
source of inspiration and direction for the
organization. The vision is typically ambitious
and aspirational, painting a picture of the
company's desired future state.
• Example: "To be the world's most customer-
centric company, where customers can find
and discover anything they might want to
buy online."
 Vision, Mission and Objectives
• Mission
A mission statement defines the company's
purpose and primary objectives. It explains
why the company exists and what it aims to
achieve in the present. The mission statement
focuses on the company's core activities, the
target audience, and the value it provides to
its customers.
• Example: "To organize the world's
information and make it universally
accessible and useful."
 Vision, Mission and Objectives
Objectives
Objectives are specific, measurable goals that a
company aims to achieve within a certain
timeframe. They are concrete steps that help the
company realize its mission and vision. Objectives
should be SMART: Specific, Measurable,
Achievable, Relevant, and Time-bound. These
goals provide a roadmap for the company’s
strategy and operations.
Example:
• Increase market share by 10% within the next
fiscal year.
• Launch five new product lines by the end of the
year.
• Improve customer satisfaction ratings by 20%
within six months.
 Indian Companies Examples
Vision
• Tata Motors: "To be the most admired
and pioneering company in our industry.
We will inspire our people to create
innovative products and services that will
excite our customers around the world."

• Infosys: "To be a globally respected

corporation that provides best-of-breed
business solutions, leveraging technology,
delivered by best-in-class people."
 Indian Companies Examples
Mission
• Reliance Industries Limited: "To create
value for all our stakeholders by
addressing growth opportunities in
petroleum refining and marketing,
petrochemicals, exploration and
production and new energy. Maximising
shareholder value through sustainable and
profitable growth and global expansion."

• Wipro: "To earn our customers’ loyalty by

delivering best-in-class products and
services, at globally competitive prices,
while upholding the highest standards of
ethics and integrity."
 Indian Companies Examples
Objectives
Hindustan Unilever Limited (HUL):
• Increase Revenue: Achieve double-digit
growth in revenue by focusing on high-
growth categories and segments within the
next two years.
• Sustainability: Reduce the environmental
footprint of the production process by 50%
by 2025.
• Market Penetration: Expand rural
distribution network to reach 80% of rural
households within the next three years.
 Indian Companies Examples
Objectives
Tata Consultancy Services (TCS):
• Customer Satisfaction: Improve customer
satisfaction scores by 15% over the next year
through enhanced service delivery and
support.
• Innovation: Invest in R&D to develop at least
three breakthrough technology solutions
annually.
• Global Expansion: Increase the presence in
emerging markets by opening offices in five
new countries within the next five years.
 Vision, Mission and Objectives
Interrelationship
• The vision sets the long-term aspirations
and desired future state of the company.

• The mission translates the vision into a

practical, actionable purpose, outlining what
the company does and how it serves its
stakeholders.

• Objectives are specific goals derived from the

mission, providing clear, measurable steps to
achieve both the mission and the vision.
Aspect Vision Mission Objectives
A future-oriented
A statement that defines Specific, measurable
declaration of the
Definition the company's core purpose targets that help achieve
company's purpose and
and primary goals. the mission and vision.
aspirations.
Long-term (5-10 years Mid to long-term (3-5 Short to mid-term (1-3
Timeframe
or more). years). years).
What the company What the company does, Concrete, actionable steps
Focus aspires to become in the who it serves, and how it to fulfill the mission and
future. does it. vision.

Clarifies the company’s Sets clear, achievable

Provides inspiration and
Purpose reason for being and how it goals to guide day-to-
a long-term direction.
serves stakeholders. day operations.

Broad and strategic, Specific to the company’s Detailed and quantifiable,

Scope often aspirational and operations and focusing on specific
inspirational. stakeholders. outcomes.

"To organize the world's

"To be the world's most "Increase market share by
information and make it
Example customer-centric 10% within the next
universally accessible and
company." fiscal year."
useful."

Guides the overall Informs strategic planning Directly impacts

Impact on
strategic direction and and aligns with core operational plans and
Strategy
long-term decisions. business activities. performance metrics.
Communicated to clarify
Used to inspire and rally Used to track progress
purpose and focus for
Communication employees and and measure success
employees and
stakeholders. against targets.
stakeholders.
 Business objectives
Definition :
• According to Koontz and O'Donell,
“Objectives are the ends towards which
activities of any enterprise or
department or project within it are
aimed".
• According to D. E. McForland,
“Objectives are the goals, aims or
purposes that organisations wish to
achieve over varying period of time".
 Business Objectives
Features:
• Ultimate goals
• Multiple in nature
• Hierarchical
• Quantitative and Qualitative
• Time bound
• Integration
• Standards of evaluation
• Flexibility
Steps in setting business objectives
Review the mission and vision
statements

Analyse environmental factors

Consider value system

Consider management philosophy

Analyse past achievement of the

organisation

Setting of objectives
 Importance of Business
Objectives
• Provide Directions
• Planning
• Decision Making
• Motivation
• Evaluation
• Quicker Growth
• Increased Efficiency
• Facing Competition
• Innovation
• Corporate Image
• Team Work
Classification of Business Objectives
Threefold
Organic
objectives

National Economic
objectives objectives
Business
Objectives

Human Social
objectives objectives
 Classification of Business Objectives
Threefold Organic Economic
Social objectives
Human National
objectives objectives objectives objectives
• Survival • Earning profit • Towards • Economic • Social justice
• Growth • Creating customers well being • Employment
• Prestige/ wealth • Towards • Motivation opportunities
Recognition • Creating share-holders • Proper • Development
customers • Towards working of backward
• Innovation employees conditions areas
• Reduction in • Towards • Social and • Contributes
the cost of government psychological revenue to
production • Towards satisfaction the
and creditors • Promotion government
marketing • Towards • Welfare and • Production of
• Effective society on social goods as per
utilisation of the whole security national
scarce measures priorities
resources
 Reconciliation between social and
economic objectives

ECONOMIC SOCIAL
OBJECTIVES OBJECTIVES

To reconcile means to harmonize or make compatible

 Reconciliation between social and
economic objectives
Reasonable price Higher profit

Higher wages Higher dividend

Creating employment opportunities Innovation

Providing satisfaction to customers Creating wealth

Perquisites to employees Reduction in the cost of production

Hierarchy of Business Objectives
 Corporate Objectives
• Corporate objectives are targets that the whole
business is trying to achieve. They are often related
to what the owners of the business want to focus
on (e.g., survival, growth, profits).
• Example 1:
The famous motorcycle company Harley-Davidson.
The typical corporate aim can be to achieve
profitable growth by continuing to play a leading
role in the industry to become and remain the
market leader in the motorcycle industry. Then, in
order to achieve that aim, the business objective
could include achieving a market share of 60% and
annual sales revenue of USD$20 million.
 Corporate Objectives
• Example 2: A soft drinks producer can have the
business aim of maximizing the value of the
business for shareholders. In order to achieve this
aim, the company set up corporate objectives such
as to increase earnings per share, and to increase
the dividends by 5% each year in the next 3 years.
• Example 3: A car producer may have the business
aim of profitable growth in the next decade. In
order to achieve its aim, it set up two business
objectives including selling at least 3 million
passenger cars each year by 2030 and leading the
way in the middle-class segment in terms of sales
volume.
 Departmental Objectives
• Based on corporate objectives, departmental
objectives are decided upon. Dept. objectives are set
up for specific functions in the business,
e.g., objectives for the marketing department or the
finance department to achieve. They need to be
consistent with all corporate objectives.
• Example 1 (continuation): In order to become the
market leader in the motorcycle industry by
achieving a market share of 60% and annual sales
revenue of USD$20 million, the marketing
department of Harley-Davidson will have
departmental objectives to achieve an increase of
sales of existing products by 20%, launch two new
products into the market in 2021 and gain at least
10% market share.
 Individual Objectives
• After departmental objectives are ready, individual
objectives will be established for each employee,
linked to performance appraisal of individual
workers, e.g., sales target for a member of the
sales team in the marketing department.
Individual objectives must align with departmental
and corporate objectives.
• Example 1 (continuation): Individual targets for
employees in the marketing department of Harley-
Davidson will include creating a new advertising
campaign to promote the launch of two new
products in 2021 and decreasing the price of
existing products with high price elasticity of
demand by 10% to boost sales.
Test Your Understanding
 Business Models: Standard Business Model and
Disruptive Business Model

Business Model

• A business model outlines how a company creates,

delivers, and captures value. It describes the rationale
of how an organization operates and generates
revenue.

• Business models serve as a blueprint for the company's

strategy and operations, encompassing various
elements such as the value proposition, customer
segments, revenue streams, and key activities.
 Business Models: Standard Business Model and
Disruptive Business Model
• Standard Business Model

A standard business model is a traditional

approach that has been widely adopted and
proven effective over time. These models are
based on well-established practices and
methodologies that are known to generate
consistent revenue streams and sustain long-
term business growth.
 Business Models: Standard Business Model and
Disruptive Business Model
Standard Business Model
Characteristics:
• Predictability: Established patterns and structures
provide reliable forecasting and risk management.
• Incremental Innovation: Focuses on gradual
improvements and enhancements rather than radical
changes.
• Market Established: Operates in mature markets with
established customer bases.
• Efficiency Focus: Emphasizes optimizing processes, cost
reduction, and maximizing existing resources.
• Competitive Advantage: Relies on factors like brand
reputation, economies of scale, and established
distribution networks.
 Business Models: Standard Business Model and
Disruptive Business Model
Examples of Standard Business Models
Retail Business Model
• Example: Walmart
• Description: Walmart operates a chain of
hypermarkets, discount department stores, and
grocery stores.
• Key Components:
– Value Proposition: Wide variety of products at low
prices.
– Customer Segments: Price-sensitive consumers and
families.
– Revenue Streams: Direct product sales in physical
stores and online.
 Business Models: Standard Business Model and
Disruptive Business Model
Examples of Standard Business Models
Franchise Business Model
• Example: McDonald's
• Description: McDonald's operates through a franchise
system where independent operators run individual
restaurant locations under the McDonald's brand.
• Key Components:
• Value Proposition: Consistent quality and service
with a globally recognized brand.
• Customer Segments: Consumers seeking fast food.
• Revenue Streams: Franchise fees, royalties, and
company-operated restaurant sales.
 Business Models: Standard Business Model and
Disruptive Business Model
Examples of Standard Business Models
Manufacturing Business Model
• Example: Ford Motor Company
• Description: Ford designs, manufactures, and sells
automobiles and commercial vehicles.
• Key Components:
• Value Proposition: Reliable and innovative vehicles.
• Customer Segments: Individual consumers,
businesses, and government entities.
• Revenue Streams: Sales of vehicles, parts, and
accessories.
 Business Models: Standard Business Model and
Disruptive Business Model
Examples of Standard Business Models
Advertising Business Model
• Example: Google
• Description: Google offers a search engine and other
services, earning revenue primarily through
advertising.
• Key Components:
• Value Proposition: Free access to powerful search
tools and a wide range of online services.
• Customer Segments: General public and businesses.
• Revenue Streams: Ad revenue from search ads,
display ads, and other advertising products.
 Business Models: Standard Business Model and
Disruptive Business Model
Disruptive Business Model

A disruptive business model introduces

significant changes to existing markets by
providing innovative products or services that
challenge traditional ways of operating. These
models often create new markets or reshape
existing ones, leading to substantial shifts in
consumer behavior and industry standards.
 Business Models: Standard Business Model and
Disruptive Business Model
Disruptive Business Model
Characteristics:
1. Innovation-Centric: Focuses on groundbreaking ideas
that transform how markets operate.
2. High Risk, High Reward: Greater potential for both
significant success and failure.
3. New Value Proposition: Offers unique benefits that are
not available through traditional models.
4. Technology Leverage: Often leverages new technologies
to create efficiencies or provide superior customer
experiences.
5. Market Creation: Can create entirely new markets or
significantly alter existing ones.
 Examples of Disruptive Business Models
Ride-Sharing Services - Example: Uber
• Description: Uber disrupted the traditional taxi
industry by providing a convenient app-based service
that connects riders with drivers.
• Key Components:
• Value Proposition: On-demand transportation that
is often cheaper and more convenient than
traditional taxis.
• Customer Segments: Individuals needing
transportation.
• Revenue Streams: Ride fares and commissions from
drivers.
• Disruption Impact: Transformed urban transportation,
reduced dependency on traditional taxi services, and
introduced flexible work for drivers.
 Examples of Disruptive Business Models
Streaming Platforms - Example: Netflix
• Description: Netflix shifted from DVD rentals to
streaming, disrupting the traditional cable TV and
home entertainment industry.
• Key Components:
– Value Proposition: Unlimited access to a wide range
of movies, TV shows, and original content for a
monthly subscription fee.
– Customer Segments: Individuals and families
seeking entertainment.
– Revenue Streams: Monthly subscription fees.
• Disruption Impact: Changed how people consume
media, leading to a decline in cable TV subscriptions
and the rise of on-demand viewing.
 Examples of Disruptive Business Models
Online Marketplaces - Example: Amazon
• Description: Amazon disrupted traditional retail by
providing a vast online marketplace where customers
can buy almost anything.
• Key Components:
– Value Proposition: Wide selection of products,
competitive prices, and convenience of online
shopping.
– Customer Segments: Consumers and businesses.
– Revenue Streams: Product sales, subscription fees
(Amazon Prime), and advertising.
• Disruption Impact: Significantly impacted brick-and-
mortar retail stores, leading to the rise of e-
commerce and changes in consumer buying behavior.
 Examples of Disruptive Business Models
Electric Vehicles - Example: Tesla
• Description: Tesla disrupted the automotive industry
with its focus on electric vehicles, autonomous driving
technology, and direct sales model.
• Key Components:
– Value Proposition: High-performance electric
vehicles with advanced technology and sustainable
energy solutions.
– Customer Segments: Environmentally conscious
consumers and tech enthusiasts.
– Revenue Streams: Vehicle sales, energy products,
and software updates.
• Disruption Impact: Accelerated the shift towards
electric vehicles, influencing traditional car
manufacturers to invest in EV technology.
 Examples of Disruptive Business Models
Digital Payment Systems - Example: PayPal
• Description: PayPal disrupted traditional banking and
payment methods by providing a secure online
payment platform.
• Key Components:
– Value Proposition: Easy, secure online transactions
without the need for traditional banking methods.
– Customer Segments: Online shoppers, businesses,
and freelancers.
– Revenue Streams: Transaction fees, currency
conversion fees, and interest on balances.
• Disruption Impact: Simplified online payments,
increased the security of e-commerce transactions,
and provided an alternative to credit card payments.
 Standard & Disruptive Business Models - Differences
Aspect Standard Business Model Disruptive Business Model
Incremental
Innovation Radical innovations
improvements
Lower risk due to Higher risk with
Risk
established practices uncertain outcomes
Established, mature New or redefined
Market Focus
markets markets
New customers attracted
Customer Base Existing, loyal customers to unique value
propositions

Growth through market

Growth Expansion through
creation and
Strategy optimization and scaling
technological adoption

Brand reputation, Unique value

Competitive
economies of scale, propositions, first-mover
Advantage
operational efficiency advantage