Business Fundamentals

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  • MattThomasMattThomas subscriber Posts: 2
    Nice, I`m loving this list so far. Let me throw in another subject that was uncovered in business school: mergers and acquisitions. I`m not positive as to how this can be converted into a fundamental, but I have found that this topic (and I majored in both management AND finance) was inadequately covered.
    Some broad topics were covered such as stock swaps, but NOTHING about small business M&As, and NOTHING about cultural adjustments when blending two different work forces together (from a managerial perspective).
    I suppose there are certain financial and cultural undertones as it pertains to fundamentals, I`m just not sure exactly what they would be.
  • MattThomasMattThomas subscriber Posts: 2
    Interesting points. And I agree that M&A itself doesn`t seem to be a fundamental. But I think we are hitting on some undertones that are getting closer to the fundamentals--equity and integration.
    Lets start with equity. Equity HAS value, but equity is, like Craig said, ownership. Percent of ownership can be used for funding, negotiation, even trading. I`m not positive how far we can take this idea, so I`ll leave that up for future discussion.
    But with integration, I think the real fundamental integration suggests is: CHANGE. Integrating different workplace cultures, individual staff members, new goals or strategy, really anything NEW that is presented into any business needs to be integrated in some way, and this represents a change. MattThomas3/10/2009 5:02 PM
  • MattThomasMattThomas subscriber Posts: 2
    Adaptation may not be exclusive to business, but it is certainly a fundamental to the survival of a business. The sheer fact that change is NOT exclusive to business is the very reason why businesses need to be able to face constant change and adapt.
    Craig, your example of coke is a good one. Sure, improving the product might not have been the most successful of ideas, but their are other elements Coke had to adopt to. The rise of the internet has forced many companies to have an online presence, and Coke specifically has had to respond to the increasingly health-conscious consumer base by purchasing manufacturers who offer healthier drinks, offering Diet coke, etc...
    @mfackrell, I`m not sure if I agree with your point about change. I think the concept of change very much implies that you are never done adjusting to change. Change is constant and thus, you must be constantly ready to adapt.
  • MattThomasMattThomas subscriber Posts: 2
    How do we present The Fundamentals of Business in such a way that this potential visitor and topical-reader has something they can take away and apply?

    Yes, its probably a good idea that we clarify why this is important and something we can all learn from.
    In the opening post in this thread, I mentioned the author of the book, "The Art of Learning" who was a master chess player and martial artist. He argued that he was able so thoroughly learn these seemingly different art forms through "mastering the fundamentals"
    Therefore, I feel we can learn a lot if we can identify the fundamentals of business and see how they are applied. Perhaps identifying these fundamentals can reveal a new business strategy that we haven`t thought of yet because our knowledge of the basics is a little cloudy.
    So we have already pointed out that a common goal of business is for the value of outputs to exceed the value of inputs--which can be related to profits, competition, staffing management, etc...
    We have defined what is a business, which is something that exchanges value--so perhaps thinking of new or creative ways to exchange value might unveil new ways to be profitable.
    We have covered that in order to justify a higher markup, we must deliver attributes with market perceived value...thus we can`t just charge a high price for a product without including some sort of valuable attribute with it.
    And we are currently discussing change and its presence in business.
    I think all of these concepts have many implications, and I believe identifying them and understanding them can help all of us come up with new and creative strategies, simply by understanding the basic concepts behind business.
  • MattThomasMattThomas subscriber Posts: 2
    Change does always occur, but change within an organization implies that once you have completed the "change" project you are done. The way change must be dealt with is throught the process of continual improvement.
     I agree that we are kind of splitting hairs here, but i think the perception of what you undertake is important.

    I agree with you, I think we just misunderstood each other a bit. When I am referring to change, I don`t mean change INSIDE of the business, but a changing environment OUTSIDE of the business. Since the environment around us is always changing, it is imperative that businesses embrace a strategy that constantly allows change.
    So I believe understanding strategies that allow businesses to better cope with change can be very helpful. How can an organization do this? Become "flatter"? Hire change agents? How can an organization overall become more nimble?
  • BurkonsConsultBurkonsConsult subscriber Posts: 0
    OK, guys. Time for me to jump in.
     
    Most businesses go through change on a regular basis. In other words, the operations in the business flex to the ebb and flow of the business enviroment. The change might be rather subtle and only affect an aspect or two of how the business operates; or it could be enterprise-wide.
     
    Obviously, enterprise-wide is the most noticable and affects the most people within a company. The only successful way to get the company through the major changes of doing business are training and "change management."
     
    Many people do not like change. That is where change management becomes so important. I have been involved in so many ERP projects that I have seen success and failures because the training or change management were inadequate. That affects productivity. Yikes.
     
    And then there are the different reasons to make operational changes: the company is on the cutting edge of technology, the company is following everyone else (remember the mid-90s when every company was getting ISO9000 certification), the company is behind the times and losing money because of it, and so forth.
     
    The best thing to do is understand your company and the environment of your business. Change will happen eventually.
  • MattThomasMattThomas subscriber Posts: 2
    @BurkonsConsult, I think your description of change and change management is right on. You really have presented a good case on why a business reaction to change is an essential discipline all businesses must master.
    @Craig--Your Wax-on, Wax-off analogy is spot on...in fact I think that is the same exact analogy that was used in the book I referenced. You are toning your muscles to react in a way by instinct, but also at the same time, having a better more intimate understanding of the "movements", you are able to tweak them to each individual scenario that would present different challenges.
    My issue with a lot of the items on this list is, mastering these basics will not lead to mastering business. Mastering accounting, I don`t believe is necessary. Display and layout of a store can be outsourced and inventory control can now be widely digitized and automated, or not even relevant to service businesses (right?). However, having a deep understanding of converting inputs into more valuable outputs can potentially give you new insight into new process innovation. Ask yourself: does this process work? And you may answer: "Yes because what we produce is more valuable than the resources we contributed to it." If you don`t understand that basic concept, you won`t understand what makes a process or business successful.
    In order to understand how to react to change, you need to understand the nature of change. In order to transact, you need to understand the nature of the exchange (ie: customers want a QUICK exchange, usually).
    What is accounting? It is really just a way of keeping track of resources and where they came from. Why is that useful? Well ultimately you really want to know if your operations are in fact, profitable (ie: the value of your outputs exceed the value of your inputs), and what resources you have to work with in all different sorts of contingencies or plans of growth (strategy and planning).
  • MattThomasMattThomas subscriber Posts: 2
    Yes, you do need to know the basics of it, but mastering accounting does not necessarily make you a better business person. I think the concept BEHIND accounting (ie: knowing how profitable your business is and what resources you are working with) is what makes accounting so important, and understanding this concept more deeply has much broader uses and implications than just accounting, such as planning and forming strategy.
  • MattThomasMattThomas subscriber Posts: 2
    Yes, but walking, like running have same basics that is locomotion and standing upright on two legs. If you can`t use your leg muscles, you can`t walk OR run.
    What I am saying is that there is a basic behind accounting that has broader implications than just profit and loss.
    Understanding intimately what resources you have to work with is an essential ability, where the better you are at it, the better you will be at planning and finding new and creative ways to use and conserve resources. Accounting has some roots to this, but keeping track of and using resources is a much broader discipline than just Accounting.
    And understanding that Profits = Revenues - Expenses is hardly understanding the concepts of accounting...hell they taught me that in an economics class MattThomas3/15/2009 4:22 PM
  • MattThomasMattThomas subscriber Posts: 2
    Right, but practicing certain basics will allow you to get more proficient in the more advanced disciplines that these same basics would apply to, no?
    Its not too much information, its practicing certain basics to get better and better at it. Think communication, managing, leading, selling.
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