Business Foundation

Understanding the Basics

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Contents

Key
components 02 Key Activities of
01 Business Functions 03
of Business business

Decision making in Common Understanding

04 business 05 Analysis 06 Business problem
Areas

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Key components of Business
Business Model
A business model
describes the rationale of
how an organization
creates, delivers, and
captures value.
Understanding business
model helps understand
important and valuable
activities and resources to
the organization.
Data analysis of these
assets is always valuable
for the organization in
decision making in
business
Value
Value is a measure of the
benefit provided by a
products or service to it’s
buyer.
It can be measured in
currency, brand
recognition, market
penetration, growth etc…
When measured in
currency it is called
economic value
Key Activities
The most important
activities in delivering
promised value of
products or services by
company to their buyers.
They are directly involved
in creating, selling and
delivering products and
services and also called as
“value chain” and treated
as primary business
activities.
Key Resources
The resources that are
necessary to create value
for the customer.
They are considered assets
to a company that are
needed to sustain and
support the business.
These resources could be
people, financial,
technological, intellectual,
and informational.
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Generic business models
Industrial sectors and vertical markets
 Based on functions, markets and products, industries
are classified in sectors, commonly termed as business
verticals or domains
 Some industries or companies work across the multiple
sectors.
 Sectorial Companies always try to specialize within
sectors to gain competitive advantage through
innovations.
 Though companies in same sector are functionally alike
in their processes, products and business models,
implementations of them are very specific to the
individual company.
 As analyst we need to understand these specific
implementations to help the management in data
driven decision making.

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Business value Contributors
Sales
It Physically sells the
product/services to generate
revenue and margin.
Marketing
It Promotes the products or
services thereby grows revenue,
margin and brand value
Supply Chain
It manages entire chain of products
from procurement to delivering
them to doorsteps of customer
creating satisfaction value
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Retail Sales and Marketing (S & M)
7 Driver P’s of Sales & Marketing
 All The process of S & M are around Customers
and S & M Employees as key roles and their
relationships
 In retail sales establishing brand impression is
most important and is shown by physical
evidences like facility, equipment, uniform of
employees, signage etc…
 Lately in retail customers are more attracted
towards customization of products and services.
Hence proper processes for services are very
helpful in sales.
 Now a days customers are very selective about
ambience, accessibility, location of stores. Hence
S & M use them to attract customers
 Suitable products & services, Optimum prices of
them and their effective promotion are the key
traditional marketing techniques used in retail.

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Supply chain - Retail
Transporter(Logistic) Warehouse
Can be Owned by
Vendor/Supplier Supplier or Retailer
Or Third Party

Transporter(Logistic)

Retail Outlet
(Store/Point of sale)

End Consumer/Customer

Transporter(Logistic) Distribution Center

Product flow
Order flow
E-Commerce Website

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Media & Entertainment
Content Sales & Marketing

 M & E covers digital media, movies and

Published media
 All the channels have specific sales models
associated with them.
 Print Media has Subscription, Rights, Royalty
and Advertising sales models
 All models in the diagram are used for Digital
media
 Movies are sold using rights distribution
model.
 In marketing the contents promotion also
has models based sharing of expenses and
benefits among content provider and
publisher

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Content Supply chain - M & E
Key stages of content supply chain are
 Content Creation
 Content Management & Publishing
 Content Sales and Marketing

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Essential business functions
Business functions are high level groupings of business processes and capabilities that describe a business at its highest level
Functional Area Essential Functions Some roles in the area Primary Responsibility
Sales & Marketing Marketing and Selling products/services Sales manager Responsible for selling and
Promotion of Products/services Sales Rep promoting Products and
Sales Forecasting Sales executive services
Customer relationship management

Supply Chain Order fulfillment Supply chain Manager End–to–end supply of

Management Procurement & Vendor management Project Manager products/services to the
Inventory and replenishment Distribution & Logistic SCM analysts customer.
management It is primary functional area of
Manufacturing/warehouse/store management business which, directly
(Operations) creates value for business.

Finance & Cash flow management Finance manager Managing and accounting
Accounting Financial Accounting Accounts manager company assets, liabilities,
Payments & Receipts accountants cash, costs and revenue
Cost allocation & budgeting realization.

Human Resource, Talent acquisition and retention HR Manager Responsible for providing,
Administration & Compensation and benefits HR Executives engaging, developing and
Technology Employee Engagement and progression Admin Executives retaining highly skilled and
Administration & people management IT manager best fit personnel for the
IT management organization.

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Key activities of Business
As a front end of business, sales, marketing and customer service always directly effect the value.

Sample Value Metrics Key functions involved Key Activity Secondary Activities
(directly impacting value) (in-directly impacting value)

Advertising & brand promotion

Brand Value Marketing HR & Admin, Finance & Accts, IT
activities

Sales enquiry processing,

Sales & Marketing Customer relationship building &
support
Margin & Revenue Order processing & shipping HR & Admin, Finance & Accts, IT
Inventory management
Order Fulfillment(SCM) Store & warehouse management,
Procurement and vendor
management
Product/services Promotion
Customer count Sales and marketing Customer relationship HR & Admin, Finance & Accts, IT

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Decision making process in business
 Decision : A course of action purposely chosen from a set of alternatives to achieve organizational or managerial objectives or goals.
 Decision making Process: A continuous and indispensable component of managing any organization or business activities.

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Typical analysis for the business functions
Some common analysis areas used in decision making for business functions across the Business verticals

Sales & Marketing Analysis Supply Chain Analysis Support Functions Analysis

Procurement and
Sales Marketing logistics Order fulfillment Human Resources Finance & Accounts

Pipeline Analysis Campaign Logistic performance Reorder, Return Employee A/R, A/P analysis
analysis and analysis for cost and customer allocation,
forecasting optimization receivables Productivity and
analysis efficiency analysis

Triangulated Promotion Supplier performance Backorder & Compensation GL/Balance sheet

Forecasting response analysis analysis Backlog analysis analysis analysis

Sales Team Product Procurement quality Order cycle time Various analysis for Profitability analysis of
effectiveness propensity and cycle analysis analysis compliance customers and
reporting products/services

Up-sell/Cross-sell Customer Loyalty Inventory analysis Demand analysis Workforce profiling Cost center analysis
analysis analysis of products /
services
Lead conversion Market Basket BOM Analysis Order linearity Turnover and Cash flow analysis
analysis Analysis attrition analysis

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Steps in understanding the Business Problem
Gather the information about business problem to
understand purpose of the analysis and impact of solution
on the business, using user and stakeholders’ interviews, 1 Collect Information
process and systems documentation.

Apply above knowledge about business vertical and

functions to understand the business problem in details
Define the Problem 2 and define problem statement clearly .

Translate the problem statement in business terms, to

data analysis problem statements. This can be for single
analysis or multiple analyses of data. 3 Translate the problem

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