Nature

(The internal scope) 

 

 

The Nature: who the Organization is, in terms of fundamental characteristics to perform its business, in the current business phase.

 

Defining the Nature of the Business Activity is defining the "Business Focus": determining the Organization's position regarding what it does actually, what it does most and what it does best:

  • Business Mission: What the Organization does actually
  • Core Businesses: What the Organization does most
  • Strategic Capabilities: What the Organization does best

                    

The following paragraphs present in more details these three components.

 

(click on the following elements for more details)

> Business Mission

(What the organization does actually)

 

The Business Mission, direct result of the Business Policy, describes the fundamental nature of the business activity, such as: 

  • manufacturer, assembler,
  • solution provider, tool provider, platform provider,
  • expertise provider, value shop,
  • asset operator, brand exploitant,
  • broker, aggregator, disintermediator,
  • value-added reseller, dealer,
  • etc.

The Business Mission is like a synopsis of the Business Activity: it defines, at a high level, the context, content and concept of the Business Activity.

 

Examples of Business Missions:

- McDonalds: Brand & real estate exploitant in the fast-food industry: Renting the McDonalds brand and buildings to a network of franchised restaurants.

  • Context: fast-food industry
  • Content: McDonalds brand, buildings, restaurants
  • Concept: brand & real estate exploitant, renting, network of franchises

- CNN: Content and solution provider in the audiovisual industry: Selling customer-reaching solutions to advertisers and TV cable operators through news-based TV programs.

  • Context: audiovisual industry
  • Content: advertisers, TV cable operators, customer-reaching solutions, news-based TV programs
  • Concept: selling, content provider, solution provider

 

> Core Businesses

(What the organization does most)

 

Although widely used, the notion of Core Business may be confusing. For an organization that has a portfolio of different business activities, the core business is usually understood as the most important of these businesses. This is not the definition that is used in the Bm2 framework. Here, a "core business" is understood as an actual functional specialty, or "métier". An organization usually has several core businesses.

If the organization was to be split in several independent entities in charge of each one of its basic functional activities, the Core Businesses would be the smallest set of entities that would still be recognized as the organization.

Core Businesses can be, for instance: production, marketing, R&D, sales, logistics, data management, human resources, purchasing, etc.

Examples of Core Businesses:

- Apple: Marketing, R&D, production outsourcing, distribution.

- Walmart: purchasing, logistics, warehousing, IT management.

- Ritz-Carlton: hotel opening management, hotel exploitation management.

 

> Strategic Capabilities

(What the organization does best)

 

A Strategic Capability is an operable functional expertise on which the organization can base its business strategy.

Strategic Capabilities can be Market-oriented, Capture-oriented of Industry-oriented, such as:

  • product quality,
  • operations excellence,
  • brand communication,
  • customer relationship,
  • supplier relationship,
  • innovation,
  • product development,
  • recruitment,
  • purchasing processes,
  • etc.

 

The nature of Strategic Capabilities can be the result of:

  • a Resource-based approach: a set of tangible and intangible resources,
  • an Activity-based approach: a set of activities,
  • a Transaction-based approach: a set of different supplies sourced.

Generally, a Strategic Capability is a combination of Resources, Activities and Supplies.

An organization usually bases its strategy on a combination of Strategic Capabilities. Moreover, Capabilities can be cumulative: a Strategic Capability mostly based on Resources may rely on another Strategic Capability allowing the building of such Resources.

 

Example of Strategic Capabilities:

- Google: the company bases its strategy for the search engine-related business on mainly 2 strategic capabilities:

  • capability to provide relevent search results to web users (thus allowing a very large traffic),
  • capability to target web users effectivelly for ad placement (thus allowing a rather high CPM price).

 

 

 

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Bm2: Design, Analyse & Manage your Business