BUSS1000 Frameworks

1 INTRODUCTION
1.1 Megatrends
Megatrend - Large, transformative processes with global reach, broad scope and dramatic
impact
Wicked challenges - complex social and policy problems highly resistant to resolution —>
products of megatrends often e.g. water and food shortage, population growth, climate
change

1.1.1 Types of megatrends

1. Impactful technology - 1 trillion objects connected by 2026
2. Demographic change - world pop 7.5b in 2016, 10b in 2050
3. Rapid urbanisation - 61% of world population live in cities by 1800
4. Amplified individuals - 400m connected in 2000, 3.2b I 2015
5. Economic power shift - Emerging economies 33% of world total in 2015, 50% by 2025
6. Climate and resource security - Energy consumption to increase by 35% by 2035

2 ROLE OF BUSINESS IN SOCIETY

2.1 Entrepreneur characteristics
1. Entrepreneur
a. Goal-oriented
b. Hands-on
c. Thrives on uncertainty
d. Continuously looks for app to improve on

2. Social Entrepreneur
a. Improve systems, create solutions, and invent new approach
b. Challenge the status quo and conventional thinking about what is feasible
c. Constantly evaluating and pursuing opportunities for social change

2.2 PM
- Value: maximising profits by cutting costs at ANY means
- Don’t care about social concerns
- E.g Offshoring production (change a process to another country) —> reduces
domestic employment

2.3 CSR
- Value: doing good (on the side —> ulterior motives)
- These activities are optional or in response to external pressures
- Effect
a. Reputation - attracting customers
 b. Attract investors - look wholesome
c. Appease the government - meet government requirements
- E.g Conducting charities + donations for social concerns

2.4 CSV
- Value: simultaneous economic, societal and sustainability benefits
- Integrated in business model
- Effect
o Better access to government funding
o Forefront of the future —> leading and paving the way for more
sustainability
o Distinguished from other competitors —> attract more customers
- E.g Food companies focusing on healthy food
a. …..should embark on CSR program to improve safety of workers i.e
provision of safe cycling awareness courses, high visibility clothing, offering
protection through insurance, look to engage with government and
community groups to understand risks of cycling + change laws to make a
better environment

2.5 SE
- Value: social change and innovation
- For community benefit
a. Social mission + respond to complex social problems
- E.g Grameen Bank (Microfinance in rural areas), provided services for more the 93%
of villages in Bangladesh

3 INTERNAL ANALYSIS
Case Study: Compsis at a Crossroad

3.1 Swot analysis

A strategic framework to help a business identify the strength, weaknesses, opportunities
and threats to a business competition or project planning

- Limitations - doesn’t show how influential each element/factor is so unable to

conclude precisely what the idea will be

E.g Flight Centre

- S - market dominance (more influential than competitor in the market),
comprehensive marketing and adv
- W - volatility in the market, lowest airfare may negatively impact bottom line
- O - movement in industry —> changes and new products can roll out widely and
quickly
- T - Online and retail competitors, stock price plummeting + currency fluctuations
 Porter’s Generic Value Chain
Value Chain - helps us understand the processes by which businesses take inputs —> add
value —> produce outputs

- Limitations: by focusing too much on the micro details, the broader strategic view
can get lost
a. How to measure the generated value from each component?
b. Can deceive us into seeing an organisation as a linear supply chain
c. Accommodates mainly to manufacturing of goods

- Primary activities: directly add value to customers

a. Inbound logistics
Involves relationship with suppliers and includes all the activities
required to receive, store and disseminate
E.g Receiving, warehousing and managing inventory
• Starbucks doesn’t grow its own coffee - this part of the
process is left to another company.
• To ensure quality, Starbucks has a contract with its supplier.
If the sample supply doesn't meet the criteria, the deal is off.
b. Operations
All the activities required to transform inputs into outputs
E.g transforming raw materials into finished g and s
• Starbucks doesn't process its own coffee - this part of the
process is left to another company.
c. Marketing/sales: implement a marketing strategy
Activities that inform buyers about products and services + induce
them to purchase them
E.g Advertising, promotion, pricing
• Starbuck’s main business focus is on the right hand side of
the value chain: marketing and sales, and service. This is
their core competence. Starbucks Coffee is marketed as the
'third place' for consumers.
d. Service
Activities required to keep the good working for the buyer after it is
sold and delivered
E.g Customer service, maintenance, repair and refund

- Secondary activities: assist primary activities

a. Procurement
Acquisition of resources for the firm
E.g How the firm procures its raw materials to manufacture a product
b. Technology development
Refers to the equipment, hardware, software, technical knowledge
that the firm needs
c. Human Resource management
All the activities involved in recruiting, hiring, training and developing
people
 d. Firm infrastructure
Consists of functions or departments e.g accounting, legal, finance,
planning public affairs

3.2 VRIN: resource-based view

VRIN - sees those resources/capabilities as the most crucial factor behind superior business
performance

- A framework to determine the resources that a firm can use to achieve a sustainable
competitive advantage
- Limitations: model doesn’t consider external factors, world in which firms operate is
changing all the time difficult to say you’ve ever achieved a sustainable
competitive advantage
a. Doesn’t take into account other factors such as networks, cause and effect
relationships and catalysts
b. Doesn’t address the creation and development of resources

- If a resource/capability has all the VRIN characteristics, then the resource/capability

enables the business to gain a sustainable competitive advantage
1. Valuable - that resource/capability (relationships, reputation, skill, patents,
plant) gives your business some benefit
a. E.g save time, attracts customers, reduce costs, creates innovation inside
the business
if not valuable at a disadvantage
2. Rare - does everyone have it? If everyone, has it, what makes it different?
If it is not rare —> no competitive equality
3. Inimitable - can everyone duplicate it?
If it is is not —> only a temporary competitive advantage

4. Non-substitutable - can other firms find a substitutable resource/capability that

can get the same thing done?
If it is not non-substitutable —> only a temporary competitive advantage
4 EXTERNAL ANALYSIS
Case study: First Solar

4.1 PESTLE
Module 4.4: Used to analyse macro-environment to help identify “key drivers of change”

- Helps identify business opportunities and threats in the external environment + i.e
how to take advantage of these and/or defend against
- Limitations
a. Only based on external factors – not internal doesn’t offer full picture
b. The factors can change which change result of PESTLE analysis

4.2 Porter’s 5 Forces

Used to analyse industries and sector attractiveness

- Module 4.9 You can use Porter’s 5 forces to define the industry, identify market
participants or stakeholders, analyse their influence on profitability, test the analysis,
consider how these factors influence and change profitability, develop a response to
the industry environment
- Limitations
a. Only lists out factors that can be advantageous or disadvantageous
Doesn’t show how influential each element/factor is so unable to
conclude precisely what the idea will be
b. Doesn’t explain why some firms perform better than others in the same
environment
c. Defining the ‘right industry’ may be difficult
d. New ways of competing are not explained
e. The idea of ‘power’ and ‘threats’ is not as useful for entrepreneurial firms
1. Threat of entry to an industry
- Scale and experience: when existing competitors reached large-scale production —>
expensive for new entrant
- Access to supply/distribution channels: e.g direct ownership of channels? Selling
directly to customers via e commerce
- Legislation: legal restraints on new entry
- Differentiation: customer loyalty

Example
The threat of new entrants in the airline industry can be considered as low to medium. It
takes quite some upfront investments to start an airline company (e.g. purchasing aircrafts).
Moreover, new entrants need licenses, insurances, distribution channels and other
qualifications that are not easy to obtain when you are new to the industry (e.g. access to
flight routes). Furthermore, it can be expected that existing players have built up a large
base of experience over the years to cut costs and increase service levels. A new entrant is
likely to not have this kind of expertise, therefore creating a competitive disadvantage right
from the start. However, due to the liberalization of market access and the availability of
leasing options and external finance from banks, investors, and aircraft manufacturers, new
doors are opening for potential entrants. Even though it doesn’t sound very attractive for
companies to enter the airline industry, it is NOT impossible. Many low-cost carriers like
Southwest Airlines, RyanAir and EasyJet have successfully entered the industry over the
years by introducing innovative cost-cutting business models, thereby shaking up
original players like American Airlines, Delta Air Lines and KLM.
-
2. Threat of substitutes to the industry’s good and service – e.g substitute for taxi is public
transport
- Products or services that offer a similar benefit to an industry’s products or services,
but by a different process (eg. trains and cars)
- Price/performance ratio: If expensive, can still be an effective threat as long as it
offers performance advantages that customers value – eg. aluminium is more
expensive than steel but its relative lightness and resistant to corrosion gives it an
advantage in manufacturing applications

Example
In terms of the airline industry, it can be said that the general need of its customers is
traveling. It may be clear that there are many alternatives for traveling besides going by
airplane. Depending on the urgency and distance, customers could take the train or go by
car. Especially in Asia, more and more people make use of highspeed trains such as Bullet
Trains and Maglev Trains. Furthermore, the airline industry might get some serious future
competition from Elon Musk’s Hyperloop concept in which passengers will be traveling in
capsules through a vacuum tube reaching speed limits of 1200 km/h. Taken this altogether,
the threat of substitutes in the airline industry can be considered at least medium to high.

3. Power of buyers
- Concentrated buyers: where the
- Low switching costs: Buyers can easily switch between one supplier or another
 - Buyer competition threat: Buyer may have some facilities to supply itself or acquiring
such facilities

Example
Bargaining power of buyers in the airline industry is high. Customers are able to check prices
of different airline companies fast through the many online price comparisons websites
such as Skyscanner and Expedia. In addition, there aren’t any switching costs involved in the
process. Customers nowadays are likely to fly with different carriers to and from their
destination if that would lower the costs. Brand loyalty therefore doesn’t seem to be that
high. Some airline companies are trying to change this with frequent flyer programs aimed
at rewarding customers that come back to them from time to time.

4. Power of suppliers: those who supply the business with what it needs
- Concentrated suppliers
- High switching cost: Can be expensive to move from one supplier to another —>
buyer dependent on the supplier – they would rather pay premiums to avoid the
trouble of switching
- Supplier competition threat: Able to cut out buyers than simply act as intermediaries

Example
The bargaining power of suppliers in the airline industry can be considered very high. When
looking at the major inputs that airline companies need, we see that they are especially
dependent on fuel and aircrafts. These inputs however are very much affected by the external
environment over which the airline companies themselves have little control. The price of
aviation fuel is subject to the fluctuations in the global market for oil, which can change wildly
because of geopolitical and other factors. In terms of aircrafts for example, only two major
suppliers exist: Boeing and Airbus. Boeing and Airbus therefore have substantial bargaining
power on the prices they charge.

5. Extent of rivalry between competitors in the industry

- Industry growth rate:
- High fixed costs: If a competitor seeks to reduce unit costs by increasing their
volumes, others will try to do the same, thereby triggering price wars
- Low differentiation: Little to stop customers from switching between competitors
and hence the only way to compete is on price
- Price matching
- Marketing
Example
When looking at the airline industry in the United States, we see that the industry is
extremely competitive because of a number of reasons which include the entry of low cost
carriers, the tight regulation of the industry wherein safety become paramount leading to
high fixed costs and high barriers to exit, and the fact that the industry is very stagnant in
terms of growth at the moment. The switching costs for customers are also very low and
many players in the industry are similar in size (see graph below) leading to extra fierce
competition between those firms. Taken altogether, it can be said that rivalry among
existing competitors in the airline industry is high.
5 STRATEGY
Case study: A2 milk company

Strategies - in terms of what an organisation needs to do in order to acheive a competitive

advantage in a specific industry through

- Businesses have to decide their strategy - either on the basis of differentiation or

cost leadership.

5.1.1 Types of competitive advantage

1. Cost
2. Products/service differentiation
3. Niche strategy

5.2 Strategic Diamond

Strategic diamond outlines the characteristics of a business and their strategy
 - Limitations
a. Doesn’t factor in the external environment

Module 5.9 with IKEA

1. Economic logic
o How will we obtain our returns?
Lowest costs through scale advantages, scope and replication
advantages, premium prices

b. E.g IKEA runs on scale.

Their stores are large and they never have stores in the middle of the city.
Generally, the stores are in the outskirts with a large warehouse.
There are many products under one roof which compels customers to buy
more than initially planned.

2. Arenas
o Where will I be active and with how much emphasis?
What product categories?
Which market segments?
Which geographic area?

c. E.g IKEA have a well-defined product

they do not try to sell costly furniture
they try to sell a cost-efficient product
if you see the market that they are trying to cater, most of the time the
average age of the consumers/ market is on the lower side because that
demographic part of the population is more interested to buy price-
sensitive furniture.

3. Vehicles
o How will we get there?
Internal development, joint ventures, licensing, acquisitions

d. E.g If you look at the vehicle, they have never had any sort of joint venture
with other companies.
IKEA owns all their stores but they do not produce or manufacture
anything.
They have created a robust supply chain where they have a detailed
contract with many different organizations across the globe which are
located closest to the place from where they are selling their product.

4. Differentiators
o How will we win?
Image, customisation, price?
 e. E.g Their differentiation strategy focuses on sleek style and easy to use,
carry and assemble furniture.
IKEA uses a self-service model. It designs and presents products in store so
customers can imagine the products in their own home, and don’t need to
be interior designers.
Yet IKEA offers other services that its competitors don’t; such as a childcare
centre so its young families (a large part of its customer base) can shop
more easily.
It offers a reasonably priced family restaurant to make customers
comfortable and more likely to stay in the store and purchase.

5. Staging
o What will be our speed and sequence of moves?
Speed of expansion, sequence of initiatives

f. E.g IKEA strongly believe that it is important to learn about local business
which can only be understood by doing business there. Wherever IKEA
starts an operation, they remain at least three years with only one store
and once they learn the local uniqueness or the buying pattern, they
expand drastically and very fast with multiple stores.

5.3 Porter’s Generic Strategy (1996)

Module 5.6 defined strategy in terms of what an organization needs to do to achieve a
competitive advantage in a specific industry through:

- Limitations
a. Some firms may not match every characteristic of the strategy depends on the
nature of the firm’s industry
b. Strategy is vague
c. Doesn’t offer step-by-step guideline settles the big picture without going
deeper

1. Cost leadership
Preconditions
- Customers who are price sensitive ready to switch to another product for a small
change in price
a. For example - local example Jetstar competes on the basis of cost
leadership. You can probably think of other airline examples.
- Economies of scale are present or possible
- Preferential access to technology, raw materials and or distribution of channels or
products

2. Differentiation
- Focus on differentiating your business from competitors e.g BMW and Mazda
a. You become different to customers so they will buy from you
b. You become the cheapest —> i.e you adopt processes so outsourced
organisations can perform a certain part of the value chain more efficiently
 - Compare BMW and Mazda. BMW competes in a crowded market on the basis of
differentiation. Mazda sells a comparable size sedan at a much cheaper cost.
However, BMW positions and markets itself as exclusive and adds luxury
features for a higher price point and higher sales

3. Focus
- Focus of a niche strategy —> an organisation seeks a narrow competitive scope,
selects a- segment or group of segments in the industry and tailors its strategy to
serve them to the exclusion of others
a. E.g Lush with its eco-friendly packaging
b. Cosmetic company Lush differentiates itself from competitors with eco-
friendly packaging, organic ingredients, and refusal of animal testing.
LUSH has a niche strategy around ethical beauty.

5.4 Hambrick’s and Fredrickson’s strategy

Implementing strategy is a combination of factors that work together
1. Mission: knowing your purpose, values and vision
2. Objectives – setting specific targets
3. Strategic analysis – external analysis of industry, trends, environment and competitors +
internal analysis of resources
4. Supporting organisation arrangements – organisation needs a structure, people,
rewards and activities to implement strategy and achieve the desired goals

6 INFORMATION, COMMUNICATION AND TECHNOLOGY

6.1 Digital ubiquity
Digital ubiquity: how connections, sensors, and data are revolutionizing business pg 90

How are connection sensors and data revolutionizing business?

• Digital technology will transforme very sector

• Now all about creating new efficiencies and other benefits through advanced
analytics and algoritihms
• Digital sensors - extending digitization + connectivity to previously analog tasks

What makes digital technology transformational?

• Digital signals can be transmitted without error

• Can be replicated indefinitely
• Page can be communicated to the consumer at zero marginal cost

6.2 Canvas
Week 6 module
System - a set of interacting components that form an integrated whole e.g. an
organisation, group or person
Business process - structured network of activities supported by resources (Human and non-
human) and information that interact to achieve some business goal.

Characteristics of a well-designed business process:

1. Complete - include all activities necessary to achieve the business goal
2. Minimal - do not include unnecessary activities (cost efficiency).
3. Well-structure - structured in a logical sequence
4. Embedded - connect and interact with other BPs in the organisation effective and
efficient ways

Outcome = effectiveness (doing the right things in relation to service and equality) +
efficiency (how well things are done in relation to costs)

Information system - hardware, software, data

Business system - value/activity system

Limitations of this view

- Can’t understand everything happening inside an organisation
- Sometimes decisions are made informally
 - Need social systems view (setting right conditions, empowering people, creative, less
hierarchical)

7 SUSTAINABILITY
Case study: Nike Considered

7.1 Porter’s Generic Strategy (1980)

1. Low-cost strategy
- Lower cost is where the price of a g or s is a better value than another

2. Differentiation strategy
- Where the characteristic of a product/service is better than another e.g Apple
iPhone compared to Samsung Galazy

3. Focus market, cost strategy

- A company seeks lower cost-advantage by focusing on a smaller market

4. Focus market, differentiation strategy

- Providing products that are different from competitors who target a broader group
of customers e.g ‘Shebah’ is a women-only ride sharing service

7.2 Orsato Generic Competitive Environmental Strategies

Article: Competitive Environmental Strategies: When Does It Pay to be Green? Pg 127 – 143
Location: Module 7.6

To be sustainable as a business, you can use

- Page 140 of article: Help managers define and prioritise areas of organisation action,
optimise the overall economic return on environmental investment and transform
these investments into sources of competitive advantage
- Limitations
a. Only lists out factors that can be advantageous or disadvantageous
Doesn’t show how influential each element/factor is so unable to
conclude precisely what the idea will be
b. Some firms may not match every characteristic of the strategy depends
on the nature of the firm’s industry
c. Strategy is vague + not specific Doesn’t offer step-by-step guideline
settles the big picture without going deeper
only ‘guides’ the business a little

1. Eco-efficiency (the bare minimum)

- Low-cost way of becoming sustainable e.g
- Utilizing resources as best as possible
- Cutting costs
2. Environmental cost leadership (involves spending money)
- Having a differentiation edge —> going above and beyond this
a. E.g buying solar panels, changing your technology, changing trucks

3. Beyond Compliance leadership (making little tweaks)

- Having to do with the product itself, involves making a product and making little
tweaks e.g swapping some elements
- Cheap, lower cost and sustainable
a. How did they change the process to become more sustainable?

4. Eco-branding (complete revamping your product)

- A complete revolution of the product
- Using money to make change the entire product e.g in terms of research, design,
development + revolutionising the product —> make it more sustainable

7.3 Sustainability investment (characteristics)

Location: Module 7 Subsection 7.5

- Integrated

• Systematic and explicit inclusion of ESG factors in investment decision making

(drivers of risk and return)
• You eliminate unsustainable types of businesses by choosing only ethical suppliers.

2. Screening

• Investing in companies that are “making a positive impact on the world”

• Screening (which companies are good/bad to invest in):
o Exclusionary/negative: Avoiding sectors that include gambling, tobacco,
alcohol, fossil fuels etc.
o Positive/best-in-class: Positive ESG, sustainability performance
o Norms-based: Minimum standards (eg. Fairtrade)

3. Sustainability themed

• Building an all-round sustainable portfolio e.g Clean energy, green technology,

sustainable agriculture etc.

4. Impact/community investing

• Targeted investments aimed at solving a specific social or environmental problem

• This sector receives the least money because it is hard to identify social needs and
create a business around that (refer to Grameen bank case study)
• But, if you can find and address one fundamental need in society, there’s a huge
opportunity to make money.

5. Corporate advocacy and shareholder action

 • Shareholder power to directly influence corporate behaviour (corporate engagement,
proposals, proxy voting)

7.4 Reinhardt’s 5 approaches

There are 5 approaches to help managers integrate sustainability into their business
mindset
1. Differentiating products
Need 3 conditions
i. Company identified customers willing to pay more for an environmentally friendly
product
ii. Communicate product’s enviro benefits credibly
iii. Protect itself from imitators for long enough to profit on its investment
b. Creating products that offer greater enviro benefits or impose smaller enviro
costs than competitors
may raise business costs but can enable it to command higher prices to
capture additional market share

2. Managing your competitors –

• Joining with similarly positioned companies within an industry to set private
standards
• Convincing gov to create regulations tht favour your product

3. Saving costs- an internal approach

- Focusing on internal cost reductions e.g by redesigning inflexible or wasteful routines

4. Managing environmental risk

- Avoid costs that are associated with industrial accident, consumer boycott or
environmental lawsuit
- Effective management of environment risk source of competitive advantage

5 Redefining markets
- Rewriting the competitive rules in their markets
E.g Xerox redefine business model because rather than selling office equipment it
takes back products from customers when there is new technology

7.5 Triple Bottom Line

Article: The triple bottom line: Does it all add up?: Assessing the sustainability of business
and CSR.

• Single bottom line = profit and loss

 • Triple bottom line = Shifting to people-planet-profit rather than solely looking at only
profit and loss
A business concept that states that firms should commit to measuring social and
environmental impact as well as their financial performance rather than focusing
solely on profit and loss
doing well by doing good (CSV) firms reap financial benefits by commiting to
sustainable business practices

1. Profit
- Looking at profit it generates for shareholders
- Strategic planning initiatives + key business decisions to maximise profits whilst reduce
costs and mitigate risk
- Stakeholders involved with profit include
i. Shareholders (investing their money into sustainable ventures to increase profit in the
future)
ii. Suppliers (switching to sustainable practices can be costly)
iii. Consumers (product or service needs to be fairly priced)

2. People
- Focus towards creatin value for all stakeholders impacted by business decisions e.g
customres, employees and community members
- E.g Ensuring fair hiring practices, encouraging volkunterrism

3. Planet
- Making adjustments to drive positive change e.g using ethically sourced materials

Example
1. People: partnership in UNICEF specifically for children’s rights, quality education,
humanitarian work e.g. partner in play campaign reaching 5.5M, encourages innovation in
young people, LEGO foundation, consider employee mental health and general satisfaction,
employ approx. 17000 people, design and technology competition for children, audit
suppliers to make sure no child labour and there are fair practices, 73000 LEGO play-boxes to
underprivileged children and refugees., donating products to Jordan.

2. Planet: 90% of waste recycled, reducing c02 emissions, partnership in WWF, sustainable
packaging, climate action like offshore wind-power and onsite solar panels, decreased energy
use by 20%, 7000 tones of cardboard recycled (2015), invest in sustainable materials centre,
research into alternative materials because currently use a lot of carbon in producing LEGO
lOM oARcPSD|7741643
bricks.
3. Profit: 350 new products, private so family shareholders, 37.9B in revenue and 9.4B profit
(2016),diversification in movies and theme parks, family controls 75% and have a net worth
of 5.9B.

8 EVOLVING WORKPLACE
Case study: Uber technology re-entering the South Korean Taxi hailing service
8.1 Gig Economy
Location: Module 8.5

Gigs - people will just perform tasks, coordinated through faceless online platforms and
compensated through digital transfers

Causes

1 Globalisation of labour
Rise of the virtual global worker —≥ Online talent platforms and high
speed internet allow workers to undertake a task from any location

- Outsourcing
- Technology

Benefits for businesses

1. Lower cost - don’t have to pay for benefits + sometimes don't even need to provide
equipment
- Don't need to provide training + no need to provide equipment + office space
1. Diverse pool of flexible workers - gig economy workers are of various age, skill —>
varying backgrounds allow for more creativity and ideas for the company.
2. Match labour to growth
- When a business is growing, they can hire workers that fit to their expansion + if their
growth isn't as high as projected, workers can be relesed
3. Match labour to peak periods
- May be times where a higher volume of labour is needed due to spikes in customer
demand

Cons for businesses

1 Less reliable workers - sometimes gig economy workers are looking for remote jobs
because they aren’t willing to work as hard
2 Tight regulations

8.2 Artificial Technology

Location: Module 8.7

• Benefits for businesses

1. Automation -greater productivity and efficiency, which in turn reduces overheads for the
business —> e.g chatbots
2. Improve Efficiencies
AI helps to process data quickly and accurately for real time results
Eliminate human error —> decisions are set by algoritihms —>
reduces room for error
Available 24/7 Since a machine does not get tired —> can work
continuously without taking breaks
3. Cut Costs - AI systems that replace low-skilled jobs —> business needs to hire fewer
people
4. Take risks instead of us —> e.g exploring the deepest parts of the ocean —> overcome
the risky limitations of humans

• Cons for businesses

1. Vulnerability - AI is software, they are vulnerable to attack just like any other computer
program
2. Technological complexity —> Skills shortage —> the availability of technical staff with the
experience and training necessary to effectively deploy and operate AI solutions.
3. Expensive to implement —> cost of installation, maintenance and repair
4. Lack creativity —> unable to thin k outside the box
5. Ethical concerns
Potential automation —> give rise to job losses

9 URBANISATION
Case study: Smart City or smart citizens: Barcelona Case

9.1 Farell’s Rapid Urban Growth Triad

Article: The rapid urban growth Triad: A new conceptual framework for examining the urban
transition in developing countries, Pg 1407

States there are a few drivers of urbanisation

1. Demographic factors

• Directly affects rapid urban growth

• Measures the number of births and deaths
• The higher the fertility rate and lower the mortality rate equates to natural growth
• Urban centres have better health care and infrastructure than rural centres

2. Natural increase
• Indirectly contributes to:
1. Internal Migration: net gain in rural births over rural deaths puts pressure on resources,
leading to possible future migrants in rural areas
2. Reclassification: net gain in rural births over rural deaths can push settlements beyond
rural population thresholds

3. Economic factors

• Directly impacts rapid urban growth

• Refers to urban ‘pull’ and rural ‘push’
• People are ‘pulled’ to urban centres by better jobs, improved infrastructure, faster
Internet, wider choice of universities and so on
 • People are ‘pushed’ to cities by lack of infrastructure, lack of education, and limited
types of jobs in rural areas
• Urban in-migration leads to a net gain in urban increment

4. Reclassification

• E.g The government may propose a development plan to turn a town into a city. This
calls for more investment, jobs and infrastructure which attracts more people. The
town grows and subsequently, the government can reclassify it into a city
• This can work the other way too! If a city starts to run out of people, governments
can declassify them as a rural area, rather than metropolitan

5. Political factors
• Directly impacts rapid urban growth

9.2 Impact on businesses

1. Potential customers: Urban customers travel on average 15 minutes (10km) to purchase
everyday items
2. Decreased freight costs: Urbanisation may bring customers closer to stores and hence
reduce business
freight costs also reduce environmental impact as fossils fuels are not burnt for transport
3. Higher revenue for same floor space: Higher foot traffic leads to higher sales and
correspondingly higher
gross margin (ie. same rent cost but earning more revenue)
4. Trade and commerce: commercialisation and trade —> offers better business opp and
return compared to rural areas
5. Tourism industry - with most people in cities, there is better transportation systems —>
attract foreigns due to its easy mobility
6. Net inward migration —> larger supply of labour for businesses —> lower cost
7. Access to more skilled workers

9.3 Smart Cities

Location: Module 9.6
Article; Building sustainable cities, Pg 40

• Fact: As of 2019, approximately 60% of the world uses the internet, whether it be on
a desktop, laptop or mobile device.
• Features of a smart city

1. Human Capital
2. Social Cohesion
3. Economy
4. Governance
5. The Environment

6. Mobility and Transportation

7. Urban Planning
 8. International Outreach
9. Technology.

•Examples
1. Smart cities can be developed from existing urban centres or cities, such as Rio de
Janeiro, Barcelona or Singapore.

10 EMERGING AMD GROWING MARKETS

Case Study: Corruption in Russia: IKEA’S expansion to the East

10.1 Theory and facts

Emerging market - countries that are in transition of becoming developed

Characteristics

1 More poor people are rising from poverty

2. Economic growth is rising
3. Higher standards of living
4. More industrialised than agriculture based —> + modernised
- Examples e.g Brazil, Russia, India, China - Have about 40% of the world's population

What makes it attractive?

1. Outsourcing - engage in labour workforce in another country e.g call centres

2. Offshoring - move manufacturing to another location overseas E.G Toyota
3. Potential for growth e.g China and India —> presence in larger m arkets
4. Technical expertise or resource availability
5. Government incentives or subsidiaries

Emerging market needs

1. Increased consumption —> when population increases, infrastructure increase

2. Floor space, water and goods —> demand for residential floor space
- Factors to consider when entering emerging markets
3 Political and social system (political structure, civil society) - Do you know the political
and social system well enough?
4 Openness (modes of entry) - Is the market open to having foreign investors?
5 Product markets - are the product markets well-established? Is there a lot of
competitiveness? Are people ready for your products?
6 Labour markets - What are the labour markets? Do you need inexpensive labour or
skilled labour with a particular language and education?
7 Capital markets - What type of banks do they have operating? Would they loan money
or support a foreign venture? Are you going to trade in their currency or use your home
currency or maybe a mutual currency such as the US dollar?

- Advantages
1. Plenty unmet needs with the rise of middle class e.g high demand for middle-tier products
2. Business have advantage as a first-mover to find solutions for these needs
3. Establish a brand and eliminating competition - If a company can set up a shop in an emerging
economy and build early success
4. High growth - Driven by domestic demand —> opp for businesses to grow faster + achieve high
returns
5. Diversification - Expanding abroad will allow a business to be more robust + less exposed to eco
shocks

- Challenges
1. Political instability
2. Cross cultural differences
3. Corruption, bureaucracy & lack of transparency
4. Family conglomerates can resist competition e.g Korea's Samsung, India's Adanie
5. Labour laws or lack of enforcement may differ (e.g supplier might use child labour)
6. Poor physical infrastructure e.g lack of high quality roads
7. Weak Intellectual Property protections

10.2 Liability of foreignness

Liability of foreignness: the risks of going to a new country
- Firms are faced with additional social and economic costs when they operate in
foreign markets (Zaheer, 1995). Additional costs of doing business with them
include:

Limitations
- If focuses on entry isn’t useful to deciding market size
- Focused on the country, not the industry or market

- These additional costs include

1. Communication costs: way and style of communication is different e.g western countries
tend to have low context communication (literal meaning) vs asian countries tend to
have high context communication (whatever they say have an underlying message)
2. Resource costs
3. Host government discrimination: might give subsidies and tax benefits to their own
beneifts
4. Cultural unfamiliarity: e.g advertise
5. Legal and institutional unfamiliarity —> law exists but implementation is different
10.3 CAGE framework
The CAGE framework is the distance between 2 countries as manifested along four
dimensions, also the cultural, administrative, geographic and economic
dimensions(Ghemawat, 2001). The main argument is that the strategy to enter a market
cannot be decided on a country-by-country basis or on one size fits all approach. Rather,
both similarities AND differences need to be considered.

- Limitations
1. If focuses on entry isn’t useful to deciding market size
2. Focused on the country, not the industry or market
- When you go to a new country, you need a game plan —> looking at the SIMILARITIES
- - and DIFFERENCES between your own country and new country

Features

- Cultural distance - difference in values, languages, religion, social norms and trust
- Administrative distance - lack of common trading currency or political association,
gov policies, political hostility or closed market
- Geographical distance - remoteness, diff time zones, weak or under-developed
communication
- Economic distance - differences in eco development level and consumer income,
difference in costs and quality of natural resources

11 DESIGN THINKING
Design thinking - when you are designing a product, you consider the customer’s need

Examples
Location: Module 11.8
- Kaiser Permanent: improving patient care
1. Innovative way to improve how nurses exchanged patient information between shifts.
2. Introduced a centralised, electronic software for nurses to record and compile patient
information and history.
3. Design thinkers asked ‘who is the recipient of this service?’. The answer is the patients.
IDEO proposed to make the exchange of information next to the bedside rather than the
nurses’ station. Patients are encouraged to participate in the exchange, ensuring better
coverage of information.

Benefits for businesses

- Becomes more efficient - Since design thinking is all about creating prototypes and
testing how effective they are —> reduce production timelines
- Fosters creativity and innovative solutions - can become a competitive advantage —>
businesses can become the first mover
- Reduced risk of launching new ideas - since if focuses on prototypes —> ensures that
their idea will actually meet the users needs and eliminate the cost of bad ideas
 Increase customer retention and loyalty in the long term —> Since design thinking puts the
user first —> when you actually listen to consumers feel and experience and give them
input on what you're building, they are happier and satisified wit the end result

11.1 5 stages of design thinking

Importance of design thinking
- In business, there is a lot of uncertainty as it is continually disrupted by the
digital economy. There are limited resources (time and money) available to
solve problems. Creative and adaptive approaches like Design Thinking are
needed.

1. Empathise - really get to know your customers closely

- Involves couple of months’ worth of observation
2. Define - think critically about the information gathered
3. Ideate - come up with lots of ideas —> several solutions to address it
4. Prototype - make a # of scaled-down version of the product in real life
5. Test - rigorously test it by the customers

11.2 The Double Diamond framework

Location: module 11.10
- Maps the divergent and convergent stages of the design process
- Limitations
o Very linear and restrictive design thinking should be more open-ended
and flexible

1. Problem - start with a challenge/problem

- A good problem/need is: unmet, frequently experienced, urgent, unworkable and
unavoidable

2. Discover: Initial idea or inspiration

- Research identifies the user need - done through market research, user research or
design focus groups
- Phase of divergent thought - goal to discover all the different types of problems
faced by all the possible stakeholders.

3. Define - distill all your findings and ideas into a tight problem and statement —> filter
out lesser alternatives.

4. Problem definition

- Upon reaching this middle point, the designer will say: “This is problem definition
and here is what I want to do”. If the organization approves your proposal, you will
be given the financial backing or funding to develop and deliver the solution.
5. Develop

- Build and test prototype

- Involve multi-disciplinary teams, visual management and testing

6. Deliver
- Complete and launch your solution in the relevant market
- Your product or service is taken through final testing, signed off, produced and
launched
- Test within a small, controlled market or sample. If you see that your product or
service is working well, and receive positive feedback from the organisation, you can
deliver it.

12 ENTREPRENEURSHIP
Case study: bKash – Financial Technology Innovation Emerging markets

12.1 Theory and facts

12.1.1 Garner’s 5 key personality traits

1. Risk-taking propensity
2. Innovativeness
3. Proactive personality
4. The need for achievement
5. Internal locus of control

12.1.2 Characteristics of a good business model

1. Alignment of goals: you need to align your business model with your company vision. –

- For example, Linux positions itself as an open-source company, whereas Microsoft is

a broker company. Therefore, their payment model is different.

2. Reinforcement or internal consistency: if you want to sell a product at a low price, you
may want to invest more in marketing. In doing so, you need a business model with an
economy of scale. You need to balance your business processes.
3. Virtuousness: This refers to the positive feedback loop – business models should gain
strength over a period of time. Other companies may even end up copying certain
features. *Refer to Intel case study (second video)
4. Robustness – over time, your business model should still be effective.

12.2 Lean Business Strategy

- A free-flowing entrepreneurial mindset

- A feedback loop of ideating, experimenting and evaluating to find a great product-
market fit
1. Build

- You build and conduct experiments with prototypes to test assumptions that are
formed around your idea.

2. Measure

- You measure your results from your experiments using quantifiable data.

3. Learn cycle

- Finally, you analyse the data you collect, evaluating what worked and what didn't,
then repeat the cycle with another experience.

12.3 Business Model Canvas

- Limitations
a. Leaves out other factors e.g the external environment, competitors, social and
environmental value,
b. Because it only shows the factors of what an entrepreneur should do it
doesn’t show weight to certain factors

1. Customer segments - what kind of customer are we going to aim at?

- Where do you want to operate (market) customer segment or group?
E.g Luxury cars under Toyota brand are sold as Lexus consciously use separate
logos and distribution channels from the mainstrem to appeal to diff market
segments

2. Value proposition - with the product we will sell, what characteristics/features will our
customer segment like?
o E.g Value created around newness, performance, brand/status, price, risk
reduction and convenience
o E.g Value proposition that Apple is selling us is that it is light, slim, comes with
status, fast
o Design thinking needed here
3. Channels - how will the product reach the customer's hand? - YES THEY SHOULD

- Have connections with distributors

- E.g Signed contracts with 2 national high end groceries that fitted their customer
demographic profile pg 7 e.g Hayfield Grocery and Connie’s Cocina
o Connie’s Cocina had an international focus potential + 400 outlets
nationwide
o Hayfield have more than 350 stores across the US

+ Everyday line was in more than 1000 stores nationwide

Customer relationships – YES

- Advertisement + reputation
o
5 Revenue streams
- Thinking about everything around sales
- E.g Transaction revenue (one time customer payments) or recurring revenue (ongoing
payment)
- E.g price of product, acceptability or attractiveness of the price, what product sells the
most or least, how often you get sales

6. Key resources - resources that the business needs

- Internal analysis – looking at physical, intellectual, human and financial

- E.g Academics, all research capabilities, workers

7. Key activities

- What are your main activities?

- Key categories include production, problem solving and platform/network
- E.g Marketing, recruiting agents
- E.g University is research and research, Apple is researching, marketing newproducts,
hiring tech savy people

8. Key partners

- Refers to suppliers and partners that make the business model work
- 4 types of partnerships
a. Strategic alliances between non-competitors
b. Coopetition – strategic partnerships between competitors
c. Joint ventures to develop new businesses
d. Buyer-supplier relationships to ensure reliable supplies
- Can be other parties e.g can suppliers give you discount + preferential treatment —>
anyone who has a good relationship
- Does not include customers

9. Cost structure

- Thinking about costs —> which are important + need to focus on cutting, the magnitude
of each cost, what are non-negotiable (e.g Apple with research and development)