Organizational diagnosis (individual assessment)

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Prof. Bulzacki BUSI 660

Small Business Management

Week 3

https://www.linkedin.com/in/adrian-bulzacki/

WHAT IS VALUE PROPOSITION?

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• A clear statement that explains how a product or service solves customers' problems or improves their situation (relevancy), delivers specific benefits (quantified value), and tells the ideal customer why they should buy from you and not from the competition (unique differentiation).

EXAMPLES OF VALUE PROPOSITION:

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•Amazon: "Everything from A to Z." Amazon's value proposition is about offering a vast selection of products with the convenience of quick delivery. It targets consumers looking for a one-stop shop with reliable service.

•Netflix: "See What's Next." This encapsulates Netflix's commitment to providing a wide array of entertainment options, including exclusive original content, to its subscribers, appealing to viewers seeking convenience and variety in entertainment.

•Tesla: "Accelerate the World’s Transition to Sustainable Energy." Tesla focuses on the innovative aspect of its electric vehicles and clean energy products, appealing to environmentally conscious consumers who also value advanced technology.

•Zoom: "Bringing the World Together, One Meeting at a Time." Zoom's value proposition highlights its role in facilitating easy, reliable, and high- quality video communication, appealing to businesses and individuals who need effective remote communication tools.

•Spotify: "Music for Everyone." This statement underlines Spotify’s extensive music library accessible to a wide range of audiences, appealing to music lovers who want personalized and on-demand music streaming services.

•Google: "Organize the World's Information and Make it Universally Accessible and Useful." Google's value proposition is about providing fast, relevant, and comprehensive search results, targeting virtually everyone who uses the internet for information.

• LinkedIn: "Connect. Find. Be Found." This proposition reflects LinkedIn’s role in professional networking, job searching, and recruitment, appealing to professionals and businesses looking to expand their professional network.

WHAT CUSTOMER PAINS DOES YOUR BUSINESS SOLVE?

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• Long Wait Times: A mobile app for restaurant reservations helps customers avoid the pain of waiting for a table by allowing them to reserve a spot ahead of time.

• Expensive Transactions: A financial tech company offers low-fee or fee-free money transfers, solving the pain of high transaction costs associated with international money transfers.

• Complex Software: A tech company creates user-friendly software that simplifies complex processes, solving the customer pain of dealing with complicated interfaces and workflows.

• Lack of Healthy Food Options: A meal delivery service specializes in organic and healthy meals, addressing the pain of finding quick, healthy, and affordable meal options.

UNDESIRED OUTCOMES

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ANCILLARY

FUNCTIONAL

SOCIAL

EMOTIONAL These outcomes are additional inconveniences associated with a product or service. For example, a fitness center located in an area with limited parking might lead to clients feeling inconvenienced and stressed about finding a parking spot.

These refer to situations where a product or service does not work as intended. For example, a mobile app designed for online shopping crashes frequently, leading to customer frustration and loss of sales.

This involves the negative social impact of a product or service. For instance, a new restaurant causing increased traffic and noise in a residential neighborhood, leading to complaints from residents.

These are related to the negative emotional responses from customers or stakeholders. An example could be customer anxiety caused by a complicated user interface in a banking app, making it difficult for them to access their account information.

UNDESIRED OUTCOMES

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OBSTACLES

RISKS

These are barriers that prevent customers from accessing or using a product or service. An example is a high-priced premium service that is unaffordable for a large segment of potential customers.

These are potential hazards associated with a product or service. For instance, a data breach risk in a new fintech app can lead to concerns about the theft of personal and financial information.

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UNEXPECTED

REQUIRED EXPECTED

DESIRED

WHAT CUSTOMER GAINS DOES YOUR BUSINESS PROVIDE?

These are the fundamental benefits that customers expect as a minimum from a product or service. For example, in a smartphone, a required gain would be the ability to make calls and send texts.

These gains are not essential but are typically anticipated by customers. For a smartphone, expected gains might include a high- quality camera, long battery life, and access to a variety of apps.

These are the benefits that customers would love to have but do not necessarily expect. In the case of the smartphone, this could be features like advanced AI capabilities for personalization or a highly durable, waterproof design.

These are the benefits that customers did not anticipate but find pleasantly surprising. An example for a smartphone could be an innovative feature like a solar-powered charging capability or a unique health monitoring function that sets it apart from other devices.

SELECTED BASIC LEGAL TERMINOLOGY

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ExamplesTerminology

Unwritten law derived from judicial decisions based on customs and usages accepted by the people.

Common law

Body of laws passed by federal, state, and local governments.Statutory law

Gives Congress the right to “regulate commerce with foreign nations, and among the several states.”

Interstate commerce clause

States’ right to regulate business, including the right to use the force of the state to promote the general welfare of citizens. All laws must be based on the federal or a state constitution.Police power

Implies that everyone is entitled to a day in court, and all processes must be equal and fair.Due process

SELECTED BASIC LEGAL TERMINOLOGY

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ExplanationTerminology

Deals with the rights and powers of the government.Public law

Deals with punishing those who commit illegal acts.Criminal law

Is administered between two or more citizens.Private law

Deals with violations against another person who has been harmed in some way.Civil law

A procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties

opt for a private dispute resolution procedure instead of going to court. Arbitration

BANKRUPTCY

• A formal legal condition of inability to repay debts.

• People or businesses can petition the courts to be relieved of this financial obligation.

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SOME PROBLEMS WITH GOVERNMENT REGULATION

• Difficulty of understanding some of the regulations, which can be confusing and restrictive.

• Enormous amount of paperwork involved in preparing and handling the reports needed to comply with government regulations and in maintaining the records needed to satisfy the regulators.

• Difficulty and cost of complying with the regulations.

• Regulations tend to discourage small firms from hiring more workers as their employment approaches the cutoffs set by federal laws and regulations.

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HOW OWNERS OF SMALL FIRMS CAN COPE WITH GOVERNMENT REGULATIONS • Learn as much as you can about the laws that can help you, such as CRA regulations.

• Challenge detrimental or harmful laws, by joining Small Business Associations.

• Become involved in the legal-political system to elect officials of your choosing who will help change the laws.

• Find a better legal environment by moving to a different location

• Learn to live with the laws and regulations

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DO I NEED A LAWYER?

Your lawyer has several roles: • Education • Knowledge of the law. • Ability to see the big picture. • Talent for weighing alternatives.

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WHERE CAN I FIND ONE?

• Personal referral from someone whose opinion you value: banker, minister, relative.

• Lawyer Referral and Information Services, provided by bar associations.

• Advertising: Internet, yellow pages, television.

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WHAT EXACTLY SHOULD I LOOK FOR?

i. First, look for appropriate experience and knowledge of your type of small business.

ii. Second, observe the lawyer’s demeanor, the style and atmosphere of his or her office, and any clients. Does he represent a competitor?

iii. Third, does the lawyer have time for you and your business? Did you have trouble getting an appointment or have a long telephone wait?

iv. Forth, discuss fees, for performance must be balanced against cost of service provided.

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SAMPLE CONTRACT FOR A LAWYER’S SERVICES

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SOCIAL RESPONSIBILITY

• A business’s obligation to follow desirable courses of action in terms of society’s values and objectives.

• Consumerism, employee relations, environmental protection, community relations.

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SOCIAL RESPONSIBILITY

Consumerism

The organized efforts of independent, government, and

business groups to protect consumers from undesirable

effects of poorly designed and poorly produced products.

Employee relations

Showing interest in and concern for employees’ rights, especially as to meaningful employment:

training, development, promotions, pay, health and

safety.

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SOCIAL RESPONSIBILITY

Pollution control

The effort to prevent the contamination or destruction of

the natural environment.

Environmental protection

Tries to maintain a healthy balance between people and

their environment.

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SOCIAL RESPONSIBILITY

Recycling

Reprocessing used items for future use.

Conservation

Means practicing the most effective use of resources, while considering society’s current and

future needs.

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SOCIAL RESPONSIBILITY: GOING GREEN

• Works best when you initially set up your office with recycled office supplies, as furniture and paper goods.

• Use products that are earth friendly or products that dissolve (corn pens and pencils?)

• Practice due diligence in this area as all others, and reduce your carbon footprint.

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SOCIAL RESPONSIBILITY: COMMUNITY RELATIONS

• Educational and medical assistance.

• Urban development and renewal.

• The arts, culture, and recreation.

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BUSINESS ETHICS

Business Ethics

The standards used to judge the rightness or wrongness of a business’s relations to others.

Deal ethically with employees, customers, competitors, and

others. Ethical and fair behavior will

grow your company.

Personal ethic

One’s own belief system that tells one what to do if or when the laws or any pertinent codes

or ethics are silent

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BUSINESS ETHICS ISSUES EXAMPLES

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Diversity and discrimination in the workplace

Theft

Data privacy

Whistleblowing

Corporate Espionage

Harassment

Health & Safety

Nepotism

UNITED AIRLINES CASE

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In 2017, one of the passengers was kicked off the flight… aggressively…

Reaction: losing customers, losing market price (4% fall),

Result: a settlement between United Airlines and Dr.Dao (passenger) is confidential, but some say it cost company $140 million… and possibly reputation.

WHAT TO DO TO AVOID ETHICAL DILEMMAS IN WORKPLACE 1. Set up the rules from the very beginning

2. Make sure to deliver ethical values to the employees

3. Remember to be the best example

4. Make communication transparent

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DISCUSSION - VALUE PROPOSITION AND BUSINESS IMPACT • How does a strong value proposition influence a business's success, and can you provide examples of companies whose distinct value propositions have significantly impacted their market position?

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A strong value proposition is crucial as it differentiates a business in a competitive market, addressing why a customer would choose its product or service over others. For example, Apple has a value proposition focused on innovation, quality, and design, which has helped them to carve out a significant market share and maintain customer loyalty. Similarly, companies like Tesla have disrupted the automotive industry with a value proposition centered around sustainable energy and cutting- edge technology, drawing in a customer base that values these aspects.

DISCUSSION - ETHICAL CONSIDERATIONS IN BUSINESS DECISIONS • In light of ethical dilemmas such as data privacy and workplace discrimination, how should businesses approach these issues, and what is the impact of ethical decision-making on a company's reputation and sustainability?

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Businesses should approach ethical dilemmas by fostering a culture of integrity and transparency. This includes clear ethical guidelines, employee training, and effective channels for reporting and addressing ethical concerns. The impact of ethical decision-making is profound; companies that actively address ethical dilemmas tend to build stronger trust with their customers and stakeholders, enhancing their reputation and long-term sustainability. For instance, companies like Patagonia, known for their commitment to environmental ethics and sustainability, have garnered a loyal customer base and industry respect.

DISCUSSION -SOCIAL RESPONSIBILITY AND ENVIRONMENTAL IMPACT • How do businesses balance profitability with social responsibility, particularly in environmental protection and community relations, and what is the role and impact of 'going green' initiatives on the business and the community?

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Balancing profitability with social responsibility involves integrating sustainable practices into business operations while maintaining financial health. This includes adopting eco-friendly practices, engaging in fair trade, and contributing to community development. The 'going green' initiatives, such as using renewable energy sources or reducing waste, not only help in reducing environmental impact but also can lead to cost savings and open new market opportunities. Companies like IKEA have shown that implementing sustainable practices can lead to operational efficiencies, innovation, and enhanced brand value, thereby benefiting both the business and the wider community.

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THE ROLE OF SWOT ANALYSIS

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