PDF Notes: Lesson 3 ToB Student Copy

What makes a business continue?

Alignment of assumptions with reality.

Why do some businesses fail?

Misalignment between assumptions and changing reality.

What is the Theory of Business (ToB)?

Framework based on assumptions about environment, mission, and competencies.

How does reality affect a ToB?

Changes in reality can render assumptions obsolete.

What are the three parts of a ToB assumption?

Environment, mission, and core competencies.

What is competitive advantage?

Factors allowing a company to outperform rivals.

What distinguishes comparative advantage from differential advantage?

Comparative focuses on efficiency; differential emphasizes product superiority.

What happens if a ToB becomes obsolete?

Businesses must rethink assumptions and adapt strategies.

What is systematic and purposeful abandonment?

Deliberate discontinuation of unprofitable products or services.

Why is understanding the ToB important throughout a business?

Ensures alignment and effective decision-making across all levels.

What should businesses do when achieving set objectives?

Reassess and innovate to avoid stagnation.

What role do noncustomers play in business strategy?

Insights from noncustomers can reveal market opportunities.

What is the implication of a service-led IT industry?

Shift from technology focus to providing comprehensive solutions.

How can businesses protect their competitive advantage?

Invest in unique capabilities and brand strength.

What is the significance of testing a ToB constantly?

Ensures relevance and adaptability to market changes.