Page 69 - MS Year in Review 2020

dimensions or constructs: 1) the “business concept” or definition, 2) the “strategic

mission,” and 3) the “core strategy.”

The Business Concept. A business concept is a statement of what the
organization is in business to do. It defines an organization’s identity and

gives it strategic focus. It provides the raison d’etre of the business. For
example, Coca-Cola is in the beverage business, Federal Express is in the

package transportation business, and Disney is in the entertainment business.

The overriding key problem or challenge of creating a business concept is that
it must be must be “valid” or validated by customers in the marketplace. This

means that the business must provide something (tangible or intangible) that
the market wants or will accept. Validation occurs when there are customers
who purchase the enterprise’s product or service, thereby enabling it to

continue to operate and survive as a business entity. When a new business
concept fails to achieve this, or an existing business concept no longer works

in the market, the organization will suffer and ultimately fail or die. For
example, many “dot.com”s (such as Webvan, eToys, Pets.com, and many
more!) never succeeded in creating valid business concepts and ultimately

perished. Similarly, “RadioShack” was once a business successful enterprise,
serving several generations of electronics hobbyists; but its business concert
became outdated and muddied, leading to a long period of and irrelevance in

the market and decline that suggests its ultimate disappearance from the
retail market space.1

Another key strategic problem or challenge of creating a business concept is
to strike a balance between one that is too narrow to facilitate future growth
and too broad as to be strategically meaningless. We shall deal with the
development of a business concept when we address strategic planning in a

future issue. At this point, our primary concern is with the purpose or function
of a business concept in the context of building a successful organization over

the long-term.

In brief, the identification and clear definition of a business concept provides
the foundation on which all other aspects of the business must be built. The

customers to be served, products offered, and day to day systems of the firm

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