June 28, 2019

The Mechanics Of Business

A business is a ‘machine’ designed to maximize ‘shareholder value’. It processes ‘time and materials’ (the business input) for a cost, to create products and services (the business output) which it sells to generate revenue.

The difference between the revenue and the cost, is the profit.

The larger the profit, the better the shareholder value.

Profit and thus ‘shareholder value’ is maximized by growing revenue and/or decreasing costs.

Revenue is grown by selling more products and services to a market.

Costs are reduced by increasingly doing more for less.


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