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Theory of Business Essay

The article, The Theory of Business, is about how businesses find their own theory of the business. What is theory of business? A theory of business has three parts. The first part of theory of business is the assumptions about the about the environment of the organization which are the society and the structure, the market, the customer and the technology. The second part is the assumptions about the specific mission of the organization. The third part is the assumptions about the core competencies needed to accomplish the organization’s mission. Also there are 4 specifications of valid theories of the business. The first is the assumptions about environment, mission, and core competencies must fit reality. Second the assumption in all there areas have to fit one another. Third the theory of business must be known and understood throughout the organization. Fourth the theory of business has to be tested constantly. Businesses have their own theories and depending on what it is determine if their business is going to last for a long time or not.

Their theories depend on their customers. How are the customers going to respond to the business? I feel that customers make 90% of your business because

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if you don’t have any customers then you don’t have a business. If your theory of business doesn’t seem to work you can always change it for the better. But changing your theory is very hard work. Having a good theory of business is a good idea to try to have a successful business but it has to be good one that customers will relate to. Making things easier for the customers will make the customers happy. In other words, good theory equals a good business and a long lasting one at that. An example of businesses that had good theory and are very successful today is AT&T, General Motors, and IBM. One successful business theory I want to focus on is Windows. Let’s say I was a customer around the year 1994. When I had a computer, the system I had on it was MS-DOS. With that program I had to type everything out to open a program. The floppy discs that I used were the size of a DVD cover. MS-DOS was a very slow program and having to type everything out just to open one program was very complicating.

The reason why it was so complicating because when writing a command you had to do it precise or the computer doesn’t know what you talking about. Bill Gates had a successful theory of business that would last him a long time. His theory of business was creating a program called Windows where everything is there for you at a push of a button. It took him hard work and thinking but he developed something that was valid. The reason why his theory of business was valid because it fits the four specifications. The assumptions about environment, mission, and core competencies fit reality. The environment can benefit from the product, the mission was successful, and the core competencies was identifiable, the design came out good and now that it’s developed it is needed all over the world on computers. The assumptions in all three areas fit one another. Like GM, developing windows was a perfect fit. The theory of the business must be known and understood throughout the organization. When Windows first came out it was probably difficult at first but then became really easy. And last the theory of business has to be tested constantly.

Windows was tested throughout out the world and as years passed Windows 95, 97,98,2000, and XP came out getting better and easier to use. With Bill Gate’s theory it last a long time until this day. Do I think there is any way that Bill Gate’s business of theory will not be successful anymore? My answer to that that question is No. The reason why I think Bill Gate’s theory of business will not fail because Windows is the dominant program on a computer. Without the program all that is left is MS-DOS and as I said before that’s complicating and slow. Bill gates thought of something that changes the environment and makes customers happy. According to the article customers make up most of the business. Without the customers there would be not business. Also to have a successful business there has to be a valid theory of business. There are four specifications of a valid theory of business. The four specifications are the first is the assumptions about environment, mission, and core competencies must fit reality. Second the assumption in all there areas have to fit one another. Third the theory of business must be known and understood throughout the organization. Fourth the theory of business has to be tested constantly. And according my example Bill gate’s theory fit all the specification and caused him to be very successful for a long time.

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