1.1 Introduction to business management Flashcards
What is the role of businesses?
produce goods and services for people
What are the main functions of a business?
human resources
finance and accounts
marketing
operations
Human resources
responsible for managing the personnel of the organisation.
→ deals with workforce planning, recruitment, training, appraisal, dismissals and redundancies and outsourcing human resource strategies.
Finance and accounts
manage the organisation’s money.
→ ensure accurate recording and reporting of financial documentation
→ comply with legal requirements and inform those interested in the business’ financial position
Marketing
identify and satisfy the needs and wants of customers
→ ensure that the firm’s products sell
→ market research, test marketing, advertising and branding.
→ functions include the four Ps:
→ product: ensure that goods and services meet the customers’ requirements
→ price: use various pricing strategies to sell the products of a business
→ place: ensure that goods and services are available in convenient places for customers
→ promotion: make sure that the customers know about the firm’s products
Operations management (production)
the process of converting raw material and components into finished goods, ready for sale and delivery to customers.
Business sectors
primary sector
secondary sector
tertiary sector
quaternary sector
Primary sector
involved with the cultivation or extraction of natural resources
e.g. farming, mining, quarrying
Secondary sector
the section of the economy where business activity is concerned with the construction and manufacturing of products
Tertiary sector
the section of the economy where business activity is concerned with the provision of services to customers
Quaternary sector
a subcategory of the tertiary sector, where businesses deal with the intellectual, knowledge-based activities that generate and share information
Sectoral change
a shift in the relative share of national output and employment that is attributed to each business sector over time
Reasons for sectoral change
higher household incomes
more leisure time
greater focus on customer services
increasing reliance on support services
Factors of production
the four types of inputs or resources necessary for the production process
land - natural resources
labour - the physical and mental efforts of people
capital - non-natural resoures
entrepreneurship - management, organisation and planning of other factors
Entrepreneur
an individual who plans, organises and manages a business, taking on financial risks in doing so
Intrapreneur
an entrepreneur but as an employee within a large organisation
Reasons for starting up a business
growth earnings transference and inheritance challenge autonomy security hobbies
Process of starting up a business
- write a business plan
- obtain start-up capital
- obtain business registration
- open a business bank account
- marketing
What are some factors to consider when setting up a business
business idea finance human resources enterprise fixed assets suppliers customers marketing legal issues
What are some problems a new business might face?
lack of finance cash flow problems marketing problems unestablished customer base people management problems legalities production problems high production costs poor location external influences
What is a ‘business plan’?
a report detailing how a business sets out to achieve its goals and objectives. It is a useful planning tool as it requires the owner(s) to consider the marketing, financial and human resources of the business.
Why is a business plan needed?
helps to reassure financial lenders (banks, venture capitalists) that the entrepreneur has researched the idea.
→ used to assess both opportunities and risks that may be reflected in a business plan.
→ can also be used by other stakeholders such as shareholders to assess the potential gains from investment.
Contents of a business plan
the business the product the market the finance the personnel the marketing
