1.1 Introduction to business management

Question 1

Business

Answer 1

Any organization that uses resources to meet the needs of costumers by providing a product or a service that they demand.

Question 2

The role of business:

Answer 2

-Business identifies the needs of consumers or other firms, they then purchase resources (inputs) in order to produce the output, it exists to produce goods or services.

Question 3

Good can be classified as:

Answer 3

• consumer goods - physical and tangible goods sold to the general public
• consumer services - non-tangible products that are sold to the general public
• capital goods - physical goods that are used in the industry to aid in the production of other goods or services

Question 4

Business ‘inputs’

Answer 4

land, labour, capital, enterprise

Question 5

Land (business ‘input’)

Answer 5

Not only land itself, but also renewable and non-renewable resources of nature.

Question 6

Labour

Answer 6

Manual and skilled labour, that makes up a workforce of an organization.

Question 7

Capital

Answer 7

Finance needed to set up a business and pay for its continues operations as well as all of the man-made resources used in production.

Question 8

Enterprise

Answer 8

The driving force of a business, provided by risk taking individuals, who combine other factors of production into a unit that is capable of producing goods and services.

Question 9

Main business functions

Answer 9

• human resource (HR)
• finance and accounts
• marketing
• operations

Question 10

Human resource (HR)

Answer 10

• identifies the whole workforce of a business, recruits, selects and trains appropriate employees and provides motivational systems to help retain workers and encourage them to work productively
• it draws up contracts of employment and covers the redundancy or redeployment of employees
• the aim of HR is to manage human resources to help the business achieve its objectives

Question 11

Finance and accounts

Answer 11

• has the responsibility of monitoring the flow of finance into and out of the business, keeping and analyzing the accounts and providing financial information
• it is a key division of any business, as without adequate finance, no effective decisions can be made within the other functional areas

Question 12

Marketing

Answer 12

• responsible for market research and analyzing the results of it so that the consumer wants can be correctly identified
• information gathered by marketing is discussed with other departments of the business so that the right product decisions can be made
• once a product is available, marketing makes decisions concerning pricing, promotion and sale

Question 13

Operations Management

Answer 13

• has the responsibility of ensuring adequate resources are available for production, maintaining production and quality levels and achieving high levels of production efficiently

Question 14

Economic sectors

Answer 14

• primary
• secondary
• tertiary
• quaternary

Question 15

Primary sector

Answer 15

Firms that extract natural resources so that they can be used and processed by other firms.

Question 16

Secondary sector

Answer 16

Firms that manufacture and process products from natural resources.

Question 17

Tertiary

Answer 17

Firms that provide services to consumers and other firms.

Question 18

Quaternary

Answer 18

Focused on information technology (IT) businesses and information service providers such as research and development, business consulting and information gathering.

Question 19

Entrepreneur

Answer 19

Someone who takes financial risk of starting and managing a new venture.

Question 20

Intrapreneur

Answer 20

Someone within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through using ‘entrepreneurial talents’ such as risk-taking and innovation.

Question 21

Impact of enterprise (and intrapreneurship) on business activity

Answer 21

• employment creation
• economic growth
• firms’ survival and growth
• innovation and technological change

Question 22

Reasons for starting a business or an enterprise (GET CASH):

Answer 22

• Growth
• Earnings
• Transference or inheritance
• Challenge
• Autonomy
• Security
• Hobbies

Question 23

Common steps in starting a business or enterprise:

Answer 23

1. Writing a business plan
2. Sourcing capital (finance)
3. Determining a location
4. Building a costumer base

Question 24

Problems faced by new businesses and enterprises

Answer 24

• poor management skills
• competition
• lack of record keeping
• lack of finance and working capital
• changes in the business environment

Question 25

Business plan

Answer 25

A written document that describes a business, its objectives and strategies, the market it is in and financial forecasts.

Question 26

Elements of a business plan

Answer 26

• the executive summary
• description of the business opportunity
• marketing and sales strategy
• management team and personnel
• financial forecasts

Question 27

Importance of a business plan

Answer 27

• for a new business is to obtain finance for the start-up - potential investors or creditors will not provide finance unless clear details about the business proposal have been written down
• financial and other forecasts contained in the plan can be used as the targets that the business should aim for