1.1 - Introduction To Business Managment Flashcards
What is business
Businesses exist to satisfy the needs and wants of their customers by selling goods and services, usually in return for profit. They do this by combining human, physical, and financial resources to create goods and services to meet the needs and wants of individuals and societies”.
➢Needs – food , water, shelter, clothes
➢Wants - cars, electronics, holidays and fashion clothing
Define needs and wants
➢Needs – food , water, shelter, clothes
➢Wants - cars, electronics, holidays and fashion clothing
Products are categorised in
Goods – tangible products (books, iPhones, etc.)
Services – intangible products (waiter at a restaurant, a class, etc.)
What 2 things can the production process be
QCapital intensive – large proportions of land and machinery (i.e. soft drinks production)
Labour intensive – large proportion of employees (labour) relative to machinery and land (i.e. shirt production
What are the 4 resource inputs
Human – the right quantity and quality of people that is needed to provide a good or a service
Physical – the right quantity and quality of machinery, land and materials to provide a good or a service
Financial – the right quantity and quality of money required to provide a good or a service
Enterprise – also called entrepreneurship, is basically the business idea! And obviously make the idea happen
What are the 4 key functions of a organisation
Human Resources (HR) – recruit the appropriate people for the job, offer training, determine the proper compensation, dismiss when necessary
Marketing – use strategies to promote, pack, price and distribute the good or service
Finance and Accounts – ensure there are enough funds to make the good or service available
Operations management or production – ensure that the appropriate processes are used to make the good or service available
How are the 4 key function linked
This 4 functions are interdependent. The decision of one function affects another. For example, hire more employees to increase production (HR and Operations management).
If this 4 functions are successfully aligned, then its more likely that the business will be a success.
What is the primary sector
Primary sector – this involves acquiringraw materials. For example, metals and coal have to be mined, oil drilled from the ground, rubber tapped from trees, foodstuffs farmed and fish trawled.
What is the secondary sector
Secondary sector – this is themanufacturing and assemblyprocess. It involves converting raw materials into components, for example, making plastics from oil. It also involves assembling the product, such as building houses, bridges and roads.
What is the tertiary sector
Tertiary sector - this refers to thecommercial servicesthat support the production and distribution process, for example insurance, transport, advertising and other services such as teaching and health care.
What is the quaternary sector
Quaternary sector – this is a subgroup of the Tertiary sector, is based on knowledge applicable to some business activity that usually involves the provision of services. For example, information gathering, distribution and technology; research and development (R&D); vocational education; business consulting; and strategic financial services.
How is the chain of production formed
The 4 sectors form achain of productionwhich provides customers with finished goods or services; more specifically, chain of production refers to every step that must be taken to reach this goal.
For example, food production chain starting from extracting milk (primary sector) till serving it at a restaurant (tertiary sector)
What are reasons for starting a business
Rewards
Independence
Necessity
Challenge
Interest
Finding a Gap in the market
Sharing an idea
What are the 6 steps to staring a business
- Basic organisation
- Market research
- Business plan
- Establishing legal requirements
- Raise finds
- Test the market
Explain the 6 steps to staring a business
Basic organization – name of the business, location, operational structure, legal structure, infrastructure, suppliers, customers, Government services.
Market research – determine how the business may distinguish itself in the market. Market target, business concept, communication. (e.g. food leading to organic food production)
Business planning – a document that addresses all the issues required to make the business happen. Planning is essential in business for potential owner or investors.
Establishing the legal requirements – different countries have different laws . Hence, the business needs to take laws and taxes accordingly.
Raising funds (finance) – how to get the funds? Money can come from savings, investors or lenders that believe in the business.
Testing the market – how will the product or service will be introduced (launched). Testing is necessary to verify if there is a positive market response towards the new business.
