Business 1.1 Flashcards
What is a business?
Decision-making company or organization
May/may not be for profit
Involves the exchange of goods and services
Produce goods and/or provide services
Exist to satisfy the needs and wants of people, organizations, governments, etc.
Enterprise – a group of people that tackles an objective, usually profit
Quality of output depends on quality of inputs
Main inputs in a business
Capital:
-Amount of money needed to run a business
-Man-made goods like machines, buildings, vehicles, and equipment needed for business to operate
Investment:
-increasing spending on capital
Land:
-Space where a business operates
-Raw materials and natural resources that are used in making a product
Labor/manpower:
-Physical & mental efforts of people to produce products/services
Enterprise/entrepreneurship:
-Management, organization, and planning of other three factors of production
-Actions of entrepreneur who shows initiative and takes risks to set up, invest, and run a business
Main business functions and their roles
Human resources:
Manages the workforce and laborers of the company
Deals with recruitment, wages, communication, and motivation of employees
Finance and accounts:
In charge of managing the organization’s money and assets
Ensures accurate recording and reporting of financial documentation (to comply with legal requirements)
Marketing:
Ensure that a company’s products sell
Concerned with identifying and satisfying consumers’ needs/wants
In charge of promotions, advertisements, etc.
Operations:
In charge of business functions and processes that produce the actual goods
Concerned with research & development, delivery, stock management, etc.
Business sectors (or economic sectors)
Primary
Secondary
Tertiary
Quaternary
Primary sector
Involves the harvesting of naturally available resources
e.g. mining, agriculture, livestock, drilling, and logging
Regulated and protected by the government
Fuels (produces inputs for) the other economic sectors
Example countries: Vietnam, Philippines, Canada, Dubai
Example companies: Philex Mining, Del Monte, Dole
Secondary sector
Involves manufacturing of raw products to finished or component goods
Finished goods – exported or sold to domestic consumers
Component goods – sold to companies in the tertiary sector
Example countries: China, Scotland, Japan, Italy, USA
Example companies: Coca-Cola, Honda, Del Monte
Tertiary sector
Involved with service and retail
Includes retail sales, transportation, entertainment, restaurants, media, healthcare, banking, etc.
Exploited in developing countries
Philippines is a victim of brain drain: where professionals go abroad to look for jobs making it difficult for companies in the tertiary sector to find the employees they need
Relies on the primary and secondary sector for inputs
Example countries: USA, United Kingdom, Singapore, Hong Kong
Example companies: JP Morgan, Convergys, Lotte
Quaternary sector
Involves intellectual activities or innovation services
Includes government, education, libraries, scientific research, information technology, etc.
All the qualities of an Entrepreneur
Ability to take a risk. …
Being Able to Adapt. …
Can Sell. …
Constant learning. …
Creativity. …
Goal Oriented. …
Motivation & Passion. …
Self-confident.
What is an intrapreneur
Is an employee of the organization
Uses resources of company to undertake projects and therefore risks very little
Rewarded in the form of a paycheck
Does not act autonomously like an entrepreneur as he is dependent on other employees or the organization he works for
Entrepreneurship (and the entrepreneur) vs. intrapreneurship (and the intrapreneur)
Entrepreneurship is the process of starting a business, company, or organization while intrapreneurship is similar to entrepreneurship but is done in an existing organization
Reasons for starting up a business or an enterprise
Money: to earn a profit by selling products at a higher price than production costs.
Autonomy: to be their own boss and have decision-making power.
Challenges: to achieve personal satisfaction and self-actualization.
Passions: to pursue personal interests and turn them into business opportunities.
Family ties: to continue a family tradition of owning a business.
Unfilled market opportunities: to fill a gap in the market for goods or services.
Making a difference: to provide a service to the community and make a positive impact on others.
Possible problems faced by a start-up (either internal or external)
Lack of finance (external): Many new businesses struggle with a lack of working capital to cover daily expenses, which can lead to bankruptcies.
Lack of market research (internal): New businesses often overestimate the size of their potential market due to a lack of effective market research.
Poor marketing strategy (internal): New businesses may have limited marketing budgets, which can lead to a lack of awareness and recognition in the market.
Limited human resources (external): It can be difficult for new businesses to attract skilled and experienced staff without an established business model or corporate image.
Long hours (internal): The owner(s) may try to do everything themselves to keep costs low, leading to long work hours and potential burnout.
Lack of knowledge, skills, and experience (internal): New entrepreneurs may lack knowledge of their target market, competitors, and industry trends, resulting in poor strategic decisions and significant losses.
What is a business plan
Report detailing aims and objectives of a business
Planning tool that serves as a blueprint to address the issues of a startup business
Meant for investors/banks to help them decide on whether to invest/approve loans
Elements of business plan
Executive summary (or Abstract) – The first part of a typical business plan provides an overview of the organization, its corporate objectives, and intended business strategy. This section provides a summary of the business plan.
Introduction / Overview – This section contains an introduction to the business, its legal status (type of organization), its vision and mission statements, and intended aims and objectives. It will also include a brief about key personnel in the organization (such as the owners or senior executives), and may include an organizational chart.
Market analysis – This part of the business plan includes details of the market or industry in which the organization operates. It will usually include a competitor analysis, outlining the main rivals in the industry and their respective market share. It should include projected sales figures and marketing opportunities. The market analysis may include a SWOT analysis, with a focus on strengths and opportunities.
Product analysis – This important section describes the planned product being offered. For example, authors needs to convince publishers that their idea for a book will be commercially viable. Ideally, the business plan should show the unique or distinctive selling points of the proposed product or idea.
Financial analysis – This section of the business plan contains details of the finances of the business. For new businesses, this will include projected cash flows. For established businesses, this will include the latest final accounts (balance sheet and profit & loss account). Detailed financial analysis can help the business to secure external sources of finance from investors and financiers.
Marketing strategy – The market analysis and other parts of the business plan should steer the firm’s marketing strategy. It should include details of the firm’s marketing mix, e.g., pricing strategies, distribution networks, promotional campaigns, and product strategy.
