Business Unit 1.1 Flashcards
What is a business? what is an enterprise
A business is any organization set up to provide goods and/or services
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
Main inputs in a business
ITo produce goods and services, a business needs to combine humna,physical, finaical and entrepuernal resourcwex. These resourcescare refered to factors of production which include: Land,Labour,Capital and enterprise
enterpise is an idnicuval with the necessary skills and ability to take risks.
in nputs are all the resources that a business uses in the production process, e.g. land, raw materials, components, machinery, equipment, labor, etc.
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
Textbook definiton: Human resources (HR) department is responsible for managing he personnel (people employed in the organization) of the organization. HR is likely to deal with the following issues: Workforce planning recuirmtnet, training, appraisal (Performance appraisal is a process for evaluating and documenting how well an employee is carrying out his or her job), dismissal and redundancies, and outsourcing resource strategieis
● Finance and accounts
The finance and accounts department is In charge of managing the organization’s money and assets. The finance and accounts director must Ensures accurate recording and reporting of financial documentation (to comply
with legal requirements)
● Marketing
The marketing department is respomisble for indenfiying and satisfying the needs and wants of customers.
It is ultimately in charge of ensuring that the firm’s products sell.
This is done through a series of activities such as market research, test marketing, advertising and branding
Functions of the marketing department can be summed up as the traditional four Ps of marketing.
Product - Ensuring that the goods and services meet the customers requirements
Price - using various pricing strategies to sell the products of a business
promotion - Mkaing sure that the customers know about the firms products
Place - ensuring that the goods and services are available in convenient places for consumers to buy
Marketing is the management task that links the business to the customer by identifying and meeting the needs of customers profitably. It does this by using the marketing mix
.
marketing means the process of getting potential customers and products or services together
marketing means the process of getting potential customers and products or services together
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
r businesses, marketing means the process of getting potential customers and products or services together
● Ensure that a company’s products sell
● Concerned with identifying and satisfying consumers’ needs/wants
● In charge of promotions, advertisements, etc.
● Operations
Also known as operations management or product, this functional area of an organization is responsible for the process of converting raw material into finished goods, ready for sale and delivery.
Business sectors (or economic sectors)
Primary
Involved with extraction, harvesting and conversion of natural resources.
● e.g. mining, agriculture, livestock, drilling, and logging
Secondary sector:
Companies involved in manufacturing or construction, of products
● Regulated and protected by the government
● Fuels (produces inputs for) the other economic sectors
● Example companies: Philex Mining, Del Monte, Dole
● Tertiary
Specialise in providing services to the generaL population. Example of this sector include retailing, transportation, insurancee
● Involved with service and retail
● Includes retail sales, transportation, entertainment, restaurants, media, healthcare,
banking, etc.
● Quaternary
● Involves intellectual, knowledge based activities that generate and share infomraiton
● Includes government, education, libraries, scientific research, information
technology, etc.
Primary industry involves getting raw materials e.g. mining, farming and fishing. Secondary industry involves manufacturing e.g. making cars and steel. Tertiary industries provide a service e.g. teaching and nursing. Quaternary industry involves research and development industries e.g. IT.
Entrepreneurship (and the entrepreneur) vs. intrapreneurship (and the intrapreneur)
Entrepenur is sonoene who is willing to take fianical risk by investing in a business idea
Entrepreneurship (and the entrepreneur) vs. intrapreneurship (and the intrapreneur)
● Entrepreneurship is the process of starting a business, company, or organization
● The Entrepreneur
● The founder, and usually owner
● Big risk, big reward
● Organizes inputs of production into goods and services (outputs)
● Obtains money, buys the inputs needed and makes decisions.
● Takes risks and provides the vision for the business idea
● Assumes large financial risk
● Provides sufficient resources
● Intrapreneurship is similar to entrepreneurship but is done in an existing organization
● The 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
Common steps in starting up a business and problems new ones may face. And what is a niche market
Common steps in starting a business:
Having an idea, conduct relevant researc, prodict a business plan, determine a business structure, meet legal requirment
Some problems that new business may occurL
Poor planning
Inability to raise sufficent start up finance
limited budget for avaible for promotion and adveritsitment
Human resources, new unestablsihed busineses may struggle to recruit suitabe and expierenced employyees
new business lack an estabslihed realtionship with suppliers, which can cause delviery and disrtrubion problems
Common steps in starting up a business and problems new ones may face
● Businesses often start up by looking for market opportunities (market gaps or niches)
● Niche marketing: Niche marketing targets specific and well-defined market segments (i.e., niche markets). Concentrating all marketing efforts on a small but specific and well defined segment of the population.
Niches do not ‘exist’ but are ‘created’ by identifying needs, wants, and requirements that are being addressed poorly or not at all by other firms, and developing and delivering goods or services to satisfy them.
As a strategy, niche marketing is aimed at being a big fish in a small pond instead of being a small fish in a big pond.
A niche market is a specialist area of the market. This is usually a small segment of a market.
● Factors to consider: What questions would businessmen ask about the factors?
● Business idea
● 4 business inputs (capital, land, labor, and enterprise)
● Four departments/functional areas
● Possible problems faced by a start-up (either internal or external)
● Internal
● No land to establish a business
● Product may not appeal to your location
● Lack of manpower
● External
● Terrorists
● Politics or government
● National Calamities
● Limited resources
Business plan
Business plan is a ofmral document that details how an oeganization intends to meet its objects.
Such can invlude:
Executive summary, business decirpion, business envirment, product description, the market, the personnel
● 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 a business plan
● Business – name of the business, type of the business, statement of aims and
objectives, details of the owner
● Product – details of goods/services, operations and equipment needed, suppliers,
price
● Market – who you’re selling to, market profile, competition (strengths and
weaknesses)
● Finance – money, start-up costs
● Personnel – employees and workforce, skills
● Marketing – marketing mix employed by business
Product vs good
Product can refer to both goods and services. Goods are physical products, while services are intangible products, ex haircuts
Product vs good
Product can refer to both goods and services. Goods are physical products, while services are intangible products, ex haircuts
