Chapter 1: Terms

Question 1

The 5 business activities

Answer 1

1. Innovation
2. Operations
3. Marketing
4. Human resource management
5. Finance and accounting

Question 2

The 4 business levels

Answer 2

1. Activities level
2. Strategic level
3. Organisational level
4. Environmental level

Question 3

KC: Business definition

Answer 3

A business is the organized effort of individuals to produce and provide goods and services to meet the needs of society.

Question 4

KC: Strategy

Answer 4

A strategy comprises a set of objectives and methods of achieving those objectives. A strategy is usually formu-lated by top management and is based on a mixture of careful analysis of the environment and the organization, the personal preferences of the managers involved, and a process of negotiation with various other stakeholders.

Question 5

Strategic level

Answer 5

Concerns the management decisions, and the influences on those decisions, that determine the direction of business activities.

Factors: products and services, advertising, number of people employed, shape of the organisation.

Question 6

Organisational level

Answer 6

Concerns goals, structure, ownership, size and organisational culture.

Question 7

Environmental level

Answer 7

Concerns the economy, state, technology, labour and cultural and institutional differences

Question 8

KC: Organisation

Answer 8

An organisation refers to the way in which people are grouped and the way in which they operate to carry out the activities of the business. We define the key elements of the organisation as the goals of the business and the way they are formulated, ownership and control, size, structure and organisational culture.

Question 9

KC: The systems approach

Answer 9

The systems approach is a view of business involving two related concepts. First, businesses are made up of a series of interactions, involving business activities, the various aspects of the organization, and aspects of the environment. What we identify as a business is the sum total of all these influences and interactions. Second, the systems approach views business as a series of inputs from the environment, internal processes and eventual outputs.

Question 10

KC: The contingency approach

Answer 10

The contingency approach focuses on the relationship between the organization and its environment. It embraces the notion that business activities and the way they are organized are products of the environment in which they operate. The most successful businesses are therefore those that are organized to take advantage of the prevail-ing environmental influences.