Business Unit 1.1

Business

A decision making organisation involved in the process of uisng input to produce good and or services

Inputs

Capital
Enteprise
Land
Labour

Processes

• Human resources

• Finance

• Marketing

• Operations Management

Output

Goods - Physical/tangible products (phone

Role of the Departments

Departments are interdependent meaning they must work together to reach the organisations goal

Human Resource Management Department

Manage personnel of organisation and personal issues like workforce planning

Finance and Account Department

Manages thee businesses money

Accurately record and report financial documents to:
- comply with legal requirements (e.g taxation laws)
- inform stakeholders and shareholders about financial position

Marketing Department

identify

Operations management Department

responsible for the converting raw materials and components into finishing goods

Revenue

All the money a business brings in

Cost

The amount of money a business spends to create and delivers goods or services

sectors of an economy

the stages of production

Primary sector

involved in extraction

secondary sector

involved in manufacturing or constructing using raw materials

medium-income countries dominate this sector. accounts for a big proportion of their national output

wealth creation sector for countries as goods are exported worldwide.

employment has reduced here due to automation

tertiary sector

provide services to the population and other organisations

most dominant sector in high income countries in terms of employment and ouputs as a % of GDP

quaternary sector (technically under tertiary)

involved in intellectual and knowledge based activities that generates and shares information

exists mainly in high income countries as it require a highly educated workforce

chain of production

primary production --> manufacturing --> services --> consumers

as an item goes down the chain value is added

entrepreneur

individual who plans

challenge of new business - lack of finance

new businesses need finance to buy fixed assets (buildings

challenge of new business - unstable customer base -

new businesses may struggle to attract and build a loyal customer base

finance working capital

the money available for the daily running of a business

challenge of new business - cash flow problems

finance working capital

challenge of new business - marketing problems

arises when new businesses fail to meet customer needs

challenge of new business - people management problems

new businesses may lack experience in hiring the right staff with necessary skills

challenge of new business - production problems

challenging for new businesses to forecast levels of demand so the could overproduce or underproduce

overproduce

leads to stockpiling

underproduce

leads to dissatisfied customers and a loss of potential sales

challenge of new business - legalities

businesses have to comply with legislation

challenge of new business - high production cost

new businesses are likely to have high setup and running costs due to the substantial amount of money needed for equipment

challenge of new business - poor location

businesses face a dilemma in terms of getting a good busy location

challenge of new business - external influences

all businesses are prone to exogenous shocks that create a challenging environment such as global financial crisis or the outbreak of a pandemic.

especially new businesses as they might not have plans for situations like this

Opportunities for new business - growth

entrepreneurs personally benefit when there is an appreciation in the value of their businesses and its assets. this is called capital growth.

capital growth has the potential to become worth than the value of the owners salaries.

Opportunities for new business - earnings

entrepreneurs can potentially earn more from their business that from salaries from other occupations

Opportunities for new business - transference and inheritance

many self-employed entrepreneurs view there business as a thing to pass on (transference) to their children (inheritance) to give them sense of financial security

Opportunities for new business - challenge

some view setting up a business as a personal challenge

this challenge is what drives them to perform well

Opportunities for new business - autonomy

the freedom of running a business and choosing working hours

Opportunities for new business - security

greater sense of job security being self employed compared to employee who can easily be dismissed.

it is also easier to increase personal wealth for financial security in retirement

Opportunities for new business - hobbies

some people start a business