Unit 1 - Intro to Business Management

Key Concepts (CESC):

Creativity
Ethics
Sustainability
Change

Creativity

The process of generating new ideas and considering existing ideas from new perspectives.
Ability to recognize the value of ideas when developing innovative responses to problems
Evident in the outcomes, products or solutions

Ethics

Refers to the moral principles that govern the behavior of a person or group of people.
Every business decision has moral implications.
The consequences of these implications can be significant for internal and external stakeholders and the natural environment.

Sustainability

Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Can be enhanced by conserving resources or finding more efficient ways to produce or discover new resources
Decisions need to consider TRIPLE BOTTOM LINE: people, planet, and profit

Change

Explored from several perspectives as businesses operate in a dynamic world that is continually subject to change.
Conversion, transformation, or movement from one form, state or value to another.
Due to increasing competition, new technologies, and markets as well as changing trends in consumer behavior, businesses need to adapt their objectives, strategies and operation in order to succeed.

Business

Any organization that uses resources to meet the needs of customers by providing a product or service they demand to earn profits

Entrepreneur

Someone who take the financial risk of starting and managing a new venture

Innovation

Providing either a different type of product or a service that is different from those of competitors, which is delivered in a distinct way.

Factors of Prodcution

Land
Labor
Capital
Enterprise

Land

Land and all the renewable and non-renewable resources of nature

Labor

Manual and skilled labor that makeup the workforce

Capital

The financial resources needed to setup and operate a business as well as man-made resources

Enterprise

Driving force of a business provided by risk-taking individuals known as entrepreneurs

Outputs of Business

The goods and services that satisfy a consumer's needs usually with the aim of making a profit

Classification of Goods or Services

Consumer Goods
Consumer Services
Capital Goods

Consumer Goods

The physical and tangible goods sold to final users; these include cars, food, and clothing. Non-durable consumer goods: can only be consumed or used once.

Consumer Services

Non-tangible products that are sold to final users; these include hotel accommodation, insurance services and train journeys

Capital Goods

Physical goods that are used by industry to aid in the production of other goods and services such as machines and commercial vehicles

Business Functions

Human Resource Management
Finance and Accounts
Marketing
Operations Management

Economic Sectors

Primary, Secondary, Tertiary, Quaternary

Primary

Firms engaged in farming, fishing, oil extraction, and all other industries that extract natural resources so that they can be used and processed by other firms

Secondary

Firms that manufacture and process products from natural resources, including furniture, brewing, baking, clothing and construction

Tertiary

Firms that provide services to consumers and other businesses such as retailing, transport, insurance, banking, hotels, tourism, and telecommunications

Quaternary

Information Technology (IT) businesses and information service providers such as research and development, business consulting and information gathering

Sectoral Change

The importance of each sector in a country's economic structure changes over time. The relative importance of each sector varies significantly between different economies. Measured by employment levels or output levels (GDP) as a proportion of the whole economy.

Entrepreneurship

Entrepreneurship the process of setting up a new business

Entrepreneur

Someone who take the financial risk of starting and managing a new venture

Opportunities of Entrepreneurship

Overcoming unemployment
Being independent
Improved standard of living

Do I have the appropriate personal qualities?

Innovation
Commitment and self-motivation
Self-belief
Risk-taking
Leadership skills

Is there a market for my product?

Where do ideas come from?
Own skills or hobbies
Previous employment experience
Conferences and exhibitions
Market research

Do I have sufficient capital?

Where does capital come from?
Personal savings
Friends and family
Banks
Venture capitalists and angel investors
Government grants

Where should I locate my business?

Need to minimize costs (home vs. new premises)
Business placement

How do I build a customer base?

Tailored product or service offerings

How do I compete effectively?

Better customer service

Must I keep accurate business records?

Vital to pay taxes, bills and chase up debtors

Do I have the necessary management skills?

Leadership
Cash handling and cash management
Planning and coordinating
Decision making
Communication
Marketing, promotion, and selling

How do I deal with change?

New competitors
Legal
Economic
Technological

Business Plan

A written document that describes a business, its objectives and its strategies, the market it is in, and its financial resources.

Contents of a Typical Business Plan

Executive summary
Description of business opportunity
Marketing and sales strategy
Management team and personnel
Operations
Financial forecasts

Sample Elements of the Business Plan

Name of business
Type of organization
Business owners
Business aim
Product
Price
Market aimed for
Market research
Human resources plan
Production details
Business Costs
Location of business
Main equipment required
Forecast profit
Cash flow forecast
Finance

Importance of Business Plans

Obtain finance for the start-up
Planning
Financial forecast

Users of Business Plans

Investors
Business Managers
Employees
Suppliers
Banks/Lenders