Business Management Unit 1.1: What is a Business?

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23 Terms

1

Business

A decision making organisation involved in the process of using inputs to produce goods and/or services.

The organised effort of individuals to produce and sell, usually for a profit, goods / services to satisfy individuals needs/wants

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2

Goods

vs

Services

Physical Products

vs

Intangible products

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3

The Production Process

Inputs → Processing → Outputs

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4

Factors of production (CELL)

Capital

Entrepreneurship

Land

Labor

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5

Needs

vs

Wants

The basic necessities an individual must have in order to survive.

vs

Things people desire, that add comfort to their life.

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6

Added value

Positive difference between selling price & cost of production.

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7

Other functions of a Business

Provide employment & disposable income

Improve quality of life

Profit & Wealth creation

More choice for consumers

Opportunity for entrepreneurship & innovation

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8

Customer

vs

Consumer

Individuals or organisations that buy a product

vs

Individuals or organisations that use a product

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9

Entrepreneur

The individual who plans, organises and manages a business and its operations, taking on the risks involved in doing so

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10

Entrepreneurship

The collective knowledge, skills and experiences of entrepreneurs.

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11

Intrapreneur

An employee of a business who is encouraged to innovate and take risks in order to improve a product or service

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12

Human Resources

The function of an organisation responsible for handling all matters relating to the workforce/ all personnel of the organisation.

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13

Finance and Accounts

The function of a business responsible for handling its money, ensuring it has enough funds to conduct its daily business operations and ensuring compliance with legal requirements.

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14

Marketing

The function of a business responsible for identifying needs and wants of customers so the business can satisfy them.

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15

Operations

The function of a business responsible for the processes involved in producing goods and services using the resources available to the business.

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16

Primary Sector

Refers to businesses Involved in the cultivation and extraction of natural resources

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17

Secondary Sector

Refers to businesses involved in the manufacturing and processing raw materials into products.

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18

Tertiary sector

Refers to businesses involved in the delivery of services

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19

Quaternary Sector

Refers to businesses involved in the development and use of information and data.

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20

Reasons for starting a business

To fill a hole in the market

Financial reward

Control

Innovation

Passion to make change

New Business Idea

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21

Challenges of starting a business

Lack of funds

Small competition

Market is too small (lack of potential customers)

Poor management skills

Unskilled employees

Environmental, political or economic shocks

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22

Steps to start a business

Refine the idea

Make a business plan

Decide on legal structure

Register the business

Find a suitable location

Hire employees

Get funding

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23

Elements of a business plan

The business Idea

how the business will be organised

the functions of the business (marketing, HR ect)

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