1.1 What is a business

A business

Any organisation that uses resources to meet the needs of customers by providing a product or service, or good

How many main departments are there in a business and what are they?

4 departments:

• Human Resources (HR)

• Finance

• Marketing

• Operations

What are dividends?

The portion of earnings that a company distributes among shareholders each year

Role of HR?

Responsible for managing the employee life cycle (hiring and fire)

Role of the Finance Committee

In charge of the legal requirements (e.g taxes) → calcualte the cash flow of the business

Role of the Marketing Committee

In charge of the visibility of business: logos, uniform, upgrades, product variety for example

Role of the Operations Committee

• In charge of the business’s production function

• In charge of how to make effective products

• Usually work with the stock control of the company as well

Formula for profit:

revenue - cost

Consumer goods

What the customer can actually consume or benefit from it physically for example: butter, food, etc.

Two types of consumer goods & examples

* Tangible (things you can poke!)→ e.g meat, cornflakes, etc
* Intangible (untouchable goods) → e.g: spotify, WiFi data plan, Netflix, etc

Capital Goods

Physical goods that are used by firms & industries to make service & goods. with mostly an estimate of usage for more than 12 months.

Price of labour is called?

Wages or Salary

Main difference between Entrepreneurship & Intrapreneurship

An entrepreneur risks THEIR own money to begin the business, however, an intrapreneur works with the money coming from that firm

Four main production divisions

* Primary
* Secondary
* Tertiary
* Quantery (this section is not recognised in several countries though!)

Primary Sector

This is the extraction committee. E.g: farmers/anything to do with agriculture.

Seconday Sector

This is the production/manufacturing committee, they make something out of the raw materials. E.g: processed food factories.

Tertiary Sector

This is the committe that encompasses a wide range of businesses, including financial institutions, schools, hotels, and restaurants

Quanternary Sector

Barely recognised in some coutries, but this is the knowledge-based committee, from technology, to education, etc.

Added Value

Increment of the utility of a product as it goes through different production stages

Channels

The ways you reach out to your consumer and deliver their goods or services.

Factors of production

Land, Labour, Capital, Entrepreneurship

Systems

A set of interconnected parts that work together to make a more complex whole to achieve a purpose

A system has four main parts:

* Inputs
* Processes
* Outputs
* Feedback

Inputs

All the resources required to create or produce a product.

Three categories of Inputs

* Physical
* Financial
* Human

Physical inputs

Raw materials or semi-processed goods used to produce a product

Semi-processed goods

Goods that have already been processed in some way, but are not consumer goods.

Financial inputs

Resources/funds needed to set up a business are also used to help it grow and keep it running.

Long-term financing

When a business borrows large sums of money for a longer period of time, this could be used to help purchase physical building for the business.

Short-term financing

Used to pay inputs that will be turned into products and sold by the business, hence, the amount of money being borrowed is not huge

Stock

An inventory help by a business to sell to customers

Inventory

Consists of raw materials used in production as well as the goods produced available for sale

Enterprise

The process of taking risks to combine the other resources to create a good or a service

Processes

structured activities or tasks performed by people or equipment

The 4 Business Functions

Human Resources (HR), Finance, Marketing, Operations

Outputs

The product that comes out of the business, the needs of customers, etc

Two categories an output can be put in

A __good__ or a __service__

A good

__tangible__ products, meaning they have physical characteristics and can be measured

A service

__intangible__ products, meaning they don’t have physical characteristics and cannot be measured

Feedback

Process by which the output becomes an input to the same system.

Negative Feedback

Output feeds back into inputs in a way that moves the system in the __opposite__ direction

Positive Feedback

When the system and process in the business move in the __same__ direction

Revenue

Income that a business generates

S.W.O.T

Strengths, Weaknesses, Opportunities, Threats

S.T.E.E.P.L.E

Social, Technological, Economic, Environmental, Political, Legal, Ethical

Business Plan

To describe a business, it can be a new one, or an existing one. Also helps to give entrepreneurs credibility

Secondary Research

Using evidence gathered by other people

Primary Research

Creating new information

Quantitative Research

Numerical data

Qualitative Research

Non-numerical data and involves descriptions

What comes first in the Golden Circle?

Why

What could consist of the “Why” sector in the GC?

* A vision and/or mission statement of the business is included here
* Description of problem being solved is also included here

What could consist of the “How/What” sector in the GC?

* The **way** you will produce the product you’re selling
* The production processes
* How the business will be set up and run
* What are the **characteristics** of the product you are offering?