Purpose of Business activity

The business activity aims to satisfy people’s needs.

In an ever-evolving world, the purpose of business owners and managers remains constant: To add value to resources while meeting people’s needs

A business is an organisation that uses resources to meet the needs of customers, by providing a product or service that they demand.

=> Many of the customers would be consumers, purchasing consumer goods and consumer services

Factors of Production

Land: Land and its resources
Labour: Human Capita
Capital: Assets, machinery (Capital Goods) , finances

Enterprise: he individual that brings the factors of production together

Added Value

• For the business: Total revenue - Tota cost => (profit)

• The consumer: the concept of value in the form of convenience, or brand values

• => Added value for the buyer becomes the profit for the seller.

=> The Value added by the business may not directly translate into profit because other costs may have to be paid for. However,if the business is able to keep the costs constant while increasing the price, then the profit increases.

How to increase added value:

• Branding: The process of differentiating a product by developing a symbol, name, image or trademark for it.

• Convenience or higher quality of goods

• Lowering the costs of production

• Creating scarcity

Enterprise is the risk-taking ability. It means that the individual puts money into a business, with no certainty of people buying the product.

Scarcity and Opportunity Cost

There are unlimited wants but limited resources. Meaning that there are insufficient goods to satisfy all our needs and wants at any one time.

The shortage of products and limited supply of resources forces us to make choices.

The need to choose the goods and resource allocation leads to Opportunity cost

Dynamic Business Environment

Changes in the Business Environment:

• New Competitors

• Legal Changes, such as new safety regulations

• Economic Changes such as when a country is in recession

• Technological changes such as advances in technology

Why do some businesses succeed:

• Good Understanding of customer needs: LEads to sales targets being achieved

• Efficient management of operations keeps costs under control

• flexible decision-making to adapt to new situations

• Appropriate and sufficient sources of finance: prevents cash shortage and allows for expansion

Why do some businesses fail:

• Poor Record Keeping:

  • Record keeping is essential for businesses. Consider the example of a florist. Without record keeping, how is a florist of a busy flower shop supposed to remember when the next delivery of flowers is due, or whether a customer has paid, or how many hours the shop assistant worked last week?

• Lack of Cash

• Poor Management skills

The role of Entreprneuers and Intrapreneurs

Intrapreneurs are a business employees who take direct responsibility for turning an idea into a profitable new product or business venture

Qualities of successful entrepreneurs and Intrapreneurs:

• Innovation

• Commitment and Self-motivation

• Multi-skilled

• Leadership Skulls

• Self-confidence

• Risk-taking

Barriers to Entrepreneurship

• Lack of Business opportunity

• Obtaining Sufficient Capital or Finance

  • insufficient savings

  • no knowledge of financial support or grants available

  • no trading record to present to banks as evidence of past business success

  • poor business plan

• Cost of Good Location

  • One may be deprived of the ideal location to sell due to its cost.

• Competition

  • Competition from already established businesses with greater resources

• Lack of Customer base

  • A new business must establish itself in the market and build up customers’ numbers quickly to survive.

The Role of Intrapreneurship

• Injectiing creativity and innovation into the business

  • Developing new products or increasing sales

• Developing New ways of doing Business

  • Creativity in solving problems such as low efficiency can be more successful

• Driving innovation and change within the business

• creating a competitive advantage

  • Developing more innovative products

• Encouraging original thinkers and innovators to stay in the business.

Business Plan

Main Elements:

• Executive summary: Overview of the new business and its strategies

• Description of the business opportunity: details of the entrepreneur’s skills and experience. Nature of the product, the target market at which the product is aimed

• Marketing and sales strategy: Details of why the entrepreneur thinks the customers will buy the product and how the business will sell them

• Management team and personnel: Details of the entreprneur’s skills and experience and the people they intend to recruit

• Operations: Premises to be used, production facilities and IT systems

• Financial Forecasts: The future projection of sales, profit and cash flow for at least on year ahea

Benefits of a business plan:

• Forces the owner to think seriously about the proposal, its strengths and any potential weaknesses

• Gives the owner and managers a clear plan of action to guide their actions and decisions in the early months and years of the business.

• Helps in getting a loan from the bank