Topic 1_Business and its Environment

Business and Its Environment

Introduction to Business

  • Definition: Business refers to an organization or entity involved in commercial, industrial, or professional activities.

  • Purpose: To organize economic production of goods or services.

  • Needs vs. Wants:

    • Needs: Essential goods/service for living (e.g., water, food, shelter).

    • Wants: Non-essential goods/services (e.g., mobile phones, cars).

Business Processes

Business Activity

  • Definition: The process of producing goods/services to meet consumer demand.

  • Components: Series of tasks/activities performed by stakeholders to achieve organizational goals.

Management Process

  • Definition: Involves setting goals, planning, controlling, organizing, and leading execution of activities.

  • Objective: Develop and implement business strategies.

Output Process (Operations Management)

  • Definition: Quantity of goods/services produced in a time period (e.g., annually).

  • Example: Number of product units produced monthly/yearly.

Support Processes

  • Definition: Enable/support core processes, assisting departments for better alignment.

  • Examples: Human resources, finance management, administration, and operations.

Input (Factors of Production)

  1. Land: Natural resources (e.g., water, oil).

  2. Labour: Workforce (includes intrapreneurs).

  3. Capital: Machinery/equipment/finance needed for production.

  4. Entrepreneur: Individual with business ideas, taking financial risks.

Characteristics of Entrepreneurs

  • Innovative: Good at generating new ideas.

  • Risk-taker: Willing to assume risks knowing failures are lessons.

  • Leadership skills: Ability to motivate and manage teams.

  • Planning & Professionalism: Strategic and organized approach to business.

  • Passion & Empathy: Strong commitment to customer needs.

Business Functions

  • Key functions crucial for effective operations include Finance, Research, Marketing, Operations, and Human Resources.

Business Dilemma

Economic Problem

  • Issue: Unlimited wants vs. limited resources leads to Scarcity.

  • Scarcity: Demand exceeds availability of goods/services.

  • Opportunity Cost: Value of the next-best alternative when making decisions.

Business Environment

  • Definition: Factors influencing a business, categorized as:

    • Internal Environment: Trends/events within an organization affecting management/culture.

    • External Environment: Forces/events outside impacting the business (Macro & Micro environments).

Comparison of Environments

  • Internal Environment: Direct impact; controllable factors like strengths and weaknesses.

  • External Environment: Indirect impact; factors like opportunities and threats affecting all companies.

Micro vs. Macro Environment

  • Micro-environment: Immediate factors specific to each firm (e.g., customers, suppliers).

  • Macro-environment: External uncontrollable forces affecting the business (e.g., political, technological).

PESTLE Framework (Macro Environment)

  1. Political: Laws that impact industries (tax laws, trade restrictions).

  2. Economic: Economic climate influences (inflation, exchange rates).

  3. Sociological: Social trends affecting workers and consumers (gender equality policies).

  4. Technological: New technologies as opportunities or threats to organizations.

  5. Legal: Legislation affecting businesses (employment laws, health regulations).

  6. Environmental: Ecological factors affecting business operations (CSR initiatives).

Micro Environment Factors

Customers

  • Role: Purchase goods/services; strategies for monitoring needs include:

    • Reactive Monitoring: Addressing issues after they arise.

    • Proactive Monitoring: Anticipating and addressing needs before issues occur.

Suppliers

  • Definition: Provide resources to businesses; dependency on suppliers can affect operations.

  • Example: A bakery relying on a grocery shop for ingredients.

Competitors

  • Definition: Companies selling similar products/services; direct and indirect analyses are crucial.

  • Examples: Samsung vs. Apple (direct); local gym vs. fitness apps (indirect).

Tutorial Information

  • Tutorial task to be uploaded on Moodle; completion counted as attendance.

  • Deadline: 11:59 PM; submit tasks as (Name_StudentID_Tutorial(#)) in PDF format.

Closing Note

  • Any questions?

  • Reminder: "What we do now echoes in eternity" - Marcus Aurelius.