Chapter 1 (Intro) - Eng

Chapter 1: Introduction to Business Management

Key Concepts

• Goods vs Services: Understanding the differences between tangible products (goods) and intangible offerings (services).

• Standard of Living: Refers to the level of wealth, comfort, and material goods available to a certain socioeconomic class.

• Quality of Life: Encompasses not only economic indicators but also social and environmental factors that affect well-being.

• Revenue, Cost, and Profit: Key financial metrics; Revenue is the income generated, Cost is the expenditure incurred, and Profit is the difference between the two.

• Not-for-Profit Organizations: Entities that operate for a purpose other than making a profit, often focused on a social cause.

• Stakeholder vs Shareholder: Stakeholders are all parties affected by a company's operations, while shareholders are specifically those who own shares in a company.

• Risk: The exposure to uncertainty or potential loss within business contexts.

Factors of Production (Resources)

• Human Resources: Involves labor, management, and skills contributing to production.

• Material Resources: The physical items needed for production (raw materials).

• Informational Resources: Data and information essential for decision-making.

• Financial Resources: Money and credit necessary for operations and growth.

• Emphasis on the optimal combination of these resources to maximize productivity and efficiency.

Stakeholders

• Definition: Individuals or groups impacted by organizational decisions (e.g., employees, customers, suppliers).

• Types of Stakeholders: can include internal (employees, management) and external (government, community, investors).

• Interests of Stakeholders: Stakeholders may have varied interests that sometimes conflict, necessitating management strategies to balance needs.

• Addressing Stakeholders’ Needs: Importance of communication and engagement with stakeholders to ensure their needs are met.

Risks

• Definition of Risk: The potential for loss or unfavorable outcomes in business.

• Types of Risks: Can include financial, operational, reputational, strategic, etc.

• Preventing and Planning for Risks: Strategies to mitigate risks include thorough planning and risk management practices.

• Risk and Return Relationship: Generally, higher risks are associated with greater potential returns.

• WEF Risk Report: Analyzes global risk assessments in various sectors.

The Global Risks Report 2025

• Overview: Insight report detailing projected global risks over the coming years.

• Current Global Risk Landscape: Risk examples include state-based armed conflict, extreme weather events, and misinformation.

• Risk Severity Rankings: Differentiating between short-term (2 years) and long-term (10 years) risk impacts in areas such as economic and environmental sectors.

Risks by Country

• Country-Specific Risks: Different nations face unique risks. Examples include:

  • Poland: Armed conflict, economic downturn, talent shortages.

  • Portugal: Labor shortages, economic conditions, social protections.

  • Saudi Arabia: Asset bubble, inflation, AI outcomes.

  • South Africa: Energy supply, unemployment, water supply shortages.

Cost of Living in South Africa

• Impacts on Consumers: Rising living costs affect purchasing power and consumer behavior.

• Industry Vulnerabilities: Certain sectors may be more sensitive to these economic changes.

• Future Considerations: Discussions on necessary actions to address the challenges posed by living cost increases.