1.1 Introduction to business management

The role of business in combining human, physical and financial resources to create goods and services

RESOURCES

• human - the skills of people
• physical - items which are natural or man-made
• financial - capital or money which is invested or borrowed

Businesses combine and use these resources to create goods or services.

The role of a business is to meet the needs and wants of people by conducting activity using these resources.

The main business functions and their roles:

• human resources

• finance and accounts

• marketing

• operations

• human resources - employment, recruitment, training, dismissal, compensation
• marketing - promotion, price products, place of sales, ensure that product is desired
• finance and accounts - availability of funds, budgeting, forecasts, cashflow control, financial needs
• operations and management/production - control production methods, quality, stock, efficiency in processes.

Smaller businesses have to deal with all these functions by themselves while larger businesses can hire specialized employees to manage the different functions as different departments.

This allows managers to focus more on their own functions which could lead to increased efficiency and productivity.

> These functions are interdependent - they depends on each other, working together and cooperating to ensure that a business accomplishes it's goals.

Primary, secondary, tertiary and quaternary sectors

GOODS      |  primary - extraction of raw materials

GOODS      |  secondary - manufacturing and processing raw materials

SERVICES |  tertiary - services and sales to the final customer

SERVICES |  quaternary - (subgroup of tertiary) focus on knowledge and IT (media, web-based)

The nature of business activity in each sector and the impact of sectoral change on business activity

The role of entrepreneurship (and entrepreneur) and intrapreneurship (and intrapreneur) in overall business activity

Entrepreneurs and intrapreneurs provide ideas to create an innovative product or service or a business idea.

• entrepreneurs - individuals who are self-employed or are the center of a business.
• intrapreneurs - individuals who are hired by organizations to develop a new product.

Reasons for starting up a business or an enterprise:

• rewards for investment
• independence > working as your own boss
• necessity of needing a source of income
• to challenge themselves
• having an interest or passion in that area
• finding a gap or opportunity to create a new product
• sharing ideas

Common steps in the process of starting up a business or an enterprise

To start a business you need a business plan and an idea.

1. Organizing the basics (basic questions)
2. Researching the market
3. Planning (business plan)
4. Legal requirements
5. Raising finance
6. Testing the market (launching)

Problems that a new business or enterprise may face

• ORGANIZATION: suppliers are unreliable, the structure does not work, location
• MARKET RESEARCH: poor research, testing was inaccurate
• BUSINESS PLAN: plan is not convincing, goals set were vague
• LEGAL REQUIREMENTS: labor laws, difficulty registering the business, tax
• FINANCE: capital is difficult to raise, accounts are not kept properly
• MARKET: failed launch, product was not inspiring

The elements of a business plan

 Reasons for a business plan:

• a clear focus for development
• to attract funds
• for strategic planning
• a measure for success
• to identify resources required
• to support launch

ELEMENTS

• Ideas, aims and objectives - what are they? USP? why?
• Business organization - location, structure, legal, type
• HR - how will the business be staffed?
• Finance - how will capital be raised?
• Marketing - how will the product or service be marketed?
• Operations - how will the product or service be produced or manufactured?