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1.1 Introduction to
Business Management
What is a Business
Any organization that uses resources to
produce a good or service to meet the
demand of a customer .
What is added-value?
Changing or altering a natural resource or
semi-finished good to make it more
What do businesses do?
Businesses identify needs of consumers
then purchase resources (or inputs) to
produce outputs usually classified as:
•Consumer goods
•Consumer services
•Capital goods
Making Profit?
Usually business aims to make money.
Land (& natural resources)
 Fields for factories/ energy for power
 Employees needed to run machines, sell, etc.
 Finance needed to setup and operate on a daily basis
(Plant/machinery/computers, $)
 People to manage the other inputs (the glue that makes
this work!)
These are also referred to as “Factors of Production”
Categories of OUTPUTS
Anything that satisfies the needs
and wants of customers.
These can be goods or services.
 “good”
something tangible—touchable
 “service” usually intangible—people do things for
Consumer Good
•Consumer goods are sold to general public.
*Also referred to as a Durable Good
Examples of: Televisions, T-shirt, books
Non-Durable Good
•Consumer goods that can only be used once.
Examples of: Food, drinks, and candy
Capital Good
•Goods used by industry to produce other goods
and services
Examples of: machinery, cranes, dump trucks
Consumer Service
•Non-tangible product that sold to the consumer
Examples of: hotel rooms, airplane ticket, insurance
Business Functions (Departments)
and Accounts
Human Resource Management
Operations Management
consumer wants based
on market research
How and where to promote
How to sell and distribute
Finance and Accounts
of money in and out of
Provides financial information
to management
Key division to all companies
Human Resource Management
 Identifies
workforce needs of business
 Recruits potential employees
 Selects and trains staff
 Motivational systems to retain staff and
encourage productivity
 Employment contracts
 Redundancy and redeployment of staff
Operations Management
resources are available
for production
Maintains production levels
Maintains quality levels
Oversees production efficiency
Interrelationship of Functions
four business functions
must work together!
Changes in Economic Structure
The growing importance of the secondary
sector on the economy.
? When did this occur in our country
? What was the impact on our society
? What benefits have we enjoyed
Did you say:
Increase standard of living
Reduced imports into our country and increased
exports to other countries
More jobs as manufacturing expands
More profits to companies, so more taxes to
Raw materials worth more to other countries
because they have been processed
What are potential problems?
? Where did people move
? What type of labor was required
? What happened to the environment
? Where do we get all of the raw materials
Did you say:
Creates depopulation in rural areas as people
gravitate towards jobs in manufacturing
Stresses on farming and agriculture
Difficult to find enough qualified workers
Imports may increase to satisfy needs of raw
What is “deindustrialization”?
In developed economies, the reliance on
the secondary sector becomes less
important as activity increases in the
tertiary sector.
Why does deindustrialization occur?
Rising incomes allows more services to be
purchased rather than goods.
 Cheaper labor used by rival companies may
force secondary firms to close.
 Employment patterns change making it
difficult for factory workers to find work in
the secondary sector.
Why Start a Business?
? Are you currently employed
 ? Are you in charge or make the decisions
 ? Can you offer something in the
marketplace that no one else provides or is
 ? Do you make enough money now
Why Start a Business?
Did you say:
 Lose of employment
 Desire for independence
 Clear need for a product or service you can
 Desire to earn a higher income by working
for yourself
Entrepreneur VS Intrapreneur
 People
who setup their own new business.
 They
have an idea
 They invest some of their own savings and capital
 They accept responsibility
 They accept risk of failure
 Someone
within an existing organization that
takes responsibility for a project or an idea.
Entrepreneurial Traits
 Committment and self-motivation
 Multi-skilled
 Leadership skills
 Belief in oneself
 Risk-taker
Why are these important?
Startups and Sectors
Each sector is capable of start ups.
What type of business would you start for each
 Secondary:
 Tertiary:
 Quaternary:
Benefits to your community!
Why do governments want to encourage start
? Who is employed
? What happens when more goods and
services are produced
? What happens to successful small
? Who has great new ideas
Benefits to your community!
Why do governments want to encourage start ups?
Did you say:
New businesses create new jobs for the economy.
When new businesses generate more goods and
services, overall economic growth of the country is
increased. (What is GDP?)
Small businesses can become BIG businesses if they
are successful.
Innovation and new ideas can spur more business.
Common Problems with Start Ups
Other competitors in the market place who are established and have better
knowledge of the industry.
Lack of record-keeping
Inadequate records to keep track of bill paying, inventory, and payroll
Lack of finance and working capital
Inadequate personal funding resources, lack of knowledge to secure government
grants, insufficient knowledge of managing day-to-day cash needs
Poor management skills
Lack of leadership, planning, communication, sales, and marketing skills
Changes in the business environment
Outside factors that may make your business obsolete, new competitors in the
market place, or legal changes
Business Plan
 Executive Summary
Overview of new business
 Description of Business Opportunity
What will be sold, why, and to whom
 Marketing & Sales Strategy
Why will customers buy, how will sell
 Management Team & Personnel
Skills of entrepreneur and the management team
 Operations
Where are production facilities, IT systems
 Financial Forecasts
Sales projections, cash flow, profits
Do you see the 4 functions of business?
Who uses the business plan?
Investors – explains why the business idea
has a reason to be successful.
 Business owner/managers – provides
benchmarks for profitability and growth
 Banks – can be used to secure loans
 Employees – can help explain the focus and
objectives of the business
 Suppliers – can express why a long-term
relationship may be important to establish