Section 1.

1 Objectives

Goods and services, sectors, entre and intra, enterprise types, mission vision, aims, objectives, business
strategy, tactics, internal factors of change, external, ethical objectives, CSR, SWOT, market
position strategies, ansoff matrix, internal and external stakeholders,

Definitions Examples
- Introduction to Business management:

Business: making, buying, or selling goods or services for money.

Business Unit: an independent entity that combines human, physical, and financial resources to
produce a product or service that would satisfy customers’ needs. Ex. Apple

 The role of a business is to meet the needs and wants of individuals or organizations by
extracting/producing raw materials, creating a product or providing a service.

Business Activity: the process of turning the resources (inputs) into goods or services (outputs).
Ex. Producing a phone
Inputs:
Human: employees that are present inside the company that may have various tasks such as
operating machines.
Physical: tangible assets that are used throughout the production process. Ex. Machines
Enterprise: idea of the entrepreneur, which is the product or service.
Financial: money required throughout the business activity.
Outputs:
Goods: tangible products that include items from the primary sector (extracted from the earth)
like agricultural products or from the secondary sector (manufactured) like cars.
Services: intangible products that could be tertiary (classes) or quaternary (knowledge-based e-
services).

 All businesses have four key functions that state what should be done:
Human Resources: hire, train, and motivate employees. They are also the ones who fire them.
Finance and Accounts: makes sure the business has enough money for the products and all fees
and paychecks.
Marketing: increase company sales by using promotion strategies. Ex. Buy one get one free deal
Operations Management or Production: used by businesses to produce goods and services at
the lowest cost without sacrificing quality.

 Chain of production is the steps through the different sectors that must be made to turn raw
material into a customer good that is marketed. Raw materials are extracted from the earth and
processed into materials that manufacturers can turn into parts. These parts are put into an
assembly line and made into the products which are then shipped to stores and sold to
customers.
 A business can experience two types of growth:
 Horizontal: when a company grows by purchasing another company in the same industry to
increase its market share. Ex. An airline company buys another airline.

Vertical: when a business purchases a company that is earlier (backwards vertical integration) or
later (forward vertical integration) in its chain of production. Ex. BVI: A cheese company buys a
farm. Ex. FVI: A farm owner buys a market.

 Sectoral Change: the shift from one sector to another. Ex. Extracting materials then
manufacturing them into products.

Changing from one sector to another requires a change in resources. For example, when
changing from the primary sector to the secondary, the resources needed change from human
to financial and physical.
Mostly the primary sector is a less developed economy (low income), the secondary high
developing economy (middle income) and developed economies (high income) are split almost
equally throughout the sectors.

 An Entrepreneur: An individual who develops new idea of starting a new business taking all
types of risks, to put their product or service into reality and make it demanded. They should be
able to take decisions, have an analytical ability, should have good people skills, highly
motivated, and a risk taker.

Entrepreneurs:
- Initiate and innovate a new concept
- Recognize and utilize the opportunity
- Coordinate the resources
- Face risk
- Take decisions and suitable actions
- Establish a new company and add value to its products
- Is responsible for the profits or losses of the company
 Intrapreneur: an employee of a large organization, who has the authority of initiating creativity
and innovation in the company’s products with the objective of transforming them into a
successful new project of the enterprise. They believe in change and new ideas. They look for
opportunities and promote innovation.
 Innovation is central to the work of both intrapreneurs and entrepreneurs and comes in three
forms:
 Market reading: observing the customers and competitors to modify products.
 Need Seeking: communication with current and potential customers to identify their needs.
 Technology driving: investing in Research and Development and following opportunities offered
by technological capabilities.

 There are several reasons to start up a business:

- Rewards: to keep all the rewards for yourself.
- Independence: working for yourself without having a boss.
- Necessity: sometimes people that cannot find work will open a business.
- Challenge: some people want to see if they can make it themselves.
- Interest: people might open a business for something that they are passionate about and that
they enjoy.
- Finding a Gap: see an opportunity and they will achieve first mover advantage.
- Sharing an Idea: if you believe in something, you might sell the idea to others.

 All startups should have a Business Idea (What the business does. Ex. Manufacturing products)
and a Business Plan (determines the cost needed to turn raw materials into the final products).
 The process of creating a startup involves 6 steps:
1) Organizing the basics: determine the essential elements of the business through addressing
the questions: where is the business going to be? What is the name of the business? What is
the operation structure? Is there sufficient infrastructure?
2) Researching the market: this determines how the business would distinguish itself from
others and determine its target segment by asking the following: How would the business
conduct market research? What is its target market? Can the business test its concept? How
will the business communicate with the market?
3) Planning the business: addresses what elements are needed in order to start operations, to
tell stakeholder how the business will operate.
4) Establishing legal requirements: related to meeting the business legal requirements that
should be fulfilled by the organization.
5) Raising the Finance: is to acquire needed financial resources to start operations. These
resources are acquired from the entrepreneur’s investments in addition or funds provided
by the investors.
6) Testing the market: tests if the goods and services that are produced by the business are
suitable for the customers’ needs to ensure success and sustainability.
 Some problems that a startup may face include problems with:
- Organization: location, name, structure, unreliable supplies
- Market Research: poor research, inappropriate target market, test was optimistic, weak
communication.
- Business Plan: unconvincing business plan, goals were too vague and contradicting
- Legal: labor laws were not addressed, registration was difficult, tax obligation were too
difficult
- Finance: the accounts were not kept properly, raising the startup capital was a problem,
and raising finance was difficult
- The Market: launch failed, pilot was conclusive, and success was limited
 Purpose of a business plan:
- Support the launch of the new organization
- Attract new funds
- Support strategic planning
- Identify resources needed
- Provide a focus for development
- Work as a measure of business success
 When starting a business one should consider: the idea, business organization, HR, finance,
marketing, and operations.