ELITE INTERNATIONAL COLLEGE

ASSIGNMENT

2019 JANUARY SEMESTER

SUBJECT CODE: BAN 0100

SUBJECT TITLE: FUNDAMENTALS OF BUSINESS

LECTURE :

LEVEL : DIPLOMA

STUDENT NAME: LIM PEI YING

MATRIX NO : DIBA203429LF

PROGRAMME : DIPLOMA IN BUSINESS ADMINISTRATION

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 1.0 CONTENTS

NO TITLE PAGES

1.0 CONTENTS 2

2.0 INTRODUCTION 3

3.0 TASK 1 4-6

4.0 TASK 2 7-9

5.0 TASK 3 10-15

6.0 TASK 4 16-18

7.0 TASK 5 19-20

8.0 CONCLUSION 21

9.0 REFERENCES 22-23

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2.0 INTRODUCTION

Business Fundamentals are the simple skills required to address the different

features of running an organization. This includes understanding of wide and generic

business structures and functions that apply to any organization. Prerequisites to this are

people management, organizational design, human resources, financial management,

micro-economics and macro-economics, international fashions, marketing and sales

strategy, R & D, production, quality control and fulfilment. Fundamental

comprehension of the business is key to efficient architecture. Architects that

understand the business will be more informed to shape solutions and position of

information technology to deliver better value to the business. Imagine visiting a doctor

for a medical check-up. What are the signs of health and wellbeing he/she would look

for? Would he/she rely on only one or a few? Similarly, business fundamentals provide

insight to the health of organisations and where vulnerabilities lie. They are early

indicators of future problems and opportunities. By training architects to understand

these, they will be in a better position to monitor the transformation of the business to

the desired future state. This will direct the selection and prioritization of projects

required. With it, projects can be better tailored to address business problems or grab

opportunities because true measures of success have been identified.

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3.0 TASK 1

Discuss the economic and social contributions of small business.

Nowadays, small business creates a lot of contributions to the economy and the

social development in a country.

The importance of small business to local communities is emotionally rooted in

buying and selling with friends and neighbours. The importance of small firms in rural

areas and big cities also is seen in the economic benefits of shopping locally. In some

towns and villages, a small business is the only type that can last while serving a

reduced population. In a big city, small businesses often offer a more diverse inventory

or specialize in providing unique or personalized customer experiences. Small

businesses also exist new employment opportunities.

First of all, small businesses contribute to local economies by bringing growth

and innovation to the community in which the business is established. Small businesses

stimulate economic growth by providing employment opportunities to people who may

not be employable by larger corporations. Small businesses are likely to attract talent

who invent new products or implement new solutions for existing ideas. Larger

businesses also often benefit from small businesses within the same local community, as

many large corporations depend on small businesses for the completion of various

business functions through outsourcing.

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 Besides, many small businesses also possess the capability to respond and adapt

quickly to changing economic climates. This is due to the fact that small businesses are

often very customer-oriented and understand the needs of the community. Many local

customers remain loyal to their favourite small businesses in the midst of an economic

crisis. This loyalty means that small businesses are often able to stay afloat during tough

times, which can further strengthen local economies. Small businesses also accumulate

less revenue than larger corporations, meaning they may have less to lose in times of

economic crisis.

Furthermore, when consumers patronize local small businesses, they are

essentially giving money back to their local community. A thriving local business will

generate high levels of revenue, which means that the business will pay higher taxes,

including local property taxes. This money is then used for local police and fire

departments as well as schools. A thriving small business also can improve property

values throughout a community, improving every homeowner's bottom line while

generating more property taxes for local governments. The small business impact on

local economy growth also takes the form of sales tax collection. Local businesses

charge sales tax based on their location and can be the backbone of special taxation

districts focused on unique projects, such as lighting and sidewalk projects to improve

historic shopping districts and attract additional customers.

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 Last but not least, small businesses do not always stay small. Large corporations,

such as Nike and Ben and Jerry’s, started off as small businesses and grew to become

major players in the national and international marketplace. Many computer-industry

leaders began as “tinkerers,” working on hand-assembled machines out of their garages.

Microsoft and Amazon are prime examples of how a small business idea can change the

world. Small businesses that grow into large businesses often remain in the community

in which the business was first established. Having a large corporation headquartered in

a community can further help provide employment and stimulate the local economy,

creating a market that favours the development of additional small businesses.

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4.0 TASK 2

Explain the benefits and drawbacks of buying a franchise.

In this era of globalisation, franchising is hugely popular in North America, and

as of 2017 there are almost 800,000 franchise institutions hiring nearly nine million

people in the U.S. When it comes to starting a business, many people choose owning a

franchise based on the belief that success is assured. In fact, interested buyers should be

fully aware of franchise pros and cons before making the decision to become a

franchisee.

First and foremost, the major benefit of buying a franchise is brand recognition.

Building a brand is no small feat and can also be quite expensive and time-consuming.

When you sign on with a franchise, the work has been done for you. Your customers

already know your name and what to expect. Owning a franchise instead of starting up a

new business saves your time and effort of building a reputation and attracting

customers.

Besides, the second benefit is corporate support. Franchisees receive support

from corporate headquarters in a number of areas including marketing, training and

even financing. Corporate headquarters of large franchises are ready with advice and

expertise for making your business the best it can be. Many companies help franchisees

by offering loans to help cover start-up expenses, and some even offer management and

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technology training for your employees. As a franchisee, you will also benefit from

well-established nationwide and local advertisement campaigns and promotions. Your

company may also already have suppliers they corporate with so that you can easily get

the supplies you require to run your business.

Furthermore, franchise business can be immensely profitable. As expected, the

most proven, popular franchises such as McDonald's and Tim Horton's tend to have

much higher franchise costs but are more probably to create high returns on investment.

This is in the light of fact that franchise business will benefit from the collective buying

power of the parent company as the franchisor can afford to buy in bulk and pass the

savings along to franchisees. Inventory and supplies will cost less than if you were

running an independent business.

Then, let us discuss about the drawbacks of buying a franchise. The main

drawback is the expensive cost of starting a franchise. Buying into well-known

franchises is very expensive. If this is your choice, you will have to have deep pockets

or the ability to arrange the necessary financing. Starting-up investments required of

franchisees can be higher than the amount that you need to start an independent

business, although it varies depending on the company. While you may have the luxury

of acting as your own boss, you are still required to pay a percentage of your sales to the

corporation. Because royalties often are given on a percentage basis, the better your

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business does the more you will hand over to the company. Additionally, some

companies require franchisees to pay marketing fees for nationwide advertising.

Next, the second drawback is that you must conform to the rules and guidelines

of the franchisor. Some franchisors exert a large amount of controls to you, as a

supposedly independent business owner, may find excruciating. Depending on the

franchise agreement, the franchisor may be able to precisely dictate terms such as

business location, hours of operation, product pricing, indoor design of shop, use of

only franchisor-supplied products and franchise resale terms. The franchisors quarrel for

this level of control is to maintain the uniformity of the product so that each franchise

location has the same look and feeling to the customer.

In addition, there are corporate problems between franchisee and franchisor.

Despite the fact that franchise owners have a customer base, brand recognition and

superior management support, there is still risk involved. Any problems the larger

company meets, whether in terms of reputation, finances or something else, become

your problems as well. Always consider the company's track record before you sign on

with them.

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5.0 TASK 3

Why is the development of safe payment systems important to the future growth of e-

commerce? What are some of the safe payment systems currently in use?

In this era of modernisation, the rapid growth of e-commerce initiatives in the

world reflects its compelling advantages, such as enhanced governmental performance,

lower cost structure, greater flexibility, broader scale and scope of services, greater

transparency, accountability, and faster transactions. However, e-commerce security

risks can be accidental, intentional or caused by a human error. The most prevalent

cyber-security threats include spoofing attacks, hacking, credit card fraud, data errors or

unprotected online services. For an e-commerce business, poor security management is

the greatest cause of risk for online retailers. Below are the reasons why development of

safe payment systems significant to the future growth of e-commerce.

In my two cents, the major reason of safe payment systems important is the

trustfulness of consumer. Trust can be a vital factor in business to consumer of e-

commerce. It gives consumers reliance to buy products or services even if an e-trader is

unknown. It boosts more use of e-commerce technologies, makes the e-transaction

process easier, enhances the level of acceptance and adoption of e-commerce, leads to

the improvement of consumer assurance, raises customer fulfilment, introduces the

concept of loyalty, sustains long-term relationships with customers and helps the

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acquiring of a competitive benefit. Future purchases can be inspired and increased

prices tolerated. It reduces customer suspicions about information privacy, and helps

customers to tolerate the irregular mistakes made by the e-trader.

Besides, the second reason is worries of consumer about security, fraud and

hacking. It is widely acknowledged by both government and industrial organizations

that, from a consumer point of view, issues of information security are a major obstacle

to the growth of e-commerce. The perception of risk regarding Internet security has also

been renowned as a concern for both experienced and inexperienced users of Internet

technologies. This happens because the online availability and accessibility of the stored

data of many corporations gives any hacker on the Internet the chance to steal data from

these corporate databases.

Furthermore, the third reason is accessibility. As the internet is fast becoming a

major source of information and services, a well-designed e-commerce website has

become essential so that citizens can access public information and improve their

participation. E-commerce websites can serve as a tool for both communication and

relations for the customers and general public. Information and data can easily be

shared with and transferred to external stakeholder. Henry (2006) states web

accessibility as getting people to use, perceive, understand, direct and interact with the

web. The International Standards Organizations (ISO) has defined accessibility as “the

usability of a product, service, environment or facility by people with the widest range

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of capabilities”. Gummerus et al. (2004) define the user interface as the channel through

which customers are in contact with the e-service provider. Park and Kim (2003) found

that the worth of the user interface affects customer satisfaction directly, since it offers

physical evidence of the service provider’s competence as well as facilitating effortless

use of the service. Because of its importance to customer satisfaction, Tan, Tung, and

Xu (2009) acknowledged fourteen main factors for developing effective B2C e-

commerce websites. Also, Cyr (2008) inspected the outcome of B2C e-commerce

website user interface design factors such as information design, direction-finding

design, and visual design on reliance and fulfilment across three developed countries;

Canada, Germany, and China. Cyr found that these user interface design variables are

key antecedents to website belief and website fulfilment across cultures.

In addition, the fourth reason is perceived quality. The perceived quality of a

service has two dimensions; the technological dimension, which refers to what is

delivered, and the functional dimension, which refers to how the service is delivered.

Speed of response, offer updates, and site effectiveness, refers to the technical quality

(Rust & Lemon, 2009). Interactive communication, personalization of the

communication and of the service, as well as new forms of customer access refers to the

functional aspect of quality. Product or service quality is defined as the customer

perception of the quality of information about the product or service that is provided by

a website (Park & Kim, 2003). According to Mcknight etal., 2002, website content

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quality has been disputed to be an antecedent of online customer trust on quality. In

addition, Park and Kim (2003) found that the information quality affects customer

satisfaction directly. Karunasena and Deng (2012) have identified the critical factors for

estimating the public value of e-Government in Sri Lanka. The study showed that the

deliveries of quality statistics and services, user-orientation of information and services,

efficiency and responsiveness of public organizations and contributions of public

organizations to the environmental sustainability are the critical factors for evaluating

the public value of e-Government in Sri Lanka.

Other than that, the fifth reason is awareness and perceived usefulness. Within

the context of the information systems domain, much research has outlined the

significance of the influence of perceived usefulness on attitude towards the use of e-

commerce. The real reason why customers would use e-commerce is that they find it a

useful facility for directing shopping online (Alghamdi, 2011). Furthermore, according

to Sathye’s (1999) research, the use of online banking services, which is a good

example of e-commerce, is new knowledge to many customers, and the lack of

consciousness of online banking is a vital factor in preventing customers from adopting

it. In his study of 500 Australian customers, he concluded that customers were not alert

of the probable benefits of online banking. This was supported by another study by

Howcroft et al., (2002) in which they found that the issue of lack of consciousness and

knowledge of online banking services leads to e-commerce adoption challenges. Suki

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and Ramayah (2010) studied user recognition of the e-Government services in

Malaysia. Their results show that the vital determinants of user acceptance of the e-

Government services are perceived usefulness, ease of use, compatibility, interpersonal

influence, exterior influence, self-efficacy, facilitating conditions, attitude, subjective

norms, perceived behavioural control, and intention to use e-Government services or

system.

In order to guarantee the safety of payment systems, the wise consumers always

look for various of safe payment systems. There are some of the safe payment systems

currently in use. The first safe payment system is Due. Due made a name for itself

through its innovative time-tracking and invoicing tools, which are especially useful for

freelancers and small business owners. More recently, Due has allowed users to start

accepting secure online payments for just a 2.7 percent transaction rate. Due also

accepts global payments, which typically occur within two business days, as well as a

digital wallet to send or receive money to anyone in the world instantly with little to no

cost. It even has an e-bank where you can store your cash online.

Apart from that, the second safe payment system is Apple Pay. If you’re a

merchant, then it’s time to consider accepting Apple Pay. Transactions are faster and

more secure, since Apple Pay uses touch ID confirmation. In other words, a customer

can use their fingerprint to pay for their take-out pizza. Apple Pay is still relatively

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young, but do not be surprised if the service will adapt to support older machines. Also,

word on the street is that Apple is working on a P2P payments system within I Message.

Next, the third safe payment system is Amazon Payments. If you want to

provide customers harmony of mind, then accept payments through Amazon. Whenever

they make a purchase on your site, they automatically go through Amazon’s checkout.

This means that they will use their Amazon credentials, which makes the checkout

process more convenient and trustworthy.

Last but not least, the fourth safe payment system is Google Wallet. Once

known as Google Checkout, Google Wallet is an online payment service that allows

users to send safe, simple, and speedy money transfers from their browser, smartphone,

or Gmail account. You can store credit cards, debit cards, loyalty cards, and even gift

cards to your account.

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6.0 TASK 4

Assume a manufacture wants to sell products directly online, in addition to selling them

through traditional retailers. What are the issues the manufacture should consider?

E-commerce is a great way to make a living, but it is not all rainbows and

sunshine. It can be hard to face the daily challenges. It takes a lot of consistent, tough

work to make it. In fact, a lot of people fail. They fail because they are not prepared to

deal with the e-commerce problems that occur along the way. They fail because they do

not have the essential strategies to get ready for challenges and avoid tragedy. There are

some issues the construction should consider before they start online selling.

First of all, cash-on delivery is slowing down business. Cash-on delivery

launched Indian ecommerce into its glorious position. Yet today it seems to be tearing

online businesses apart. Collecting cash manually is punctured with potential problems

like theft, added expenses, restricted cash flow and work postponements. Courier

services generally send payments to sellers only after two weeks. In addition to logistic

services sellers also pay for the collection and payment of the cash collected. Add

reverse logistics to the mix and you are definitely in for trouble. On the other hand,

removing COD from your payment options can rub consumers the wrong way, since

they unadorned the danger of being deceived. Online payment is catching on in many

cities but it would not cause complete cashless transactions anytime soon. People are

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still not persuaded about the safety of online transaction or the dependability of online

sellers.

Besides, customer loyalty is tough to maintain. Customer loyalty is the core of

good business. When it comes to ecommerce people like to discover. Considering the

Indian consumer, price is what makes them wander. Besides this, convenience and low

priced deals are also what seize people’s attention. If an online store is willing to

provide branded goods at a specific price, marketplace sellers may be adept of offering

the similar for an attractive discounted rate or another store may promise to do better by

throwing in something for free. And with the additional estimates of more sellers

joining this industry, competition will be solemn.

Furthermore, one of the biggest risks of a retailer’s success on a marketplace is

low profit margins. An online marketplace site has seller costs. There can be any

combination of monthly seller costs, per-item costs, shipping costs, referral costs, and

closing costs. It’s all part of the cost of doing business on an already built selling

platform. You also have to cope with stiff competition. Customers are often looking for

the lowest priced item. This forces sellers to continually lower the price of their items.

These two factors together can really cuddle a retailer’s profit by the time you lastly

make a sale.

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 In addition, the manufacture will not have chances to control brand image.

Marketplace sellers must face the reality that you don’t get to control your brand image.

There will be little opportunity for you to brand your products as your own. Unlike your

own e-commerce platforms, you don’t have a storefront to brand. If you don’t satisfy

items yourself, shipping materials cannot be branded to your distinctive company.

Instead, the marketplace’s branding is front and centre for customers. Some retailers

don’t want to take the time, effort, and resources to do their own branding. For others,

this is a missed opportunity to reinforce your brand image with your customers.

Lastly, too much competition is one of the biggest online selling problems. You

make that determination to find your special niche and the stage that is right for you.

What do you find at every turn? Loads of other sellers are already competing on those

marketplaces for the specific niches that you took an interest in. It can be very

discouraging. Although disappointing, this is all the more reasons to keep at it. You do

not want to build another hot dog stand next to the one that has been there for a few

years and do not forget that other, bigger one that is right around the corner. You want

to provide something that shoppers would not find in that neighbourhood, something

that they want and require right now.

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7.0 TASK 5

Explain the differences between click-through rates and conversion rates.

Click-through rate(CTR) is a metric, shown as a percentage, that methods how

many people clicked your advertisement to visit a website or landing page. You split the

number of advertisement impressions by the number of clicks to get the CTR. For

example, if you show an advertisement 100 times and get two clicks, you have a CTR

of 2 percent.

Otherwise, conversion rate is a metric, shown as a percentage, that displays how

many website or app visitors complete an action out of the total number of visitors. For

example, if a page is selling a product, then the conversion rate is the number of sales

per visitor. Other likely actions include subscribing to a newsletter or calling a phone

number. Divide the number of visitors by the number of sales to get the conversion rate.

For example, if you make one sale for every 100 visitors to your website, you have a

conversion rate of 1 percent.

If click-through-rate is low, you can either show an advertisement to audiences

that are not very relevant and need to make adjustments to your target or your need to

improve your advertisement copy. Targeting adjustments can include any number of

things such as adjusting devices, time of day, demographics, adding negatives, or by

revisiting audiences who you are targeting.

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 If conversion rate is low, it means that people have been interested enough to

click through to your site but are not forced to adapt. This can mean a lot of things. It

could be that the advertisement did not set up the landing page well and that the

advertisement oversold your product or service. Other than that, it could mean that your

landing page is not well adjusted or your site is hard to pilot. Or it could be a defect

with the price or product. If your conversion rate is low, you probably need to focus on

your website experience as well as your audience to ensure you are driving the right,

qualified people to the website.

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8.0 CONCLUSION

Having a true desire for the business you are handling is very significant for

your achievement. But desire alone is not enough. You also need core business abilities

to properly run your organization and survive in the long run. You must comprehend

business planning, strategy, finance, and marketing. If you plan to employ people to

help run things, you need communication abilities, leadership abilities and an

understanding of how to inspire and reward employees. You need a perfect strategic

vision for the company and a skill to make informed management decisions based on

research and analysis of the market, the competition and any other inner or exterior

forces that can affect your business. As a conclusion, initiating and running a business

takes a great deal of business knowledge and experience.

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9.0 REFERENCE

1. https://iasaglobal.org/itabok/capability-descriptions/business-fundamentals/

2. https://smallbusiness.chron.com/important-small-businesses-local-

economies-5251.html

3. https://www.thebalancesmb.com/should-you-buy-a-franchise-2948127

4. https://smallbusiness.chron.com/advantages-disadvantages-owning-

franchise-3886.html

5. https://researchleap.com/factors-influencing-e-commerce-development-

implications-for-the-developing-countries/

6. https://www.entrepreneur.com/article/286006

7. http://connorgillivan.com/7-ecommerce-problems-youll-face-selling-online/

8. https://browntape.com/top-5-issues-with-online-selling/

9. https://www.nchannel.com/blog/risks-of-selling-on-online-marketplace-

sites/

10. https://www.quora.com/What-is-the-difference-between-a-click-through-

rate-and-a-conversion-rate

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11. https://www.techwalla.com/articles/ctr-vs-conversion-rates

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