The Dynamics of

Business
 Learning Objectives
1-1 Define basic concepts such as business, product, and profit.
1-2 Identify the main participants and activities of business and
explain why studying business is important.
.
Basic concepts of vision, mission and
goals.

An enterprise’s vision provides a perspective

(view) on where the company is headed and
what the organisation can become.
• It clarifies the company’s strategic (long term)
intent. - VMGO
• Strategic intent is the leveraging (use to
maximum advantage) of a firm’s resources,
capabilities and core competencies* to
accomplish the firm’s goals in the competitive
environment.
• *Core competencies are the resources and
capabilities that serve as a source of
competitive advantage for a firm over its rivals
(competitors).
• Enterprise’s mission is the basic purpose for
which or the reason why an organization
exists.
• It provides answers to the following
questions:
• What types of products or services that
produces?
• Who its customers tend to be?
• What important values that it holds?
Expressed in writing (mission statement) so that all
members will have easy access to it and
understand what the organization is trying to
accomplish
• Enterprise’s goals (1-5 years) are the objectives
that a business hopes and plans to achieve.
Goals are evolve from the mission and vision of
the organization. E.g. Achieve RM 1 mil sales in
2020.
 The Nature of Business 1
1. Businesses try to earn profits by providing products
that satisfy people’s needs

2. Business refers to the individuals and organizations

seeking a profit by providing products that satisfy
people’s needs.

3. Products refer to goods or services with tangible

(touchable) and intangible (untouchable) attributes
(characteristics/features) that provide satisfaction and
benefits.
 3. Products include:
• Tangible goods
Automobile, smartphone, pair of jeans
• Service
Dry cleaning, doctor’s visit, movie
• Idea
Accountants and attorneys
provide ideas for solving problems
 The Nature of Business 2
4. The Goal of a Business: to earn a
profit (the difference between what it
costs to make and sell a product and
what a customer pays for it).

5. Nonprofit organizations do not have

the fundamental purpose of earning
profits, although they may provide
goods or services.
Organisation is

Achieve
common
purpose
Work
together

A group of people
 Make
Business/
money or
Profit
2 types of Earn
organisation
organisations
profit

provide
goods &
services
Help Others
/make Society
Better NOT
for profit Non-Profit
Organisation
Examples of business ($$$)
 Example of non-profit
organisations
Salvation Army

The Society for

the Prevention
of Cruelty to Buddhist Tzu The Malaysian
Animals Chi Foundation Anti-Corruption
Commission
World Wildlife
Fund
Employee
Provident Fund
 The Nature of Business 2
Nonprofit organizations
• Do not share the purpose of earning profits
• May provide goods or services
• Engage in fund-raising
• Engage in management, marketing, and
finance to reach goals
 The Nature of Business 4
4. Why Study Business?
• Help you develop skills and
acquire knowledge to prepare
for your future career
• Help you understand activities
needed to provide goods and
services
• Help you become a
well-informed consumer and
member
of society
1. Earning a profit requires:
• Management involves the
functions of planning, organizing,
leading, and controlling
• Marketing expertise to learn what products consumers
need and want and to develop, manufacture, price,
promote, and distribute those products.
• Financial resources and skills to fund, maintain, and
expand its operations. Refers to all activities concerned
with obtaining money and using it effectively
• The ability to face challenges such as
abiding by laws and government regulations.
• Acting in an ethical and socially responsible
manner.
• Adapting to economic, technological,
political, and social changes.
2. To earn a profit, businesses need to produce quality
products, operate efficiently, and be socially responsible
and ethical in dealing with stakeholders.

3. Stakeholders: Groups (customers, employees, investors,

government regulators, and the community) that have a
stake(involvement/ personal interest) in the success and
outcomes of a business.
Stakeholders

Environmentalists
Customers
Media Elected
officials

Employees
Community
members

Stockholders
Dealers Suppliers
Figure 1.1 Overview of the Business World
 The most significant macro-environmental factor
that impacts businesses?
• Technology :
Changes in technology can alter (change) an
industry or completely destroy it, to be displaced
by a new market. Technology can impact
everything from a product design to manufacturing
and distribution to marketing.
Consider the use of mobile apps, websites, social
media, and data
mining in the
promotion and
selling of goods
and services.
Politics/Legal Issues:
Politics determine 1) which businesses are allowed
to operate and the regulations under which they
operate.
For example, in the tobacco industry, laws were
passed which impacted the marketing of tobacco
products. And pharmaceutical companies are now
legally able to advertise prescription drugs.
Sociocultural:
Sociocultural factors are a blending of a society’s
customs, ethics, morals, and lifestyles, which
impact the way individuals choose to live their
lives.
Consider how social trends such as “going green,”
“internet privacy,” and “cell phone addiction,” have
impacted the business world.
Economic:
During a bull market (good), the economy is
expanding; businesses are investing in R&D and
taking risks by expanding into new industries.
Contrarily, during a bear market (bad), companies
become miserly (tight) with their earnings and
utilize cost-cutting strategies
to maximize the gain
from every dollar spent.