Important concepts in Business Mangement

A business can be defined

 As an organisation or economic system where goods and services are
exchanged for another or for money

 An organisation that produces and sells goods and provides a service

 A business can be either privately owned not-for-profit or state owned it

can be formal or informal

The difference between a formal and informal business

Formal
 Registered with the relevant
authorities and pay tax on their
earnings
 Their activities are included in
the Gross Domestic Product
(GDP) of a country
Example: Capitec Bank
Informal
 Are not registered and
therefore do not need to pay
tax although by law they
should be reporting their
earnings
 Their activities are not
monitored and reported and
can not be included in the
country’s Gross Domestic
Product (GDP)
Example: Freelance plumbers\

The different types of organisations

For-Profit: Business has a profit motive as their primary goal to covert factors
of production of products and services to satisfy market needs and to
distribute profits to shareholders when appropriate

Private Organisations : Are a type of fro-profit business that are owned by

private individuals rather than the government

State-owned enterprises: Have varying levels of government control and

intervention through government ownership example: Airport Company South
Africa

Parastatals: Businesses owned in collaboration between private business

and government

Non-profit: offer products and services to meet market needs profit is not the
main purpose of a non-profit organisation the primary motive is the
organisation offers products and services that are philanthropic or community
centered
4 Elements of a business

Elements of business Description Examples

Human and human People that are involved Hair stylist employs one
activities in a business and the receptionist
human effort involved in
producing goods and
services
Goods and services: Equipment that is used Furniture company may
processes that convert un the process of use wood, glue, plastics
resources into goods an conversion and machinery in a
services defined process to
create furniture
Profit/surplus Applies to both for-profit A for-profit business
and non-profit makes 30% on each
businesses item that it sells
Has to make a profit
( a Surplus ) of income
over expenditure to stay
in business
Exchange The products or A customer receives a
services that businesses food order pays cash in
produce are given to exchange for the food
customers in exchange and delivery thereof
for something generally
in exchange for money

What is business management ?

 A field of therefore focuses on organisations in the economy that use
limited resources to meet the needs of society .It enables us to be
better understand the structure and internal functioning of a business
and the way in which it is affected by its environment

What is an entrepreneurship?
 Taking on the risk of creating and growing a new business with the
intention of realising a return
 Entrepreneurship and successful businesses drive economic growth
and prosperity and also reduces unemployment
Factors of Production
 Businesses exsist to satisfy humankinds wide and almost unlimited range
of needs they do this by taking scarce resources or factors of production
and converting them into products and services to the market
 Businesses uses four factors of production Natural resources ,Human
resources ,Capital and Entrepreneurship

Natural Resources  These resources are those

resources that are provided by
nature such as land ,water air
minerals and wood
Human Resources  Referred as labour human
resources represent the human
effort involved in production of
goods and services
Capital  The buildings and equipment
used in the production of goods
and services these resources
have a long working life and can
used repeatedly over many
years
Entrepreneurship  Factor that brings the other
three factors
together .Entrepreneurs accept
the risk of loss in starting and
managing a business and enjoy
profit as a reward if the
business is successful

Business managers are responsible for making sure the factors of productions
are converted in the most effective and efficient way to best serves the market
while meeting the vision and mission of the busin