LEC MT 02:

INTRO TO BUSINESS
MANAGEMENT
 BUSINESS CLASSIFICATION
• Business classification can be done
on the basis of theory and practice.

• Theoretically, a business can be

classified into the functional areas
of production, accounting/finance,
management, and marketing.
 OBJECTIVES OF BUSINESS MANAGEMENT
Any business firm must have basic objectives
which it hopes to achieve. Generally, business firms
have the following objectives.
a. To produce goods or services efficiently and
effectively to suit the needs and demands of end
users.
b. To generate enough revenue and to make profit.
c. To protect the well-being of employees.
d. To exercise good community relations.
e. To engage in certain social responsibilities such as
the provision of access roads, drinking water, and
scholarship awards to deserving students within
the country, host community or children of
employees.
 THEORETICAL CLASSIFICATION OF BUSINESS
1. PRODUCTION
• Every business must produce one form of product or the other. Some firms produce tangible products while
others produce services. Goods or services must be produced before consumers‘ needs can be satisfied.
Production is basically the process by which raw materials (inputs) are converted into finished goods
(outputs). This definition applies equally to human services which are rendered directly. These four major
steps are necessary for an effective production process (Vadim, Valery, Ivan, & Dmitry, 2015; Braungart,
McDonough & Bollinger, 2007; Williamson, 1981) namely;

i. set input and output standards;

ii. compare actual performance with standard performance;
iii. take corrective action where performance is unsatisfactory; and
iv. measure productivity by comparing output with input.
 THEORETICAL CLASSIFICATION OF BUSINESS
2. ACCOUNTING/FINANCE
• Simply described, according is the recording of business transactions in such a
manner that the records will show at any point in time the true affairs of the
business. A large firm with high sales turnover may not know whether or not
it is making profits or losses unless its accounts books are systematically kept
to show the financial implications of the business.
• A successful business firm is judged by its ability to meet its financial
obligations as well as declare profits at the end of the financial year. While a
firm may not be required to balance its expenditures with its revenues in the
short run, on the long run, it will be required to do so.
 THEORETICAL CLASSIFICATION OF BUSINESS
2. ACCOUNTING/FINANCE
• Accounting procedure deals mainly with the recording of business
transactions while the financial management component deals with the
forecast for the future. The financial directors must ensure that enough funds
are set aside to provide the following:

i. Maintain an adequate reserve to meet contingencies.

ii. Replace capital assets, such as machinery, when necessary.
iii. Cover fixed interest payments on loans and overdrafts.
iv. Permit the distribution of appropriate dividends to shareholders.
 THEORETICAL CLASSIFICATION OF BUSINESS
3. MANAGEMENT

• All business firms should have a crop of experienced and seasoned managers if they are to
succeed. Management is, in fact, a general term that should apply to those who have
subordinates under them.

• By definition, management is the process of getting jobs done through people. A manager
is, therefore one who plans, organizes, directs, and controls to ensure that set goals are
achieved at a minimum cost to the organization.
 THEORETICAL CLASSIFICATION OF BUSINESS
4. MARKETING
• It is important that we emphasize the fact that marketing is not selling. Just as management is a
component of Business Administration so also is selling a component of marketing. Most people
coming in contact with the discipline of marketing for the first time have the pre-conceived
knowledge of marketing and selling being the same thing.
i. Identifying opportunities in the market and producing sales forecasts.
ii. Initiating and coordinating new product innovation and development.
iii. Planning and developing a profitable product range
iv. Maintaining the personal selling effort at a high level of performance and cost efficiency.
v. Ensuring that the physical distribution of goods meets the needs of company strategy.
vi. Developing and implementing advertising and sales promotion plans.
vii. Providing the planned level of customer and technical service
viii. Monitoring product pricing and initiating desirable changes.
 THEORETICAL CLASSIFICATION OF BUSINESS
4. MARKETING
• 4 PS OF MARKETING
- Product
- Price
- Place
- Promotion
Research Presentation End