Upload
thich-choi-dai
View
245
Download
0
Embed Size (px)
Citation preview
7/29/2019 1- Introduction to business.pdf
1/12
20.9.2011
1
Defining BusinessWhat does business mean?
Any activity that provides goods or servicesto consumers for the purpose of making profit.
any activity that seeks to provide goodsand services to others while operating at a
profit.
Key Terms in Business Definition
Seeking profit Activity
Goods and Services
Consumers
7/29/2019 1- Introduction to business.pdf
2/12
20.9.2011
2
Goods and Services GOODS refer to all tangible products.
SERVICES refer to intangible products. (i.e., productsthat cant be held in your hand)
Classify the following types of businesses into goods andservices
Car repair shops Hospitals and medical clinics
Travel agencies shoes
Grocery shops Schools and universitiesHotels and restaurants Sport and fitness clubs
Banks Car manufacturing
Car agencies Dairy products (Milk, butter..etc)
Computer manufacturing Department stores (Prisma, CM, Lidl)
Facts about goods and services
Since The industrial revolution in late 18th centuryand early 19th century, businesses continued to shiftfrom manufacturing to service provision.
Nearly two third of business ideas nowadays areservice based.
Information technology is one contributor to thisgreat shift.
Wealth and prosperity is another reason. (speciallyin Developed countries)
7/29/2019 1- Introduction to business.pdf
3/12
20.9.2011
3
Goods vs. Services Goods production contribution to Finland GDP
is 38.1%
Services contribution is 61.9%
Consumers
They are the key factor for any business to exist andsucceed.
They are the buyers of the goods and services
provided.
A business must satisfy and fulfill a specificconsumer need.
Key issue in Marketing!
7/29/2019 1- Introduction to business.pdf
4/12
20.9.2011
4
Profit You earn aPROFIT when you sell goods or services for
more than it costs. PROFIT = Sales revenues Expenses (costs) REVENUE: is the total amount of money a business takes
in during a given period by selling goods and services (UnitPrice * units sold)
EXPENSES: are all costs paid to produce/ provide goods orservices. (cost of raw material, rents, salaries, wages, etc)
What if Expenses are higher than Revenues? LOSSES!
Business is Risky There is always some level of uncertainty.
Exercise
A business bought 10 thousand units of productX from the factory at 3/ unit.
Paid rent for the shop: 2000
Paid salary for the salesman: 1500 Paid electricity: 500
sold 10 thousand units of product X at 5/ unit
Define the businesss revenues and expenses
Did it make profit?
7/29/2019 1- Introduction to business.pdf
5/12
20.9.2011
5
Activities Business activities may be classified into the
following: Primary activities:
extraction of raw materials from the earth mining, fishing,agriculture, forestry.
Secondary activities: Processing of raw materials into finished or semi-finished
products manufacturing.
Services
leisure, tourism, transportation, banking, finance, distribution,retailing, wholesaling, communications, etc.
Can a single business have multiple activities?
Business Objectives
What ever the activity or industry in which thebusiness is operating, businesses have a group ofcommon objectives. Profitability
Survival
Reputation
Quality
Efficiency
Growth* Surely more objectives exist depending on the business specific
industry, environment, and stage.
7/29/2019 1- Introduction to business.pdf
6/12
20.9.2011
6
Factors of Production Goods and services are the result of a transformation
done by the different factors of production within thebusiness.
Main Factors of production are: Land: refers to the location of the business. Also refers to
the natural resources, and raw material land provides.
Capital: refers to buildings, money, equipments, tools... Etcused in the transformation process.
Labor: the working force that use raw material, andequipments to produce goods and services.
Enterprise: refers to entrepreneurs who combine andorganize the production factors of land, labor and capital tomake goods and services.
The business process (cont.)
Land
Labor Capital
Entrepreneurship
Business
(Transformation)
Outputs
Goods Services
7/29/2019 1- Introduction to business.pdf
7/12
7/29/2019 1- Introduction to business.pdf
8/12
20.9.2011
8
Business Stakeholders Business stakeholders refer to all the people/ parties who
have close relationship with the business, which may leadto either achieve gains or losses by the activities of thebusiness.
How all these parties can affect and are interested in yourbusiness??
ConsumersEmployeesSuppliersDealers
Investors
Banks/ other financial institutionsCommunity interest groups (e.g.
environmentalists)Government ( e.g. taxation)
ExerciseFactors of Production & Stakeholders
Group of 3-4 students.
Define the key factors of production of OurSchool.
Think of the schools stakeholders
7/29/2019 1- Introduction to business.pdf
9/12
20.9.2011
9
The business Environment
Any business (Organization) operates within two layers ofenvironment. Internal environment
External environment
Internal environment consists of the factors of production
used by the business.
External environment refers to all outside institutions andforces.
Business External Environment
The external environment plays a great role indetermining the success or failure of any businessorganization.
It is therefore that managers must, not only managethe internal environment through the differentmanagement functions , but have a complete andaccurate understanding of the external environmentin order to operate and compete within.
7/29/2019 1- Introduction to business.pdf
10/12
20.9.2011
10
Business External Environment
Business
Political andLegal
Economic
Technological
and Ecological
Socio-cultural
Competitive
Global
Political, Economic & LegalEnvironment
Freedom versus restriction of ownership. Political system (democracy vs. autocracy!) Economic system (free market/ Centrally planned)
Investments regulations (encouraging/ discouraging) Economic condition (e.g. interest rate/ currency
stability/ inflation/ unemployment)
Corruption. Bureaucracy.Taxation.
Business law enforcement (e.g. contractualregulations)
7/29/2019 1- Introduction to business.pdf
11/12
20.9.2011
11
Technological and Ecological
EnvironmentTechnology plays an important role in the development
of business. (e.g. new technology to improveproduction efficiency, improve communication withcustomers), innovation for creating new concepts.
Also technological developments can generate newbusiness ideas, new opportunities. (e.g. internet and E-commerce)
Ecological status, natural resources and depletionresources.
Competitive Environment
A business operating in any given industry issurrounded with many other similar businesses. Allcompeting for extra market share, and increasingsales revenues.
Every unit sold by a competitor is a minus oneunit of your sales.
It is no longer enough providing a high qualityproduct, but extend it to high quality service tocreate customer loyalty.
7/29/2019 1- Introduction to business.pdf
12/12
20.9.2011
12
Social Environment Social environment refers to the customs, values, and
other cultural issues in the community.
Also the demographic characteristics of the society inwhich the business is operating. The demographicdistribution of population. Immigration, agingpopulation.
Cultural issues such as time awareness, and familyrelationship.
Religions, Beliefs and values of the community.
Global Environment
Free trade agreements, and increasing internationalcompetition. (opportunity or threat)
Wars and other crises with global scale
Outsourcing and business expansion across the border. Environmental matters that affect business globally.