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IntroductionBusiness Management
The Role of Business
0Needs vs. Wants0Businesses aim to meet the needs and wants by:
0 Producing crops or extracting raw materials 0 Creating a product0 Providing a service
Inputs Outputs
Business Activity
human
physical
financial
enterprise
production
goods
services
Inputs Processes to add value Outputs
Business Functions
Human Resources Marketing
Finance and accounts Operations management / production
Sectors of Business Activity
Services
Goods
Quaternary
Tertiary
Secondary
Primary
• Services focused on knowledge• IT, web-based, media
• All services, sometimes manufactured products
• Finance, leisure, education etc.
• Manufacturing
• Raw materials• Extraction, mining, farming, fishing,
etc.
Chain of Production
0Read the definition of production chain on p. 60Think what primary, secondary, tertiary, quaternary
business are involved in0 Production0 Distribution0 Marketing
Sectoral Change
0The size of each sector of the economy may change0 individual, bussinesses and countries develop
0Social technologies means the social context where the business functions0 Skill level of workforce and “sophistication” of
consumers’ needs0Development of economy (moving from primary
towards quaternary sector) develops social technologies and viceversa.
Entrepreneurship & Intrapreneurship
0 Entrepreneur0 An individual who demonstrates enterprise and initiative in order to
make profit0 Intrapreneur
0 An individual employed by a large organization who demonstrates entrepreneurial thinking in the development of new products and services
0 They are both types of people who want to create a new start-up, either for a product or a whole new business
0 Innovation0 Market reading0 Need seeking0 Technology driving
Reasons to starting up a business
Interest
Independence
NecessityChallenge
Rewards
Finding a gap Sharing and idea
The process of starting up a business
1.Organizing the basics
2.Market
Research
3.Planning the
business
4.LegalIssues
5.Raising finance
6.Testing the
market
1.
1. Organizing the basics0 Where is the business going to be based?0 Name?0 What will be the legal structure?0 What will be the operational structure?0 Is there sufficient infrastucture?
0Suppliers?0Potential customers?0Government services?
1. 2.
2. Refining the business idea through market research0 The entrepreneur should do market research to
determine how the business will distinguish itself0What is the precise market segment you will target
0 How will the research be made?0 Who will be the target market?0 Can the business concept be tested?0 What will be the unique selling proposition?0 How will business communicate with market?
1. 2. 3.
3. Planning the business0 Once the concept has been narrowed a business plan
should be written0 The business plan will serve multiple stakeholders,
especially potential investors
Business Plan: A document that addresses all the
issues that need be planned before
operations may begin
1. 2. 3. 4.
4. Establishing Legal Requirements0Labour Practices0Operational Practices0Tax obligations0Licences / inspections
1. 2. 3. 4. 5.
5. Raising the finance0Convincing investors/lenders with your business plan0Who will do the accounts? Who will (external actor) make
sure they are accurate?0 Investors vs. Loan
1. 2. 3. 4. 5. 6.
6. Testing the market & Launch0Should the business start on a small scale (a pilot) to test
the consumer reaction?0What will be the pilot success criteria?0How is the business idea received by customers?
Problems new businesses face
0Organization0 Location is appropriate0 The name does not register0 Supplies are unreliable
0Market Research0 Poor research0 Wrong target market0 Weak communication channels
Problems new businesses face
0 Business Plan 0 The plan was not convincing0 Goals were to vague or contradictory
0 Legal Requirements0 Labour laws were not addressed0 Tax obligation were overlooked
0 Finance0 Raising start up capital was too difficult0 Accounts were not kept properly
0 Market0 Launch failed0 Pilot was inconclusive0 The product failed to inspire
Elements of a Business Plan
Set out the idea in the
right context
How the business will be
organized
How the business will be staffed
How the business will be
financed
How best to market
the product
How the product will be made
Elements of a Business Plan
0Starting the business – the idea0 Core idea, objectives, unique selling point etc.
0Business organization0 Location, structure, type of business, decision making,
profit sharing0HR
0 Responsibilities, rewards, what will be the HR plan, contract type
Elements of a Business Plan
0Finance0 Start-up capital where and how and at what cost,
budgets, income statements, cash-flow forecasts0Marketing
0 What market research was done, sales forecast, market segment, promotional mix
0Operations0 How is production organized, how many units will be
produced, how long will production take, potential lead time, supply chain