1.1 introduction to business management
TRANSCRIPT
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1.1 Introduction to Business Management
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Role of Business
Input Process Output
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Business
Businesses exist to satisfy the needs and wants of people, organizations and governments
Market Customers
Market place
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Adding Value
Adding value is increasing price of the products by improving packaging or adding features
It leads to profit making by allowing a business to sell its products for more than its production costs
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Opportunity Cost
This next best alternative foregone while making a choice is known as Opportunity Cost
Because of the fact that choice involves opportunity cost, the factors of production have to be used in the most efficient way and therefore SPECIALIZATION
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Division of labor
The separation of a work process into a number of tasks, with each task performed by a separate person or group of persons.
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Business Functions
Human Resources (Personnel)
Marketing Finance Production
(Operations)
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Human Resources
Manpower Planning Job analysis and Job
description Determining wages and
salaries Recruitment and Selection
Training and Development Employee welfare and
motivation Labour management
relations Performance Appraisal
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Marketing
Conducting Market Research
Price Planning Customer Relationship
Management Identifying New Business
Opportunities
Product Planning Distribution Planning Consumer Analysis
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Finance
Advice on the financial and tax implications of business decisions
Management of wages Raising Finance Preparation and monitoring of annual budgets and
forecasts
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Production
Production and planning Purchasing department Stores department Manufacture of products Design and technical support department
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Business sectors
Primary Tertiary
Secondary Quaternary
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Primary sector
Larger sector in underdeveloped & developing countries
Less capital investment Less use of machinery Agriculture constitutes the major part
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Secondary sector
Takes the output of the primary sector and manufactures finished goods
Important sector to promote economic growth and development
Important source of income in developing countries
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Tertiary sector
Significant contribution to GDP in developed countries
Provides key inputs to most other business Transformation of goods through providing
services
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Quaternary Sector
The portion of an economy that is based on knowledge applicable to some business activity that usually involves the provision of services
Examples: Consultancy (offering advice to businesses) and R&D (research, particularly in scientific fields)
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Sectoral change
Refers to a shift in the GDP contribution from primary sector to secondary and tertiary sector
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Reasons for sectoral change
Cultural Changes Development of Markets Market orientation Rampant migration Focus on customer relationship management
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Benefits of sectoral change
Creation of more jobs Gradual movement towards Tertiary sector High capital investment towards Government Increase in country’s GDP Decrease in imports & increase in exports
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Role of Entrepreneurship
Bringing together the factors of production Contributes towards growth of
economy Reduces unemployment
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Intrapreneurship
Giving opportunity to a person within a large corporation to take direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation
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Start-up cost of business
Premises Buildings Capital equipment Marketing costs Legal and professional fees
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Factors to consider when setting up business:
Business idea Finance Human resources Entrepreneurial skills Fixed assets Suppliers Customers Marketing Legalities
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Reasons for starting business
Growth Earnings Autonomy Security Hobbies
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Challenges of start-up business
Obtaining Finance Market potential Cash flow problems Customer Loyalty towards other brands Regulations Finding the right staff Uncertainty
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Elements of Business Plan