MNB1501-Business Management 1 STUDY SUMMARY NOTES FOR 2022.

MNB1501-Business Management 1 STUDY SUMMARY NOTES FOR 2022. Contents 1. Business world & business management ............................................................................................... 3 1.1. Key concepts .................................................................................................................................... 3 1.2. Role of business in society ............................................................................................................... 3 1.3. Needs & need satisfaction ............................................................................................................... 4 1.4. Main economic systems .................................................................................................................. 5 1.5. Need-satisfying institutions of market economy............................................................................. 7 1.6. Nature of business management & classification ........................................................................... 7 2. Entrepreneurship .................................................................................................................................... 9 2.1. Key concepts .................................................................................................................................... 9 2.2. Entrepreneurs & entrepreneurship ................................................................................................. 9 2.3. Role of entrepreneurs & small-business owners in society............................................................. 9 2.4. Entrepreneurial process................................................................................................................. 10 3. Establishing a business .......................................................................................................................... 14 3.1. Key concepts .................................................................................................................................. 14 3.2. Importance of geographical location ............................................................................................. 14 3.3. Legal forms of ownership .............................................................................................................. 14 3.4. Business plan ................................................................................................................................. 17 4. Business environment........................................................................................................................... 19 4.1. Key concepts .................................................................................................................................. 19 4.2. The organisation & environmental change ................................................................................... 19 lOMoARcPSD| 5.4.2. SA Initiatives & imperatives .................................................................................................... 27 5.5. Business case for CSR ..................................................................................................................... 27 5.6. Corporate governance ................................................................................................................... 28 5.7. Stakeholder & stakeholder engagement ....................................................................................... 29 5.8. Sustainable development .............................................................................................................. 29 5.9. Link between CSR & various business functions............................................................................ 29 6. Planning ................................................................................................................................................ 30 6.1. Key concepts .................................................................................................................................. 30 6.2. Why planning is needed? ............................................................................................................... 30 6.3. Managerial goals and plans ........................................................................................................... 31 6.4. The planning process ..................................................................................................................... 32 6.5. Setting organisational goals and developing plans........................................................................ 33 7. Organising ............................................................................................................................................. 37 7.1. Key concepts .................................................................................................................................. 37 7.2. Introduction to organisation .......................................................................................................... 37 7.3. Importance of organising ............................................................................................................... 37 7.4. Fundamentals of organising .......................................................................................................... 37 7.4.1. Specialisation .......................................................................................................................... 37 7.4.2. Departmentalisation ............................................................................................................... 38 7.4.3. Reporting relationships ........................................................................................................... 39 7.4.4. Responsibility & authority ....................................................................................................... 39 7.4.5. Co-ordination .......................................................................................................................... 40 7.5. Factors influencing organising & organisational design ................................................................ 40 lOMoARcPSD| 8.4.2. Behavioural theory .................................................................................................................. 42 8.4.3. Contingency (situational) theory ............................................................................................ 43 8.5. Motivation ..................................................................................................................................... 44 8.5.1. Basic model of motivation ...................................................................................................... 44 8.5.2. Maslow’s hierarchy of needs .................................................................................................. 44 8.5.3. Alderfer’s ERG theory .............................................................................................................. 45 8.5.4. Hertzberg’s 2 factor theory & job enrichment ....................................................................... 45 8.5.5. McClelland’s theory of needs.................................................................................................. 45 8.6. Groups and teams .......................................................................................................................... 46 8.7. Communication .............................................................................................................................. 47 9. Controlling the management process .................................................................................................. 49 9.1. Key concepts .................................................................................................................................. 49 9.2. Introduction to control .................................................................................................................. 49 9.3. Purpose of control ......................................................................................................................... 49 9.4. Control process .............................................................................................................................. 49 9.5. Types of control ............................................................................................................................. 50 9.5.1. Physical resources ................................................................................................................... 51 9.5.2. Financial resources .................................................................................................................. 51 9.5.3. Information resources ............................................................................................................. 52 9.5.4. Human resources .................................................................................................................... 52 9.6. Characteristics of an effective control system............................................................................... 52 lOMoARcPSD| Exchange – products & services for money or other goods/services o Profit – reward for meeting people’s needs • Countries have different economies o Market economy – business can decide what to produce, how to produce & selling price. Business’ primary purpose:  Make profit while satisfying needs of the people. • Industry – group of businesses performing similar activities, e.g. mining, financial services, construction etc. • Business creates wealth & is catalyst for economic growth • Business serves community indirectly o Technological innovation, research & development, improvements to infrastructure. o Support education o Develop human resources, arts, conservation & sport • Interdependency between business and society o Business: influence on physical environment, consumers, economy and competitors o Society: regulations, legislation, exercise choice to support business (or not), pressure on business:  Social responsibility • Responsible & safe workplace • Housing • Health • Involvement – community issues • Environmental awareness • Empowerment of previously disadvantaged individuals  Business ethics • Ethical behaviour of managers & executives  Consumerism • Social force protecting consumers against unsafe products & malpractice – exert moral & economic pressure on business • Consumer Protection Act 13Nd&dtiftilOMoARcPSD|  Supply cannot be increased - scarce o Human resources  Production factor of labour e.g. physical & mental talents and skills of people employed  Size of labour force: size of population, level of education & training, retirement age. o Capital  Buildings, machinery etc. used to produce products, e.g. factories, equipment, roads and other infrastructure.  Generally long working life & high price. o Entrepreneurship  Collective capacity of entrepreneurs – risk taking to develop goods & services  Scarce – not everyone prepared to take risks and to identify opportunities.