1.1 introduction
18 września 2022 19:34
A BUSINESS - any organisation that uses resources to meet the needs of customers by providing a product or
service that they demand
BUSINESS OUTPUTS:
- consumer goods - the physical and tangible goods sold to the general public. They include cars and washing
machines, which are referred to as durable consumer goods. Nondurable consumer goods include food, drinks
and sweets that can only be used once
- consumer services - nontangible products that are sold to the general public and include hotel
accommodation, insurance services and train journeys
- capital goods - physical goods that are used by industry to aid in the production of other goods and services
such as machines and commercial vehicles
BUSINESS INPUTS:
- physical – this general term not only includes land itself but all of the renewable and non-renewable resources
of nature such as coal, crude oil and timber
- human – manual and skilled labour make up the workforce of the business. Some frms are labour-intensive,
that is they have a high proportion of labour inputs to other factors of production, e.g. house-cleaning
services
- financial – this consists of the fnance needed to set up a business and pay for its continuing operations as well
as all of the man-made resources used in production. These include capital goods such as computers,
machines, factories, ofces and vehicles. Some frms are capital-intensive, that is they have a high proportion of
capital to other factors of production, e.g. power stations
- enterprise – this is the driving force of business, provided by risk-taking individuals, which combines the other
factors of production into a unit that is capable of producing goods and services. It provides a managing,
decision-making and coordinating role. Without this essential input, even very high-quality land, labour and
capital inputs will fail to provide the goods and services that customers need
WHAT A BUSINESS NEEDS:
- customers
- suppliers
- land
○ raw materials
○ site for buildings
- labour
○ skilled
○ unskilled
○ temporary
○ permanent
- enterprise
○ risk-takers
○ decision-makers
○ coordinators
- capital
○ finance
○ factories/offices
○ machines
- government
○ schools/colleges
○ roads/rail/airports
○ law and order
BUSINESS FUNCTIONS:
- human resource management - indentify the workforce, recruit, select, train the employees and also provide
motivation they are all
- finance and accounts - monitor the flow of finance, provide financial information connected and work
- marketing - do research and analyse results, discuss them with other departments and (possibly) make a new closely together
product
- operations management - ensure that necessary resources are available for production
ECONOMIC SECTORS:
- primary sector business activity - firms engaged in farming, fishing, oil extraction and all other industries that
extract natural resources so that they can be used and processed by other firms
- secondary sector business activity - firms that manufacture and process products from natural resources,
including computers, brewing, baking, clothing and construction
- tertiary sector business activity - firms that provide services to consumers and other businesses, such as
retailing, transport, insurance, banking, hotels, tourism and telecommunications connected, sometimes
- quaternary sector business activity - is focused on information technology (IT) businesses and information there's no distinction
service providers such as research and development, business consulting and information gathering
THE RELATIVE IMPORTANCE OF THE SECONDARY SECTOR IN DEVELOPING COUNTRIES IS INCREASING:
- benefits
total national output (gross domestic product) increases and this raises average standards of living
business management Strona 1
, ○ total national output (gross domestic product) increases and this raises average standards of living
○ increasing output of goods can result in lower imports and higher exports of such products
○ expanding manufacturing businesses will result in more jobs being created industrialisation - describes the growing
○ expanding and proftable frms will pay more tax to the government importance of the secondary sector
○ value is added to the country’s output of raw materials rather than simply exporting these as basic,
unprocessed products
- problems
○ The chance of work in manufacturing can encourage a huge movement of people from the countryside
to the towns, which leads to housing and social problems. It may also result in depopulation of rural
areas and problems for farmers in recruiting enough workers
○ the expansion of manufacturing industries may make it difcult for a business to recruit and retain
sufcient staf
○ imports of raw materials and components are often needed, which can increase the country’s import
costs. Business import costs will vary with changes in the exchange rate
○ pollution from factories will add to the country’s environmental problems
○ much of the growth of manufacturing industry is due to the expansion of multinational companies
THE RELATIVE IMPORTANCE OF THE SECONDARY SECTOR IN DEVELOPED COUNTRIES IS DECREASING
STARTING A BUSINESS:
- losing a job
- desire for independence
- business opportunity
- a wish to make more money
INTRAPRENEUR (someone within a large corporation who takes direct
ENTREPRENEUR (someone who takes the financial risk responsibility for turning an idea into a profitable finished product through
of starting and managing a new venture): using entrepreneurial talents such as risk-taking and innovation):
- had an idea for a business - innovative
- invested some of their own savings and capital - commitment and self-motivation
- accepted the responsibility of managing the business - multi-skilled
- accepted the possible risk of failure - leadership skills
- belief in oneself
- risk-takers
IMPACT OF ENTERPRISE AND INTRAPRENEURSHIP
- employement creation - self employment + other people; national level of unemployment will fail
- economic growth - increase the gross domestic product; increased living standards
- firm's survival and growth - expansion is really important; take place of the declining ones
- innovation and technological change - creative; new ideas; competition - growth
STARTING A BUSINESS:
PROBLEMS FACED BY STARTUPS: - identyfying market opportunities
- competition - sourcing capital (finance)
- lack of record-keeping - determining a location
- lack of finance and working capital - building a customer base
- poor management skills
- changes in the business environment
THE PROCESS OF STARTING A BUSINESS
1. organizing the basics
2. researching the market
3. planning the business
4. esthablishing legal requirements
5. raising the finance
6. testing the market
business management Strona 2
,business management Strona 3
, 1.2 types of organizations
26 września 2022 19:02
BUSINESS ACTIVITY:
- the private and public sector
- profit-based and non-profit-based organisations
public sector - comprises organisations accountable to and controlled by central or local government (the state)
private sector - comprises businesses owned and controlled by individuals or groups of individuals
free market = small public sectors;
command economies = small private sectors
privatisation - organisations put proft-making as one of their main objectives
share - a certificate confirming part ownership of a company and entitling the shareholder to dividends and certain
shareholder rights
shareholders - individuals or institutions that buy/own shares in a limited company
public corporation - a business enterprise owned and controlled by the state, also known as nationalised industry or
public sector enterprise
advantages:
○ managed with social objectives rather than solely with profit objectives
○ loss-making services might still be kept operating if the social benefit is great enough
○ finance raised mainly from the government so not subject to limitations from banks or shareholders
disadvantages:
○ tendency towards inefficiency due to lack of strict profit targets
○ subsidies from government can encourage inefficiencies
○ government may interfere in business decisions for political reasons, e.g. by opening a new branch in a
certain area to gain popularity
FOR-PROFIT ORGANISATIONS
1. sole trader - a business in which one person provides the permanent finance and, in return, has full control of
the business and is able to keep all of the profits
advantages:
○ easy to set up – no legal formalities
○ owner has complete control – not answerable to anyone else
○ owner keeps all profits
○ able to choose times and patterns of working
○ able to establish close personal relationships with staff (if any are employed) and customers
○ the business can be based on the interests or skills of the owner – rather than working as an employee for
a larger firm
disadvantages:
○ unlimited liability – all of owner’s assets are potentially at risk
○ often faces intense competition from bigger firms, e.g. food retailing
○ owner is unable to specialise in areas of the business that are most interesting – is responsible for all
aspects of management
○ difficult to raise additional capital
○ long hours often necessary to make business pay
○ lack of continuity – as the business does not have separate legal status, when the owner dies the business
ends too
2. partnership - a business formed by two or more people to carry on a business together, with shared capital
investment and, usually, shared responsibilities
advantages:
○ partners may specialise in different areas of business management
○ shared decision-making
○ additional capital injected by each partner
○ business losses shared between partners
○ greater privacy and fewer legal formalities than corporate organisations (companies)
disadvantages:
○ unlimited liability for all partners (with some exceptions)
○ profits are shared
○ as with sole traders, no continuity and the partnership will have to be reformed in the event of the death
of one of the partners
○ all partners bound by the decisions of any one of them
○ not possible to raise capital from selling shares
○ a sole trader, taking on partners, will lose independence of decision-making
business management Strona 4
18 września 2022 19:34
A BUSINESS - any organisation that uses resources to meet the needs of customers by providing a product or
service that they demand
BUSINESS OUTPUTS:
- consumer goods - the physical and tangible goods sold to the general public. They include cars and washing
machines, which are referred to as durable consumer goods. Nondurable consumer goods include food, drinks
and sweets that can only be used once
- consumer services - nontangible products that are sold to the general public and include hotel
accommodation, insurance services and train journeys
- capital goods - physical goods that are used by industry to aid in the production of other goods and services
such as machines and commercial vehicles
BUSINESS INPUTS:
- physical – this general term not only includes land itself but all of the renewable and non-renewable resources
of nature such as coal, crude oil and timber
- human – manual and skilled labour make up the workforce of the business. Some frms are labour-intensive,
that is they have a high proportion of labour inputs to other factors of production, e.g. house-cleaning
services
- financial – this consists of the fnance needed to set up a business and pay for its continuing operations as well
as all of the man-made resources used in production. These include capital goods such as computers,
machines, factories, ofces and vehicles. Some frms are capital-intensive, that is they have a high proportion of
capital to other factors of production, e.g. power stations
- enterprise – this is the driving force of business, provided by risk-taking individuals, which combines the other
factors of production into a unit that is capable of producing goods and services. It provides a managing,
decision-making and coordinating role. Without this essential input, even very high-quality land, labour and
capital inputs will fail to provide the goods and services that customers need
WHAT A BUSINESS NEEDS:
- customers
- suppliers
- land
○ raw materials
○ site for buildings
- labour
○ skilled
○ unskilled
○ temporary
○ permanent
- enterprise
○ risk-takers
○ decision-makers
○ coordinators
- capital
○ finance
○ factories/offices
○ machines
- government
○ schools/colleges
○ roads/rail/airports
○ law and order
BUSINESS FUNCTIONS:
- human resource management - indentify the workforce, recruit, select, train the employees and also provide
motivation they are all
- finance and accounts - monitor the flow of finance, provide financial information connected and work
- marketing - do research and analyse results, discuss them with other departments and (possibly) make a new closely together
product
- operations management - ensure that necessary resources are available for production
ECONOMIC SECTORS:
- primary sector business activity - firms engaged in farming, fishing, oil extraction and all other industries that
extract natural resources so that they can be used and processed by other firms
- secondary sector business activity - firms that manufacture and process products from natural resources,
including computers, brewing, baking, clothing and construction
- tertiary sector business activity - firms that provide services to consumers and other businesses, such as
retailing, transport, insurance, banking, hotels, tourism and telecommunications connected, sometimes
- quaternary sector business activity - is focused on information technology (IT) businesses and information there's no distinction
service providers such as research and development, business consulting and information gathering
THE RELATIVE IMPORTANCE OF THE SECONDARY SECTOR IN DEVELOPING COUNTRIES IS INCREASING:
- benefits
total national output (gross domestic product) increases and this raises average standards of living
business management Strona 1
, ○ total national output (gross domestic product) increases and this raises average standards of living
○ increasing output of goods can result in lower imports and higher exports of such products
○ expanding manufacturing businesses will result in more jobs being created industrialisation - describes the growing
○ expanding and proftable frms will pay more tax to the government importance of the secondary sector
○ value is added to the country’s output of raw materials rather than simply exporting these as basic,
unprocessed products
- problems
○ The chance of work in manufacturing can encourage a huge movement of people from the countryside
to the towns, which leads to housing and social problems. It may also result in depopulation of rural
areas and problems for farmers in recruiting enough workers
○ the expansion of manufacturing industries may make it difcult for a business to recruit and retain
sufcient staf
○ imports of raw materials and components are often needed, which can increase the country’s import
costs. Business import costs will vary with changes in the exchange rate
○ pollution from factories will add to the country’s environmental problems
○ much of the growth of manufacturing industry is due to the expansion of multinational companies
THE RELATIVE IMPORTANCE OF THE SECONDARY SECTOR IN DEVELOPED COUNTRIES IS DECREASING
STARTING A BUSINESS:
- losing a job
- desire for independence
- business opportunity
- a wish to make more money
INTRAPRENEUR (someone within a large corporation who takes direct
ENTREPRENEUR (someone who takes the financial risk responsibility for turning an idea into a profitable finished product through
of starting and managing a new venture): using entrepreneurial talents such as risk-taking and innovation):
- had an idea for a business - innovative
- invested some of their own savings and capital - commitment and self-motivation
- accepted the responsibility of managing the business - multi-skilled
- accepted the possible risk of failure - leadership skills
- belief in oneself
- risk-takers
IMPACT OF ENTERPRISE AND INTRAPRENEURSHIP
- employement creation - self employment + other people; national level of unemployment will fail
- economic growth - increase the gross domestic product; increased living standards
- firm's survival and growth - expansion is really important; take place of the declining ones
- innovation and technological change - creative; new ideas; competition - growth
STARTING A BUSINESS:
PROBLEMS FACED BY STARTUPS: - identyfying market opportunities
- competition - sourcing capital (finance)
- lack of record-keeping - determining a location
- lack of finance and working capital - building a customer base
- poor management skills
- changes in the business environment
THE PROCESS OF STARTING A BUSINESS
1. organizing the basics
2. researching the market
3. planning the business
4. esthablishing legal requirements
5. raising the finance
6. testing the market
business management Strona 2
,business management Strona 3
, 1.2 types of organizations
26 września 2022 19:02
BUSINESS ACTIVITY:
- the private and public sector
- profit-based and non-profit-based organisations
public sector - comprises organisations accountable to and controlled by central or local government (the state)
private sector - comprises businesses owned and controlled by individuals or groups of individuals
free market = small public sectors;
command economies = small private sectors
privatisation - organisations put proft-making as one of their main objectives
share - a certificate confirming part ownership of a company and entitling the shareholder to dividends and certain
shareholder rights
shareholders - individuals or institutions that buy/own shares in a limited company
public corporation - a business enterprise owned and controlled by the state, also known as nationalised industry or
public sector enterprise
advantages:
○ managed with social objectives rather than solely with profit objectives
○ loss-making services might still be kept operating if the social benefit is great enough
○ finance raised mainly from the government so not subject to limitations from banks or shareholders
disadvantages:
○ tendency towards inefficiency due to lack of strict profit targets
○ subsidies from government can encourage inefficiencies
○ government may interfere in business decisions for political reasons, e.g. by opening a new branch in a
certain area to gain popularity
FOR-PROFIT ORGANISATIONS
1. sole trader - a business in which one person provides the permanent finance and, in return, has full control of
the business and is able to keep all of the profits
advantages:
○ easy to set up – no legal formalities
○ owner has complete control – not answerable to anyone else
○ owner keeps all profits
○ able to choose times and patterns of working
○ able to establish close personal relationships with staff (if any are employed) and customers
○ the business can be based on the interests or skills of the owner – rather than working as an employee for
a larger firm
disadvantages:
○ unlimited liability – all of owner’s assets are potentially at risk
○ often faces intense competition from bigger firms, e.g. food retailing
○ owner is unable to specialise in areas of the business that are most interesting – is responsible for all
aspects of management
○ difficult to raise additional capital
○ long hours often necessary to make business pay
○ lack of continuity – as the business does not have separate legal status, when the owner dies the business
ends too
2. partnership - a business formed by two or more people to carry on a business together, with shared capital
investment and, usually, shared responsibilities
advantages:
○ partners may specialise in different areas of business management
○ shared decision-making
○ additional capital injected by each partner
○ business losses shared between partners
○ greater privacy and fewer legal formalities than corporate organisations (companies)
disadvantages:
○ unlimited liability for all partners (with some exceptions)
○ profits are shared
○ as with sole traders, no continuity and the partnership will have to be reformed in the event of the death
of one of the partners
○ all partners bound by the decisions of any one of them
○ not possible to raise capital from selling shares
○ a sole trader, taking on partners, will lose independence of decision-making
business management Strona 4
