1.1 Intro
The role of businesses: Business Functions:
• exist to create value • Human Resource Management
• taking inputs and using them to create outputs of increased worth • makes sure the business employs the correct number of
• business will receive payment from customers generating sales appropriately skilled employees
revenue • ensuring remuneration for employees
• businesses must ensure that the value of their outputs are greater • recruitment
than the value of their inputs • training
• businesses have the potential to help society as well as harm it • termination of employment
• non-profit and government owned organisations also operate • guaranteeing the company’s treatment of employees complies
alongside businesses with law
• Finance and Accounts
• ensuring the business has sufficient funds necessary to carry
out its operation
• maintaining accurate accounts
Resources used by businesses (inputs):
• forecasting financing requirements
• paying creditors
• inputs are categorised as physical, financial and human • assist the business in determining pricing strategies
• physical resources • evaluate potential profitability of investment projects
• raw materials and semi-finished goods • Marketing
• raw materials - include agricultural products, lumber, minerals, • selling the right product, at the right price, at the right time, to
metals and crude oil the right customers
• semi-finished goods - have already been finished in some way • anticipating and meeting the wants and needs of customers
but are not yet ready for sale to customers profitably
• physical resources also include capital goods such as equipment • promotion
and machines that will be used to produce other goods • advertising
• financial resources • 4 P’s
• funds needed to set up and invest in a business and keep it • market segmentation
running on a daily basis • Operations Management
• medium or long term financing may be used to purchase the • how the core activity is carried out
business’ location • must plan how goods and services are to be produced
• short term financing may be used to pay for inputs that will soon • make sure that products are produced and services are
be used and sold by the business such as inventory delivered at the lowest cost possible given the standards of
• human resources quality expected by customers
• people needed to run the business, including managers, • looks for ways to make the core business activity more efficient
employees and enterprise
• enterprise is set by entrepreneurs who take risks to establish
businesses and drive them forward
Economic Sectors
• Primary Sector
Business outputs (goods and Nature of business activity • extraction of raw materials to be used to manufacture goods
services): in each sector • Secondary Sector
• manufacture and processing of raw materials to be converted
• outputs can be categorised as • the steps involved in into products for sale
goods and service producing finished goods • construction is also included
• goods - physical, can be are together called the • can sell directly to consumers or to other businesses
measured, tangible, include chain of production • Tertiary Sector
food, drinks and clothes • many businesses limit their • any business that sells a service
• services - non-physical, activities to a single sector • includes retail stores, education, healthcare, travel and
intangible, include • companies whose activities transportation, accounting and legal services
accountancy, hairdressing and that span two or more • Quaternary Sector
education sectors are called • focused on knowledge, research and development
• consumer goods and integrated companies • information technology
consumer services - • companies move in and out • businesses have emerged that specialise in collecting,
purchased directly by of the different sectors over repackaging and selling or providing information
individuals and families time, in accordance with • includes services related to the development and use of data
• B2B - business to business changes in the market and and information
• B2C - business to consumer their own business strategy
Entrepreneurship and Intrapreneurship:
Reasons for Starting a business • Entrepreneurship - the process of setting up a new business.
• Entrepreneurs - individuals that take a risk in turning a business
• earning a living, financial reward, control, work-life balance, new plan into a successful business enterprise. Characteristics of an
technology or business idea, unfilled market niche, entrepreneur include being a risk take, self-motivated, confident,
• problems new businesses face and innovative
• lack of funds, strong competition, recruiting qualified personnel, • Intrapreneurship - the activity of entrepreneurship when it takes
lack of management skills place within an established organisation.
• business plan - a written document that describes the nature of a • Intrapreneur - encouraged by their employer to take risks to
new enterprise in terms of the product or business idea, finance, develop new products, processes and services whilst retaining
operations, marketing, and human resources. Contains the business their status as employees. Security go employment and can
idea, target market, outlook of the market in terms of competition, maintain their salaries while benefiting from the resources of the
type of ownership, production of the product, financing, need for company.
employees, and executive summary.
The role of businesses: Business Functions:
• exist to create value • Human Resource Management
• taking inputs and using them to create outputs of increased worth • makes sure the business employs the correct number of
• business will receive payment from customers generating sales appropriately skilled employees
revenue • ensuring remuneration for employees
• businesses must ensure that the value of their outputs are greater • recruitment
than the value of their inputs • training
• businesses have the potential to help society as well as harm it • termination of employment
• non-profit and government owned organisations also operate • guaranteeing the company’s treatment of employees complies
alongside businesses with law
• Finance and Accounts
• ensuring the business has sufficient funds necessary to carry
out its operation
• maintaining accurate accounts
Resources used by businesses (inputs):
• forecasting financing requirements
• paying creditors
• inputs are categorised as physical, financial and human • assist the business in determining pricing strategies
• physical resources • evaluate potential profitability of investment projects
• raw materials and semi-finished goods • Marketing
• raw materials - include agricultural products, lumber, minerals, • selling the right product, at the right price, at the right time, to
metals and crude oil the right customers
• semi-finished goods - have already been finished in some way • anticipating and meeting the wants and needs of customers
but are not yet ready for sale to customers profitably
• physical resources also include capital goods such as equipment • promotion
and machines that will be used to produce other goods • advertising
• financial resources • 4 P’s
• funds needed to set up and invest in a business and keep it • market segmentation
running on a daily basis • Operations Management
• medium or long term financing may be used to purchase the • how the core activity is carried out
business’ location • must plan how goods and services are to be produced
• short term financing may be used to pay for inputs that will soon • make sure that products are produced and services are
be used and sold by the business such as inventory delivered at the lowest cost possible given the standards of
• human resources quality expected by customers
• people needed to run the business, including managers, • looks for ways to make the core business activity more efficient
employees and enterprise
• enterprise is set by entrepreneurs who take risks to establish
businesses and drive them forward
Economic Sectors
• Primary Sector
Business outputs (goods and Nature of business activity • extraction of raw materials to be used to manufacture goods
services): in each sector • Secondary Sector
• manufacture and processing of raw materials to be converted
• outputs can be categorised as • the steps involved in into products for sale
goods and service producing finished goods • construction is also included
• goods - physical, can be are together called the • can sell directly to consumers or to other businesses
measured, tangible, include chain of production • Tertiary Sector
food, drinks and clothes • many businesses limit their • any business that sells a service
• services - non-physical, activities to a single sector • includes retail stores, education, healthcare, travel and
intangible, include • companies whose activities transportation, accounting and legal services
accountancy, hairdressing and that span two or more • Quaternary Sector
education sectors are called • focused on knowledge, research and development
• consumer goods and integrated companies • information technology
consumer services - • companies move in and out • businesses have emerged that specialise in collecting,
purchased directly by of the different sectors over repackaging and selling or providing information
individuals and families time, in accordance with • includes services related to the development and use of data
• B2B - business to business changes in the market and and information
• B2C - business to consumer their own business strategy
Entrepreneurship and Intrapreneurship:
Reasons for Starting a business • Entrepreneurship - the process of setting up a new business.
• Entrepreneurs - individuals that take a risk in turning a business
• earning a living, financial reward, control, work-life balance, new plan into a successful business enterprise. Characteristics of an
technology or business idea, unfilled market niche, entrepreneur include being a risk take, self-motivated, confident,
• problems new businesses face and innovative
• lack of funds, strong competition, recruiting qualified personnel, • Intrapreneurship - the activity of entrepreneurship when it takes
lack of management skills place within an established organisation.
• business plan - a written document that describes the nature of a • Intrapreneur - encouraged by their employer to take risks to
new enterprise in terms of the product or business idea, finance, develop new products, processes and services whilst retaining
operations, marketing, and human resources. Contains the business their status as employees. Security go employment and can
idea, target market, outlook of the market in terms of competition, maintain their salaries while benefiting from the resources of the
type of ownership, production of the product, financing, need for company.
employees, and executive summary.
