Summary Introduction to Business Management

Matthew Eggett


Business Management
Chapter 1
The business world and business management
Role of business in society

 Involves human activity.
 Production – transformation of resources into products and services.
 Produce products and services, to exchange for money or for other products and services.




Mixers
flour Business
Bread
sugar (bakery)
labour Products
Transformation
Resource
s (Production) (Products/services for
exchange)


Sectors

 Formal sector
o Large businesses – standard bank
o Listed on the JSE
o Responsible for most of South Africa’s economic activity
 Informal sector
o Microenterprises
o Not registered + people involved live primarily on a subsistence or survival basis.
o Do not contribute to rates and taxes




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Society’s limited resources




Unlimited needs: Limited resources:
1. Physiological needs 1. Natural resources
SATISFACTION OF
2. Safety needs 2. Human resources
THE NEEDS OF
3. Social needs SOCIETY 3. Capital
4.Esteem needs 4. Entrepreneurship
5. Self-relisation needs (including management)




 Natural resources
o Production factor of land
 Agricultural
 Industrial sites
 Residential stands
 Minerals and forest
 Metals
 Water
o The amount of natural resources any one country possesses is given, and is in most
cases, therefore, scarce.
 Human resources
o A.K.A production factor of labour, include the physical and mental talents and skills
of people employed to create products of services.
o People receive wages for their labour.
o Size of labour force = size of the population, level of education and training,
promotion of women in the labour force and the retirement age.
 Capital
o Represented by:

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 Machinery
 Buildings
 Cash registers
 Computers
 Entrepreneurship
o Fourth factor or production
o Collective capacity of entrepreneurs, who are those individuals who accept the risks
involved in providing products and services for their society.
o If they are successful then the risk of investing their capital will result in profits if
they are successful. However, if they fail the may lose a lot.

Main economic systems

 Market economy
o Most products and services demanded by the community are supplied by private
organisations seeking profits. It functions on the following assumptions:
 Members of community may possess assets and earn profits on these.
 The allocation of resources is affected by free markets.
 Members of the community can freely choose between products, services,
places of residence and careers.
 The state keeps its interference in the system to a minimum.




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