UNIT 1: INTRODUCTION
TO BUSINESS
MANAGEMENT
1
,1.1 What is a business?
THE NATURE OF BUSINESS
- A business is a decision-making organisation that uses inputs to produce goods and/or services.
Inputs are the resources that a business uses in the production process labour, raw materials,
etc. The production process generates outputs or products. The purpose of a business is to
create goods and services that meet the needs and wants of customers.
- Products refers to both goods and services. Goods are physical products and services are
intangible products. Businesses can provide goods and services to particulars or organisations.
Consumer goods are products sold to the general public (durables and non-durables). Capital
goods or producer goods are physical products bought by businesses to produce other goods or
services.
- Customers are people who buy the products or services, consumers are the ones that use the
products without necessarily buying them.
- There are different types of resource inputs. Human resources are the people required to make
the product or provide the service, all businesses need human inputs. Physical resources are the
materials, land or machinery. Financial resources is the capital, cash and other forms of finance
required to make the product or service.
- The nature or purpose of business activity is to generate added value. This occurs when there is
a positive difference between the selling price of a product and the cost of producing the
output.
DEPARTMENTS
Function Role
Human Resources They ensure that appropriate people are
employed and they are suitably rewarded.
Finance and Accounts They ensure that appropriate funds are made
available to make the service or product.
They ensure that the business offers a product
Marketing or a device that is desired by a sufficient
number of people or businesses for profitable
operations.
They ensure that appropriate processes are
Operations Management or Production used in order to make the product or service,
and that the output has the desired quality.
These functions or departments are interdependent. A decision from a department could influence
another. The departments work together in order to achieve the businesses goals.
2
,SECTORS
- Businesses can be classified according to the stage of production that they are engaged in.
- All four business sectors are interdependent because each sector relies on the others to remain in
existence. They are linked through the production chain.
PRIMARY SECTOR
- Businesses that operate in the primary sector are involved with the extraction of natural
resources
- Some examples are fishing, agriculture, mining, foresting and oil extraction.
- In low-income (or less developed) countries, the primary sector has a large percentage of output
and employment.
- The added value of the primary sector is low.
SECONDARY SECTOR
- Businesses that operate in the secondary sector are involved in manufacturing or construction, in
other words, transforming raw materials into consumer goods.
- Some examples include clothes manufacturers, car productions or electronic manufacturers.
- Outputs are sold to customers such as businesses, domestic customers or governments. These
outputs can be sold internationally.
- This sector is dominant in medium-income countries.
- The added value is added to the natural resources during the production process.
- Automation and mechanisation in modern societies have caused a decline in this sectors´
employment.
TERTIARY SECTOR
- Businesses that operate in the tertiary sector provide services to general population and other
organisations.
- Some examples can be transportation, distribution, healthcare, tourism and entertainment.
- This sector is dominant in high income countries in both employment and output. Countries
measure the value of their output each year as a percentage of gross domestic product (GDP).
- The added value in this sector is high.
QUATERNARY SECTOR
- Businesses that operate in the quaternary sector provide and generate information through
knowledge-based and intellectual activities. This sector is a sub-category of the tertiary sector.
- Some examples are scientific research, high education, research and development and information
communications technology.
- This sector has been created due to the rapid shift of technology.
- The added value in this sector is really high and is present on well economic developed countries.
Primary Manufacturing Services Consumers
Production
3
, ENTREPRENEURSHIP
- An entrepreneur is an individual who plans, organises and manages a business, taking financial risks
in doing so.
- Entrepreneurs have the skills needed to oversee the whole production process, while having the
ability and willingness to take potential risks. Entrepreneurs usually are visionaries because they
have the foresight and driving force behind the growth and development of an organisation. They
are also able to respond or forecast changes in the marketplace.
- Entrepreneurs are usually self-employed or hold the position of CEO.
- Entrepreneurs are creative, visionaries, passionate and innovative.
INTRAPRENEURSHIP (LAST GUIDE)
- Intrapreneurs are individuals who work for an organisation but act as entrepreneurs. They are not
self-employed
- Intrapreneurs take the lead on implementing new initiatives or growth strategies in order for the
business to increase profits.
- Intrapreneurs take direct responsibility, problem-solving and risks into projects and opportunities.
THE ROLE OF ENTREPRENEURSHIP AND INTRAPRENEURSHIP
Entrepreneurs Intrapreneurs
Owners and/or operators of organizations Employees of organizations
Take substantial risks Take medium risks
Visionaries Innovators
Rewarded with profits Rewarded with pay and remuneration
Responsibility for workforce Accountability to the owner
Failure incurs personal costs Failure is absorbed by the organization
4
TO BUSINESS
MANAGEMENT
1
,1.1 What is a business?
THE NATURE OF BUSINESS
- A business is a decision-making organisation that uses inputs to produce goods and/or services.
Inputs are the resources that a business uses in the production process labour, raw materials,
etc. The production process generates outputs or products. The purpose of a business is to
create goods and services that meet the needs and wants of customers.
- Products refers to both goods and services. Goods are physical products and services are
intangible products. Businesses can provide goods and services to particulars or organisations.
Consumer goods are products sold to the general public (durables and non-durables). Capital
goods or producer goods are physical products bought by businesses to produce other goods or
services.
- Customers are people who buy the products or services, consumers are the ones that use the
products without necessarily buying them.
- There are different types of resource inputs. Human resources are the people required to make
the product or provide the service, all businesses need human inputs. Physical resources are the
materials, land or machinery. Financial resources is the capital, cash and other forms of finance
required to make the product or service.
- The nature or purpose of business activity is to generate added value. This occurs when there is
a positive difference between the selling price of a product and the cost of producing the
output.
DEPARTMENTS
Function Role
Human Resources They ensure that appropriate people are
employed and they are suitably rewarded.
Finance and Accounts They ensure that appropriate funds are made
available to make the service or product.
They ensure that the business offers a product
Marketing or a device that is desired by a sufficient
number of people or businesses for profitable
operations.
They ensure that appropriate processes are
Operations Management or Production used in order to make the product or service,
and that the output has the desired quality.
These functions or departments are interdependent. A decision from a department could influence
another. The departments work together in order to achieve the businesses goals.
2
,SECTORS
- Businesses can be classified according to the stage of production that they are engaged in.
- All four business sectors are interdependent because each sector relies on the others to remain in
existence. They are linked through the production chain.
PRIMARY SECTOR
- Businesses that operate in the primary sector are involved with the extraction of natural
resources
- Some examples are fishing, agriculture, mining, foresting and oil extraction.
- In low-income (or less developed) countries, the primary sector has a large percentage of output
and employment.
- The added value of the primary sector is low.
SECONDARY SECTOR
- Businesses that operate in the secondary sector are involved in manufacturing or construction, in
other words, transforming raw materials into consumer goods.
- Some examples include clothes manufacturers, car productions or electronic manufacturers.
- Outputs are sold to customers such as businesses, domestic customers or governments. These
outputs can be sold internationally.
- This sector is dominant in medium-income countries.
- The added value is added to the natural resources during the production process.
- Automation and mechanisation in modern societies have caused a decline in this sectors´
employment.
TERTIARY SECTOR
- Businesses that operate in the tertiary sector provide services to general population and other
organisations.
- Some examples can be transportation, distribution, healthcare, tourism and entertainment.
- This sector is dominant in high income countries in both employment and output. Countries
measure the value of their output each year as a percentage of gross domestic product (GDP).
- The added value in this sector is high.
QUATERNARY SECTOR
- Businesses that operate in the quaternary sector provide and generate information through
knowledge-based and intellectual activities. This sector is a sub-category of the tertiary sector.
- Some examples are scientific research, high education, research and development and information
communications technology.
- This sector has been created due to the rapid shift of technology.
- The added value in this sector is really high and is present on well economic developed countries.
Primary Manufacturing Services Consumers
Production
3
, ENTREPRENEURSHIP
- An entrepreneur is an individual who plans, organises and manages a business, taking financial risks
in doing so.
- Entrepreneurs have the skills needed to oversee the whole production process, while having the
ability and willingness to take potential risks. Entrepreneurs usually are visionaries because they
have the foresight and driving force behind the growth and development of an organisation. They
are also able to respond or forecast changes in the marketplace.
- Entrepreneurs are usually self-employed or hold the position of CEO.
- Entrepreneurs are creative, visionaries, passionate and innovative.
INTRAPRENEURSHIP (LAST GUIDE)
- Intrapreneurs are individuals who work for an organisation but act as entrepreneurs. They are not
self-employed
- Intrapreneurs take the lead on implementing new initiatives or growth strategies in order for the
business to increase profits.
- Intrapreneurs take direct responsibility, problem-solving and risks into projects and opportunities.
THE ROLE OF ENTREPRENEURSHIP AND INTRAPRENEURSHIP
Entrepreneurs Intrapreneurs
Owners and/or operators of organizations Employees of organizations
Take substantial risks Take medium risks
Visionaries Innovators
Rewarded with profits Rewarded with pay and remuneration
Responsibility for workforce Accountability to the owner
Failure incurs personal costs Failure is absorbed by the organization
4
