SlideShare a Scribd company logo

Introduction to business management

•
•
Fereshteh Mohammadian
Fereshteh Mohammadian

The document provides an overview of business organization and the business environment. It defines a business as an organization that uses resources to meet customer needs by providing products or services. It outlines the key functions of businesses as identifying customer needs, purchasing resources for production, and producing outputs like goods and services. The document then discusses the four main business functions of human resources, finance/accounting, operations/production, and marketing. It explains how each function contributes to the business. Finally, it covers the common elements included in a business plan like the business idea, organization, HR, finance, marketing, and operations.

1 of 26
Downloaded 140 times
Business Organization and Environment(Unit one) 1.1 An Introduction to business management Dr. Fereshteh Mohammadian
WHAT IS A BUSINESS? A business is any organization that uses resources to meet the needs of customers by providing a product or service that they demand.
The role of business • A business aims to meet the needs and wants of individuals or organizations by these actives: • Producing crops or extracting raw materials form the earth • Creating products • Providing a service.
WHAT DO BUSINESSES DO? Businesses identify the needs of consumers or other firms. They then purchase resources, which are the inputs of the business or factors of production, in order to produce output. The 'outputs' of a business are the goods and services that satisfy consumers' needs, usually with the aim of making a profit.
Business activity Human Physical Financial Enterprise Production Goods Services Resource inputs Process to add value Product outputs
Resource inputs Human Physical Financial Enterprise The right quality and quantity of people required to make the product or service. The right quality and quantity of materials, machinery, and land space required to make the product or service. The right quality and quantity of cash and other forms of money required to make the product or service. The business idea and the will to see the other elements become a functioning and, ideally. (entrepreneurship)
Production Process and product outputs Human Physical Financial Enterprise Production Goods Services The tangible products from primary sector(agriculture), or secondary sector(manufactures). Intangible sector Capital intensive= large proportion of land or machinery inputs Labour intensive= large proportion of labour inputs
Business functions All businesses, from small start-ups to huge conglomerates, are organized by 4 key functions. Business Organization HR Finance and accounts operations Marketing Business Organization HR Finance and accounts operations Marketing A small business A large business SME= Small & Medium sized enterprises. ( # of employee, turn over or balance sheet
Function Role of business departments HR • ensuring about appropriate employed people to make the product or service • recruiting & training them, at times dismissing them, and determining of appropriate compensation. Finance and accounts • ensuring of availability of appropriate funds • Forecasting requirements, keeping accurate records, procuring financial resources from various providers, and ensuring about proper payment for goods and services acquired to operate the business Marketing • ensuring about business offered desired by a sufficient number of people or businesses for profitable operations • Appropriate strategies to promote, price, package and distribute a product or service. Operation managements or production • ensuring of appropriate processes to make product or services with desired quality • Control of the quality and flow of stock, look for ways to produce the good or service more efficiently.
Change of customer taste Redesign the processes Financial resources required for redesign Influence on number and type of working people found by marketing dep. by operation management or production dep. by financial dep. by HR functions.
Changing of priority in business • New business needs to survive (All four deps). • Plan to diversity (products or goods) after business establishment (All four deps). • Growth and market control for a successful business…significant modifications to the different business deps.
Sectors of business activity Goods Primary All raw materials are acquired in the primary sector (extraction, mining, farming, fishing, hunting and trapping) Secondary Raw materials are processed to goods by manufacturing. (to durable, non-durable and capital goods) services Tertiary Includes all services such as financial, leisure, healthcare, education, transport, security,…) and some important especial services such as banking, insurance, transportation, retail/ wholesale and consultancy. Quaternary Subgroup of tertiary focused on knowledge such as speaking, e-services, IT, the media and web-based services.
•Shipping to automobile dealerships •Sell to consumers •After sale service •Providing online records about automobile features and services • Providing information about cars features by for-profit companies that sell information. • Processed raw materials into the other materials which used by manufacturers into automobile parts. • Assembling of automobile parts to make automobile. • Providing raw materials(metals, rubber, materials to make plastic and glass) • Extracted raw materials Primary sector Secondary sector Tertiary sector Quaternary sectors A sample of product chain
Horizontal and vertical integrations Integration Backwards vertical Horizontal Forwards vertical Horizontal • Increase market share • Increase market power • take advantage of economies of scale. • Lowering transaction costs(elimination of transaction cost between businesses) • Ensuring reliable supply(treating of “downstream” stage as a preferred customer in terms of quantity, availability and price by “upstream” stage. • Avoiding government regulation(such as price controls, taxes) • Increasing market power(by using various pricing strategies) • Eliminating or weakening the market power of other businesses
Entrepreneurship and intrapreneurship • Entrepreneur : an individual (a self-employed or central part to the start-up of a business) who demonstrates enterprise and initiative in order to make a profit. • Intrapreneur: an individual employed by a large organization who demonstrates entrepreneurial thinking in the development of new products or services. • Innovation is central to what both group do in three forms: – Market reading: observe customers and competitors to make small changes to existing products – Need seeking: communicate with potential customers to determine their needs – Technology driving: invest in R&D and follow technological capabilities
Reasons to start up a business Rewards No receiving of all or same rewards of people who work for the business owners(who put their capital at risk). Independence Setting the policies and procedures by individual with an entrepreneurial spirit with working for themselves Necessity Income necessity for some ones with redundant positions or unsuccessful to find work. Challenge Trying to perform all functions by some people who want to see whether they can “make it” by themselves. Interest Working an area for some ones who have a passion. Finding a gap Finding untapped opportunity in order to achieve “first mover advantage”. Sharing an idea Spreading or selling of some ones idea to others.
The process of starting up a business Two features are common to start- up any successful business: • the business idea(fundamental activity which can drive by market, product or service) • planning(to reduce many risks associated with starting- up a business) 1 Organizing the basics 2 Researching the market 3 Planning the business 4 Establishing legal requirements 5 Raising the finance 6 Testing the market Steps for start-ups
1- Organizing the basics Basic questions of entrepreneurs: • base & name of business • legal & operational structure • business infrastructure to make the business feasible suppliers, potential customers, and government services
2-Researching the market • Market research is needed to determine the precise market segment it will target. These questions are important to answer by entrepreneur: • How will the market research conduct? • Who will be the target market? • Can the new business test its concept? • What will be its “ unique selling proposition (USP)”? The market research will refine and narrow the basic business idea to a significantly more precise idea.
3-Planning the business After narrowing the business concept, the entrepreneur will write a business plan for any needed issue before beginning of operations; especially for stakeholders, potential owners of the business and financial institutes to provide capital. • How the business will operate by specific elements? Business plan will provide some confidence to investors and financiers by indicating foreseen potential issues and trying to address them.
4-Establishing legal requirements Legal requirements for an organization: • labour & operational practices, • tax obligations (income taxes and various sort of payroll tax (employee pension, sickness benefits and medical insurance)), • business registration according to the host country laws, • specific licenses • required inspections before operation
5-Raising the finance Providing the capital from the investors (selling share) or lenders (loans) by making them confidence about accounting and auditing procedures.
6-Testing the market • The purpose of testing the market is to verify that the business idea will be enough to receive by consumers to suggest that the business has a reasonable chance of success.
Problems a new business may face Organization • The location of the business is inappropriate. • The name does not register. • The structure does not work. • Supplies are unreliable. Market research • The research was poor. • The target market wasn’t appropriate. • The test was too optimistic. • Channels of communication were weak. Business plan • The business plan did not convince. • Goals were too vague or contradictory. Legal requirement • Labour laws were not addressed. • Registration was too difficult. • Tax obligations were not addressed. Finance • The accounts were not kept properly- cash flow, in particular, was a problem. • Raising start-up capital was too difficult. • Raising medium –tem to long-term finance was difficult. The market • The launch failed. • The pilot was inconclusive. • Success was limited- the product failed to inspire.
The purpose of a business plan A business plan is drawn up to: • Support the launch of a new organization or business idea • Attract new funds from banks, grant providers, or venture capitalists • Support strategic planning • Identify resource needs • Provide a focus for development • Work as a measure of business success.
Element The element focus Key questions (of business plan) to address are: Starting the business- the idea Setting out the business idea in the right context What is the core idea and what are the objectives of the business? How will the product work? Does it have a unique selling point(USP)? How will the product be developed? Why should it succeed? Business organization How the business will be organized Where will the business be located? What structure will it have? What type of business will it be? Who will make what decisions? How will the owner or owners share out the profits? Are there any legal requirements necessary to start up the business? HR How he business will be staffed Who will have what responsibilities and what rewards should they expect? What will be the HR plan? What type of contract will be used? Finance How the business will be financed Where and how will the entrepreneur source the start-up capital and at what cost? This unit should include projected budgets, income statements, and cash-flow forecasts. Marketing How best to market the product What market research has been done? Has a sales forecast been made? Is the product to be targeted at a particular segment of the market or will it be mass marketed? What will the promotional mix be? How will the product be distributed? operations How he product will be made How will production be organized? How many units will the business produce? How long will production take? Is there likely to be lead time? What is the supply chain likely to be?

More Related Content

Introduction to business management

  • 1. Business Organization and Environment(Unit one) 1.1 An Introduction to business management Dr. Fereshteh Mohammadian
  • 2. WHAT IS A BUSINESS? A business is any organization that uses resources to meet the needs of customers by providing a product or service that they demand.
  • 3. The role of business • A business aims to meet the needs and wants of individuals or organizations by these actives: • Producing crops or extracting raw materials form the earth • Creating products • Providing a service.
  • 4. WHAT DO BUSINESSES DO? Businesses identify the needs of consumers or other firms. They then purchase resources, which are the inputs of the business or factors of production, in order to produce output. The 'outputs' of a business are the goods and services that satisfy consumers' needs, usually with the aim of making a profit.
  • 6. Resource inputs Human Physical Financial Enterprise The right quality and quantity of people required to make the product or service. The right quality and quantity of materials, machinery, and land space required to make the product or service. The right quality and quantity of cash and other forms of money required to make the product or service. The business idea and the will to see the other elements become a functioning and, ideally. (entrepreneurship)
  • 7. Production Process and product outputs Human Physical Financial Enterprise Production Goods Services The tangible products from primary sector(agriculture), or secondary sector(manufactures). Intangible sector Capital intensive= large proportion of land or machinery inputs Labour intensive= large proportion of labour inputs
  • 8. Business functions All businesses, from small start-ups to huge conglomerates, are organized by 4 key functions. Business Organization HR Finance and accounts operations Marketing Business Organization HR Finance and accounts operations Marketing A small business A large business SME= Small & Medium sized enterprises. ( # of employee, turn over or balance sheet
  • 9. Function Role of business departments HR • ensuring about appropriate employed people to make the product or service • recruiting & training them, at times dismissing them, and determining of appropriate compensation. Finance and accounts • ensuring of availability of appropriate funds • Forecasting requirements, keeping accurate records, procuring financial resources from various providers, and ensuring about proper payment for goods and services acquired to operate the business Marketing • ensuring about business offered desired by a sufficient number of people or businesses for profitable operations • Appropriate strategies to promote, price, package and distribute a product or service. Operation managements or production • ensuring of appropriate processes to make product or services with desired quality • Control of the quality and flow of stock, look for ways to produce the good or service more efficiently.
  • 10. Change of customer taste Redesign the processes Financial resources required for redesign Influence on number and type of working people found by marketing dep. by operation management or production dep. by financial dep. by HR functions.
  • 11. Changing of priority in business • New business needs to survive (All four deps). • Plan to diversity (products or goods) after business establishment (All four deps). • Growth and market control for a successful business…significant modifications to the different business deps.
  • 12. Sectors of business activity Goods Primary All raw materials are acquired in the primary sector (extraction, mining, farming, fishing, hunting and trapping) Secondary Raw materials are processed to goods by manufacturing. (to durable, non-durable and capital goods) services Tertiary Includes all services such as financial, leisure, healthcare, education, transport, security,…) and some important especial services such as banking, insurance, transportation, retail/ wholesale and consultancy. Quaternary Subgroup of tertiary focused on knowledge such as speaking, e-services, IT, the media and web-based services.
  • 13. •Shipping to automobile dealerships •Sell to consumers •After sale service •Providing online records about automobile features and services • Providing information about cars features by for-profit companies that sell information. • Processed raw materials into the other materials which used by manufacturers into automobile parts. • Assembling of automobile parts to make automobile. • Providing raw materials(metals, rubber, materials to make plastic and glass) • Extracted raw materials Primary sector Secondary sector Tertiary sector Quaternary sectors A sample of product chain
  • 14. Horizontal and vertical integrations Integration Backwards vertical Horizontal Forwards vertical Horizontal • Increase market share • Increase market power • take advantage of economies of scale. • Lowering transaction costs(elimination of transaction cost between businesses) • Ensuring reliable supply(treating of “downstream” stage as a preferred customer in terms of quantity, availability and price by “upstream” stage. • Avoiding government regulation(such as price controls, taxes) • Increasing market power(by using various pricing strategies) • Eliminating or weakening the market power of other businesses
  • 15. Entrepreneurship and intrapreneurship • Entrepreneur : an individual (a self-employed or central part to the start-up of a business) who demonstrates enterprise and initiative in order to make a profit. • Intrapreneur: an individual employed by a large organization who demonstrates entrepreneurial thinking in the development of new products or services. • Innovation is central to what both group do in three forms: – Market reading: observe customers and competitors to make small changes to existing products – Need seeking: communicate with potential customers to determine their needs – Technology driving: invest in R&D and follow technological capabilities
  • 16. Reasons to start up a business Rewards No receiving of all or same rewards of people who work for the business owners(who put their capital at risk). Independence Setting the policies and procedures by individual with an entrepreneurial spirit with working for themselves Necessity Income necessity for some ones with redundant positions or unsuccessful to find work. Challenge Trying to perform all functions by some people who want to see whether they can “make it” by themselves. Interest Working an area for some ones who have a passion. Finding a gap Finding untapped opportunity in order to achieve “first mover advantage”. Sharing an idea Spreading or selling of some ones idea to others.
  • 17. The process of starting up a business Two features are common to start- up any successful business: • the business idea(fundamental activity which can drive by market, product or service) • planning(to reduce many risks associated with starting- up a business) 1 Organizing the basics 2 Researching the market 3 Planning the business 4 Establishing legal requirements 5 Raising the finance 6 Testing the market Steps for start-ups
  • 18. 1- Organizing the basics Basic questions of entrepreneurs: • base & name of business • legal & operational structure • business infrastructure to make the business feasible suppliers, potential customers, and government services
  • 19. 2-Researching the market • Market research is needed to determine the precise market segment it will target. These questions are important to answer by entrepreneur: • How will the market research conduct? • Who will be the target market? • Can the new business test its concept? • What will be its “ unique selling proposition (USP)”? The market research will refine and narrow the basic business idea to a significantly more precise idea.
  • 20. 3-Planning the business After narrowing the business concept, the entrepreneur will write a business plan for any needed issue before beginning of operations; especially for stakeholders, potential owners of the business and financial institutes to provide capital. • How the business will operate by specific elements? Business plan will provide some confidence to investors and financiers by indicating foreseen potential issues and trying to address them.
  • 21. 4-Establishing legal requirements Legal requirements for an organization: • labour & operational practices, • tax obligations (income taxes and various sort of payroll tax (employee pension, sickness benefits and medical insurance)), • business registration according to the host country laws, • specific licenses • required inspections before operation
  • 22. 5-Raising the finance Providing the capital from the investors (selling share) or lenders (loans) by making them confidence about accounting and auditing procedures.
  • 23. 6-Testing the market • The purpose of testing the market is to verify that the business idea will be enough to receive by consumers to suggest that the business has a reasonable chance of success.
  • 24. Problems a new business may face Organization • The location of the business is inappropriate. • The name does not register. • The structure does not work. • Supplies are unreliable. Market research • The research was poor. • The target market wasn’t appropriate. • The test was too optimistic. • Channels of communication were weak. Business plan • The business plan did not convince. • Goals were too vague or contradictory. Legal requirement • Labour laws were not addressed. • Registration was too difficult. • Tax obligations were not addressed. Finance • The accounts were not kept properly- cash flow, in particular, was a problem. • Raising start-up capital was too difficult. • Raising medium –tem to long-term finance was difficult. The market • The launch failed. • The pilot was inconclusive. • Success was limited- the product failed to inspire.
  • 25. The purpose of a business plan A business plan is drawn up to: • Support the launch of a new organization or business idea • Attract new funds from banks, grant providers, or venture capitalists • Support strategic planning • Identify resource needs • Provide a focus for development • Work as a measure of business success.
  • 26. Element The element focus Key questions (of business plan) to address are: Starting the business- the idea Setting out the business idea in the right context What is the core idea and what are the objectives of the business? How will the product work? Does it have a unique selling point(USP)? How will the product be developed? Why should it succeed? Business organization How the business will be organized Where will the business be located? What structure will it have? What type of business will it be? Who will make what decisions? How will the owner or owners share out the profits? Are there any legal requirements necessary to start up the business? HR How he business will be staffed Who will have what responsibilities and what rewards should they expect? What will be the HR plan? What type of contract will be used? Finance How the business will be financed Where and how will the entrepreneur source the start-up capital and at what cost? This unit should include projected budgets, income statements, and cash-flow forecasts. Marketing How best to market the product What market research has been done? Has a sales forecast been made? Is the product to be targeted at a particular segment of the market or will it be mass marketed? What will the promotional mix be? How will the product be distributed? operations How he product will be made How will production be organized? How many units will the business produce? How long will production take? Is there likely to be lead time? What is the supply chain likely to be?