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1.1: Introduction to business management (New business (Problems (poor…
1.1
:
Introduction to business management
Business
an organisation that uses resources to meet the needs of cutomers by providing a product or service they want
business activity
adds value to resources in order to make them more desirable
exists to produce goods or services
consumer goods
: physical, tangible goods sold to the general public
durable
: washing machines or cars
non-durable
: can only be used once, like food or drinks
consumer services
: non-tanglible products, are sold to the general public
include hotal accommodation, insurance or journeys
capital goods
: physical goods, used by industry to aid production of other goods or services
includes machines and commercial vehicles
inputs
: factors of production; resources
human, physical & financial resources
land
: includes land and all renewable and non-renewable resources of nature
labour
: manual & skilled, make up the workforce of a business
capital
: the finfance nedded to set up a business and keep it in operation
enterprise
: driving force, combines factors of production
provides managing, decision-making and coordinationg roles
outputs
: the goods and services for customers
Plan
executive summary
: overview and strategies
description of the business opportunity
: details of enterpreneur, what is being sold, why and to whom
marketing & sales strategy
: why you think customers will buy, what you plan to sell and how do you aim to sell it
management team & personnel
: skills & experience of enterpreneur and staff needed
operations
: premises to be used, production facilities, IT systems
financial forecasts
: future projections of sales, profit and cash flow
Functions
four main functional departments
human resource management (HR)
: workface needs of the business
recruits, selects and trains eployees
help retain workers and encourage to work productively
draws up contracts and covers redundancy (when a job is no longer required) or redeployment
finance and accounts
: monitors the flow of finance
keeps and analyses accounts
provides financial information to senior management and other departments
marketing
: market research
analyses research to identify consumer wants
makes decisions about pricing, how and where to promote it, how to sell it and distribute it
operations management
: the production function
ensures adequate resources for produciton
maintains production and quality levels
functions work close together to achieve efectiveness
Economic
four types of business activity or economic sectors
primary
: firms engaged in farming
industries that extract natural resources
secondary
: firms that manufacture and process products
tertiary
: firms that provide service
retailing, transport, insurance, banking, tourism
quaternary
: focused on information technology (IT) businesses
economic structure
: the balance of the primery, secondaty and tertiary secotrs
the importance of each sector can change
structural unemployment
: wrokers find it dificult to find jobs in other sectors of industry
New business
new product or new way of offering a service
enterpreneur
: person that takes the financial risk
invest own capital
intrapreneur
: person (within large corporation) who is resposible for turning an idea into a profitable product
don´t risk own capital
drive forward new product idea
innovative
: present business as different
commitment & self-motivation
: accept it´s not easy but keep trying
multi-skilled
: make product, promote it, sell it and count money
leadership skills
: lead by example and encourage people to follow
belief in oneself
: not discourage, belive they can bounce back from setbacks
risk-taker
: take risks to see results
Steps
I. identify market oppotunities
own skills or hobbies
emplyment experience
franchising
small budget market research
II. sourcing capital (finance)
use own savings
ask friends and family for support
bank loans
III. determining a location
vital if intention is to sell directly to customers
break-even level of output
: output levels are enough to cover all costs
operate from home
servicio a domicilo
IV. building a customer base
establish in the market
encourage customers to return to purchase products
Problems
competition
: from older established businesses
lack of record-keeping
: to pay taxes and bills
lack of finance and working capital
lack of sufficient own finance
lack of awareness of financial support availabe
lack of trading record to present to banks
poorly produced business plan
poor management skills
no leadership
no cash management skills
no planning & coordinating skills
poor decision-making skills
no communication skills
poor marketing, promotion and selling skills
changes in the business environment
: risk of change
new competiors
legal changes
economic changes
technological changes
Impact
employment creation
: national level of unemployment will fall
economic growth
: increase in output will increase gross domestic product
firms´ survival and growth
: expand into important businesses
innovation and technologicas change
: creativity adds dynamism to economy
Cecilia Martínez A01197738