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Introduction to BM and the environment (Factors of Production (ENTERPRISE,…
Introduction to BM and the environment
Consumer Goods
Physical and tangible goods sold to the general public
Durable Consumer goods:
Goods that last for a long time and include items like cars, gadgets etc.
Non-Durable consumer Goods:
Items that are used up easily - Newspaper, bic pens, magazines
Capital Goods
Used by other businesses in the production of products / services -- Education, transport, legal advice
Physical goods used by industries to aid in the production of g's and s's such as machines
Factors of Production
Inputs
available to supply goods and services in an economy
LAND
All natural physical resources
REWARD: RENT
LABOUR
The human input into production
REWARD: Wage
ENTERPRISE
Management, organisation and planning of all FOP's.
Entrepreneurs will invest their own financial capital and take on the risks.
REWARD: Profit
CAPITAL
Refers to Capital Goods used to produce other G's and S's -- Machinery, equipment, new technology etc.
Sectors of Production
Primary
Extracts or harvest products from the earth.
Includes the production of raw materials and food
Secondary
Manufacturing of finished goods.
Metal working, car production, construction...
Tertiary
The service industry
Provides services to the general population and businesses
Retail, whole sales, transportation, entertainment...
Quaternary
All intellectual knowledge based activities that generate and share info.
ICT, Scientific research, consultancy services
The role
Identify the needs and wants of consumers and other firms. They then purchase resources or FOP's - inputs - in order to produce g's and s's - outputs.
Business functions
Human Resource Management
:Identifies the workforce needs of the business, recruits, selects and trains appropriate employees and encourage them to work productively (motivational aspects)
Finance and accounts
: Monitoring the flow of finance in and out of the business. Analysing accounts, predicting the future for the business and providing info to other departments.
Marketing
: Responsible for market research and analysing results of such research. This info will then be discussed with other departments so the correct product decisions are made. Marketing function decides pricing, how and where to promote the product etc.
Operations management
: Function of ensuring adequate resources are available for production, maintaining production and quality levels and achieving high levels of productive efficiency.
Starting up a business
How
Reason:
Loss of a job = encouraging, desire for independence, a want to make more money
Qualities needed:
Innovation, multi-skilled, commitment and self-motivation, leadership skills, risk-taker and belief in oneself.
Steps
:
Identify market opportunities - own skills or hobbies, previous employment experience - finding a problem and creating a solution.
Sourcing capital to start the business
Determining the best location for the business
Building a customer base
Issues
:
Competition
Lack of record-keeping
Lack of finance and working capital
Poor management skills
Changes in the business environment
Role
Entrepreneur
: Someone who takes the financial risk of starting and managing a new venture
Intrapreneur
: Someone who does not risk their own capital and the consequences of failure. These are accepted by the organisation they work for.
Elements of a business plan
Executive summary - overview of the business + strategies
Description of the business opportunity - details of the entrepreneur, what is sold, why, by whom etc.
Marketing and sales strategy - details of why the customers would buy the product + how to sell them
Management team and staff - skills + experience of the entrepreneur and the staff recruited
Operations - Premises to be used, production facilities etc.
=- Fiancial forecast - Projection of sales, expenses = profit and loss account, break even, cash flow forecast etc.