Unit 1 - Introduction to Business Management

• A business plan is an outline that describes the nature, objectives, strategies, financial projections, marketing plans, management structure, and other relevant information about a new or existing business.
• The purpose of a business plan is to guide the development and operation of a business by providing a roadmap for decision-making and resource allocation.
• Horizontal integration: when M&As happen between companies in the same sector of industry
• Vertical forwards integration: when a company merges with or takes over a company from a “higher” sector of industry.
• Vertical backwards integration: when a company merges with or takes over a company from a “lower” sector of industry.
• M&As refers to mergers and acquisitions. Merger means two or more companies forming one larger company. Acquisition (or takeover) happens when one company takes ownership of another company
• Joint venture is formed when two or more companies create a third company that operates for their mutual benefit
• Strategic alliance is a cooperation of two or more companies in certain aspects for their mutual benefits
• Franchising is a way of external growth whereby franchisor company allows other companies (franchisees) to sell their products and trade under its brand (franchise) in exchange for royalty payments (regular payments for using the franchise) and franchise fee (payment to “buy” the franchise)
• Multinational/transnational company (MNC) — is any company that operates in two or more countries
• Globalisation is a trend/process of integration of local economies into one global economy, whereby companies, organisations and people think globally, but act locally.
• host countries (countries that MNCs enter).
• repatriation of profits is when a company returns profits to the country of origin
• Business is an organisation that provides goods and services and satisfies needs and wants in a profitable or non-profitable way
• Inputs are the resources that businesses use in order to transform them into outputs by adding value
• factors of production:

  1. Land (physical resources) — land, real estate or raw materials, for example, fish, gold, wood.
  2. Labour (human resources) — people in business: employees and managers.
  3. Capital (financial resources) — cash and other forms of financial resources as well as capital goods, i.e. things/equipment used in production: office chairs, desks, laptops or assembly line robots.
  4. Entrepreneurship — skillset that combines all the factors of production in order to transform them into products (goods and services).
• Added value is extra perks/features that are added to inputs in order to sell them to customers
• Capital-intensive refers to high reliance on machinery in production process.
• Labour-intensive refers to high reliance on human labour.
• Output is a product, that can either be tangible (good) or intangible (service).
• If a product is sold by one business to another, this is a producer good or service
• If a product is sold by business to the general public, this is a consumer good or service
• HRM

  Making sure that the right people are employed and paid by the business, regularly trained, appraised and treated in accordance with Health & Safety regulations
• Marketing


  Making sure the right product is sold at the right price in the right place using appropriate promotion methods
• Business functions

  • Human resource management (HRM)
  • Finance and accounts
  • Marketing
  • Operations management
• Operations management

  Making sure that goods are produced using relevant methods of production and/or making sure that the most efficient processes are used to provide services
• Finance and accounts

  Planning for the future costs, revenues and cash flow and keeping records of the costs, revenues and cash flow in the past, as well as financial analysis and budgeting
• This idea of organisation where all functions are united by common goal and rely on each other is called interdependence
• Economic sector (or sector of industry) refers to all the businesses within an economy that are involved in a similar activity.
• Secondary sector


  Refers to manufacturing businesses that transform raw materials, extracted by primary sector businesses, into goods
• Selling apps and video games in retail stores

  An example of tertiary sector activity
• Quaternary sector


  Refers to provision of services that relate to data, knowledge and IT
• Quaternary sector activities

  • App and video game development
• Tertiary sector


  Refers to provision of services
• Primary sector


  Refers to all the businesses that extract raw materials
• the decrease of the secondary sector is called deindustrialisation
• Economies where primary sector dominates are called less developed economies
• Economies where secondary sector dominates are called developing economies
• Countries where tertiary and quaternary sector dominate are referred to as developed economies
• Public sector refers to part of the economy that is comprised of organisations that are created and run by governments to provide public services, for example police, public transport, healthcare, education, infrastructure. Public sector organisations are mostly funded by tax revenue