Unit 1.1 business

• Business


  A decision-making organization established to produce goods and/or provide services
• Factors of production


  • Land
  • Labour
  • Capital
  • Entrepreneurship
• Consumers


  The individuals or organizations that actually use a product
• Customers


  The individuals or organizations that purchase a product
• Entrepreneurs


  The individuals who take risks in overseeing a business organization or business venture, usually in pursuit of profit
• Entrepreneurship


  The knowledge, skills and experiences of individuals who have the capability to manage the overall production process
• Functional areas


  • Human Resources
  • Sales and Marketing
  • Finance and accounts
  • Operations Management
• Human Resources (HR)


  The business function that handles all aspects relate to the workforce, involving all aspects of a firm's operations related to staff (personnel) within an organization
• Sales and Marketing


  Business function of identifying the needs and wants of customers so that the organization can provide goods and services to meet these requirements and desires, usually in a profitable way
• Finance and accounts


  Function of an organization responsible for ensuring that the business has sufficient funds in order to conduct its daily operations
• Operations (or operations management)

  The business function referring to the process of making goods and providing services from the available resources of a business to meet the needs and wants of its customers
• Goods


  Physical products, such as cars, clothes, flowers, food, furniture, smartphones, and toys
• Services


  Intangible products, such as haircuts, tourism, public transport, banking, insurance education, and healthcare
• Adding value


  The process of producing a particular good or service that is worth more than the cost of the resources used to produce it
• Sectors of the economy

  • Primary sector
  • Secondary sector
  • Tertiary sector
  • Quaternary sector
• Primary sector


  Business activity involved with the extraction of natural resources, e.g., fishing, mining and agriculture
• Secondary sector


  Business activity involved with the manufacturing or construction of finished products
• Tertiary sector


  Business activity that involves providing services to customers, i.e., consumers and business clients
• Quaternary sector


  Business activity involving the creation or sharing of knowledge and information
• Needs


  The basic necessities that an individual must have in order to survive, such as food, water, and shelter
• Wants


  These are the desires of individual customers, i.e., the goods and services that they would like to have (rather than things they need to survive), such as a new smartphone, a family holiday in an overseas location, fresh flowers, or jewellery
• Challenges for starting up a business

  • Lack of finance
  • Lack of market research
  • Poor marketing strategy
  • Limited Human Resources (attracting suitable/skilled staff)
  • Long hours
  • Lack of knowledge, skills and experiences
• Opportunities for starting up a business

  • Money
  • Autonomy (being the boss/independent)
  • The challenge itself
  • Passions
  • Family ties
  • Unfilled market opportunities
  • Making a difference (purpose)
• Walt Disney (1901 - 1966): 'All our dreams can come true, if we have the courage to pursue them'
• David Allen (b.1945), American productivity and management consultant: 'It's easier to change directions if you are in motion'
• Anatole France (1844-1924), Nobel Prize Winner for Literature, 1921: 'To accomplish great things, we must not only act, but also dream, not only plan, but also believe'
• AO1


  Demonstrate knowledge and understanding
• AO2


  Demonstrate application and analysis
• AO3


  Demonstrate synthesis and evaluation
• AO4


  Demonstrate a variety of appropriate skills
• Key Terms


  • Vision Statements
  • Mission Statements
  • Objectives
  • Strategies
  • Tactics
  • Corporate Social Responsibility (CSR)
• Vision Statement


  The vision statement is forward looking and speaks to the long-term aims and highest aspirations of a business. Vision statements do not have to be actual targets that must be achieved (this is the purpose of setting mission statements). Instead, vision statements express the goal in order to inspire everyone involved with the firm, they are often somewhat idealistic.
• Mission Statement


  The mission statement outlines the overall purpose of the organisation and its core values. It complements the vision statement by explaining what the organisation does, right now, at the present time, in order to achieve its vision.
• Vision statement addresses the question

  What do we want to become?
• Mission statement deals with the question


  What is our business?
• Criticisms of vision and mission statements

  • Too vague, so therefore are rather meaningless and / or difficult to measure
  • Based on public relations (i.e. to make the organization "look good" - what the business aspires to and what it actually does on a regular basis may not align
  • Vision statements (and many mission statements) are very long term, so may not ever materialise
  • Virtually impossible to really analyse or disagree with, so may be ignored or not taken seriously by stakeholders such as employees
• Business objectives (or simply objectives) are the clearly defined and measurable targets of an organization, used to achieve its overall goals
• Examples of business objectives

  • To generate greater shareholder value by targeting new market segments
  • To achieve sales growth of $500 million in the Asia Pacific region in 2022
• Successful objectives


  • Specific
  • Measurable
  • Attainable or achievable
  • Relevant
  • Time-specific
• Examples of SMART objectives

  • I want to sell more high-quality sports products in my 4 stores located in malls to take advantage of the effect of a sports festival that will happen in my city
  • Sell 35% more high quality sports products, compared to last year, in the 4 stores located in malls to take advantage of the effect of a sports festival that will happen in my city
  • Increase the market share of our company by 10% by opening 4 new stores in the 3 main malls of the city by the end of the year, taking advantage of the increase in consumption generated by the sports festival that will happen in the city
  • To achieve sales of growth of €10 million in European markets by 2023