BUSINESS UNIT 1

BUSINESS UNIT 1

1. DEFINITION

   • Is a decision-making organization involved in the process of using inputs to produce goods and/or to provide services.
   • Revenue
     • The income generated from normal business operations and includes discounts and deductions for returned merchandise.
   • Costs of production
     • The cost incurred by a business from manufacturing a product or providing a service. CP= MC+LC+IC

2. ROLE OF BUSINESS

   • Combine human, physical and financial resources to create goods and services in order to satisfy the needs and wants of people, organization  and government.

3. PRODUCTION PROCESS

   • Inputs
     • Raw material, components, machinery, equipment and labour
   • Processes
     • Turning the inputs into manufactured goods or into the provision of services.
   • Outputs
     • The outputs or provision

4. CUEGIS CONCEPTS

   • A three-dimensional model that structures facts and skills with concepts of a particular discipline.
   • Change
   • Ethics
   • Culture
   • Globalization
   • Innovation
   • Strategy

5. PRODUCT

   • Goods
     • physical products
   • Services
     • intangible products

6. CONSUMER AND COSTUMER

   • Consumers
     • People or organizations that buy a product.
   • Constumers
     • The ones who use the products.

7. TYPES OF PRODUCTS

   • Consumer goods
     • Products sold to the general public, rather tan to other businesses. They can be further split into consumer durables or non-durables.
   • Capital goods
     • Physical products bought by businesses to produce other goods and/or services.
   • Services
     • Tangible products provided by business.

8. FACTORS OF PRODUCTION

   • Resourced needed by business to produce goods or services-
   • Land
     • Includes land itself and all of the renewable and non-renewable resources of nature. Solar energy, water, wind, phosphate, oil, limestone.
   • Labour
     • Manual and skilled labour make up the workforce of business.
   • Capital
     • The finance needed to set up a business and pay for its continuing operations as well as all the man-made resources used in production.
   • Enterprise
     • The driving force of business provided by risk-taking people, wich combines the other factors of production into a unit that is capable of producing goods and services.

9. MAIN FUNCTIONS OF BUSINESS

   • The main functional business areas must work together in order to achieve the organization´s goals.
   • Business Organizations
     • Human Resources (HR)
       • Responsible of managing the personnel of the organization
     • Finance and accounts
       • In charge of managing the organization´s money. The director must ensure that accurate recording and reporting of financial documentation takes place.
     • Marketing
       • Responsible for identifying and satisfying the needs and wants of costumers. It is in charge of ensuring that the firm´s production sell.
     • Operations
       • Responsible for the process of converting raw materials and components into finished goods, ready for the sale and delivery to costumers.

10. Entrepreneurship and intrapreneurship

    • Entrepreneurship: creating a business while building and scaling it to generate a profit Intrapreneurship: being an entrepreneur but as an employee.
    • Entrepreneur
      • Individual who plans, organizes and manage a business taking on financial risks. Combines the other 3 factors of production to produce a good or service.
    • Intrapreneur
      • Employee who thinks and acts as an entrepreneur within a section of the organization, Is independent, proactive, creative and generates new ideas for the organization.

11. BUSINESS SECTORS

    • Primary
      • Involved with extraction, harvesting and conversion of natural resources Activities tend to account for a large percentage of output and employment in LEDS (less economical developed countries)
      • Mining, mineral extraction, forestry, fishing, agriculture
    • Secondary
      • Involved in the manufacturing or construction of products. Economical developing countries usually have a dominant secondary sector. Value is added to the natural resources used during the production process.
      • Clothes, energy production companies, manufacturers, publishing firms, breweries and blottles...
    • Tertiary
      • Specialize in providing services to the general population. Goods can be transformed in the process of providing services.
      • Retailing, health care, insurance, finance, banking, leisure and tourism...
    • Quaternary
      • Subcategory of the tetiary sector. Involved in the intellectual, knoledge-based activities that generate and share information. Mainly in the MEDCs (more economically developed countries)
      • Scientific research, consultancy service, research and development, information communication technology

12. REASONS FOR STARTING UP A BUSINESS

    • Hobbies
      • Turn their hobbies into a business.
    • Autonomy
      • Being self-employed Not working for someone else
    • Challenge
      • Personal satisfaction Being succesful in business boost self-esteem
    • Transference and heritage
      • Business passes to the next generations.
    • Security
      • Financial security No dismissment

13. PROBLEMS OF STARTING UP A BUSINESS

    • Lack of finance
    • Cash flow problems
    • Marketing problems
    • Unestablished costumer base
    • People management
    • Legalities
    • Production problems
    • High production costs
    • Poor location
    • External influences

14. STEPS FOR STARTING A BUSINESS

    • 1. Write a business plan
      • Goals, objectives, an outline plan of how the targets would be accomplished
      • Shareholders
        • Internals: employees Externals: government, costumers...
      • Stakeholders
        • They have an interest in the performance of a company
    • 2. Obtain start-up capital
      • The business owners will use their credits and/or obtain loans to finance their start-up.
    • 3. Obtain business registration
      • The owner must register the legal statue of the business.
    • 4. Open a business bank account
      • To facilitate the financial operations of the business. Scholar and christmas bonus.
    • 5. Marketing
      • Establish presence on internet. Establish credibility.
    • 6. Starting a new business
      • It is highly risky because all owners and investors are taking a step into the unknown.

15. CHAIN OF PRODUCTION

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