1 - Business organization and environment Flashcards
Business
An organization that provides a good (tangible) or service (intangible) to a market.
Tangible
Something you can physically touch (good)
Intangible
Something you can’t physically touch (service)
The functional areas of a business:
1) Marketing
- Product - ensuring goods and services meet customers demand
- Place - distributing goods to the right market
- Price - Strategic prices to maximize profit
- Promotion - communicating with customers and sales promoters
2) Finance
- Monitoring cash flow
- Paying creditors back
- Investment appraisal
- Tax issues
- Budgeting
- Recording data
3) Human resources
- Recruitment of employees
- Terms and conditions of employment
- Workplace issues
- Health and safety
- Ensures employee treatment follows laws
- Training
4) Operations management
- Designing manufacturing process
- Stock management
- Quality control
- Distribution
- Planning time scale
- Research and development
The business sectors:
1) Primary - extracting raw materials
2) Secondary - Turning raw materials into semi-finished goods
3) Tertiary - Services such as education
4) Quaternary - Services that involve development and use of data information
Industrialization
Changing from the primary sector to the secondary one
Factors that determine the development of a country:
1) Human resources
2) Raw materials
3) Capital formation
4) Technological development
5) Social and political factors
Chain of production
The steps involved in producing finished goods
Integrated companies
Companies whose activities span over two or more sectors
Furniture maker and seller - involved in both primary and secondary sector
Entrepreneur
A person who sets up a business, taking on financial risks in the hopes for profit
Entrepreneurship
Is the process of setting up a new business
Characteristics of an entrepreneur
Risk takers
Self motivated
Confident
Innovative
Intrapreneurs
An individual encouraged by their employees to take risks to develop their new products, processes and services while maintaining their status as an employee
Intrapreneurship
The activity of entrepreneurship when it takes place within an organization
Advantages and disadvantages for Entrepreneurs and Intrapreneurs
Entrepreneurs
Advantages:
- Full control of project
- Business ownership
- 100% commitment
Disadvantages:
- Start from scratch
- High risk
- Stake everything on one card
Intrapreneurs
Advantages:
- Controlled risk
- Multiple career opportunities
- Job security
- Resource access due to large corporations
Disadvantages:
- 100% commitment
- no business ownership
- Dont have full control
- No freedom
Concepts of a business:
1) Globalisation - a concept businesses react to…
2) Ethics
3) Culture
4) Change
5) Innovation
6) strategy
Culture
- Refers to common beliefs, social norms and specific characteristics of a group of people.
OR.
Set of shared characteristics, attitudes, values and practices that dominate within an organization.
What are the two cultures:
1) Organizational culture:
- Individual values and behaviors that contribute to social and psychological environment of a business
Eg. Law firms wearing suits vs Google wearing anything they want
2) National culture
- How a business develops its management practice to fit with the national culture they operate in.
Eg. Maccas changing the 1dhs ice cream to green tea flavor in Japan
Innovation
- The process of creating something new or improving an existing idea/ product
How does it affect the business:
improves products / efficiency / profitability
Change
- When something becomes different or undergoes a certain transformation from its initial condition
Two types of change:
1) Organizational change
There are three levels: Individual, team, organizational
2) External change - outside factors that influence a businesses ability to achieve its goals
- Politics
- Ethics
- Social
- Technological
- Environmental
- Law
Ethics
Refer to moral values which determine the behavior of an individual or group
Good…Toms
Bad…Volkswagen
Globalisation
Is the process of increase integration of national economies.
OR
The process by which businesses or other organizations start operating on an internal scale.
Advantages and disadvantages of Globalisation:
Advantages:
- Cheap labour
- Access to a large market
- Cheaper resources
- More expertise
Disadvantages:
- Exploiting labour
- Bad brand image
- Breaking laws
- Increased transport costs
- International law/ tax
- Language barrier