Chapter 01 INTRODUCTION TO BUSINESS AND ITS STRUCTURE

What do you mean by a business? It is an occupation, profession or trade; something that is someone duty or concern. The profit motive is always there in a business.

Business Process
Input factors of production (Land, Capital, Labour and Entrepreneurship) Process factors of production and try to retain profit

Provide goods and services

What are the business resources? Each and every organization uses different kind of resources in the business processes. Businesses are always trying to maximize their shareholders/owners wealth. Therefore businesses are using their resources (Factors of production) in efficient and effective manner. Factors of production can be elaborated as follows:

Land Capital Labour and Entrepreneurship

Efficiency & Effectiveness

Efficiency refers to getting the most output from the least amount of inputs. Efficiency is often referred to as doing things right that is, not wasting resources. However, its not enough just to be efficient. Management is also concerned with being effective, completing activities so that business goals are attained.

Effectiveness is often described as doing the right things that is, those work activities that will help the business reach its goals.

In successful business, high efficiency and high effectiveness typically go hand in hand.

The most important resource to commence a business is entrepreneurship. Because the effectiveness of the other resources is defend on the entrepreneurship. An entrepreneur is a person who has the ability to take the risks and organize the factors of production.

What are the basic requirements to start a business? Followings are basic needs to commence a business:

Capital/Finance Land, premises and equipments Labour Customers Suppliers Management/Organization Structure Ideas, Knowledge, Information and methods etc.

Business Vision, Mission, Goals and Objectives

What is vision? The first step of a business is envisioning the future This is exercise the seeing the future first. The top management of the business/Organization should have a clear mental picture about future context within the organization will operate in the long run.

What is mission? Vision defines the envisioned societal purpose of the business in the envisioned future, while mission defines the business in its scope and philosophy. That means a typical mission contains some expressions of the business Scope and business philosophy.

Business scope can be defined as;

Product or service that business will offer (What) Geographical scope/market scope within which the business aims to excel (Where/Who) Type of technology that the business will employ in defining its presence. (How) Business Philosophy can be defined as; underline values and believes that the business as a corporate citizen will worship.

Goals provide the direction for all management decisions and actions and form the criteria against which actual accomplishments are measured.
Objectives are specific end results that the Specific Measurable Achievable Rational Time Bound
business aims to achieve within a set time frame. It is said Objective should be SMART.

What is Internal and External factor effecting Businesses?

Internal and external constraints that restrict a managers decision options exist within every business. Internal constraints arise from the

organizations culture and external constraints come from the organizations environment. External
factors in this view, its unreasonable to expect managers to significantly affect a businesss performance. Instead, an organizations results are influenced by factors outside the control of managers. These factors include, for example, the economy, customers, governmental policies, competitors actions, industry conditions, control over technology, and decisions made by previous managers.

What are the business functions of a business?

There are difference business functions in a business. Those businesses functions are interlinked each other. Some of the major business functions can be listed as follows; Production Marketing Human Recourse Management Procurements/Purchase Finance Administration Research and Development Management Structure

What are major types of business do you see in the present context?
There are different kinds of business in the present context such as;

Sole proprietorship Partnerships Limited Liability Companies Public Companies Public Corporations Corporative Societies Franchises etc.

There different types of advantages and disadvantages each kind of business types.

Growth of a Business How do you see the growth of a business?

Growth can be seen in following way; Revenue/Turnover Profitability Total Assets Share Capital Market Share Number of employees Number of branches

Why do businesses want to grow?

The businesses want to grow because of the following reasons;

To enjoy the economies of scale to minimize the cost of production To enlarge the existing market share To ensure long term survival of the business.

What are the major types of growth?

There are three major types of growth; Building up new business Acquiring Merging

Who are the stakeholders?

Who are stakeholders? We define them as any constituencies in the organizations external environment that are affected by the organizations decisions and actions. These groups have a stake in or are significantly influenced by what the organization does. In turn, these groups can influence the organization. The following exhibit identifies some of the most common stakeholders.

Customers Employees

political Action Social and

Unions

Competitors

Organization industry Trade and

Shareholders

Communities Suppliers

Governments

Note that these stakeholders do include internal and external groups. Why? Because both can affect what an organization does and how it operates. However, were primarily interested in the external groups and their impact on managers discretion in planning, organizing, leading, and controlling. This doesnt mean that the internal stakeholders arent important.

What is Social Responsibility?

Businesses regularly face decisions that have a dimension of social responsibility: Employee relations, philanthropy, pricing, resource conservation, product quality and safety, and doing business in countries that violate human rights are some of the more obvious. Therefore in simply social responsibility is the duty and obligation of a business to different stakeholders. The social responsibility always has conflicts with different stakeholders such as shareholders and employees.

What is organization structure? A comprehensive definition for organizational structure is the way in which an organizations activities (job tasks) are divided, organized and coordinated.
The organizational structure is related with seven key elements that are given below.

Work Specialization Departmentalization Chain of command/hierarchy Span of management/control Delegation (Centralization/Decentralization) Formalization Coordination.

Thank You!