Business and External Environment

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Questions and Answers

What is the primary purpose of a business entity?

To provide financial services to consumers

To distribute products to customers

To achieve specific declared goals (correct)

To transform basic materials into finished products

According to Appleby (1987), who is involved in obtaining, arranging and transforming basic materials into finished products?

Producers (correct)

Financial service providers

Distributors

Consumers

What is the relationship between inputs and outputs in a business, according to the concept of efficiency?

A relation between inputs and outputs (correct)

A direct proportional relationship

An inverse proportional relationship

A fixed ratio of inputs to outputs

What is the condition when no additional output can be obtained without increasing the amount of inputs?

Productive efficiency Signup and view all the answers

What is the term for the efficiency where any changes made to assist one person would harm another?

Pareto efficiency Signup and view all the answers

What is the primary division of business activity, as mentioned by Appleby (1987)?

Consumers, producers, and distributors Signup and view all the answers

What is productivity expressed as?

The ratio of output to inputs used in a production process Signup and view all the answers

What is the main focus of the Human Relations School, led by G.E. Mayo?

Understanding the components of job and work satisfaction of employees Signup and view all the answers

Who is credited with developing the concept of Knowledge Management?

P. Drucker Signup and view all the answers

What is the main goal of the time and motion study approach?

To eliminate waste and increase productivity Signup and view all the answers

What is the name of the system of work developed by Henry Ford?

Fordism Signup and view all the answers

What is the name of the experiment conducted by G.E. Mayo?

Hawthorne Experiment Signup and view all the answers

What type of knowledge is described as being extremely difficult to set out in tangible form?

Tacit knowledge Signup and view all the answers

What is the primary goal of a value chain?

To deliver a valuable product or service for the market Signup and view all the answers

Which type of knowledge is set out in tangible form?

Explicit knowledge Signup and view all the answers

What is the term used to describe the knowledge gained from hands-on experience?

Kinesthetic knowledge Signup and view all the answers

What is the primary advantage of knowledge management in production?

To facilitate knowledge transfer Signup and view all the answers

Who are the authors of the concept of knowledge forms?

Nonaka and Takeuchi Signup and view all the answers

What is the primary focus of the 'Operations' activity in Porter's Value Chain?

Transformation of inputs into final product Signup and view all the answers

Which of the following support activities is responsible for recruiting, hiring, and training personnel?

Human Resources Management Signup and view all the answers

What is the primary focus of the 'Inbound Logistics' activity in Porter's Value Chain?

Receipt of inputs and storage Signup and view all the answers

Which of the following primary activities is responsible for providing after-sales support to customers?

Service Signup and view all the answers

What is the primary focus of the 'Technological Development' support activity in Porter's Value Chain?

Equipment, hardware, and software development Signup and view all the answers

Which of the following primary activities is responsible for distributing finished goods to buyers?

Outbound Logistics Signup and view all the answers

What is the primary focus of the Operations activity in Porter's Value Chain?

Converting inputs into outputs Signup and view all the answers

Which primary activity in Porter's Value Chain involves managing the process of storing and moving the final product?

Outbound Logistics Signup and view all the answers

What is the primary focus of the Inbound Logistics activity in Porter's Value Chain?

Arranging the inbound movement of materials Signup and view all the answers

Which primary activity in Porter's Value Chain involves selling a product or service?

Marketing and Sales Signup and view all the answers

What is the primary focus of the Service activity in Porter's Value Chain?

Keeping the product/service working effectively for the buyer Signup and view all the answers

Study Notes

Business and Value Engineering

A business is an organizational, economical, and legal entity that unites individuals to provide goods and services to consumers and achieve specific goals.
Business activities can be categorized into consumers (demanding goods and services), producers (transforming raw materials into finished products), and distributors (delivering products and financial services).

Business Economics and Microeconomics

Efficiency is defined through the relationship between inputs and outputs.
Allocative efficiency: Any improvement for one individual results in a loss for another.
Productive efficiency: No more output can be generated without increasing input; production operates at the lowest possible average total cost.
It's possible for a system to be allocatively efficient but not productively efficient, or vice versa.

Porter’s Value Chain

Primary Activities: Critical for transforming inputs into outputs.
- Inbound Logistics: Receipt, storage, and control of inputs.
- Operations: Converting inputs into final products using labor and technology.
- Outbound Logistics: Managing distribution of finished goods to customers.
- Sales & Marketing: Advertising and persuading consumers to purchase.
- Service: Providing after-sales support and maintenance.
Support Activities: Enhance primary activities.
- Infrastructure: Encompasses management tasks like accounting, legal, finance, and quality assurance.
- Technological Development: Involves tools, procedures, and knowledge for production processes.
- Human Resources Management: Focuses on employee recruitment, training, development, and compensation.

Productivity

Productivity is measured as the ratio of output to the inputs used in production.
Scientific management principles proposed by F.W. Taylor emphasize well-defined tasks, standard conditions, high compensation for meeting standards, and penalizing failures.
Fordism, associated with Henry Ford, emphasizes effective mass production techniques.

Human Relations School

G.E. Mayo's Hawthorne Experiment highlighted the importance of employee satisfaction in enhancing productivity.
Understanding employee needs allows managers to motivate subordinates more effectively.

Knowledge Management

Types of knowledge:
- Explicit Knowledge: Tangible, documented information.
- Implicit Knowledge: Non-tangible but can be made explicit.
- Tacit Knowledge: Difficult to articulate knowledge learned through experience.
Toyota serves as a prime example of effective knowledge management in production, showcasing how tacit knowledge is invaluable in practical applications.

Summary of Value Chain Components

A value chain consists of activities essential for delivering valuable products/services to the market.
- Inbound Logistics: Managing the supply chain.
- Operations: Transforming raw materials into finished products/services.
- Outbound Logistics: Overseeing final product storage and distribution.
- Marketing and Sales: Strategies to sell products/services.
- Service: Activities ensuring product effectiveness post-sale.

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Description

This quiz covers the basics of business and its external environment, including business economics, microeconomics, Porter's value chain, and the primary and support activities of a company. It also touches on material, informational, and financial flows.