Business Management Notes

Business Essentials

• Businesses aim to fulfill people's needs and wants through goods or services at a cost.
• Needs refer to essentials for survival, while wants are individual desires that are non-essential.

Key Factors Needed for Business

• Human Resources: Essential for labor-intensive operations, requiring qualified personnel.
• Physical Resources: Goods, items, or materials necessary to run a chosen business.
• Finance: Capital is crucial, with considerations for borrowed money and ensuring profitability for repayments.
• Enterprise/Entrepreneur: Refers to individuals or spaces dedicated to business activities.

Functions of Business

• Human Resources: Hiring qualified individuals for specific business roles.
• Marketing: Promoting the business to attract customers and potential employees.
• Finance/Accounts: Ensuring adequate financial resources and managing financial obligations.
• Operations: Managing inventory and the supply of raw materials for continuous business functionality.

Sectors of Business

• Primary Sector: Involves acquiring raw materials for business startups.
• Secondary Sector: Focuses on processing raw materials into finished products.
• Tertiary Sector: Provides services and distributes goods.
• Quaternary Sector: Engages in person-to-person services, consulting, or online IT services.

Vertical Integration Strategies

• Vertical Integration: A company owns multiple stages of its production process, from raw materials to retail.
• Backward Integration: Expanding control by taking over suppliers to strengthen the supply chain.
• Forward Integration: Merging different value chains to enhance market share or reduce costs.

Sources of Entrepreneurship Ideas

• Engaging with reading materials.
• Seeking new needs in the market.
• Utilizing technology.

Reasons for Starting a Business

• Driven by necessity for income or independence in work choices.

Process of Business Startup

• Organize the foundational aspects of the business.
• Conduct thorough market research.
• Develop a detailed business plan.
• Address and establish legal requirements.
• Test the business concept in the market.

Definition and Role of an Entrepreneur

• An innovator tasked with developing new ideas or projects within a company setting.

Common Problems Faced by Businesses

• Issues related to organization, such as inappropriate locations.
• Challenges in market research.
• Difficulties with business planning.
• Legal compliance hurdles.
• Financial management concerns.
• Market competition issues.

Types of Business Organizations

• Private Organizations:
  • Owned and operated by a sole entrepreneur responsible for decisions and operations.
  • Limited accountability and personal liability for business issues.
• Partnership:
  • Owned by two partners who share responsibilities and finances.
  • Personal liability for legal matters; presence of "sleeping partners" who may have minimal involvement.