Business Management Overview

Key Stakeholders in Business

• Manager: Oversees business operations with a focus on profitability.
• Employees: Engage in physical and mental efforts essential for producing goods and services.
• Customer: End-users whose demand and satisfaction determine business success.
• Government: Establishes laws and regulations that create a conducive environment for businesses.

Characteristics of Business

• Entrepreneur: Identifies market needs, visualizes business opportunities, and coordinates production factors to establish a business.
• Economic Activities: Involves the production and distribution of goods and services, distinct from non-economic activities.
• Exchange: Fundamental to business, emphasizing the transfer of goods/services with profit as the central motive.
• Profit Motive: Primary objective in business activities; enterprises seek to earn profits despite potential losses.
• Risk and Uncertainty: Businesses must navigate unpredictable factors that affect opportunities and outcomes.
• Continuity of Transactions: Regular and ongoing transactions characterize a business, not one-off deals.
• Creation of Utility: Involves storing products when unnecessary and supplying them when needed, facilitating consumer choice.
• Organizational Structure: Essential for smooth operations and compliance with operational standards.

Understanding Law

• Definition of Law: A set of rules established by authorities with legal binding force, aimed at dispute resolution and regulation of conduct.

Role of Law in Business

• Criminal and Civil Law:
  • Criminal law protects society from wrongdoing, leading to fines or imprisonment.
  • Civil law addresses compensation for losses incurred from others' actions.
• Substantive and Procedural Law:
  • Substantive law defines rights and duties.
  • Procedural law outlines methods for enforcing these rights.
• Public and Private Law:
  • Public law governs relations between individuals and the state.
  • Private law manages agreements between individuals without statutory intervention.

Legal Considerations in Business Operations

• Legal Counsel: Essential for setting up a business correctly to avoid liabilities and to handle agreements and contracts.
• Tax Compliance: Businesses must adhere to various tax regulations, including federal and state tax obligations. Non-compliance can result in penalties.
• Accountants' Role: Accountants must stay updated on legal changes, ensuring that clients comply with tax laws while avoiding legal pitfalls.

Business Classification

• Criteria for Classification:
  • Business objectives
  • Areas of operation
  • Size of the business
  • Types of products
  • Economic sectors
  • Mode of ownership

Multi-National Corporations (MNCs)

• Definition and Structure: MNCs operate in multiple countries, often with decentralized structures allowing for local responsiveness.
• Impact on Host Countries:
  • Positive Effects: Job creation, skill transfer, GDP contribution, increased competition, consumer choice, and tax revenue.
  • Negative Effects: Potential harm to local businesses, cultural imposition, profit repatriation, and lack of meeting local ethical expectations.

International Business Strategies

• International Strategy: Focuses on selling standardized products globally without significant adaptation to local markets.
• Multi-Domestic Strategy: Adapts products and marketing to meet local preferences while often disregarding cost efficiency.
• Global Strategy: Prioritizes cost reduction and efficiency over local adaptation, allowing firms to compete internationally based on price.