Introduction to Business

Overview of Subject

• This section covers understanding the concept of business, managing the business, and marketing the products of the business.

Introduction to Business

• A business is a profit-making entity.
• Profit is the money remaining after all expenses have been deducted.
• Profit is the incentive for engaging in business activity.

Creators of Business: Entrepreneurs

• Entrepreneurs initiate businesses.
• Entrepreneurs are risk-takers who bring something into existence.
• They discover new ways of combining the factors of production.

Factors of Production

• Land
• Labor
• Capital
• Entrepreneurship

Special Nature of Entrepreneurs

• Entrepreneurs are risk takers
• They are ambitious
• They are not satisfied with the status quo

Characteristics of Entrepreneurs

• They possess distinct characteristics.
• Entrepreneurs are highly disciplined.
• They believe they control their destiny.
• They listen to their senses.
• Entrepreneurs relate well with others.
• They are eager to learn necessary skills.
• They learn from mistakes.
• They stay informed on market changes.
• Entrepreneurs are willing to exploit new opportunities.
• They are driven by ambition.
• They think positively.
• Entrepreneurs are excited by potential rewards from taking risks.

Meeting Internal Challenges

• A value system provides purpose and guiding principles for venturing in an activity.
• An organization's value system is guided by its mission, vision, and goals.
• All organizations should have a clearly defined mission, vision, and goals.

Business Owners: Shareholders

• Shareholders are the owners, and they own shares in the business.
• When a business is profitable, shareholders are paid a dividend.
• Shareholders may or may not manage the business, depending on its structure.

Forms of Business Ownership

• There are three forms of business ownership:
  • Sole Proprietorship
  • Partnership
  • Corporation
• Each has its own advantages and disadvantages.

Competitive Situations

• Pure competition
• Monopolistic competition
• Oligopoly competition
• Monopoly competition

Stakeholders

• A stakeholder is an individual or group with direct or indirect interest in a business's activities.
• Organizations have both internal and external stakeholders.

Internal Stakeholders

• Employees
• Shareholders
• Board of Directors

External Stakeholders

• Customers
• Suppliers
• Government
• Special Interest Groups
• Media
• Labor Unions
• Financial Institutions
• Competitors

The Environment of an Organization

• An organization must interact with its environment to sustain its operations.
• A business is influenced by many forces.
• These forces include direct and indirect action elements.

Direct Action Elements

• These forces are close to the business and directly affect its operation.
• They include employees.
• They include suppliers.
• They include competitors.
• They include consumers.
• They include natural disasters.

Indirect Action Elements

• These are political elements.
• These are economical elements.
• These are social elements.
• These are technological elements.

Tutorial Activities

• What makes businesses come into operation?
• What are the main forms of businesses that can be owned and operated?
• Why should we be concerned about stakeholders?
• What is the need for understanding the environment of an organization?
• How do we manage the demands for the elements of the environment?