Understanding Business Management

Business Management

• A business is an organization where people interact and exchange products or services for money.
• Key players in a business are the provider of goods or services, and the person or group who wants to buy them.
• Business management involves planning, organizing, leading, and controlling activities.
• These activities ensure the organization provides goods or services to customers.

What Drives Business

• Business management skills are valuable for application in both small and large organizations.
• These skills give a broader understanding of business management.
• The two main goals of any business are to gain profit and satisfying customers' needs by selling products or delivering services.
• Management utilizes planning, organizing, leading and controlling resources.
• Business management coordinates all activities and resources required for business operations.

Needs vs. Wants

• Businesses seek to satisfy people's wants and needs.
• A need is something a customer cannot live without, such as food, water, or fresh air.
• A want is something people desire but can live without.
• Customers prioritize products and services based on whether they are a need or want.
• A need is a necessity whereas a want is optional

Products and Services

• Generating an income allows people to purchase goods or services, satisfying needs and wants.
• Products are tangible e.g. fruit or equipment
• Services are intangible e.g. a hairdresser cutting hair.

Maslow's Hierarchy of Needs

• Abraham Maslow identified five levels of needs to understand human behavior being physiological, safety, love/belonging, esteem, and self-actualization.
• Physiological needs consist of air, water, shelter, sleep, clothing, and reproduction.
• Safety needs include security, employment, health, and property.
• Love/Belonging needs include friendship, intimacy, family, and connection.
• Esteem needs include respect, self-esteem, status, recognitions, and strength.
• Self-actualization needs include wanting to become the most one can be.
• People usually focus on satisfying lower level needs before upper level ones.
• Businesses can tailor their goods and services to better meet needs if they understand the hierarchy of needs.
• Meeting customer needs helps businesses increase profits.

Business Interaction with Communities

• Businesses employ people and pay taxes to assist local governments.
• This helps with infrastructure and services, such as roads or electricity.
• Corporate social responsibility includes sponsorships or support for local schools

Factors of Production

• Natural resources include water, coal, land, gold, iron, soil, and wind energy.
• Capital includes money, buildings, equipment, and human capital knowledge.
• Labour consists of physical and mental work from workers.
• Entrepreneurship combines a business idea with other factors to form a business.

Business Environment

• Businesses are dependent on communities to utilize them.
• Communities rely on businesses for products and services to meet their needs.
• Change is constant, with business landscapes continuously evolving.
• The business environment consists of micro, market, and macro components.
• The external environment includes macro and market elements, influencing the microenvironment.
• Macro factors include economic, political-legal, socio-cultural, technological, ecosystem, and international.
• Market factors include interactions with consumers, suppliers, competitors, intermediaries, special interest groups, and the labour market.
• The internal business environment is the microenvironment encompassing vision, mission, ethics, diversity, and culture.

PESTLE Analysis

• PESTLE stands for Political, Economic, Socio-Cultural, Technological, Legal, and Environmental factors.