Intro To Business Notes PDF

# Intro to Business ## **Ali Al Harthi** ## **Chapter One** ### **Business Organizations: The External Environment** ### **The Business Organization As A Transformation System:** - **Inputs**: Materials, Labor, Technology - **Business Organizations**: Inputs create outputs & vice versa - **Outputs...

# Intro to Business ## **Ali Al Harthi** ## **Chapter One** ### **Business Organizations: The External Environment** ### **The Business Organization As A Transformation System:** - **Inputs**: Materials, Labor, Technology - **Business Organizations**: Inputs create outputs & vice versa - **Outputs**: Goods, Services, Informations ### **The EXTERNAL ENVIRONMENT** includes a wide range of influences that can affect the business activity in various ways. ### **Two Levels of External Environment** #### **General/Contextual Environment:** - Economical - Political - Legal #### **Immediate/Operational Environment:** - Suppliers - Competitors - Labor market ### **General/Contextual Environment:** - **P.E.S.T.L.E. Analysis** can be used to analyze a firm's current and future environment as a part of the strategic management process. - Political - Economical - Social - Technological - Legal - Environmental - **S.W.O.T Analysis** - **Strengths**: What are you doing well? (Internal) - **Weaknesses**: What do you need to improve? (Internal) - **Opportunities**: How could it benefit you? (External) - **Threats**: How can it harm you? (External) ### **Immediate/Operational Environment:** - **Resources** - **Suppliers** - **Competitors** ## **Chapter Two** ### **Business Organizations: The Internal Environment** ### **What Is An Organization?** Two or more people who work together in a structured way to achieve a specific goal(s). Common features: - People - Objectives - Structure - Management ### **What is Management?** A system of roles fulfilled by individuals who manage, identify, and achieve the organization's goals and to adapt to change. ### **The three types of sectors:** - **Private Sector**: The part of the economy owned and controlled by private individuals seeking profit. - **Public Sector**: The part of the economy owned and controlled by the government seeking the general well-being of citizens. - **Voluntary Sector**: Charities, voluntary bodies, and community businesses that are non-profitable and non-governmental organizations. ### **How Are Organization Structures Created?** Labor is usually divided, resulting in the ability for employees to specialize particular roles then occupying designated positions. This results in a pattern which is called the **Organizational Structure**. ### **Important Objectives of an Organizational Structure** - Ensure Accountability of Individuals - Provide Opportunities for organizational monitoring performance - Guarantee co-ordination between the different parts of the enterprise - Provide an efficient and effective means of organizational communication - Adapt to changing circumstances by internal/external influences ### **Organizational Chart:** - Appoints the formal pattern of role relationships and interactions roles and their occupiers. ### **Classification of Relationships** - **Line**: Occurs when authority flows vertically downward from superior to subordinate - **Staff**: When senior personnel appoint assistants who normally have no authority but acts as an extension of their superior. - **Functional**: Between specialists and line managers and their subordinates. - **Lateral**: Exists between individuals occupying equivalent positions within different departments. ### **Types of Organizational Structure:** - **Function or Major Purpose**: Associated particularly with departmental structures. - **Product or Service**: Individuals responsible for a particular product or service are grouped together. - **Location**: Based on geographical criteria - **Common Process**: Based on particular skills/methods of operation. - **Client Group**: Example: children, disabled, elderly. ## **Chapter Three** ### **The global context of business** ### **What is globalization?** A term used to describe the process of integration on a worldwide scale of markets, production, free global movement of capital. ### **What is hyperglobalization?** A term describing the extremeness of globalization, where the world market is borderless consisting of weak nation states and strong corporations. ### **What is Internationalization?** The increased links between nation states with respect to trade and the movement of resources. ### **What is Regionalism?** Regional trade agreements, like the: EU & Arabian Gulf Council. ### **What is Transformationalism?** A term used to describe globalization as changing both in the (power of countries and companies) and (national characteristics and Culture) ### **Globalization Pros** - Increased specialization, all countries involved benefit from the increased international trade. - Exponential growth in countries that are open to international trade. - Encourages industries to be competitive and efficient. - All sized companies (small/medium/large) benefit from globalization and engaged in global production and marketing. ### **Globalization Cons** - Benefits have not been shared equitably throughout the world. - It empowers the large companies at the expense of governments, making them financially stronger than nations. - Large organizations promoting free trade are not democratically elected, and their decisions are private. - These organizations often ignore human rights and environmental concerns; they aim to trade only. ### **Examples of International Organizations:** - World Trade Organizations (WTO) - International Monetary Fund (IMF) - United Nations Conference on Trade & Development (UNCTAD) ### **People are categorized into three bands:** - **High Income**: North America, Australia - **Middle Income**: East Asia, Pacific Rim - **Low Income**: South Asia, Africa ## **Chapter Four** ### **The demographic, social culture context of business** ### **What is Demography?** The study of population in terms of both their size and their structural characteristics. ### **Key Interests from Business's P.O.V** - **Size and Structure of population change over a period of time.** - **Age Structure** - **Gender Balance** - **Geographical Distribution** ### **The Demographic Environment of Business** - **The Size of the Population**: - Potential market size - Workforce availability - Public expenditure - Economic growth - International trade - **Age/Sex Distribution of the Population**: - **Ageing Population**: An increasing % of the population (65+) group, and a decreasing % in the (16-). - **Demographic time-bomb**: A term describes a country that has more older populations in it. - **Other Structural Characteristics**: Ethnicity and geographical distribution influences business. They could have a knock-on effect for the public and private sectors. - **Population Change**: - **Birth Rate**: The number of live births per thousand of the population in a given year. - Trend towards smaller families - Increased availability of contraceptives: ways to avoid pregnancy - Trend towards late marriages/childbearing for social reasons. - **Death Rate**: The number of live lost per thousand of the population in a given year. - Rising life standards - Developments in medical technology and practice. - Better education. - **Natural Population Change**: The difference between the birth rate and the death rate. - **Net Migration**: The balance between those leaving the country (emigrants), and those entering (immigrants) a country over a period of time. - Legal barriers - Economic migrancy - No. of fleeing prosecutions - Government policies ### **The Demographic Change & Business** - **As population increases, the demand for various goods/services increases. For example: food, energy, houses, etc.... A growing population also provides a larger workforce (at ceteris paribus).** - **An ageing population (demographic time-bomb) increases the demand for various goods/services provided by all sectors: (public, private, voluntary). for example: healthcare, pensions, etc... It also ↖ (dependant populations).** - **A Birth rate influences the demand for education, childcare, comics, toys, etc.... It can also reduce the number of young people available to enter the workforce to replace those who retire.** - **Changes in ethnic groups of the population will affect the demand for particular goods/services. It can also ↖ demand on public authorities. Certain studies show that a diverse workforce improves performance.** - **Regional redistribution the population (migration) affects the consumption of various goods/services and affects their prices like the housing market and the make-up of the local labor market.**