Introduction to Business PDF

Introduction to Business  WHAT IS BUSINESS A business is usually defined as a commercial enterprise Each business can be defined or described by its type of ownership, the goods produced or services offered, the types of jobs provided, or the functions it performs in a community...

Introduction to Business  WHAT IS BUSINESS A business is usually defined as a commercial enterprise Each business can be defined or described by its type of ownership, the goods produced or services offered, the types of jobs provided, or the functions it performs in a community Businesses are started by entrepreneurs who see a need, recognize the opportunity, and go into business to meet that need  Industry An industry is group of businesses that all produce similar products. Example: Automobile manufacturers and automobile parts is the Automobile Industry The industry is separated into three categories: – primary, - secondary, - tertiary  Primary Industry  Those involved in the first stage of development of products  There are used natural resources which later are used to manufacture products  Mining, fishing, agriculture, forestry, oil and gas extraction are all primary industries  Large amounts of money is needed for research, equipment and machinery  Automation reduces the need for labour  Secondary Industry  Manufacture raw materials into finished products  Gold and silver are refined and made into jewellery  Crude oil is refined into machine oil, gasoline, and plastics  Technology innovations has led to automation with computer assisted design  Production is increasing using fewer workers  Tertiary Industry  Provide services to consumers and other businesses  Often involves selling or using products produced by secondary industries  Tertiary industries are rapidly expanding creating job opportunities in service occupations  Due to advances in technology (including electronics, communications, and computer science and aerospace), consumer demand for higher quality services Influences on Business Marketing External Objectives and Factors Strategy Internal and External Influences Accounting Human and Finance Resources Production and Operations Management  Marketing Market Analysis  Market Size - The Market Research number of individuals in a certain market who Primary and Secondary are potential buyers and/or sellers of a product or service. The Marketing Mix  Market Segments - A Price market segment is a Place group of people who share one or more Promotion common characteristics Product Marketing Strategy  Objectives of Business  Marketing Portfolio  Objectives and Strategy Legal Structure Stakeholders  Sole Proprietor Customers Suppliers  Partnership Employees  Corporation Communities Business Objectives SWOT Analysis  Strengths,  Mission  Weaknesses, Statements  Opportunities,  Starting  Threats Business  Human Resources  Management Structure and Organizational Design  Top Managers, Middle Managers, Front Line Managers  Operatives  Leadership and Management Styles  Autocratic, Democratic, Laissez-Faire  Motivation  Recruitment and Training of Employees  Workforce Planning  Communication  Production/Operations Management  Efficiency and Effectiveness  Stock and Quality Control  Capacity Utilization  Production Methods  Accounting and Finance  Profit and Loss  Balance Sheet  Budgeting  Revenue  External Influences  Market Structure The Legal Environment (The Law)  Perfect Competition Social Responsibility  Monopoly  Imperfect Competition Business Ethics  Oligopoly  The Macro-Economy  Business Cycles  Government Objectives and Policies  Business Goal  Tosatisfy customer needs and surpass their expectations (Drucker. P)  Tocreate, communicate and deliver value to the target customer at a profit (Kotler, P) Marketing Levels  Differences between international and domestic  Culture: diverse, multicultural markets.  Markets: fragmented  Data: difficult to obtain, expensive to collect  Politics: regimes vary in stability  Governments: strong regulations and influence  Economies: unstable currencies, varying levels of development  Finance: different finance systems  Stakeholders: commercial, home country and host country.  Business: diverse rules, culturally influenced  Control: difficult control and coordinate across markets. Internationalization platform Ethnocentric management orientation  Domestic company and country is seen as superior.( Toyota, Samsung, Siemens)  International markets are seen as similar to domestic market.  Strategies and planning are done by domestic company.  Actions which succeeded in domestic market are implemented internationally.  Manufacturing companies see international markets as a means for disposing of surplus domestic production.  Polycentric management orientation  Each host country is seen as unique by domestic company. (Mc Donalds, Nestle)  Each subsidiary develops it’s business and workout unique marketing strategy.  Subsidiaries work independently.  Focus on local customers’ needs and wants. Regiocentric management orientation  Company sees similarities and differences in a region.  Regions are seen as unique.  Development of integrated regional strategies.  EU regional strategies, NAFTA regional strategies.  Geocentric management orientation  Global marketing concept.  World as potential market.  Seeks to create global strategy which is responsive to local needs.  Development of integrated world strategies.  Coca-Cola, McDonald’s.  Internationalization barriers  External barriers: –Legal barriers: high taxes; import quotas –High level of competition: blocked distribution channels, low prices, etc.  Internal barriers: –Finances: lack of investments; –Psychological barriers –Unknown environment: language, attitudes, etc. –Lack of market information –Lack of skilled employees  Reasons of international business growth and globalization  Less trade barriers, liberalization of trade (EU, NAFTA)  Increase of international investments.  Businesses became more interdependent (raw materials, spare parts, operations, etc.)  Increase in productivity efficiency forces to look for new markets.  Increased buying power in developing regions: India, China, Brazil.  https://theconversation.com/china-makes-it- incredibly-hard-for-foreign-businesses-to-operate-but- they-stay-because-the-money-is-just-too-good-147546  Reasons of international business growth and globalization  Loyalty to global brands: Coca-Cola, Apple, Nike, MTV  Unification of market segments and consumer needs: global teenagers.  Increased mobility of people: new experiences, idea sharing, demand of product which are not available at home country.  Competitive advantage - Example  Concentration on core business: –Coca-Cola – soft drinks –McDonald’s – fast food restaurants –Nestle – food and beverages –Nivea – cosmetics  The Importance of Globalization  Bigger business opportunities because of new markets and target segments.  Increasing export - companies generate more sales outside home countries. –For Japanese companies, 85% of potential is outside Japan. –For German and EU companies, 94% of potential is outside Germany. Local or Global? General framework Market entry: entering a new geographic location, introducing a new product line, or targeting a different customer segment  Domestic and international process  Includes the same elements: – Planning; – Promoting; – Distributing; – Pricing; – Support of the goods and services; – Providing information to customers.  Business steps  Analysis of external environment.  Market segmentation of potential markets.  Researches of customer behavior and market.  Product standardization or adaptation strategies.  Pricing policy.  Distribution channel strategy.  Product promotion activities.  Communication strategy and it’s implementation.  Management of marketing programs.  Standardization vs Adaptation  Globalization (Standardization) – Developing standardized products marketed worldwide with a standardized marketing mix  Global localization (Adaptation) – Mixing standardization and customization in a way that minimizes costs while maximizing satisfaction – Essence of segmentation – Think globally, act locally