Introduction to Business - Part 1
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2024
E. Khoumeri
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Summary
This document provides an introduction to business, covering various aspects, including definitions, classifications, missions using case studies.
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Introduction to Business E. KHOUMERI 05/10/2024 Course Overview Definition of The Business 01 Business 04 as a System Basic Missions 02 of a Business 05 Business 03 Classification 06 01 Definition of Busine...
Introduction to Business E. KHOUMERI 05/10/2024 Course Overview Definition of The Business 01 Business 04 as a System Basic Missions 02 of a Business 05 Business 03 Classification 06 01 Definition of Business Course Objectives Learn basic business concepts. Understand how businesses work in the economy. Connect business ideas to computer science. Why Business is Important for Computer Science "Why Learn Business in Computer Science?" Businesses need technology (software, apps, websites). Computer scientists often work with businesses. Understanding business helps in creating better technology. Course Overview What is a business? What are the goals of a business? How are businesses classified? How do businesses work like a system? What is a Business? A business is an organization that makes or sells things to earn money. Businesses meet the needs of people by providing goods or services. Legal Definitions of a Business A legal entity that can own property, take loans, and sign contracts. Types: Corporation, Sole Proprietorship, Partnership. Economic Definitions of a Business Businesses exist to meet demand and supply in the market. hey use resources to make goods or services. Types of Businesses – Private, Public, and Cooperative Private: Owned by individuals or companies to make a profit. Public: Owned by the government to help society (e.g., healthcare). Cooperative: Owned by people working together to help each other. Non-profit vs. For-profit Businesses For-profit: Aim to make money for owners. Non-profit: Focus on helping people, not making profit. Business vs. Organization Business: Makes money by selling goods or services. Organization: Can exist for other reasons, like charity or government work. Role of Businesses in the Economy "How Businesses Help the Economy" Businesses create jobs. They produce goods and services people need. Businesses pay taxes that help fund Case Study – Private Business (Apple Inc.) Apple is a private business. It started small and became a global technology company. It focuses on innovation and selling products (e.g., iPhones, Macs). Case Study – Public Business (NHS) "Case Study: National Health Service (NHS)" NHS is a public organization owned by the UK government. It provides healthcare for free to the public. Its goal is to help society, not to make a profit. 02 Basic Missions of a Business Introduction to Business Missions A business has different purposes or goals. These are called missions. Four main missions of a business: 1. Production Mission: Make goods or services. 2. Marketing Mission: Sell products. 3. Social Mission: Care for employees and society. 4. Financial Mission: Manage money and make profits. Production Mission The production mission is to create goods or services that people need or want. Examples: Cars, computers, food, or software. The business must focus on quality and efficiency. Case Study: Toyota’s Production Mission Toyota’s focus on producing cars. Lean Production: Toyota uses a method that reduces waste and improves efficiency. Marketing Mission The marketing mission is about selling products to customers. Businesses must promote their products and know what customers need. Examples: Advertisements, special promotions, online sales. Case Study: Apple’s Marketing Mission Apple’s focus on customer experience and innovation. Strong brand image and loyal customers. Apple’s products, like the iPhone, are marketed as high-quality and innovative. Social Mission Social Mission: Caring for Employees and Society The social mission is about being responsible to employees and society. Examples: Good working conditions, fair pay, charity work, environmental care. Businesses should aim to help the community and protect the environment. Financial Mission Financial Mission: Managing Money and Making Profit The financial mission is to make money and manage resources. Businesses must control costs, earn revenue, and invest wisely. Without profits, a business cannot survive. Case Study: Amazon’s Financial Mission Amazon’s focus on growth and reinvestment. They use their profits to invest in new technologies and expand globally. This helps Amazon stay ahead of Summary of Business Missions A successful business balances all four missions: 1. Production: Making quality goods or services. 2. Marketing: Selling and promoting products. 3. Social Responsibility: Helping employees and society. 4. Financial: Making money and managing 03 Business Classification Introduction to Legal Classification of Businesses Businesses are classified based on legal structure. Different legal structures give businesses different responsibilities and benefits. The most common types are: 1. Corporations 2. LLCs (Limited Liability Companies) 3. Partnerships Corporations A corporation is a business owned by shareholders. The business has a separate legal identity from its owners. Corporations Advantages: Owners have limited liability (they are not personally responsible for business debts). Easy to raise money by selling shares. Disadvantages: More regulation and higher taxes. LLCs (Limited Liability Companies) An LLC is a flexible business structure. It combines the advantages of a corporation and a partnership LLCs (Limited Liability Companies) Advantages:Limited liability for owners.Fewer rules and less paperwork. Disadvantages:Can be harder to raise money compared to corporations. Partnerships A partnership is a business owned by two or more people. Partners share profits and responsibilities. Partnerships Advantages:Easy to start.Partners bring different skills and ideas. Disadvantages:Partners are personally responsible for the business's debts. Comparison of Legal Business Types Corporation: Best for big businesses, limited liability, easy to raise money, more rules. LLC: Flexible, limited liability, fewer rules, harder to raise money. Partnership: Easy to start, shared responsibility, personal responsibility for Sector Classification Businesses can be grouped by the sector they work in. Three main sectors: 1. Primary Sector: Natural resources. 2. Secondary Sector: Manufacturing. 3. Tertiary Sector: Services. Primary Sector The primary sector includes businesses that extract natural resources. Examples: Farming, mining, fishing, and forestry. Businesses in this sector provide raw materials for other businesses. Secondary Sector The secondary sector includes businesses that manufacture products from raw materials. Examples: Factories that make cars, clothing, or electronics. These businesses create finished goods for sale. Tertiary Sector The tertiary sector includes businesses that provide services. Examples: Banks, hospitals, restaurants, and retail stores. These businesses do not make goods; they offer services to people. Examples of Sector Classification Primary Sector: Farming, mining. Secondary Sector: Car factories, clothing factories. Tertiary Sector: Banks, hospitals, restaurants. Size Classification Businesses can be classified by their size. Two main types: SMEs (Small and Medium-sized Enterprises). Large Enterprises. SMEs (Small and Medium- sized Enterprises) SMEs are small or medium-sized businesses with fewer employees and lower revenues. Examples: Local shops, small manufacturers, and startups. SMEs often have simple management structures. Large Enterprises Large enterprises are big businesses with many employees and high revenues. Examples: Multinational corporations like Google, Toyota, or Coca-Cola. They have complex structures and more departments. Impact of Size on Structure Small businesses have simpler structures. Large businesses need more management and departments. Bigger businesses may have more rules and more levels of management. Summary of Business Classification Legal Classification: Corporations: Owned by shareholders, limited liability. LLCs: Flexible, limited liability, fewer rules. Partnerships: Owned by two or more people, personal responsibility. Summary of Business Classification Sector Classification: Primary Sector: Natural resources. Secondary Sector: Manufacturing. Tertiary Sector: Services. Summary of Business Classification SMEs: Small and medium businesses. Large Enterprises: Big companies with many employees. 04 The Business as a System Systems View of a Business Definition of a Business System A business is like a system that has inputs, processes, and outputs. Inputs are resources like materials, money, and information. Processes are the actions that use the inputs to create products or services. Outputs are the final goods or services. Holistic Approach A business cannot work with just one part; all parts must work together. A holistic view means seeing the business as a whole system. Examples of Inputs, Processes, and Outputs Input: Money, raw materials, technology Processes: Manufacturing, marketing, finance Outputs: Cars, software, services Diagram: Business System Overview